Future of Postal Services

Tahir Ali Excerpts

Tuesday 10th January 2023 Westminster Hall

[Sir Gary Streeter (in the Chair)]

Before I call Tahir Ali to move the motion, there is obviously a cast of thousands here. It is a one-hour debate, and the Opposition Front-Bench spokespeople will speak for five minutes and the Minister for 10 minutes. When Tahir has sat down, I will let you know what your life expectancy will be, but it will be about two minutes, so you should prepare for that. I might give you one minute more, Jeremy, but for most of you it will be two minutes.

[Tahir Ali (Birmingham, Hall Green) (Lab)]

I beg to move,

That this House has considered the future of postal services.

It is indeed a pleasure to serve under your chairmanship, Sir Gary, and I refer you to my entry in the Register of Members’ Financial Interests as a proud member of the Communication Workers Union and an employee of Royal Mail.

The question of the future of postal services has been thrown into stark relief in recent times. The pandemic meant that many were confined to their homes, reliant on deliveries to meet their basic needs. It became clear to everyone that postal workers were key to the economy and to the regular functioning of our society. For many during lockdown, the relief provided by our postal services was vital in maintaining wellbeing and keeping families and communities safe.

During the pandemic, the volume of parcels delivered grew by a staggering 50%, with a total of 4.2 billion parcels delivered in the year 2020-21. Royal Mail saw its parcel volumes increase by 30%, with a total of 1.7 billion parcels delivered, which means 40% of the total number of parcels delivered in the UK were delivered by Royal Mail.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I congratulate the hon. Gentleman on securing the debate. While Royal Mail may have some challenges, it is important to recognise what it does well, which includes parcel delivery. With Evri, formerly known as Hermes, parcels are stolen, lost or delayed at huge cost to customers and businesses alike. Does the hon. Member agree that companies such as Evri should be held to account for their failings?

[Tahir Ali]

I agree with the hon. Member’s comments and I hope to cover that specific issue later in my speech. The longer interventions are, the less time other Members will get.

All Royal Mail deliveries were achieved in a way that satisfied most service users. Some 83% of residential customers said they were satisfied with Royal Mail’s service, while 79% of small and medium-sized enterprises said they were satisfied. That was all the result of hard work and sacrifice by Royal Mail staff, who increased the revenues of Royal Mail by a huge 40%, generating healthy profits of £758 million for the company in 2021.

However, £576 million of those profits were promptly paid out to shareholders, with the chief executive officer of Royal Mail, Simon Thompson, paying himself a massive bonus of £140,000. Let us pause for a minute and think about what that £570 million could have done if it had come into the Treasury. It could have contributed hugely towards money to pay nurses, doctors and ambulance drivers.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on securing this timely debate. He mentioned the chief executive officer of Royal Mail, Simon Thompson. Does my hon. Friend agree that if Royal Mail is to be sorted out for the future, which the CWU was trying to do, Simon Thompson has no place as chief executive officer?

[Tahir Ali]

I agree with my hon. Friend. Where a chief executive does not have the interest of the workforce at heart, they need to consider their position.

[Dawn Butler (Brent Central) (Lab)]

My hon. Friend is making a powerful speech, based on his 30 years’ experience working as a postie. As he said, if half the money given to shareholders was given to the actual workers, there would be no need for this dispute or strike. Does he agree that CWU members deserve a pay rise and that the company can afford it?

[Tahir Ali]

I thank my hon. Friend for her intervention; that is a very pertinent point. I stressed that £576 million, which she also referred to. This is not about affordability; this is about picking a fight with the workforce, who have put themselves at risk to make sure that we were safe and secure, and received our deliveries throughout the pandemic.

[Imran Hussain (Bradford East) (Lab)]

As noted, my hon. Friend is making a powerful case. Does he agree, following on from the previous points, that there can be no long-term sustainable future for our postal services while Royal Mail is paying millions to shareholders from its announced profit of £758 million, while at the same time cutting pay and condition for postal workers?

