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Mr. O'Neill: The TSB?

Malcolm Bruce: Well, the TSB is important, I agree, but the hon. Gentleman knows perfectly well that the Bank of Scotland and the Royal Bank of Scotland play a considerable part, and that, because of the decisions made by those banks, Scottish post offices will be significantly disadvantaged in regard to revenue potential, compared with those in England, yet there is no plan to offset or compensate them for that.

The contention that my colleagues and I are making is that change is necessary and desirable. However, a lot of what the Government call investment is actually dead money being paid to shrink the network. In reality, the Post Office needs investment to develop new services, and Royal Mail needs investment to compete with the private sector. The Government's business plan does not inspire confidence that either of those two wings of the post office network will be able to make the investment needed, on the scale required and in the time scale that we face, to deliver a viable, profitable future. In those circumstances, the question will continue to be asked as to whether the Government really are in control of Royal Mail and the Post Office.

5.17 pm

Mr. Martin O'Neill (Ochil) (Lab): When I got back last night from a foreign trip with the Trade and Industry Committee and read my Whip, I saw that today's debate was to be on postal services, so I thought that we would be discussing the delivery of letters. However, such is the understandable ambition of a frustrated Opposition Front Bencher that a scattergun approach has been adopted and everything is the subject of attack. I suppose I shall have to revise my notes a little as a result.

I want to start by discussing the Royal Mail. I welcome a debate on this subject, because it is probably an appropriate time to have a discussion in the House on this issue. The Royal Mail has had a chequered experience in recent months—I use the term "months" rather than "years". Last September, a vote was taken on a strike and, to my surprise, it was won by the management. I had thought that other factors were at work and that the workers would come out.

I recognise that neither the Post Office nor the postal service is a monolith. It is unfortunate that the hon. Member for Lichfield (Michael Fabricant) either has not read or does not know the work of Tom Sawyer and his consultancy, which introduced some seminal changes into the thinking on industrial relations on both the employer and the trade union side. His analysis of the situation bears repetition today. He identified a number of groups employed in the Post Office. First,
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there were the people who had been there for many years and who were Royal Mail loyalists. They in turn could be split into two camps. The first consisted of those who were prepared to work for what is really a pittance. If there was a cause for dispute at the time of the ballot, it was the fact that all the people who deliver our mail every day get less than £300 a week. If anyone is telling me that people should get paid less than 15 grand a year for doing work of that nature, that is a disgrace. We cannot run a high-quality service on low-paid workers.

A number of people formed their view on the basis that they had been at the Post Office a long time. I do not have the exact figures and they vary across the country, but in my constituency a job with Royal Mail, as it is now called, is perceived as a good job. It is regular employment and it has an index-linked pension at the end of it. A number of people who entered into that ballot took the view, "We don't get very well paid, but we're getting near retirement so we don't want to rock the boat and we certainly want to retain an index-linked pension." It is to the credit of the management that they expressed in the evidence that they gave to us recently a continuing commitment to the index-linked pension, which has to be there as a reward for people who for too long have been too lowly paid.

Historically, some people who joined the Post Office came from the services. One problem that we have had with the Post Office, which was identified by Sawyer, is the fact that the management structure has, on occasion, been militaristic, multi-layered and authoritarian. It has not been conducive to changes in working practices—which takes us on to the second group. These people may not like the pay and may be more recalcitrant, but they nevertheless have a loyalty to the concept of public service as expressed in the delivery of mail. They were, in large measure, the ones who were fed up and last year voted for strike action. However, the negative vote meant that it did not take place. None the less, some of those people took strike action.

There is a third element, which is most pronounced in the big cities—the people who are part of the churn. They work at Royal Mail for a relatively short period and, frankly, are not interested in the long game. They are certainly not the kind of people who by and large want to go out on strike, because they are happy to take what they can get for as long as they need it and then move on to another job. Some have been unemployed while others have left a job to go to Royal Mail. They see it as a pathway to other areas of employment.

So the labour force are not monolithic, but the people who work at Royal Mail are highly committed to a concept of service. One management shortcoming was that, before the ballot, they were unable to sell the changes in work practices. It is fair to say that the person who has fought hardest for the single delivery is the general secretary of the union, Billy Hayes. Billy has argued consistently that a system that accounts for 4 per cent. of the mail but, as the Minister said, 20 per cent. of the costs is an unreasonable burden to place on his members.

