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Mr. John Horam (Orpington) (Con): The Minister makes the point that the Post Office is turning round
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because of investment. On the contrary: it is turning around because it is dumping the second daily service and closing post offices up and down the land.

Mr. Timms: In a moment I shall spell out to the hon. Gentleman the unprecedented scale of investment that is being made. Of course, turning the business around is a difficult job. Neglect is easy, and if turning the business around had been easy, no doubt even the previous Government would have done it. However, doing so is hard, so they did not do it. We have been willing to make the hard decisions that were needed. More importantly, we have been prepared to make the big investments that are needed. The result will be a far better service ahead.

To respond directly to the hon. Member for Orpington (Mr. Horam), over the decade from 1997 we will have invested more than £2 billion to modernise the post office network, and made more than £1 billion available to the letters business to implement its renewable plan, in order to return the company to sustainable profitability. It was the failure to invest in the previous 18 years or more that is at the root of the problems that we still see today.

Mr. Mark Field: There is one issue in respect of which the Minister cannot blame the past—the urban reinvention programme. He will have read in today's London Evening Standard that his own London Labour MPs—I note that none of them is on the Benches behind him—are complaining about the lack of transparency in the Government's urban reinvention programme, and about the fact that the figures have dripped out constituency by constituency, rather than giving the context throughout the capital. Does the Minister feel that urban reinvention is likely to work in London, and will he apologise for the lack of transparency that has vexed so many of his colleagues?

Mr. Timms: I will say a good deal about that programme in a few moments. However, in opening the debate, even the hon. Member for Lichfield acknowledged, a little grudgingly, that the exercise needs to be conducted because of the position that the business has got itself into.

There certainly are problems for Royal Mail customers—no question about it—and they deserve a good deal better. Thanks to the determination of the management team that we brought in to turn the business around, and to the investment that we have been prepared to make, customers will get a much better deal in the future. Credit where credit is due: Royal Mail has held up its hands and acknowledged the problems. Allan Leighton and his team have given my right hon. Friend the Secretary of State and me a firm commitment to sort out the current quality of service problems. I am confident that the organisation will deliver on the commitment that has been made.

Mrs. Shephard: The Minister is extremely generous in giving way. He has spoken of the need to take tough decisions, so I wonder whether he will comment on the criteria that the Post Office uses when deciding which post offices to close, particularly in urban areas. In the most deprived ward in my constituency, the Post Office has decided to close a post office that serves a community of 4,000 people that is two miles from
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another post office, which has an irregular bus service, and of which one third are elderly or disabled. That community also has a large number of young mothers with one or more children. The problems are therefore perfectly clear for the people whom the closure would affect. When I discussed the criteria that had been applied to select, unerringly, the ward with the greatest difficulties, Post Office officials told me that there had to be a certain number of closures per constituency. Does the Minister agree with that criterion?

Mr. Timms: No, I most certainly do not. We have insisted that in the 10 per cent. most deprived urban wards, if there is no alternative post office within half a mile of the post office that is proposed for closure, it should not be closed. If the right hon. Lady wants to drop me a line about the case that she raised, I will be happy to consider it.

I want to address the concerns that have been raised about postal services, before going on to discuss the post office network. It is certainly the case that Royal Mail failed to meet quality of service performance targets last year. I have seen in my postbag the scale of the problems that have resulted and the anger that that has caused. In fact, in 2003–04 Royal Mail still delivered more than 90 per cent. of first-class letters the next day—the hon. Member for West Chelmsford (Mr. Burns) was right to draw attention to this issue—despite the impact of industrial action. However, 90 per cent. is not good enough and the level ought to be a good deal higher, as he rightly said.

The picture is in fact varied. At lunchtime, I met a group from an organisation called North West in Business. A representative of one of the big accountancy firms told me that his company enjoys a superb postal service in its offices in Manchester and Liverpool, and that he does too, at his home on a farm in a rural area that receives van deliveries every day. He described the service as "superb". Elsewhere, however, that is not the case. The problem is a localised one. Royal Mail accepts that current performance is not good enough and is committed to putting things right. Agreement has been reached with the trade unions for a massive restructuring of the delivery and the transport systems, and everybody is working hard to get the service back to the levels that customers are right to demand.

Mr. Patrick McLoughlin (West Derbyshire) (Con): The Minister has just referred to the role that the trade unions play in this issue. Does he agree that the role that the trade unions have played in the past has led to some of the Post Office's problems? If he does, has he had any talks with the Minister for Lifelong Learning, Further and Higher Education to ask him why he should not take the blame for them?

Mr. Timms: My right hon. Friend has taken a considerable interest in the Post Office in his former career and as a Minister. We need a much closer partnership between management and the trade unions, and I am pleased with the progress that we have made in the past few months. My noble Friend Lord Sawyer has played a helpful role in that respect, and there is now much more optimism about the future. That area is another that was scandalously neglected by the previous Government.
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Allan Leighton was appointed as chairman to provide the leadership to turn the company around, and we have since made other changes to strengthen the board. We agreed a three-year renewal plan and we have put in place a financial package of more than £1 billion to support its implementation. That plan has just entered its final year. From the bleak position that the hon. Member for Lichfield mentioned, Royal Mail made an operating profit last year. That is impressive, but the turnaround to sustainable profitability is not yet complete. This final year is crucial as major changes are made to the way Royal Mail operates to remove inefficiencies and to tackle the quality of service problems that have arisen.

A key element of the restructuring is the move to a single delivery. That is by far the most visible change to the company's customers and its introduction has not been straightforward. It has involved a massive reorganisation, but we must recognise that the UK is the last place in the world to move to single delivery. Second delivery used to account for 4 per cent. of the mail but 20 per cent. of the cost. The change was essential if Royal Mail is to be viable and competitive in the modern postal market. Those figures make it clear that the financial case for retaining the second delivery simply could not be made.

Mr. Mark Field: While I appreciate what the Minister says about the financial viability of a second delivery, surely he must realise that Royal Mail no longer has a meaningful monopoly, what with electronic mail and the other new ways of communicating? Will he talk to his friends in the trade unions or with Royal Mail to ensure that some long-term vision is implemented? The organisation needs leadership, because that is what has been lacking so visibly. All consumers of Royal Mail services now have a wide range of communication options, and they can say, "Enough is enough, whether we have one, two, three or four deliveries." E-mail, for example, provides multiple opportunities with umpteen different daily deliveries, and it is a direct competitor to the Royal Mail.

Mr. Timms: Leadership is precisely what Allan Leighton and his team have provided. The hon. Gentleman is right to say that the market is increasingly competitive and it will be even more so in the future. That is why it has been so important for the organisation to turn around as it is now doing.

Each day, Royal Mail delivers more than 82 million items to up to 27 million addresses. The amount of mail for daily delivery every day is equivalent to the highest Christmas peak of 30 years ago, so we have not seen a decline in overall volumes. The number of addresses to which deliveries must be made has also increased significantly. Change is unavoidable and the competitive market is one of the reasons.

A consequence of the change to single deliveries is that postmen and women will be delivering for longer, which means a later start on some routes in order to sort mail for delivery and put it into route order. The aim is to deliver to the majority of customers by lunchtime and for all rural deliveries to be completed by 3 pm.

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