Postal Services Bill

Lord Low of Dalston Excerpts

Wednesday 4th May 2011 Lords Chamber

[Lord Rogan]

My Lords, I wish to move Amendment 15 standing in my name and that of the noble Lord, Lord Laird. This amendment seeks to ensure that there is adequate consultation with the devolved Governments, small and medium-sized businesses, rural communities, pensioners and people with disabilities prior to the disposal of shares in Royal Mail. In light of the news I read this morning that 9,000 post offices could close under the current proposals, this amendment seems all the more important and pertinent.

As the Bill has progressed through the House, noble Lords from Scotland, Wales and Northern Ireland have been keen to ensure that it protects the current level of postal services in those nations. We have sought, and received assurances from the Minister, that consultation will take place with service-user groups prior to any changes being made to the universal service obligation. This is most welcome. I now ask the Minister to ensure that that same sensible process is undertaken for largely the same reasons prior to the disposal of shares in Royal Mail.

In Committee, the Minister referred to Sections 3 and 7 of the Communications Act, which gives Ofcom a duty to have regard to a specified range of groups when carrying out any of its functions. In particular, Ofcom must have regard to the needs of four user groups: persons with disabilities; the elderly; those on low incomes; and the devolved Administrations. This amendment refers to matters that I believe fall outside Sections 3 and 7. It relates to the need for consultation to take place with the devolved Administrations as soon as is practical after the Minister has taken the decision to dispose of shares in Royal Mail.

I am somewhat bemused that Clause 2 does not already contain this provision. Noble Lords on all sides of the House have been keen to ensure that this privatisation does not result in services being cut back in remote rural areas. I believe that noble Lords are equally keen to ensure that what we broadly call “vulnerable service users” do not see their postal services denuded. Let us be clear: this legislation is not without controversy. I believe that it will benefit from a far greater sense of legitimacy if Ministers are able to report on their intentions to the devolved Administrations and key service user groups as the Government undertake a share disposal in Royal Mail.

The postal services are not devolved matters for logical reasons, as my noble friend Lord Empey so eloquently put it in a previous debate. Royal Mail is a part of our national infrastructure which is highly valued by the British public. I would not want to see the type and quality of postal services that we receive differ from one area of the United Kingdom to the next. It is precisely because this is not a devolved matter that I believe the Government must go that extra mile and ensure that their intentions in respect of privatisation are communicated to the devolved Administrations.

As many noble Lords have explained in Committee, small businesses in Scotland, Wales and Northern Ireland are particularly reliant on Royal Mail services and it would seem sensible that this user group is consulted prior to disposal, particularly in the current economic climate. Other key service user groups, such as people living in rural communities, pensioners and disabled people in the devolved Administrations could be affected by the sale of Royal Mail, and as a result deserve to be consulted prior to Royal Mail moving from the public to the private sector.

This amendment, and others similar to it, that were moved during Committee reflect deeper concerns about the impact that privatisation of Royal Mail will have on services in our communities, particularly in rural areas of Scotland, Wales and Northern Ireland. Noble Lords set out in Committee a number of worries they have about the lack of a commitment from the Government to use this Bill to ensure that postal services are continued at a level users currently enjoy, and that no one user group is impacted on negatively.

We are equally concerned that plans to privatise Royal Mail will be forced on the devolved areas without a meaningful consultation with the devolved Administrations. There is real concern about the consequences of Royal Mail privatisation on service users in Scotland, Wales and Northern Ireland. Failure to consult specifically in these areas will lessen the credibility and legitimacy of the privatisation—a potential problem that is easily rectified by Ministers agreeing to the terms of this amendment.

I trust that your Lordships will be able to support this well intentioned amendment, which aims to increase the legitimacy of this legislation and ensure that the Government's plan to privatise is fully communicated through the proper channels to those who most rely on Royal Mail services.

[Lord Low of Dalston]

My Lords, I apologise to the House for missing my cue at the beginning of this group but I should like to speak briefly to my Amendment 14, which is in this group. It seeks to ensure that service-user groups are consulted before Royal Mail is sold off and would require the Secretary of State to bring a report to Parliament setting out how the universal service provider will maintain the minimum requirements contained in the universal postal service obligation. Before I do that, I want to say a word about the debate we had on this issue on the second day in Committee on 14 March. In that debate, the noble Lord, Lord Razzall—I am not sure whether he is in his place today—whom the Minister described as having all the subtlety of an air raid, said:

“If we are to preserve the reputation of this House for knowing the facts and having expertise, we really must not say things that are not true … I said earlier, it is more expensive for the Royal Mail to deliver to Norwood Green or Hampstead than to maintain the service to the Orkneys and Shetland … if we are to be the serious House that knows the facts, we should take that on board”.—[Official Report, 14/3/11; cols. 113-14.]

Having a concern for the truth which is at least as great as that of the noble Lord, Lord Razzall, I undertook to follow up the matter and come back to it on Report, if it was necessary to set the record straight. The Minister helpfully sent us a note on the subject and I have also taken the matter up with the Royal Mail. From this it appears that the cost of delivering the universal service in urban areas other than London is approximately 11 per cent lower per postal item than the average cost across the country as a whole. The cost of delivering the universal service in rural areas is approximately 11 per cent higher per postal item than the average cost across the country as a whole. However, the cost of delivering the universal service in London is an anomaly at approximately 10 per cent higher per postal item than the average cost across the country as a whole, largely due to higher wage rates in London.

