Alan Reid
Main Page: Alan Reid (Liberal Democrat - Argyll and Bute)Postal Services Bill
Alan Reid Excerpts(13 years, 4 months ago)
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Mr Alan Reid (Argyll and Bute) (LD)
I agree that much more Government and local government work has to go to the Post Office, but can the hon. Gentleman tell us what his Government in Scotland are doing to give more Scottish Government work to the Post Office?
Mr Weir
The Government in Scotland will have discussions with the Post Office, in the same way as the Government here, but that will depend on what happens. I was making the point that, although I welcome the development that I have described—I could equally well ask the hon. Gentleman what his colleagues in local government are doing about it—I have concerns about what will be produced, albeit not because I distrust the Government’s intentions. The Minister held a meeting before the Bill came forward and he explained what he was trying to do. I support that, but there are practical difficulties.
I made the point that, in my area of Angus, the local authority has established local access offices in most boroughs to offer a front-office service for all local authority services. In Arbroath, Brechin, Kirriemuir, Forfar and Montrose, those offices are all situated around 100 yards at most from a post office. In the case of Kirriemuir, Forfar and Montrose, those are the only post offices in the borough. However, there are two difficulties with that. It is difficult to see how the local authority will have a greater ability to deliver services through the post offices in those borough areas, especially where there is only one post office. Also, because of what happened in the last round of closures—when many of our stand-alone larger post offices were closed, being moved into sweet shops, paper shops and other premises, as the hon. Member for Linlithgow and East Falkirk said—those post offices do not have the space to deliver greater services and nor, in many cases, do they have the expertise.
In my constituency, there are already problems with some of those post offices because of lengthening queues and an inability to deliver the services already provided by the Post Office. It is difficult to see how those post offices will cope with an influx of other services from the UK Government, the Scottish Government, local authorities or anybody else. That is a practical difficulty, and I have not heard anyone in the Government come up with a solution to it. What is proposed may be a possibility in rural areas, but in their programme for post offices, the Government are talking about 4,000 main post offices that will provide a full range of services—incidentally, that is the number of post offices that are currently viable, which is slightly worrying. However, on top of that is what the Government call the post office local model. The idea of the local model is to put post offices into smaller businesses to deliver—the Government say—longer office hours and greater help for local people.
That is fine in theory, but the post office local model does not provide the full range of post office services. I suggest that the bulk of our post offices will be unable to provide the full range of services in smaller communities if the Government, local government, Scottish Government and whoever else get their act together and produce such services in the first instance. That practical difficulty needs to be tackled before things can proceed. That is another reason why a long-term inter-business agreement is a good idea. We have to look at not only the business, but the structure of the post office network, so that it can deliver the new business that is being promised to it.
However, the most important point is what the relationship will be between a privatised Royal Mail and a Government-owned Post Office Ltd, where the Government are determined to push down the costs to the taxpayer of continuing to support Post Office Ltd. As the hon. Member for Colchester rightly said, Royal Mail will inevitably try to push down its costs in delivering a mail service. When asked about that in the evidence session, Paula Vennells of Post Office Ltd said:
“In terms of what is in the Bill, what is important for Post Office is that we maintain our strong relationship with the Royal Mail Group.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 5, Q6.]
That is fine and well, but we all know that at present Post Office Ltd gets fully one third of its business through the inter-business agreement. The Minister will, I am sure, point to the statement made during the evidence session by Royal Mail. Moya Greene, the chief executive, said:
“For me it is unthinkable that we would not have a very long-term relationship with the Post Office.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 18, Q42.]
Again, that is all very well, but I would suggest that the relationship between a fully privatised Royal Mail and a Government-owned or mutual Post Office Ltd would be very different from that between two companies that are both members of Royal Mail Group, as they are at present. In passing, one might also wonder how long the present management will remain in place, given what has happened with management previously.
Mr Davidson
The Committee unanimously welcomed the points that the Minister was making about the access criteria and the fact that he was guaranteeing, as I understood it, 11,500 post offices, but surely he will accept that his guarantee does not guarantee the same 11,500. It does not guarantee them in the same locations. In some areas, particularly rural areas, where there are small post offices, the access criteria are, thankfully, better met. One of those could easily close, one could open somewhere else, such as London, and both sets of criteria would still be met.
If the Minister cannot give us a commitment today, perhaps he will take that away and consider whether something could be done at a later stage in the passage of the Bill. I think that he accepts that this is a genuine anxiety and that we are here to help him. We are identifying gaps in provision and trying to strengthen the Bill.
