Postal Services Bill

John Pugh Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Denham]

Clearly, any measure that allowed that kind of swift onward sale, resulting essentially in 100% private ownership of Royal Mail, would explode the Government’s rhetoric on the Bill. I can assure my hon. Friend that we will look at the proposals in great detail in Committee.

[Dr John Pugh (Southport) (LD)]

The right hon. Gentleman makes a rational and intelligent case, but if the Bill proposed a majority stake for private finance—say 51 or 55%—would it be possible to protect the public interest?

[Mr Denham]

That is an important point. If the hon. Gentleman will forgive me, I will return in a moment to how majority sale or full sale would shift the balance of power against the public interest during the sales process.

--- Later in debate ---

[Dr John Pugh (Southport) (LD)]

The powers that be in the Whips Office approached me last week to ask whether I would like to speak on the Bill, and then a few days afterwards they asked which side I intended to speak on. I reassure them that I shall speak largely for the Bill.

The Government are to be congratulated on introducing a Bill on postal reform. I accept that stagnation is not an option. The pension deficit is crippling. The regulatory environment is crazy, as many Members have established. The communications market is changing dramatically, and the work force are confused and demoralised.

The last time I spoke on postal services in this place, I did so on behalf of employees in my constituency who were locked in battle with the local management. I must admit that like other Members I did not find the Crozier-led management easy to deal with. Nor did I find the union especially helpful, although I have a generally high opinion of the Communication Workers Union and of Billy Hayes in particular. The battle was over an astonishingly high rate of dismissals and disciplinary actions taken against a work force who are neither work-shy nor particularly militant.

A pattern of petty penalisation and unreasonable demands had emerged, and it needed to be dealt with. Otherwise decent staff were being punished for not fulfilling unreasonable schedules, or for simple lapses of concentration, such as not wearing their cycle helmet at the right time in the right place, or for not following procedures with absolute accuracy. In some cases, that became the basis for dismissal, and bit by bit, long-term staff were replaced by casuals. I came to the conclusion that the management wept no tears at all about that, and that the dismissal of long-term, high-pension staff was in fact relatively welcome.

I came to the conclusion that unreasonable schedules were being set—almost wilfully—because Royal Mail believed that the only way it could compete was to ask staff not only to go the extra mile, but to go another and then another. I draw no comfort from the current agreement whereby Royal Mail is to beef up massively the junk mail element in every postbag. A business that plans to survive by giving its customers more of what they do not want does not seem to have much future. That is why something has to change, and there is a lot in the Bill we should welcome.

We need to do something about the insanity of postal regulation. For years, Postcomm has forced Royal Mail to upstream and downstream prices to subsidise its competitors. The line is, “Let the poor old Royal Mail struggle with the long paths, the dogs, the gates that fall off their hinges, the flats with no visible means of access and the long country roads.” While Royal Mail does that, the private market looks at what is actually profitable.

Payment for the final mile has been derisory, and as the hon. Member for Vauxhall (Kate Hoey) would point out, it is due to the bloodless application of EU law and directive that has done untold damage to the postal system of the UK. I do not want to go into the rationale for that; suffice it to say that as a consequence of the single market agreement that Mrs Thatcher introduced—or got Parliament to agree to—we are stuck with it. But as far as I can see from the Bill, we are not stuck with Postcomm. That is a significant improvement. I welcome, too, the emphasis on employee share ownership.

[Jack Dromey]

Does the hon. Gentleman share my concern that there is nothing in the Bill that would prevent ownership passing to private equity, perhaps aided by the hedge funds, and a takeover not in the national interest, including potentially by foreign ownership?

[Dr Pugh]

The hon. Gentleman is assuming that the Bill is totally finished business. If he has amendments that he feels ought to be tabled and that ought to impress the Minister, I am sure he will have the opportunity to do so.

Not only is employee ownership part of Lib Dem policy, but it is a long-standing part of Liberal policy before that, as many of my hon. Friends will recognise, and it was backed by candidates in the recent Labour leadership elections. It is good to see employee ownership in the Bill. It is 10%, but it is there.

I welcome the central place in the Bill given to retaining the universal service obligation and the measures taken to secure it. We all hope that they will be good enough.

I welcome the plans for the Post Office, but with some caveats. It is a huge franchise and it still has huge potential, but it remains the case that there is virtually nothing that it now does which cannot be done in some other way. Its viability depends on elderly customers preferring to do things in a traditional way, via paper transactions. It needs more than the good wishes of the House, the occasional subsidy and a more modern and diverse facade. It is a very distinctive type of franchise, unparalleled in any other European country, and it needs a distinctive role.

That can only be through an enduring link with the Government or with the community that post offices serve. It is not clear to me yet what long-term role the Government or the community wants the Post Office to discharge. My fear is that if central Government, local government and the community cannot identify that role, the franchise will lose its universal service provider status and part of its raison d’être. The Government need to work out what they want a sustainable post office network to do. We cannot have, as we have had in the past, some Departments promoting it and others, such as the Department for Work and Pensions, effectively sabotaging it.

I fear there is also an element of backdoor sabotage. I have had difficulty in my constituency, where sub-postmasters have tried to sell franchises to somebody else and have encountered untold difficulties in seeking to do that and prohibitive prices presented to buyers.

The fundamental issue that we are facing is privatisation. Some people approach the subject with a presumption against privatisation, and some have a presumption in favour of privatisation. I guess most of us are fairly pragmatic about it, but do we accept that the safeguards of the universal service obligation are robust? If we accept that there is an argument for the Government to absorb the pension deficit, and if we accept that the business will go better with sane regulation and employee involvement, the big question is why not retain the business in public ownership. That is the issue on which we will torture ourselves over the next few days. We hope that we will have from the Minister an exhibition of evidence-led policy where the balance of argument prevails, not the balance of numbers.