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8 Jan 2002 : Column 516

Postal Services

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Caplin.]

10.20 pm

Mr. Colin Challen (Morley and Rothwell): I begin by thanking you, Mr. Speaker, for giving me the opportunity to raise the important issue of competition in postal services. This is the first Adjournment debate of 2002 in this Chamber, and it could not be more opportune.

We have just come through a record-breaking Christmas period, in which the Royal Mail delivered 50 million more items than in the same period of the previous year. That took the total number of cards and letters delivered to well over 2 billion. The tens of thousands of post men and women achieved that in all weathers, generally without any significant hitches and generally on time. They should be congratulated.

However, it is also important to raise this matter in the House now because alarming reports—subsequently denied—have emerged in recent weeks that tens of thousands of post men and women were to be sacked. There has also been the ongoing Postcomm consultation on competition in postal services, the responses to which were published on 28 November. Notwithstanding that consultation, I note the concern of the Communications Workers Union that Postcomm had pre-empted the conclusions by beginning the process of issuing licences to competitors. Some consultation that is turning out to be.

Since the general election, there have also been two early-day motions—one in my name—supporting a universal postal service. They have attracted widespread support. Last but not least, there are continuing and disturbing reports that, although Consignia's postal business has been granted a 15-year licence, it is being considered by some as ripe territory for that worst of all privatisations—dismemberment by outsourcing.

Before I look at some of those issues, I want to acknowledge the support that the Government have given to the Post Office. Although I shall be talking primarily about postal services, I confess that I shall use the shorthand term "Post Office" instead of Royal Mail, Parcelforce or Consignia, as that is how my constituents recognise and refer to the business. Perhaps I and they are being old fashioned but, if so, I offer no apology. Some of the standards that we expect from the Post Office are decidedly old fashioned—if that means quality as opposed to mission statements, mail delivered on time as opposed to value-added services, or a universal postal service as opposed to a system based on "you pays your money and takes your choice".

For the first time, the Government have enshrined in law the principle that there should be something called the universal postal service. I admit that the proposal is not that the universal postal service should be publicly owned, nor that it should necessarily be delivered by one business.

I share the concerns of Age Concern, which have also been expressed by Postwatch. Age Concern sought clarification of what Postcomm meant when it used the term "universal postal service" in its consultation document. The minimum definition provided by the Postal Services Act 2000 seems clear enough, but the fear is evident that the universal service could merely become

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what some people might call the "bog standard" service and that it could be, as Postcomm suggests, in need of subsidy. A minimum level of service is just that—a minimum: like a speed limit, it is not necessarily a target to be worked towards.

Thankfully, the Government have kept faith with the British people by rejecting the Tories' proposal for outright privatisation of the Post Office. It comes as no surprise that the Conservatives want to sell off a service that has been part of the fabric of our country for more than 350 years, and it will come as no surprise when they return with the same policy in a couple of years' time, as they no doubt will. I understand that the Centre for Policy Studies is working on it already.

The Government can be congratulated too on maintaining the current licensed area—that is, the limits on competition for items under £1 in value, or under 350 g in weight. They are also to be congratulated on lifting some of the borrowing constraints on the Post Office and on lifting the external finance limit, which had effectively prevented the Post Office from investing in new machinery, buildings and information technology.

Giving the Post Office more financial freedom was the biggest step forward in allowing it further to develop and enhance its services. For too long, it had been a milch cow for the Treasury, delivering billions in revenue. Since the 1970s, we had been beholden to the idea that somehow the Post Office had to pay back earlier subsidies from the taxpayer from the time when it was, in effect, a Department and run like one.

Everyone is content that Post Office has moved on from that mindset, but the question we face at present is whether we must say goodbye to the public service ethos altogether, or say hello to the service industry ethos that is, in my experience, something very different. The Post Office's competitors certainly want what they describe as a level playing field across Europe, allowing only minimum state intervention but maximum competition. That is the view of the CBI, trade bodies and others. For them, the liberalisation of trading services is a holy grail. Perhaps the only thing preventing the progress of so-called competition in postal services is that those bodies have not yet quite figured out how to dismantle the necessarily large national postal services into pieces small enough for them to digest. They also know that throughout Europe politicians—let me rephrase that: European citizens—do not want myriad services at different prices, from different outlets and with different delivery mechanisms to complicate their lives further. If they wanted such services, why have postal volumes stagnated in Sweden, where there is a fully liberalised market?

