House of Commons Hansard Debates for 12 Jul 1994

Ms Ann Coffey (Stockport) : Although it identifies three possible options for the future of Royal Mail and Parcelforce, the Green Paper on the future of postal services effectively dismisses two of them out of hand. The Government are clearly batting for only one, and will spend the next three months trying to sell it to the public--for they are well aware that the public do not favour any kind of privatisation of the Post Office, and are very concerned about the current proposals.

One of the options dismissed by the Government was 100 per cent. privatisation, although they were enthusiastic about it. Having heard a couple of Conservative speeches today, I can see that there is a good deal of support for it within the party ; the Green Paper, however, commented :

"many people prefer a closer link between Government and Royal Mail than this would provide".

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In other words, the Government have recognised that the public will not tolerate 100 per cent. privatisation. Perhaps that is because the public are not so impressed with its consequences. The comments of my constituents about the privatisation of our existing public utilities are mainly about the size of the chairmen's salaries and the problems of job losses among ordinary employees.

The Government also dismiss out of hand the retention of the Post Office in the public sector, while giving it greater commercial freedom. In case somebody stands up to ask what I mean by that, I refer them to the Government's option, which makes several suggestions about how that may happen.

The Government have three principal arguments against that option : first, that, as a publicly owned company, the Post Office would be protected from failure. Most people in the country do not want to see the Post Office fail and that option would be positive rather than negative. Secondly, they say that it would be underwritten by taxpayers, but the Post Office has made a considerable profit for a number of years, which has been very beneficial to taxpayers in the country by helping to finance other public services such as health and education.

Thirdly, the Government say that, as a public company competing in the market, it would distort the market and would become a soft option for private finance. Surely the water, gas and electricity companies and British Telecom are effectively private monopolies. That is why they attract such a good level of investment, because large investors see them as low risk.

The option that the Government are trying to sell is that of retaining 49 per cent. of the shares in the Post Office, so that they would be a passive partner, while selling off 51 per cent. of the shares. I am sure that, if they did that, like the gas, electricity and water companies, it would also be seen as attractive to private finance.

Whether it would meet the Government's criteria for attracting private finance that it should be seen as a high-risk business is very doubtful, because I am sure that all private investors would be attracted if 49 per cent. of the Post Office is publicly underwritten by the Government. Therefore, as one of my hon. Friends said earlier, the notion that on the one hand there are privatised companies and on the other publicly owned companies, and that the finance attracted to each of them is different, is absolute nonsense.

One of the biggest selling points of the option that the Government have put forward is that the employees will have 10 per cent. of the shares. In fact, that is the only mention of the future of the employees in the whole Green Paper. The reality is that, in this country, private shareholders have diminished in the past 15 years of our share-owning democracy, and shares held by institutional investors, whose power is enormous, have increased as a percentage. Companies' accountability to their individual shareholders is very small. If privatisation takes the proposed form, the accountability to those shareholders who are employees of the Post Office will be exactly the same as it is in other companies--a lot of shouting about it, but very little accountability. I cannot imagine the chairman of a future privatised Post Office ringing up to consult the local postman, who has a few hundred shares, about the commercial decisions about to be made, although I can imagine the chairman telephoning a large investor for consultation.

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That is a very poor way in which to maintain the accountability of the Post Office to its employees. The Government may feel that that is a good selling point, but it is a sham, and it means very little. I am sure that many of the employees who will be offered 10 per cent. of the shares would willingly part with their shares to ensure that the Post Office remained in public ownership, because they feel that that would be the best way in which to ensure the protection of their jobs.

Privatisation will not protect employees from losing their jobs, nor will it increase their pay in real terms. We are talking about many employees-- 165,000 people are employed by the Post Office. One of the most powerful arguments for keeping the Post Office in public ownership is that, in the aftermath of privatisation, thousands of employees will lose their jobs--it may not happen the month after privatisation, or the month after that, but it will happen. Commercial pressure cannot consider job loss. The driving force is the demand of the market for short-term dividends, and that will be no different for a privatised post office.

