Postal Services Bill

Lord Bruce of Bennachie Excerpts

Wednesday 27th October 2010 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I beg to move, That the Bill be now read a Second time.

Let me begin by making it clear why we are here: Royal Mail and the Post Office are two cornerstones of our society. They are different businesses, but they are both essential to everyday life in the UK. Royal Mail is responsible for collecting and delivering letters. It provides a universal service that ensures the collection and delivery of letters and parcels from any postbox to any address in the country, and all at uniform, affordable prices. The Post Office is an unrivalled network of shops spread throughout the country. It allows people local access to essential services in the heart of their communities. The aim of this Bill is to secure the future of those two institutions and the services that they provide.

I look forward to support from Labour Members, because I know that they genuinely tried in recent years to secure the future of Royal Mail and the post office network. They no doubt agree with me that this must be the final, successful attempt to conclude that process.

[Malcolm Bruce (Gordon) (LD)]

We know that the previous Government tried unsuccessfully to privatise the Post Office. Does my right hon. Friend agree that the Opposition amendment would, if carried, prevent us from carrying out the reforms that he and I, as former Trade and Industry and Treasury spokesmen, understand require capital to invest in the Post Office, and the workers and mutual beneficiaries to take a degree of ownership and control, in order to get the Post Office out of the mess in which it has been struggling for the past 10 years?

[Vince Cable]

The amendment to which my right hon. Friend refers was tabled by the nationalists rather than by the Labour Opposition. I think that it was drafted before the nationalists were aware of our proposals to strengthen the network. I hope that when they hear what we have to say they will rethink their amendment, because we will have done a great deal to meet their concerns.

--- Later in debate ---

[Mr Davey]

My hon. Friend has corrected the record, and I can say that we have that good management with Moya Greene.

The real challenges of the digital world, as the right hon. Member for Wolverhampton South East (Mr McFadden) said, apply to all postal administrations across the world. It is the deep challenges that face Royal Mail and the Post Office that make the position of the Opposition at best incredible and at worst downright irresponsible. They know the problems that Royal Mail faces: the decline in letter volumes as e-mail volumes grow exponentially, the large losses the company has made in recent times, and the incomparably large pension deficit. We know that they know, because just last year they said the same thing, and put a Bill before Parliament to address those very same problems. I have that Bill here—but unfortunately it was not brought down the corridor from the other place for us all to debate in this Chamber. If it had been, the similarities in the Bill would have meant that many of the questions raised in this debate could have been debated then. So, let me address some of the questions that I have been asked.

The hon. Member for Vauxhall talked about foreign ownership. She may remember that when her Government tabled their Bill there was concern on the Labour Benches that TNT and Deutsche Post might buy Royal Mail, so she has an issue to raise. What is often forgotten in this debate is that British investors already own 30% of Deutsche Post. That is the real world: investors invest in good companies.

The hon. Member for Blaydon (Mr Anderson) had worries that the royal associations would somehow be broken as a result of privatisation. The Queen will continue to approve all stamps that bear her image, as she does now. The Royal Mail brand is valuable and we will put safeguards in place against its misuse. We have initiated discussions with the Palace for that very purpose. I should tell the hon. Gentleman, who claimed that more post offices closed under the Conservative Government, that he is wrong. In 18 years of Conservative government fewer post offices closed than in 13 years of Labour government.

Coalition colleagues might be concerned because of the similarities between our Bill and the Labour Bill. They are so similar that we half expected the Labour party to feel duty-bound to support our Bill.

For example, there are almost identical proposals on pensions, except that our proposals are slightly more favourable to Royal Mail employees. The clauses on regulation are also similar, except that our Bill introduces new safeguards for the universal postal service that were strangely absent from the previous Government’s Bill. Our Bill rebalances the regulatory framework, putting the universal service and its financial sustainability at its heart.

Those ought to be major areas of agreement, but we did not get that tonight. We heard some bizarre criticisms from Opposition Front Benchers. They said that we are not addressing the problems of the regulatory system, but it is their regulatory system. They do not appear to have read the Bill, because we are making changes to that regulatory system.

The right hon. Member for Wolverhampton South East brought in Ofcom in the previous Government’s Bill. It has a duty to reduce unnecessary regulation, which will assist the legislation. The Bill requires cost transparency and accounting separation to deal with many of the regulatory problems that my hon. Friends the Members for Southport and for Pendle (Andrew Stephenson) raised in the debate.

Surprisingly, Opposition Members also raised concerns about the pensions solution. The hon. Member for Vauxhall said that it is possible to achieve a solution on pensions without a sale. It would be irresponsible to ask the taxpayer to take on an £8 billion deficit without securing private capital and disciplines and without transferring future risk from the taxpayer. This is a package deal, which is what Hooper argued for and what we are delivering.

Richard Hooper made it clear that action is needed if we are to secure the future of a universal postal service. His document, “Modernise or Decline”, sets out those options. When the hon. Member for Angus (Mr Weir) questioned whether a privatised Royal Mail would threaten the universal service obligation, he was ignoring the evidence put forward by Sir Richard Hooper. I can only think that he has not read the Bill. If he had read it, he would know that it is all about safeguarding the universal postal service of Royal Mail and the Post Office, recognising the particular importance of those services to our rural communities.