Mr Reid
I share the hon. Gentleman’s anxieties. However, as we discussed in Committee, the problem was framing legislation to cover all eventualities. He correctly pointed out that the previous Government’s access criteria, which continue under the present Government, could be satisfied with 7,500 post offices. The only way to solve the problem would be to pass legislation that no post office could ever close, but it was agreed that that was not a practical solution. No amendment has been tabled today that offers a practical solution. The problem is putting such a solution into legislation. We have to accept the assurances of the Government. That is the only way in which we can proceed, because of the impracticality of legislating.
Mr Davidson
The hon. Gentleman serves with me on the Scottish Affairs Committee. As he will remember, we were not recommending that there should be a change to the legislation on this point. Unanimously we agreed that putting it in legislation would be too difficult, and we understood the Minister’s difficulty in identifying a policy that would encompass these points. But we wanted to raise the matter again because it was raised with us on a number of occasions by people who could see how the Government’s commitment could, in effect, continue to be met while there was none the less a deterioration in service.
The Minister has made the point that the contractors are independent. If somebody leaves a post office, somebody else will have to decide whether they want to take that on. After the next election, there may well be a number of Liberal Democrats looking for new jobs, and they may consider whether to become sub-postmasters. So, I am actually thinking of the Minister as much as anything else. He might wish to become a sub-postmaster in those circumstances, and, to return to a previous point, I am sure that he would much prefer a 10-year, or what might then be a five-year, guarantee with Royal Mail to one of only a few weeks. Again, it would be for his own good.
Mr Weir
Indeed. I would put it a different way. There is no effective sanction available to Ofcom to deal with something after it has happened to the detriment of the USO. It is only able to impose conditions or a fine, and fining a shell company is no good. Ofcom cannot prevent the sale; it can react only if what is happening turns out to undermine the ability to provide the USO. As I said, if the company has already sold off all its profitable parts leaving only a shell, what is the point of a large fine that it is not in a position to pay?
The Bill must provide the power to allow Ofcom to take action before a sale is proceeded with and to ensure that the privatised company cannot dispose of all profitable assets to avoid the duty of the USO. I am sure that the Minister will say that that is a burdensome hurdle, but it is not. It is not the first sale that would be required to clear a regulatory hurdle before going ahead—indeed, many deals are done subject to regulatory approval. I am sure that the Secretary of State for Business, Innovation and Skills is only too well aware that the BSkyB case had to go to the European Commission to determine whether it would be blocked at that level before the remaining shares could be put forward.
If the new clause was passed, Ofcom could look at the proposal and ensure that the assets of the company remained sufficient to meet the needs of its social obligation. In most cases, that would be a relatively quick process. However, it would give the reassurance that once there is a privatisation—if that disaster should happen—there would at least be something in place to ensure that the universal service continues in all circumstances. I ask hon. Members to support the new clause to give that extra protection.
Time is short, but I would like to mention briefly the other amendments in my name. Amendment 11 would add to the Bill a reference to
“the needs of small business users in rural and remote areas”
and make it a specific matter to which Ofcom must give concern in considering the USO. The reason is simple. We need to ensure that the universal service obligation is secured for small businesses in rural areas if we are to have any chance of creating new employment opportunities in our rural communities. On Second Reading, Scottish National party Members tabled an amendment supported by Plaid Cymru and all the parties of Northern Ireland because of our huge concern that the Bill would have profound implications for that ability to continue the USO.
It is vital to bear in mind that not only residential but small business customers rely on Royal Mail. They do not have any real options and cannot access the deals that may be on offer from alternative carriers. In the parcels market, if one can get anyone to deliver to large parts of Scotland at all, it is only at a vastly increased price. Not so long ago, the then management of Royal Mail proposed a zonal pricing structure that would have created different prices for different areas of the United Kingdom. In the recent spate of bad weather in Scotland, many of the alternative carriers simply gave up, and several publicly stated that they would not attempt deliveries in Scotland at all.
Throughout this time, Royal Mail did its best to ensure that the mail got through, with postal workers struggling in very difficult conditions to ensure that the mail was delivered. Although there were delays and although, for obvious reasons, some areas could not get mail, most of the mail got through. We should congratulate Royal Mail and its workers on doing that. It shows the difference between a dedicated public company service and the privatised services that operate elsewhere. Amendment 11, allied with the others in the group, is simply an attempt to ensure that if the disaster of privatisation befalls Royal Mail, as much as possible is done to ensure that the USO is watertight and that the interests of all users are adequately protected.