The country cannot afford any more unemployment. We must consider ways in which to keep people employed, of employing more people and of not making people unemployed. If we do not, we will not have many customers or consumers left--people need money to consume--nor will we have money going into pension funds, or money to invest in industry ; nor will we achieve the social order or the stability that we need. The Government need to accept their wider responsibility to ensure that everyone has access to the wealth of the country through employment. To do that, they need to look at their role as a purchaser and their role as an owner of public companies and their role in every single Department.

The Government also need to consider the job implications of their policies, as well as the commercial interests about which we have heard a lot tonight. The question should always be how we can consider employment, how can we create employment, how we can keep people in employment, as well as how we can make a business more efficient and more competitive, and how we can give value for money to customers. All those questions should be asked before any policy change, and they need to be asked when considering the future of the postal service.

There is only one answer to the present proposals : to retain the Post Office in the public sector, give it more commercial freedom and ensure that it continues to be a successful public enterprise, employing 165,000 people and much valued by the British public. That is what the public want, and I am sure that they will express it locally over the next three months. The big question, is will the Government listen ?

7.6 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : A lot has been said in the debate, but may I first make it clear that, when my right hon. Friend the President of the Board of Trade made his announcement on 19 May, he said that three inviable functions would be kept in the Post Office organisation which would be laid down by statute ? They are, first, maintenance of a nationwide

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letter and parcel service with a daily delivery to every address in the UK ; secondly, a uniform and affordable structure of prices ; and, thirdly, perhaps most importantly, a nationwide network of post offices.

As I have already made clear in an intervention, 19,000 out of the network of 20,000 sub-post offices are owned by private individuals, involving their own capital. I pay tribute to them and assure them that I do not believe that any of the proposals which I have seen mentioned in the Green Paper would in any way threaten the viability of their sub-post offices. There are other factors at work which may well threaten that viability and I shall address those in a moment. I also pay tribute to my hon. Friend the Member for Gloucester (Mr. French). In particular, he mentioned his sorting office in the city of Gloucester. I very much hope that the viability of that sorting office will be maintained exactly as it is at present, because it is from there that the majority of my constituents' letters come. Over past years, I have visited sorting offices in my constituency in Cirencester and Tewkesbury early in the morning and I have seen the valuable work done by the Post Office delivery men in those sorting offices. They then go out in all the worst weather. I pay tribute to them for that work and also for their valuable services in often providing companionship, advice, messages and so on when visiting the doorstep.

Mr. Hain : If the hon. Gentleman is paying such a generous tribute to his postmen and women, why does not he listen to them ? None of them wants the privatisation which the Government are thrusting down their throats.

Mr. Clifton-Brown : As I shall make clear to the hon. Gentleman in a minute, the best way to secure the maximum employment in the Post Office is to ensure that it is profitable. As I shall make clear, it is only by some radical alteration to the existing structure that it will remain profitable and, above all, retain its market share. It is losing market share at the moment and we must do something about that, whatever solution we come up with.

Ms Estelle Morris (Birmingham, Yardley) : If the hon. Gentleman is so concerned about the loss of market share and about the need for the Post Office to be allowed to be more competitive, does he think that the Government have assisted that process by dilly-dallying for two years on the result of their review of the Post Office ? How did that delay help the Post Office to prepare for increased competition ?

Mr. Clifton-Brown : This is probably the most fundamental reorganisation of the Post Office for the past 150 years--since Rowland Hill invented the penny black. In such a fundamental reorganisation, we want to ensure that we get it absolutely right. That is why we are having this debate today and that is why my right hon. Friend the President of the Board of Trade and my other right hon. Friends are considering carefully what is the best course for the employees of the Post Office, above all, and for the maintenance of the profitability of that business.

One has only to look at the Opposition motion to see precisely what the hon. Member for Birmingham, Yardley (Ms Morris) is alluding to. The Labour party is not prepared to consider the future. We must consider the future, otherwise we shall find that the Post Office's business slowly gets smaller and smaller. We should

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contrast the motion with my right hon. Friends' amendment, which is positive ; it suggests positive solutions and that is what I wish to address today.