The universal postal service is as natural a monopoly as they come. That should not be seen as a failing but as a strength—suitably regulated, of course. What do we face at present? Partly in response to single-market pressures—which I acknowledge are genuine, as cross-border trade and postal volumes are increasing—and partly, no doubt, due to behind the scenes lobbying in Brussels by such bodies as the LOTIS—liberalisation of trade in services—Committee, predatory campaigns are being mounted to top slice some types of postal business and give them up to so-called competition.

My use of the phrase "so-called competition" is a reference to the type of revenue-generating business that can be handled without large overheads: urban, big-city

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business mail as opposed to rural, domestic mail. The arguments are well known and I do not want to go over them again; nor, it seems, does Postcomm, which clearly feels compelled to give licences to so-called competitive services, thereby denying yet more of that profitable work to the Post Office.

There is a big question that must be answered urgently: how far down that road do the Government think it possible to travel before we end up with a basket case postal service for everybody else? The loss of such revenue to the Post Office will have a disproportionately large impact on its profits.

We seem to have decided that we want a Post Office, but I am not sure that current trends would permit it to be a profitable one—unless, of course, we take the route of back-door privatisation, which is sometimes known by the euphemism "outsourcing". For example, given a full head of steam and, presumably, without any need for intervention from the Post Office's single shareholder, the management of the Post Office could choose to outsource the fleet management of their 30,000 Royal Mail vehicles and their 10,000 Parcelforce vehicles.

I am sure that it would look good on paper to create a stand-alone fleet management business, with staff sent across to the new business clutching their TUPE fig leaves. Eventually, of course, such a business would start employing new staff at lower rates of pay, with worse terms and conditions and worse outcomes. For example, that is what happened under many hospital cleaning contracts.

I have no doubt that, eventually, it would be necessary to wait longer and longer for work to be done, because the whole business philosophy of just-in-time delivery—the effort to reduce overheads—would inevitably take its toll.

Fleet management is one sector that appears to be in contention for outsourcing. Sortation might be more contentious. The manufacturer of sortation equipment might be asked to lease the equipment to the Post Office on the basis of a private finance initiative, complete with staff to run the whole process in an area. The staff, naturally, would not be Post Office employees. They would not necessarily be on the same terms or conditions or even working exclusively on the Post Office contract. That would certainly reduce the Post Office's overheads, and what a marvellous entrée it would make for competitors which might contract to use the same equipment for their own services. Is there any way of preventing that from happening, except by saying that what we mean by a universal postal service includes the word monopoly?

What I have described is not such a far-fetched proposition. Already the name of Siemens, which manufactures such equipment, has been linked with something like this scenario, except I have read that postal delivery staff may be asked to wear Siemens logos as part of a sponsorship deal.

What else could be outsourced? Everything, in reality. We could have partnership deals, sponsorship deals, holding companies—indeed, that is all that Consignia actually is. A few years down the road—15, perhaps—we would have a Post Office that was unrecognisable and could easily be 50 or 75 per cent. privatised in effect. The staff would notice the change, of course. They—those that remain after natural wastage—will not have very

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encouraging prospects. Let me quote from a report called "The Impact of Competition in the Postal Sector" by the Association of International Couriers and Express Services. In consultant-style speak, it addresses the impact of market features which need to be considered:

That is the problem in a nutshell. However, I would say to the author of that piece that it does not apply simply to new entrants. Look at the way in which Post Office staff are increasingly employed. Flexible working is the order of the day and I suppose we must call a spade a spade. "Flexible" generally refers to part-time work and the very nature of such work means more casualisation and the necessity for working men and women to take on other part-time jobs to secure a reasonable standard of living, not to mention having to rely on the working families tax credit to top up their earnings.

None of that features in my vision of what a modern Post Office should look like. I realise that we may no longer be employing postmen and women who had to sign the Official Secrets Acts before they could start work or had to sign for their brass security badges, along with their uniforms. Those requirements were designed to reassure the public about the security of their mail. The idea was, I believe, that they were people who could be trusted and respected. They were not transient employees, demotivated and anonymous.

In my vision of what we should be seeking, the notion of the public service ethos still looms large. Why, when we talk about community safety, do we never assume a role for the largest uniformed service in the country, whose members walk every street in every town and every village and pass every letter box of every house every morning six days a week? Has the public service ethos of the Post Office become so invisible in this competitive age that we cannot harness sufficient imagination to see what a gem we possess?

In all my reading in preparation for this debate, I have seen no lateral thinking about how we can develop our publicly owned universal postal service. If we do not, I fear that we could witness a disaster of Railtrack proportions—a disaster for which we never intended to legislate.

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