Community Postal Services

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Miss Anne McIntosh (Vale of York): Does the hon. Gentleman accept that that is why Sweden, with its well-developed social welfare model, has a staggeringly high rate of income tax?

Mr. Connarty: I am sure that that is one reason. Similarly, Denmark, which is probably the most environmentally conscious country in the world, levies a huge amount—we would probably see it as a penal level—of energy tax. However, people in Denmark value the environment so highly that they do not consider the tax level an imposition. Liberalising in the way that Sweden and, possibly, Finland have done fits with their way of doing things. I do not think that it would necessarily suit this country's economic environment. I hope that we do not follow the Swedish model, as it clearly leads to higher consumer costs, which would be unacceptable. Opposition Front Bench Members made a similar point, albeit for different reasons. It would not be acceptable to the public if we opted for a single tariff but the tariff kept rising beyond the level of inflation.

Mr. Tim Loughton (East Worthing and Shoreham): Perhaps I might question the hon. Gentleman's logic. Although environmental consciousness is exceedingly high in Denmark, and taxes on energy are also very high—for example, VAT on domestic electricity is about 25 per cent., with no discount for pensioners—the level of CO2 emissions per head in Denmark is one of the highest in the European Union.

Mr. Connarty: I take the hon. Gentleman's word for that. I shall look it up. Nevertheless, Denmark is clearly going in the claimed direction. I recently visited Denmark to examine its wind-power projects, which are advancing quickly. That country will be using less energy in 2020 than now, even with an expanded economy. If we could boast such a change, we would be doing very well. However, we have moved away from the subject of the Post Office.

The second factor is the impact that a change in weight levels might have on a universal service. It seems that everyone here finds the assessment of the 150 g limit acceptable, and believes that we can move towards liberalisation by reducing it to 50 g. The 50 g level was originally recommended by the Commission. I do not know whether the hon. Member for Vale of York, who was then a Member of the European Parliament, was party to that Parliament's decision to oppose the 50 g limit. If the Post Office, or Consignia, loses 30 per cent. of its volume or 40 per cent. of its revenue should the limit be reduced to 50 g, it is likely to cause difficulties. Solutions may be found to those difficulties, but the change is not acceptable.

Miss McIntosh: I am sure that the hon. Gentleman will acknowledge that his socialist brethren in the European Parliament opposed the 50 g limit, but Christian Democrat and Conservative Members were in favour.

Mr. Connarty: I do not know the arithmetic, but when Europe moved to its crazy system of proportional representation, the Labour and Socialist groups were reduced to a minority. Even with a so-called socialist minority, the European Parliament was still opposed to the 50 g limit. I commend the hon. Lady for her continued support for Europe; she is a member of a euro-sceptic party—even a xenophobic party. When the hon. Lady and I were last there, I noted that that view was echoed by her European colleagues on the Constitutional Committee, despite the fact that the party leadership is anti-Europe at the moment. Even with a non-socialist majority, the European Parliament is opposed to the 50 g limit.

I was interested to discover from a memorandum that Finland, Sweden, Denmark, Germany, the Netherlands and Austria are the only countries in favour of full liberalisation. A more gradual approach is supported by France, Greece, Luxembourg, Spain and Portugal. Italy, Ireland and Belgium are fudging the issue and not taking a firm position, but they seem not to support the 50 g limit. That shows that we are in the mainstream in Europe on the matter; we should remain so.

The Post Office Commission is an excellent initiative. It is a good idea for a commission to look at the industry and try to judge what is fair. However, it must not be obsessed by price, as was the telecom commission. The telecom commission's price obsession and its determination to break up our largest UK plc telecom asset, British Telecom, did great damage to that company. Regulation must be quality driven. That has been missing from the regulation of BT, and it must form part of the role of the Post Office Commission. It must have a clear and specific remit to ensure the maintenance of high quality services and to assess whether any competition cherry picks and damages the central purpose of a universal service. That central purpose is to give everyone everywhere the same quality of service at a reasonable price, rather than to provide a service that focuses only on price, which may allow in competition that damages the quality of service so that it becomes cheap and shoddy. I hope that we will consider the BT experience when we talk to the Commission.

