Postal Services Bill

Lord Touhig Excerpts

Monday 14th March 2011 Lords Chamber

[Lord Low of Dalston]

My Lords, Amendment 16 is designed to strengthen the rights of users of postal services. As has been seen in the past, with privatisation and a greater focus on commercial imperatives, it is all too easy for the most vulnerable users of services to be put at the greatest disadvantage. Let us take the energy sector. The most expensive way to buy gas and electricity is with a prepayment meter, yet it is the poorest in society who are forced to buy them in this way as they do not have access to direct debit facilities. There is a real risk that certain groups of service users who rely on Royal Mail more than others will similarly be vulnerable to change. I believe it is important that Parliament sends a strong message that it expects the services provided to vulnerable groups to be maintained.

To take one example close to home—and I declare my own interest here—on the one hand, the Bill legislates to protect specialist services for blind people, but on the other, it requires the proposed postal services regulator, Ofcom, to review that service and all the other services contained within the universal postal service within 18 months of the Bill coming into force. The Minister was very clear at Second Reading that this review is not intended to lead to a reduction in the minimum requirements of the universal postal service. However, in discharging its primary duty to secure provision of the universal postal service, Ofcom must give specific consideration to the financial viability and efficiency of the service. The review will decide whether the current universal service obligations work in the interests of users. I believe they do, but I do not think a regulator with a remit to further competition in postal services necessarily would.

A similar concern applies to the concept of the single tariff: a single price for a stamp. At the moment, Royal Mail is obliged to offer customers the same letter service without discriminating on price, regardless of the distance between the point of posting and the point of delivery. This works in favour of people who live in rural areas, but once the accountants and management consultants are let loose, questions about why users in urban areas should go on subsidising an often loss-making postal service in rural areas are bound to arise. Why not reduce the cost of a stamp in the cities and make those in the countryside pay a price that better reflects the cost of providing the service?

Small businesses are equally vulnerable to changes in the price of letters and packets. The Federation of Small Businesses has expressed concern about the Bill. It is worried—and I can understand its fears—that a more aggressive pricing regime will harm small businesses. The collection and delivery of postal packets forms part of the universal postal service. Such a service is vital for small enterprises. With economists in charge, these businesses could well be charged a price for the service they receive based, at least in part, on their location. Small businesses in rural areas are perhaps the most vulnerable to the more commercial spirit that will inevitably come with privatisation.

Older people, pensioners, who are a growing section of the community, again rely on the postal service more than younger users. With the advent of electronic communications, there has been a seismic shift away from writing and sending letters in the conventional way, but many older people are marginalised when it comes to such technologies. They are more reliant on the traditional postal service as a means of communication. It is important that a privatised Royal Mail does not operate in such a way as to disadvantage older users of postal services.

I am not against this Bill. I simply want to strengthen it so as to protect the postal service for those who live in a rural area, who run a small business that is reliant on Royal Mail, who receive specialist services for blind people or who are elderly. The object of this amendment is to restrict the ability of Royal Mail and the postal services regulator to use their new-found commercial freedom and a more competitive environment slowly to chip away at those services, to raise their costs disproportionately or reduce their frequency.

The Minister will no doubt say that it is absolutely the intention of the Government to protect these services. I do not question her intention for a moment. But once the Bill receives Royal Assent, the Minister hands over responsibility for the maintenance of these services to the regulator. An obligation on the Secretary of State to consult in the way I have suggested with this amendment and to report to Parliament strengthens the hand of the consumer and helps to build into the legislation another safeguard for service users. I beg to move.

[Lord Touhig]

In supporting the amendment tabled by the noble Lord, Lord Low, I shall speak to my Amendment 16A. The Bill does little to ensure accountability to the devolved Administrations in the United Kingdom. Yet we must recognise the vital services provided by the Royal Mail to the whole of Great Britain and Northern Ireland. It is part of our country’s infrastructure, supporting economic and social interaction across all the nations and regions, and we should retain universality of service across the whole country.

The needs of service users varies depending on where they live, with those in rural and hard-to-reach areas particularly dependent on postal services and vulnerable to changes that may follow from the introduction of the Postal Services Bill. For that reason, I believe that the devolved Administrations must be kept informed about the developments in postal services. Specific analysis should be undertaken and the likely impact of changes to postal services in Scotland, Wales and Northern Ireland should be properly considered. Moreover, specific consideration should be given to those with particular needs, such as pensioners and people with disabilities, a point eloquently argued by the noble Lord, Lord Low of Dalston, a few minutes ago.

The devolved Administrations already take a keen interest in postal affairs and recognise their importance. Economic development has been important to the Welsh Assembly and the Scottish Executive. They support the needs of small business in rural areas and both Administrations have made significant investments in their post office networks over these past years. In my view, it is unlikely that any of the devolved Administrations would want to see the break-up of the universal service. Providing detailed reports to the devolved Administrations would give them the opportunity to comment on particular implications of changes and will be important to improving oversight and accountability.

