Postal Services in Scotland after 2014

Jim Hood Excerpts

Wednesday 10th July 2013 Westminster Hall

[Mr Davidson]

Indeed. I intend to come on to that, but I want to make the initial point that now, as distinct from when I first applied for the debate, the question of separation is largely hypothetical. Therefore we need to discuss the future of postal services in Scotland in the context of remaining in the United Kingdom. Many of us who have been involved in previous elections have seen, either from our own party or the one that is now in government, a decapitation strategy, but I never expected to see the yes campaign operating a self-decapitation strategy, ejecting members of its leadership, as it is doing. It is now pretty clear that the yes campaign is no more than a sham. Essentially it is an SNP campaign for separation.

I want to turn to the question of the future of Royal Mail within the Union and under the present Government. I never thought that I would see a Liberal Secretary of State proposing privatisation of the Post Office, and a Liberal Minister supporting it in a Westminster Hall debate. Who—among those of us who can remember how Liberals previously campaigned for this post office to remain open, or in defence of that aspect of Royal Mail, always blaming someone else—would have thought that they would be the drivers of the privatisation of Royal Mail? A Liberal Secretary of State will this afternoon call for its privatisation. What a turn-up for the books. Well, well.

We must be clear about the Royal Mail’s position. It is clearly not a company in crisis. It has been suggested that it faces imminent danger, and that privatisation is the only answer. That is simply not correct. Its profits more than doubled in the past year, to £403 million from £152 million in 2012. Revenues grew by 5%. The Government, correctly, have taken over the assets and liabilities of the Royal Mail pension scheme, which saves the company £300 million a year. Parcel volumes are growing. Royal Mail, admittedly, used to be a letters company with a parcels business attached. Now it is the converse: essentially a parcels company with a letters business attached. Therefore, adjustments are obviously required. However, it is adjusting. Its business is expanding and it is doing exceptionally well.

Why, then, is there a drive by the Government for privatisation, fronted by the Liberals? Is it because, as has been argued, Royal Mail can have access to money only if it is in the private sector? That is clearly not correct. Network Rail, for example, which is essentially in the public sector, has access to private sector money and borrowing. When Moses came down from the mountain with the ten commandments, he did not also have the Treasury rules on a block of stone. Those rules were drawn up by the Treasury and can be changed by the Government. The Government—and particularly the Liberals, which I find particularly appalling—choose to argue that Royal Mail needs private capital and that the only way it can be brought into the business is through privatisation.

The Labour party is opposed to privatising Royal Mail. We want to clarify why the Government are in such a rush and are pressing forward with the proposal now. Is it simply because of the deficit in the Government finances, and because they want a large influx of money to pay for bankers’ bonuses? Should Royal Mail be privatised to pay for bankers’ bonuses? That is one of the questions to which we need an answer from the Government. There are credible alternatives to privatisation. There is no crisis to solve, and therefore it is inexplicable—other than that it is ideologically-driven—that the Government should be putting the proposal forward.

The obvious anxiety is that the universal service will come under pressure with privatisation. The point of introducing private sector finance will be to allow those in the private sector who buy shares to make a profit. They will obviously seek to enhance that profit by driving down costs, and one of the best ways for them to do that will be through the universal service obligation.

The Government have shown that they are willing to undermine Royal Mail at every opportunity by, as my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) said, allowing other people to cherry-pick the best fruits—the busiest areas—and drain funds from Royal Mail, so that it will not be able to cross-subsidise as an overall national service would. [Interruption.] We cannot have faith in a system of regulation. We have seen, for example, that the power company regulators have been impotent—[Interruption.] One of the Scottish National party Members keeps chuntering away. Would the hon. Member for Perth and North Perthshire (Pete Wishart) like to intervene, or does he just want to chunter?

[Mr Jim Hood (in the Chair)]

Order. The hon. Member for Perth and North Perthshire cannot have a chat across the Chamber. If he wants to intervene he should do so, but he should not comment while a Member is on his feet speaking.

[Mr Davidson]

Thank you, Mr Hood. It is interesting that SNP Members choose not to intervene, but just to chunter from a sedentary position.

The Government claim that the universal service is enshrined in law, but I understand that that covers only the bare minimum, and we are of course aware that the Government cannot bind their successor. It cannot be guaranteed that future Governments will abide by pledges that are given now.

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[Mr Davidson]

Well, that is an interesting point. Of course we do not know at the moment where we will be in 2014. We are putting all our efforts into ensuring that privatisation does not take place, so we are focusing on that. It is a bit like the question of the bedroom tax. Nationalists are calling on Labour to clarify whether we will reject it in 2015, when at the moment, the SNP could be doing something about it in Scotland by helping local authorities but declines to do so. It could pay the costs of the bedroom tax to local authorities and social landlords now, but it refuses.

That is the difference between us. At the moment, we are relatively impotent, regrettably, because we are not in power here or in Holyrood. The power lies, in this case, with the Conservatives and their front men and women, the Liberal Democrats. Did I mention that it is surprising to me that the Liberal Democrats are fronting the privatisation of Royal Mail? What a scandal that is. People ought to be aware of it—[Interruption.] There is no point in the Minister shaking her head. She is letting her tresses flow back and forth; I wish I could do that. None the less, it is a fact that the Liberals are selling off the Post Office—[Interruption.] Royal Mail; I apologise. We are opposed to that.

