Mr. Taylor : No. The fact is that there is a commercial threat to the viability of the service if the status quo is preserved. What is the proposal of the hon. Gentleman to ensure that we have a uniform national Post Office that is excellent in its delivery of service, and which gets access to capital--which it will not if it stays entirely in the public sector ?
Mr. Cook : No one is defending the status quo ; nor was the Select Committee. The hon. Gentleman is absolutely right in that : no one wants the status quo. Everyone wants to find a formula that would provide a stable consensus solution for the Post Office. As the hon. Gentleman asked, we produced 13 pages in our plans for a modern Post Office, in which we went for the option of commercial freedom in the public sector. Later, I shall spell out exactly what that means and how it can be delivered, and how even the current Government believe, in another context, that that can be delivered.
Mr. Anthony Coombs (Wyre Forest) rose
I invite the hon. Gentleman to consider this. Although I referred earlier to the opinion polls which showed that 71 per cent. of the general public opposed privatisation, I must warn the hon. Gentleman and his colleagues that 56 per cent. even of those people who last month owned up to voting Tory opposed privatisation of the Post Office. The people who voted Tory last month in the European elections are the bottom bedrock of the Tory vote. Not even a majority of the last 27 per cent. who turned out to vote Tory would vote for privatisation of the Post Office.
Column 838The reason why those people will not buy privatisation of the Post Office is straightforward : they have more common sense than the dogmatists and ideologues who now rule over them.
Mr. Cook : That has not been the policy of the Labour party since 1987, and there is no great secret about that. If the hon. Gentleman would read our manifesto with the same care that we read the Conservative manifesto, he would know that.
I should like to return to the question why the public have more sense than to swallow the proposal in the Green Paper. It is because they have more sense than to believe that the Post Office would work better if it was broken up, which is what the Green Paper proposes. Mr. Anthony Coombs rose
To privatise the Post Office, the Government first have to carve it up. Their only reason for proposing to separate Royal Mail from Post Office Counters and put them under separate ownership is so that they can privatise the Royal Mail, which is the profitable part. If privatisation was not on the agenda, no one in his right mind would propose to divide the Post Office and place the parts under separate ownership.
As the Minister knows, the Government held a two-year review, during which they invited views on the future of the Post Office. Not one of the published submissions suggested that it would be a good idea to break it into two separately owned companies.
We are repeatedly told that it is important to privatise the Post Office and to move it with the times, so that it can meet the challenge of the international market and beat off the Dutch raiders. Not one post office in the world has split its counter service from its delivery service, and the Dutch post office, which is held up to us as the threat to our postal services, has not only kept them integrated but said last month that separating counters from delivery would hamper their management.
Mr. Anthony Coombs : The vast majority of people would agree that the dogmatism and lack of common sense are entirely on the hon. Gentleman's part. Is he not peddling the sort of scare stories that we heard in 1983 when British Telecom was being privatised ? But since then the cost of telephone calls has fallen by 30 per cent., there is more investment and the privatised BT is providing a better service for the customer than ever before.
Mr. Cook : I am astonished that, in the week in which the National Consumer Council produced a blistering report on how water charges have increased by three quarters since privatisation, hon. Members have the nerve to claim that privatisation has been the source of lower
Column 839prices. The hon. Gentleman should try telling that to the consumers of South West Water, who have seen prices double.
If the hon. Gentleman wants to take his stand on prices, let us argue prices. During the period since British Telecom was privatised, postage prices have gone up by less than the rate of inflation. BT prices overall have dropped by over 12 per cent. compared with inflation, and the price of the postage stamp compared with inflation has gone down by 2 per cent. The percentages would have precisely matched those of BT if the Treasury had not perpetually insisted on increasing payments to the Treasury. That forced the last increase in the price of postage stamps.
Mr. Malcolm Bruce (Gordon) : The hon. Gentleman spoke about the Dutch example. Does he agree that the competition about which the Government complain from the Dutch post office comes from an organisation that has exactly the degree of commercial freedom that the Government say is unacceptable here ? It has enabled the Dutch to compete with our Post Office. Why cannot we have the same kind of operation here ?
