Royal Mail and the Universal Service Obligation

Kate Osborne Excerpts

Thursday 12th January 2023 Westminster Hall

[Kate Osborne (Jarrow) (Lab)]

I beg to move,

That this House has considered Royal Mail and the future of the Universal Service Obligation.

It is a pleasure to serve under your chairmanship, Ms Ali. The future of Royal Mail and the universal service obligation is important to us all. It is important for our communities and businesses, and for our economy. For many in rural communities, particularly the elderly, our posties are a lifeline. That was never more evident than during the pandemic. In November 2022, Royal Mail wrote to Ministers setting out its arguments for reducing the postal service to a five-day-a-week service, despite Ministers confirming that they did not want that to happen.

In Tuesday’s debate on the future of postal services, I was pleased to hear from the Minister that the Government remain committed to securing a sustainable universal service for users, and that there are currently no plans to change the minimum requirements of the service. Unfortunately, Royal Mail does not seem to be listening. Even after the Minister’s response on Tuesday, it wrote to me continuing to push for a reduction in the universal service obligation. Royal Mail took £758 million in profit last year, yet it is still pushing to reduce our services and to erode workers’ pay and conditions, and is threatening to cut thousands of jobs. The universal service obligation sets out that Royal Mail must provide a six-day-a-week, one-price-goes-anywhere postal service to the 32 million UK addresses. That obligation is overseen and monitored by Ofcom. I have spent this week meeting people from professional publishing agencies, business, industry and trade unions, as well as others, are all whom are keen to protect the future of Royal Mail. I have met representatives from Royal Mail, and my office met them again this week.

Royal Mail has been a huge part of my life. Before being elected the MP for Jarrow, I was employed by Royal Mail for 25 years. I joined the Communication Workers Union—or the Union of Communication Workers, as it was then known—on the very first day. I saw numerous chief executive officers come and go—a bit like Ministers—and take millions in pay-offs on their way out. We have had Adam Crozier, Moya Greene, Rico Back and Simon Thompson over the last 20-odd years. In 2010, Moya Greene was the highest-paid civil servant in the UK. Just three years later, she oversaw the privatisation of Royal Mail and then disappeared with a pay-off worth over £3 million and a pocket full of shares. Less than two years later, Rico Back left with around £3 million of shares. Now we have Simon Thompson, a CEO with no experience of logistics, who is hell-bent on inflaming industrial relations and destroying Royal Mail and our USO.

During the pandemic, posties were relied on to deliver covid tests, as well as deal with the huge increase in parcels. That led to an influx of cash that would not, of course, continue post-covid. Instead of using that extra money to transition back to a business-as-usual level of revenue, Thompson awarded £567 million to shareholders. Thompson is insisting on a confrontational row with Royal Mail employees and their trade unions, and is deliberately mismanaging our postal services to undermine them and to put pressure on Ministers to reduce the USO. The Government could help to solve the dispute by reiterating to Royal Mail that it should not be going down the gig economy path to a parcel service, and that the USO will not be reduced. Will the Minister commit to that?

During my years at Royal Mail as a union negotiator, I had many meetings with CEOs and management regarding pensions, pay, terms and conditions and working practices. We agreed changes to deal with new challenges, which were numerous. The workers know much more about the detail of everyday working practices than most, if not all, of the senior management teams. Workers and management negotiated, and we made changes together. 

Instead of negotiating, Simon Thompson is attacking employees on social media, and taking disciplinary action against workers who are taking legitimate action. Rico Back, the former CEO, said that the management and board had “wasted time” and failed to negotiate properly with trade unions, and were on a

“confrontational path, which is not necessary.”

Will the Minister condemn the inflammatory actions of Royal Mail’s senior management team?

Yesterday, Royal Mail wrote to me, disputing that it is destroying the postal service. It said:

“We remain very much committed to the Universal Service.”

The next sentence contradicts that:

“Our request to the Government to move to a five-day letter service, comes from the fact that we want to better meet changing customer needs.”

How can it be fully committed to something that it is desperately trying to change? Royal Mail often cites the fall in letter volumes since privatisation, which the Minister mentioned in Tuesday’s debate; however, the price of first and second-class stamps has risen dramatically. Will the Minister confirm whether the USO is the financial burden that it is being portrayed as?

In response to the shadow Minister for employment rights and protections, my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), the Minister said that he had

“met both Ofcom and Royal Mail management to discuss”

the future of the postal service,

“made it clear to Royal Mail that it needs to make any case for change to Ofcom”,

and

“will fully consider any advice”—[Official Report, 10 January 2023; Vol. 725, c. 222WH.]

given by the regulator. I welcome that commitment, but will the Minister give an assurance that the process will be more thorough than the previous Ofcom review of users’ needs?

Many letters sent in the UK are non-USO mail, but they are delivered jointly over the same network. That mail includes important, time-sensitive information, such as letters from hospitals, His Majesty’s Revenue and Customs, communications from the police and legal documents, as well as current affairs magazines. The 2020 Ofcom review of users’ needs—often cited by Royal Mail, which claims the review found that five-day-per-week deliveries would meet residential and small and medium-sized enterprise user needs—did not properly account for large business users and non-USO mail. It is not a reliable review. It is certainly does not do a good enough job of showing the impact that the removal of Saturday deliveries would have.

The Royal Mail is a beloved national institution, loved by the public and relied on by many. It can have a vibrant future, but only if Ministers act now to stop the Royal Mail management team destroying the service. I hope that the Minister will respond to the important questions that I have raised, and that will be raised by others in the debate, and will commit to the retention of the USO’s six-day-a-week delivery service.

[Several hon. Members rose—]

--- Later in debate ---

[Kate Osborne]

I thank all hon. and right hon. Members for speaking in the debate. I am not surprised to hear the Minister say that he will be voting for the legislation on Monday; I will certainly not be voting in favour of it, because it is a fundamental attack on workers and human rights. I thank the Minister for his responses, and I mostly want to thank all postal workers—my old colleagues—for continuing to deliver, literally, in the face of the vile attacks that they are receiving from the management of Royal Mail.

As the Minister has heard, there are so many different areas in which Royal Mail’s senior management is failing. We need an inquiry into the gross mismanagement of Royal Mail; that is something that I have asked for before, and I ask for it again. The millions of pounds given to shareholders and CEOs in profit should be put back into the business, and Royal Mail—a service that we all rely on—should be renationalised. Royal Mail needs to resolve the dispute with the CWU, and I send solidarity to all members and workers—I know that they are in talks this week. It must row back from threatening to sack tens of thousands of workers; these job losses will impact on not only those losing their jobs but the workers who are left behind to pick up the slack and, of course, it will impact on us all as users of Royal Mail.

Motion lapsed (Standing Order No. 10(6)).