[Mike Gapes in the Chair]
I beg to move,
That this House has considered Royal Mail delivery office closures.
It is a real pleasure to serve under your chairmanship, Mr Gapes. I was prompted to seek the debate because my constituency is threatened with the closure of two delivery offices, and I understand the impact that those closures will have on my constituents if they go ahead. I also want to highlight the wider pattern of delivery office closures, which affect not only my constituents but communities across the country, which I believe to be a direct, damaging consequence of the coalition Government’s decision to privatise Royal Mail in 2013.
Earlier this year, Royal Mail announced plans to close the West Norwood and East Dulwich delivery offices in my constituency. Since then, more than 1,000 local residents have contacted me to express their opposition to the closures, and many have also written to Royal Mail’s chief executive, Moya Greene. People from all walks of life have attended three public protests on the issue, among them wheelchair users, small business owners, home workers and many families and elderly residents who are keen to speak out on the impact that the loss of their local delivery office will have on them.
Royal Mail delivery offices are where the final stage in the mail sorting process takes place, the depots from which postal workers collect their rounds, and the front counter facilities where customers can collect parcels, recorded delivery mail and mail sent to a PO box address. Royal Mail argues that because a parcel can be left with a neighbour or have its delivery rescheduled, communities can manage without delivery offices, but there are many people for whom those options simply do not work, including those who work long hours; the many small business owners and sole traders who prefer to collect their mail from their local delivery office precisely because they can pick it up at a time of their choosing, allowing them to get on with other important meetings and errands rather than being tied inflexibly to a particular location; and people who simply do not have the time to be tied to their home just to wait for a delivery.
I congratulate my hon. Friend on calling this debate. Does she agree that often the most vulnerable people—elderly people and so on—who are restricted by problematic public transport such as a lack of buses are also hit hard by these closures?
I, too, congratulate my hon. Friend on securing the debate. Does she also agree that where offices are proposed for closure as part of wider regeneration plans, as is the case in my constituency in relation to Stretford sorting office, it is important that new public facilities are considered as part of that regeneration?
I concur with the congratulations to my hon. Friend on securing the debate. Does she recognise that when Royal Mail argues, as it has in the case of the proposed closure of the Holbeck delivery office in my constituency, that it will
“improve facilities for our customers in the LS11 postcode area”,
that kind of comment provokes a hollow laugh on the part of residents who will have to travel much further, taking in some cases not one but two buses to pick up a letter or parcel from the office that Royal Mail now tells them they will have to go to, if the closure goes ahead? We are very much resisting the closure, together with the Communication Workers Union.
My right hon. Friend is right to make that point. Extended delivery hours at a location very far from where residents live is no substitute for having a facility directly in their community. That is exactly the issue we are debating.
There is also a significant problem for customers who pay to use the PO box service, for the confidentiality and convenience that provides, and for whom Royal Mail appears not to have accounted at all in its plans. Delivery offices are also part of the fabric of our communities. There is a strong relationship between Royal Mail staff and the customers they serve, which makes the institutions more than simply transactional in the role they play.
The closures Royal Mail is proposing in my constituency would severely restrict the accessibility of services for my constituents. Under the proposals, residents in the SE27 postcode area, who currently use the West Norwood delivery office, would be required to travel not to the next nearest delivery office, which is too small to accommodate the work from West Norwood, but to a delivery office three miles away, which requires them to take two different buses on congested roads: a journey that can easily take an hour each way, not accounting for the queuing time that will inevitably result from more mail being delivered at that delivery office.
I congratulate my hon. Friend on securing the debate. I want to make an observation that I hope she will agree with. There is a general decline in our parcel service, which is exacerbated by the closures of facilities. I think 38% of parcels arrive late, 28% of parcels are left in insecure areas, and 28% of people get a note through the door saying that nobody was in when there was. What I find most difficult to accept is that all these closures have taken place without public consultation.
It is precisely my argument that Royal Mail needs to compete on quality, not simply seek to reduce its costs to survive in the competitive environment it finds itself in.
The impact is similar in East Dulwich, where residents will have to travel to Peckham to collect their post, to a delivery office that is not easy to find and which has no dedicated parking. In East Dulwich, it is accepted by staff that the current delivery office building is not fit for purpose, but that is only because of the immense growth in parcel deliveries at that location, which means that the workload has outgrown the site. That is only an argument for finding new premises in the SE22 postcode area, not an argument for forcing residents to travel longer distances to collect their mail.
I congratulate the hon. Lady on bringing a very important issue to the House. I apologise that I will have to leave early—I have already apologised to the Chair and Minister. The hon. Lady refers to parcel services. A large number of constituents do not have access to the internet or computers or may not be computer literate. Therefore, when it comes to arranging delivery, they cannot use the alternatives of parcel lockers or click and collect. Does she feel that Royal Mail has not been fair to its bread-and-butter customers who have kept it going all these years?
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.
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.
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?
Thank you for letting me speak in this important debate, Mr Gapes. I pay tribute to the Communication Workers Union, whose members feel strongly about this matter, and have voted overwhelmingly to strike in protection of their pay and pensions.
Since the privatisation of Royal Mail in October 2013, as my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) said, 142 delivery offices have closed. That is 10% of the network. Thankfully, my delivery office in Hartlepool is not one of them, but with closures happening at such a pace, I wonder when it will be our turn. The impact of a delivery office closure on the public is immense. Losing them not only deprives people of a local place to go to collect their parcels or undelivered post, but often means they must commute to the next town or beyond to access a service that all of us rely on at some point.
The Royal Mail is able to make these changes because the provision of delivery offices is not regulated. As we found with the closure of our central post office in Hartlepool earlier this year, a short consultation is often followed by swift closure. There are implications for pay and pensions in those closures, as there were in that closure and in the transfer of staff to WHSmith. The current CWU dispute is about fighting the introduction of an inferior pension scheme and a below-inflation pay offer. People rely on a delivery office being close to hand. The programme of managed decline needs to be stopped before any more damage is done, more jobs are lost and more communities lose these important assets.
Thank you for allowing me to speak, Mr Gapes. I am grateful to the hon. Member for Dulwich and West Norwood (Helen Hayes) for bringing the debate to Westminster Hall. Mike Weir, my predecessor for Angus, worked hard on the issue of closures of local post offices and it seems entirely fitting that I speak with that in mind. We are fortunate in this country to have the Royal Mail operating as the UK’s designated universal service provider, making sure that six days per week we still get our post, no matter how rural our homes. Being from Angus myself, I know full well how remote some of those households can be.