We must recognise the changed environment in which we live. Customers no longer automatically go to the village shop. They may prefer to go instead to the large out-of-town superstore. When my constituents write to me saying that they are worried about the future of their rural sub-post office, my reply to them is, "If you are worried about its future viability, use it." It is up to the sub-post office in turn to provide the range of services that the customers want. I am delighted by some of my right hon. and hon. Friends' recent announcements about allowing a wider range of services to be sold in sub-post offices. I am particularly delighted by the announcement that a number of sub-post offices will be able to sell lottery tickets. That will considerably enhance their viability and profitability.

One must consider changing employment patterns. People now have less time to shop, so they increasingly look towards convenience shopping--towards electronic shopping--and that trend will continue. As consumers rapidly adopt the new technology, they will, if the sub-post offices do not provide that range of services, use them less. Apart from adapting to changing consumer patterns, the Post Office will need to adapt to changing trading conditions in three main ways. First, new forms of communication, such as fax and electronic mail, are increasingly emerging. The electronic data exchange market is growing by 20 per cent. annually. Television licences, for example, may now be paid for by direct debit. The fax market is growing by 30 per cent. The scope for expansion in that sector is huge and could wipe out much of the current letter business within a comparatively short time.

Secondly, competition from overseas post offices as the point of posting for bulk mail is increasing. As my hon. Friend the Member for Gloucester made clear, I have a company in my constituency with a large mail delivery which made a contract with the Dutch post office. It sent all its magazines to the Dutch post offices, which in turn contracted the magazines back to our own Post Office. The organisation making the profit was the Dutch post office and our own Royal Mail was left with the fag-end of the business. It had to make the daily deliveries and the charge for that was little above the cost price. We must respond to competition from overseas. Thirdly, increasingly there is a trend towards contracting out and franchising ancillary services that the Royal Mail would be well placed to provide. Let us consider the competition. Let us consider the express deliveries around the country for bulk mail and parcels which are springing up all over the place. How can the Royal Mail respond to the challenges when it has to go to the Treasury every five minutes to ask for permission to invest in more facilities ? In those circumstances, how could any commercial business succeed in the modern world ?

As my hon. Friend the Member for Gloucester said, when the Dutch telecommunications business was privatised, one of the first things that it did was to make a joint venture deal with the huge American corporation AT and T to enable it to have access to the huge capital investment and the huge technology that would be required in that fast-changing business. As we shall see, the electronic mail business will change just as fast.

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Mr. Gordon Prentice (Pendle) : Will the hon. Gentleman tell the House precisely when the Dutch post office was privatised ?

Mr. Clifton-Brown : The first tranche of the Dutch post office privatisation took place in May.

Hon. Members : No.

Mr. Peter Ainsworth : It was 13 June this year.

Mr. Clifton-Brown : I have a little bit of extra knowledge from behind me. I am told that the exact answer is 13 June this year.

Mr. Prentice : Is it not the case that the Dutch Government kept 51 per cent. of the shares ? Is that not, therefore, a perverse definition of privatisation ? The Government hold the majority shareholding.

Mr. Clifton-Brown : I was coming to that very point. I will deal with it ; it is important and I should like to illustrate it a little later.

One option is to give the Post Office much greater freedom to trade commercially while still remaining in the public sector. Many hon. Members, including the hon. Member for Livingston (Mr. Cook), have said that the Post Office would not succeed in the commercial world. Three options are proposed in the Green Paper. The first is some form of greater freedom in the public sector, whatever that means. No one has yet been able to tell us whether that would mean that the Post Office would not have to apply to the Treasury every five minutes and that it would be given increasing freedom to run its business. What about the external finance limit of £230 million ? It has gone up four times since 1992. How would we deal with the increasing difficulty of the Post Office being in the public sector ? I do not think that that is a realistic option.

The second option in the Green Paper is much more realistic. It is that 51 per cent. of the Post Office should be privatised. That would create a partnership between the private sector, the employees, above all, and the public sector. That seems a sensible way to go forward. In the other privatisations, City investors have been a little slow to realise the fundamental change in businesses that have been in the public sector for so long. It seems eminently sensible to let part of the business be sold off to the private sector and to prove that it can be run successfully in the private sector.

