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6.36 pm

Dr. John Pugh (Southport): I apologise in advance for the brevity of this contribution, although I am not entirely sure why I am doing so. I must also apologise for not altogether concurring with my hon. Friend the Member for Twickenham (Dr. Cable), in that I do not think that we are talking about a project that may or may not fail; we are talking about a project that is doomed to fail.

Only 10 years ago, we had something called the Royal Mail. For hundreds of years before that, it was a monopoly in this country. This country does not take easily to monopolies; by inclination, we do not favour them. We need—and we had—very good reasons for enforcing that monopoly. Those reasons were to do with

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the reliability and integrity of the mail, and with the universality of the mail—the fact that we could post a letter in one place and it would end up anywhere else in the United Kingdom for the same price, whoever posted it. Those reasons were also to do with economies of scale. Our ancestors could not visualise the possibility of hundreds of different types of letter boxes provided by different companies in different places.

The Royal Mail was a Crown service. It was not an absolute monopoly; people could deliver mail themselves, and it called upon the Scouts at Christmas. None the less, it was a monopoly for a reason. It was very profitable, but as hon. Members have said, it had all the problems of a state monopoly. There were Spanish practices and industrial relations problems. So gradually the presumption that it should be a monopoly was questioned. It was questioned intellectually by people who had ideological hang-ups, full stop, and ideological hang-ups about state provision.

A competitive market was thought to be better for the provision of all services, whether or not they had a social dimension. Many case histories illustrate that there are certain benefits when state monopolies are broken up. Equally, cases such as Railtrack illustrate that, following the break-up of British Rail, there have been very few benefits that the public can identify. None the less, the weight of the argument was against monopolies.

I accept—as I expect the Minister to point out—that the nature of the mail was going to change anyway. E-mail has made it possible for people to communicate in different ways, and the volume of mail will necessarily decline, to a certain extent. The computer has had an effect on the mail service. It has also made possible the infinite quantities of junk mail which make the volume of mail very similar to what it was in the past.

The other reason for change is that there was a legal challenge with regard to the single market. All these challenges led in the same direction: towards an end to the monopoly. The simple question was: how soon and how fast? It was a question of, "Goodbye, Royal Mail; hello, Consignia." Almost immediately after that happened, there were closures, losses and redundancies. That is all, somehow, thought to be coincidental. There is a temptation to see the whole of the present problem as one of transition and change. It has been suggested—wrongly, I believe—that some changes have already come about on the continent, but the continent was never in the position we were in in the first place.

I am not easily persuaded that we are talking about new, innovative ways of delivering an old service, and that this is simply a change in the method of delivery, rather than a change of product. The consumer—the person actually using mail services—is now receiving services that are more expensive, that will become less frequent and less reliable, that will not necessarily be guaranteed to those in the far-flung reaches of this country and that, certainly in terms of post offices, will be far less local. People who used to be able to go to suburban centres will have to go to the centres of towns. So it is not just a question of a change of method; it is a question of a change in the product.

There is a reason for that. Indeed, all the reasons for Royal Mail's existence are the reasons why Consignia does not work now. Economies of scale are not possible if profitable areas of business can be cherry-picked, as they can. Businesses are severely hampered if they have

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a universal service obligation to discharge, as they have. Reliability is not possible, or satisfactory, when a company is permanently placed in a vulnerable market situation, as Consignia is.

Consignia is a doomed project, and at least four categories are affected. The staff are already casualties. The public are receiving diminishing services. Then there are Government finances. The Government are now having to fund closures, whereas in the past post offices made a net contribution to the Revenue. Communities, too, are losing out. In my constituency, when a sub-post office closes, the little nest of shops surrounding it suffer from less passing trade and have to close as well. Staff, the public, Government finance and communities: they all lose. It is a doomed project.

The Government have two options. They can leave Consignia to the permanent tender mercies of Postcomm, to the unions as they fight for the remaining jobs, and to a flailing and failing management. They can let predictions of a second-class service for the ordinary consumer come true. They can adopt an arm's-length, Pontius Pilate approach, and let it all happen. Or they can simply look at the facts, step in now, and work on the premise that the old lady of John O'Groats wants a world-class service as much as the city slicker, and may have much more difficulty in finding alternatives to Royal Mail.

