Postal Services Bill

Lord Stevenson of Balmacara Excerpts

Tuesday 17th May 2011 Lords Chamber

[Lord Rogan]

My Lords, this amendment is of the utmost importance to the post office network, which has been in steady decline over the years. I welcome the Government's commitment to oppose post office closures, although that is not entirely in their hands. However, if an inter-business agreement between Royal Mail and Post Office Ltd is not enshrined in law, there is a real concern that, over time, Royal Mail will downgrade the value of its contact with the post office network, putting it under even more financial pressure. I am not alone in thinking this, and many noble Lords have raised similar concerns. Indeed, the Minister agreed that the Government hoped to achieve a 10- year agreement prior to disposal on our previous day on Report. With such agreement on the record, I hope that the Government will accept this amendment and see that the concern which is shared across the House is addressed.

The post office network is part of the fabric of British life. In Northern Ireland, as elsewhere, the local post office is so much more than a retail outlet; it is an essential community hub. I fear that, without an inter-business agreement, a privatised Royal Mail will seek new outlets for its services, which can be only a bad thing for our struggling post office network. The amendment in my name and that of the noble Lord, Lord Laird, seeks to guarantee that local post offices are able to continue to plan and operate their business safe in the knowledge that they will continue to receive the revenue streams from Royal Mail that help them survive as small businesses.

We cannot legislate to protect the post office network for an indefinite period. It is probably true that, at some point in the future, the post office network will end up going it alone, which will be regrettable, but, as Royal Mail goes through a major transformation and the post office network’s existence depends upon a very generous taxpayer subsidy, it is surely vital that we do all we can to help it through these tumultuous times.

Post offices provide a vital service to communities around the United Kingdom, especially in rural areas in Scotland, Wales and Northern Ireland. But their existence is fragile. Over the past 20 years, there have been some 9,000 post office closures. An inter-business agreement, enshrined in law for 10 years, provides the stability that the post office network needs to survive. Without an IBA, the future of post offices across the United Kingdom looks bleak and further closures will undoubtedly follow.

[Lord Stevenson of Balmacara]

My Lords, I rise to speak to Amendment 67A in this group and to give our support to Amendment 63B in the names of the noble Lords, Lord Laird and Lord Rogan. We associate ourselves with the remarks that the noble Lord, Lord Rogan, has just made.

The Bill separates Royal Mail from the post office network, the first time such a separation has happened anywhere in the world. Throughout our debates in your Lordships' House, we have stressed the importance to the country of the post office network, not just as a vehicle for the day-to-day transactions of our citizens and in support of our small businesses—important though those are—but because the post office is at the heart of our communities up and down the country. In an earlier debate, the noble Lord, Lord Empey, described the post office as part of the national infrastructure. It is, indeed, a vital part of the hard wiring of our country and, with its continuing presence and high standards of operation and service, it helps to define who we are in an increasingly globalised world.

The Government have supported the post office network and we pay tribute to this. It must have been hard to secure the funding necessary to honour the increase to £180 million per annum in the previous Government’s social network payment for otherwise unviable post offices, but they have secured the necessary investment within the confines of the spending review and they have specified that Post Office Ltd must have 11,500 outlets in the year 2014-15. That is all very welcome but—there is always a but—it leaves a number of operational and practical questions unanswered, which we fear may bring down what are the clearly genuine good aspirations of the Government for the post office network. Of these, the two areas our amendment probes are what happens after 2014-15 and what is to stop a privatised Royal Mail reducing its use of post offices.

As we have heard, the Post Office is dependent on Royal Mail’s business for its survival. Over one-third of its revenues, £343 million, and one-third of sub-postmasters’ pay, £240 million, is generated selling Royal Mail products and services. The bald fact is that there is nothing in the Bill to require a privatised Royal Mail under new ownership to utilise the current post office network. Andy Burrows of Consumer Focus has said:

“It’s entirely conceivable … that several years down the line you could have a post office network where you cannot undertake mail transactions”.

We already know that post offices, predominantly those in rural areas, are finding it hard to survive. As the National Federation of SubPostmasters has said, many sub-post offices are “hanging by a thread”.

Despite Ministers’ assurances that there will be no government programme of post office closures, post offices are closing. Last week it was revealed that there are now 400 post offices which are, in the parlance, subject to “long-term temporary closure”—up from 150 last year. I am sure that all Members of your Lordships’ House hope that “long-term temporary closure” is not just a euphemism for permanent closure. Whatever the truth of that, the fact is that there are nearly 1,000 sub-post offices up for sale but unsold. We accept that there is always churn, but this is an unusually high number according to the NFSP.

We have argued throughout the passage of the Bill that we simply do not understand why it is impossible for the Government to work with the component parts of the present Royal Mail to broker at least an extension of the current agreement between Post Office Ltd and the soon-to-be separated Royal Mail so that our post office network has a more certain future. They currently have an agreement in place and both managing directors appear to believe that such an agreement is necessary and makes good business sense. The experience from the rest of the world suggests that neither Royal Mail nor Post Office Ltd could survive for long without such an inter-business agreement. It seems logical that any private sector bidder for Royal Mail would appreciate the good sense of having an agreement in place at the time of sale. It would be an asset, not a liability.

The Minister for Postal Services told the other place that,

“we, as shareholders, will ensure that the commitment that Royal Mail made in its evidence to the Public Bill Committee—that it would conclude the longest legally permissible contract before separation—is fulfilled”.—[Official Report, Commons, 12/1/11; col. 357.]

So what is the problem? If the Government have the power at the moment to require the Royal Mail and the Post Office to conclude an agreement or to extend the present one, and they believe they have the power as shareholder to ensure that Royal Mail concludes the longest legally permissible contract before separation, why on earth do we not put it in the Bill and be done with it? It would be very sad if, a few years down the track, the post office network collapses because the new owner of Royal Mail does as we fear. It may seem overly melodramatic to say this, but I do not think the country would ever forgive a Government that passed over the opportunity to save our much loved and cherished post offices.

We believe the Government should do it—as do the noble Lords, Lord Rogan and Lord Laird—and so we support the amendment standing in the names of the noble Lords. Our amendment does not ask for the Government to determine the terms of an inter-business agreement—that would be a matter for the two companies —but to ensure that the agreement is of sufficient duration, which we suggest should be 10 years, so that the people who operate and work in our post offices, most of whom invest their own money in the business, know where they stand.

George Thomson of the NFSP told the Public Bill Committee in another place:

“We need security for sub-postmasters; they have £2 billion of their own money invested in this business. If you were a company investing £2 billion in a PFI to build a school or hospital, you would get a 21-year contract. I am not asking for a 21-year contract, but, by God, I am asking for a 10-year IBA contract”.—[Official Report, Commons, Postal Services Bill Committee, 9/11/10; col. 39.]

Those are strong words, but we firmly believe that your Lordships’ House should listen carefully to those on the front line.