[Tahir Ali]

I could not agree more with my hon. Friend. Services in his region are delivered through Leeds mail centre, among others, which is one of the biggest in the region that he serves, yet many employees are now resorting to food banks to feed their families. In this day and age, it is absolutely shocking that a Royal Mail employee should be resorting to food banks.

[Several hon. Members rose—]

[Tahir Ali]

I will make a bit of progress before I give way, otherwise interventions are going to take over.

Staff were given a derisory pay offer, and faced an assault on working conditions and threats to cut up to 10,000 permanent jobs and replace them with self-employed drivers and agency workers. It has been left to the Communication Workers Union to challenge this attempt to restructure Royal Mail as a gig economy-style company and protect the interests of permanent members of staff. The recent industrial action, led by the CWU, reflects the anger and exasperation of employees, who have had enough of being overlooked and underrated. After several days of walkouts, 91.24% of workers voted in favour of continuing the strike action into the new year. If management continue to refuse to negotiate in good faith and reach a deal with workers, disruption could continue.

However, I know that staff at Royal Mail do not want to be in this situation. They do not want to be on strike, but they feel as though their hand has been forced. I know this because I spent my working life at Royal Mail—my hon. Friend the Member for Brent Central (Dawn Butler) almost gave my age away there; I did not think I was even 30 years old—and I know the values and principles that motivate all who work there. I have experienced at first hand the dedication and professionalism of Royal Mail staff, and I know that they put the needs of service users and communities at the very centre of their efforts.

[Mohammad Yasin (Bedford) (Lab)]

When Royal Mail made a record £758 million profit last year, surely it can invest in its staff to continue to deliver on the universal service obligation that it promised its customers?

[Tahir Ali]

My hon. Friend makes a very important point, which has been echoed in previous interventions. We will be calling on the Minister to go back to the Royal Mail board and stress the need to resolve this issue, because it is not one of affordability.

Royal Mail has, through thick and thin, managed to provide a truly excellent and universal service. Despite the shambolic privatisation of Royal Mail, the ethos of those working within it is still one of public service. Royal Mail was founded on the principle of universal service, and its staff still stand by that principle today. However, the current leadership of Royal Mail seems to be moving the company further and further away from its public service ethos, and seeking to emulate multinationals such as Amazon, DPD and DHL, where bogus self-employment is rife and pay and working conditions are abysmal.

[Bell Ribeiro-Addy (Streatham) (Lab)]

I thank my hon. Friend for giving way; he is making a fantastic speech. Does he agree that if Royal Mail cannot operate without driving down workers’ pay and cutting jobs because its first priority is clearly always its shareholders, it has failed in its stated aim to provide the public service that it is meant to? Does he agree that that is an argument for taking Royal Mail back into public ownership? In my view and the view of the overwhelming majority of the public, that is where it belongs.

[Tahir Ali]

I thank my hon. Friend for that intervention, and I could not agree more.

I have highlighted a glimpse of the bleak future that the management at Royal Mail want: poorer pay, poorer conditions, overworked staff, a zero-hour workforce and a service that is neither universal nor satisfactory to the customer. That has been seen in the steady erosion of the universal service obligation, along with the recent announcement that Royal Mail will be split into two entities and potentially sold off to the asset-stripping company Vesa Equity Investment, which is currently its largest shareholder.

It is evident from this that Royal Mail profiteering is becoming the name of the game. The billions in revenue generated by Royal Mail staff are eaten up by shareholders and management, who pay themselves huge bonuses while staff struggle to make ends meet. Instead of being reinvested to truly modernise and improve Royal Mail, this revenue is being used to pay off shareholders.

It is clear to me, therefore, that there are two possible futures for Royal Mail: one as a universal public service provided with compassion and dedication by employees who are valued and respected; and the other just as a delivery company, to be pumped for profit and asset-stripped, at the expense of service users and with workers’ pay and conditions eroded. What does all of this signal for the future of postal services in the UK?