Without a doubt, the delivery sector faces increased pressures, as demand drops and competitors such as TNT, DPD, Yodel and, of course, Amazon seek to break into the market. In addition, as alternative, faster and cheaper forms of communication become more established and, indeed, essential to more people and organisations, it will not be easy for the Royal Mail to continue with business as usual.
While I am not aware of a specific number of closures planned in my constituency, I will monitor the situation closely to ensure that each major town—Forfar, Kirriemuir, Brechin, Montrose and Arbroath—is looked out for. Each of those delivery offices provides a source of employment, which is vital in my constituency with its higher than average unemployment level. It is also an important local service, which no one with Angus’s interests in mind wants to see weakened or reduced.
However, I am encouraged by a recent example from just over the county’s border in Carnoustie. While it was disappointing that the Carnoustie office closed in June 2016, the positive to take from that closure is that services were transferred to the nearby Dundee east office and no job losses were incurred. I absolutely appreciate the concern that even when jobs are protected there is still a risk to the local economy, as staff may move away and take businesses with them. Furthermore, as previous hon. Members have mentioned, we must never forget how dependent the public in a rural area such as Angus are on those offices. People who rely on public transport or who are disabled could well face tougher journeys to reach larger, more centralised delivery offices. My promise to my constituents is that I will always seek to protect their interests in these matters and make sure that Angus residents get the best services possible.
I thank the hon. Member for Dulwich and West Norwood (Helen Hayes) for securing the debate. It is a pleasure to serve under your chairmanship, Mr Gapes.
If a post office fails, a lot of people are in trouble. The slash-and-burn approach to closing scores of outlets across Scotland and the UK is nothing short of a disgrace. Public opinion has been ignored and a blind eye turned to the needs of our communities. Crown post offices are being closed down and replaced by counters in stores. The House of Commons Library analysis shows that in Scotland there are now 1,403 post offices, down from 1,904 in 2002.
Those who work with vulnerable groups have highlighted the damaging effect that the closures will have on the elderly, disabled and unemployed. The picture I see is of a fast disappearing network, leaving Scottish citizens, especially in the more isolated communities, stranded. Some of the most remote parts of the country are among the hardest hit, with about half the abandoned branches in the sparsely populated highlands and islands of Scotland, where residents most need them. Tory cuts to local post offices threaten the economic wellbeing and the social fabric of local communities all over the country and need to be stopped. Hundreds of jobs will be lost across the country and workers’ rights eroded. The Communication Workers Union has revealed that the post office network has been reduced by more than 50% over the past three decades.
The Post Office claims that there is good public transport and people can simply “get on their bike”—to coin a phrase—and find another one, but that is a triumph of imagination over fact. For many, the cull of this vital network means that there is no longer a meeting point where they can easily collect their pensions or have access to the advice and support on a range of issues that their local office offers. It is a human touch that goes beyond just stamps and letters. To suggest that there are always easy bus routes or that vulnerable people can simply jump on public transport to another town is out of touch, to put it mildly. This Government seem to know the price of everything and the value of nothing.
In my constituency of Falkirk, within the existing delivery office is the main post office counter. Yes, we have sub-post offices in the town, but the future of that office, which serves the local businesses and communities well in the town centre, is in jeopardy. So far, there is no clear indication of what will happen to that counter if the delivery office closes. Can I have an answer to the delivery office closing in Falkirk? Have communities or council been consulted? How does a small sub-post office deal with parcels? There are so many questions about the future of that delivery office and post office counter. There has been a total lack of information for the public; there have been no details of future plans, including on the use of the existing building.
The same seems to apply across a host of other towns and communities. A reply that I received from a fellow Scottish MP, the hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), a CWU member, confirmed that uncertainty about the future and a lack of any decision information being communicated.
A very clear concern is that some offices allow foreign students to use the Home Office biometric enrolment service. Does that transfer across to other offices? Is there a plan to ensure that that service will be protected? In Falkirk, a large number of overseas students use the local Forth Valley College, which will benefit from an £82 million investment to build a brand-new college. Surely a service for overseas students such as that should be introduced where needed and protected when in place.
As usual with this Government, there is far too much uncertainty. Is the problem planned mismanagement failure or sheer incompetence? People can make up their own mind, but I know one thing: these short-term policies have been practised for far too long. While the UK Government preach to us about building a shared society, the destruction of yet another public service shows that we are reaching the point where we will have little left to share.
Post Office bosses say that franchising will keep services
“where customers want and need them”,
but I cannot see how that can be the case when public opinion seems not to have been considered. The Tory Government have to take responsibility and set out a proper strategy for the Post Office. The public as well as the local businesses that rely on the post office have a right to expect more than this managed decline. For many people, the post office is a lifeline, and the steady closures that we have seen over recent years raise serious questions about whether many of these communities will ever have a branch again.
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) on securing this important debate. It is a pleasure to speak in a debate considering the future of our post offices. This consideration is happening at a time when a wider struggle within Royal Mail is taking place. I speak today in support of my hon. Friend’s comments on post office closures, and of the men and women across the country in this sector. I am a CWU member and supporter of its four pillars campaign, which seeks, as we have heard, improvements to pensions, pay, conditions and the business vision in Royal Mail more widely.
It is not just post office closures but the wider context that we are minded to consider. Across the service, post offices close, with consequences for local communities. There is a policy on open vacancies which leaves positions unfilled to save on costs. For postal workers I know, staff shortages lead to a workload that is too great and pressures that have consequences for health and life outside work. The workload increases and will continue to do so with post office closures, while the hours to complete the job are reduced and the pressure to take on the workload without extra hours is ramped up. Let us not confuse choosing overtime with being overworked.
My constituency towns of Bury, Tottington and Ramsbottom want Royal Mail to look after their postal workers and value their post offices. Those men and women work long hours—ever-changing hours—doing physical work to deliver items that we deem important to send or receive. They enrich our communities and play an important part in keeping our towns, cities and economies running. With industrial action now planned—it was voted for by a huge 89.1% of the members—the dispute will spill out into the consciousness of the wider public and, I hope, sharpen minds as to the threat to postal services more widely. If it does not do that, the threat of a High Court battle certainly will, and I think news of that will be met with sympathy.