Mr. Cook : The hon. Gentleman anticipates a matter to which I shall turn. The exact model that we are invited to be threatened by, and because of which the Post Office should be privatised, is a model of commercial freedom in the commercial sector.
I was speaking about the division that is proposed in the Green Paper between the Royal Mail and Post Office Counters. That division will leave them no longer accountable to one board and under one owner. Accountability to one board has been important in the history of those two distinct businesses, because it makes sure that they pull together. The danger under separate owners who are no longer accountable to the same board is that they would pull against each other.
I shall give an example. The Royal Mail has now established callers' offices at more than 3,000 Royal Mail sorting offices to provide a limited service direct to business clients. The service is kept limited because, while there is common ownership with Post Office Counters, the Post Office board rightly recognises that that service would provide direct competition to Post Office Counters. Once the Royal Mail is a separate company with private owners, there is nothing to hold it back from marketing those callers' offices, providing the full range of Royal Mail services. It will be under pressure from its private owners to do so, because the one advantage of breaking Royal Mail away from Post Office Counters is that it could open its own outlets and bypass post office branches. Those callers' offices are all in delivery offices. By definition, they all have large car parking spaces. It would be easy to market them to businesses as the Royal Mail equivalent of the out-of-town Sainsburys. That would do to high street post offices what Sainsburys superstores have done to village shopping.
That brings me to the confidence trick at the heart of the Green Paper. It contains many assurances, and I am willing to accept one of them in full. I unreservedly accept the assurance on page 22 that children will still be free to write to Santa Claus after privatisation. It is good to know that the Government retain a human and delightful touch. It is also good to know that Santa Claus remains inviolate, at least until the next election.
Column 840However, we really have to believe in Santa Claus to believe the financial arithmetic of the other assurances. The big con trick practised in the Green Paper is that, by keeping Post Office Counters in the public sector, we will keep open the network of post office branches.
They will stay open only if the Royal Mail keeps up its payments. Currently, it pays £250 million a year for the handling of its services by Post Office Counters. That payment is related to the volume of its business so handled. Suppose the Royal Mail seizes its freedom to handle more of its own business in the way that I have described--how much will it be willing to pay Post Office Counters then ? If its volume goes down, how much will its payment go down ? There is not much of a margin in the books for a reduction. Post Office Counters made a profit of only £25 million last year. It would take only a 10 per cent. drop in its business from Royal Mail for it to end up making a loss. What would happen then ? It would have to make cuts. Where would those cuts fall ? We can all predict that. The point that should worry Tory Back Benchers is the fact that it is the small village sub-post offices that get the vast cross- subsidy from the Crown post office.
Is not the hon. Gentleman indulging in exactly the same scaremongering tactics that the Opposition indulged in a decade ago, when they told us that a privatised British Telecom would result in vastly increased charges and the ending of rural services and rural telephone provision ? In fact, the number of telephones in the rural communities that work has increased. The hon. Gentleman is simply repeating scaremongering tactics. Why should we believe him now, when what his colleagues were saying 10 years ago has been shown to be untrue ?
Mr. Cook : The hon. Gentleman should be quiet and listen, because he obviously needs to do so. If he and his hon. Friends have not grasped one fact, the future of rural post offices is in deep trouble.
That fact is that the difference between telecommunications and the postal services is that, with new technology, it is now a matter of indifference how far a telephone call is going, but with the postal service the cost of delivering a letter is directly proportionate to the distance that it travels. That is why privatisation of the Royal Mail raises the problem of protecting rural post offices and remote deliveries.
If the payment to Post Office Counters goes down, and if the Crown post office is unable to maintain the cross-subsidy, how long will it be before we begin to see a retreat from the post office network ? How many post office branches would close if the cross-subsidy between Crown and village post offices were
Column 841cut ? I accept that rural areas which the hon. Member for City of Chester (Mr. Brandreth) claims to represent are increasingly represented by Labour MEPs in Strasbourg, but they are still represented by Tory Members of Parliament, who may well go the way of their local Tory MEPs and disappear if privatisation results in the closure of their village shops.