I merely ask whether anyone on the Opposition Benches—their numbers are more depleted than once they were, although I realise that the shadow Minister, the hon. Member for Lichfield, had a captive audience;
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they were agog at his oratory while mere mortals such as me have to put up with a far lower turnout—is prepared to defend a system that accounts for such a large part of the costs while being responsible for such a small part of the delivery.

Michael Fabricant: I am bitterly disappointed that, despite my oratory, the Chairman of the Trade and Industry Committee cannot remember what I said. I made it very clear that we think there should be only one delivery, for all the reasons to which he has already referred. Does he not accept the point made by Conservative Members—and, indeed, by Labour Members in previous debates—that it is unacceptable for the single delivery to happen at inconsistent times day by day so that businesses and individuals just do not know when it will be made? When deliveries are made so late, that delays the first class post by, in effect, a further 24 hours.

Mr. O'Neill: The hon. Gentleman makes a couple of points with which I would not altogether disagree. On occasions, the service has been highly variable. My understanding is that it is beginning to bed down and the obvious excesses are now being removed. We must also recognise that not only do most other countries have just one delivery but few have the standards of delivery—even the ones that we fail to achieve—that we must currently put up with. It takes a lot longer for mail to be delivered in most of Europe, and that is certainly not matched in the United States.

Were we to have a regular system of delivery, whereby everything that could be delivered was delivered by 1.30, there would probably be an awful lot of mail turning up the next day. There would be a knock-on effect. As we are talking about trying to find a means of reducing costs, one of the major contributors to which is the removal of the second service, we must recognise that there will be differences. Nobody argued that a single delivery would be as good as two; they said that it would be almost as good, and that with other improvements, it could be as good in future.

To take a different tack, the selling of the one delivery was not well handled by the management. More than any other single issue, the problems that arose after the vote—with a number of areas taking the view that they wanted extra money and that they wanted it right away, for which they went on strike—are responsible for the failure to meet performance standards over the past 12 months.

Therefore, in the pursuit of cost reduction, the Post Office management have sacrificed service. They have gone for a quick financial fix. They have not done that only by taking out the delivery. There have been the usual things: they have reorganised, got rid of properties, realised assets that have been lying dormant, and got a far better grip on the finances. Across the board, in the public sector, one of the problems is that, provided that an enterprise does not make a profit or does not wash its face in only one year in every four, it is not too closely examined. If we consider British Nuclear Fuels Ltd. and some other public enterprises still in state ownership, we see that the quality of accounting has left a lot to be desired. The Government, as a consequence
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of their endeavour to have both transparency and accountancy, have been hoist with their own petard because, occasionally, they have brought out the inadequacies of the funding arrangements.

The Royal Mail left a lot to be desired. There was rigidity in the management and a failure to invest, and on a number of occasions only one target was identified—to make sufficient money to give to the Treasury to satisfy the Government of the day. It is common knowledge that until about two years ago there was no automatic sorting equipment for A4 envelopes. Given the amount of A4 mail that we receive in our mailbags—we could be regarded as small businesses—and given the nature of business in Britain, let us consider how much business mail was unsortable for a long period due simply to the fact that the Royal Mail, the Post Office, or whatever incarnation it was in, lost that opportunity.

In some respects, the service offered by Royal Mail is not rocket science. We have first class and second class mail, and then there is special delivery. That is all that is offered. For a price, FedEx and the other speedy couriers can deliver packages and letters very quickly.

Parcelforce has been a problem—some might call it an unmitigated disaster. I would not go as far as that, but I would say that it has been a source of embarrassment to a major international logistics company—for that is what Royal Mail is. It has not been able to organise the delivery of parcels. Equally, it has been extremely cautious and conservative about the range of services it has offered as a mail deliverer. That is one instance in which the old guard of the Post Office must stand condemned, and the problem dates back to before 1997. Successive Governments have demanded far too little from the postal service in terms of product range.

We are told that none of this really matters because we are moving to the age of the paperless office. That is nonsense. However, one thing that is relevant to the paperless-office argument is the internet. Why was Royal Mail not an internet service provider? Why did it not get in on that act at the outset, and why does it not do so today, when it has at least 16,000 retail outlets online? It could install keyboard facilities and the like, thus providing community access to the internet as well as access for those behind the counter. That is one of many lost opportunities.

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