Royal Mail (Hansard, 7 September 2004)

§ Lord Davies of Oldham
My Lords, the Government are disappointed that Royal Mail's quality of service performance, announced by the company on 31 August, was below the targets in the first quarter of this financial year. The Secretary of State has Allan Leighton's assurance that improving quality of service is the top priority for the management. We are confident that the management is committed to putting things right and expect to see significant improvement in the near future.

§ Baroness Oppenheim-Barnes
My Lords, while I thank the noble Lord for his reply, I hope that he will not continue to be too disappointed. Does he accept that Royal Mail, which is giving less for more money, has become a national scandal presided over by a chief executive who is being richly rewarded when he should have been sacked? Does he accept that the chaotic delivery of Royal Mail is depriving many small businesses of their livelihood and is causing misery to some disabled groups? Above all, does he accept that the Government have a role and obligation where a 443 monopoly service is treating its customers with contempt and therefore abusing its monopoly position?

§ Lord Davies of Oldham
My Lords, the House will be aware that Postcomm obliged Royal Mail to pay the highest compensation award at that time for its failure in the previous year. I have no doubt that Postcomm is looking at performance this year with the same critical scrutiny. We are assured by the chairman that the present level of performance is completely unacceptable. The noble Baroness is right that all classes of consumers are suffering badly from a lower level of performance by the Post Office than we have the right to expect. Everyone in Royal Mail is fully aware that standards must be improved.

§ Lord Clarke of Hampstead
My Lords, it is not compensation that the public want from the Post Office, but a good service. Would the Minister like to comment on the reported statement in today's papers by David Mills, who heads the counter services, that it is all right for people to queue for five or 10 minutes because it gives them a chance to talk to their neighbours and friends? I wonder what the Minister thinks of that.
At the previous election the party that I support said that the network would be safe. Is the Minister aware that in five years the network has declined from 17,500 to 14,000 outlets?

§ Lord Davies of Oldham
My Lords, I want to emphasise to the House and to my noble friend that in indicating that Postcomm had obliged the compensation to be paid I was not saying that that was a solution. I am eager to emphasise that Royal Mail is all too aware that the public expect a higher standard of service than that at present and that the targets that have been set and committed to should be reached.
My noble friend will recognise that throughout Royal Mail there has been major change in operation. We are judging an organisation that is going through the greatest reorganisation of its existence. We may therefore be prematurely judging too harshly an organisation that is committed to improvement, which the changes are intended to effect; not least the enormous losses that Royal Mail was sustaining on its second delivery in previous years.

§ Lord Razzall
My Lords, will the Minister accept that opinion on all sides of this House clearly reflects the opinion in the country that the Royal Mail and the Post Office have a particular place in our national life? Will he also accept, in the light of that fact, that the bonuses that are being paid to various executives in the Royal Mail are regarded by the country at large as grotesque? Will he not accept, therefore, that Her Majesty's Government, in the light of all that, can really no longer say that the problems of the Royal 444 Mail have nothing to do with them, while claiming credit when things go well? What are the Government going to do about the matter?

§ Lord Davies of Oldham
My Lords, the Government are all too well aware of the crucial role which the Royal Mail and the Post Office play in our national life; that is why we sought the assurances from the chairman that he recognised that targets had to be reached and performance improved. He gave those assurances and for went his bonuses for that past year. Of course, the whole House has had the opportunity on past occasions to emphasise the fact that, unless the Royal Mail improves on its performance, the concept of bonuses for key executives will be regarded with considerable distaste.

§ Earl Attlee
My Lords, of the targets agreed between the Government and the Post Office, which have been met?

§ Lord Davies of Oldham
My Lords, the reason why this Question was tabled was because, at the beginning of August, the Royal Mail indicated that the 15 main performance targets which it had set had not been met. That is a source of very considerable concern. Those figures were for the first quarter of the year, and we do see some degree of improvement from that point. But let us be absolutely clear: the Government, on behalf of the nation, are not prepared to tolerate the Royal Mail's failure to hit the targets thus far. That is why, on all sides, it is necessary that everyone serving in the Royal Mail plays his part in ensuring that performance improves.

§ Baroness Greengross
My Lords, does the Minister not accept that the situation, which is quite dreadful, is totally self-defeating? Small businesses, and many medium-sized businesses, have turned to other means of sending mail, such as e-mail, or other means of delivery. The only people who are left are the most vulnerable, who cannot afford to use other means of postal delivery. The targets have not even been set at 100 per cent; I have never understood why we have targets below 100 per cent. The situation is getting worse and worse, the losses are getting greater and greater, and that will go on unless the spiralling situation is brought under control.