This will be the Government's problem. It will come home to roost. I ask them to consider what ordinary folk want, and I say, "Do not stand aside; make it happen."

6.42 pm

Mr. David Heath (Somerton and Frome): The debate has proved that this was the right subject to discuss, and at the right time. There is clearly concern throughout the House about what is happening to postal services. My hon. Friend the Member for Twickenham (Dr. Cable) set out extremely well the issues that we need to address, in a speech that was as inexorable as it was unanswerable. Indeed, we received no answers to it.

A number of other Members made excellent speeches. My hon. Friend the Member for Southport (Dr. Pugh) described the damage done to communities by closures. My hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) spoke of the centrality of the post office to small island communities. There is, in fact, little difference in that respect between an island community and a rural constituency such as mine—or indeed urban areas, to which the sub-post office network is equally important. The hon. Member for Angus (Mr. Weir) made similar points on behalf of his constituents.

Members of other parties also made useful contributions. The hon. Members for South Ribble (Mr. Borrow) and for Conwy (Mrs. Williams) drew attention to deficiencies in management. That, I think, is self-evident: there have certainly been management failures in the Post Office. The hon. Member for Conwy was honest enough to say that ACT posed a real threat, which is our view as well. The hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) took a rather more conventional line in respect of new Labour. He may have strayed towards complacency; we shall see whether his complacency is well founded.

Mrs. Betty Williams: May I correct something that the hon. Gentleman said? I was not expressing my view

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on ACT. If the hon. Gentleman reads Hansard tomorrow, he will see that I was reading a passage from a letter from a sub-postmaster.

Mr. Heath: I can only say that the sub-postmaster was absolutely right, and I am glad that the hon. Lady quoted him.

In support of that, let me cite what was said in an intervention by the hon. Member for Vauxhall (Kate Hoey)—who spoke of the coercion inherent in the migration to bank accounts—and also the exceptional speech by the hon. Member for Morecambe and Lunesdale (Geraldine Smith). I do not want to embarrass the hon. Lady, but she will be very welcome in the Lobby this evening—for the right reason: not because I am claiming a miraculous conversion to our cause in general, but because the hon. Lady has read our motion and agrees with our analysis. She has exercised independence of thought. I commend her for that, and wish that more Members were prepared to take the same attitude.

As for the Conservatives' speeches, we heard a vigorous defence of the post office network from the hon. Member for North Thanet (Mr. Gale), who I think was entirely sincere. The contribution of the hon. Member for South-West Hertfordshire (Mr. Page) was amiable and extensive, and extraordinarily indiscreet—that being one of the reasons for our holding him in such affection. He said, "The guilty party moves on, and someone else clears up the mess," and we know that to be true. He was also sufficiently indiscreet to reveal himself as an unashamed supporter of full privatisation of the Post Office—and that, I must say, is why it is so difficult to take the comments of Conservative Front Benchers seriously.

There may be individual Members who share our conviction that the post office network and the delivery system are crucial, but we can only look at their record. Listening to the hon. Member for Eastbourne (Mr. Waterson), and observing the extraordinarily bleak picture he painted of postal services, I was reminded of the bleak picture the Conservatives also paint of the national health service. I think it is possible to identify what is wrong with a system without damning it as a whole, and damning everyone who works in it; but the hon. Gentleman nearly reached that point.

We remember how many post offices were closed during the Conservatives' years in government. We also remember more recent events: we remember the amendments that the Conservatives were prepared to table to the Postal Services Bill, which would have reduced the reserved area and the universal service obligation. There has clearly been no change in their underlying policy. But let us return to the Government of today, and consider what the Minister said.

I have a great deal of time for the Minister—I hope that does not embarrass him—but he did not answer the questions, possibly because he cannot. One of the problems we always encounter when discussing this issue is a faint feeling that DTI Ministers are put up to respond to questions to which they do not know the answers. That is partly because, as we know, the universal bank programme has been taken away: it has been moved to the Department for Work and Pensions, and Mr. Secretary Darling is in charge—I am sorry; I have forgotten his constituency. That may be the reason for the remarkable degree of ministerial imprecision and obfuscation.

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Let us consider the key points that have been raised today. First, let us deal with delivery, which is crucial to the communities we all represent. In fact, collections are almost more important: without an adequate collection service it is difficult for businesses, in particular, to survive.

