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Postal Services Bill [HL]

Volume 709: debated on Tuesday 24 March 2009

Committee (1st Day)

Clauses 1 and 2 agreed.

Amendment 1

Moved by

1: After Clause 2, insert the following new Clause—

“Post Office company review

(1) Within one year of an order being made under section 2, a post office company must review the services a post office may provide to the public under arrangements with a government department.

(2) The Secretary of State must lay the review, and the government response to it, before both Houses of Parliament as soon as reasonably possible.”

First, I declare my interests as set out in the register and, in particular, as a partner in the national commercial law firm Beachcroft LLP. At the outset, I make it clear that the Conservative Party supports this legislation in principle. However, I have to add that Ministers are now guilty of the most negligent, costly and culpable late delivery of all time. By failing to act until now, this Government have condemned the Royal Mail to 10 years of unnecessary uncertainty and inevitable decline. The loss of potential revenue and the consequent damage to staff morale has been little short of catastrophic, particularly for the pension fund and the status of the company, despite Royal Mail’s best efforts. Furthermore, as we now scrutinise this Bill line by line, I fear that its shortcomings will become all too evident. We have endured the injury of 12 years of inaction followed by the added insult of a cobbled together rush job of a Bill, so we are going to do our utmost to make this legislation work.

The first group of amendments to be discussed in Committee, and which I have tabled, relate rather unusually to an issue that should be addressed in the Bill but is not; I refer, of course, to the post office network, which at Second Reading was the problem that dared not speak its name. There have been two swingeing rounds of post office closures in recent years, and under this Labour Government some 40 per cent of post offices and sub-post offices have now been closed. Perhaps Ministers truly believe that such enormous cuts to such an integral component part of our society were necessary, but it is utterly irresponsible of any Government not to consider seriously how to prevent any future closures, or even how to allow for the reopening of many of these businesses.

We on these Benches were deeply sceptical of the business case that Ministers made for these closures, and of their contention that they made a real effort to find an alternative way forward. There are enormous numbers of references, particularly in the other place, to post office closures, so the Minister, Pat McFadden, has had every opportunity to come forward with some alternative strategy. Ministers’ strategy in responding to the many debates on post office closures has been to say that this is not a matter for them; it is up to the Post Office. On 13 March last year, Pat McFadden said:

“For the future, the Post Office must keep developing new products and new reasons for customers to go through the door”.—[Official Report, Commons, 13/3/08; col. 512.]

This was against the background of what he described as a “difficult closure process”.

If any noble Lords decide to search Hansard for references to the Post Office, I ask them to sit back and just let them all come, because there have been so many debates about closures. Ministers have said so many times, as Pat McFadden did on 20 June last year, that,

“the Post Office has to innovate”,

and that,

“There are new areas of work for the Post Office”,—[Official Report, Commons, 20/6/08; col. 1270.]

as though it was all the Post Office’s fault.

In all the debates that I have read through, there seemed to be no clear or genuine understanding of the importance of post offices in many communities not only in rural areas but in some of the poorest areas of our towns and cities. The post office is usually the heartbeat of any parade of local shops and usually the centre of any rural community. If it goes under, particularly in a parade of shops, the shops inevitably follow.

I see from the Marshalled List that my concerns are shared by many around the Committee, so I welcome this opportunity to raise this issue.

Before the noble Lord goes any further, will he tell us how many post offices closed between 1979 and 1997, and perhaps even more significantly between 1992 and 1997 when he was a Cabinet Minister in the other place?

There is so much wrong with that question. First, let us look forward and not back. But in looking back, let us see where 40 per cent of the closures occurred. The noble Lord may want to play general election games—I suppose there has to be an election in the next 12 months—but let us now work out and hear his ideas on how to ensure that these closures no longer take place. I certainly will give some examples to the noble Lord, and to other noble Lords, about how we can at least do something constructive in this Bill.

As I was about to say, Amendment 14 in my name, seeks to explore what the relationship between Royal Mail Group Limited and Post Office Limited will look like after part privatisation. We also have an amendment from the Benches to my right on the board of directors and, to be debated much later in these proceedings, on the question of an investment fund. I look forward very much to those debates. I hope that we will get some idea of the Government’s thinking in this area.

My amendments in this group focus in a slightly different direction. We on these Benches strongly believe that this Bill should have come many years ago. We also feel that the Bill was produced in a rather unhelpful rush. These views—I recall the Secretary of State said this at Second Reading—are not mutually inconsistent. Proper analysis of the problems and proper consultation on the possible solutions, and proper pre-legislative scrutiny, should all have their place in the process of producing a Bill, particularly one as contentious as this. I hope that my amendments will encourage the Government to start the process as soon as possible, before it is too late.