Mr Hood, I know that a large number of other Members want to speak, so finally—finally, finally—I thank you for your chairmanship of the debate so far.

[Mr Jim Hood (in the Chair)]

I have four speakers on my list, plus the two Front-Bench Members. I ask Members on my list to be considerate of others, so that everyone has time to speak.

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[Mr McKenzie]

Labour is the only party to defend the universal service obligation. The debate is about what a postal service in Scotland would look like post-2014. The two challenges to Royal Mail are not only privatisation, as I have rightly pointed out, but separation.

In my constituency, the sorting office at Knowe road employs about 150 people working full time, with some part time. Working in teams, they deliver throughout my constituency, which is diverse, with some rural and mostly urban communities. Daily, the Inverclyde office receives mail by road from Glasgow, where the large city sorting depot employs many hundreds of people more, directing the mail across the country, and that is replicated in all Scottish cities.

Individually, our engagement each day remains with the postie. Well known to the community, posties deliver to our doors in all weathers, six days a week, and that brings me to the quality of service and the delivery six days a week. Under privatisation and, as well, an independent Scotland, would we be guaranteed a six-day service? Could it be maintained? After all, we have come to expect our Saturday mail delivery; if ended, what would be the impact on business?

The price of a stamp has already been discussed by my hon. Friend the Member for Glasgow South West. What price for first and second-class stamps? Would there be a first and second-class service in a separate Scotland? Would sending a letter or document to the rest of the UK be classed as overseas mail? If so, how much would that cost? Those are all questions that we need answered. Furthermore, how would that affect Scotland’s businesses? Has all that been taken into account?

What of our postcodes in an independent Scotland? Postcodes are used to identify our homes throughout the UK quickly. Would they be retained in their present form or, as we have already heard about in Ireland upon separation in 1917, would the postcodes be changed? What would our postcodes look like?

There is a risk that a new mail service would not be anywhere near the size, scale and complexity of Royal Mail at present. Royal Mail is clearly vital for business, the economy and our everyday life. Much as we need electronic mail to speed and support business, we still require the physical mail. The rise of the e-mail and its challenge to the physical letter is now being outweighed by the rise of online shopping and the resultant increase in parcel delivery. Will Scottish online shoppers be penalised? Independence will mean being outside the UK, so will the cost to deliver increase?

Surely, before the Scottish people vote on the most important constitutional decision in their history, such questions need to be answered, and as soon as possible. Who knows, but, bizarrely, the ever-increasing popularity of the postal vote could contribute to keeping the UK together and Royal Mail in Scotland?

This morning, we have highlighted yet another concern for Scottish people—the impending referendum in 2014 and the future of Royal Mail beyond 2014. From applying a stamp to a letter to recognising the postie coming down our street in distinctive uniforms and vans, we have become accustomed to and reliant on the Royal Mail service as part and parcel of being in the UK. After all, one of the first acts of the Scottish King on coming to London to unite the Crowns was that he sent the royal mail north. Like many Scots, he recognised a good thing when he saw one; we still recognise Royal Mail as a good thing, and we want to keep it.

Disruption to Royal Mail services across the UK will impact not only on the Scots, but on the rest of the UK. We must hear how the SNP intends to sign, seal and deliver a mail service in an independent Scotland.

[Mr Jim Hood (in the Chair)]

So that I can get in all the speakers on my list, I am imposing an 11-minute limit on the next contributions.

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[Mr Weir]

I am sorry that the shadow Minister does not remember his own policy. Lord Mandelson proposed privatisation of 49%, not 40%. The hon. Gentleman may believe that the situation would have stopped there, but the clear intention was to privatise. What will happen if privatisation goes ahead? In the Netherlands, where the universal service provider—[Interruption.]

[Mr Jim Hood (in the Chair)]

Order. The hon. Member for Edinburgh South (Ian Murray) and the hon. Member for Glasgow Central (Anas Sarwar) should remain in order while the hon. Member for Angus (Mr Weir) is on his feet.

[Mr Weir]

Thank you, Mr Hood.

I understand that, under the Government’s proposals, there will be an initial public offering on the stock market, but there is absolutely nothing to stop Royal Mail falling into the hands of an alternative provider such as Deutsche Post or TNT, and the history of privatisation suggests that that is likely. When the energy companies, BT and British Gas were privatised, most of the shares in the first instance went to small investors, but now the companies are owned by large institutions. It is very likely that that will happen to Royal Mail.

It is also likely that in due course a provider such as Deutsche Post or TNT will become the owner of Royal Mail. That is not to be welcomed, given the attitude of some of those companies to the universal service. The Communication Workers Union made the point that in the Netherlands, where TNT, the universal service provider, is privately owned, within a year of the mail market being fully opened to competition in April 2009, the managing director of TNT’s European mail network declared that the USO was

“a kind of Jurassic Park and we should be rid of it”.

The company plans cut down its deliveries.