Postal Services Bill

Nicholas Brown Excerpts

Wednesday 27th October 2010 Commons Chamber

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

It is a pleasure to follow the hon. Member for Northampton South (Mr Binley), and I strongly agree with what he had to say about the bully-boy school of management. The hon. Gentleman is committed to privatisation, as he made clear in responding to the intervention from his hon. Friend the Member for Gainsborough (Mr Leigh). However, although I listened carefully to the Secretary of State, I do not think that he made a case for selling Royal Mail.

My problem with the Bill is that it does not seem to be directed at the individual problems faced by Royal Mail. Indeed, I believe that in some ways it would make matters worse. Specifically, privatisation does not of itself deal with the problems identified in the Hooper report.

At the time of the Bill proposed by the last Labour Government, two arguments were advanced in favour of a private sector minority stake in Royal Mail. It was argued that Royal Mail needed private sector drivers, incentives, commercialisation and benchmarking—all the disciplines associated with private enterprise. It was said that they were necessary to drive forward the modernisation programme. At the same time and in the same context, it was argued that there was a need for the managerial expertise that could be found in the private sector, which prompted a question: if that managerial expertise was really needed, why could it not simply be hired?

The Government—correctly, in my opinion—have asked Richard Hooper to review his work. He has reported progress on the crucial modernisation issue, and has had reassuring things to say about managerial expertise. The key necessity is surely to drive the modernisation through, but that will not be easy, because mechanisation brings with it job losses and reorganised work arrangements.

The challenges are well understood. My right hon. Friend the Member for Southampton, Itchen (Mr Denham) listed some of them. Modern communications such as text, e-mail and mobile phones have led to a remorseless decline in the use of traditional postal services. That has been offset to some extent by the use of direct mail marketing and the growth of the parcel business, which is partly dependent on internet shopping—but the trend is clear, and change is therefore essential. I accept that the background of poor industrial relations makes the process harder, but in the circumstances it is surely right to support the progress that has already been made—and identified by Richard Hooper—and to find ways of reinforcing the work on the modernisation programme.

In any event, why do we need legislation to bring about privatisation? The Government have the power to sell shares now, although they are handicapped by the need to report the precise arrangements to the House and obtain our consent. The then Business and Enterprise Committee was very forceful on that point when it examined the Labour Government’s proposals, and I am pretty certain that its members’ views will not have changed.

The Bill also separates Royal Mail from the post office network, even more explicitly than is currently the case. That will not solve the problems faced by individual post offices, and it will open up new dangers. In short, the problems are insufficient turnover and a small margin on individual transactions through the outlets. It is reasonable to consider what other business could be put through traditional sub-post offices—that is not an original idea—but it will be difficult to provide services requiring a volume of users in smaller population catchment areas. The problem is usually discussed in terms of rural communities, but it affects inner-city and other urban communities as well. The Government should focus on that, rather than on separating Royal Mail from the post office network.

The burden of the universal service guarantee still rests effectively with Royal Mail, to the extent that it is effectively forced to subsidise its competitors in the parcel business, apparently—although I understand that the figures are a matter of dispute—to the tune of some 6.5p per item. That cannot be fair, and it is evidence of poor regulation.

I urge caution, although I am not opposed to the idea of share ownership. However, as my hon. Friend the Member for Coventry South (Mr Cunningham) pointed out, when employee share ownership was introduced at Rolls-Royce and by the municipal bus companies, the employees took the shares and then sold them. What matters to employees is the wages, job security and pension arrangements; those are the crucial things for them.

Part 3 of the Bill deals with the regulator and reconfigures the existing arrangements. The relationship between Royal Mail and its regulator is poor. I have looked at the arrangements in the Bill, and this looks to me—I was wondering how I could explain this in summary to the House—like the Post Office version of the Independent Parliamentary Standards Authority, with the industry having to pay for the regulator, at costs set by the regulator.

Part 4 deals with what happens when everything goes wrong. I will urge the House to pass that part of the Bill if the rest of it is passed.