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Postal Services

Volume 462: debated on Thursday 5 July 2007

The Secretary of State for Business, Enterprise and Regulatory Reform
(Mr. John Hutton)

We are committed to securing the long-term future of both Royal Mail and the Post Office. We have made substantial investments available to Royal Mail on commercial terms and, subject to European Community state aid clearance, we will provide substantial further support for the Post Office, in order to provide a comprehensive and accessible national network.

Does the Secretary of State agree that the proposed post office closure programme is likely to hit rural areas disproportionately hard? For many people living in villages such as Llansannan, Llanfair Talhaiarn and Llangernyw in my constituency, the post office is frequently the only convenient means of access to financial services. Will the Secretary of State say how he reconciles his Government’s aim to combat social and financial exclusion with a proposal that, if fully implemented, may well put financial services out of reach of people in such areas?

What the hon. Gentleman says is right. We all recognise the importance of sub-post offices to the social infrastructure of our country, particularly in rural areas. I, too, represent a constituency that includes a substantial rural area. However, we cannot hide from the reality of what is happening in the post office network. Customer behaviour is changing. People are not using the post offices in the same way that they did, and we cannot hide from that fact. What we are proposing, with the compensated closure plan and the new outreach locations, is a sensible strategy to deal with the change. I understand that Opposition Front-Bench Members have recognised that the current network is not sustainable, as has the National Federation of SubPostmasters. I urge the hon. Gentleman and his hon. Friends to work with us. I hear what he says about concerns about rural areas. I think we have addressed them, but I am rather surprised that he chose not to take part in the recent consultation exercise about the future of the post office network affecting his constituency. [Interruption.] The hon. Gentleman did not take part.

I welcome my right hon. Friend to his new role. We are all aware that the deal between Post Office Ltd and WH Smith in relation to some Crown post offices is a done deal, but will he use his good offices to ensure that before those transfers take place, the Post Office and WH Smith have full regard to disability access to the relocated branches? I give the example of the WH Smith branch in Churchill square, Brighton, where the relocated post office will be in the basement, where the lift has been out of order for the past three weeks and where, although there is a down escalator, there is no up escalator. I suspect the same is true of many other branches.

I am very sorry about the problem with the escalators in my hon. Friend’s constituency. Let me make it clear to him and to other hon. Members who have perfectly reasonable concerns about the issue that there is very clear legislation about the need to ensure that premises such as post offices and Crown post offices are accessible to disabled people. It will clearly be the responsibility of the franchisee—WH Smith, in this case—to make sure that all its premises are fully accessible to disabled people.

There is unfair competition between private mail operators and Royal Mail, because the private operators are able to cherry-pick the most profitable areas. In order to even up the market, would the Government consider imposing a levy on private mail operators who do not fulfil the universal service obligation, and use the money to help fund Royal Mail for delivering in remote rural areas and islands?

No, we will not impose additional levies as the hon. Gentleman suggests. It is the responsibility of the regulator to make sure that all these issues are properly addressed and the universal service obligation is properly implemented. There are significant benefits for all of us in a more liberalised, competitive postal market, and we will do all we can to ensure that those benefits reach businesses, customers and eventually taxpayers.

How do the Government intend to fulfil their manifesto commitment to review the operation of the Postal Services Act 2000 and the impact of market liberalisation?

We will keep all these matters fully under review. We are strongly behind the liberalisation of the postal sector. In the long term it will be in the best interests of British business, consumers and taxpayers. If my hon. Friend wishes to come and discuss any aspects of these matters with me, he is more than welcome to do so.

The number of post offices in my constituency has been exactly halved, from 22 to 11, in the past seven years. Now the Post Office in another WH Smith deal proposes, in this case, to put the Crown post office upstairs rather than in a basement, but again with a one-way escalator and a lift at the back of the building, which may suit WH Smith but does not suit my constituents, yet two further post offices are ear-marked for possible closure in the latest round of consultations. What faith can my constituents have in the consultation process or in the words of the Minister’s earlier reply, given that in his previous incarnation he was significantly responsible for taking away a great deal of the work that kept small post offices going—

I understand some of the concerns that the hon. Gentleman raises, but I am slightly surprised that a Conservative Member is making those accusations, particularly about the failure of the Post Office to win business in a competitive marketplace. He seems to be urging Ministers to give the Post Office business on terms that are not advantageous to consumers and to business. That would be a completely unacceptable state of affairs. There will be a full and open consultation in the hon. Gentleman’s area, and I urge him to take part in it. Let me remind him of some of the facts that he overlooked. During the period of the previous Administration, nearly 3,500 post offices were closed without any type of agreement on consultation or on ensuring proper and appropriate access to the remaining branches of the network. There are difficult decisions that we have to take. My view is that we should not hide from them or duck them; his view seems to be that we should do both.

