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6.4 pm

Mr. Alistair Carmichael (Orkney and Shetland): A great deal has been said in this debate that I would like to pick up on, but I have one careful eye on the clock and I am aware that other hon. Members want to speak, so I shall try keep my remarks within as narrow a compass as possible.

There were interesting contrasts between the speeches of the hon. Members for Edinburgh, North and Leith (Mr. Lazarowicz) and for Morecambe and Lunesdale

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(Geraldine Smith), who is unfortunately not in her place. If there is a race to achieve junior ministerial office, I suspect that the hon. Member for Edinburgh, North and Leith will probably win it, but I thought that the speech of the hon. Member for Morecambe and Lunesdale was a great deal more commendable.

The closure of post offices has been an ongoing sore in my constituency for many years. It strikes at the heart of island communities—especially the smaller ones that I represent. Rural post offices in such areas bring with them another Government wage and eventually a pension—money coming in to an island that would not otherwise be available. As other essential Government services such as coastguards and Customs and Excise are withdrawn, taking with them jobs from rural and island communities, particular importance must be placed on the continuation of post offices in our communities.

Barely a month goes by when I do not receive another letter from the Post Office telling me that yet another sub-post office is to close. It always happens because somebody has retired or is moving away, which is an indication of just how unattractive the job of sub-postmaster in a rural or island community now is.

I shall focus on the current Postcomm consultation on deregulation of letter post—a subject that has exercised many of my constituents and causes grave concern throughout Orkney and Shetland. In March, I presented at Downing street a petition bearing some 5,000 signatures; since that time, a further 1,000 signatures have been added. I have an electorate of 34,000, so about 17 per cent. of my electorate were represented. [Interruption.] I hear barracking from behind me, but I remind hon. Members that were my constituency situated on the mainland, it would stretch from London to Harrogate, so I am not looking for any extra pieces to be added, even if that were possible.

My main concern about the Postcomm proposals is that they are a licence for cherry-picking. I can see the great advantage of competition in attractive areas such as Glasgow, Edinburgh and other towns, but I cannot envisage much competition to deliver mail to Papa Westray or to Graemsay, which has a population of 17, or Papa Stour, which now has a population of 15. That is why the continuation of the universal service obligation is so important to my constituents and why we so desperately oppose the Postcomm proposals.

The proposals are the thin end of the wedge, as once the Post Office monopoly is removed, the universal service obligation will also go as sure as night follows day. I do not understand how Postcomm can possibly say that its primary concern is the preservation of the universal service obligation when it chooses to conduct a consultation about it after the current consultation on deregulation. To my mind, that seems a classic case of putting the cart before the horse, and I think that it gives the game away.

We have had experience of deregulation in relation to parcel post. Hon. Members can now pick up any Sunday supplement and see in the mail order advertisements small print saying "Free delivery to all mainland areas of the United Kingdom". We already routinely expect to pay a supplement for our parcel delivery service.

Postcomm's response to my concerns about the universal service obligation ending as a result of deregulation was to tell me, "Don't worry, old chap—we've thought about that

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one and we've got it sussed. The people who want the universal service obligation are the banks, credit card companies and big mail users, and they won't let it go." The real tragedy of that argument is that it was made with a totally straight face—I could almost have believed that it was made sincerely. I cannot believe that the Royal Bank of Scotland, the Bank of Scotland, Mastercard and American Express will go to the barricades to save the universal service obligation in my constituency.

The problems with Consignia have been well documented, and I am pleased that they are at last being taken seriously. Now, time should be given to allow the radical measures proposed by the Post Office in relation to the Postcomm consultation to bed in and take effect.

I want to say a few words about Postcomm—the regulator on a mission. I am disappointed that the Government take such an extremely non-interventionist attitude towards Postcomm. The Government have a duty, where they see a regulator acting as perversely as Postcomm, to intervene and pull it back into line. Whatever the fine print of the law may be, the fact remains that this House must ultimately be accountable for postal services, and the Government cannot be allowed to duck the issue in this way.

