HC Deb 25 February 1998 vol 307 cc468-76

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]

10.1 pm

Maria Eagle (Liverpool, Garston)

I am pleased to be able to deal with the issue of postal services in Liverpool at such a timely moment, as the decisions that will affect the quality of that service must shortly be made by the Post Office board under the overall policy direction of the Government.

I pay tribute to the men and women who work for the Post Office. May I narrow down my tribute and pay particular tribute to those who work for the Post Office in Liverpool and in the precincts of this House? I know from personal experience in both places how effectively they work, and that they often work under extreme pressure.

The Royal Mail prides itself on its ability to collect a letter anywhere in Britain and deliver it as quickly as possible anywhere else at a fixed price. If one purchases a first-class stamp, the letter is often delivered by the following day. That outstanding quality of service may be threatened in Liverpool by the Royal Mail's plans to remove the sorting of mail away from the city to Warrington.

That is part of the Royal Mail's £64 million investment programme to enable it to meet global and European challenges to its domestic markets. The investment is a welcome indication of the Government's commitment to ensuring that the Royal Mail in the public sector can compete with the best and face the challenges of the new millennium with cutting-edge technology, and with confidence that it can provide a top-quality service to its customers.

I am no Luddite, but I have a quarrel with one aspect of the strategy announced by the Royal Mail in June 1997, and that is what I wish to highlight in this debate. To do so, I must first outline the plan as it affects Liverpool.

In so far as it relates to the Royal Mail's north-west and north Wales region, the plan involves transferring processing from three mail centres, five outward vouching offices and three centres for bulk mail handling to new mail centres and a new regional distribution centre. The Royal Mail envisages a new Warrington mail centre replacing Crewe and Liverpool mail centres, a new Chester mail centre replacing the current Chester mail centre, five outward vouching offices in the Wirral and north Wales, and a new Crewe regional distribution centre replacing Brunswick Dock, Westhoughton and Lostock bulk handling centres.

However, ever since the announcement of those proposals, there has been a strong feeling in Liverpool that the Royal Mail is wrong to move more than 900 jobs to Warrington if they can be retained in Liverpool. I remind the House that Liverpool has an unemployment claimant count of 9.4 per cent., with male unemployment at 13.7 per cent.—one of the highest rates in the country.

The Government and the European Union recognise the relative deprivation. Liverpool is a European objective 1 area, which is a recognition of the fact that it is one of the poorest regions in Europe. The Government have also acknowledged the economic and social disadvantage that is clear for all to see in the city, and have granted Liverpool the status of an employment zone.

My constituency benefits from Government funding for regeneration through two single regeneration budget partnerships at Speke-Garston and Netherley valley. Many other regeneration initiatives throughout Liverpool are backed with Government money. Only last week, the Government approved an estates renewal challenge fund application for £43.78 million to assist in the regeneration of the public sector housing stock in Speke-Garston.

Mr. Eddie O'Hara (Knowsley, South)

Does my hon. Friend recall that, only two weeks ago, she and I were at Ford's factory in Halewood congratulating the workers on being awarded the contract for Jaguar car production, which carries with it £43 million-worth of Government investment? The factory is located between our constituencies. It is a tragedy that such a good news story for Merseyside has been cancelled out by the Post Office's plans for the sorting office.

Maria Eagle

My hon. Friend must be psychic, because I was just about to make that very point.

The Pinehurst estate in the north of Liverpool has also benefited from the estates renewal challenge funding that was announced last week. As my hon. Friend said, Ford's Halewood plant has received £43 million of assistance from the Department of Trade and Industry, and I should like to commend the Minister on his role in that. Many of my constituents work at Halewood, although the plant is in my hon. Friend's constituency. That assistance will enable Ford's decision to build the baby Jaguar on Merseyside to be realised. The Department has also been actively involved in promoting business on Merseyside in other areas. It puts its money where its mouth is, to the tune of millions of pounds.

The Government have also given £13 million of extra money to repair rundown schools in Liverpool. I could use the whole of my speech to give examples of similar Government initiatives. Liverpudlians applaud the Government's concentrated effort to tackle the legacy of unemployment and poverty that long-term decline and 18 years of Tory destruction have left us.

