Royal Mail Delivery Office Closures

Susan Elan Jones Excerpts

Wednesday 11th October 2017 Westminster Hall

[Helen Hayes]

The hon. Gentleman’s point is well made. I will come on to data that clearly prove that it is the overwhelming preference of customers to have parcels delivered to their home and not to any other location.

The much longer journeys will clearly be even more challenging for older people, disabled residents and those with very small children. As one of my constituents —a 77-year-old pensioner who cares full-time for her disabled adult daughter—has described in a letter to Moya Greene,

“this journey would be exhausting but since I do not drive and I am unable to afford a taxi, there would be no alternative to it.”

Royal Mail has argued that a need for modernisation is driving the changes, but when I visited the West Norwood delivery office during the very busy Christmas peak period it was clear that it is a modern, efficient working environment. The staff are dedicated and hard-working, and they provide an excellent service to their customers.

[Susan Elan Jones (Clwyd South) (Lab)]

I congratulate my hon. Friend on securing the debate. She speaks of distance. Does she agree that there will be a massive problem across rural Britain if this goes ahead? Royal Mail is supposed to be here to serve us, but on this it is not doing so.

[Helen Hayes]

I thank my hon. Friend very much for that intervention. The issue of distance applies in rural areas, but in urban areas congestion and journey time rather than distance are the impediment to accessibility. Her point is well made.

The issue is far from unique to my constituency. Between the privatisation of Royal Mail in October 2013 and May 2017, 142 delivery offices—10% of the network—have been closed, and more offices are at risk of closure. Royal Mail has sold more than £200 million-worth of property and it is expected to receive at least a further £500 million of receipts shortly. At the same time, it has paid out more than £800 million in dividends, with an annual dividend now running at more than £220 million. Its chief executive is paid an annual package worth £1.9 million.

Concerns were raised time and time again by Labour MPs during the passage of the Postal Services Act 2011 under the coalition Government that privatisation would place the motive of delivering profits for shareholders at the heart of the organisation and that that would drive down the quality of service for Royal Mail customers and compromise terms and conditions for staff. The Government argued that that would not happen, because the investment funds Royal Mail would be able to access as a consequence of privatisation would be significant, but that is exactly what has happened.

There is no doubt that the postal delivery market is extremely competitive and that Royal Mail is operating in a difficult context, but it is far from clear that Royal Mail’s approach makes good business sense. In addition to providing facilities for mail collection, delivery offices are the depots from which postal workers begin their rounds. Fewer delivery offices mean that postal workers will have further to travel from their base to their rounds, resulting in mail deliveries taking place later in the day.

Among Royal Mail’s customers there is demand for high-quality delivery services, in part fuelled by the continued growth in online shopping, which means that while the number of letters delivered has reduced, the number of parcels delivered is still growing every year. A recent Ofcom survey found that 70% of people still prefer their parcels to be delivered to their home, rather than to work or a click and collect facility. While many competitors offer increasingly short delivery time slots, Royal Mail services in many areas are becoming later, less predictable and therefore less convenient.

Royal Mail was privatised in a shambolic fashion. The coalition Government rushed through the privatisation, with the then Chancellor desperate for funds to prop up his failing austerity agenda. In their rush to sell, the Government grossly underestimated the value of Royal Mail, with its shares jumping 38% on the first day of trading and the taxpayer losing out to the tune of an estimated £1 billion, according to the Business, Innovation and Skills Committee. The Committee also set out how the Government failed to reap the benefits of the sale of Royal Mail assets included in the privatisation package. The Government ignored National Audit Office advice to remove those assets, notably the network of delivery offices, from the privatisation deal or to add clawback provisions on the future sale of properties. The Government valued three London sites at around £200 million, when the NAO thought they could be worth anywhere between £330 million and £830 million.

Royal Mail continues to sell sites across London at eye-watering prices, to no taxpayer benefit and with no reinvestment in its services to customers. I should be clear, however, that Royal Mail is mistaken if it believes that its site in West Norwood is a potentially lucrative housing site. The site is situated in Lambeth Council’s key industrial and business area, or KIBA, which provides strong protection to employment land uses. There is no possibility that Royal Mail will be able to sell that site for housing.

The Government also failed to define the universal service obligation beyond mail delivery, to secure an appropriate geographical distribution of delivery offices and the time and frequency of deliveries for the future. As a consequence, the social contract at the heart of Royal Mail’s relationship with the communities it serves has been broken. The organisation is orientated only toward profits, while at the same time alienating its workforce with a damaging attack on staff pensions and other terms and conditions. It is not acceptable that pensioners and disabled people in my constituency should have to travel an hour each way to collect their mail while £800 million is distributed to shareholders and the chief executive of Royal Mail is paid almost £2 million a year.

I call on the Government to recognise the scale of the problem, the aggressive approach that Royal Mail is taking to the disposal of its land assets and the total disregard that the organisation is showing for the customers and communities it was created to serve. If no action is taken, our postal delivery service will continue to be decimated and vulnerable residents, disabled people, parents with small children and small business owners will lose out the most. Privatisation is not working for Royal Mail’s customers or for postal workers, and it is time for the Government to take action. A Labour Government would take Royal Mail back into public sector ownership and replace profit with public service at the heart of the organisation.

Will the Minister commit to take action to safeguard delivery offices and the services that communities across the country rely on, and intervene to regulate Royal Mail? Will the Minister also support my urgent call on Royal Mail to scrap its closure plans in West Norwood and East Dulwich, and ensure that its vital services remain accessible to my constituents in SE27 and SE22, and across the country?