The cause and the proposed way forward outlined by the CWU is fair and righteous. Royal Mail has a fight on its hands. Workers inside Royal Mail are fighting, but outside it matters, too. They are fighting for an economy that works for everyone, for this struggle could be just as much about the workers and the emergent business model that we now see in the UK. Evidence given yesterday by Deliveroo, Uber and Hermes in the Business, Energy and Industrial Strategy Committee put that on show for all to see.
I associate myself with all the comments made by hon. Members about Royal Mail closures. Does my hon. Friend agree that the companies that he mentions have taken advantage of the gig economy to undermine workers’ rights and force many hard-working employees into uncertain terms and conditions and precarious work over the past decade?
I thank my hon. Friend for her intervention and absolutely agree with her comments. In the struggle at Royal Mail, we see the argument being made by the workers for an economy that does not deny or prevent profits paying for public services, but argues, as I do, that workers and business models are not just assets to be sweated for maximum immediate gain. We are talking about industry that provides good employment and good career prospects, with development, investment and good profit, which is not exploitative—a sustainable business for the future. Towns such as mine still have the rows of terraced houses built by employers for their workers in a different age. That age has passed of course, but it was an example of employers looking after their workforce and not complaining of high turnover of staff or sick rates without connecting poor working practices, which they determine, to those issues. I am talking about short-sighted commercial ideals. It is not too much to expect that postal workers in my region and staff in post offices elsewhere should be well paid, can save for retirement and can trust the leadership of the organisation to step up to the opportunities that a changing economy brings.
The repeal Bill going through Parliament will challenge assumptions that we have as a country about working practices that we take for granted. Those measures were bombarded on the way into law and will be under attack as they are transferred across from the EU statute book, too. I am talking about health and safety at work, working conditions and treatment of staff, employed or self-employed. The ever more likely US-made models of employment that we see can undermine working conditions for millions of people trying to make ends meet if we do not argue for a settlement that works for all.
I support the plan, which does not ignore business needs and does not ignore the pressures that Royal Mail is under. A costed plan was submitted by the CWU with the backing of its members that included the appliance of risk to a pension pot to be put on the members of the pension scheme and away from the company. It is worth noting at this point that for 11 years Royal Mail did not contribute to the pension pot, while its workers continued to do so and, as has been mentioned, it is on course to take £1 billion out of the business while post offices close.
I support the responsible approach taken by the union and its understanding of the pressures the company is under, but Royal Mail has picked up the bits of the plan that work for it, and stripped that of its balancing qualities. The gain has been reframed but the pain has been retained. Royal Mail should be setting standards in this sector for the future, not dismissing the workers’ proposals to introduce wider scope for post offices and postal workers. A postal worker’s role can expand as per the workers’ plans. I know that there is enthusiasm among Royal Mail workers to broker a future as a unionised workforce, sharing the interests of growth, helping deliver it, in the certainty that they have a place in it and a share in its rewards.
Sitting suspended for Divisions in the House.
It is a delight to serve under your chairmanship, Mr Gapes, and I congratulate the hon. Member for Dulwich and West Norwood (Helen Hayes) on securing this debate. The attendance both before and after the Divisions, which were an interruption of our discussion this afternoon, really shows that there is significant interest in this issue right across the House.
Of course, mail services are incredibly important to the public, whether for sending personal items, gifts or communications. They are also important for our economy. The rise in online shopping is important; for retailers seeking to branch out and sell to people in different parts of the country, mail services are certainly a significant part of the equation.
Parcel delivery ought to be an increasingly important part of Royal Mail’s business, particularly because of the decline in letter volumes, which has been a trend for some years now. We can all regret that fact, but it is a pretty consistent trend and we all know why—the advent of new technology. However, the parcel delivery market, which has grown with internet shopping, shows real scope for increase and additional business opportunities. Many of us will know our local delivery offices very well, having been invited every year to visit them, especially around Christmas time. I have visited the various delivery offices in my constituency and I am sure other hon. Members have visited the delivery offices in theirs.
I want to talk in particular about the challenges for Bishopbriggs delivery office, which is to be closed and merged into the Kirkintilloch delivery office under new Royal Mail proposals. The Kirkintilloch delivery office does a good job for Kirkintilloch, as the Bishopbriggs office has done for Bishopbriggs, but it is four miles away. I am concerned about the potential impact of that closure, should it go ahead, both for customers—that is to say, members of the public—and staff. The round trip would be around an hour on public transport. Even in a car it would certainly take over half an hour to collect a parcel and get back. That adds a layer of inconvenience for customers who would previously have been able to go to their local delivery office in the town in which they live, at a time that worked for them, to pick up a parcel while running other errands.
Given that people are often not in when the postman or postwoman calls, being able to collect a parcel locally is important. The move will also potentially have negative consequences for staff, and not just in terms of the base moving and the longer journeys, so I want Royal Mail to guarantee that it will not be used to undermine existing jobs in the Bishopbriggs office. There should be guarantees for those workers.
I want to pick up on the Royal Mail’s claim that no inconvenience will be caused; I share the concern of the hon. Member for Dulwich and West Norwood about how it proposes to deal with this issue. It says that it can deliver to other addresses or on a different day. Some individuals have a good relationship with a neighbour whom they know will always be in, so that can certainly work well, but not everybody is in that situation, and the neighbour may be out when the delivery arrives.
Delivery on a different day sometimes makes sense. It might be fine if someone who works Monday to Friday and is out when Royal Mail tries to deliver a parcel on Thursday says, “Can you deliver it on Saturday?”, but for many people that is inconvenient. Royal Mail ought to be thinking much more proactively, even if some closures do go ahead. I certainly hope that it will think again in the case of Bishopbriggs. Given that it is looking at the issue, it ought to be more proactive in looking at networks of local collection points. That could be of benefit not only in areas where there are potential changes to delivery offices, but much more widely.
I am aware of a programme called Royal Mail local collect, which I understand is fairly new, whereby local post offices can be used and chosen as a collection point. That has its merits, as far as it goes, but it seems to me that that option can be chosen only when making the online purchase. If Royal Mail has that system already in place, why can it not be offered as an option to people who are not in when the delivery arrives? Instead of choosing for it to be delivered on a different day or to a different address, they could choose for it to be delivered to their local post office. That would be helpful not only in places where delivery offices close, but for many people in rural communities, which the hon. Member for Clwyd South (Susan Elan Jones) mentioned.