Why should a major publicly owned concern such as Royal Mail, which should be expected to take its social responsibilities seriously, so blithely counteract the Government's good work and threaten to remove 900 jobs at a stroke? It should not, but I accept that operational decisions such as where to site new mail centres should be made by the Royal Mail and the Post Office board and not by the Minister. His role is to set overall policy guidelines, and I know that he would not be swayed to intervene by the facts that I have mentioned alone, although I have no doubt that he is sympathetic to my point of view. However, it should interest him to know that the business planning, evaluation and comparisons of alternative options on which Royal Mail based its decisions were fundamentally and seriously flawed. He should want to put the matter right.

While the work force and local Members of Parliament have campaigned on this issue, it has emerged that there is indeed a site in Liverpool that is better than the Warrington site chosen by Royal Mail for the new mail centre. It is at Speke-Garston, on the old Northern airfield site, soon to be launched as the Estuary business park in my constituency.

Mrs. Louise Ellman (Liverpool, Riverside)

Does my hon. Friend agree that, as the independent consultants' report—which has now been published—shows that it is more cost-effective for Royal Mail to stay in Liverpool, it would be extremely serious if it took action that would result in the loss of 900 jobs in the most deprived city in the United Kingdom? That would mean a loss of £16 million a year from the local economy, which would affect the whole community.

Maria Eagle

I could not agree more with that.

As my hon. Friend has said, it is not a matter of conjecture that the decision is strange. Like many of my hon. Friends, I have had the benefit of seeing an analysis by the business consultants PA, carried out on a like-for-like basis and using the same evaluation and modelling techniques as Royal Mail to appraise options. PA has not sought to add factors that would make Speke look better than Warrington; its role has been purely to check the rigour of Royal Mail's own option appraisal. Had Royal Mail done a rigorous job itself, one would have expected PA's analysis to result in the same conclusions as those of Royal Mail.

PA, using the same modelling techniques as Royal Mail, produced a very different result when it analysed the various sites. It disagreed with some of Royal Mail's assumptions about travel times to the rail hub for outward mail, and I must say that I agree with its worries. It does not take 40 minutes to travel from Speke to the rail hub at Warrington, as Royal Mail assumed in its analysis. Moreover, although we are often told that the Warrington site is adjacent to the rail hub, it is actually three miles down a road that is unsuitable for heavy goods vehicles, and is often congested. "Adjacent" is therefore a somewhat misleading description, and certainly a relative term.

Furthermore, PA could not fathom Royal Mail's rationale for sending all the mail to Warrington to be sorted, and then sending it back to Liverpool to be delivered. That clearly would adversely affect transport costs and distribution time targets.

It is no small matter, either: 60 per cent. of the mail to be handled at the new centre—whether it is built at Warrington or at Speke—originates from Liverpool, and half that mail is then returned to Liverpool to be delivered there. Meanwhile, only 27 per cent. of the overall volume originates in Warrington. Speke has 14 per cent. more volume returning to it than it originates. Surely it is important to sort the mail closer to where it is posted and to be delivered, if possible, than to transport it to a site by a rail hub that is not needed and then return it to its original point. I for one fail to see how that can be efficient.

I have referred to a few of the detailed points in the analysis, but, as my hon. Friend the Minister will know, there are many more. Let me summarise the full findings of the PA report.

The report shows that a mail centre in Speke is operationally as viable as a Warrington centre; it shows that land is cheaper in Speke, and that there is room for expansion; it shows that a Speke mail centre is cheaper to operate than a Warrington mail centre; it shows that 60 per cent. of the total mail to be processed at the new centre originates from Liverpool, so mail arrival times must be better in Speke than they are in Warrington; it shows that Speke has 14 per cent. more volume returning to it than it originates; and it shows that a Warrington mail centre will increase travel and subsistence costs for Royal Mail by £3.6 million over three years.

Using Royal Mail's own modelling techniques and data, PA has shown that the Speke site is £3.7 million less expensive to run—on a non-reoccurring account cost basis—than the Warrington site, and worth £4 million more in net present value terms. The report is a devastatingly effective document, and I commend it to the Minister. It raises serious questions—which I hope he will address tonight—about the quality of the Royal Mail analysis in respect of other decisions, and its use of public money in implementing them.

