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Hooper Report
3. Geraldine Smith (Morecambe and Lunesdale) (Lab): What recent assessment he has made of the findings of the Hooper Report on the future of Royal Mail. [264471]
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The Secretary of State announced in December that the Government accepted the analysis set out in Richard Hooper’s review of postal services and that, to maintain the universal postal service, the Government intended to implement his recommendations. I repeated that statement in the House of Commons on the same day.
The Postal Services Bill has since been introduced into the House of Lords, and received its Second Reading on 10 March. The Bill proposes a new regulatory framework for postal services, enables the Government to tackle Royal Mail’s pension deficit, and ensures that Royal Mail remains in public ownership, while supporting modernisation through a strategic partnership.
Geraldine Smith: Are the comparisons in the report made on a like-for-like basis in terms of prices and the services provided? Does the report not fail to identify either the cause of the pensions deficit or the devastating effect that unfair competition has had on Royal Mail?
Mr. McFadden: The report covers all the issues relating to pensions, pricing and regulation. It is entitled “Modernise or decline”, which is an accurate description of the choice that we face. If we do not act to turn Royal Mail around, the decline in mail volumes will decide the issue for us. For every 1 per cent. decline, the company loses £70 million. There has already been a decline of 7 per cent., and a further 7 per cent. decline is forecast. That demonstrates the urgent need to transform and modernise the company. If we do not take that action, Royal Mail will end up cutting services, which is not a solution that we want it to apply to its current problems.
Richard Ottaway (Croydon, South) (Con): In 2007, 637,000 days were lost at Royal Mail as a result of industrial action. That is 60 per cent. of the number of days lost to strikes in the entire United Kingdom. Does the Minister accept that the Communication Workers Union must become far more realistic about modernisation if industrial relations at Royal Mail are to improve?
Mr. McFadden:
Richard Hooper identified industrial relations as a significant problem for the company, and it is not just the industrial action and the strikes that have taken place, but the regular threat of industrial action—such as, in recent months, over changes to the pension scheme and the closure of a number of mail centres. A fresh start for industrial relations is, therefore, needed in Royal Mail, and I would say to the CWU that the current relationship is not what it should be and
that bringing in a new partner may present a possibility of improving industrial relations, given their current very poor state.
Mr. Dennis Skinner (Bolsover) (Lab): Will the Minister confirm that the argument in previous answers to questions has been that the Government will privatise Royal Mail and a foreign firm will come in? Can he explain to me how it is that now that we have an economic tsunami lapping on every shore, in Holland, let us say, Dutch TNT can find money that nobody else can find? If the economic recession is hitting everybody, where is the magic wand in Holland to find the money that we cannot find here?
Mr. McFadden: I have great respect for my hon. Friend, but he is not right to say that we are privatising the Royal Mail. The Bill clearly says that we will keep Royal Mail in public ownership, so it is simply not true to say that we are privatising it. He questions why the Dutch postal service may be in a better position than Royal Mail; that is precisely because it has carried through the transformation and modernisation that Royal Mail has not yet managed to achieve. I cannot comment on any particular potential partner, because there has to be a proper process to get the best agreement for Royal Mail and the taxpayer, but if there is a partnership with another European postal company, I remind the House that liberalisation of postal services will be introduced in 15 members of the European Union by the end of next year. That will also give Royal Mail the opportunity to be a major European player, and that is not an opportunity that we should shy away from.
Mr. Alan Reid (Argyll and Bute) (LD): I welcome the clauses in the Postal Services Bill that allow a levy to be placed on the large private mail operators that are not fulfilling the universal service obligation to compensate Royal Mail, which is fulfilling the USO. There is an urgent need for those clauses to be implemented, because Royal Mail is facing unfair competition at present. Will the Minister give a commitment to a rapid introduction of those clauses?
Mr. McFadden: Those clauses, like all the other clauses in the Bill, will be implemented if the Bill is passed by Parliament, but the hon. Gentleman raises a very legitimate point with regard to regulation. That has been a subject of considerable controversy in this House and more widely, and we propose in the Bill to put at the heart of the regulatory system the maintenance of the universal service—of the one price goes anywhere, six-days-a-week universal postal service. That is the foundation of our postal system. We want to legislate to maintain that, not to leave Royal Mail alone to have its finances eaten away by the fall in mail volumes, which is costing it £70 million for every 1 per cent. of decline. That is no future for Royal Mail, but the Bill that we have presented is.