§ Lord Davies of Oldham
My Lords, the House should be fair to Royal Mail and the Post Office. There are a number of factors behind the present difficulties, but one important factor has been the massive reorganisation that the Post Office and Royal Mail has effected over the past two years as a consequence of the very point that the noble Baroness sought to emphasise—that customers were turning elsewhere for services. Of course, there is also international competition to provide such services. That is why Royal Mail and the Post Office were obliged to engage on a major reorganisation of their activities. We have been going through that reorganisation for many months, and the Government had certainly expected 445 that the targets set by Royal Mail for the beginning of this year would be hit. They were not—and that is the source of the disappointment that we share with the whole House.

Baroness Sharpies
My Lords, I wonder whether the Minister can help me. On two separate occasions, I have sent cheques to British Telecom, neither of which have been received, resulting in my telephone being cut off and resulting in a £20 charge for reconnection. Am I able to collect that £20 from the Royal Mail?

§ Lord Davies of Oldham
My Lords, as I indicated, there is a structure whereby compensation can be given. However, I would just say to the noble Baroness that cheques being lost in the post have rather a long history in British life.

§ Baroness Oppenheim-Barnes
My Lords, does the noble Lord accept that cheques are even longer in the post than they ever used to be? Does he also accept that this is not about targets but about people? If the Government would only stop the silly business of targets and deal with real people and a real service, the situation would be a great deal better. I am sure that noble Lords will want to put further questions in the months to come to see what progress has been made.

§ Lord Davies of Oldham
My Lords, of course, the Royal Mail is a service industry, and the quality of the people and the work that they do are important. That is why the Royal Mail has given every assurance that it will tackle the issue, which my noble friend Lord Clarke of Hampstead has raised at previous Question Times, about the use of casual labour and the necessity of seeing that such casual workers are adequately trained. The Royal Mail is committed to effecting that.
The issue with regard to targets is straightforward. If the target of 90 per cent of first class mail being delivered the next day were hit, the service that people received would be far better than it is presently. It is right that a target should be set, and it is also right that that target should be hit. I have not the slightest doubt, either, that when the Royal Mail hits that target, we shall expect higher standards to be set beyond it.

§ Baroness Byford
My Lords, does the Minister accept the unsatisfactory position that post offices are continuing to be closed, which obviously has a direct effect on people? Does he accept, too, that that is partly due to the Government's stand, and their insistence, that welfare and benefit payments are paid through people's banks, rather than through the post offices? That adds to the demise of urban and, particularly, rural post offices; hence, the service is declining, and people have greater difficulties in gaining access to the facilities.

§ Lord Davies of Oldham
My Lords, that situation partly reflects a changing environment with regard to bank accounts and the efficacy of payments. But the noble Baroness is right: everyone regrets the closure of 446 a local post office, because all local post offices provide a significant service that is valued by people in their locality. Let me make the obvious point that the Post Office intends that everyone in an urban area should be within one mile of a post office. That is a significant commitment to providing the standards of local service that we value.

§ Lord Haskel
My Lords, if I remember rightly, last year the Post Office was losing £1 million a day. What is the position now?

§ Lord Davies of Oldham
My Lords, I cannot go into detailed figures at this stage, but I can say this: it was made clear to the Royal Mail that the losses that obtained on the question of second delivery were making the service hopelessly uncompetitive with others entering the field, and that those losses were being borne by the whole service and by all paying customers. The Royal Mail has engaged in a transformation of its operations to wipe out that area of loss. I am not in a position at present to demonstrate how efficacious it has been. Certainly, none of us would want to see an improvement in its finances at the cost of quality of service to our people.

§ Lord Faulkner of Worcester
My Lords, will my noble friend confirm that in the days when the Post Office conveyed a far higher proportion of its mail by rail, it met a much higher proportion of targets for next-day delivery? Does that not underline the need for the organisation radically to rethink its decision to remove mail from the trains and put it on the road?

§ Lord Davies of Oldham
My Lords, I hear what my noble friend says, but I believe that he would also recognise that we must be fair in comparing a steady state that obtained for more than a century, with a great deal of our mail being transported by rail, and a situation that has obtained only for a matter of months, with the transfer of a great deal of mail to road. The Royal Mail will need some time to establish that it has in fact effected a worthwhile economy in that regard; but, of course, it would never have embarked on that action if it was not persuaded that such economies would be effective.