The PA report was commissioned by the Communication Workers Union nationally, in response to the CWU Merseyside amalgamated branch's request for back-up. I commend that local branch. Those who see Liverpool as a place bypassed by the modern world of industrial partnership and stuck in the past of industrial relations might have predicted that, faced with the threat of 900 job losses, the local branch would have responded by downing tools and walking out. Instead, the branch has conducted itself in a most exemplary manner, and has shown itself to be a fine example of a modern trade union. It has taken its campaign to the people of Liverpool, the Royal Mail, hon. Members and the Government, but it has ensured that its members kept working, and has constructively looked for a viable, alternative plan.

The union backed its judgment by producing a devastatingly effective piece of business planning which the national union commissioned on its behalf. That was done despite the worry about the future which I know that those working at Copperas hill have felt for the past eight months.

The union's forward-looking and positive approach has not stopped there. Until the introduction of new technology, preferably at Speke, the union has agreed to change working arrangements to bring in 30,000 items of mail in the early afternoon to ensure that it can be dispatched to the rail hub at Warrington in time for next-day delivery. However, the local management has not implemented the change, and one wonders why not. The local branch of the union is working closely with management to improve overall performance, and it is currently working with Royal Mail industrial engineers to see how staff can best be utilised. Those are hardly the actions of a militant or obstructive union branch.

The results of the PA analysis justify the union's approach. As the Minister knows, I have been pressing for some time for assurances that the constructive and positive way in which the campaign has been conducted will be rewarded with proper consideration for the Speke option.

The Minister for Welfare Reform (Mr. Frank Field)

My hon. Friend may find it helpful if I draw attention to the fact that, although usually in an Adjournment debate only the hon. Member initiating it and the Minister who will reply are present, there are 10 of us here with an interest in this matter. Royal Mail might like to take that into account.

Maria Eagle

I thank my right hon. Friend for that intervention.

Mr. Field

I am told that I cannot count.

Maria Eagle

My hon. Friend certainly counts. I had not noticed how many of my hon. Friends were behind me, but I notice that not many Opposition Members are here.

I have some questions for the Minister. Is he happy that Royal Mail is assessing the Speke option fairly, fully, and against consistent and rigorous criteria? If necessary, will he intervene to ensure that the Royal Mail decision is soundly based? What does he make of the fact that Royal Mail has been unable properly to assess net present values, and, in view of PA's findings, is he sure that the rest of Royal Mail's analysis is robust enough to be implemented?

As Royal Mail is using public resources for major investment, is the Minister confident that its decisions are based on proper business planning and financial competence? I understand that Royal Mail originally ruled out the Speke site without even visiting it. When does he expect Royal Mail to make a decision in respect of the Speke-Garston option? Is he content that, on the day that the union presented the PA report to Royal Mail, it called for final bids from seven tenderers to build the mail centre at Warrington that it had originally planned? Does that show that Royal Mail has made up its mind, and has no intention of changing its plans?

Although I accept that Royal Mail will not enter into binding contractual arrangements in respect of Warrington before returning to the union, does the Minister think that it is sensible for Royal Mail to expect its tenderers to go to the expense of submitting final bids for a particular site before a decision has been made to build the mail centre there? On the basis of his knowledge and the PA report, does he think that option A, which is to build a mail centre at Speke-Garston, should be followed?

Finally, I invite the Minister to visit the Estuary business park in the near future when his parliamentary business is not quite as exhaustingly pressing as it was on the last occasion. Such a visit will enable him to see for himself the advantages of siting the mail centre there.

10.18 pm
The Minister of State, Department of Trade and Industry (Mr. Ian McCartney)

I congratulate my hon. Friend the Member for Liverpool, Garston (Maria Eagle) on securing this debate on postal services in Liverpool. I should like to declare an interest. I am married to an Evertonian, and my wife's family all live and work in Liverpool. They are probably more interested in how I respond to the debate than are my hon. Friends. I shall pick carefully through the issues that have been raised, because I am keen to maintain a safe and enjoyable family weekend for the first time in many months.