In response to the hon. Member for Pendle (Mr. Prentice), I say that I see no reason why, as in the case of British Telecom, we should not sell further tranches. As he knows, each time we had a privatisation of British Telecom--BT one, BT two and BT three--the share price increased because potential investors could see that the business had a tremendous future in the private sector and that it was becoming more successful.

The Government are eminently sensible not to go for the third option of a 100 per cent. sell-off in one go, although I must say that my personal preference would be to sell off the Post Office in one go and to let the Post Office management have complete commercial freedom. Why on earth should they not have that freedom, as has been mentioned by other speakers ? As the Green Paper makes perfectly clear, the regulator's functions will be enshrined in statute. We are discovering in other previously privatised industries--water and electricity--how the regulator should function.

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Opposition Members have spoken of the excess profits, as they put it, made by the water industry. If the industry did not make profits, it would not have the money for the £27 billion of investment over the next 10 years. Opposition Members do not seem to want an improved water system. My constituents want ever better water quality and they want money to be put into better water services. If those companies do not make a profit, where would the money come from ? That is part of the problem about the Opposition's policy-- [Interruption.] The answer is always the taxpayer.

What has happened to those businesses in the past ? As we have heard, between 1976 and 1978, investment in the Post Office fell by a half and the same thing happened in the water industry and in the telecommunications industry. Why was it that up to the privatisation virtually every telephone box one went to was out of order and yet today 80 per cent. of them are in good working order and are clean ? It is because British Telecom is making profits and investing them to provide an ever better service. There is no reason why the Post Office, minus the counter services, should not do exactly the same. That is the way forward. We must also make sure that the regulator has all the statutory teeth that he needs. No doubt, night after night in Committee we will debate that very point. I want the regulator to have statutory teeth so that my constituents and those of Opposition Members, who have protested so much tonight, can enjoy the benefits to be gained from the Post Office providing a proper service, at a realistic price, across the country. That is best delivered by transferring the Post Office to the private sector, where it will make a profitable return. [Interruption.] The Opposition are obviously trying to make sure that I am truly put off my stride. They obviously do not like what I am saying.

Mr. Purchase : Is the hon. Gentleman in his stride ?

Mr. Clifton-Brown : I will happily give way to the hon. Gentleman.

Mr. Purchase : We need some explanation of one small point that you made earlier. You said that the Government were sensible not to sell off the entire shooting match in one go, but, seconds later, you declared that that would be the best idea.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. I am afraid that the Chair is unable to explain anything to the hon. Member for Wolverhampton, North-East (Mr. Purchase). He should refer to the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown), not to the Chair. He should not use the word "you".

Mr. Clifton-Brown : I am grateful for your little bit of protection, Mr. Deputy Speaker, but I was about to deal with the hon. Gentleman. He obviously was not listening to what I had to say, because, although my personal preference is for a 100 per cent. sell-off, I see the merits of a partial sell-off of between 49 and 51 per cent of the business. That would make a lot of sense from the taxpayer's point of view.

As I said earlier, the Government had considerable success in selling off tranches of BT and I am sure that the same thing will happen with the Post Office. From the

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point of view of business development, however, the commercial freedom that an immediate 100 per cent. sell-off would give to the Post Office would be of considerable benefit to it. I hope that I have managed to explain that difference to the hon. Member for Wolverhampton, North-East. It takes a little understanding and I appreciate that he is a little bit slow to appreciate such matters. The chief executive of the Post Office, Bill Cockburn, summed up the entire debate by saying :

"I have had to say quite bluntly recently that, without commercial freedom, we face an increasingly bleak future. Loss of business to the competition, from overseas postal administrations and the use of new technology, could mean both significant job losses and post office closures."

That just about sums it up.

The Labour party's motion advocates doing nothing in the hope that everything will be all right. That simply is not an option. The Opposition are burying their heads in the sand, but the Conservative Government have proposed realistic options in the Green Paper. The options will be thoroughly discussed and considered by my right hon. Friend the Minister. I look forward to coming back to the House in the autumn to debate this matter and to progress to selling off 49 per cent. of the Post Office's business. I look forward to that business going from strength to strength in the private sector. 7.23 pm

Ms Estelle Morris (Birmingham, Yardley) : Whatever our views about the future of the Post Office, hon. Members have a common starting point : there is universal agreement that the Post Office is a success story. Whether one considers the profits that it has made, its efficiency, its popularity or its social worth, the Post Office comes out with credit. No one has sought to advance any other view of the Post Office. We need to remember that all that has been achieved with a Post Office firmly rooted in the public sector.

