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House of Commons

Thursday 7 May 2009

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Business, Enterprise and Regulatory Reform

The Minister of State was asked—

Post Office

2. Mr. Alan Reid (Argyll and Bute) (LD): What plans he has for the future viability of the Post Office network. [273161]

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The Government will continue to support the post office network financially with a subsidy worth £150 million per year until 2011 and, building on the recent allocation of the contract for the Post Office card account, we will continue to work with Post Office Ltd to support new areas of work and new business opportunities for the post office network.

Mr. Reid: I thank the Minister for that answer, but with the banking system in great difficulties and discredited in the eyes of the public, the Post bank proposals give the Government an ideal opportunity to provide local and trusted access to the banking system. The banks have long been closing branches in rural communities, but the Post Office’s extensive network has the potential to put local banking back at the heart of our communities and give our post offices a secure future. Will the Government commit to setting up a Post bank?

Mr. McFadden: I agree that banking and financial services are an important part of the Post Office’s work, and it is already the leading supplier of foreign exchange services to the public. It also provides savings products and insurances, and millions of bank accounts held with high street banks are also available through post offices. It makes sense for Post Office Ltd to build on those services, and I know that both the company and sub-postmasters are very keen to expand their services in the banking and financial services area.

Mr. Dennis Skinner (Bolsover) (Lab): Does the Minister agree that Post Office and Royal Mail are inevitably linked? Can he comment on the suggestion that the Network Rail system should be used to get over the problem of selling off certain parts of Royal Mail? Will he ensure that there are other ways of developing that
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idea and that they are discussed later on, including at the national executive committee meeting in a fortnight’s time?

Mr. McFadden: I very much agree with my hon. Friend that Post Office Ltd and Royal Mail are linked. There is an inter-business agreement between the two and that will continue under the Government’s plans in the Postal Services Bill. As to the issue he raises about Network Rail, the Government do not legislate with a closed mind, as I have said several times this week. However, some of the plans put to us do not meet the test of transforming Royal Mail, and we need a future for that organisation that does not just attract new capital, but provides a convincing plan for transformation. That is what we have set out in the Postal Services Bill.

Mr. Jonathan Djanogly (Huntingdon) (Con): Having slashed the post office network by 2,500 branches, the Minister and Lord Mandelson now say soothingly that they have no intention of supporting further closures. But why should we believe the Government on this, any more than in relation to any of their other phoney economic forecasts?

Mr. McFadden: Unlike the Conservatives, we have supported the post office network financially. As I said, we give a subsidy of £150 million a year to the Post Office that helps to sustain many thousands of branches that might otherwise be under threat. With the Conservatives’ new-found enthusiasm for cutting public expenditure, I wonder whether they could guarantee a subsidy of that size. They certainly have not said so, and people would have good reason to doubt whether that would be the case.

Kerry McCarthy (Bristol, East) (Lab): As chair of the all-party group on credit unions, I know that the credit union movement is very keen to be involved in a Post bank if such proposals are on the table. However, various separate discussions seem to be taking place—the Communication Workers Union has a plan, as does the National Federation of SubPostmasters. Can the Minister assure me that he will do what he can to bring together all interested parties so that we do not have several different proposals?

Mr. McFadden: My hon. Friend makes a good point. As she will remember, we have met to talk about credit unions offering services through post offices. Following that meeting, I spoke to the managing director of Post Office Ltd and I understand that discussions are taking place between the company and the Association of British Credit Unions.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): The legislation passing through the other place offers a once in a generation opportunity to give the Post Office a viable future, quite apart from the proposals for Royal Mail. May I again urge the Minister to seize the opportunity when the legislation comes to this House to secure the future of the Post Office by giving it its own board and proper resources so that it can develop a strategy on a Post bank, instead of leaving it as the poor relation of Royal Mail, withering on inadequate subsidies?

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Mr. McFadden: Given the hon. Gentleman’s question, I think that he will agree that there is much in the Bill that the Post Office can be enthusiastic about. It will have its own board, which will give it an increased standing. With the Post Office card account contract awarded by the Government just a few months ago, as well as a new contract between the Department for Transport and Post Office Ltd on the renewal of driving licences, there is reason to look forward to greater stability in the network. There is a great deal for the Post Office in the Government’s plans to reform postal services.