When I have time to do so, I should be more than happy to visit the constituency of my hon. Friend the Member for Garston. I have already visited her constituency on at least two occasions since becoming a Minister, and I look forward to visiting it again. As my hon. Friend the Member for Knowsley, South (Mr. O'Hara) said, I was there on the day that the massive new investment at Halewood was announced. I hope that I have time in my reply to give the House details of other investments that have been made and to advise my hon. Friend the Member for Garston of other investments that will be made, with the Government's support, in Merseyside.

My hon. Friend the Member for Garston, the Minister for Welfare Reform, my right hon. Friend the Member for Birkenhead (Mr. Field), and my hon. Friends the Members for Liverpool, Riverside (Mrs. Ellman), for Liverpool, West Derby (Mr. Wareing) and for Liverpool, Wavertree (Jane Kennedy) have discussed those matters with me, and I acknowledge the close interest that they have had in the subject since last June. They have maintained—with the Under-Secretary of State for the Home Department, my hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth), the Parliamentary Secretary, Office of Public Service, my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) and my hon. Friends the Members for Knowsley, South and for St. Helens, North (Mr. Watts), and with Liverpool city council and the Communication Workers Union—their involvement in the matter, and have assiduously raised their concerns with me and my Department.

Before responding to the issues of postal services in Liverpool that have been raised in this debate, it is important that the House should understand the matter's broader context. Postal services at both national and local level—in the form of letters delivered to the door or services provided through the nationwide network of post offices—are an important element, on either a personal or a business level, in everyone's daily life.

It is therefore only natural that plans for change might cause concern. When those plans centre on proposals for major investment in automation and introduction of new technology, there is understandable concern, as in Liverpool, about the loss of local employment, local identity and the quality of service that is so closely tied to local postmen or postwomen.

My Department has had discussions with the Post Office on Royal Mail's proposals because of such concerns. Last summer, I met the CWU and Liverpool Members, to hear their views and to discuss their concerns.

At my insistence, Royal Mail subsequently opened discussions on its strategic investment programme with the CWU, and offered to provide the CWU with data on its preferred north Wales and north-west scheme, and with data on other options that it had considered but had rejected on operational and financial grounds. Royal Mail agreed also not to make irrevocable purchase commitments for new sites, and to consider any alternative proposal made by the union within three months. At the union's request, the Post Office subsequently extended the time limit to four months.

Royal Mail's primary duty is to develop and maintain an efficient and competitive postal system on both a national and a regional level. Its overall investment programme is designed further to improve its standards of service, which are already among the highest in the world. That programme accords also with a policy advocated, for example, by the Communication Workers Union in a consultative document that it issued last autumn, which calls for a substantial increase in the Post Office's capital investment programme.

Royal Mail's planned £64 million investment in the north Wales and north-west region, which was announced last June, is part of its national programme of progressively developing a network of automated processing centres and distribution centres. Those are equipped with the new technology necessary to handle more speedily and accurately the increasing volumes of mail, to improve the quality of service for customers and to maintain its competitive position in the communications market.

An efficient and modern postal infrastructure is obviously very important in attracting new investment and jobs to the north-west and in maximising the potential of the major regeneration projects that are now under way in the region. Unfortunately, Royal Mail's proposals will lead to a net loss of 400 full-time equivalent jobs in the region—comprising 800 from Liverpool and 300 from the Bolton area—which is offset by about 700 jobs at new automated processing centre and regional distribution centre sites.

Royal Mail envisages that a substantial number of Liverpool staff would transfer jobs if a site were eventually agreed at Warrington.

Mrs. Ellman

Does my hon. Friend accept that, given the economic and social circumstances in Liverpool, it will be very difficult for Liverpool workers to travel to Warrington? This is because there is a far lower than average level of car ownership in Liverpool, many jobs are part-time, and the shift times, particularly for women, mean that it would be extremely difficult for the distances involved to be overcome.