Mr. Page: I find some of the hon. Gentleman's arguments confusing. Will he expand on the parallel between the Post Office and British Telecom? Surely today, as a result of privatisation policy, we have more choice in telephones, mobile phones and other communication services in that area than we could have dreamed of if BT had remained under state control.

Mr. Connarty: There is no way to judge that hypothesis because to ask, ``Where would we be now had telecom services remained wholly publicly owned?'' is a hypothetical question. I believe that, under this Government, who have a positive attitude towards the market and liberalisation, we could have retained BT under public control and seen a reasonable and balanced expansion of all our current services. Instead, a major deliverer of a fixed network, which should be delivering the highest level of telecommunications and computer services to everyone in the country, is so burdened with debt that it cannot expand its ADSL or other facilities, which would enable it to provide a much better service. We have damaged one of Britain's greatest assets by allowing cherry picking of its more profitable assets, but that is the subject for another debate.

What mechanism exists for taking into account the concerns and debates generated by the devolved legislatures? To give proper note to the wishes of people in Scotland, it cannot be sufficient for this matter to be raised only by Members of this Parliament. The devolved legislatures, especially the Scottish Parliament, have the time and processes to enable them to debate and take evidence on such issues in a way that we cannot. As this is the Parliament with reserved powers, I would like to know what mechanisms are being put in place to allow those views to be taken into account when we debate matters in a European context.

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Miss Anne McIntosh (Vale of York): As a member of the European Scrutiny Committee, I welcome this debate. It was the wish of that Committee that we should fully discuss the draft directive and scrutinise its proposals. This morning, we have gone some way towards that. The directive represents only a modest move towards liberalisation. We are asked this morning to take note of the directive and to welcome it as a useful framework for the future liberalisation of postal services in the European Union. I wholeheartedly support the motion.

A universal postal service should remain at the heart of our system, and that must not be compromised in any way. That is a matter of interest and priority for the Swedish presidency, and I understand that discussions will continue under the French presidency, although no decision is expected before the end of this year.

The Swedish and Finnish post offices have liberalised further and beyond the objectives of the directive. Both suffer from rurality and a sparcity of population. It is obviously alarming to see that the Swedish Government have imposed VAT on post office services, which undoubtedly led to the increase in prices. It was commendable of the Minister also to acknowledge that owing to increased competition, prices in Swedish cities have fallen. That is now a matter of record and it is a welcome development.

I support the Government's thinking that the Commission proposal to continue with a simple formula of a weight and price limit is consistent with the UK view that there should be a clearly defined first step. The Government are considering the focus of that first step and the reduction of the reserved area to 150 g could be achieved without putting the universal service at risk. If that is the case, perhaps we can revisit the question of 50 g. I believe the Minister said that the second deadline was 2007.

We have not considered—the Minister may comment on this when he sums up—the ever greater service that couriers perform. They are competing with the Royal Mail and its equivalents throughout the EU and no one has considered how the courier service will develop in tandem with them. I should like to examine that in more detail.

The directive also proposed to introduce a new definition of special services, which would bring added value enhancements to postal services that are then taken to be outside the reserved area. I support the Government. They are right to insist on further work on the definition of such services so as not to put at risk the legal certainty provided by the proposed weight and price limit definition of the reserved area. I should also like to commend the Government's objectives as set out in their explanatory memorandum of 9 October 2000, which says:

    ``These proposals to liberalise the postal market come at a time when the Government is putting in place a new legislative framework for the regulation of the UK domestic postal market to give the Post Office the commercial freedom to operate effectively in a dynamic and changing global market.''

The Minister went on to state the value, importance and cost to the whole service of the continuing emphasis on rural services. His memorandum refers to the recent performance and innovation unit report. My concern is that the rural postal network will come under even more pressure. I am sure that the Minister and the Government would accept that. When the computerisation programme has been completed, the Government propose to take away the right for benefits and payments to be paid exclusively through postal services with the introduction of the universal bank. I hope that that will not expedite further the closure of rural post offices. My understanding is that such post offices currently earn 40 per cent. of their income in that way. If there is a further charge on the postal network nationally, it will be a greater burden for post offices to bear. I welcome the debate. We have had a good run around the course. I have no hesitation in supporting the motion before us this morning.

11.58 am

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