Many people will have a post office that is much closer to where they live than their nearest delivery office. That is an obvious potential solution that has not been properly explored. Clearly, there would be some cost to Royal Mail, and there would be a potential income stream for the Post Office, which I am sure it would welcome and would help it improve its sustainability. The relationship between post offices and the Royal Mail has been strong over many years, so it strikes me that that really ought to be explored further. Although there might be a cost to the Post Office, it is important to note that there is, of course, a cost to every failed delivery that Royal Mail tries to undertake.
I appreciate that other hon. Members want to speak and that we have been slightly waylaid by Divisions. I have been raising these issues with Royal Mail and I hope that the Minister will do likewise. The Government have sold off the last public stake in the Post Office—the 30%, which I think should still have been maintained because the Government should have a public stake in Royal Mail. None the less, the Minister still has influence and is able to meet with Royal Mail’s senior management. I very much hope that she will take these points, and the others that have been made in this debate, strongly and forcefully to Royal Mail.
Order. Before I call the next speaker, I inform Members that this debate will conclude at 4.48 pm, because we have injury time. There are three Front-Bench speeches and two Back-Bench speeches, so we have until about 4.18 pm before we have to start the Front-Bench speeches.
I will be as brief as I can. I worked for Royal Mail and am still employed there—I am on a five-year career break—and I am proud to be a Communication Workers Union member. I pay tribute to my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) for calling this debate and ensuring that as many Members know about this issue as possible.
This is an important debate for me. I spent 27 years working for Parcelforce—I am still employed by it—delivering in and around my constituency, which I am now fortunate enough to represent here in Westminster. In fact, when I chat on doorsteps, I simply ask local people to keep letting me deliver for them—this time in Westminster rather than in the villages and rural areas around Coatbridge, Chryston and Bellshill.
This debate is not just important for me; it is important for everyone in this country, from Land’s End to John O’Groats. I spoke out against and challenged the privatisation of Royal Mail by the coalition Government. I was here at the time campaigning; my name is mentioned three times in Hansard. I was really involved in this debate. It is very hard for me to accept some of the stuff that the hon. Member for East Dunbartonshire (Jo Swinson) said, because the Lib Dems made many bad decisions during those five years. Inconvenience—Royal Mail was not for sale. It should never have been sold, and I cannot help but remind colleagues that it was taken through this House by the Lib Dems’ current leader. I will not name him, but I will not forget him.
It will not be a surprise to Members who follow me on Twitter and know a little about me that I am a proud member of the Communication Workers Union. My focus is on Coatbridge, Chryston and Bellshill, but I very much view part of my role in this House as standing up for workers in this country—in particular, our postmen, people on zero-hours contracts and every single working person in this country who is being treated wrongly in my eyes.
Since Royal Mail was privatised in 2013 until May 2017, 142 delivery offices have been closed. That amounts to losing 10% of the network in just three and a half years. Disgracefully, more offices are now slated for closure as Royal Mail looks to implement a wide-ranging and unwanted cost-cutting programme. These closures mean something. They have an impact; they change people’s lives for the worse. I cannot understand how closing delivery centres can be defended when we know the impact that will have on older people, those with disabilities and mobility issues, and those without a car.
The hon. Member for East Dunbartonshire mentioned that letters are in decline and yes, letters are declining, but packets and parcels are increasing because people now live off the internet. They do not go shopping any more, and the Royal Mail carries the bulk of that post. Remember that, because the strike is coming up. The disadvantage and disruption caused could be huge, and there is little interest in addressing it, made worse by the fact that a privatised Royal Mail could make the changes because the provision of delivery offices and collection points is not regulated. It can do what it wants, without question—perhaps the Minister will take that up for us and have a look.
The changes and the resulting problems are affecting all parts of our country. My hon. Friend the Member for East Lothian (Martin Whitfield) has been working with his community to stop the closure in Gullane.
Just to explain, when the bank branch in Gullane, East Lothian, was closed, the bank held up the post office as the answer to all the problems. Unfortunately, because of an illness, the post office closed, though only temporarily. However, that temporary closure continues, apart from two hours a week when the post office is in the village hall. That is unsatisfactory for the community and is tearing the heart out of the high street. It needs to be stopped. There is a responsibility to communities.
That is happening up and down the country—or else the banks are meant to replace the post offices, but the banks and the post offices are all shutting down. Need I say more? Instead, let us open another betting shop, another place to gamble money away or treat people wrongly with charity shops.
My hon. Friend the Member for Hornsey and Wood Green (Catherine West) has been leading a campaign against closures in her part of north London, a campaign that has developed a real following in print and social media, because people are fed up. Those are just some examples of what is happening, and we have heard many more, including from the hon. Member for Falkirk (John Mc Nally). I thank him for that.
I cannot speak today without mentioning the Royal Mail dispute that has been in the media recently. It will continue to be in the media. For those who do not know, 110,000 postal workers in Royal Mail were balloted on whether they supported taking industrial action—110,000 people up and down the length and breadth of this country, United Kingdom workers who check our letter boxes every single day, in all kinds of weather, six days a week, with a universal service obligation or USO to do that. That is what the Royal Mail got when we privatised it.
Millions have fought and died for the rights of workers and working people, and it is the right of all of us to withdraw our labour if the right terms and conditions are not in place.
The hon. Gentleman just mentioned the Royal Mail dispute. Does he agree that the results of the ballot, which easily surpassed the restrictions imposed by the Tory anti-trade-union Act, show the depth of feeling of the Royal Mail workforce?
Totally. This is all about anti-trade-union laws and workers again being treated the wrong way. A yes vote of 89.1% on a turnout of 73.7% suggests that the country is standing up to the Government and saying, “Enough is enough!” Every community should support our postal workers, because they are doing their best. They are only human beings, working-class people, doing their best and serving their communities every single day—support them.
I hope that a strong, collective and loud voice will be heard loudly and clearly not only by Members in this House but by Royal Mail bosses—I know you are listening and, if you are, come and join us, sit at the table, look us in the eye and talk. The postal workers do not want to go on strike; they want a deal, and a deal can be done. That is all we are asking for.
