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Post Office

Volume 455: debated on Thursday 18 January 2007

The Government have worked closely with Royal Mail and Post Office Ltd to ensure that they can deliver high quality services that customers want. That includes the £500 million investment in Horizon, thus enabling the Post Office to develop its financial service businesses by opening its counters to 20 million bank customers and becoming the UK’s leading provider, for example, of foreign exchange services. The vast majority of post offices are private businesses that can also pursue commercial interests.

I thank the Minister for that reply and, for the record, his help over the summer. I also thank Labour party activists in Shrewsbury. We all campaigned to try to save our main post office in Shrewsbury but, regrettably, it closed and has been subsumed by WH Smith. What help will he give rural post offices in my constituency to ensure that they can continue to prosper? They provide an important service to the people in my rural community.

Notwithstanding my discussion with the hon. Gentleman and his constituents about Shrewsbury, I take a different view. The post office is still open. It has moved to different premises, but the services are available. Most customers’ experience of franchise arrangements for main post offices and directly managed branches moving to other premises has been positive. We are trying to maintain the largest national network that we can, including large branches in towns and cities. Although the example of Shrewsbury caused initial concern, I hope that it will prove beneficial to the hon. Gentleman’s community.

I can confirm that discussions have taken place between the Post Office and the credit unions national body on greater scope for working together. Regular dialogue will continue. Although working together would have a social role, it is not clear that it would generate much revenue for the Post Office. However, it would obviously increase footfall and ensure that the Post Office was further rooted in most vulnerable communities. Credit unions are on the up and expanding. I hope that they have a positive future with the Post Office.

When the gas, electricity and telecommunications industries were opened up to competition, it was vital that transmission and distribution networks were made available to competitors. The sub-post office network could and should be the distribution network for the competitors to Royal Mail for packets and parcels. However, I expect that Royal Mail Group would fight hard against that. Will the Minister assure me that he will do all in his power to ensure that that valuable new additional source of revenue is opened up to sub-post offices?

The hon. Gentleman makes a fair point and several people have raised the matter. However, it is not clear that such action would generate additional revenue. Royal Mail might well be replaced by competitors so the business would remain the same. The matter is constantly under review. Competitors can apply to Postcomm for a licence to operate. It is Postcomm’s decision under the universal service obligation.

Will my hon. Friend ask the Post Office to consider entering into partnerships with catalogue businesses such as Littlewoods or Argos? Low-income families depend on those businesses, but there is a growing gap between families who are e-enabled and those who are not. Perhaps there could be an internet point in post offices and links with those businesses so that the Post Office can survive.

In his statement on 14 December, my right hon. Friend the Secretary of State announced a three month consultation period until 8 March for representations about spending the £1.7 billion additional money that we will use to support the Post Office’s sustainable network. There are several innovative and new ways in which we can improve the protection arrangements for the Post Office. New ways of doing business are an example of that and we welcome representations from colleagues, as well as outside organisations, about how best to expand the business.

As the Minister knows from our previous questions and discussions, suburban areas such as mine need the post offices as much as rural areas in order to be sustainable communities. Will he consider how he could expand the role of sub-postmasters to provide more products and services, perhaps using private mail services and new markets, to allow post offices to continue as profitable businesses?

As I mentioned a moment ago, the vast majority of the 13,800 post office outlets across the country are privately owned businesses. It is a matter for those business people to determine for themselves whether, for example, they apply for lottery or PayPoint terminals or engage in local partnerships with other franchises. These are opportunities for them to expand their businesses, and many people take advantage of them. Notwithstanding that, because of the nature of the business and the fact that it is not commercially viable at its present size, we are saying that there should be at least 12,000 outlets, and another 500 mobile outlets, and there has to be public subsidy to maintain that.

The Minister said that his Government are committing an additional £1.7 billion to invest in the post office network over three years. Surely, however, that sum includes money for the social network payments—that is, “ticking over” money—and compensation for redundancies and for the cost of closing post offices. Will he now tell us what sum will be left over to invest in new business and in training, equipment and marketing? Or is that amount so token that it has no hope of reinvigorating the post office network?

I would be happy to write to the hon. Lady to give her a complete breakdown of the figures, although I think that we have already given that information in answer to several parliamentary questions over the past few weeks. I must point out, however, that regardless of whether the money is going into compensation payments or social network payments, it is money that the Government are committing to protecting the post office network to ensure that we get it on to a sound financial footing by 2011, and to ensure that we have a national network. It is Government money, regardless of how it is being spent.

This week, it has been reported that several major companies and one major Government Department have switched hundreds of millions of pounds of business away from Royal Mail. Is it not the case that the Government are opening up Royal Mail to greater competition—and demanding that it behave like a private business—while denying it the freedom that it needs to compete effectively? How does the Minister expect it to do well when its competitors are free to compete with it, yet it is not free to compete with them?

We do not accept the hon. Gentleman’s point. Royal Mail has the freedom to compete. We have liberalised the markets to ensure that it is a competitive service industry. It is not consistent for Opposition Members to say that there should be freedom within the market, but then to tell us that the restrictions on Royal Mail are making the business less profitable. Royal Mail has the opportunity and freedom to compete.

Perhaps the Minister will write to me to explain how Royal Mail is free to raise capital in the same way as a private sector company. I look forward to hearing his reply. The management of Royal Mail has been pushing the Government to allow it to introduce an employee share ownership scheme. The Government have been considering that proposition for more than a year, but they seem incapable of deciding anything. Will the Minister tell us by what date he will have made a decision on that proposal?

On the hon. Gentleman’s last point, discussions are continuing and I am sorry that I am unable to give him a date at the moment. On his first two points—I apologise, but I think that two different issues are being raised—the freedom to compete is one issue, and Royal Mail has that freedom. The freedom to invest is a matter for the shareholder, in which capacity the Government clearly act on behalf of the taxpayer. My right hon. Friend the Secretary of State made a statement late last year on the freedoms that we have given to Royal Mail to use money from its reserves and to raise money to ensure that it can invest in the business.

The Minister will be aware of the great uncertainty and fear felt by many proprietors of sub-post offices. The cry that I hear is that they are not getting the information that they ought to be getting from the Post Office, and they are certainly not getting advance information about any problems that might affect them. Will the Minister be kind enough to look into those matters and try to speed up the process and make it more efficient? Those people are important to the industry, but they are beginning to think that there is no future for them.

I fairly regularly get letters from right hon. and hon. Members about particular causes for concern in their own local directly managed branch or post office. If the hon. Gentleman would like to write to me about the concerns being expressed by his local sub-postmasters and mistresses, I would be happy to look into the matter and get an answer from Post Office Ltd for him as soon as possible.