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Postal Services

Volume 476: debated on Thursday 22 May 2008

7. What progress has been made on the Hooper review on liberalisation of postal services; and if he will make a statement. (206987)

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

The review’s first report was published on 6 May. It described the current state of the Royal Mail business and changes taking place in the market. I have asked the review team to come forward with proposals later in the year to improve the efficiency of the service and to ensure that the universal postal service is maintained.

I am grateful to the Secretary of State for that answer. The interim report concludes that only a handful of the big mail companies have benefited from liberalisation and that

“There have been no significant benefits for smaller businesses and domestic consumers.”

Will he use the interim report as the basis for starting the work in his Department on how a levy might be placed on those operating in the liberalised market that do not provide a universal service in order to support the universal service? If we wait for further conclusions, it might simply be too late.

I will not pre-empt the review team’s conclusions. We should all wait until we see the final recommendations from Richard Hooper’s team. The hon. Gentleman is quite right that the principal beneficiaries of the liberalised postal services market have been the big-volume large corporations that have significant amounts of addressed letters going through. His constituents and mine have not seen a significantly improved service at all. We have to consider that very carefully.

Further to the point raised by the hon. Member for Orkney and Shetland (Mr. Carmichael), the fact is that liberalisation has meant that many companies can cherry-pick the most lucrative parts of the mail system. That is creating the problem for Royal Mail. Since in order to survive businesses rely on Royal Mail’s ability to deliver the last mile, it is essential that they be forced to pay towards maintaining that universal service. Otherwise, it will fall on the public purse to maintain the service so that we can supply mail across the country, and even to areas such as Orkney and Shetland.

We need a competitive regime for postal services that encourages innovation, new investment and so on, and that does so at a price that ordinary consumers can sustain. As I said, I shall not pre-empt the outcome of the report and I certainly shall not commit myself today to taking specific measures. We need to see the outcome of the wider study in which the review team are engaged to which our manifesto committed us.

As one who has always supported the Royal Mail and did not welcome the liberalisation, I ask the right hon. Gentleman whether he agrees that my constituents, and his, have received a continually deteriorating service. It would be appalling if, having lost the second delivery, we lost the delivery on a Saturday. Will he do everything in his power to ensure that the people of this country get a decent service from the Royal Mail?

Yes, I will. I agree with the hon. Gentleman’s comment about the importance of a delivery on Saturday, too. I do not think that we will build confidence in the need for the taxpayer to continue to invest significant amounts of money in the Royal Mail—we are putting nearly £2 billion in to sustain the Royal Mail network and to modernise it to meet the challenges of the future—if the price is a constantly deteriorating service to consumers. We cannot build consensus on that basis and on those terms.

Will the Secretary of State assure the House that the universal service obligation will not be watered down in any way?

Our commitment is to sustain the universal service obligation, and we have made that very clear. As the hon. Gentleman will know, sustaining the universal service is Postcomm’s principal responsibility, according to legislation that this House has passed. We believe strongly in the universal service obligation: it is an essential feature of our country and our civic, economic society that there should be a universal service, accessible across the country at a standard universal rate.

Given that the National Federation of SubPostmasters believes that the failure to keep the Post Office card account will result in a further 3,000 post offices closing, will the Secretary of State now listen to residents up and down the country? They are fed up with post office closures, as he will know from his own constituency, where he is trying to stop a closure. Will he give a firm undertaking that the decision on the card account will be announced in a statement to the House before the summer recess?

The hon. Gentleman has acknowledged from the Opposition Front Bench that there is a consensus in the House that the sub-post office network will need to be smaller. The shadow Secretary of State has made that commitment clear in this House, so I do not know quite what the hon. Gentleman’s point is. He will know that the Post Office card account is a matter for my right hon. Friend the Secretary of State for Work and Pensions, but I hope that an announcement can be made as soon as possible.