Universal Postal Service

Debate between Baroness Clark of Kilwinning and Alan Reid

Thursday 17th July 2014 Commons Chamber

[Mr Reid]

My hon. Friend makes an important point. Some forms of high-volume business mail incur lower costs than for people sending Christmas cards or postcards. Obviously, if a company has high-volume mail from a big organisation coming into its system, that is much easier for it to deliver.

In fairness, it should be pointed out that Royal Mail has some advantages. For example, it has a nationwide infrastructure and benefits from economies of scale.

Royal Mail is very concerned about TNT’s plans and sees them as a threat to its ability to deliver the USO. We must always remember that Royal Mail is a private company with a duty to maximise the revenue for its shareholders. Therefore, it may or may not be crying wolf. It is Ofcom’s responsibility to decide whether Royal Mail is crying wolf.

Ofcom has many tools at its disposal to protect the USO. It could impose regulatory conditions on other operators to level the playing field. For example, it could require other providers to deliver over a larger geographical area than just a small urban area or to deliver on more days in the week. Ofcom also has the power to introduce a universal service fund. It can review whether delivering the universal service places a financial burden on Royal Mail and determine whether it is fair for Royal Mail alone to carry that burden. However, that cannot be done before October 2016 without Government direction.

[Katy Clark]

The hon. Gentleman has mentioned the possibility of a compensation fund, which organisations such as TNT could pay into. Does he agree that organisations that deliver business mail, which they have been able to do for many years, might also be required to pay into such a fund, given the amount of money they make from the lucrative work that they do?

[Mr Reid]

I agree with the hon. Lady that it is not just TNT and companies like it that would have to pay into the fund, but a wider range of companies. That would be a decision for Ofcom.

If Ofcom finds that there is a net burden on Royal Mail, there is a provision in the 2011 Act that allows the Government to direct Ofcom to establish the universal service fund. That would require other operators to contribute financially to support the universal service. I do not think that we are at that stage yet, but the Government and Ofcom might have to use that power at some time in the future.

Royal Mail has pointed out that it has to meet all the targets that are set by Ofcom and publish its performance against those targets quarterly and annually.

Pensions and Benefits Uprating

Debate between Baroness Clark of Kilwinning and Alan Reid

Tuesday 25th February 2014 Commons Chamber

[Katy Clark]

Obviously the Minister is aware that the range of factors taken into account has been smaller every year since the change was brought in. I oppose the orders not necessarily because they do or do not include housing costs—I understand the point he makes; he has made it before and we have debated it previously—but because the method does not reflect the real cost of living that people who rely on these benefits experience.

Every year since 2010 RPI has been higher than CPI and the gap between those figures has made a real difference to pensions and benefits. The danger with the change is the cumulative impact over many years. In 2010 the RPI figure was 4.6%. That went up to 5.6% in 2011, down to 2.6% in 2012, and was 3.2% last year. But the equivalent CPI figures were 3.1%, 5.2%, 2.2% and 2.7%. Every year there has been a gap, which has meant that some of the poorest and most vulnerable in our society have ended up with less money in their pocket.

The Prime Minister has made much of his decision to introduce a triple lock guarantee for the basic state pension. He has already pledged to retain it throughout the next Parliament should he have any success at the next general election. The guarantee ensures that the basic state pension will always rise in line with whatever is the greatest as between inflation, wages or 2.5%. The uncomfortable truth, however, as the Minister must accept, is that the triple lock was introduced alongside the change from RPI to CPI, so the basic state pension increases in 2012 and 2013 were lower than they would have been if the previous system had been used. By 2015, the basic state pension will therefore be £1.11 a week lower than it would have been if it had risen in line with RPI, so pensioners will be £106.60 worse off as a result.

That is how just one group is affected. If we look at other groups, such as carers, the situation is even worse. Next year, carer’s allowance will be £1.69 per week lower than it would have been under RPI, with carers £255.84 worse off by April 2015 as a result. Those receiving both the higher rate mobility and care components of disability living allowance will be £571.48 worse off by the same date.

[Mr Reid]

Does the hon. Lady accept that, with the triple lock, pensioners will benefit from an economic recovery by their pension going up in line with earnings, whereas when the economy was doing well in the early years of the Labour Government, pensioners did not share in the increased benefits, because their pension only went up in line with inflation and not in line with earnings?

[Katy Clark]

As the hon. Gentleman will appreciate, I am focusing on the change from RPI to CPI. He will be aware that in the last Parliament I strongly advocated a return to the link with earnings. However the reality, as he well knows, was that even though Labour did not reinstate that link, the increases every year were far higher than they would have been if that reinstatement had taken place. Therefore, I frankly did not understand why my Front Bench at the time would not make that change.

I support the return to the link with earnings, but as I have said, the point I am making is about the change from RPI to CPI, which I understand is a long-term policy of this Government. Some of the poorest people in the hon. Gentleman’s constituency and mine will experience a cumulative long-term reduction in their incomes as a result of that change.

