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Ms Hewitt: The reorganisation of the transport system is something that the management and the unions have been discussing for some time. We are all familiar with the situation in urban and rural areas where a Royal Mail van that is collecting or delivering mail is rapidly followed by a Parcelforce van delivering parcels. That is not a sensible way to run a business, and by reintegrating the universal parcel service within Royal Mail, the company will be able to manage with fewer vehicles and deliver a better service to customers. Despite the fact that painful job losses will result from that, we should support the better service that will result.

Mr. Alan Duncan (Rutland and Melton): Perhaps the only sympathy that one might have for the right hon. Lady stems from the fact that most of these problems have been dumped on her because of the incompetence of her hapless and hopeless predecessor, the right hon. Member for Tyneside, North (Mr. Byers). What plans are there to increase the price of a first-class stamp?

Ms Hewitt: That is a matter for the company and the regulator, and the company may well wish to apply to the regulator for an increase in the price of the stamp. But I do not think, and I hope that this is not what the hon. Gentleman was suggesting, that the problems faced by the loss-making Parcelforce or the inefficiencies inherent in an out-of-date transport system should be dealt with by increasing the price of the stamp paid by the customer.

John Cryer (Hornchurch): Is my right hon. Friend aware that the Post Office has for many years been run with a steadily and steeply declining work force and a management that is vindictive and bullying in the extreme? The job losses that have been announced today and those that will follow from the announcement in the coming years will hit some of the poorest and most vulnerable communities in Britain, including many of the people whom I represent in the London borough of Havering. Is not the only real answer to start to invest properly in the Post Office and even to allow the price of a stamp to rise, which it has not for some time? In addition, we should tell Postcomm and the European Commission, which seem desperately keen to break up the Post Office, to open it up to commercial competition and to end universal service, to get lost and stick their plans.

Ms Hewitt: I agree entirely, and I have said so before in the House, that part of the Post Office's problems are down to poor management and appalling industrial relations in some parts of the country. That situation, for which the union as well as the management bears some responsibility, was well described in Lord Sawyer's report last year. I am glad to say that many of those problems now appear to be behind us and that the union and the company are now committed to partnership working of the sort that is essential in any modern organisation that is to deliver decent customer service and be a good place to work.

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However, I repeat, today's announcement of job losses, extremely regrettable though they are, has nothing to do with the proposals from the regulator. They are a direct result of a parcels company that has been losing money for 10 years, an out-of-date and inefficient transport system, and inefficiencies in the management and support services—all of which are now being dealt with by new management.

Hywel Williams (Caernarfon): Mr. Allan Leighton, the new chairman of Consignia, is charged with reforming the company's industrial relations. That he begins with 15,000 redundancies is a kick in the teeth for the Communication Workers Union, which has worked hard to improve industrial relations over the past few months.

It is a kick in the teeth for the people of Wales that the depots at Wrexham and Pontypridd are to be closed, leaving only the Swansea depot working. Will the Secretary of State tell us what environmental or commercial sense it makes for parcels to be delivered to the far reaches of my constituency in the Llyn peninsula from Manchester or Liverpool?

Ms Hewitt: As Allan Leighton's announcement made clear, parcels that fall within the universal service will be integrated within the Royal Mail and will therefore use the logistics and delivery system of the Royal Mail as a whole. As for Parcelforce, the only way in which a sensible organisation can be created from the existing loss-making one is to rationalise the distribution system in the way that Allan Leighton proposes.

Kate Hoey (Vauxhall): The Secretary of State says that the regulator Postcomm is independent, but surely the Secretary of State ultimately has overall responsibility for the Post Office. Surely now is the time to discuss with the regulator the nonsense of accelerating the process of opening up to competition, to say that because of the current situation we need more time, and, as my hon. Friend the Member for Hornchurch (John Cryer) said, to tell the European Union that the process is not something that we can speed up?

Ms Hewitt: The proposals made by the regulator, on which the regulator is consulting, are clearly within the scope of the European directive and are not being imposed on us by the European Commission. However, the independence of the regulator, which was sought by, among others, the union itself, was enshrined in the Postal Services Act 2000, which Labour introduced and supported. Now, the company and the regulator need to sit down and discuss the restructuring needed in the company, of which today's announcement forms a part, and a sensible regulatory framework that will allow the company to go forward and, above all, continue to deliver its universal service obligation. I hope that the regulator and the company will achieve that rapidly.

Tim Loughton (East Worthing and Shoreham): I am sure all our constituents are greatly encouraged by the fact that the Minister responsible for mail delivery thinks that Harrogate has a coastline, and even more encouraged to learn that even more of our mail is to go by rail and thus be the responsibility of the Secretary of State for

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Transport, Local Government and the Regions. Before she prays in aid the National Federation of Sub-Postmasters, which has its headquarters in my constituency, may I remind the Secretary of State for Trade and Industry that that organisation co-ordinated the gathering of 3.5 million signatures in petition in response to her original proposals? She complacently reels off the fact that everybody lives within half a mile of two sub-post offices, but may I remind her that half a mile is well beyond the reach of pensioners in towns such as Worthing, and that many of those sub-post offices are the life-blood of parades of shops in village areas within urban areas, and without those sub-post offices whole communities will quickly fade and die?

Ms Hewitt: I welcome the hon. Gentleman's support for sub-post offices, whether in urban or rural areas; thousands of them closed under the Conservative Government. We have responded to the deterioration in the post office network under the Conservatives with the comprehensive report of the performance and innovation unit, and we have already invested and committed £270 million to investing in the urban and rural networks. Of course, we put a requirement on the company to prevent avoidable closures—something that the hon. Gentleman's Government never did.

Mr. Lindsay Hoyle (Chorley): I am sure that my right hon. Friend agrees that this is a very sad day for the 15,000 people who are losing their jobs. As the representative of the shareholder—the Government—I hope that she will try to ensure that there are no compulsory job losses and that they will be voluntary. We ought to stop hiding behind the protection of Postcomm, which is not acting for the benefit of the business or the consumer. It needs to be dragged back and told that we ought not to change in advance of our European competitors, as we would face the danger of the same problems that we had with electricity market, where France has still not opened up its market. We keep saying that we will provide a universal service; however, we can do so only if one is profitable.

Ms Hewitt: I entirely agree with what my hon. Friend said about the people who face the prospect of losing their jobs. As the company said, every effort will be made to find alternative employment in other parts of the business for people whose jobs will disappear as a result of the restructuring; the rest will be dealt with, as Allan Leighton said, through voluntary redundancies. When people lose their jobs and take voluntary redundancy, the Employment Service will be ready to help them get new jobs as quickly as possible.

My hon. Friend is of course right that the company must restore its profitability, above all to secure the universal service and a better quality of service for customers. It is for that precise reason that these difficult and painful decisions have been made today; they are in the longer-term interests of the company and its customers.

Mr. John Redwood (Wokingham): What would the Secretary of State say to the postman in the Wokingham sorting office who told me that costs have got out of control on branding, imaging and an increasing number of managers—from three to eight in Wokingham alone—

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in recent years? He forecast that the bill would be paid for in job losses and the abolition of the early morning delivery. Despite all that nonsense about the universal service provision, the truth is that the first delivery in the early morning will go. That is the price of failure in spending far too much on branding, logos and more management.

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