The Post Office has already faced change. Anyone who goes around a sorting office will appreciate what it has had to do to mechanise. In recent years it has also restructured its work force. It has already adjusted to changing patterns of communications not only in this country but throughout Europe and the rest of the world.

At the very same time as the Post Office has coped with adjusting to meet all those changes, it has increased its profits, kept its prices down and helped, in no small measure, to pay off the Government debt. From all the evidence of what has happened in the Post Office so far, there must be a predisposition in favour of our leaving it in the public sector.

We are now told, however, that the Post Office faces a new threat of increased competition. Because of that, we are told that, for the first time in 150 years, the Post Office will no longer be able to cope with that competition unless it moves into the private sector. Despite all the adjustments that it has made, the mechanisation that it has introduced and the fact that the work force have adapted to new work practices, we are told that, because of that threat of competition, the Post Office can no longer cope in the public sector. Frankly, I do not believe that. I do not believe that that obstacle can be overcome only by a private company and I do not believe that giving the Post Office commercial freedom is the reason behind the privatisation proposal in the Green Paper.

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Let us look at the Government's record in supporting the Post Office in the two years since the general election. If Ministers are so concerned that the Post Office should be able to meet new challenges, why have they done so little to help ? Why have the Government left Parcelforce dangling, uncertain of its future, for two years ? Why have they taken just under two years to publish the results of the Post Office review ? If the threat of competition was so great, why did the Government cut investment in the Post Office in last year's public sector round ? Why did they double the external financing limit in a year and treble it in three years ?

The Government have cut investment while arbitrarily increasing their take of the Post Office's profits. They also shelved a review because of political shenanigans in the Conservative party. Those are more the actions of a Government concerned with securing their own future than the actions of a Government concerned with securing the future of the Post Office. Given what the Government have done for the Post Office in the past two years, one must conclude that their motives on the future ownership of the Post Office cannot be trusted. They are based on a different agenda.

I do not believe that privatisation is necessary to give the Post Office the freedom which it wants and which the Opposition acknowledge that it needs. I acknowledge that privatisation could give it the freedom that it needs, but the Opposition believe that the cost entailed is not worth paying.

The Green Paper acknowledges that, for centuries, the Post Office has

"made a vital contribution to our national life."

It also talks about the Post Office being a

"unifying force of the nation."

That is what is at risk, unless the Post Office stays in the public sector. Can we really see the private sector companies, shareholders or boards agreeing to keep open 5,000 small sub-post offices that represent only 1 per cent. of the company's business ? Can we imagine a resolution at the annual meeting of Royal Mail plc agreeing to keep prices 13 per cent. below the rate of inflation for a decade ? That will not happen. That is not what motivates a private company. Such agreements will not be reached if the Post Office is removed from the public sector.

What we have in the Post Office is not repeated anywhere else in British industry : it is a special mix of public service ethos with a commercially successful track record. That combination must be addressed successfully in any review of the Post Office.

In the private sector, the pressure to increase dividends and top managers' salaries, as well as to cut out economically unviable parts of the business, will dominate. That is, by nature, the way in which shareholders and private sector companies work. Hon. Members have already mentioned what has happened in the water companies and the electricity boards. Tory Members may talk about guidelines which mean that the Post Office should not do that, but the Government cannot give a guarantee that goes beyond so many years, and they will be under pressure for the regulatory body to limit its restrictions on Post Office activities. The definition of a company operating in the private sector is that it has the freedom to cut out parts which are not economically viable. I do not believe that any statutory measures will stop the privatised Post Office doing that.

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The Green Paper acknowledges that people are the Post Office's most important asset. Yet one of the main areas of anxiety and concern among Post Office staff--that of Post Office pensions-- is dismissed in only three lines at the bottom of page 26 of the Green Paper. In those three lines, Post Office staff are assured that the Government will safeguard pension rights. That assurance might be welcome-- indeed, I welcome it--but it does not go far enough and it is not sufficient to allay the justifiable fears of Post Office workers.

