Jo Swinson
Main Page: Jo Swinson (Liberal Democrat - East Dunbartonshire)(10 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I congratulate the hon. Members for North Ayrshire and Arran (Katy Clark) and for Angus (Mr Weir) on securing this debate on the future of postal services in rural areas, for which the Backbench Business Committee has found time. The hon. Lady mentioned in her opening remarks that there have been particularly strong representations on the issue from parts of Scotland. It is lovely to return to these issues, as just a few weeks ago we had a good debate in Westminster Hall on the future of postal services, particularly in Scotland. I welcome the opportunity to respond to some of the issues raised this afternoon.
I will try to address as many as possible of the points made during the debate, focusing especially, as has much of the debate, on Royal Mail and the universal service, particularly in the light of the forthcoming privatisation. It is important to scotch the myths that have grown up during some of the speeches in this debate. I will also make sure that my remarks focus on the future of the Post Office because postal services relate not just to the delivery of letters and parcels, but to the wide range of postal services provided through the post office network.
Huw Irranca-Davies
I thank the hon. Lady for giving way so early. In scotching one of those myths, could she deal at the outset with the issue of the Liberal Democrat manifesto, which stated:
“49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government.”
Is that an accurate reading of the manifesto, and is that what the Government are proposing?
Jo Swinson
The hon. Gentleman is obviously an avid reader of the Liberal Democrat manifesto, perhaps unlike his hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann)—
Jo Swinson
If the hon. Member for East Kilbride, Strathaven and Lesmahagow will let me finish the sentence first, he may be fortunate and I may be able to give way to him.
Indeed, we recognised in the Liberal Democrat manifesto that Royal Mail would need an injection of private capital. Clearly, in the current plans at least 10% is guaranteed as worker shares. That is right and, importantly, it is set down in the Postal Services Act 2011. Obviously, the shape and format of the present proposals is not a carbon copy of what was in the manifesto. We are three years on from then and we are working within a coalition Government.
Mr McCann
May I remind the Minister that the Liberal Democrat manifesto committed also to full public ownership of the post office network? Can she explain how that sits with selling off the Crown post office network through franchising and with the Government’s plans to sell off most of Royal Mail, whereas the manifesto specified only 49%?
Jo Swinson
It is very important to make the point that the post office network remains in public hands. We need to get it on to a sustainable footing. I should have thought the hon. Gentleman welcomed that. The opportunity to mutualise the post office network ought to be welcomed not just on the Liberal Democrat and Conservative Benches, but on the Labour Benches, as it will ensure that ownership of such an organisation is more widely available to stakeholders within it, including not just sub-postmasters, but customers and others. That mutualisation process is an important part of the future of the Post Office.
The hon. Gentleman mentions the Crown network. In our post office network of almost 12,000 branches, the vast majority of which, as has been outlined eloquently by many speakers in the debate today, are small sub-post offices. About 370 are Crown post offices in the busiest high streets and town centres. For those 373 offices to be losing more than £40 million a year, as they were when this Government came into office, is unsustainable. I hope the hon. Gentleman will recognise, therefore, that getting the Crown network as well as the rest of the post office network on to a sustainable footing is essential to the future success of the Post Office.
Jo Swinson
I am making the point clearly that the Government remain the key shareholder in Post Office Ltd and therefore accept that the Post Office is in public hands. I concede that we are suggesting that when it becomes financially sustainable it would be a positive future if the post office network could be mutualised, which would mean it would not remain in Government hands, but I would have thought that that was something the hon. Gentleman welcomed.
With regard to the motion, I understand that with Back-Bench business we often have good debates on various issues and that votes are not common. I agree with much of the motion, but hope to be able to reassure the House on a couple of points. In relation to the claim that
“the impending privatisation of Royal Mail will place a question mark over its willingness to maintain what may be loss-making services”
and the reference to providing
“more concrete, long-term protections for postal services in rural areas”,
I hope to reassure the House that the Government have long-term, concrete protections in place for postal services, and indeed that the Royal Mail will have to continue to provide the universal service. Many Members have raised that as a concern.
In setting out the background to how we got where we are today, it is important to remember that the Government are implementing a package of key reforms recommended in Richard Hooper’s independent review, which was first commissioned in 2008 by the previous Government. He set out three clear recommendations that needed to be implemented as a package if the Government wanted to secure the future of the universal postal service: that they should tackle Royal Mail’s historic pension deficit; that responsibility for postal regulation should transfer from Postcomm to Ofcom; and that Royal Mail should have access to private capital to support its ongoing modernisation. The previous Government accepted those recommendations in full, but their Bill was subsequently dropped owing to market conditions.
The Postal Services Act 2011, which was passed a little over two years ago, enables the Government to implement the full package of recommendations. As the House will be aware, we have now relieved Royal Mail of its historic pension deficit—I am glad that the hon. Member for North Ayrshire and Arran was able to welcome that move—and established a new regulatory regime under Ofcom, with stronger powers to protect the universal service. The third and final recommendation, to give Royal Mail future access to private capital, is now being progressed through the planned sale of shares in the company. That is a crucial element of the Hooper package. It will be positive for Royal Mail as a business, enabling it to respond to the changing needs and demands of postal users now and in the future. Most important, it will help secure a sustainable universal postal service in the UK.