Mr. McCartney

I recognise my hon. Friend's argument. Indeed, it has been put to me many times and was deployed as part of the socio-economic case for the site to be in Speke-Garston instead of Warrington. Over the next few days, many people will no doubt put it again to the Post Office to illustrate what impact the people of Liverpool believe a decision to locate the operation at Warrington will have. I have previously assured my hon. Friend the Member for Garston, and did so again today, that the points she has made in relation to the potential cost of relocation have been delivered with some force to the Post Office.

I said at the outset that there have been recent successes in attracting new jobs to Merseyside. In addition to the new Jaguar X400 line at Halewood, there will be 250 jobs at QVC at Knowsley, and a £40 million investment by Medeva is expected to create 100 new jobs in the important pharmaceutical and drugs industry, which has also received substantial additional investment from Glaxo and Eli Lilley. The north-west as a whole is now the top UK region for attracting call centres, which is a rapidly growing sector. Of course, a few years ago, Merseyside won additional postal jobs, from my constituency and other parts of the north-west, in the restructuring of Parcelforce operations.

My hon. Friend the Member for Garston has highlighted the substantial level of Government funding being injected into Liverpool in recognition of its objective 1 and employment zone status. This is part of my work at the Department, and we have made substantial efforts to ensure that our strategy in relation to objective 1 status and the attraction of inward investment has been successful since we came into office. I believe that we will continue to be successful in attracting new investment and job opportunities to Merseyside, including Liverpool.

While the proposals clearly have negative features in employment terms for Liverpool, and also for the Lostock and Westhoughton areas of Bolton, it is important to recognise the scale of Royal Mail's long-term commitment to the north-west and north Wales region, whatever the final decision may be. What is clear is that, without any major investment in automation to maintain Royal Mail's competitive position, regionally and nationally, there would over time be a progressively much greater loss of postal jobs in the region than is currently envisaged.

In agreeing to defer any irrevocable commitments to a Warrington site, and to consider seriously any alternative options put forward, Royal Mail did, however, make it clear to the union that contingency planning for its own preferred option would continue while alternative options were being explored. My hon. Friend asked what was happening in relation to the Warrington site, and that is my response to her.

It was made absolutely clear from the outset to the union and others that while alternatives were being considered, there would be no decision to make binding commitments to the Warrington site, but, at the same time, contingency planning had to continue. That is precisely what has happened.

Maria Eagle

Will the Minister give way?

Mr. McCartney

Not at the moment, as I have only three minutes left to finish my remarks.

I know that Royal Mail has been studying carefully the alternative proposals set out in the report. I am arranging an early meeting with the chief executive of the Post Office to discuss the results of its analysis and studies of the alternative Speke-Garston proposal. Decisions relating to the operational arrangements for the postal businesses are and must remain a responsibility of the Post Office board and management.

My locus in what is essentially a management issue is limited to satisfying myself that, in the case of the north-west and Liverpool operations, the alternative options have been fully and fairly considered and judged on consistent and rigorous criteria on a like-for-like basis. When I have done this, it will then be for the Post Office to reach its final commercial decision, which it will discuss with the CWU as soon as it is in a position to do so. Following that, it will meet Members of Parliament for the area to give them its decision on this potential new investment.

Maria Eagle

Does the Minister consider that inviting final tenders to build a plant is contingency planning?

Mr. McCartney

I cannot be any more specific or open with my hon. Friend than I have been. The Post Office gave the commitments in good faith; I intervened personally to ensure that an alternative proposal was made. Having exerted my influence in that manner, there was no way I would countenance any undermining of the professional viability of the proposal. What has happened is a matter of due process. It has nothing to do with irrevocable decisions that would render that process null and void.

That was not the reason I made the decision. If I had not felt that the process of having a potential alternative was right, I would have been open, frank and honest from the outset, last summer, in saying: "This is the site; go ahead with it." I hope that that assurance is of assistance to my colleagues.

Last summer, the people of Liverpool were worried that the Liverpool postmark was going to be lost. I took representations on that, and I can confirm that Liverpool's postmark will continue in use indefinitely. The Post Office has offered a commitment in that respect.

There has been unhelpful press speculation during the past few days to the effect that Girobank is to announce a complete withdrawal from its operations on Merseyside. That is completely speculative. It would be wrong at this stage to assume that the review will result in job losses. A refurbishing—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to Eleven o'clock.