Post Office staff want to know what effect the envisaged changes in the Post Office structure will have on the now closed Post Office superannuation scheme and the Post Office pension scheme. Given assets of £10 billion and £435 million respectively and surpluses in both the closed and open schemes, Post Office employees want to know what access the board of a privatised Royal Mail will have to those funds. With Post Office employees paying 6 per cent. of their salaries in pension contributions, that is a question to which they are entitled to know the answer. Again, we wish to know how Postel, which has proved to be an effective investment arm for both the pension schemes, is likely to be affected by any changed structure in the Post Office.

There are 140,000 retired pensioners in the Post Office superannuation scheme and 120,000 still contributing to that scheme. Who will administer that closed pension fund in future if privatisation goes ahead ? One of the major anxieties for everyone in the Post Office is whether the Government will give a pledge that the pensions for both current and new employees will continue to be index-linked under a privatised Royal Mail. The Government have not announced how the assets and surpluses of the Post Office superannuation scheme and the Post Office pension scheme will be divided between a privatised Royal Mail, Parcelforce and Post Office Counters.

Post Office workers have worked in an atmosphere of uncertainty for the past two years, and that is long enough. I invite the Government to give firm assurances on the specific questions that I have raised about the future of the Post Office pension schemes. I look forward to the Minister's response in that direction.

The Government will find themselves in a small minority when the results of the consultation exercise are made known at the end of September. The people have a stake in their Post Office. They have a right to be heard ; more than that, they have a right to see their views reflected in any legislation that follows the consultation process. I believe that they, like us, will say that the future of their Post Office, which has served them well for more than 150 years, should be in the public sector, marrying the two ingredients of a successful and efficient public service and a profitable and popular commercial enterprise.

7.33 pm

Mr. Peter Ainsworth (Surrey, East) : This is an important debate because we are discussing not only an aspect of national life with which all of us are familiar--I know that my constituents in East Surrey are familiar with the Post Office because they use it regularly to communicate with their Member of Parliament--but two important and successful British businesses : a communications business and a retail business. We are talking about how we in Parliament can best help them to succeed.

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I agree with the hon. Member for Birmingham, Yardley (Ms Morris) that we start with much common ground. No one would deny that the Post Office has been successful in the past ; it incorporates not only one of our greatest distribution businesses but one of the greatest distribution businesses in the world. It has not only consistently improved its service delivery over the years ; it has managed to reduce prices in real terms and deliver a substantial stream of money--about £1 billion in real terms over the past 10 years--to the Treasury.

Equally, few people would deny that there are mounting and real pressures on the Post Office's ability to continue to succeed in the way that it has. For Royal Mail, the challenge comes principally, as we have heard, from the growth in telecommunications, faxes--which are growing at some 30 per cent. a year--and electronic data exchange. They all threaten the Royal Mail's largest and most profitable markets. My hon. Friend the Member for Gloucester (Mr. French) mentioned the current British Telecom advertising campaign. On my way here today, I drove past a poster which said :

"Enjoy a 1st class conversation for less than a 2nd class stamp". No further indication of competition is needed ; that advertisement sums it up squarely. We are talking about a global communication market ; we are not simply talking about the Post Office and Postman Pat, however important he may be.

If the Royal Mail is to maintain and improve its position within the communications industry, and if it is to participate in the activities that my hon. Friends have talked about, such as the international data highways of the future, it will require a substantial level of capital investment.

The Royal Mail has great advantages, as well as threats,, to face. It has a superb national delivery network ; it has a reputation for excellence in service delivery ; and it has a name that is recognised throughout the world.

For Post Office Counters, the challenge comes principally from a decline in its traditional markets, which has come about as a result of changing patterns of behaviour and the exercise of consumer choice. Ninety per cent. of Post Office Counters business is from as few as eight clients--and most significant among them is the Benefits Agency. We must consider the future of Post Office Counters in the light of the fact that, for example, 40 per cent. of new pensioners already have their benefit sent direct to their bank. We must also consider it in the light of the developing interest in direct debit and the fact-- [Interruption.] There is that fly again. I do not know what the Official Report will make of that. Stamps are now widely available from outlets other than post offices. I think that the fly is trying to deliver a message to the Chamber.