Amendment 1 states:

“Within one year of an order being made under section 2, a post office company must review the services a post office may provide to the public under arrangements with a government department”.

The Secretary of State must lay the review and the Government response before both Houses of Parliament as soon as reasonably possible. Amendment 2 would insert a new clause relating to the Post Office company report. That is because the Government have on every occasion when closure has been discussed said, “It is not for Parliament to have a view about this closure or that”. I hope that these two amendments will ensure that that does not happen any more.

Amendment 2 embodies an attempt to ensure that a proper analysis is undertaken of why post offices around the country are closing, not only putting people out of jobs, but also causing many villages and areas to lose a vital centre of their community. Amendment 1 seeks to ensure proper consideration of what more could be done to support post offices. I recall that the noble Lord, Lord Whitty, said at Second Reading that government departments should look at what services they could deliver through the post office network. He is right. We were extremely pleased that outside campaigners, and MPs and noble Lords from all sides, were able to persuade the Minister to reaward the Post Office card account to the Post Office. However, I felt and I still feel that the handling of these matters by the Government was a disgrace. Such a destabilising retendering process should never have been forced on the Post Office network. Cancelling it midway smacked of panic—and pretty expensive panic too.

There are a number of other services we feel the Post Office could provide. Our amendment would seek to ensure that the establishment of a post bank, in particular, to take one example, is properly explored. I look forward to hearing what the Secretary of State has to say about that. I think we all were very impressed indeed with the documentation launched about the post bank. The documentation, Post Bank at the people’s Post Office, makes the case for a post bank, and the comment was made, quite rightly, that the Post Office network is a unique national resource. Communities, businesses and individuals all depend on it. That raises the idea that as well as the universal service obligation, we should have a universal banking obligation. I look forward to hearing from the Secretary of State what he is going to do about all this, because there have been hints in the press about how other services could be provided. We want to know what is going on and what could be included. Not only do we want the idea of the post bank to be explored, but also its feasibility based on evidential grounds.

The noble Lord, Lord Razzall, quite rightly raised the issue of private mail expansion in this area and many others that could be looked at, such as the provision of expert advice on pension entitlements or tax returns. None of this must be rushed into. I participated in many of the debates on the setting up of the Financial Services Authority, and as noble Lords know, financial services are very heavily regulated. It would therefore be helpful if the Secretary of State could give us an idea of exactly what he has in mind. The drafting also discloses that we are providing for reviews to be undertaken by Post Office Limited. I would prefer to see a more independent review, particularly on the consideration of future services, but that is another matter.

The Hooper review caused a great deal of contention, although we have had some helpful evidence from the Communication Workers Union that reflects the extent to which it agrees with certain parts of it. However, in his excellent report, Richard Hooper has finally made it impossible for the Government to sweep all these structural problems under the carpet. Post offices would also benefit from an equally rigorous analysis. In looking forward to the Secretary of State’s response, I beg to move.

I oppose this amendment. I feel that the absence of the noble Lord, Lord Hunt, from the other place over the past 12 years means that he has probably gone to sleep on the issue of the Post Office and that in a number of respects he does not know what has happened to our post offices. In 1997, the incoming Labour Government inherited the Horizon project, which was set up to provide benefit recipients with swipe cards for collecting their benefits. The instructions given by either the Civil Service or Ministers—ultimately it is a ministerial responsibility—were so incoherent that the problems encountered by the system providers were of such an order that it took the best part of a decade to fully computerise Post Office services in the United Kingdom. That is the first thing that we have to recognise.

During that period, a number of people decided that it would be better to get their benefits through the bank than from the Post Office. Certainly, if they went to a post office, they could not take advantage of automatic teller machines because the Post Office, with the acquiescence of the then Conservative Government, had refused to allow individual postmasters to have ATMs on their premises, as they would be regarded as competition with the state run Post Office as adumbrated by the Conservatives.

Let us get the facts correct. A number of people who already get their works pensions through the bank find it equally convenient to get their state pension through the same source so that they can take their money out of the one account. They can also make standing order and direct debit arrangements, which are so convenient for elderly people who cannot get out so easily.

Certainly, in my constituency when I was a Member of Parliament there was a significant drop in attendances at post offices, which then had difficulty in continuing. Some tried to diversify and it would have been an advantage if there had been a postal bank. There could have been a postal bank because there used to be the Girobank, but that was privatised, went over to the Alliance & Leicester and disappeared. So it ill becomes noble Lords on the Front Bench opposite to lecture us about the desirability of expanding services when they, more then any other group, were responsible for the contraction of a number of services and for the indifference of the then Government—and, in part, of the incoming Government—to the plight of some postmasters across the country.