Mr. Lindsay Hoyle (Chorley) (Lab): As a member of the Select Committee on Business and Enterprise, which has been challenged to come forward with a report on the future of the Post Office, I know that we all want it to have a sustainable and viable future that ensures that the network remains in its entirety. We should establish the community bank by using Northern Rock, which has branches throughout the country, in rural and urban areas. That community bank would then pose a real challenge to the high street banks. As he is well aware, the Post Office does not have a banking licence and to set up a bank would cost millions, but the Government already own a bank that my right hon. Friend could use, so will he consider that as a good vehicle for the way forward?

Mr. McFadden: I am happy to work with the Select Committee on its inquiry into the future of the post office network, and I have already met the Committee to discuss that. Of course we want to see the Post Office build on its provision of banking services, but in any discussion of the expansion of those services we must remember the existing agreements with the Bank of Ireland. However it is done, I am sure that banking services will be a major consideration for the future of the post office network.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Will the Minister take forward the Post bank proposal with more urgency? It is not just about giving the Post Office a new breath of life, but about restoring confidence for individual small savers in a basic simple banking system, where they put in deposits and small loans are made out. The Post bank could restore confidence after the banking crisis.

Mr. McFadden: I assure the House that there is no lack of urgency or energy on the part of the Government about working with the Post Office on securing its future. Only yesterday, I was extolling the Post Office’s potential to provide services for the new identity cards, but, sadly, if the Liberal Democrats were in power that opportunity would not be available to Post Office Ltd.

WTO Negotiations (Doha Round)

3. Tony Baldry (Banbury) (Con): What steps the Government have taken to seek a successful outcome to the Doha round of World Trade Organisation negotiations. [273162]

The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas): At the London Summit we secured renewed commitment from G20 leaders to
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concluding the round. Indeed, business groups from around the world, and in particular developing country Ministers continue to welcome the Government’s strong support for a successful conclusion to the round as early as is possible.

Tony Baldry: No, the Minister did not secure that commitment. The G20 communiqué says that the G20 is

That language is even more flaccid than that used by the G20 in its communiqué on the Washington G20 meeting last November. We are moving backwards. Given that everyone reckons that if we could have a successful conclusion to the Doha development round it would be worth about $150 billion to the global economy each year, what are the UK Government doing to help kick-start the Doha development round and to reach a conclusion rather than going backwards?

Mr. Thomas: I have a lot of respect for the hon. Gentleman, not least because of his stint as Chair of the Select Committee on International Development, but with all due respect to him I think that his analysis of the situation is wrong. There has been a commitment to build on the progress that we made in July last year, when Pascal Lamy said that we were some 75 per cent. of the way towards a deal. We have begun the process of engaging with the Obama Administration. Indeed, the G20 summit was the first opportunity to do that. We are obviously waiting to see the outcome of the Indian elections, because India is also a key partner in making progress towards securing agreement on the rest of the round. I agree with the hon. Gentleman that we need to see progress in that round. There are huge potential benefits if we can reach agreement, and that is why the Government remain a strong supporter of completing the round and making progress as soon as we can.

Ms Patricia Hewitt (Leicester, West) (Lab): I welcome my hon. Friend’s reference to the Indian elections. Will he ensure that as soon as the elections are concluded and a new Indian Government are in place, the British Government will do everything possible to work with that Government, both to remove the remaining obstacles to the Doha round and to ensure a successful agreement on the proposed India-European Union trade agreement?

Mr. Thomas: My right hon. Friend is absolutely right to re-emphasise India’s importance to the Doha round. From her own contacts with this issue in the past, she will be aware of the huge importance that British business attaches to engaging successfully with India through the EU-India free trade agreement. We will, of course, have further discussions with the Indian Government once the elections have been concluded. Indeed, we look forward to a series of discussions with other member states, through international gatherings such as the forthcoming round of G8 meetings.

Peter Luff (Mid-Worcestershire) (Con): It is, of course, a cause of great disappointment that the Doha round is making such slow progress, but we need to recognise that simply joining the WTO and following its rules can have a dramatic impact on individual countries. I am thinking in particular of Saudi Arabia, from where my
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Committee has just returned. That impact is not always lost on British business, which is doing very well in Saudi Arabia, but the challenge is to find the resources in UK Trade and Investment to support that effort. We are concerned about that, so will the Minister look at UKTI’s resources in countries such as Saudi Arabia, which are opening their markets rapidly through WTO membership?

Mr. Thomas: I welcome the hon. Gentleman’s support for encouraging countries that are not WTO members to join the organisation, and I also welcome his strong support for UKTI’s work. I hope that the Opposition Front-Bench team continues to listen to him: he may not have noticed it, but further support for UKTI was announced in the Budget, and he might want to encourage his party to endorse that part of the Budget as well.