The Post Office Counters market is undoubtedly facing a threat as well. But like Royal Mail, it, too, has advantages. For example, it has 20,000 outlets. I think that that makes it the largest retail network in Europe. It has unparalleled penetration not only in cities but in town centres and rural areas. It is our job to help to build on those strengths to make it a truly successful business for the long term.

I freely admit that these are not particularly original observations. The same observations have been made by

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the Post Office, my right hon. Friend the Minister, my right hon. Friend the President of the Board of Trade, the Post Office National Users Council, the Mail Users Association, the Select Committee, the National Federation of Sub Postmasters and even the Opposition parties. All have observed the same trends, the same threats, the same challenges and the same opportunities, and all have been led to the same question : given that the status quo is not an option, how do we best enable the Post Office to build on its advantages and meet the challenges ? Of course, this is where the differences begin in the Chamber.

The Government have clearly considered the matter with great care. They have listened to representations before publishing the Green Paper. They have listened to the Post Office management, who have stressed that in their view the Post Office needs the freedom to raise capital, to invest with confidence, to engage in joint ventures, to participate in international markets and to develop new markets and technologies.

Now the Government have produced their Green Paper, and with it a recommendation which--not just in my view but, far more important, the view of the Post Office--represents the best possible way forward. I believe that the Government's preferred choice will satisfy the Royal Mail's objectives, which I have outlined ; in addition, it will have the benefit of enabling the work force and sub-postmasters to participate in the ownership of the company. Our preferred choice will build in greater consumer safeguards by way of regulation. It recognises the great public interest in the network of post offices, and it guarantees core functions in the service--daily delivery to all parts of the country and universal pricing.

The Green Paper is a consultative document ; it invites an informed debate. Yet what is the response from Opposition Members ? I fear that, taking their cue from the Union of Communication Workers and rooting their position in a blind attachment to state control, they merely offer a diatribe of scaremongering and a rather facile political polemic. They talk about job losses, post office closures and rising prices. They talk about failure--all this despite the evidence that they were wrong about BT, wrong about British Airways, wrong about gas and wrong about steel. Despite all that privatisation has achieved for taxpayers, businesses and consumers in the past decade, Opposition Members remain implacably ideologically opposed to it.

While the Union of Communication Workers rushes off to print two million leaflets and God knows how many stickers, the Labour party offers, in time honoured cliche , to

"turn the summer heat on to the Government by taking our campaign into the rural shires who have most to lose from the privatisation of the Post Office".

I wish the Opposition much joy on their rural ride. They tend to get a little lost in the shires.

It is an inescapable fact that, just as enabling post offices to increase substantially the range of goods and services that they can offer is the most certain way to ensure their success, so privatisation offers the best way forward for protecting jobs in, and enabling the future success of, the Royal Mail.

Opposition Members need to understand, when launching the campaign to which the hon. Member for Vauxhall (Ms Hoey) referred, that it will be a campaign against the Post Office, against its workers and against its future prosperity. When they return from the rural shires,

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accompanied by Sancho Panza in the shape of the Liberal Democrats, I have no doubt that they will continue to peddle the option about which we have heard so much today and which Opposition Members claim will achieve all that the Royal Mail wants and needs. In truth it will do nothing of the kind.

At least this time the Opposition parties have been able to face up to the problem, but unfortunately ideology has forced them to shy away from the solution. Curiously, there is one aspect of Opposition policy about which they have been rather reticent. We have not heard what that policy would be in the event of privatisation taking place. I invite the Opposition spokesman to confirm now that such is their commitment to the ideology of state control, so deeply embedded in the Opposition motion tonight, that they would not hesitate to renationalise the Post Office in the unlikely event of a Labour Government.

Mr. Cousins : The hon. Gentleman was presumably here at the beginning of the debate to hear my hon. Friend the Member for Livingston (Mr. Cook) make it clear that it would be our intention if we returned to power, and if by some mischance the option that the Government appeared to support had been implemented, to restore public ownership.