What are the postal workers going on strike for? Pensions. Royal Mail announced changes to pension agreements that will see thousands of working people stand to lose up to 45% of their entitlement. People are living longer, so how dare they? It beggars belief to make changes that will see people thousands of pounds worse off in retirement. That is what the strike is about. It is not just about the pay—they were due a pay rise in April this year, but no rise came. Four pillars are mentioned, but pensions is the thing we are talking about, because they are attacking workers.
While workers got no pay rise in April, chief executive officer Moya Greene—listen to this, Moya—received a 23% increase in her pay package and took home almost £2 million. Is that the country we live in now? Moya, you have been asked to go to the table—go to the table, sit down and talk to the workers. How can Royal Mail not want to invest in and support its workforce? How can it not do that? We have just heard those figures, and Royal Mail’s failure reflects the wider issues we have in this country—working people are suffering and it will only get worse unless we see my right hon. Friend the Leader of the Opposition in Downing Street. He will be welcome any time.
There are issues around industrial agreements and, more widely, the future of Royal Mail. Where are we? Rather than wanting to get around the table, and rather than wanting to negotiate and show some respect, Royal Mail has decided on immediate legal action. We are going to the High Court tomorrow. That is what we receive for the high result despite the anti-trade union laws—we play by the book, we get the result, but Royal Mail still wants to go to the High Court.
The CWU is not afraid of debate and mediation. It is committed to finding the best way forward for its members, for the future of the service and, importantly, for the millions of people across the four nations that make up our United Kingdom. I condemn the Royal Mail for going to the High Court, but the CWU will be there tomorrow, at 10.30 am, and I hope to join our CWU members there—everyone is more than welcome to come and join me.
Finally, I again thank my hon. Friend the Member for Dulwich and West Norwood for securing the debate. This is such an important issue, not only for Royal Mail workers and the ordinary people of this country, but for everyone. We are not going down the way, we want their pay up the way.
It is an honour to speak in this debate under your chairmanship, Mr Gapes, and I thank my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) for securing it. It is a fantastic debate.
I also thank my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) for a fantastic speech. Many on the Opposition Benches hope that his five-year career break will be a lot longer than five years. We need to hear his voice in this place, and it is a privilege to speak after him.
One of the key reasons why Opposition Members are opposed to the privatisation of national public assets such as Royal Mail is that we see no benefit for the country as a whole, just a benefit for a small handful of individuals who profit at the expense of the many. The number of Labour MPs who have turned out for this debate is instructive, while the sterling turnout on the Government Benches is a tumbleweed turnout—no one to speak up for the Government side, except of course for the Minister.
The British post has been one of the best in the world for almost two centuries: fast, reliable and much cheaper than that of nearly other country in the world. Also, it is—or was—a technological leader. It is widely envied throughout the world, not least because it has been a key historical driver in the UK economy.
When we opposed privatisation, we did so because we predicted that the only things it would lead to would be a worse service to the public and, as usual, the resulting extra profits being scooped off by the usual small cosy elites. I have to say that it looks like that is exactly what has happened. I will not go into the details, which we heard from Members earlier, because time is pressing.
I will say, however, that as the service is being squeezed, assets are literally being flogged off, with £200 million in property sales since privatisation. Fat dividend payouts to shareholders are estimated at £1 billion over the four years post-privatisation, and there have been the huge pay rises for senior managers for whom the word “privatisation” is like the word “Christmas” for a five-year-old. In 2016-17, Royal Mail’s chief executive, Moya Greene—I think my hon. Friend the Member for Coatbridge, Chryston and Bellshill told her, poignantly, to get her arse to the negotiating table and negotiate with the CWU—saw her total pay package increase by 23% to £1.9 million. I could not even begin to think about how to spend that.
The Conservative party likes to present itself as the party of business, the real world and responsibility, but in reality it is the complete opposite. It has taken a key component of a modern manufacturing economy, which is already a world leader in its field in nearly all measures, and has undermined it and hollowed it out to skim off short-term profits and shower them like confetti on a small, self-seeking minority. It has achieved much of that by chipping away at the quality of service and flogging off assets for one-time profit hits. The other obvious target for the vulture capitalists and asset strippers is the rights of the workforce, with attacks on pensions, pay and agreements.
On pensions, there is a new scheme that, according to Royal Mail’s own pension trustees, will produce pensions so small that Royal Mail pensioners will live in poverty. Who will make up the living standards of those workers? Other taxpayers, naturally. Once again, the management of a privatised asset have transferred costs on to the shoulders of us ordinary taxpayers and shovelled the profits into their own pockets. We can be pretty confident that plenty of that profit will find its way out of the country and to the spivvy tax havens of the rich, where it will be of almost no benefit to this country’s economy.
On pay, I have already mentioned Moya Greene’s generous offer to herself of a 23% pay increase this year. What has she offered her workers? A below-inflation pay offer. Let us call that what it is: a pay cut.
On industrial agreements, there has been an attempt to ram through huge alterations to agreements reached with workers through the CWU. Let us be clear: Royal Mail is reneging on its deals. It has already been mentioned that, unsurprisingly, when balloted on strike action, on a 73% turnout, 89% of Royal Mail workers voted for strike action. That is as clear a mandate as any decision ever gets, and in a healthy work culture it is a clear signal to management to start re-thinking their policies. But that is not where we are. Instead, management have merely threatened legal action against their employees—a bully-boy tactic that they are unlikely to use because they fear the cost of their likely defeat in court.
What my constituents want, and what the country needs, is not macho posturing by Royal Mail management. Nor do we need to see them handing one another more fat-cat bonuses and closing down more services. The actions of companies like Royal Mail affect all of us and none of us can ignore them, even if we wish to. That means that management need to consider their social licence to operate—the consent that the people, through their elected representatives, give them to operate. I believe that they have lost it. Without that, they do not have a right to be there and to do what they are doing to Royal Mail.
I thank the hon. Member for Dulwich and West Norwood (Helen Hayes) for securing this important debate.
Any uncertainty that affects our postal services causes alarm, because our post offices and Royal Mail are institutions that are still held in much affection and esteem, despite the politics that sadly so often swallows them up. Royal Mail is special, because it has a unique position in the United Kingdom postal market as the universal service provider and it is by far the largest operator in that market. Consumers want and employees need Royal Mail to give full details of planned closures and the scale of any planned job losses.
