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Mr. Bacon: I have two points to make. The first is to say that the hon. Gentleman has been trying to describe Conservative policy when no Conservative Member has promoted the idea of privatisation in this Parliament yet. The second is to ask whether he does not recognise that the deterioration that he is describing is happening now. We are interested in what the solutions are for the deterioration that is happening now under a publicly owned company.

Mr. Challen: The hon. Gentleman will hear one or two of my suggestions as I conclude my speech. On his first point, I am describing the effects of privatisation in other countries.

Let me deal with price. That is what the Conservatives want. They are fixated with pounds, shillings and pence, or perhaps I should say euros and cents. We might ask why it is that we have some of the cheapest postal rates in Europe. A National Audit Office report makes that clear. In the UK, it costs just l9p to post a 60 g item; in Germany, it costs £1.08p. Full privatisation would bring the joys of many price hikes. It has been suggested that privatisation would lead to many services that we accept as standard—such as early morning delivery—becoming premium rate services. We would have to pay more for them.

How long would it take for a case to arrive at the European Court of Justice brought by the competitors of a privatised Post Office asserting that the value added tax exemption was illegal? A row is already taking place in Germany over whether the partially privatised Deutsche Post should have certain tax exemptions. It would not take the Post Office's competitors any time at all to realise that the VAT their customers had to pay was placing them at a disadvantage. So there would be another price rise for everyone to pay, but without any extra benefit.

Where is all the competition coming from? It is possible to believe from some reports that tomorrow morning, or perhaps tomorrow afternoon, people will wake up and find that some of their mail is to be delivered by a Dutchman. Perhaps a German will then come cycling down the street with direct mail, followed by a Swede with a stocking filler from Stockholm. Indeed, it is generally agreed that in recent years it is direct mail, or junk mail as some people cruelly call it, that is the driving force in maintaining postal volumes. I can believe that, having just torn up the 20th credit card offer that I have

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received since Christmas. The message of the market is: "You owe it to direct mail that you have a service at all, so do as we say, or the Post Office gets it."

I do not buy into that, and I suspect the vast majority of the British people still do not buy into that. We want a Post Office that delivers for all, equally. That is why it is natural for it to be a monopoly and, as such, the public interest is best protected by its being in public ownership.

Half of the reasons that are driving market change in postal services, which are summarised on page 23 of the NAO report, are specious. They are assertions that can and should be challenged; for example, that legislation must lead to liberalisation. Much of the time legislators are accused of lagging behind, but the underlying assumption, whichever way round the equation works, is that liberalisation can bring only benefits. We should be grown up enough to say that sometimes it does and sometimes it does not. This is a case in which, as I have made clear, it does not.

We have to address what action the European Union is taking to ensure that citizens' interests are protected. I am afraid that it is not the direct mail industry, for all its undoubted benefits, including credit card offers, that will be the ultimate protector of people's interests; it is the Government. That is why we should be challenging the EU's objective of complete liberalisation of postal services by 2009. To achieve that objective, each country's postal service will have to relinquish more and more of its restricted area to competition. The EU is effectively telling us that our Post Office should be just like any other business, be it Joe Bloggs express deliveries or a transnational corporation, which can decide, from some remote headquarters, how our national interest in this essential service is to be upheld.

Finally, I have no doubt that the management of the Post Office can be improved, just as the management of any organisation, including the Conservative party, can be improved. Thankfully, we are not considering the latter today. The Government are clearly not responsible, nor should they be, for the day-to-day operational management of Consignia, but I urge them, as shareholders, to ask Consignia what are its plans to broaden the business.

David Taylor (North-West Leicestershire): My hon. Friend is right to say that the Government are not responsible for Consignia's day-to-day decisions. Nevertheless, should not our colleague on the Front Bench have a word with Consignia's management about its approach to industrial relations, following the casual announcement in a television interview of the probability of 30,000 redundancies? Is that the way to motivate the work force on whom Consignia's reputation depends?

Mr. Challen: I agree with my hon. Friend that that is not the way to operate. Having said that, a reading of the 1994 debate to which I have referred reveals that even then, eight years ago, it was claimed that 27,000 job losses could be the cost of liberalising postal services.

It is clear that, privatised or not, other countries' post offices are moving into other areas, such as logistics, which add to their profitability. In preparation for this speech, I did a survey of the websites of other national post offices, privatised or not. They offer a greater range of services than the British Post Office is willing to offer.

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I would like our Post Office to work with the British printing industry, for example, to send a message abroad: "The British are coming. Our product is excellent." We will win business on that basis, not by decimating our Post Office.

8.32 pm

Mr. Michael Weir (Angus): It goes without saying that Post Office deliveries are vital in Scotland and Wales, but that is especially true in more rural areas such as the highlands and islands, which get deliveries because of the universal service obligation. We in the Scottish National party and Plaid Cymru believe that that should be protected at all costs, and we do not believe that it will survive under privatisation. On that basis, we cannot support the Opposition motion, as we believe that they are seeking full privatisation. That does not mean that we are completely happy with the Post Office, or Consignia, as it is at present—far from it. I agree with much of what Conservative Members have said about the rural sub-post office network. However, the universal service obligation is important to rural Scotland.

We have heard much in the debate about e-business and the threat from text messages and e-commerce, but although we can order goods over the internet and even pay for them electronically, until we get our hands on Star Trek's transporters, someone physically has to move goods from one place to another. In most of rural Scotland, that service is provided by the Post Office. The universal service obligation ensures that those in remote areas of Scotland and Wales can get packages delivered at the same cost as those who live in more central or urban areas. Under privatisation, or even part-privatisation, that service will be chipped away.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): I note that the hon. Gentleman praises the universal postal service, and I join him in that, but does he accept that as Scotland has a higher percentage of rural areas than England and Wales, an inevitable consequence of independence would be higher postal charges for people living in Scotland?