Mr. Ainsworth : I am grateful for that interesting reply. It differs markedly from my recollection of what the hon. Member for Livingston said. The Labour party appears to be divided, but it is encouraging to see that the clause 4 adherents in the Labour party are alive and well and sitting on the Front Bench. I have no doubt that the hon. Gentleman's answer will be noted with considerable interest outside the Chamber.

The nub of this debate concerns whether the Royal Mail can meet the challenges ahead while still in the public sector. The Opposition parties maintain that it can, but there are three obstacles to that. We have heard about them before, and I have yet to hear any convincing arguments that would remove those obstacles.

Mr. Clapham : Has the hon. Gentleman had a look at the Trade and Industry Select Committee report on the future of the Post Office, published in March of this year ? If he has read through the notes of evidence, he will have seen that the management of the Post Office stated that they would be well suited with the option allowing commercialisation of the Post Office, so that they would be freed from the external financing limits and able to compete on a level playing ground with the post offices of Sweden, France and Germany, which are also state plcs.

Mr. Ainsworth : I am glad that the hon. Gentleman has referred to that report, which I read with considerable interest. He will have noticed, of course, that since publication of the Green Paper the Post Office management have made it abundantly clear that they do not favour remaining within state control, for the good reasons stated in the Green Paper itself.

As my hon. Friends the Members for Gloucester and for Leeds, North-West (Dr. Hampson) said, the Royal Mail's ability to invest in new technology and in the development of new markets has been and is being hindered by Treasury restraint. As long as the Royal Mail remains in the public sector it will effectively be forced to compete in the general public expenditure survey, a fact clearly reflected in the rising EFL at a time of public expenditure restraint and of

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the application of the Treasury's blue pencil to the spending plans submitted by the management of the Post Office.

The Minister of State gave several examples of the sort of problems that arose for publicly controlled companies under the Labour Government, and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) dwelt on the same subject. It is essentially a simple idea : as long as the Royal Mail is owned by the state, the state will have other spending priorities and the Royal Mail will suffer as a result.

I should like to quote from the Select Committee report, which states

"the chief executive of the Post Office said that above all what was needed was that the Post Office should be free to raise money without it being in the PSBR and free to make investments without having to consult the Treasury every five minutes. We support those sentiments."

The hon. Member for Yardley may disagree, but it is frankly naive to think that those objectives can be met while the Royal Mail remains under state control.

Secondly, as we have discussed, competition with the private sector must operate fairly. I know that that is a difficult issue--the hon. Member for Gordon (Mr. Bruce) has said that it is by no means simple--but how can it possibly be fair to have a system whereby a publicly owned Post Office, backed by the taxpayer, competes with private companies for markets and capital ? That simply is not fair. The third problem with the Opposition's contention today is that although, as I think most people will agree, the future of Royal Mail lies in exciting new markets, if the company is to become a significant player in new markets for electronic information transfer, substantial capital investment will be required, and one is entitled to ask why the taxpayer should take risks on that capital investment which are rightly the business of shareholders and financial professionals.

The Green Paper says that, if the Post Office remains in the public sector, it may well be subject to slow decline, and we simply cannot afford to waste the opportunities that now exist. The Green Paper's preferred option makes clear a commitment to universal pricing and delivery ; it reinforces the position of Post Office Counters ; it enables the business to expand and develop new markets ; it recognises the social dimension of the Post Office and its services. It commits the Government to substantial continued investment in two businesses, which would be newly freed to succeed.

The competitiveness White Paper published by my right hon. Friend the President of the Board of Trade a few weeks ago discusses how the Government can best help British businesses :

"Often the Government can help most by getting out of the way." That is the case here.

Opposition Members claim to speak for the Post Office. They do not. They speak for the old socialist belief in state control. We have heard that from the Opposition Front Bench this afternoon. They have learnt nothing ; they would do it all again.

The Post Office, in any case, can speak for itself. It did so when the Green Paper was published. The headlines of the Post Office press release will suffice :

"Partnership Option Best--'A Real Winner for Britain' Post Office Urges Public Support".

It is a matter for great sadness that the Post Office will

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