The hon. Member for Morecambe and Lunesdale made an important point about the primacy of the universal service obligation for Postcomm. Why, she asked, does Postcomm not appear to be giving priority to an aspect that Parliament felt it had made a clear priority? What is the Government's attitude to this? It is no good saying that it is a matter for someone else. We are dealing with legislation that has been passed by the House and that affects an industry for which we all have corporate responsibility. It is for Ministers to explain why there appears to be a movement towards aggressive and accelerated competition which is doing no good whatsoever to the structure of postal services in the UK.

What will happen if Consignia fails to deliver its universal service obligation, quite apart from the fact that constituencies that are not in profitable postal service areas will lose the services on which they depend? Will there be a fine? That will help Consignia a great deal, given its present financial state. Will it lose its licence; and if so, what will happen to the UK postal service, for that is what is at stake?

Let me turn to the post office network, a matter that is dear to the heart of so many hon. Members and one that we have discussed on many occasions. We have heard the Government's rhetoric and we applaud their intentions, so let us not be distracted into pretending that they do not share our aspiration to maintain the post office network. We are not discussing whether the Government wish to do that, but whether they have done so and whether they will do so in future. The reality is that there has been a continuation of closures—547 sub-post offices closed in 2001.

What issues need to be addressed? The Minister said that he was concerned to achieve an outstanding retail experience within the post office network. I would love an outstanding retail experience when I go to the post office, but a great number of recipients of pensions and benefits do not want an outstanding retail experience; they just want to get the money on which they depend, in cash, on the day they need it.

It is important that Ministers explain how they will ensure that the collection of pensions and benefits in cash, which they have promised on so many occasions will continue. The promised mechanism is the universal bank service, particularly the post office card account. However there is a difficulty: design and investment decisions have been left so very late, and the clock is ticking. The system has to be in place by April 2003, yet we know that the original contracts were not let to the IT firm—EDS—until last November, and we heard from the Minister this evening that the contracts with post offices are not yet complete. There is no clarity, no decision and no certainty that the systems will be up and running when they are needed. A whole migration programme needs to be put in place and the training of post office staff has not started and cannot start yet. That is why we are so concerned.

When we look at other Government Departments such as the Ministry of Defence, which deals with war pensions, we find that war pensions will no longer be paid

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out in post offices. The decision has been taken—end of story. What sort of communication is that within a Government who claim to be taking the matter seriously?

We have heard about the so-called actively managed choice. It is clear from anecdotal and other evidence that Consignia will strain every sinew to prevent people from having post office bank cards. That is a tragedy for post offices and for the least well-off who require such a service.

We still have, nagging at the back of our minds, the fact that £400 million of replacement income for the sub-post offices has to be found somewhere. If it cannot be found from the footfall of benefit and pension claimants, there will be a serious problem.

We remain worried about the rural network. We have already heard how important it is and I applaud what the Government have done in its defence. Let me make a confession to the House: far from closing post offices in my constituency, I have opened two in the past two months. I have cut the tape on post offices in Sparkford and Henstridge and that is good news, although there have been many closures across the country. We require the overall network to be maintained, and despite the funds and support available, particularly in rural areas, there is no evidence of that yet.

There is also the issue of so-called urban re-intervention. We know that post offices are closing. We acknowledge that it is sensible to close post offices that are next door to one another if one post office can provide a comparable service with no difficulty of access for the public, but is there a proper system for ensuring that people in urban areas who need access to post offices will continue to have it? We know that Postwatch is to take on the arbitration of these matters, but we do not know whether it will have the money to pay for it.

We have not been told whether the £270 million in the comprehensive review and the Labour manifesto of 2001 includes the £180 million which has been set aside for compensation or whether it is all part of the bigger picture. We do not know about "your guide", which was hailed as a great success story. We were told that "your guide" in Leicestershire was a marvellous success and that it would be rolled out across the country. Now there will be no decision until June.

We do not know what the Government will do if the IT systems are not in place by April 2003. They rejected our amendments to the Tax Credits Bill which would have given them the option, so let them tell us tonight how they will preserve the service, the network and the delivery systems. I do not believe that they can give us those answers and that is why we must continue to express our concern.

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