Mr. Weir: After independence Scotland will have a much more efficient postal service.

At the moment, however, no one else will provide that universal service in Scotland. It is interesting that many other carriers already refuse to deliver to the highlands and islands or will do so only at a much greater cost than that charged by the Post Office. Indeed, that includes the carriers praised by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) that are owned by continental post offices. If the universal service provision is withdrawn by Consignia, or amended in any way, that will inevitably lead to greater costs for people living in remote areas and contribute to the cycle of rural decline.

Lembit Öpik (Montgomeryshire): Does the hon. Gentleman agree that in areas such as mid-Wales, the fear that those services may be withdrawn is having a practical effect on people's outlook and quality of life?

Mr. Weir: Indeed, it is the same in rural Scotland, where there are great fears about the future of the rural economy.

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The hon. Member for Chorley (Mr. Hoyle), who is not here at the moment, made a good point about the cross-subsidy of postal services and the danger of cherry-picking under privatisation. To some extent, cherry-picking is already with us. Many businesses have entered into agreements on mail deliveries outside the postal system to ensure that they get next-day delivery and so on; Hays DX and the Legal Post are two examples.

Consignia has already said that it is thinking of moving away from the universal service obligation. I was encouraged to some extent by what the Secretary of State said about the Government's reaction. Inevitably, however, if there is privatisation or part-privatisation, the obligation will not survive because of the implied need to cut costs. Consignia has already signalled that an increasing number of homes, mostly in rural areas, do not receive a service direct to their door. It is claimed that that is coming to light only because of better record keeping, but there are obvious concerns that the universal service obligation is already being diminished.

Only the other day, it was reported that Consignia was proposing to dispense with morning deliveries to domestic addresses to concentrate on business mail. Again, the justification is to achieve savings; in an otherwise excellent speech, the hon. Member for Ochil (Mr. O'Neill) failed to pin that down. There are serious difficulties with the proposal, especially in rural areas in Scotland and Wales. How is a business address to be identified? In many areas, business and residential premises are mixed. What about those who rely on postal deliveries? The Federation of Small Businesses has warned that the proposal would be a disaster for more than 1 million businesses based at residential addresses. It is vital for them to get cheques, contracts and other documents first thing in the morning. If they do not get them until late afternoon, they will effectively have lost a day because they cannot bank cheques until the following morning, which will affect their cash flow and could be disastrous.

Whatever happened to the concept of working from home—telecommuting—which has been pushed in the past few years? As I have said, it is not possible to do everything over the telephone. The move to restrict delivery services would seriously damage any chance of extending home working and have a disproportionate impact on rural and remote areas, where many of those businesses have set up. In a rural village, how is one supposed to differentiate between business and domestic addresses, or are all the addresses in the area to suffer a downgraded service? It must be remembered that in many of those areas, there is effectively only one delivery at present.

Consignia's defence of that policy was breathtakingly arrogant. It reported:

That translates as, "It doesn't matter if our service deteriorates and increases in price; it is still better than some." That is hardly a ringing endorsement of Consignia's business acumen.

Above all, in many rural areas in Scotland and Wales, including my own, the fate of sub-post offices is causing huge concern. In June 2000, the Prime Minister's

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performance and innovation unit published "Counter Revolution: Modernising the Post Office Network" on the future of the network. Over a year later, sub-post offices are still closing at a reported rate of two a day, depriving whole communities, especially already deprived rural areas, of a broad range of services.

That will only be exacerbated by the Government's determination to press on with the payment of benefits by automated credit transfer, which could spell the end for many sub-post offices in Scotland. If no alternative sources of income are found—frankly, it is difficult to see how many sub-post offices will find such sources—it is calculated that some 80 per cent. of surviving rural post offices could go. Post offices rely on benefit payments for 40 per cent. of their revenue. If that is lost, it has been calculated that, over the next five years, Scotland could lose around one quarter of its post offices. Again, that is a real worry for rural areas.

According to a report in the Financial Times, some 5,000 to 8,000 post offices throughout the UK could become non-viable by 2003 when ACT for benefits is introduced. I am sure that in his reply the Minister will point to the universal bank as an alternative. I asked the Secretary of State earlier whether she would assure us that the universal bank will be in place by the time the ACT regulations are introduced. She did not give me that assurance. Unless the universal bank and the regulations are introduced at the same time—if the Government insist on going ahead with ACT—there will inevitably be a massive reduction in business in rural post offices. If a service is not immediately available, people will make alternative arrangements. They must do so to secure a regular flow of income.

The PIU recommended:

What exactly has happened? I appreciate that the Minister may not any longer be the Minister in charge of the universal bank, since responsibility for it was reported to have been transferred to the Department for Work and Pensions, but a year after the so-called big four banks signed undertakings to provide the cash support required, I must ask what progress has been made on its introduction. Banking sources suggest that there has been no appreciable progress.

I also understand that it will probably take a minimum of a year to implement systems that will allow the smooth transfer of those without bank accounts to an electronic system. If that is so and the universal bank is not ready to be put into operation now, it will not be in place by the time that ACT is introduced. That will lead to chaos, both for those looking for their benefits and the sub-post offices that rely on providing them. That will lead to a further round of rural sub-post office closures.

We on the Scottish National party and Plaid Cymru Bench find ourselves in a difficult position. We are not afraid to put our position squarely on the record: we oppose the privatisation of the Post Office. For that reason, we cannot support the Tory motion. It is clear from what Conservative Members have said in this debate that that is the way that they wish to go. At the same time, we find it difficult to support the Government unless the Minister can give some answers to the various questions about the universal bank, ACT and rural sub-post offices and the universal service obligation.

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