From this it is apparent that the cost of delivering to London and rural areas is roughly the same and far higher than the cost of delivering to other urban and suburban areas. Royal Mail comments that, other than in London, delivery of an item to an urban area is on average 22 per cent less costly than delivery to a rural area. I repeat that the claim of the noble Lord, Lord Razzall, that it is more expensive to deliver to Hampstead and Norwood Green than to Shetland and the Orkneys is not quite correct. I have actually toned down what Royal Mail said. As Shetland and the Orkneys are more remote than the average rural area, delivery costs substantially more per item than it does in London—more than double. It is not clear where the noble Lord was getting his figures from. He was probably comparing wage rates that are higher in London; and he was probably not comparing like with like. Myriad other costs are involved in delivering to places such as Shetland and the Orkneys. I hope that that is now clear and that we can put that matter behind us.

--- Later in debate ---

[Lord Razzall]

My Lords, I was not going to intervene, but because the noble Lord, Lord Low of Dalston, raised the point I made in Committee, we should put on the record that after the noble Baroness looked into this point she wrote to both of us and said that we were actually both right. As the noble Lord indicated, the cost of delivering items of mail in London is more or less the same as the cost in rural areas, and is significantly greater than the cost in other United Kingdom cities. The point that I was trying to make, obviously inelegantly, was that if I was really worried about what would happen I would worry about London. It is not only that the cost of delivery in London is greater, but London is such a huge element in the costs of Royal Mail, which has huge overheads, any third party looking at the overall cost of the Royal Mail—rather than looking at the Orkneys and Shetland—will have to look at the costs in London. It is Hackney that ought to worry, rather than the Orkneys and Shetland. That was the point I was trying to make.

[Lord Low of Dalston]

If it is truth that we are concerned with, as a serious House concerned about its reputation, it is not correct to say that it is more expensive to deliver to Norwood Green and Hampstead than to the Orkneys and Shetland.

[Lord Stevenson of Balmacara]

I hesitate to interfere in what is obviously an important battle of words; perhaps the Minister will take on the mantle of responding to ensure that we have equity at the end of this debate.

I shall speak to the substance of the amendments in the names of the noble Lords, Lord Low and Lord Rogan. The sale of Royal Mail and the separation of the post office network is a momentous event and is bound to cause concern and have genuine repercussions on the universal service and on the post office network, as we have heard and will continue to hear during debates on Report. We are very pleased by the stress that the Government are placing on retaining the universal service. There has not been a sitting in which we have discussed the Bill without that provision being at the heart of the remarks that have been made; we welcome that.

I pay tribute to the noble Lord, Lord Low, whose representations led the then Government to incorporate a service to blind and partially sighted customers into the universal service minimum requirement and to put it in the 2009 Bill. Nine million items a year are sent free of charge through the Articles for the Blind service, and the Bill carries through that decision, a move which will be welcomed on all sides of the House.

That experience illustrates the value of proper consultation to improve results and help people to feel part of the decision rather than the victims of one. It can be argued that there is a general duty on Ofcom to take into account the interests of vulnerable groups, but the amendments would require—just at the time it is needed—proper consultation with user groups, including small business, pensioners, people with disabilities and people in rural areas. People with a disability are more likely to use mail services as a means of communication. Disabled people visit the post office to post mail more than the average. Equally, other groups who I mentioned in that list need to be consulted, and the amendments would ensure that.

The other amendment deals with concerns in those parts of the UK which would be most vulnerable to any reduction in the USO or the post office network. Scotland, Wales and Northern Ireland certainly feel more at risk than other parts of the UK.

I am not sure whether Ministers have had the chance to read the current edition of the London Review of Books and, in particular, the article by James Meek entitled “In the Sorting Office”. It is an extremely good tour d’horizon of some of the problems facing modern post services. He spends some time describing his experiences visiting the Netherlands and the operations being carried on there, some of which were mentioned by my noble friend Lord Christopher.

In particular, I draw attention to the points Mr Meek made in the article about when he visited rural parts of the United Kingdom. Muck is a Scottish island two and a half miles south of Skye. The article states:

“There are 12 households on Muck, and they get mail when and if the ferry arrives from Mallaig … Bad weather can cut the ferries down to one a week in winter. There have also been times—it happened the other day”—

when one puts a first-class letter on the early ferry and it reaches London the next morning. So they get a very variable service. The problem is that Muck now has a satellite dish for broadband internet. You can even, if you are lucky, catch a mobile signal in some parts of the island, if the wind is in the right direction—I added that last bit, but it is true.

“Nowadays email’s so important for communication that the post is getting less and less important”,

says one islander:

“I'm afraid the Royal Mail's in a losing battle”.

The article goes on to draw something to the wider public's attention which I had not known, which is that Jersey,

“has just announced it is abandoning Saturday deliveries in an attempt to staunch the flow of red on its balance sheet”.

I think that Jersey is still a part of the United Kingdom, although it is obviously a separate entity, so we are in danger of some dilution of the USO.

We will return to the question of the USO and how we will protect it. We know that the Government are on our side, but I think that there are measures that might strengthen that protection. The amendments are about consultation to make sure that user groups, including small businesses, pensioners, people with disabilities and people in remote and rural areas, are consulted, and I urge the Government to accept them.