Postal Services Bill

Tom Blenkinsop Excerpts

Wednesday 27th October 2010 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I want to pose questions to the Government and to make some points, several of which have already been made, based not only on the general public’s fear of what postal privatisation might mean for Royal Mail, but on why previous privatisations show that this privatisation and its minimum of 10% shares offered to current employees are not great enough or dynamic enough an offer to revolutionise how such a business could go forward in restoring, as Lord Young puts it, a “sense of ownership” for public sector workers. I want to ask why mutualisation of the Post Office has not been offered to Royal Mail, too, and to draw on the broader point that the Post Office and Royal Mail are inextricably and obviously linked and that their division weakens the service. I also want to show how the mutualisation of the one and the privatisation of the other will only ensure that both fail.

Historically, if we consider examples of previous privatisations of companies in the UK with fewer than 50,000 employees, we recall that none had a percentage of shares going to employees above 10% of all shares. That precedent of 10% shares sales to workers was set in 1987 by Rolls-Royce. Today, in 2010, the Royal Mail has 150,000 employees, more than three times that amount, yet the share sale proposed for staff is 10%. Why?

Why cannot the Royal Mail be mutualised alongside its Post Office sister? Why has that option not been considered to allow evidence-led policy? That proposition would allow better interdependent models of co-operation between Royal Mail and the Post Office. I remind the House that the Post Office depends on Royal Mail to provide it with one third of its revenue.

The National Federation of SubPostmasters is seeking a 10-year deal with Royal Mail, a deal that the Con-Dem Government will not guarantee as they have still not clarified whether Deutsche Post or the Dutch-run TNT will take over, rather than have a proper stock market share float. Also, the findings of a recent UNI Post & Logistics study into postal services liberalisation throughout the world are not encouraging and should be considered to inform evidence-led policy.

Postal privatisation has already occurred in a number of countries. Normally, the national operator is transformed into a corporation and split into several companies. Privatisation then follows.

[Neil Carmichael (Stroud) (Con)]

Will the hon. Gentleman give way?

[Tom Blenkinsop]

I would normally, but I am pressed for time.

Liberalisation is often introduced piecemeal, with the private sector being handed a slice of the pie at each stage. The report found that competition was often based on price-related targeting, as a result of which many new companies home in on niche targets and cherry-pick, concentrating on business-to-business, business-to-consumer, dense urban markets or bulk mail. Previously, Royal Mail was able to use profitable bulk mail business to cross-subsidise unprofitable but socially necessary deliveries to remote areas, but private competitors have snatched 40% of bulk mail in downstream contracts. As a result, Royal Mail’s £233 million profit in 2006-07 was transformed into a loss of £279 million the following year. Privatisation and liberalisation have resulted in huge job losses and exerted pressure on wages and conditions.

[Chris Evans]

Like me, my hon. Friend is a former trade union official. He knows that—

[Chris Evans]

My hon. Friend knows that TNT has a terrible track record on employee relations. If it takes over Royal Mail, will productivity be affected in terms of worker happiness?

[Tom Blenkinsop]

As a former trade union official, who often likes to stand and cannot normally sit down, I agree with my hon. Friend. Between 1996 and 2006, Germany’s Deutsche Post axed more than 21,000 full-time and 12,000 part-time jobs. In some cases, the employment situation has been transformed beyond recognition. In Holland, the 27,000 mail deliverers employed by the three major companies have service contracts rather than employment contracts, thus they are without employment protection, holiday pay, disability insurance and entitlement to unemployment benefits.

[Mr Anderson]

The rigours of the private sector.

[Tom Blenkinsop]

Exactly.

In Germany, only 18% of the jobs created by Deutsche Post’s competitors are full time. Deutsche Post cut average pay by 30%, but things are even worse in the new competitors, where delivery workers in western Germany earn 40% less than their Deutsche Post colleagues and delivery workers in eastern Germany earn 50% less than their Deutsche Post colleagues. The disparity is starker still in Holland, where the total payroll cost for a postal worker employed by the main operator is €23 an hour compared with just €7.60 an hour for someone who works for its competitors, which pay by the piece.

The Bill provides no real protection for service users, irrespective of definitions of a universal service obligation. Clause 50(1) states:

“A consumer protection condition may require postal operators to be members of an approved redress scheme.”

That is useless. Any future privatised service must be a member of such a scheme in order to give the consumer redress. The word “may” allows an opt-out and no consumer redress.

Clause 50(5) states:

“A consumer protection condition may require postal operators…to provide information to OFCOM.”

Again, the word is “may”. There is no requirement that the provisions are checked.

In conclusion, we are not looking at something new today. Other countries have gone down this road, and the result is a bad one for the staff, the business, other businesses and the general public. Put simply, if people live in a rural or far-flung area, are poor or are unable to pay for a promised premium service, they will suffer. What use to a postal worker is a market share in their own demise? What use to the general public and business, as service users, is a purely profit-driven postal business with no consumer redress, rather than a postal service that serves the public?