As the footfall was declining and people ceased to go to post offices in numbers, in many attractive villages where the post offices were located in positions where their real estate value was far in excess of the business case for keeping the shop going, the buildings were sold off as private dwellings because planning permission, from what I imagine would be Conservative local authorities, was easily granted for a change of use from commercial to domestic purposes. There are a number of reasons why post offices closed and why they changed. The rather flip and inaccurate way in which this amendment, which is not superficially unattractive, has been presented is irrelevant.

The post office system is now on a far more rational basis than ever before. There are a number of franchise businesses across the country and, to all intents and purposes, the Post Office is a franchise business. In the past, franchises were granted with no regard to whether there was local competition or to the proximity of one post office to another—in some instances the distance between them was very slight and in others it was quite considerable—but that has now been rationalised. It might be said that it has been rationalised by a closure programme, but the closure programme was carried out with a rigour beyond the comprehension of the Front Bench opposite. Paradoxically, post offices could now be in a better position than ever before. There is less business, for the reasons that I have given, but there are fewer post offices, they are a distance away from one another and they should be able to stand on their own feet.

There was a complete change when the lottery started. The lottery was a franchise and there had to be a certain distance between shops; alternatively, an outlet had to be within walking distance of any citizen in the country so that we could all have access to the fabulous prizes that the lottery affords. If the Royal Mail, the Post Office and the then Conservative Government had applied these sensible rules to the allocation of post offices across the country, we probably would not have had half the problems that we have encountered in the past 15 to 20 years.

The crocodile tears being shed by the Tories are little short of hypocrisy. Certain things can be done and I would certainly be happy with a Post Office bank; I would be very pleased to have the Girobank brought back and available. However, if there were to be a change of government, I wonder whether the Tories would have the same priority following a general election as they have today. I very much doubt it. I am not satisfied that a report about the Post Office would come out. God almighty, there are so many reports about the Post Office. As I said on Second Reading, for 10 years we had about three meetings a year with the Post Office and the then Trade and Industry Select Committee. There is no shortage of reporting on it or debate about it. We do not necessarily need yet another report that will gather dust on the shelves of the Library of this House. The amendment is unnecessary and I hope that the Committee will reject it.

I shall respond to the invitation of the noble Lord, Lord Hunt, to look to the future rather than to the past. I have a couple of questions on these amendments, following up on the final point that my noble friend has just made.

When the report is delivered to Parliament, what would happen to it? What would change? So far as I can see, nothing in the Bill would require anyone to take any further action beyond delivering the report. If that is the case, I would like to know what this is all about. My reading of the amendment is that, notwithstanding the drive to improve efficiency and effectiveness in all other government departments—I am assuming that it covers not just Civil Service departments but the whole of the public service, including areas such as the NHS, which is a substantial user of the Royal Mail and Post Office at the moment—none of those departments or agencies could enter into any changes that would lead to an improvement in performance, efficiency and effectiveness without waiting to see whether the report was prepared and delivered and then awaiting the outcome from Parliament. That would mean a substantial addition of regulation in the area of improving public performance. Has the noble Lord addressed that? Does he believe that it would lead to more or less efficient and effective public service?

I have a few questions. We are in the position of looking forward today and of seeing what has happened. I agree with my noble friend that it is interesting to look to the past and note that these days some people are singing a different tune from the one that they used to.

I shall come on to the present structure. What I am interested in, and we may be able to get some answers on this, is the proposal to separate the Post Office from the Royal Mail. That raises a number of questions. The Post Office itself is the largest retail business in the country; in fact, nowhere does it stretch more than the Royal Mail and nowhere could it offer more services, particularly in relation to banks. When I was speaking before on this matter, I suggested that one of the banks that could be considered was the merged Co-op/Britannia mutual. Certainly, providing all the financial services would be the right way to go. Maybe there were broader reasons for going into a post office in the past, but at the moment you go in to purchase stamps, post a letter or have a parcel weighed and then delivered.

I am interested in what the new structure will be because at the moment the Post Office and the Royal Mail are intertwined and dependent on each other. What will the relationship be as we go forward? At the moment, many post offices are for delivery as well as access. Where does that leave them? Will there be access points only for the Post Office in future? We need to know this; we need to know what the structure might be. I will be interested in what my noble friend has to say. I am hoping for a bit of light to be shed on the new relationship; it is vital that we know.

