Royal Mail and the Universal Service Obligation

Seema Malhotra Excerpts

Thursday 12th January 2023 Westminster Hall

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Ms Ali. I start by congratulating my hon. Friend the Member for Jarrow (Kate Osborne) on securing this important and timely debate. I cannot think of many Members who have had the experience of Royal Mail that she has had. I thank her for her 25 years of service and her relentless advocacy for those who rely on the USO and wider services.

Posties are indeed a lifeline. It is clear from the contributions across the House today that there is a great strength of feeling in all parts of the Chamber. There is a strength of feeling on the importance of the management and delivery from Royal Mail of our USO for communities across our country, and on the need to safeguard the USO, which so many across the country rely on. Notwithstanding the commercial challenges that Royal Mail faces, there is a problem with the management that has come through very clearly in this debate. Complaints are not being effectively dealt with and customers are paying more for less.

I thank the postal workers in my constituency of Feltham and Heston and the CWU, not just in my constituency but around the country—they are represented in the Public Gallery today. Royal Mail is a prized and loved institution. Royal Mail staff are essential workers. Whether it was delivering test and trace kits or being a point of contact for those isolating, they helped to get us through the pandemic. It is Royal Mail’s dedicated workers who deliver the universal service obligation, delivering to every address in the UK, six days a week, at a uniform affordable price.

Almost all of us still rely on letters, and as my hon. Friend the Member for Reading East (Matt Rodda) has said so clearly, the service is much more important for those who are vulnerable. The quality of service also matters. Citizens Advice has been calling out the quality of service in recent years—an issue over which the management of Royal Mail need to be held to account. Royal Mail has failed to hit a single quarterly target for over two years. Letter delays can result in consumer harm, such as missing hospital appointments, fines for missing court dates and weakened credit scores following missed bills.

The pandemic highlighted the importance of having a robust, well-functioning and affordable delivery service that can reach all parts of the country. It also demonstrated the value of postal workers connecting communities and delivering vital services to those in need. That is why Labour is committed to the universal service obligation as the company’s central mission. The next Labour Government will want to ensure that the USO is secure for the future and continues to be provided by Royal Mail in a way that is affordable and accessible to all users, and financially sustainable for the long term. We will also strongly oppose any attempts, whether by the Conservatives in the future or by the leadership of Royal Mail Group, to weaken or abandon the USO.

I am glad to have seen the Minister’s response to a recent written parliamentary question, as well as the debate earlier this week. I will be listening closely to what he says today. As we have heard, Royal Mail has asked the Department for Business, Energy and Industrial Strategy to cut Saturday letter deliveries from the USO. We are extremely concerned about that and about the potential consequences, including for example for businesses with magazine subscriptions where Saturday deliveries form part of the delivery model.

Any industrial challenge needs to be resolved in a way that is pro-business and pro-worker, which is why we will support Royal Mail workers in their efforts to secure the long-term health and future of the service, by supporting mutually agreed changes to modernise the service. We all recognise the challenges that Royal Mail faces—whether it is the rising cost of doing business, much of which is due to the Tories’ mismanagement of the economy and 13 years of failure, or growing competition in the parcel business—but it is wrong to see it as a service that is not changing or modernising, as some people have sought to characterise it. It has changed, and it is changing.

The Labour party will work with Royal Mail and the unions to expand the role of postal workers, adding social value to our communities and introducing innovative products and services to support the levelling up and growth of our local and regional economies. The Labour party stands against the break-up of Royal Mail and will oppose any attempt to turn this vital service into a gig economy employer through a takeover. Labour will review all aspects of the postal sector to ensure that the USO is continued and strengthened, including the delivery of parcels. This includes assessing the options for improving Royal Mail, taking into account the proposals from the CWU.

Let us be in no doubt that we all want to see a successful, long-term future for Royal Mail, in which the Government have to play their part, too. However, decisions by management are rightly under scrutiny, with questions remaining over the decision of International Distributions Services to give out over £400 million in dividends and £167 million in share buybacks last year, despite knowing about the post-pandemic mail traffic forecasts. The company is now seeing a financial loss in the first half of this financial year.

The Secretary of State has yet to respond to the letter from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) in November, which outlined his concerns about recent developments and the increased shareholding in International Distribution Services by Vesa Equity, a company with links to Russia, which the Government have allowed to acquire a controlling stake. The management’s handling of the current industrial dispute is also under question—not just from colleagues today, but from former CEO Rico Back.

It has also been concerning to hear reports of Royal Mail intimidating striking workers. If that is correct, even in a small number of cases, it is absolutely unacceptable. I ask the Minister to put on the record his and the Government’s condemnation of any intimidation. Frankly, Royal Mail’s essential workers, who I know take such pride in their jobs, should not have felt driven to take industrial action to get a fairer deal. It is positive that the CWU and Royal Mail are now in a period of intensive negotiations, and the country will expect a fair negotiated deal and an end to the dispute.

We have had a very important debate today, and at a very significant time. But it is clear that, at a time like this, the Government’s vision and policy for the future of Royal Mail really matter. Will the Minister confirm that the Government will not change the statutory minimum requirements of the universal postal service, which are set out in the Postal Services Act 2011? What recent discussions has he had with Ofcom regarding Royal Mail’s performance against the USO and its performance targets? What concerns has he raised, including about its sudden and rapid reversal of fortunes? What discussions has the Minister had with the CWU about its proposals, and what discussions has he had with Royal Mail about how it has handled the management of the organisation and the assessment of its strategy for the future of the business, for workers and for our constituents? As my hon. Friend the Member for Eltham (Clive Efford) said, this is a service that people rely on and we should not be dumbing it down.