Postal Services Bill

Mark Hendrick Excerpts

Wednesday 27th October 2010 Commons Chamber

[Vince Cable]

Is that the voice of heritage Labour—at last?

Let me summarise the substance of the Bill. As the discussion so far has revealed, Members will find much in the measure that is familiar. As I said, when drafting the Bill we drew on much the same evidence as the previous Government. The facts are not in dispute, and we have reached much the same conclusion: the company needs private sector investment, the pension deficit must be tackled and the regulatory regime must be reformed. However, this Bill is not identical to the previous Government’s Bill.

We have taken the opportunity to learn from what has gone before and to develop a new Bill that builds on this Government’s commitment to employee participation. The right hon. Member for Wolverhampton South East made a major contribution to advancing the debate on the modernisation of the Post Office. When he was Minister for postal services, he said:

“We need a longer-term plan, with a proper buy-in from the work force”.

—[Official Report, 11 February 2009; Vol. 487, c. 1449.]

That is exactly what the Bill hopes to deliver.

First, let me turn to specific issues relating to the Post Office. As I have said, the Post Office and Royal Mail are different businesses. They face different challenges, which means that our approach has to be different. The post office network is unique. There are about 11,500 branches across the country, and it operates in places where other retailers do not. It offers services that other retailers do not. Above all, the Post Office plays an essential social and economic role in our communities. For that reason, the Post Office is for sale. The Bill is absolutely clear on that point.

I am concerned, however, that the current structure of the company is holding the network back. It seems to me that the Post Office is ideally suited to a Co-operative Group style of structure, where employees, sub-postmasters and communities get a greater say in how the company is run. The Bill includes a provision that would allow for a possible future mutualisation of the Post Office. Let me be clear that no firm decision has been taken on mutualisation; there would be a full public consultation before we moved to a mutual structure. In the meantime, I have asked Co-operatives UK to explore options for how a mutualised Post Office would work best.

[Mark Hendrick (Preston) (Lab/Co-op)]

Has any thought been given to whether that would be a worker co-operative or a consumer co-operative?

[Vince Cable]

It could be either, or a combination of the two. That is why we have turned to the Co-operative Group to give us advice on the structure. However, I take it from the tone of the hon. Gentleman’s intervention that that broad approach would be welcome to him.

--- Later in debate ---

[Lorely Burt]

We have already had the announcements of the Secretary of State, which have covered the point that the hon. Gentleman has made. The Secretary of State might wish to address that point in his summing up.

[Mark Hendrick]

Will the hon. Lady give way?

[Lorely Burt]

I cannot take any more interventions. I am sorry.

The point is that 90% of Royal Mail will become a private company. That necessitates close scrutiny to ensure that Royal Mail employees and customers and the taxpayer are protected.

Consumer Focus wants changes that protect consumers to be added to the Bill. It believes that Ofcom “must” impose a consumer protection condition on every postal operator—rather than “may”, which is the term currently used in the Bill. Please can we have “must” instead of “may”? Can we also add the requirement that Ofcom must impose the essential condition that every postal operator must guarantee the confidentiality, safety and security of mail?

I know that Opposition Members are concerned that the Bill’s provisions may be detrimental to customers in rural areas. Can we therefore insert into the Bill a definition of the minimum number of access points to the mail system—post offices and post boxes—and the criteria for geographic distribution, together with criteria under which exceptions could be sought? Can we also add a requirement on Ofcom to consult representatives of residential and small and medium-sized enterprise customers, and other particularly vulnerable customers, when conducting any review of the universal postal services order? SMEs often get left off the list, but it is important that they are consulted as well.

Customers need proper protections when things go wrong. Can we build into the Bill a requirement for postal operators to be members of an approved redress scheme to ensure complaints-handling standards can be monitored and independently investigated? Finally on the consumer front, can we build in a requirement that postal operators continue to provide appropriate information to the regulator and an appropriate consumer watchdog in order to enable independent monitoring of performance, quality of service, complaint handling and services provided to vulnerable consumers?

I want to make a few comments about the separation of Royal Mail and the Post Office. Key provisions in the Bill allow for the privatisation of Royal Mail and the formal separation of Royal Mail and the Post Office. Formal separation offers considerable advantages for the Post Office. For example, it would be managed by a board that could be more closely aligned to its own strategic objectives, and would no longer be a junior partner in group decision making. However, the Government have announced that they will seek a refreshed inter-business agreement between Royal Mail and the Post Office. Will subsequent contracts be subjected to a competitive tender process given that, as Opposition Members have pointed out, there would be no guarantees that the Post Office would retain its mail contract thereafter? I fully accept that there may be arguments against seeking to maintain the contractual relationship between the Post Office and Royal Mail in perpetuity as we cannot reasonably assume that consumer need will necessitate upholding the current access arrangements indefinitely. I also understand why, in light of future uncertainties, the Bill must not be too prescriptive, but might it include provision for the Secretary of State to seek a review of the access criteria at a future date, subject to parliamentary approval?

On the division of assets between the Post Office and Royal Mail, the Bill allows for the transfer of property or other assets between parts of Royal Mail Holdings plc. These provisions allow property transfers to be made directly by the Secretary of State or the holdings company. My worry is that the Post Office has frequently taken a minor role compared to Royal Mail, so when negotiating the property transfers, we need to ensure that the greater weight of Royal Mail is not used unfairly. Therefore, can the Government take steps now, in advance of measures contained in the Bill and the separation of the holdings company taking effect, to maintain the Post Office’s current assets?

Finally, there is speculation about who might buy Royal Mail. All the protections I have mentioned must be in place, but I would like whoever the purchaser might be to be given the best possible chance to make Royal Mail a world-beating postal service.