I am all in favour of expanding the services, but I am very interested to know whether the access point will still be the Post Office. What about delivery? Indeed, what will be the definition of a post office in the future? We know what it is now, but what will it look like in the future? Will other people be able to deliver? Will we be able to go to other places as well? There are a lot of things that we need to know. Will there be a greater separation between Royal Mail and the Post Office? I look forward to my noble friend explaining the situation between the Post Office as it is now, part of Royal Mail, and as it will be in the future when there are two separate companies, although they will come under one holding company.

I do not know whether other noble Lords share my disappointment at the way in which this Committee stage has started. I had assumed, listening to the noble Lord, Lord Hunt of Wirral, at Second Reading, that we would be going through the Bill line by line and dealing with the detail. I understand that people who cut their political teeth in another place cannot resist making what are effectively Second Reading speeches in Committee, but I urge noble Lords to accept that, if we carry on in this way, we will need not three days to deal with the detail of the Bill in Committee but 33. It is particularly unfortunate that the noble Lord, Lord Hunt of Wirral, produced this as Amendment 1, because all the people who no doubt will not be here at 9.30 on a wet Tuesday night when we are going to discuss what happens to the Post Office under Part 3 wanted to get their Second Reading speeches in now, either to lambaste the Tories or their own side. They are entirely free to do so but it is a pity.

We all know the history of what happened to the Post Office and Royal Mail. During the 1980s and into the 1990s, the Tory party allowed them to take a pension holiday and allowed the Treasury to take a huge amount of revenue which was not reinvested in the network. We all know what has happened since 1997; the Government were slow to pick up what was happening to the post office network. Let us accept all that; let us accept that the noble Lord, Lord O’Neill of Clackmannan, wants to bash the noble Lord, Lord Hunt of Wirral, over the head, and the noble Lord, Lord Hunt of Wirral, wants to bash the noble Lord, Lord Mandelson, over the head. Let us move on to what is the Committee stage, to try to get a Bill that we can or cannot support rather than trading insults over the next 33 days.

This perfectly sensible amendment aims to get what is happening to the Post Office back into the arena of Parliament so that the public can look at the Government’s proposals. It is a small nut that has been given a large crack with a number of Second Reading speeches.

In response to my noble friend Lord Hoyle, who asked some pertinent questions, all the answers are very clearly set out in the Bill and in the policy statement that was issued to accompany it. We will of course be happy to elucidate further in response to later amendments in Committee.

The noble Lord, Lord Hunt, began his remarks by suggesting that the Bill represents the most negligent, culpable late delivery of all time, to which I say, “Better late than never”. However, I realise that some who oppose modernisation altogether would say, “Better never than late”.

Let me address the amendments directly and respond to the noble Lord’s remarks. I regard the amendments as being grounded in an admirable sentiment—the wish to ensure a secure future for the post office network, to which I say, “Hear, hear”. The closures of the past year were difficult but necessary. I can say to noble Lords this afternoon that the Government have no intention of supporting any further programme of post office closures.

The network is now on a more secure footing and better placed to look to the future. Its unrivalled network of branches, its strong brand and the face-to-face contact that it offers are all the Post Office’s real assets. We are working hard with the Post Office to build on those assets and identify new opportunities to help ensure a secure future for it, a process in which the Business and Enterprise Select Committee in another place, chaired by a member of the party of the noble Lord, Lord Hunt, is involved. Given the current economic and financial climate, this is the right time to look for potential new business opportunities that can build on the Post Office’s trusted brand, the geographical reach of its network and the option of face-to-face contact that it offers.

Let there be no question of the Government’s commitment to the post office network. We are investing up to £1.7 billion, including £150 million a year specifically to support non-commercial branches. This will help to ensure a network of around 11,500 branches across the country.

Despite this continued investment, noble Lords will recognise that, in certain limited and highly unfortunate circumstances, individual post offices close. However, protections already exist to address those very particular circumstances, without the need for the provisions in Amendment 2. The Post Office and Consumer Focus, the statutory consumer body, have agreed a new code of practice to deal with such changes in local provision. The code, which will come into force on 1 April this year, sets out how local communities must be informed about the changes, how they will impact on the service and why they are necessary. The code also requires that local stakeholders, including local authorities, disability groups and Members of Parliament, are consulted on the changes. The code is in addition to Consumer Focus’s existing powers to investigate post office provision and its statutory duties in respect of consumers who are elderly, have disabilities, are on low incomes, or who live in rural areas.

