Postal Services Bill

Julie Hilling Excerpts

Wednesday 27th October 2010 Commons Chamber

[Vince Cable]

I will press on. The hon. Gentleman has had his say.

In addition to funding, we are injecting new ideas. We have been re-thinking the role of post offices in providing Government and banking services, and we will be coming back shortly with a fuller statement on that problem, setting out some new and positive ideas that I hope will command support on both sides of the House and in the country.

I would like to reassure the House with respect to the relationship between the Post Office and Royal Mail. The Post Office is currently a subsidiary of Royal Mail, but they are separate companies and they are very different businesses. As part of our plans for both companies, the Bill will allow for the separation of Royal Mail and the Post Office. Separation will give the Post Office management greater freedom to focus on the branch network and providing new services, but I want to make it clear that in this case at least, separation is not a first step towards divorce.

The Post Office and Royal Mail will continue to work closely together. Each company needs the other. Post offices carried out over 3 billion mail transactions for Royal Mail last year. The two companies are closely linked in the public mind, and are bound together by an overwhelming commercial imperative. There is currently a long-term contract in place between the two companies, and there will continue to be a long-term commercial contract in place. The chief executive of Royal Mail has said that it would be “unthinkable” that there will not always be a strong relationship between the Post Office and Royal Mail.

I shall move on to Royal Mail ownership and the processes involved in the sale of shares.

[Julie Hilling (Bolton West) (Lab)]

I am slightly confused by what the right hon. Gentleman has said. First, will all post offices remain open? Secondly, will the private company always have to do business with those post offices? Is that guaranteed for ever and ever?

[Vince Cable]

No. The relationship between Royal Mail and the Post Office rests on two things—first, on mutual interest. They have strong mutual interests and depend on each other. Secondly, there is a contractual relationship. This will not change as a result of the separation of the two. Public ownership did not secure the arrangement. It is secured by mutual interest and contractual obligation. That will continue.