The six-day, one-price-goes-anywhere universal service obligation is enshrined on the face of the Bill, but we have not stopped there. The Bill introduces new safeguards to protect that service, ensuring that any future change must be properly debated by Parliament, must retain the uniformity of the service and must take into account the interests of postal service users, which, of course, includes rural communities. The scaremongering of the Scottish nationalists flies in the face of both the facts and the text of the Bill.

Returning to the substance of today’s debate, despite our producing a Bill that is better than the previous Government’s Bill—better for Royal Mail employees’ pensions and better for the protection of the universal service—the Opposition are determined to oppose it. Where are the huge differences that are causing the Opposition such problems? We want to provide Royal Mail employees with shares, so workers can benefit from the prosperous future for Royal Mail that our reforms will enable. The previous Government talked about involving employees, but they argued with the unions about giving employees shares and then argued with themselves. This Government are united, and we are going to do it through the largest employee share scheme by percentage of shares of any major British privatisation. For the first time ever, I believe, we are mandating an employee share scheme on the face of a Bill. As a member of a party that championed employee share ownership for decades in opposition, I could not be more proud to present this radical measure to the House tonight. I pay special tribute to my hon. Friend the Member for North Norfolk (Norman Lamb), who did so much to develop those issues when we were in opposition.

I also thank my hon. Friend the Member for Warwick and Leamington (Chris White), who explained how important employee share ownership can be in driving productivity. He was concerned that only 10% of shares will go to the employee share scheme, but I can tell him that the Bill refers to “at least 10%”. I was pleased by the support for employee shares from my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). His chairmanship of the all-party group on employee ownership shows that he knows about that area. He raised a constituency case, which I will take up if he writes to me.

Another key difference between Labour’s Bill and our Bill is our mutualisation proposal for the Post Office. Sub-postmasters, Post Office employees and communities can all have a say in how their post offices are run. The Co-operative model is a huge example of the big society and something that the old Fabians would have classed as public ownership, but the Labour party is going to vote against the Bill.

Let me clarify the mutualisation proposals for the Opposition, who do not seem to understand what they are all about. Post Office Ltd, the national company that franchises to individual post offices and chains of post offices, would become a mutual if our proposals go ahead. We believe that having a national mutual similar to the Co-op would have many practical benefits and would align the incentives of sub-postmasters with those of the company and their main franchisor. When it comes to modernisation and putting services online, it is important to have aligned incentives.

[Malcolm Bruce]

Will the Minister give way?

[Mr Davey]

No, I am sorry.

My hon. Friend the Member for Solihull (Lorely Burt) raised concerns about the conditions for mutualisation. Of course we will have to ensure that there is a viable post office network, otherwise we could not make mutualisation work, so that is one of our conditions. Clause 7 makes it clear that a mutualised post office network would have to be “for the public benefit”, so that is also a clear condition.

Despite the fact that our Bill is better for Royal Mail employees, Royal Mail, the Post Office, customers and the taxpayer, the Opposition still oppose it. What is their problem? The right hon. Member for Wolverhampton South East, the former Minister of State for Employment Relations and Postal Affairs, said that it is about ownership but he did not ask the next question: what is the difference between the shareholdings to which the previous Government and this Government were prepared to agree? That principle concerns about 0.2% of the shares—the extra shares that they were not prepared to sell but we are. The sale of those shares will free Royal Mail from Treasury control and will enable it to be the master of its own fate and to invest for the future without coming cap in hand to the taxpayer. New Labour has been dying for some years but with the opposition to this Bill, old Labour has returned. I thought that I would be in danger of being called Red Ed with the bail-out of the pension plan, but the real Red Ed is on the Opposition Benches—ideology before reality, dogma before common sense and, worst of all, vested interest before national interest.

The idea that public ownership has delivered a successful Royal Mail and post office network clearly is not right. Perhaps Opposition Members are aware that Royal Mail shed 65,000 jobs during the 13 years of Labour government, so public ownership did not deliver for workers. Let us consider the experience under privatisation around the world. Since Deutsche Post was floated in 2001, it has seen investment of £11.6 billion. That just will not be possible for Royal Mail if it remains in the public sector, but through our measures, it will become possible.

The right hon. Member for Southampton, Itchen (Mr Denham) made another accusation against the Bill—it would lead to post office closures. What a cheek! Ten post offices closed in his constituency under the previous Labour Government and about 5,000 post offices were shut in total. As so many colleagues have made clear throughout this debate, Labour is the party of post office closures. This Government will not make those same errors. That is why my right hon. Friend the Business Secretary today announced our £1.34 billion investment programme for the post office network. That money will not pay for a closure programme—we will not throw money down the drain as Labour did—but it will bring a lasting change to the network and will tackle the underlying economic issues it faces. That is why the right hon. Gentleman and his colleagues will see, when we make our full statement on policy for the post office network shortly, a Government working as one—joined-up government is what they used to call it.