[John Spellar (Warley) (Lab)]

I thank my hon. Friend for giving way; he is making an excellent speech. Is it not, even in commercial terms, an incredibly short-term prospect? Fundamentally, the current management of Royal Mail are trashing the business and will therefore end up, even on their own terms, with a much-weakened company, which unfortunately may then have to be nationalised because it is failing. The service that it is providing is so bad that people are moving away from it. That really is a national crisis that requires Government intervention.

[Tahir Ali]

I could not agree more with my right hon. Friend, who is a neighbouring MP from my region. This will turn Royal Mail into a badly performing company. CEOs and management move on, but it is the employees who stay and have to pick up the pieces.

I believe that the present circumstances offer us two possible paths forward: one ensuring that Royal Mail continues to offer an exemplary public service to all in the UK, with the profits of expanding operations going into decent pay and conditions for staff, as well as improvements to the service overall; and another in which Royal Mail is stripped of its public service ethos and reorganised to generate maximum profits for shareholders, while the service loses out to private competition. I believe that the choice is an obvious one. Royal Mail should be considered a public service, and therefore it should be owned and governed as one. I believe that Royal Mail should be renationalised.

[Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)]

I thank my hon. Friend for giving way and for securing this debate. As we all know, he has a huge interest in the service and has worked for a long period in it, supported by the people who work continuously. I visited a number of post offices and distribution offices during Christmas, when all the cards and everything else are sent.

This current management structure is purely about asset-stripping and making money out of the service in the short term, and getting rid of the whole service. I think it is incumbent on this Government and the Minister who is here today to have a far more serious debate—I am sure that my hon. Friend would lead it—about ensuring that Royal Mail remains a proper public service for all those people, from grandparents to grandchildren, who enjoy all the cards and other mail that they receive every day.

[Sir Gary Streeter (in the Chair)]

Order. I remind hon. Members that interventions should be brief. If we have many more, there will not be any time for speeches.

[Tahir Ali]

I thank my hon. Friend for his intervention. He is always keen to visit the local mail centre. Under the boundary changes, that mail centre will fall in his constituency, so we can visit it jointly.

I believe that Royal Mail should be renationalised, and I am not alone. A recent poll showed that 68% of the public back the renationalisation of Royal Mail, and studies have highlighted that renationalisation might save £171 million a year. However, we cannot talk about postal services and the renationalisation of Royal Mail without discussing the post office network. The network is inarguably one of the most important for small businesses and local communities, which rely on their local post offices to collect and receive parcels and letters, as well as to export items all over the world.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

As my hon. Friend is aware, there are only 116 Crown post offices left. When it comes to closing banks, part of the Government’s strategy is that people can access banking services and cash from their post offices. Does he agree that it is highly unlikely that people can access banking services from a post office when that post office no longer exists?

[Tahir Ali]

My hon. Friend makes a very important point. If a post office operates as a franchise, it can close shop and go at any time. When someone is providing a public service, they have a duty of care towards the community. In rural areas, post offices are usually the only contact that people—especially elderly people—have with someone who is providing them with a service.

The value of postal services must not be overlooked. Citizens Advice reports that one in five residents visit the post office at least once a week, and in rural areas that figure is one in four people. That shows the continued importance of post offices to constituents.

[Mrs Paulette Hamilton (Birmingham, Erdington) (Lab)]

I thank my hon. Friend for securing such an important debate. Post office staff work really hard, including in Erdington, Kingstanding and Castle Vale. We have seven post offices, but I understand that, despite one in five people visiting post offices every week, there are serious concerns about franchises being lost across the country. Does my hon. Friend agree that the Government should fulfil their duty and ensure that post offices are protected?

[Tahir Ali]

My hon. Friend makes an important point: we should not just look at the Post Office board; the Government have a role to play. I am sure that the Minister will respond to that.