Hon. Members should not think that the regulator will help if that problem arises. In the Green Paper, the regulator is the regulator of the Royal Mail, not Post Office Counters. In the Green Paper, the role of the regulator has been carefully structured so that, on the most contentious issue--the closure of a rural post office branch--the regulator will have no role.
In any case, the real job of the regulator--as with so many of the regulators appointed by the Government when they privatise utilities--has nothing do with protecting services and everything to do with promoting the interests of competitors and reducing the market share of the utility.
Lady Olga Maitland (Sutton and Cheam) : We have been hearing constant jeering about the Government's plans for the Royal Mail, but will the hon. Gentleman not tell us what his policies would be for the Royal Mail ? Would he invest in it ? If so, is this a spending pledge, and would he sustain it ?
Mr. Cook : I do not know whether the hon. Lady was here when I answered precisely that question. I gather that she was not here, so I should stress that it is a waste of the House's time if hon. Members feel free to intervene without having listened to a speech. The hon. Lady asked about investment. The Post Office would have no problem meeting its investment plans if the Treasury were not constantly increasing the amount of money that the Post Office has to hand over ; it has trebled over the past three years.
There is a paradox before the House. We are invited by the Green Paper to believe that, in the public sector, the Post Office faces slow decline, but the public expenditure White Papers say that the Treasury expects rising profitability in the public sector. That is why the Post Office cannot invest.
The hon. Lady asked about the spending commitment. If the Treasury did not demand so much in profits from the Post Office, there would be no need for any spending commitment. [Interruption.] No, there would not. That money would provide the investment.
The Green Paper opens up the Post Office to competition ; it opens up every part of the operation of the Royal Mail except the last bit, where the letters are pushed through the letter boxes. It is understandable that the Green Paper does not propose to open that up to competition. Door-to-door delivery is the labour-intensive part of the operation. It is high in costs, and it is impossible to find anybody who wants to take it over, but it is the only part of the monopoly that will be left.
Under the Green Paper, Royal Mail will be forced to accept competitors collecting bulk mail from big clients,
Column 842sorting it out in their own mail rooms, transporting it to the city of destination and then dumping it at the Royal Mail delivery office for the postman to cart round the streets.
It will not save the Royal Mail much in costs. Even if the competition cuts out all the large clients who are easy to handle at a profit, the Royal Mail will still be obliged to collect from every collection box, run vans between every town and maintain all 80 mechanised sorting offices round Britain. The fixed costs of its network will not decrease in step with the volume that is passing through it, but the revenue will fall with that volume.
The problem for the public is that, as the competitors skim away the profitable parts of its operation, Royal Mail will not have the same profits to cross-subsidise the domestic customer who wants to post a single letter--particularly the expensive domestic customer who wants to send it a long way.
I refer to it as a problem. I am not sure that everyone sees it as a problem. In the early 1980s, one Tory MP advocated that we should have a Royal Mail in which people paid for the distance they wanted their letters to go. As he rather cheerfully argued,
"There does not seem to be a case for massive subsidisation of all those living in the outer Hebrides who also choose to have all their friends in London. The introduction of distance pricing for the mail service could be crude but still effective."
Just how crude can be seen from the estimated cost of sending a letter from the Hebrides to London, which would produce a distance pricing of £10. Certainly crude, and only effective in relieving the Post Office of any need to provide the service.
Mr. Cook : The hon. Gentleman accuses me of scaremongering, but the Member of Parliament that I quoted was no ordinary Tory. He is now a Cabinet Minister--the Secretary of State for Wales. The hon. Gentleman can shake his head as much as he likes, but that was said by the Secretary of State for Wales. My Welsh colleagues may also shake their heads in disbelief, but he is unfortunately still the Secretary of State for Wales. He may not have stayed overnight in Wales, but every week he sits in the Cabinet that will decide the response to the Green Paper and that invites us to believe their assurances that a uniform, affordable tariff will remain.