Importantly, absolute cast-iron guarantees are needed that any closures will not affect the delivery of the universal service obligation, which we all hold dear. Telling the public that the number of facilities is to reduce is not the same as being clear and open about the overall plans. We need to see a full list of offices and timescales of proposed closures. We are all concerned about piecemeal reductions in this key network, as a major public service provider. We need to know what we are dealing with and to have a detailed plan in front of us.
These measures could be particularly alarming for Scotland. I urge Royal Mail to factor the geographical spread of delivery offices, not just the volumes of mail, into any analysis of proposals to close delivery offices.
I am grateful to the hon. Lady for giving way; this has been a disjointed debate and I fear that we might have another Division soon, so I want to make this point in case I am not able to return for the closing speeches.
On locations, the Minister will recall that, in the last debate on this issue, I placed particular emphasis on the effect on deprived areas. She said that she would look into that. Does the hon. Lady hope, as I do, that the Minister will refer to the effect on deprived areas across the United Kingdom?
Indeed; I would expect socio-economic and geographical factors to feature largely in Royal Mail’s considerations and in the Minister’s response.
The figures that we have heard today show that parcel delivery services are a huge part of our economy and are very important to Royal Mail. Indeed, increased parcel delivery was cited as one of the main reasons that Royal Mail’s annual profit rose by 25% this year. We know that parcels are frequently delivered when recipients are at work or otherwise not at home, so trips to delivery offices need to be manageable and realistic, and those offices need to be accessible, particularly in rural areas.
Order. We have another Division. If there are two or three, I am afraid we will have to come back later, but I hope that there will be just one, in which case we will return in 15 minutes. If the Front Benchers are here before then, I will start the closing speeches straight away.
Sitting suspended for a Division in the House.
Given the growth in the online parcel economy and the digital economy, and given the importance of parcel delivery in general and to the Royal Mail in particular, it seems odd that Royal Mail delivery offices face cuts and closures. Digital connectivity is very important to our economy and parcel delivery has grown enormously —it is soaring, in fact—due to our increasingly large digital marketplace. According to Ofcom, in 2015-16 almost 2 billion parcels were delivered, which is an average of 30 parcels per head of population in one year. Any closures must not disproportionately affect our rural communities, which could be hit very hard by ill-considered decisions on closures.
However, I cannot help feeling that today we are simply bemoaning and lamenting the symptoms of the ill-judged decision to privatise Royal Mail in the first place. Many of us predicted that such privatisation would lead to a reduction in postal services in rural areas, and over the last four years that certainly seems to have been borne out, as pointed out by my hon. Friend the Member for Falkirk.
The Tories and Lib Dems, having formed the coalition, were part of the decision-making process to privatise the Royal Mail. I wonder today whether they regret that decision; perhaps the Minister can tell us. Sadly and regrettably, under the last Labour Government we had to endure the rolling programme of post office closures that hit my own constituency very hard indeed. Wiser people than I have stated categorically that the Royal Mail was sold off for far less than it was worth.
Ultimately, the very future of our delivery service is at stake and I fear that the universal service provision is under real threat. I also fear for the future of the entire estate and the public service that it provides. As the hon. Member for Hartlepool (Mike Hill) has pointed out, there is the prospect of the first national strike since Royal Mail was privatised. Royal Mail workers have voted massively in favour of a walkout in a bitter dispute over pensions, pay and jobs. Of course, industrial action was backed by a huge 89% on a turnout of 73% of the 110,000 members of the Communication Workers Union who were balloted, passing even the UK Government’s threshold for strike action under the terms of the Trade Union Act 2017, as pointed out by my hon. Friend the Member for Glasgow South West (Chris Stephens).
Significantly, the unions believe that there has been a
“relentless programme of cost-cutting to maximise short-term profits and shareholder returns”,
creating a climate of fear and insecurity in Royal Mail. As outlined by the hon. Member for Bury North (James Frith), that situation has not been helped by the prospect or threat of legal action to prevent the impending strike from taking place at all.
I hope that we all agree that there is real cause for concern about the future of the entire Royal Mail service, and I urge management and unions to work together to ensure its future. In addition, I urge the Minister to use her good offices to the fullest extent for a positive future for our Royal Mail.
It is a pleasure to serve under your chairpersonship, Mr Gapes. I thank my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) for securing this debate. Her campaign to fight for the future of the local delivery offices in her constituency is inspirational; she made Royal Mail stop and reconsider what seemed like an inevitable closure. I commend her for standing up for good local postal services for her community and for a certain future for postal workers. I would like to mention the many contributions by hon. Members from both sides of the House—in particular, the hon. Member for Angus (Kirstene Hair), who was the only Member representing the Conservative party.
Last week, CWU members sent a clear message to Royal Mail when they voted by a momentous number—almost 90%—in favour of strike action in defence of their job security, their pensions and the future of the service. Defying the draconian Trade Union Act 2016 and attempts to quell the power of unions to demand better workers’ rights, the stunning vote was a clear mandate for a strike. My hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) went into that very eloquently so I will not dwell on it, but I am extremely disappointed to say the least by the Royal Mail’s approach to the ongoing dispute with CWU members. It showed the workers very little respect, but, as always, defended Moya Greene’s right to earn almost £2 million per annum, which in my view is completely obscene. The Royal Mail has now escalated the dispute to the High Court. We await that decision tomorrow, but I think it should have honoured the decisive result in the ballot. I welcome both sides back to the table to try to sort this matter out.
The Labour party supports a delivery office network that remains the heart of a community-based Royal Mail, with local posties based in our communities, mail delivered on time and parcels available for collection quickly and easily. Local delivery office closures often leave the most vulnerable and most affected with longer trips to collect mail and, in many cases, later deliveries of crucial post.
The Royal Mail insists that there is no programme of closures, but only ad hoc decisions to close offices where there are operational issues, but that flies in the face of the evidence. Since it was privatised in 2013, 75 delivery offices and up to 90 scale payment delivery offices, where postal workers are based, have been closed. Yet with £850 million more due to be taken out of the Royal Mail in dividends, it is clear that profit, not service, is driving the agenda for the Royal Mail. We have had one closure in my city of Sheffield, but that is dwarfed by large numbers in Manchester, London and many other places. It is difficult to believe that those closures represent anything but a planned programme to cut costs and drive profits in the privatised Royal Mail.