My right hon. Friend was absolutely right when he said that the Welsh Tories, and indeed the Welsh nationalists, did not take part in the Department of Trade and Industry review of post offices, although they use it as a political football. By contrast, Welsh Labour MPs have convened four meetings, including with credit unions, high street banks and, next Tuesday, the Welsh Local Government Association. In our meetings, we have come to the conclusion that there needs to be greater co-ordination between all those organisations. What measures will he take to improve that co-ordination between the various Departments and agencies that have an influence on the Post Office?

I am grateful to my hon. Friend. He clearly makes the point that it is incumbent on all of us on both sides of the House, whatever party we represent, to address the reality of the situation, including the commercial reality of the difficulties that the post office network is facing—it is currently losing £4 million a week. We have a choice: we can either engage seriously in the consultation process, as are my colleagues, I am glad to say, or we can run away from the issues. In Government, I will do all that I can to co-ordinate across a variety of interested Departments a proper response to the challenge that the Post Office faces. I urge all right hon. and hon. Members to support that sensible process.

The Minister will be aware of Royal Mail’s proposals on zonal pricing, which are being considered by Postcomm. He will also be aware that there is already a problem with parcels in remoter and island areas of Scotland, and many fear that zonal pricing will lead ultimately to an attack on the universal service obligation. It is only for business mail at the moment, but it could be extended later to all mail. Will the Government stand by the universal service obligation and not allow that zonal pricing scheme?

We do stand by the obligation—in fact, it was put into primary legislation as recently as 2004. Postcomm is responsible for dealing with all these issues; that is the settlement that Parliament legislated for. We should let the regulator make these decisions. If the hon. Gentleman wants to come and discuss any particular concerns with me or my ministerial team, he is welcome to do so.

While liberalisation might be good for Royal Mail in the long run, is my right hon. Friend aware of the difficulties that many of the cost-cutting measures that are taking place at the moment are creating for local businesses? For example, Jackson Coachworks in my constituency requires its post by 9 o’clock in the morning in order to do its business but is not getting it until at least midday, and sometimes in the early afternoon. Will he use his good offices to be in contact with Postcomm to ensure that the service that businesses require to carry on day by day is delivered on the ground?

Yes, we will certainly do that. We keep a careful watch on all these matters. However, Royal Mail now operates in a highly competitive marketplace, and if it is not delivering the service that its business customers want, there are probably other companies that will. It therefore has a simple set of choices ahead of it—to be responsive to the needs of its customers or lose business.

I warmly welcome the Secretary of State to his new role. We always found his predecessor to be helpful, engaging and courteous—although, sadly, utterly misguided in the policies that he proposed for the Post Office, which threatened to close a third of the network.

Is the Secretary of State aware that it costs Royal Mail 25 per cent. more to operate its services than it costs its competitors, that it is 40 per cent. less efficient, and that any attempts by the trade unions to prevent the modernisation of the service will result only in Royal Mail becoming less efficient and ultimately cost more jobs in the long run? Does he agree with his new friend, Comrade Digby, who is no doubt learning the words to “The Red Flag” as we speak, that the current mail strike is about “last century issues”, and why does he think that that statement has made many Labour peers think that he should not be a Minister and may be a loose cannon pointing in their direction?

I am grateful to the hon. Gentleman for his kind words—that is probably as good as it gets. In fact, I heard Comrade Digby singing the words of “The Red Flag” this morning as I passed his office; he had perfect pitch, too.

The hon. Gentleman is concerned about a genuine problem, and we must all want the current wave of industrial action that is affecting Royal Mail to end quickly. We all hope that that will happen. It is not in the interests of the company or the business for the industrial action to continue. Talking, not strikes, resolves disputes. I hope that that is clearly understood.

On the wider point in the question, the hon. Gentleman said that at least 1,000 sub-post offices needed to close. Perhaps it would be helpful in the course of our exchanges if he could assist us to identify them.