Amendments 12 and 13 are linked, in that the purpose of both is to ensure that the universal service obligation for postal packets is a six-day service.
Mr Reid
The hon. Gentleman has a point. Although the USO for parcels is currently only five days, and the Bill does not change that, I hope that the Minister will consider increasing the USO to six days for parcels. He has improved the USO in many ways in the Bill, but I ask him to take this away and look at it again, because I am concerned that if we do not have a six-days-a-week USO for parcels, Saturday parcel deliveries in the highlands and islands will end.
Mr Weir
The hon. Gentleman is perfectly right. I hope that he will follow up that strong support for the proposal by coming through the Lobby and voting for it in order to send an additional message to his Minister.
As the Bill stands, we have a six-day service for letters but only a five-day service for postal packets. I am at a complete loss as to the logic behind the differences between the two. One thing that came through loud and clear from Richard Hooper’s report, on which the Government have relied, is that the market for letters is declining substantially. The bulk of private letters are now being sent around Christmas, and they will mostly be Christmas cards. I suspect that I am not the only one who has noticed that the rise of the e-card is biting even into this market, with fewer cards being sent through the post, or perhaps it is just that I have fewer friends this year—I do not know. In any event, the one area where there is real scope for building the business is what we are now told we should call e-fulfilment—in effect, the delivery of orders made over the internet. This is a two-way process. In my constituency, for example, there are businesses in rural areas who sell over the internet and send out packages on a regular basis. They rely on the universal service obligation to ensure that they have access to the postal service at a reasonable cost and that allows them to operate at a reasonable cost.
Interestingly, in research on the business market carried out by Postcomm, more than half the businesses surveyed were of the opinion that they will use the internet more in future, but the vast majority—93%—believe that they will always need to send some things by post. Half of businesses expect more customers to order products online in future, indicating a belief that the market will grow further. Digging down into the figures, it appears that of those who spend between £100 and £500 a month on mail—basically small businesses—72% have either stayed at the same level of usage of Royal Mail or have increased it in the past year.
That is the one growth area within Royal Mail, and not having the universal service obligation cover it in the same way as in the letters market does not appear to make any great sense. Again, I point out that if we are to grow private businesses in rural areas, we need to have the infrastructure to allow them to flourish, and that includes a reliable six-days-a-week postal service.
Mr Reid
I am grateful to the hon. Gentleman for giving way again. I reinforce my earlier point that I am concerned that if the USO for parcels is not extended to six days a week, parcels will not be delivered in the highlands and islands on Saturdays. As he said, the delivery of parcels in response to internet selling is such an important growth area that the highlands and islands would miss out if parcels were not delivered on Saturdays.
Mr Weir
I reiterate that the hon. Gentleman may have a chance to vote for that later and to help the Minister make up his mind.
Goods not only go out by post, but are received by post. Raw materials may come in by post. For many constituents, no one is at home during the day from Monday to Friday. I am sure that such people would like packages to be delivered on a Saturday, when they actually might be in and would not have to travel to collect them at the nearest sorting office, wherever that may be after privatisation. If we are serious about increasing business and ensuring that every area of the country has access to a reliable, reasonably priced postal service, it would be daft to exclude from the universal service the one area that has potential for substantial growth.
Finally, amendment 14 would remove Ofcom’s ability to use geographical criteria to suspend the universal service. That has long been a contentious issue, even under the current framework. Households that are difficult to reach can have delivery suspended. The condition in the Bill is far too wide and could result in whole isolated mainland or remote island communities being removed from the universal service. That would be a travesty and lead to a huge increase in costs for such communities. There may always be some individual dwellings where the mail simply cannot be delivered, but those should be looked at on an individual level.
I urge all hon. Members to support the proposals, which all attempt to strengthen the USO and to recognise that the highest priority for the Royal Mail, whether it continues as a publicly owned company, as I hope, or becomes a privatised company, is to deliver to all our citizens.
Mr Reid
As I said in my interventions on the hon. Member for Angus (Mr Weir), I hope that the Minister takes away the proposal in amendments 12 and 13 to extend the universal service obligation for parcels to six days a week. As I said, I am concerned that parcels will not be delivered on Saturdays in the highlands and islands without such an extension. Apart from that one remaining concern, I think that the Minister has done a great job in the Bill to strengthen the USO in many ways, which is so important for the highlands and islands.