The Royal Mail also insists that there will be no compulsory redundancies. That is welcome, but the closure programme has already forced hundreds of staff to move workplace at a time when changes to the pension scheme are making working relations difficult for thousands of postal workers. I accept that as the type of post changes to more parcels purchased online, so must Royal Mail’s process. We might therefore expect to see a clear plan to adapt, relocate and improve delivery offices where there is need to provide more parking or parcel storage, but the current programme of closures has no timeline and no agreement, and there has been no overall public communication.
I welcome Royal Mail’s efforts to leave parcels safely with trusted neighbours and to offer quick and easy redelivery or pick-ups from local post boxes or facilities, and I am sure that can go further. However, although those options suit some people, for many—especially those in difficult-to-access properties or unpredictable working patterns—they are not appropriate. Everyone, including Royal Mail, knows that people still need collection points. Given the volume of mail we are talking about, that will normally need to be a delivery office. For example, in parts of Sheffield the closures are forcing some people to travel five miles through pretty terrible traffic to a city-centre delivery office with no free parking. Of course, not everyone owns a car, so we can imagine the anxiety that causes many constituents—in particular disabled constituents who have to make that journey, possibly by public transport. We all know about the reliability of that.
Delivery office and scale payment delivery office closures often mean that residents and businesses will receive much needed post later in the day. We need our nation to be as productive as possible, but later post will prevent work from being done. The programme is bad for our economy.
When the Government, together with their bedfellows, the Lib Dems, sold off the Royal Mail at an excruciating low price, there was a clear statutory promise under the Postal Services (Universal Postal Service) Order 2012 that a universal service would continue. I believe delivery office closures are the start of a slippery slope towards a reduced service, falling far short of that promise.
The universal postal service order is a statutory instrument that sets out Royal Mail’s responsibilities as a universal postal services provider. Article 4(d) guarantees that Royal Mail provides delivery offices as an option for the collection of undelivered mail. The closure of so many delivery offices is the start of a threat to the cherished and vital universal service. The order as it stands does not specify a distance from people’s homes or any specification for a collection service. What action does the Minister propose to take to protect delivery offices under the universal postal service? Does she agree that the order is far too vague on how Royal Mail must provide collection services?
The truth is this: there is little currently to stop the universal service from becoming universal in name only. The Government must give Ofcom, as the regulator, a stronger mandate under the universal service order to defend the wider network of postal deliveries. Otherwise, we face the prospect of Royal Mail becoming just another mail delivery company, delivering a service that gives residents and businesses their post later, and of longer journeys to collect undelivered mail.
The Labour party believes in a publicly owned Royal Mail: a people’s post, integrated with a strengthened Post Office, offering a wide variety of services including a post office bank. Such a move would provide a much better basis for an efficient service, potentially combining the collection of parcels with much-valued services to local people. The Government have still, after nearly a year, yet to respond to the submissions to their consultation on the future of the post office network. Will the Minister tell us when they will respond?
My hon. Friend the Member for Dulwich and West Norwood, who moved the motion, and the many other Members who have spoken so passionately have my support in their fight for their local delivery offices, which provide the basis of a high-quality local service. With a Labour Government, we will, once again, have a postal service working simply to provide a high-quality, affordable service: one that does not dress up cuts as improvements or flog off the Royal Mail estate to prop up dividends, but provides a first-class service for citizens to receive their mail at their door or in their local area.
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate the hon. Member for Dulwich and West Norwood (Helen Hayes) on securing today’s important debate at which some crucial issues facing the Royal Mail and the public that it serves have been raised. The Government recognise the crucial role that postal services play in communities across the country. The relocation and closure process that is the subject of the debate has dominated discussion. I would like to respond to some of the points made.
There are very good drivers for running an efficient and effective delivery service. Proposed relocations or closures of delivery offices are part of Royal Mail’s ongoing business transformation, which aims to meet changing customer expectations, increase efficiency and, yes, keep costs under control. Royal Mail always engages with its people and the trade unions before any decision to close a delivery office is taken. It also writes to the local MP and issues a press release, to provide an opportunity for wider public engagement, which is taken into account in the final decision-making process. The same goes for the Post Office.
It has been my experience in my constituency that the lack of an obligation on Royal Mail itself to consult the public is a huge omission in that process. Royal Mail relies on notifying the local MP and assuming that the news will somehow get out. Of course we make a noise about it, but that is no substitute for the organisation itself consulting and engaging with the public it serves. Will the Minister comment on that?
I thank the hon. Lady for her question. I will take that point back to Royal Mail. I have been given the impression that the consultation requirements for changes such as the relocations and closures that we are discussing are the same for Royal Mail as they are for the Post Office. If that has not been the case in her constituency, I will raise that issue directly with Royal Mail.
Many local residents and businesses rely on the convenient facility that Royal Mail offers for the collection of parcels and items of mail. Where closure or relocation is necessary, Royal Mail takes care to ensure that there will be no impact on deliveries to its customers. I recognise from comments that have been made in the debate that there is a strong feeling that that statement does not seem to transmit to Members present or, possibly, to the wider public.
The postmen and women who deliver to the postcode areas covered by a relocated delivery office will continue to serve the local community. Customers do not have to visit a delivery office to collect items of mail if they are unable to do so or are not at home when Royal Mail first attempts delivery. The hon. Member for East Dunbartonshire (Jo Swinson) raised concerns about the alternative methods that are in place, which I will run through before I come to her proposal. Royal Mail has put in place a variety of options to ensure that customers get their deliveries in the most convenient way possible. It will always attempt to leave an item with a neighbour in the first instance, and customers may nominate a neighbour to take in their parcel. It is also possible for customers to arrange a delivery free of charge on a day that is convenient for them, including Saturdays. A further option is to arrange for the item to be delivered to a different address in the same postcode area. Those are several ways in which Royal Mail has attempted to maintain customer service.
The hon. Lady proposed that local networks of delivery points, including post offices, should be considered. There is already an option to redirect mail to a post office —that is a paid-for service, for which I believe the charge is 70p—but I am sure that Royal Mail will be open to that suggestion and others, as it is determined to improve its customer service throughout this change process.
If the hon. Gentleman means Crown post offices, I understand his point. Many of those post offices are being franchised to other retail outlets, but some of those outlets are more convenient for customers. That point should not be lost on him.