Mr. John Heppell (Nottingham, East) (Lab): The Government seem to have accepted the Hooper review in total. The official Opposition have accepted, and are supporting, the sale of some shares. Are they also supporting other measures in the review, including regulation—
Mr. Speaker: Order. That is not a responsibility for the Minister. He has more to worry him.
Broadband Providers
4. Mark Pritchard (The Wrekin) (Con): If he will discuss with Ofcom measures to increase the number of providers of broadband to the wholesale telecommunications market. [264473]
The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas): Wholesale broadband is closely regulated, and the market is regularly reviewed by Ofcom. That ensures that the UK broadband market remains competitive at the retail level. I can tell the House that there are more than 400 suppliers of broadband services.
Mark Pritchard: I note the Minister’s reference to retail. Given that people up and down the land are facing great and real financial hardship, is it not time that the broadband telecoms market was opened up to true competition—not fake competition—so that the current pretty poor service levels can be driven up and customer prices can be driven down?
Mr. Thomas: The hon. Gentleman may know that a number of companies offer wholesale broadband products and a series of other companies that are in a position to do so are choosing not to do so for commercial reasons. That is one of the reasons why we have made sure that the industry is closely regulated. In those parts of the country where there is considerable competition some of the price controls that have been in place have been relaxed. In other areas, where competition is not as strong as we might like, we have kept that regulation in place. He will know from the work of Lord Carter that this issue is being closely examined in government, with industry and with a range of other players. An interim report has been published and further work is in hand. The hon. Gentleman will be able to judge, with the rest of the House, the fruits of that further work towards the summer.
John Robertson (Glasgow, North-West) (Lab): Surely my hon. Friend will agree that the problem is not the number of competitors in the market, but the uptake. Surely we should be examining what is happening in cities such as Glasgow, which has the lowest uptake of broadband in the country, rather than the number of people who are in the market.
Mr. Thomas: With respect to my hon. Friend, I think we need to look at both issues: the level of competition in the market; and how we can ensure universal access to broadband services and speed up broadband access. He raises an important point, which deals with one of the issues reflected on in the interim report that was recently published by Lord Carter. The issue is part of the further work that is being done, and my hon. Friend, along with other Members of the House, will be able to judge our progress in that work towards the summer.
Mr. Mark Field (Cities of London and Westminster) (Con): Does the Minister agree that whether in telecommunications or, indeed, the banking world, the best form of regulation is open competition?
Mr. Thomas: With due respect to the hon. Gentleman, I think that competition is a good thing but that, as he knows, or ought to know, only too well as a result of the economic difficulties that our country faces, there is, on occasion, a strong role for regulation to play too. On the particular issue that we are discussing, I should say that where there is real competition, we have been able to relax price controls, but where there is not strong competition, we have kept those controls in place.
Paddy Tipping (Sherwood) (Lab): In his discussions with Ofcom and the providers, will the Minister ensure that the needs of businesses working in rural areas are met? High-quality broadband is essential in rural areas and sparsely populated areas, because people need to compete on a level playing field.
Mr. Thomas: I accept that there is an issue about ensuring broadband access in rural areas, as in the rest of the country. As I have said, the question of universal access is one on which the Government are very much focused in discussions with Ofcom, the industry and other stakeholders. An interim report was published by Lord Carter, further work is under way and the House will be able to judge our progress in that sense towards the summer.
Automotive Industry
5. Tony Baldry (Banbury) (Con): What recent assessment he has made of the future prospects of the automotive industry. [264474]
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): I talk to people in the automotive industry on a regular basis—indeed I have received three texts from companies in the past 30 minutes. The industry-led, BERR-facilitated new automotive innovation and growth team’s report on the future of the UK automotive industry is expected in early May.
Tony Baldry: People have not stopped driving cars; they have just stopped buying them, because it is difficult to access finance for buying or, indeed, leasing them. Way back, on 27 January, the Secretary of State said that he was setting up a taskforce, to be led by the new trade Minister, Lord Davies. It was supposedly going to work out how consumers could access finance again to buy all these cars and get the car purchase market going. Nothing has been heard of that taskforce, so when are we going to hear the outcome of the work supposedly being done by Lord Davies on this car financing taskforce?
