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7.36 pm

Clive Efford (Eltham): Earlier, I challenged the hon. Member for West Derbyshire (Mr. McLoughlin) about the Conservative party's position on Railtrack and its demand that the Government should devote taxpayers' money to paying dividends to Railtrack shareholders. I wanted to know how its approach to that issue compared with its position on Consignia. The hon. Gentleman failed to answer that question.

I think that we can dismiss the Conservative motion. I doubt that anyone will believe that the Opposition would do anything other than privatise the postal service. That demonstrates that they have learned nothing from the past five years, and that they will be consigned to the Opposition Benches for many years to come. People can be pleased that, at least in the near future, they will be saved from another term of Conservative misrule.

I wish to take this opportunity to pay tribute to postal workers in my area. They have been through a difficult time, and my hon. Friend the Under-Secretary must understand that parts of the work force are very demoralised. We have a lot to do to assure those people that their futures are secure. There has been a great deal of scaremongering, and that will inevitably cause much anxiety.

In recent times, the postal service in my area has been very short of staff, as a result, it seems, of management failure, but, even so, local workers displayed an enormous amount of good will. For instance, they used their own cars to take extra bags of post out to make sure that people got their post on time. In addition, they turned up early for work so that they could sort the post and get out on time. In that way, they made sure that they met the delivery deadlines for the first post.

Unfortunately, a new manager was appointed who did not respect the good will and dedication to providing a quality service exhibited by the work force. He started to play about with some of the restrictions governing the use of private cars, with the result that the good will was lost and the postal service in Eltham deteriorated enormously. For many people locally, that caused problems that went on for a long time. It has taken a lot of effort to put matters right.

There was a long delay in implementing a review of the local postal service. It was clear to anyone who knew anything about the matter that extra staff were needed. I intend to return to the question of the universal service and the fact that it is so labour intensive.

With a few exceptions, the service in my constituency has got much better, because extra staff were taken on. Some of the attempts made by the postal service over a number of years to automate the service and the sorting, which were doomed to failure, underline the fact that this is a labour-intensive service. The prospect of large cuts in

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the work force raises anxiety about the quality of the service in the future and the ability to deliver a universal service.

The delivery of letters to every household every day of the week requires a high level of service and is dependent on a vast army of postal workers. Figures in the Consignia budget show a huge overspend in the universal service. The Postcomm website puts the cost of providing a universal service at around £80 million. That is cross-subsidised from more profitable and lucrative areas of the postal service.

The future funding of a universal service gives rise to great concern. From what is said on the Postcomm website, it is clear that it is determined to have more competition in the postal network. That in itself is not a bad thing; I do not object to competition per se. However, when such competition is bound to undermine the postal service's ability to deliver a universal service to every household in the country, we have to question whether that is the direction in which we want to go.

Postcomm states that competitors coming into the market need not necessarily provide a universal service. I feel that I should point out to my hon. Friend the Minister that the costings for Postcomm were carried out by Andersens. He may wish to revisit those calculations in the light of recent events.

Postcomm is offering a recipe for cherry-picking the more lucrative areas of the postal service. That, in turn, will cause a great deal of concern not just to the work force but to those who rely heavily on the universal service.

A great many of my constituents who run their business or work from home rely on the postal service. I know that because when we recently had problems with our local postal service, they expressed their concern to me about the poor quality of service. We must ensure that their needs are considered when we look at the future and at the standards that we set for a universal service.

I was concerned when I heard a Consignia spokesperson suggest on the "Today" programme that a universal postal service might mean that a letter was delivered some time within the working day. For people who rely on having the post delivered within a reasonable period of time, that could have a devastating effect. When challenged, he said that perhaps Consignia could come to an arrangement for people who rely on it. If such an arrangement results in extra costs for those people, particularly if they work independently and have not budgeted for it, I am sure that it will not be welcome. I ask my hon. Friend to take that on board when considering the future of a universal service. Many small businesses rely on it heavily, and any changes to the delivery of the service could have a devastating effect on them.