Amendment 14 deals with the hon. Gentleman’s concern that the geographical exceptions clause will be used to remove large parts of the highlands and islands from the universal service obligation. I do not share that concern. The wording is the same as that in the Postal Services Act 2000. The regulator, Postcomm, has used that exception only in a small number of cases, such as for islands that do not have a daily ferry service. Obviously, it would be nonsense for Royal Mail to charter a boat to an island to which Caledonian MacBrayne does not have a daily ferry service. The solution is for Caledonian MacBrayne to improve the service so that islands such as Tiree, Coll and Colonsay have a daily ferry service, but it is not for Royal Mail to charter special boats. Postcomm has also introduced exceptions on health and safety grounds, such as dangerous dogs. Under amendment 14, Royal Mail would have to deliver to houses with a dangerous path or animal. The wording in the Bill, which is taken from the 2000 Act, is satisfactory. I questioned Postcomm and Ofcom in the Scottish Affairs Committee and Ofcom gave an assurance that it will maintain Postcomm’s regulatory regime for geographical exceptions. Given those assurances, amendment 14 is not necessary.
Gordon Banks
I wish to speak to amendments 23 to 26, which we have tabled. Amendments 23 and 24 are similar to those tabled in Committee and are intended to ensure that no review of the universal service obligation can take place for at least five years after clause 33 is enacted. I note that the hon. Member for Northampton South (Mr Binley) tabled a similar amendment that was not selected, and I commend him for doing so. I trust that he will be able to support us in our aspirations tonight.
The minimum service requirements laid out in clause 30 are exactly the same as those set out in the Postal Services Act 2000. However, as my hon. Friend the Member for Llanelli (Nia Griffith) said in Committee, clause 33 will allow them to be eroded. The Bill sets in train a range of processes to reduce the universal service obligation, and I imagine that many Members fear that we cannot even be sure to which Secretary of State the powers in clause 33 will fall. Perhaps it will not be the Secretary of State for Business, Innovation and Skills, and who knows, it may even be the Secretary of State for Culture, Media and Sport. Perhaps, if time allows, the Minister will be able to tell us which Secretary of State will inherit those powers if the Bill is passed, and then I will leave it to my hon. Friends to determine whether that is a good thing.
Mr Reid
I point out to the hon. Gentleman that clause 33(7)(a) states that the review of the minimum requirements would be subject to the affirmative procedure, so it would require a vote of both Houses of Parliament. The Secretary of State could not take the decision on his own. Is that not adequate security?
Gordon Banks
No, it is not, and I will come to that if I have time. The Minister will be aware of my office’s deliberations with him on parliamentary scrutiny when the Bill was in Committee, and I will deal with that matter if I can.
We believe that it would be better to relieve both potential contenders of the powers to be granted under clause 33(5). At least the current Secretary of State for Business, Innovation and Skills would then know about that change in advance, and it would have been made through the democracy of Parliament and not by the Prime Minister as punishment.
In a letter to the Public Bill Committee, the Minister mentioned the failsafe of clause 29(5), which is relevant to clause 33. However, that failsafe could work only if one had faith in the actions and intentions of the relevant Secretary of State, and we do not.
Restrictions to ensure that there could not be a review before five years had passed would provide important stability to both the business and customers following privatisation. The universal service obligation is of such immense importance that it will need that period to bed down under a new, private provider. I am afraid that throughout the Committee stage, the Minister was unable to convince my hon. Friends and myself why a review should take place after 18 months. We want a statutory period of five years, during which everyone would know that today’s universal service obligation was in place. We want the consumer to be protected. As it stands, the inter-business agreement could be subject to review after 18 months, when an Ofcom review of the USO could also be ongoing. That would mean turmoil. As the Minister heard in Committee and from some of my hon. Friends today, we have only his best interests at heart. I am trying to save him from that turmoil, and that caused by the Secretary of State.
The Secretary of State told Members on 27 October last year:
“The Bill will maintain the universal postal service at its current levels…I have no intention of downgrading this service.”—[Official Report, 27 October 2010; Vol. 517, c. 360-361.]
That does not square with the Bill’s contents, and the Secretary of State needs to come clean. If he has no intention of downgrading the service, why does he need a review within 18 months? In fact, the Bill is riddled with review opportunities. There are three—in clauses 29, 33 and 42. It is obvious that the Secretary of State’s actions in promoting the Bill do not live up to his words. Maybe, in line with other matters that he has promoted, he does not really support the Bill anyway.