Mr. Andy Reed (Loughborough) (Lab/Co-op): I am sure that my hon. Friend will agree that progress has been tremendously slow, but that is understandable given that we are trying to get several largely competing vested interests to work in the same direction. He mentioned the Obama Administration, but can he tell us what progress is being made on cotton, for example? The previous US Administration resisted making concessions on that, so might not a change in Administration make a significant difference for some of the poorest countries in the world?

Mr. Thomas: My hon. Friend is right to underline the importance of securing movement from the US on cotton subsidies. Cotton represents a huge potential opportunity for Mali, Burkina Fasso and some of the other poorest developing countries in the world to sell goods into markets in the rich developed countries such as the US and the EU. We need the Obama Administration to move on the issue, and we therefore welcome President Obama’s support for the strong language agreed in the text of the G20 communiqué. We also welcome the further positive noises that his trade representative, Ron Kirk, has been making in recent days.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The question from my hon. Friend the Member for Banbury (Tony Baldry) got to the heart of the matter. A successful conclusion of the Doha round of WTO talks would increase world trade by $150 billion, and the new US trade representative, Ron Kirk, has made the positive comment that we should

Even so, creeping protectionism is returning to Europe in respect of cars, milk subsidies, steel wire and candles. What positive action can the British Government take to support our American friends and the Obama Administration, and what can they do to take a lead in Europe against that creeping protectionism?

Mr. Thomas: The Government are concerned about the possibility of the creeping protectionism that the hon. Gentleman described, which is one reason why we sought to use the G20 summit to secure agreement that the WTO would monitor what is happening in respect of possible protectionist measures. It will publish quarterly reports on the matter, and so hold a spotlight on what countries are doing.

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I am sure that the hon. Gentleman and the whole House will welcome the fact that there has not been a wholesale uptake of new protectionist measures. Indeed, there has been a reduction in some of those measures, most notably in Indonesia and Argentina recently. Most significantly of all, however, the Obama Administration drew back from endorsing a very crude “Buy America” approach to Government procurement, and we warmly welcome that.

Finally, it is a little difficult to take lectures from the Opposition about working with colleagues in Europe, when they seem to have so few friends there—something that I am sure that the right hon. and learned Member for Rushcliffe (Mr. Clarke), who leads for the Opposition on these matters, will acknowledge.

Business Link

4. Mr. David Kidney (Stafford) (Lab): What assessment he has made of the performance of Business Link in providing support to businesses in the last 12 months. [273163]

The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): Business Link is in the front line, providing real help to business. In the past 12 months, nearly 1 million businesses have used the service, with more than 73,000 receiving intensive support. The latest customer survey shows a 90 per cent. satisfaction level with the service.

Mr. Kidney: I am grateful to my hon. Friend. Business Link has certainly been active, and I have received more positive comments than negative comments about the range and quality of its services. However, one thing that concerns some people is the remoteness of the service since the model changed from a local presence to call centre. Could we not overcome that problem by introducing closer working partnerships between Business Link and business representatives, such as chambers of commerce, the CBI and the Federation of Small Businesses, and delivering more services through such representative bodies?

Ian Pearson: As my hon. Friend is aware, Business Link is delivered through several different partners, and in the different regions some close working relationships already exist between Business Link and chambers of commerce, in particular. It is important that Business Link is promoted through those chambers. He makes a valid point, however, and the Government are keen to ensure that Business Link gets people out on the ground, visiting companies, attending meetings and promoting its services. That is part of the business strategy of every Business Link service in every region.

Miss Anne McIntosh (Vale of York) (Con): I could not agree more with the hon. Member for Stafford (Mr. Kidney), because the regionalisation programme with which the Government persist makes bodies such as Business Link even more remote. We had a perfectly good local model in north Yorkshire, but now it has gone to west Yorkshire. MPs have a role to play, but what is the Minister and his Department doing to promote access to Business Link by small and medium-sized companies at a time of credit crisis?

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Ian Pearson: Whenever there is change, there will inevitably be some noise, but, overall, the changes to the Business Link network have led to greater operational efficiencies and the delivery of a better service to business customers. As I said, the latest customer survey shows a 90 per cent. satisfaction rate, and that is something to be welcomed. It is vital, however, that Business Link continues to engage with the small and medium-sized enterprises to which the hon. Lady refers. It does so through a variety of mechanisms, and I find that, these days, SMEs are well aware of Business Link. Its brand recognition is high and SMEs understand how they can access its services via the Business Link website. Again, however, it is a part of every Business Link service to adopt marketing strategies that promote its services to small and medium-sized companies, and to use intermediaries, such as chambers of commerce.

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