While I am addressing the Post Office, which is not the subject of this debate, I will take up the point made by the hon. Member for Falkirk (John Mc Nally). I am not aware of the closure at the moment of any Royal Mail distribution centre in Falkirk, so perhaps he will provide the details. As far as I am aware, there is not one closing in Falkirk. He talked about the closure of post offices up and down the country. That simply is not the case. I will send him the statistics for post offices opening, rather than closing, around the country. The total numbers bear out what I am saying.
I appreciate the Minister’s giving way, and she is of course right that, as the hon. Member for Falkirk (John Mc Nally) mentioned, there were a significant number of post office closures under the Labour Government. That was halted, but that is exactly why it is a good network. I urge the Minister to ask Royal Mail not to put barriers in the way of people using the network, such as the 70p additional charge for consumers. Surely there must be a solution, given that Royal Mail is trying to save some costs. It is a small amount of money that might go to the post office, and if we save consumers from having to shell out, it would be more of a success.
As the hon. Lady knows, I am not responsible for the operational aspects of Royal Mail, but I shall put that to its management. It is appropriate that she has raised the matter of costs, as I was just coming on to that; it is important that we appreciate why business transformation is necessary.
Efficiency is a key component of ensuring the financial sustainability of the universal obligation. Price increases are not a long-term solution, particularly in such a competitive market. We have already heard that the market for letters has declined by 40%. The market for parcels, while buoyant, is highly competitive. At the time of the 2008 Hooper review, Royal Mail was estimated to be 40% less efficient than international comparators. Since the Postal Services Act 2011 Royal Mail has spent more than £1 billion on its transformation programme. In 2010 only 8% of Royal Mail letters were sorted by machine, compared with 85% for leading EU operators. The investment that Royal Mail has made has closed the gap and increased automation of letter sorting to more than 80%. Ofcom has found that those investments have improved efficiency.
Sitting suspended for a Division in the House.
I was coming to efficiency. Ofcom has found that the investments made by Royal Mail have improved efficiency. Labour productivity in delivery and processing increased by 5.6% between 2011 and 2015. Royal Mail’s transformation programme between 2012 and 2015 produced cumulative savings of £340 million—an average of £110 million per year. In its review of postal services regulation, Ofcom recognised the steps that Royal Mail had taken on transformation but also concluded that it could do even more to improve efficiency. Royal Mail’s approach to the continuous improvement of its efficiency and productivity allows it to be more competitive and helps it to meet changing customer expectations. The closure of some distribution points was because of the new market in packages, for example. Some of the old distribution points were simply not large enough or fit for purpose for the modern requirements for so many packages. The totality adds up to a company better positioned to grow its existing customer relationships and win new business.
A number of colleagues have talked about the privatisation and the financial side of the management of Royal Mail. I just point out that since privatisation Royal Mail has invested £1.4 billion in employee pension schemes. That is a vast amount of money. It has also paid out dividends of £800 million, which it has to do as a publicly quoted company. One of the key reasons for privatisation was to put Royal Mail on a footing where it could borrow on the markets to fund its investment rather than have to compete with schools, hospitals and other Treasury-backed spending obligations. As such, it has managed to raise £500 million in debt and has maintained profitability, as well as growing sales, in a highly competitive market. I do feel that rather than criticising the chief executive, I should put on record my admiration for her in the difficult job that she has had steering Royal Mail through a highly competitive environment. I appreciate that there are other views on the matter, but I must put that on record as my view.
Overall, the service and value provided by Royal Mail to its customers is good and, where it needs to make difficult commercial decisions, it does so in a way that minimises disruption to businesses and consumers. The CWU’s announcement last week of a 48-hour national strike, planned to commence on 19 October, will challenge even Royal Mail’s high delivery standards. We are hopeful that both parties will reach an amicable solution on the matters under discussion and avoid a strike, if at all possible, and the inevitable disruption to the postal service that would follow. If the worst happens, Royal Mail has planned contingency arrangements in place to minimise the impact on delivery services. It is inevitable, however, that some or all delivery offices will be affected during any industrial action.
Ofcom also has a well-established monitoring regime that allows it to track market developments closely and that informs its decisions about the regulatory framework. We hope that both sides will keep talking—I think that is something all hon. Members agree with—and that an amicable solution is found. It is in everyone’s interests to see Royal Mail continue its proud tradition of delivering the UK’s universal postal service in the private sector.
I congratulate the Royal Mail and its hard-working staff. I am sure it will continue to focus on delivering this key mission: connecting companies, customers and communities; making e-commerce happen; and delivering the universal service obligation.
I thank all hon. Members who have contributed and taken the time to be here. I particularly thank everybody for their forbearance with the interruptions of the Division bell—including yourself, Mr Gapes. We are nearly at the end of the debate.
I pay particular tribute to my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), who spoke with such passion and conviction on the basis of his long experience working for Royal Mail. I join others in saying that I hope his career break from the Royal Mail will be significantly longer than five years, much as I am sure he is missed by his colleagues.
We have heard from many hon. Members, but notwithstanding the alternative provisions for parcel collection and redelivery that Royal Mail has put in place, those solutions simply do not work for many communities across the country. They certainly ring hollow with my constituents, as it is not the case that nobody ever needs to visit a delivery office. In my opening speech, I mentioned the situation for users of the PO box services, and the same applies to people who have to pay excess charges for their mail. There are reasons why it is sometimes essential to visit a Royal Mail delivery office.
The hon. Member for East Dunbartonshire (Jo Swinson) mentioned the possibility of using the network of post offices more for collection services. It is problematic that customers currently have to pay for that service. From my experience in negotiations with Royal Mail on the situation in my constituency, I know that often post offices do not have the physical capacity to cope with large numbers of parcels, so I think that is a flawed solution.
I come back to the issue that I started with. The problem in many communities is the erosion of the services that Royal Mail provides. What is being proposed in my constituency, if you understand its geography and how public transport works there, simply lacks all credibility as an approach to public service. I see an organisation that is putting profit at its heart and not its obligations to the public that it was set up to serve. Once again, I ask the Minister to consider whether the flawed decision to privatise Royal Mail is working for communities up and down the country—I maintain that it is not. Once again, I ask the Minister to consider intervening and using her good offices to secure the services that our communities rely on, and to think again about Royal Mail’s status in the private sector as a profit-making entity.
Question put and agreed to.
That this House has considered Royal Mail delivery office closures.