Mr. Stuart Randall (Kingston upon Hull, West) : I am worried by my hon. Friend's remarks about possible charging. What would happen at Christmas ? Would the poor and pensioners no longer be able to send Christmas cards ?
Mr. Cook : I will answer my hon. Friend by considering the one example in the world of a country that has opened up its postal services to outside competition in the way that the Green Paper envisages for the Royal Mail after privatisation. Since New Zealand liberalised its postal services, the average postal charge has increased 50 per cent. to compensate for the loss of profitable business. Tory Members might like to note that rural residents in New Zealand pay an annual fee of 80 dollars if they want their mail delivered to their door.
One hundred and fifty years of public ownership has given Britain one of the best postal services in the world. It has more deliveries than, for example, the Dutch postal service can manage. There is no second delivery or
Column 843Saturday delivery in Holland. London enjoys 11 deliveries a week, but Amsterdam has only five. Anyone who reads the Green Paper's tepid paragraph on second delivery will know that there is no assurance that delivery will join Santa Claus in surviving privatisation. The UK postal service is also cheaper. Since the mid-1980s, its charges have fallen against inflation, and they are now one fifth lower than those of the Dutch postal service. The Post Office has also made bigger productivity gains. Since the mid-1980s, it has achieved higher productivity while in public ownership than gas or electricity under privatisation.
I grant that the Post Office is not top of the table. If one considers all the energy and utility industries, whether public or private, top of the table for productivity is British Coal--not that it receives any reward from the Government. The Post Office comes in higher than many industries that the Government have already privatised.
Mrs. Dunwoody : What is happening already in rural areas is bad enough. Not only are small country towns losing Crown post offices, but many rural post offices are under such pressure that they too will soon lose their trade.
Mr. Cook : My hon. Friend emphasises that many Members of Parliament on this side of the House represent rural areas, and understand perfectly well the anxieties felt by people living in them. They know precisely why strong public opinion is registered against privatisation.
Ours is also the only postal organisation in the world that makes a profit on its mail services.
Mr. Clifton-Brown : I have listened carefully to the hon. Gentleman's arguments against privatisation, and I am particularly concerned, as is the hon. Gentleman, about rural offices. Does he realise that 19,000 out of 20,000 offices are currently in private ownership ? As he is so keen to reverse privatisation of the Post Office, will he pledge here and now that his Government will find the funds to renationalise the Post Office if we privatise it ?
Mr. Cook : I have already answered that question. If the Government are daft enough to proceed with privatising the Royal Mail, we will look at ways of restoring it to where we believe it belongs--in public control, where the bulk of its customers want it kept.
As for the 19,000 sub-post offices in private ownership, it is perfectly correct that they have private sub-postmasters. Those people are working to a contract with Post Office Counters, and the money they receive under the contract depends critically upon the money that Post Office Counters receives from Royal Mail. If the hon. Gentleman is really concerned about the future of his village post office, he should ask himself whether it makes sense to do as the Government propose and to break Post Office Counters, a company making a £25 million profit, away from Royal Mail, a company making a £280 million profit. If I, as a constituency Member for that village, were interested in the hon. Gentleman's village post office, I should seriously doubt the wisdom of that separation of Post Office Counters from its major source of revenue.
As I was saying, we have the only Post Office in the world that makes a profit. It gets not one penny in subsidy. On the contrary, it subsidises the Treasury with the profits that it hands over--and those demands have trebled over the past three years. This year, the Post Office will pay the
Column 844Treasury £230 million--almost as much as Post Office Counters receives from Royal Mail for handling charges and for keeping open the entire post office network throughout Britain.