Online shopping is growing exponentially in the UK, with the parcel market growing to over 50% of all post since 2010. Over 130 million parcels have been sent in the UK by small businesses. That has placed pressure on the postal sector to hire more employees and open more post office branches, with 11,365 branches open by March 2022. The postal service has worked hard to keep up with the surge of technology by signing contracts with Amazon, DHL and DPD, among others, to introduce click and collect services, and reaching agreements to deliver parcels to post office branches to meet higher customer expectations.

Despite all the changes, however, there are big cracks in the post office network that gesture towards a bleak future. Government funding for post offices through the network subsidy and investment grants declined from £410 million in 2012-13 to just £120 million in 2020-21—a reduction of 71%. Post office branches have been opened, but out of the 11,000-plus post offices, only 4,000 are open seven days a week and many provide only partial outreach services. By September 2021, over 1,200 branches had closed, which is double the number five years ago.

The accessibility of branches has become a massive issue in recent years; some constituents, especially in rural areas, only have a few post offices near them, and those either work on a part-time basis or are temporarily closed. Not all residents are tech savvy—I am not, either—meaning that post offices are a necessity for some, especially for banking. Over 110 million banking transactions were carried out in post offices in 2017. The number of branch closures has been rising steadily, and it is becoming harder for communities and businesses to access post offices.

The Government have played their part in creating an uncertain future for postal services by severely downplaying their role in helping the community and the economy, and significantly reducing investment in the network. Nick Read, the chief executive of Post Office, expresses the same concerns. He stated that the Government “should not overlook” the role of post offices and postmasters in keeping national and local communities connected, and urged the Government to extend their support for post office branches with energy bills beyond March 2023 to keep the postal service alive.

The CWU has described the continued selling off of post offices as “backdoor privatisation”, an assessment I agree with. It is evident that the increase in parcel delivery and collection, along with e-commerce, gives the Post Office a new opportunity for future growth. That is why we must continue to foster and grow our post office network through investment and not through sell-offs to the highest bidder.

To conclude, I have some pertinent questions for the Minister. First, at a time when the Government claim to be levelling up the nation, what are they doing to increase the presence of post offices in rural areas where elderly populations are reliant on these services? Furthermore, as more post offices are partial outreach services open for an average of five and a half hours a week, what impact assessment will the Government undertake to ensure that every member of the public has sufficient access to these vital services? Will the Government commit to restoring the post office network grant to previous levels as a means of providing real investment and modernisation to the network?

Do the Government agree that Royal Mail should see being the universal service obligation provider as a competitive advantage, rather than as something to be whittled away over time? Do they accept that those hard-working postal workers who put their lives on the line during covid-19 should be considered essential workers key to the national infrastructure? Will the Government confirm that they stand against the restructuring of Royal Mail into a casualised, gig economy-style service, which will prove detrimental to both staff and service users?

Will the Minister explain the reasoning behind allowing Vesa Equity to acquire a controlling stake in Royal Mail, particularly given the threat it poses to the future of both Royal Mail and universal UK postal services? Finally, does he agree that a postie is there for life, not just for Christmas?

--- Later in debate ---

[Tahir Ali]

I want to respond forcefully on the issue of union-busting tactics. Within days of members taking industrial action, Royal Mail announced that it was taking 10,000 jobs away from workers to scare them into not going on strike. It says that it has more than £1 billion to break up the union. It is suspending union representatives without proper reason, just as a ploy to scaremonger and to bully the staff. An attack on one employee is an attack on all employees, and neither the CWU nor any employee will stand for that in any way, shape or form.

In this country, we can send a letter for 58p to Orkney or Shetland, or to the Isle of Wight. That is the only duty that the company has. None of the private companies is legally obliged to deliver to every single address in this country. We want a level playing field, but the profit and the cream are taken away by the other companies. Royal Mail is modernising—it has been—but the workers deserve more.