Staff are concerned about the effects of many of the decisions made in the postal service. An enormous amount of money was invested in the Horizon scheme, for instance—I am advised that the figure exceeded £500 million. When they see Consignia return a loss in this financial year, they are worried that their jobs could be threatened by decisions over which they have no influence and which do not have a direct bearing on their performance.

Money has also been invested in the integrated mail preparation scheme, which cost more than £120 million, and is still not in operation. The work force feel a great

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deal of frustration and concern that they may be faced with redundancies as a result of poor management decisions. The scheme was purchased to automate the sorting of mail and, according to my friends in the Eltham post office, it is still not in operation.

Postal workers in my constituency feel threatened because of those decisions. We need to impress on Consignia that a great deal more needs to be done if industrial relations are to be improved and we are to avoid a strike.

Let me refer in passing to South West Trains. The trade union is prepared to go to arbitration and has acted within the law. If it had not, South West Trains would have gone straight to court to deal with the union and stop the industrial action. Managers are being used to undermine the strike, and the long-term effects on industrial relations in the industry could be felt for many years to come. We could rue the day that South West Trains took action to undermine the strike. I caution against any such action being taken in the postal industry, which already has poor industrial relations in many areas because of the decisions and threats that have been made.

People in my constituency and elsewhere want a reliable, efficient and economic public mail service. I accept that most people would not be concerned if part of the service were provided by the private sector. They are concerned about the quality of the service. However, it is not possible to maintain a universal postal industry where the core function is to provide a universal service without the cost being underwritten by the Government or by cross-subsidies from other lucrative areas of the postal industry. I caution against further privatisation without taking those issues into consideration.

7.48 pm

Mr. Robert Syms (Poole): The debate is about the Government's mismanagement of the Post Office. If we had been in year 1, year 2 or even year 3 of the Government's term of office, the debate might seem a little unfair, but this is year 5. The current Post Office regime is covered by the Postal Services Act 2000, which, as we have repeatedly heard in the debate, was passed in the face of many Government assurances about what it would mean for the Post Office and the services that it was meant to deliver. So this is a perfectly fair debate to have and, as we have heard, the Post Office, or Consignia, has major problems.

When we talk of the Post Office we mean both the monopoly state business and thousands of small private businesses. I am not sure whether I agree with some of the comments that it is terrible to privatise the Post Office, because, of course, much of it is privately run. The general efficiency of the system over the years has been underpinned by the fact that it has been a successful marriage between small private businesses and a universal Post Office. However, there is no doubt that change is necessary because the volume of letters sent is not rising as much as it used to. There is a vast number of alternatives, ranging from electronic mail and mobile phones to the fax machine. They all mean that the Post Office—Consignia—will have greater difficulties in maintaining its market dominance in future.

The Government's solution has been to set up a state-owned but independent business. As we have heard, that business is suffering—it has moved from profit into

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loss. There are reports in the newspapers almost weekly about suggested changes to the service—the suspension of second deliveries and so forth. It is a business whose chief executive just happened to mention before a Select Committee that as many as 30,000 workers may lose their jobs. The business is not in a happy state. It does not seem to be well managed at present and it needs to change.

Some of my colleagues have suggested that private capital might be needed in the industry. The reason is not that we believe that privatisation is necessarily always the best solution for every case, but that sometimes, in industries such as the Post Office, we have to change the culture. Part of the problem—as we have heard repeatedly during the debate—is that the management and the trade unions, both of whom have had problems over the years, have not worked well together. We have a changed name and a changed set-up but the same old culture, which does not deliver the first-rate service that we need for this century. That is why we sometimes need to consider the ownership of businesses and how they are run.

My hon. Friend the Member for South-West Hertfordshire (Mr. Page) set out clearly what happened 10 years ago when the Government under John Major had to back down, due to the size of the parliamentary majority against the options that they were proposing. To some extent, we are returning to the debate that was held 10 years ago. The Labour Government are having to change the way in which the Post Office is managed—perhaps far more than they would have admitted 10 years ago—because of tremendous pressures from various sources.

