Future of Postal Services

Richard Burgon Excerpts

Tuesday 10th January 2023 Westminster Hall

[Richard Burgon (Leeds East) (Lab)]

I have been speaking to local posties on the Harehills and Seacroft picket lines in my Leeds East constituency. It is clear that our posties care deeply about this service, but they are being attacked by Simon Thompson and the Royal Mail bosses. There are attacks on jobs, pay and, crucially, hard-won terms and conditions and, of course, the service itself—on the universal service obligation. Only the other Friday, 17,500 postal workers were in Parliament Square because they had had enough of being attacked by Royal Mail bosses and not being supported by the Government. They want to save this service. That is what it is all about.

If we need any further proof that Simon Thompson and the Royal Mail bosses have embarked on a path of confrontation, not negotiation, let us look at the fact that over 100 Communication Workers Union representatives have been suspended during this strike by the bosses. That smells rotten to me, and it looks like an attempt at union busting. We need a real change and solidarity with the Communication Workers Union. Anybody who cares about our public services and the future of Royal Mail should listen to the workers who keep it going day in, day out, in all weathers. Let us support them, and let us have action from the Government to turn this around.

--- Later in debate ---

[Kevin Hollinrake]

That is a separate point that I will come to, if I may. I have yet to hear a convincing case for the need for change to meet users’ needs and ensure the financial sustainability of a universal postal service. I have met with both Ofcom and Royal Mail management to discuss that issue. I have made it clear to Royal Mail that it needs to make any case for change to Ofcom, and that I will fully consider any advice the regulator gives me on the future scope of the universal postal service.

The hon. Members for Chesham and Amersham (Sarah Green) and for Motherwell and Wishaw (Marion Fellows), who I have worked with closely on other matters regarding the Post Office, raised concerns about quality of service. I am aware that over the last few years the business has faced increased pressures on its operations for a variety of reasons. First, there was the covid pandemic and its lingering effects; secondly, operational revisions were required to modernise and transform the business; and, most recently, there was the industrial dispute with the Communication Workers Union. I do not accept the point made by the hon. Member for Leeds East (Richard Burgon) that this is union busting. The management has been clear that there will be no compulsory redundancies, but these issues impact both the business and users of postal services, particularly when important mail items are delayed.

[Richard Burgon]

The Minister rejects my allegation that the bosses of Royal Mail are engaged in union busting, but does he not think it is rather strange that over 100 trade union representatives have suddenly been suspended by Royal Mail bosses in the course of the dispute? Is that not rather odd? What conclusion does he draw from that?

[Kevin Hollinrake]

We do not get involved in negotiations, as Royal Mail is clearly a private company. I welcome the fact that the CWU and Royal Mail are now sitting down with ACAS and trying to resolve the dispute. We should give that process time to reach a resolution. I understand that any strikes have been suspended until the outcome of those negotiations. As I say, the Government are not involved in negotiations because Royal Mail is a private company, but we will monitor the dispute closely, and urge Royal Mail and the Communications Workers Union to reach a resolution as soon as possible.

To ensure that consumers receive an adequate service, Royal Mail is required by Ofcom regulation to, among other things, meet certain performance targets relating to the delivery of universal service products. The regulator has the power to investigate and take enforcement action. Indeed, in 2020 it fined Royal Mail £1.5 million for missing its 2018-19 first-class national delivery targets. Ofcom investigated Royal Mail’s service quality performance in 2021-22, and in doing so considered evidence submitted by Royal Mail of

“exceptional events, beyond the company’s control”

that may explain why targets were missed. In that instance, Ofcom accepted that there had been a continued impact of covid-19 on Royal Mail service delivery, and concluded that

“it was not appropriate to find Royal Mail in breach of its regulatory obligations”.

However, Ofcom was clear that it does not expect covid-19 to have a continuing significant impact on service going forwards. It stated:

“We are concerned by the fact that Royal Mail’s performance in the early part of 2022-23 fell well short of where it should be. We believe the company has had plenty of time to learn lessons from the pandemic, and we are unlikely to consider the factors outlined above as exceptional and beyond its control in future.”

When it comes to renationalisation, we probably part company with many of those on the Opposition Benches who expressed views on the subject, including the hon. Member for York Central (Rachael Maskell), the right hon. Member for Islington North, the hon. Member for Birmingham, Hall Green, who sponsored the debate, the hon. Member for Llanelli (Dame Nia Griffith), and the hon. Member for Motherwell and Wishaw. I do not believe that renationalisation is the answer. Although there are undoubtably challenges facing Royal Mail, the Government are clear that renationalising the business is not the answer.

One of primary reasons for the sale was to enable Royal Mail to access the capital it needed to invest in and grow the business. When Royal Mail was independently reviewed in 2008 under the last Labour Government, we were told that it was underfunded and had not kept pace with equivalents around the world, which were 40% more efficient. Compare this to the present day: Royal Mail has invested over £2 billion in the UK business since privatisation, including £900 million over the last three years and £441 million in the last financial year in areas such as electric vans, two new parcel hubs, automation and improving its poorest performing delivery offices.

The hon. Member for Birmingham, Hall Green, mentioned the £576 million pounds distributed to shareholders. I point out that there are good years and poor years in terms of financial performance. In the first half of this financial year, I think Royal Mail declared a £219 million loss. That is in the marketplace, so it is not breaching any confidentiality.