My other great disappointment over the past few weeks with the Postcomm consultation came from the body that one might have hoped would be prepared to take up the cudgels for the individual customers being served by the Post Office—Postwatch. When I met the chairman of Postwatch Scotland, he told me that it regards the big mail companies, banks and credit card companies as consumers as well, so it was prepared to represent their views as vigorously as those of my constituents. That unhelpful attitude leaves a big gap in the debate and a vacuum where there should be proper representation of constituency needs and wishes.

I deeply regret the exceptionally poor relations, as I see them, between Consignia and Postwatch. Having those two bodies, regulator and provider, at each other's throats, as they have been since the end of January, is not in any way helpful. My plea to the Minister is this. Do not leave it to the regulator, because it has shown that it is following an agenda that will be to the detriment of communities such as those that I represent. Get in there, bang heads together and get it sorted out.

6.14 pm

Mr. David Borrow (South Ribble): I am grateful for the opportunity to speak in this debate. We seem to have a similar debate every few months as we follow the Post Office's progress.

Ministers are well aware of my concerns about the future of the Post Office. Many of its problems can be traced back many years. I want to separate the problems in postal services from those in the sub-post office network, as they are slightly different.

I well remember discussing the structure of the Post Office during the passage of the Postal Services Act 2000. The dilemma that we faced was how to allow the Post Office commercial freedom while retaining its role as a public service. Under the model that we came up with, a Post Office regulator—Postcomm—was introduced. Since then, the frailties and inadequacies of the management,

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operating under the old nationalised industry model, have become increasingly apparent, and their failure to cope with the change to a commercial freedom role has become increasingly obvious. I hope that the changes that have taken place since the introduction of Allan Leighton and David Mills to the Post Office's senior management will begin to make a difference.

On Postcomm, having a regulator in a public service will remain a problematic issue whether it is a publicly owned company such as the Post Office or a privatised utility. Wherever it is necessary for the public interest to intervene in the markets, and there is a regulator, that imposes a great deal of responsibility on that regulator, which needs to be at arm's length from the Government. I fully recognise the difficulties faced by my colleagues on the Front Bench in intervening directly. The key decisions that Ministers make about regulation concern the brief that is given to the regulator and the individual or individuals who are appointed to regulate. Let us be under no illusion. If Postcomm messes up when it produces its final report, and the universal service is not maintained because it is not financially viable, the regulator will walk away and politicians will be blamed.

I have noticed in discussions with privatised utilities that have moved through several regulation regimes that they are always dependent on the skill and knowledge of the regulator in being able to make a judgment on the degree of competition and, where relevant, of price fixing that it can impose on a monopoly or semi-monopoly. Postcomm has to make decisions on market access from other competitors and on whether to allow an increase in the price of first-class and second-class stamps. The job of a regulator is to make a judgment on whether the industry concerned is capable of making the internal reforms and changes that are required to meet external competition and price restraints. That is what happened in relation to many of the other utilities that were privatised. Getting it right places a great deal of responsibility on Postcomm.

One of my concerns remains the quality of the Post Office's management, because the key information on which Postcomm will make its judgment when it has finished its consultation is that provided by the Post Office. If that information is not robust or is badly put together or inadequate, there will be a grave danger of real damage being done to the Post Office in terms of postal deliveries. I stress to my colleagues on the Front Bench that that is my main anxiety.

I voted for the model that we established, but it depends on a Post Office management that can provide good and adequate information to the regulator, and a regulator who has skill and knowledge and is prepared to seek information to make an adequate judgment on the market in postal offices—on what it is and what it should be.

I want to consider also the post office network. We have debated the matter endlessly, but I believe that the existing network will continue to decline irrespective of what happens to the benefits system. More and more people will transfer benefits directly into their bank accounts, and fewer and fewer will collect them from the post office. The drip, drip decimation of the post office network over the past 20 years will continue.

We must also acknowledge and make it clear to our constituents that the post office network is, to all intents and purposes, a network of private businesses. It is not run, owned and controlled by the Post Office. If it needs

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to be subsidised, robust and adequate systems need to be in place to assess reasonable and fair amounts of subsidy to ensure that a specific rural post office is maintained.

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