Ian Pearson:
People have not stopped buying cars, but car sales have fallen. February sales were down 22 per cent. in the UK, 48 per cent. in Spain and 24 per cent. in Italy. There is a problem in the automotive sector, and that is one of the reasons why we announced the automotive assistance programme. We are still in discussions with the Bank of England and the Treasury on how car finance arms might be able to access some of the support that is available through Government programmes, but every day newspapers contain good deals on cars, including 0 per cent. finance and cashback in many cases, so finance deals are available. Clearly, we
want to ensure that we support a strategically important industry such as the car industry, which is going through a very difficult time. We are doing that and we will continue to look at what further support we might be able to make available.
Mr. Kenneth Clarke (Rushcliffe) (Con): The Minister must realise that for tens of thousands of people in the automobile industry, the Department is all talk and spin, but no action. He says that Lord Davies is still studying the proposals on car finance that we put forward as a policy suggestion months ago, but when will we get a result? As Lord Mandelson has indicated his sympathy for that policy, is it being blocked by the Bank of England or the Treasury? When will a decision be taken on this important matter?
Ian Pearson: We all agree about the importance of ensuring that the car industry has support in these difficult times. Along with the construction sector, the automotive sector has borne the brunt of the recession, in addition to what has happened in the banking system. It is difficult to point to other sectors that have seen quite such dramatic falls, but a car is a big discretionary purchase.
The right hon. and learned Gentleman should not pretend that car finance assistance would be a panacea and that if funding is made available through the banks to car finance arms, everyone will go out and buy cars. We will continue to have discussions about whether we can do something that represents value for money for the UK taxpayer that will assist car finance arms. Some of those finance arms are already providing good deals, however, and he knows that.
Topical Questions
T1. [264489] Mr. David Chaytor (Bury, North) (Lab): If he will make a statement on his departmental responsibilities.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The focus of our Department is on working with business and employees during these difficult economic times, and on ensuring that British business is as well placed as possible for the future.
Mr. Chaytor: This week, the Federation of Small Businesses, the Communication Workers Union and Unite came together to launch the manifesto for a post bank. At a time when the main commercial banks, with the honourable exception of the Co-operative bank, are held in increasing contempt by their customers, and at a time when the Post Office remains one of the most popular and trusted institutions in the country, is not this an idea whose time has come, and will the Minister support it?
Mr. McFadden:
I attended the launch of that pamphlet a few days ago. It is right that if the Post Office is to survive and prosper, it needs to look to new areas of business. It cannot survive on nostalgia or by ignoring the changes in people’s lifestyles, such as using the internet and direct debits. The Post Office is already expanding its banking services: it is the leading supplier of foreign exchange in the country and it supplies credit cards, insurance and savings products. I agree with my
hon. Friend that an expansion in banking and financial services is a very important part of the Post Office’s future.
Mr. Nigel Dodds (Belfast, North) (DUP): In relation to the European Investment Bank loan scheme, will the Minister take action to ensure that funds coming from the EIB to banks with a presence both in Northern Ireland and the Republic of Ireland will be made available to businesses in Northern Ireland? As he will know, two of the main banks are owned by the Republic, so this is a particular problem for the Province. That money needs to be made available to businesses in Northern Ireland.
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): The hon. Gentleman is right to point out the action that the Government have taken to get EIB support through the banks for further loans to small and medium-sized enterprises. It is right that those loans should be available throughout the United Kingdom and my understanding is that that will be the case. Of course, EIB loans are at advantageous rates and it is right that they should be available in Northern Ireland, just as they are in the rest of the UK.
T2. [264490] Mr. John Heppell (Nottingham, East) (Lab): Only yesterday, the Minister for Employment Relations and Postal Affairs warned that the recession should not be used as a reason to exploit vulnerable workers. Many of us welcomed that warning, but can he tell us what his Government are doing in practical terms to ensure that that does not happen?
Mr. McFadden: My hon. Friend is absolutely right to draw attention to that danger. The recession must not be an excuse to deny employment rights to some of the most vulnerable workers in the country. That is why we have changed the law, bringing in tougher penalties for employers who do not pay the minimum wage and better arrears for employees who are denied the minimum wage. We are also putting in extra resources, including a £1 million campaign that was recently launched to inform agency workers of their basic employment rights, including wages, paid leave and so on. It is very important that we come through this recession not only by helping business but by ensuring that the most vulnerable workers do not pay the price.
Mr. Kenneth Clarke (Rushcliffe) (Con): Last week, the Minister held a seminar in his Department for businesses in the car industry and for banks to begin to explain how to apply for EIB loans that were first announced by the Government last September. Can he now tell us how many applications have been received and how many more weeks or months it will be before anybody receives any of that support?
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