Postal Services (Rural Areas)

Debate between Jesse Norman and Baroness Clark of Kilwinning

Monday 2nd September 2013 Commons Chamber

[Katy Clark]

My hon. Friend makes an incredibly important point, one that has been made to me by many who run post offices in my constituency.

The post office is vital, not only for individuals, but for many rural businesses—that is another point that many people in my constituency have made. I believe that those who work for Royal Mail have a strong public service ethos. They provide a vital service in many parts of the country, and in rural areas nobody else is going to provide it. There are real concerns about the impact that the privatisation of Royal Mail will have on not just Royal Mail itself, but our post office network. I suspect that many issues associated with that will be explored in this debate by many hon. Members from all political parties.

The background to this debate is, of course, the Postal Services Act 2011, which was passed by this House and allows not only for the privatisation of Royal Mail, but for competition for postal services. The Government have not, as yet, specified what form the sale of Royal Mail will take—whether it will be an initial public offering or a sale to private equity—although they have said that an IPO is their preferred method of sale. There is a great deal of concern throughout the country that the Government are rushing their timetable for political reasons. They have said that the sale will take place within the 2013-14 financial year. If that is the case, we will be hearing further details on the privatisation very soon.

The Government have framed their argument for privatisation in such a way as to suggest that Royal Mail is in imminent danger and that privatisation is the only solution, but that is not the case. Royal Mail is doing very well at the moment, and profits more than doubled in the past year, to more than £400 million. That is partly because the Government have taken over the assets and liabilities of Royal Mail’s pension scheme, saving the company £300 million each year. I congratulate the Government on taking that step. Of course Royal Mail needs access to capital for investment, but the urgency of the Government’s case seems to be driven more by a political timetable. There are many ways to get access to capital. For example, Network Rail is a public body that is authorised to access private capital, without affecting Government borrowing. This House has the right to expect the Government to look at other ways in which Royal Mail could get this access without going down the privatisation path.

The privatisation path is deeply unpopular, with not only the public, but Royal Mail staff. When the Communication Workers Union consulted its staff, it found that 96% opposed privatisation. Unite, which represents managers in Royal Mail, has also come out strongly against privatisation. The National Federation of SubPostmasters was originally sympathetic to some of what the Government were saying but it is now calling on them to halt the privatisation of Royal Mail, because of what it says is the Government’s failure to provide new work to post offices. In the briefings that it has been providing to Members throughout the country, which have been given to me by my constituents and when I have visited post offices over the past few days, the NFSP says that no new work has been awarded to post offices since May 2010 and that the new services that have been introduced are one-off transactions available only at a small number of post offices. It says that without the promised new Government work Post Office Ltd and individual post offices do not have a viable future and that a close relationship with Royal Mail is vital and will be jeopardised by privatisation.

One reason people are so opposed to privatisation is the fear that the universal service obligation will be under threat. The affordable six days a week service that is so valued in the United Kingdom is expensive to provide, particularly in rural areas. Rural post offices and rural postal services are most vulnerable because they are the most costly, and private parcel delivery companies routinely charge a high premium for delivering to remote or rural areas or to islands—or simply refuse to deliver at all.

A report by Citizens Advice Scotland in 2011 found that 83.8% of people surveyed living in remote parts of Scotland had been refused delivery altogether by a retailer using a carrier other than Royal Mail and that increased charges are normal. That is, of course, a problem not just in Scotland but throughout many parts of the UK.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

The hon. Lady mentions the universal service obligation. Is it not the case that the obligation is now better protected than ever as it has been written into primary legislation by Parliament?

[Katy Clark]

There is not a short answer to that question, but I will try to explore it. My point is that the legal protections are inadequate, as there is a great deal of uncertainty about where we will go. The 10-year agreement that has been entered into is not good enough and does not last long enough. I expect that we will explore those issues as we continue the debate.