We would argue that the modernisation programme under way in Royal Mail needs to be completed and bedded down before any review of the USO takes place. It is only a few months since Postcomm and Consumer Focus completed a review of customers’ universal service needs, and it is against that backdrop that the Government are proposing the minimum service levels in the Bill. There is therefore no good reason to recommence the review process within 18 months of the Bill being passed.
We do not believe that such a review at this time would be in anyone’s interests other than those of the provider, who may want to downgrade the service for a bigger shareholder return. More than anything, we want to protect the interests of the consumer. I believe that, in principle, the amendments have cross-party support. Whereas our appeals to the Minister and his colleagues in Committee fell on deaf ears, I am a little more hopeful today. Indeed, in accepting our amendments 23 and 24 today, the Minister would be committing himself to recognising the value of the current USO, while also alerting potential bidders to his clarity on the matter—after all, we are always told that that is what business wants these days. Our amendments will offer that.
It would be wrong for a business to purchase Royal Mail with the intention—or should we say the hope?—that a quick review by Ofcom and a stroke of the pen by the Secretary of State, or perhaps by some other Secretary of State, would lead to a better deal. Why do we have such fears? It is because we can see how committed the private sector is to the universal service obligation.
The Minister regaled the Committee on more than one occasion with his international understanding of postal services. I would therefore like to refer him to an article in Holland’s De Telegraaf on 9 June last year, so that he can test his Dutch reading skills, as opposed to his usual double-Dutch Government jargon. In that article, Pieter Kunz—I do hope that I have pronounced that gentleman’s name accurately—who is the managing director of TNT’s European mail networks, said that his company planned to cut 11,000 employees from its Dutch mail operations and wanted to move to a three-day-a-week delivery service. Mr Kunz went on to say that collection and delivery services would be outsourced, and that TNT would become managers of mail. However, the worrying bit about how the private sector sees the USO in the round came when Mr Kunz stated that the universal service obligation was
“a kind of Jurassic Park and we should get rid of it”.
The worry is accentuated by the possibility that TNT could be the successful bidder for a privatised Royal Mail.
Although Mr Kunz might think of the USO in such terms, my constituents and the businesses in my constituency see it as a valued, necessary and fundamental service. We want to prevent any such erosion wherever possible. I wish that we had an opportunity to guarantee the current service levels indefinitely, but I recognise that this is not the Government’s will. However, we want the minimum five-year period to be included in the Bill, I suppose for the very same reasons that Mr Kunz, and perhaps the Minister, do not.
Amendments 23 and 24 would allow the newly privatised Royal Mail to be secure in the current service delivery levels for the next five years without change. As the Bill stands, the first review could come along at any time and have far-reaching effects. I referred earlier to our time in Committee, where my hon. Friend the Member for Kingston upon Hull East (Karl Turner) said that a similar amendment was
“a reasoned amendment that turns on the issue of speed versus proper consideration.”––[Official Report, Postal Services Public Bill Committee, 7 December 2010; c. 592.]
He recognised that such a safeguard would prevent Royal Mail’s new owner or owners from exerting any pressure on Ofcom to re-examine the minimum requirements straight after a sale, as a way of trying to secure bigger returns for shareholders. However, he and other members of the Committee recognised too—I hope that other Members will recognise this today as well—that such a safeguard would also prevent Ofcom from undertaking a hasty review before the full effects of privatisation and modernisation were understood and their impact on the service evaluated.
It is not just those on this side of the House who want to protect the USO in the long term. The Federation of Small Businesses also believes that the USO
“must be protected and services must not diminish”,
stating:
“Any change to the scope of the USO could have a negative impact on small businesses.”
Indeed, FSB members have shown their further concern, in that 82% of small businesses want to keep the single UK-wide pricing structure. Then we have the National Federation of SubPostmasters, which has said that
“communities across the UK depend”—
that is the key word—
“on the six-days-a-week collection and delivery at a uniform and affordable price”.
Indeed, in their recent report, that august group of cross-party and pan-UK parliamentarians known as the Scottish Affairs Committee also expressed alarm about
“the Bill’s requirement for Ofcom to review the minimum requirements for the USO within 18 months. We fear this may be seen as an opportunity to decrease the requirements of the USO.”
Many Opposition Members get fed up with listening to the Government telling the country what they are doing to help small business, when there is precious little sign of such help in the real world. Here is an opportunity for the Government to do just that—help small business, support these amendments and support the Federation of Small Businesses.