From April 2013, the coalition slashed the annual uplifts to a range of benefits to 1%; I appreciate that that issue is being dealt with in other legislation. Some of the disability benefits, such as carer’s allowance and disability living allowance, are exempt from that 1% cap, but employment and support allowance, which is the primary income replacement benefit for disabled people, is not. The Government have exempted from the cap the higher rate care component paid to the most severely disabled people, supposedly shielding the vulnerable from it. Unfortunately, however, this is a sleight of hand. ESA is paid in two parts—a basic rate, plus an additional component—and although the additional component of £35.75 is exempt from the 1% cap, the basic rate of £72.40 is not. Therefore, over-25s in receipt of the care component of ESA will receive £5.11 a week less than they would have received if it had increased in line with RPI. These cuts matter, because they are having a real impact on some of the poorest and most vulnerable people in our society.

Between 1997 and 2010, the Labour Government reduced the percentage of people living in absolute poverty from 28% of the population to 15%. During that time, 2.3 million children and 2 million pensioners were lifted out of poverty. Research from the Institute for Fiscal Studies suggests that investment in the social security system was the primary factor behind that reduction in poverty. By slashing social security benefits with these orders and the other legislation that we have considered previously, the Government risk putting some of the most vulnerable people in society back below the poverty line, and that is on top of the large number of people whose incomes have already been cut as a direct result of this Government’s policy. These orders are completely inadequate and the Government should come forward with something that protects the most vulnerable in our society.

Fuel Costs

Debate between Baroness Clark of Kilwinning and Alan Reid

Monday 7th February 2011 Commons Chamber

[Mr Reid]

I hope that the scheme will be implemented as soon as possible, and that it can be extended to remote parts of the mainland once the pilot schemes are proven to be successful, as I am sure they will be.

Any argument that fuel duty must increase yet further in order to deter car use is complete nonsense. The high price of fuel already deters car use, and simply increasing the duty further will have no effect on the environment. As other hon. Members have said, increasing the duty will simply harm the rural economy.

I recognise that fuel duty brings in a lot of money for the Treasury, and that the Budget must be balanced. We face an enormous budget deficit, which was inherited from the previous Government, but I put it to the Chancellor that yet another fuel duty increase in the coming Budget will harm the economy, particularly in rural areas, and I urge him to find another way of raising that money. Fuel duty discriminates against rural areas in a way that no other tax does. Almost any other tax increase to replace an increase in fuel duty would therefore be an improvement.

We have debated the stabiliser previously, particularly during proceedings on the Finance Act 2009, when the hon. Member for Dundee East (Stewart Hosie) proposed one. The crucial decision is on the amount around which the price should be stabilised. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Taunton Deane (Mr Browne), who was a Liberal Democrat Treasury spokesman at the time, pointed out that the proposal from the hon. Member for Dundee East would mean that the fuel duty would have been 4.5p higher if it had been introduced in the 2008 Budget. I am disappointed that in the intervening two years, the hon. Gentleman has not come forward with a detailed, workable proposal.

[Katy Clark]

I recall the debate and vote on that proposal. Parts of my constituency are similar to the hon. Gentleman’s constituency. Does he agree that the technical and practical problems of introducing a nationwide derogation would need to be looked at very seriously? When those on the Treasury Bench consider the detail, they might find that a nationwide scheme is impossible. Does he therefore agree that we need to consider introducing a scheme in specific communities in specific parts of the country, like the pilot scheme?

[Mr Reid]

Yes, I agree with the hon. Lady. I hope that a stabiliser formula for the whole country can be found and made to work, but I remain sceptical. It is important that the Government consider that idea, but it is also important that no idea is put into practice without careful consideration of all possible negative effects. Any rigid formula could have such unforeseen effects, such as the 4.5p increase that would have resulted in 2009. I am convinced that a rural fuel derogation could be made to work in a specific area. I have no argument whatever against a stabiliser pilot scheme, but I remain sceptical. It would be great if a stabiliser could be made to work—the Government ought to consider it—but we must be very careful. The way forward is definitely a rural fuel discount.

The Budget is only a few weeks away. It is important that the Chancellor exercises restraint and that he does not increase fuel duty in the Budget, when the fuel price is already so high. However, rather than having a rigid stabiliser formula, which could have unforeseen side effects, it is important that he acts sensibly.

Under the previous Labour Government’s policy in their last Budget—the fuel escalator—the tax on fuel would increase by more than 4p a litre in April. I hope that the Government do not follow Labour’s policy. That would be grim news for a rural economy that is already struggling under the burden of a high fuel price. I urge the Chancellor to heed the warnings he has received on the impact that another 4p per litre increase would have, and I plead with him to cancel the proposed fuel duty increase in the Budget.