The future of Post Office Ltd and the continued provision of the universal service are a particular concern. Scotland, Wales and Northern Ireland contain large rural communities that would be disproportionately affected by any further decline in the post office network. The post office network is struggling. More than 150 post offices were closed as long-term temporary closures in 2010 alone and more than 900 post offices are up for sale. Sub-postmasters are struggling to make a living from their post offices. I fear that this Bill will potentially make things more difficult for them if we do not seek to improve it.

Breaking the link between Post Office Ltd and Royal Mail puts one-third of the Post Office’s revenue at risk. If the two cease to be part of the same company, there will be no guarantee that Royal Mail continues to sell its products through the Post Office. The Government’s proposals for the redesign of the post office network will see 4,000 “main” post offices created and the remaining post offices becoming “essentials” and “locals”. Essentials and locals will not provide the full range of post office services and some 2,000 sub-post offices would be transferred into essential or local category by 2014. They will offer only a proportion of the widespread post office services now available. I think that all remaining non-main post offices are likely to follow soon after.

--- Later in debate ---

[Lord Razzall]

My Lords, I do not want to intrude in the debate on this amendment, but unfortunately the noble Lords, Lord Touhig and Lord Low of Dalston, were not in their places when I made this point earlier. If we are to preserve the reputation of this House for knowing the facts and having expertise, we really must not say things that are not true. As I said earlier, the issue for the Royal Mail is not about whether it can deliver to rural Wales or rural Scotland. As I said earlier, it is more expensive for the Royal Mail to deliver to Norwood Green or Hampstead than to maintain the service to the Orkneys and Shetland.

If we are to debate this issue, the concern should not be about whether or not the universal service can be maintained to outer Wales or northern Scotland. It is about whether we can maintain it to Hampstead or Norwood Green. If we are to debate this issue, we should not fall into the trap of thinking that this is about how we preserve the service to the outer islands or parts of the UK. All the other issues that noble Lords have raised are worthy of debate, but if we are to be the serious House that knows the facts, we should take that on board.

[Lord Touhig]

Did the noble Lord suggest that the noble Lord, Lord Low, and I were somehow misleading the Committee by not telling the truth in this matter? I take exception to that. I am sorry that he has this metropolitan view. I know that his party is not that strong in Wales and will probably be wiped out in the coming elections, but there is no need to dismiss Wales as if it is at the other side of the moon.

[Lord Razzall]

No, I actually said that the noble Lord, instead of making party-political, snide comments, should actually learn the facts. The facts are that the Royal Mail at the moment is seriously under pressure delivering to Norwood Green and Hampstead, not to outer Wales, which is easy for Royal Mail to deliver to. That is the truth and he cannot deny it just because he wants to make Labour party-political points.

--- Later in debate ---

[Lord Razzall]

My Lords, I normally try to avoid rising before the Minister’s response. Although the noble Lord does not know my name, I think that he is the noble Lord, Lord McAvoy. One of the conventions in this House is that if you are going to be rude to somebody, as he was, you ought to know their name. I am Lord Razzall.

I am terribly sorry that the noble Lord did not know my name. He called me unctuous. Yes, I probably am quite unctuous, because I am quite polite to various people on his Benches. The only point that I was trying to make, which cannot be denied, is that the Royal Mail cost figures demonstrate easy-to-provide services to northern Scotland and rural Wales. That was the only point that I was making. Why that produced a diatribe against the Liberal Democrats I do not know, but I suppose that that is what he has introduced to this House. I am Lord Razzall, by the way, if he wants to name me.

[Lord Touhig]

The noble Lord suggested that people were not telling the truth. I do not know where he has been this evening—perhaps he has had a very good dinner. However, it is quite improper without any evidence to suggest that either I or the noble Lord, Lord Low—he followed both of us—were not telling the truth.

[Lord Empey]

My Lords, I do not wish to get involved in this particular exchange, but I declare an interest as a Member of the Northern Ireland Assembly.

The point that the noble Lord, Lord McAvoy, makes is valid. Like it or not, people who are furthest away from the centre in any country feel—rightly or wrongly—that whenever there is an economic contraction it comes from the outer areas and goes to the centre. That is not exactly a surprise. I hope that in her response the Minister will be able to reassure people in the regions.

I took the opportunity to make my maiden speech on this Bill at an earlier stage because I regard this service as a fundamental piece of national infrastructure. It is just as important to people as railways, air links, or whatever. It is not only a vital service for individuals. We must remember that we spend large amounts of money pushing rural development. That has not only a European but a national dimension; we spend a lot of money and time trying to develop rural businesses. One of the principal mechanisms that they have to distribute their products is the Royal Mail.

I fully understand that people feel the risk, whenever there is a contracting situation, that people at the outer edges will be disadvantaged. I hope that the Minister will be able to reassure us. I have no difficulty with the regional Administrations being consulted; that makes sense. We are trying to have a balance: not to impose a whole lot of conditions on the sale that make it less likely to happen at a good price for the taxpayer but at the same time to ensure that people in less central areas—let us face it, that applies to areas of England as well as to Scotland and Wales—feel that their interests are being taken seriously into account at the core. I hope that the Minister can reassure the House that, when it comes to consultation on the matter, those interests will be taken firmly into account.