Under the Postal Services Act, the Government proposed Ofcom. We all know that Ofcom, due to pressure from the European Community among other things, will be making proposals for increased competition in the postal market. We are all concerned about whether that will kill the universal service or spur the company into making the service more successful in future.

None of us knows what will happen, but we know that there are tremendous challenges. The Post Office has high fixed costs, but we know that the whole regime will have to change during the next few years. The company will have to face those challenges under the Labour Government. It is thus right and proper for my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) to say that our view will be set out in our manifesto, as we do not know what state the business will be in when the next Conservative Government take office. That is fair, because things are changing fast—indeed, in some cases, they are deteriorating much more than one would have thought possible a few years ago.

The business has stodgy management and the trade unions have not learned that they will have to improve their working methods. A total of 62,000 days has been lost through unofficial strikes, which have caused their own problems. We can all offer examples of industrial action in various sorting offices that has caused tremendous disruption to businesses, especially to small businesses.

Earlier in the debate, we heard how unusual it is for people to wait behind their front door for the mail to arrive. We were told that people have better things to do.

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However, the reality is that many small businesses in my constituency depend on the arrival of the mail because it brings the cheques that they need to pay wages and bills in order to trade. A regular cashflow can mean the difference between life or death for some businesses. That is why the postal service is important. Regular and decent deliveries are essential. There must be change.

There is no doubt that the sub-post office network faces major challenges. We have already heard that 547 sub-post offices closed during the past year. We know that the ACT changes—payments through banks—will deprive many of between a third and a half of their income. Many of those small businesses are marginal—they barely make a living—and if their income falls by that amount they will face problems staying in business as part of their community. There will be an avalanche of closures over the next few years.

None of the questions posed during the debate has been answered. It is true that the payment of benefits through post offices is an implicit subsidy of about £430 million for the post office system. It might be respectable to say that post offices should not have that role, but if the income of those small businesses is to be sustained the money will have to come from somewhere else. Although several schemes have been suggested, none of them would produce anything like £430 million.

The Government's proposals for a universal bank to offset that loss of income may not be implemented on time. We are not sure that the bank could cater for the required number of people. There are also concerns about whether a cap will be imposed.

When the Government took office, about 30 per cent. of benefits were paid through banks. The amount has risen to 40 per cent. but it will have to rise to almost 100 per cent. Will the universal bank have the capacity to deal with the rush? Will it be able to ensure that benefits are paid after the changes?

There are great concerns. Many sub-postmasters have invested years in their small business. They are part of the community, and dealing with that change is presenting them with a huge challenge. They are concerned. We have received general assurances, but nothing to make up for that substantial loss of income. That will have a major effect not only on the rural economy but in many urban areas.

I have an urban seat so I have not experienced the scale of the problems described by some Members today who have spoken about post office closures in villages. However, many urban branches will close. Many pensioners and others in my constituency consider their local sub-post office as an extra arm of the social services. They go there for advice and for help in filling out forms, to check information and sometimes to have official letters interpreted. The sub-post office is an important part of their life. When those businesses close, people will no longer have that facility. They may write to their MP or visit the citizens advice bureau, but all of us will find that the quality of life for many of our constituents will have deteriorated as a result of those changes.

We want a clear view of where the Government are going. We want an explanation of how the business will change in the broadest sense. How will Consignia perform in the future? We want reassurances about how the competition regime will change things. We want further assurances about the impact of the Government's policy

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on the large number of sub-post offices. Will the Government be able to deliver their universal bank? What is their commitment to subsidy? What and how much will it mean for the sub-post office network?

Although many questions have been posed in the debate, we have received few answers. There have certainly been few answers that will reassure those whose future depends on those answers—whether small post office businesses or the people who value and rely on their services. This is only one debate, but if we do not receive answers today we shall return to it. This will be a key political issue for the next two or three years. I can see only bad news ahead. If the Government do not listen, it will be bad news for them.

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