I turn to Amendment 1. Noble Lords will no doubt agree with me that the best way to ensure the continued sustainability of the post office network is to use it fully. That is why we are working closely with the Post Office to identify new opportunities to increase both its financial role—I am looking with interest at the post bank proposals to which the noble Lord referred—and its government business.

This process has already borne fruit with regard to the handling of government business. Last November, the Government decided to award the substantial new contract for the Post Office card account to the Post Office—for which I noted that the noble Lord, Lord Hunt, deftly tried to take credit by saying that we took our decision as a result of his extraordinary pressure. This was followed by the announcement in the Pre-Budget Report that the Post Office would provide the new saving gateway account for those on benefits. Just yesterday, the Post Office announced a landmark contract with the DVLA to provide the face-to-face service for the 10-year renewal of driving licences. This contract puts the Post Office at the forefront of ID verification technology and helps to open the door for future potential work on passports and ID cards.

We have made progress on government business as recently as yesterday, and we will continue to do so. As for the Post Office’s financial role, we already regard it as an important provider of banking and other financial services. In our view, with its financial services partners, the Post Office continues to look for products well matched to the needs of its customers, and we will encourage it to do so in future. On closures, government services and the Post Office’s future putative financial role, I think that noble Lords will see that the processes are already in place and are robust. The amendments would impose unnecessary duplication of those processes, without adding to the sum total of human knowledge or our responsiveness to the general public, and might even risk undermining them. I therefore ask the noble Lord to withdraw the amendment.

I thank the Secretary of State very much indeed for responding so positively with the statement “Better late than never”. I warmly welcome that admission. My criticism was that the whole initiative could have been so much more successful had he pursued it when he was appointed Secretary of State for Trade and Industry. The noble Lord, Lord O’Neill, has upbraided me already in a way that he never used to when he was chairman of the Trade and Industry Select Committee. If he does not mind, I must go back to some of those reports and remind myself what he was saying then, because the very idea that it needed 10 years to get it all sorted out was not something I recall him referring to when he chaired the committee. I may well be wrong and, if I am, I apologise.

I welcome the fact that the noble Lord, Lord Brooke of Alverthorpe, wanted to look forward, not back. To the noble Lord, Lord Razzall, who knows that I greatly respect his judgment in these matters, I would say that before we get in to the line-by-line scrutiny we must remind ourselves that out there, in local communities and elsewhere, there is real concern about the way in which post offices have closed, along with a wish to fulfil the intention of the Secretary of State to find some way through to those new business opportunities that he has just described. I strongly support what he said about those opportunities and about the post bank; a successful post bank would offer real long-term financial security to individuals and businesses and provide a vital role for the Post Office commensurate with the high esteem in which it continues to be held by the British people. It would have been wrong to embark on the line-by-line scrutiny without spending a little time on the issue that really does occupy a lot of people out there, in communities up and down the country.

I should say to the noble Lord, Lord O’Neill, that we are not arguing, as he does, that post offices should be able to stand on their own two feet, because that fails to recognise the importance that they have for local communities. When the report is delivered, what happens is a very relevant question. We got a little indication at last from the Secretary of State that things are beginning to happen. My wish is to see more. I agree with the noble Lord, Lord Hoyle, that when people go into a post office, certainly in rural areas, they go not just for services from the post office, because post offices have often extended their services widely to become the local village store. We have to work out what the new structure should be—with access points—and what the definition should be of a post office in future.

In this short debate, there has been a bit of confusion about Crown post offices and sub-post offices. Otherwise, I thought that the noble Lord, Lord Razzall, made the sort of speech that he was criticising other noble Lords for making. Noble Lords should understand that we are not going to shirk the line-by-line scrutiny. The noble Lord called it a sensible amendment. Perhaps he will allow me to treasure those words.

I say to the noble Lord, Lord Mandelson, that his statement on the Floor of the Chamber that the Government have no intention of supporting any further closures was welcome news indeed and will be welcome news to a whole range of communities up and down the country. I suppose I should thank him for that. If that were all he had said, that would be enough for me.

In this vein almost of comradeship, will my friend confirm—he is a friend; Wales lost on Saturday and it was a very bad day for us—that there is no prospect of the Opposition privatising the Post Office?

We have no present plans to increase the extent of the privatisation. I still await our debate on the very clauses to which the noble Lord referred. I have been restricting my remarks to just these two amendments. If he will allow me, I will return and properly answer his question when we debate the meaning of public ownership, privatisation and all those things. I am trying not to stray into that area. If I did, I would be criticised for making a Second Reading speech, which was the last thing on my mind. This has been a useful occasion. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.

House resumed.