Many Members have rightly mentioned that the universal postal service is crucial to the UK’s economy and social fabric, particularly in rural communities, and the coalition Government recognise that. That is why the overarching objective of our postal market reforms is to secure the future provision of the universal postal service, the six-days-a-week service at uniform, affordable prices for everyone in the United Kingdom, regardless of whether they live in urban, suburban or rural communities.
Various references have been made to whether that is a sufficient service or a minimum one, so I thought that it would be helpful to state what it actually means and what is set down in the legislation, which will continue to apply in the event of Royal Mail being sold: six-days-a-week delivery to the home or premises of every individual in the UK; six-days-a-week collection from every access point—post boxes and post offices—in the UK; a uniform, affordable tariff across the UK; the provision of a registered items service at uniform tariff; the provision of an insured items service at uniform tariff; free postage for the blind and partially sighted; and a free service of conveying qualifying legislative petitions. That is all set out in legislation, so regardless of ownership Royal Mail will continue to provide that universal service. The ownership change does not change that; only Parliament can change those requirements.
Katy Clark
Does the hon. Lady not accept that what Members have been saying today is that the commercial pressures will be on both Royal Mail and the Government to reduce those universal service obligations if privatisation goes ahead?
Jo Swinson
It is up to Parliament to defend that universal service. That lies in Parliament’s power. We have protections in place through the 2011 Act because the Government recognised that that is an important service. [Interruption.] Members heckle from a sedentary position, but I highlight that it was the coalition Government who enshrined the universal service in legislation, not the previous Government. I think that it is incumbent on all Members of Parliament to ensure that we protect that, because it can be changed only if Members of Parliament decide to do so. I can certainly give an undertaking that I have no desire to do so. Perhaps Opposition Members are worried that they might feel under too much pressure and cave in; that is all I can imagine must be the cause of the concerns they are raising.
Mr Weir
The Minister is ignoring the point that has been made consistently: the universal service might become endangered owing to privatisation and increased competition. She can stand there and say that it is enshrined in legislation, but if Royal Mail can no longer deliver, there is very little that Parliament can do to stop it collapsing; there are only Ofcom’s various processes, which, as I explained in my speech, are unlikely to work.
Jo Swinson
Of course, Ofcom, as the regulator, has a range of tools. The nub of the hon. Gentleman’s point—there is a sensible point that he is making—is that it is vital that Royal Mail can continue to deliver as a successful company, and one of the challenges it currently faces is its lack of ability to invest. The postal service market it changing rapidly—parcel delivery, in particular, is very much a growth area, as other hon. Member have outlined—and we need to ensure that the Post Office has the capacity to react to changing circumstances. That is why it needs to be able to access private capital and why that is a way of protecting the universal service obligation, rather than the contrary.
Time is short and I would like to ensure that I mention post office matters, but on the issue of profitability and Royal Mail, which various hon. Members raised, I will put into context the challenges it faces. Competitors are investing significantly in their postal service markets and in improving their technology to deal with that. For example, Deutsche Post has invested more than €700 million over the past two years alone in its mail facilities and infrastructure and is focusing on another €750 million of investment by 2014. That is the type of investment that Royal Mail, in its market, ought to be looking at and that others in similar markets are looking at. That is why accessing private capital will be so important.
The debate has also covered the post office network. I think it is important to point out clearly that Post Office Ltd is not for sale; as of 2012 it is formally separate from the Royal Mail Group and remains wholly owned by the Government. Issues of Government contracts have been raised. I point out to hon. Members that Post Office Ltd has won 10 of the 10 Government contracts it has bid for since 2010, and it has done so on merit.
The hon. Member for South Down (Ms Ritchie) talked about the important opportunity of high street banking being provided through post offices, and I absolutely agree. It is pleasing that 95% of high street bank accounts can now be accessed through local post offices. That network is very important, particularly in areas where many of the banks have closed their branches. I encourage hon. Members to bring that to the attention of constituents, as they might not be aware of it. Also, the Post Office is currently undertaking a current account pilot in the east of England, so current accounts can be available from the Post Office as a financial services provider across the rest of the country.
Lady Hermon
The Minister is very kind to allow me to intervene when she has only a few minutes left. I must say that, despite the assurances she has given in the Chamber this evening, there will remain a nervousness and anxiety right across Northern Ireland about the Government’s future intentions in relation to both Royal Mail and postal services. Will she kindly give a commitment that a senior member of the Department will come to Northern Ireland, visit rural and urban post offices and meet a representative group of postmasters and politicians?
Jo Swinson
I will certainly take the hon. Lady’s representation on board. I cannot give a commitment on when that can happen, but I thank her for the invitation.
The 2010 spending review allocated a funding package of £1.34 billion to the post office network up to 2015, which is providing significant investment in the shape of network and Crown transformation. The new Post Office Local models are proving very successful, as indeed are the Post Office Main models. More than 1,750 sub-postmasters have signed contracts to convert their branches and nearly 1,000 are open—the 1,000th is expected to open this week. These new offices are reporting high levels of customer satisfaction; many Members will be aware of that because more than 400 have at least one in their constituencies.
I take on board the point made by my hon. Friend the Member for North Cornwall (Dan Rogerson) about local branches. Where sub-postmasters wish to sell a going concern, it will be assessed on a case-by-case basis, and if it is not viable for one of the new models it can be sold under the existing type of contract.
I welcome this debate, which has featured contributions from all parts of the House and from all four nations. Postal services are indeed vital in rural areas, which is why the coalition Government are investing £1.34 billion to improve and modernise the post office network and putting Royal Mail on a sustainable future footing.