Of course, the reason why that sum is demanded from the Post Office has nothing to do with an estimate of its profitability and everything to do with the Treasury's calculation of what it desperately needs. That is the real reason why the "For Sale" sign is going up outside the Post Office : the Treasury needs the money. After 150 years of public stewardship of the Royal Mail, the threat is that it will be brought to an end to pay for 15 years of economic incompetence by the Government.
The Post Office need not be privatised. There is an alternative. Let me answer the hon. Members who have asked about it. There is an alternative that would provide the commercial freedom that the Post Office needs to meet the new competition while keeping it together and keeping it in the public sector. The Post Office would have the commercial freedom to allow it to expand its commercial activities, to form joint ventures with private sector companies, to raise capital for investment from private sources, and to compete in the new global communications markets.
It is true that commercial freedom in the public sector is included as an option in the Green Paper--I hope to hear something from the Minister about that. However, I have never read any Green Paper with so little faith in one of the options that it lays before us. Indeed, even before the rest of us can express a view, the Green Paper tells us that the Government have concluded that that option will not work.
It is not entirely clear why Ministers have come to that conclusion. I was perplexed by the reasoning used by the Under-Secretary of State for Technology on the "Today" programme last week, when he said that the Post Office could not have commercial freedom in the public sector because there is
"always the knowledge that so long as it remains in the public sector then it can't go bankrupt".
That seems to me a good reason for keeping it in the public sector. The idea of the freedom to go bankrupt seems an excellent argument against privatisation.
The Green Paper that the Minister was discussing says that public ownership would condemn the Post Office to "slow decline". That is an appalling admission. Ministers are effectively saying that, if they remain responsible for the Post Office, the best they can offer it is slow decline. If that is true, it is an argument not for taking the Post Office out of the public sector, but for putting that lot out of government, so that they are no longer responsible for the public sector.
The Minister is now in a difficult position, because last week his argument that there cannot be commercial freedom in the public sector was demolished from the Government Dispatch Box, when the White Paper on the BBC was introduced. That offered the BBC commercial freedom within the public sector--the freedom to expand its commercial activities, to form joint ventures, to raise capital for investment from private finance and to compete in the new global communications network. The BBC will be able to do all that, and still stay in the public sector.
Why is that possible for the BBC, yet we are told that it is not possible for the Post Office as a public corporation ? When the Minister comes to speak, he cannot
Column 845pretend that that option is now not available to the Post Office, unless he intends to vote against the Government's White Paper on the BBC.
But there is another reason why the Government should embrace the option of commercial freedom within the public sector. If they are to be responsible about the future of a major public corporation, they should build that future on consensus. Every party on the Opposition Benches would support the option of commercial freedom in the public sector ; that would make it a firm and stable option, which would take the Post Office into the next century. That does not need legislation. It does not even need consultation. It is an option on which we could go snap this afternoon.
But of course, I know that the Minister will not do that. I know that the Government will not do it. They will not do it, because they have been in power for so long that they have forgotten that they are there only as the trustees of public corporations, not the owners of those corporations, to sell them off whatever the rest of us think. This Government are at the fag end of their days, marking their time until the day that they return to their community. Yet this Administration, on borrowed time, claim the right to end the public status of the Post Office, which goes back 150 years and is supported in public opinion polls by three times the number of members of the public that were prepared to support the Government.
Moreover, the Government claim the right to sell the Post Office without any mandate from any election. If they proceed on that basis, they will make a mockery of parliamentary democracy. They have three months in which to reconsider--the three months that they have given themselves for consultation on the Green Paper.
I asked at the start of my speech whether the Government would listen to the overwhelming majority of the customers in that consultation who will not want the Royal Mail privatised. It was no trick question. It is the real test of whether they will govern according to the wishes of the people or rule by imposing their own political prejudices on the nation.
We will ensure that, during the next three months, the public are given every chance to express their views on the Post Office loud and clear. [Interruption.] The public will notice that, when we refer to that, Tory Members of Parliament already laugh at the idea of listening to the views of the public. I warn them that, if they choose to laugh rather than listen to those views, we shall make their contempt for the views of the public one of the main issues of the next parliamentary year, and we will fight to keep the Post Office where it belongs--in the public sector providing a public service.
agrees with the Select Committee on Trade and Industry that the Post Office cannot be retained in its present form ; therefore welcomes the publication of the Government's Green Paper on the future of postal services which acknowledges the need for greater commercial freedom for the Post Office and provides increased opportunities for sub-post offices ; recognising the importance to communities of Post Office Counters and the Royal Mail, supports the Government's commitment to the universal service at a uniform and affordable tariff, with a nationwide
Column 846network of post offices ; condemns the approach that the only possible solution is 100 per cent. public ownership ; and welcomes the opportunity of consultation on the range of options.'. Before I respond to points on the Green Paper, I remind the House that I have a declared interest as a shareholder in J. Sainsbury plc. Recently, the Post Office has transferred a number of its Crown offices to agency or franchise status. Those franchise arrangements are made with a number of stores, including those of the Co-operative movement, and I understand that five of them have been established in Sainsbury stores.
I should make it clear to the House that the choice of private sector franchisees in individual cases is wholly an operational matter for Post Office Counters. Ministers and officials of the Department of Trade and Industry are neither involved in nor informed about such decisions.
We welcome the Opposition's choice of the Green Paper on the Post Office as the subject for today's debate because it gives us an opportunity to publicise the options in it and the guarantees that it repeats. It also enables us to expose once again what I could almost call the Opposition's North Korean approach, exemplified so splendidly by the hon. Member for Livingston (Mr. Cook). The motion is based on the Opposition's simple proposition which the Government totally reject : public sector good, private sector bad.
The speech of the hon. Member for Livingston exposed his failure to recognise the opportunities that technological change is bringing to the Post Office and, indeed, could bring to Post Office customers if we were to respond positively. It was fairly predictable. We know the style--a nice snappy start and some good knockabout stuff. It reminded me of an England batting performance these days. The start was followed, I am afraid, by a middle order collapse. There were some wild, ill-judged strokes-- exemplified by the hon. Gentleman's usual scare stories--an absence of runs scored and an absence of content. There was a little flourish by the tail, but the end verdict has to be that it was another very unsatisfactory performance.
Most of all, the hon. Gentleman's speech was a missed opportunity to be positive and to put clause 4 out of his mind for a change, although that may be too much for the hon. Gentleman. It is no wonder that, like the England cricket team, he has such a consistent record of losing.
Hon. Members have been reminded that on 30 June we published a consultative document entitled "The Future of Postal Services". Let me stress straightaway the word "consultative". The Green Paper sets out the issues surrounding the future of postal services and discusses a number of options for the future of the Post Office. It invites comments by 30 September and all members of the public and organisations with an interest are invited to comment on the proposals. The Government will form a view in the light of all the comments received.
Mr. Michael Clapham (Barnsley, West and Penistone) : My hon. Friend the Member for Livingston (Mr. Cook) referred to the MORI poll. The Minister should be aware that 70 per cent. of the people who took part in the poll were against the privatisation of the Post Office
Column 847and that 57 per cent. of the people who took part were Conservative voters and were against privatisation of the Post Office. Furthermore, 70 per cent. of the people who took part came from the constituencies of Tory Members. Does not the Minister agree that the poll shows that there is enormous public pressure for keeping the Post Office public rather than privatising it ? Should not he be acting on that consultation process ?
As I said, the point of the Green Paper is to have an informed consultation period, which, I regret, will not be helped by the hon. Member for Livingston giving publicity again to his usual scaremongering stories.
Mrs. Dunwoody : The Post Office put out for consultation over a three-month period the proposal to close the main post office in Nantwich, which has had a post office almost since the 1700s. It received a large volume of letters, postcards and petitions, all of which opposed the closure of the post office. The Post Office, however, has carried out a decision that it took three months earlier and our post office will now be located in a store somewhere else, which is deeply resented by many people and is certainly not the result of proper consultation.