HC Deb 29 November 2001 vol 375 cc1096-100
7. Mr. Mark Lazarowicz (Edinburgh, North and Leith)

What steps she is taking to improve postal services. [16476]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt)

We have given the Post Office greater commercial freedom so that it can improve its services and performance. We have established a new independent regulator, which has set tough standards of service for Consignia and is monitoring them closely. New licensed operators will also help to give consumers more choice and better services.

Mr. Lazarowicz

When I tell the Secretary of State that the Edinburgh postcode area recently topped the UK-wide list of complaints about delivery services, she will understand my concern. What progress is being made with the implementation of the conclusions of the performance and innovation unit review of postal services? May I ask her to intervene in the meantime, and ask Consignia to improve delivery services for my constituents?

Ms Hewitt

I entirely understand and share my hon. Friend's concern. The service currently provided by Consignia is simply not good enough. The PIU report, which he mentioned, was more to do with the future of the post office network than with Royal Mail deliveries, but we are working effectively with the company to implement the recommendations. The "Your Guide" pilot, in particular, will help those using post offices to obtain information on a wide range of other Government services. That is going very well.

Let me make it clear that I expect management and unions, which have been asking for more commercial freedom for years, to work together to use the freedom that we have given them to deliver a better service to customers, in my hon. Friend's constituency and everywhere else.

Mr. Richard Page (South-West Hertfordshire)

Does not that response show how far adrift the Secretary of State is from reality? Is she not aware that over the last two years there has been a record number of sub-post office closures? Is she not aware of the appalling industrial relations that have led to poor deliveries? During the last election, many of my constituents in the Watford area did not receive their postal votes. Is she not aware of the record losses of Parcelforce, which are hitting day after day? Is she not aware of the international competition that is coming along? Is she not aware of Monday's announcement of Consignia's losses, £100 million of which are operating losses? That is particularly important and worrying.

Will not the Secretary of State do the decent thing—[Interruption.]

Mr. Speaker

Order. That is enough.

Ms Hewitt

I am not going to take any lectures on the Post Office's performance from the hon. Gentleman and his colleagues who had the opportunity when they were in government to give the Post Office the commercial freedom that the management and the unions wanted. If the previous, Conservative Government had done that when it should have been done, years ago, the company could have begun to get a grip on what are very deep-seated problems.

I make it very clear that steps have already been taken to strengthen Consignia's management and improve the company's performance. Earlier this year, a new finance director, Marisa Cassoni, joined the board, and the company is now recruiting a chief executive for the new Post Office Ltd. to run the post office network. We have also appointed Allan Leighton as a non-executive director to take a special interest in the post office network. Consignia's chairman, Dr. Neville Bain, who has led the company through this first stage of reform and modernisation, will stand down as chairman when his term expires at the end of this year. We will appoint a new chairman as quickly as possible.

Mr. Martin O'Neill (Ochil)

Does my right hon. Friend share my disappointment in the half-yearly figures that have been announced? In some respects, she has anticipated my comment that the patience of many of us who regard ourselves as defenders of a public postal service is becoming severely strained. We require drastic steps of an even more far-reaching character than those that she has announced to ensure that the postal service can be successful in the public sector.

Ms Hewitt

I entirely share my hon. Friend's view of Consignia's results which were announced on Monday. They were disappointing and reflect the deep-seated problems within the company and the challenges facing it in a rapidly changing market for postal services not only in the United Kingdom but across Europe. I am glad to say that, in the wake of the report by Lord Sawyer on industrial relations in the firm, management and unions have started to work together much more effectively. They have just renewed the commitment to a moratorium on those industrial difficulties. I have made it quite clear that we expect, and the independent regulator also expects, the company significantly to improve its performance. I hope that that is precisely what the management and the unions together will now deliver.

Dr. Vincent Cable (Twickenham)

Does the Secretary of State acknowledge that one of the consequences of the disastrous losses being recorded at Consignia is that it will no longer be able to sustain by cross-subsidy the universal service obligation under which letters are delivered across the United Kingdom at a constant rate? Does she intend to intervene to ensure that the Post Office's social obligations in that respect are fully maintained?

Ms Hewitt

I do not accept the assumption in the hon. Gentleman's question, but remind him that the first duty of the regulator whose post we created in the Postal Services Act 2000 is to maintain the universal service obligation. The regulator will ensure that that universal service is indeed delivered right across the country.

Mr. Tony Lloyd (Manchester, Central)

My right hon. Friend is right to take no lessons from Opposition Members, certainly on the issue of post office closures. However, although the action that she is taking is very welcome, there is a mounting crisis not only in rural post offices but in urban sub-post offices, which are under enormous pressure because of profitability and other external factors such as crime. What action can the Government take to ensure that we maintain a high-quality and well-represented sub-post office network in urban areas such as mine where that network is vital?

Ms Hewitt

I entirely agree with my hon. Friend on the enormous importance of post offices not only in rural communities but in deprived urban areas, including parts of my own constituency. The service delivered by local post offices to deprived and remote local communities is essential. He will be aware, of course, that there has been a welcome reduction in the rate of closures and that we are taking steps, including a formal requirement placed on the Post Office, to maintain the rural network and to prevent avoidable closures. We are also working closely with the post office network—for example, in the "Your Guide" pilot to which I referred in an earlier answer—to strengthen and expand the services that local post offices can offer and thus attract more people to them.

Mr. Henry Bellingham (North-West Norfolk)

I am glad that the Secretary of State said that she believes in rural sub-post offices, but is she aware that many of those offices in Norfolk and Suffolk are threatened as a direct consequence of the Government's decision to pay pensions and other benefits by direct debit? Surely that is another example of a Government with urban-based values who do not understand the countryside.

Ms Hewitt

That is nonsense and I regret that the hon. Gentleman does not understand the real benefits to be gained by modernising the system of benefit payments, including of course the reduction of fraud. We are working with Postcomm, as recommended by the PIU report, to ensure that financial assistance is given to post offices in rural communities to sustain that network. We have already invested nearly £500 million pounds in modernising the post office network and we have ring-fenced a further £250 million for support of the rural network and modernisation of the urban network.

Fiona Mactaggart (Slough)

I know that Consignia can work, because when a post office in my constituency closed, it acted quickly and reopened it within a week, following a campaign led by me. In Slough, one in six first-class letters are not delivered on the following day and there is no way that the Christmas post will be delivered. I met the local management of the Post Office yesterday, who at present are blaming its staff. The Post Office is not delivering for the people of Slough. What message does my right hon. Friend have for it to ensure that the Post Office locally delivers and that the post is delivered to addresses in my constituency?

Ms Hewitt

I must congratulate my hon. Friend on the success of her campaign in getting her post office reopened. As I have already said, I entirely share her concern and that of other hon. Members about the failure in some parts of the country to deliver the post on time or indeed, in some cases, to deliver it at all. The responsibility is on the management and unions to work together, as they are now doing much more effectively, to build on the recommendations of the Sawyer report on industrial relations to take advantage of the commercial freedom that our Government have given them and to ensure that they deliver both the post and better results.

Mr. Nigel Waterson (Eastbourne)

I invite the Secretary of State to rejoin the real world. Against a background of losses of £10 million a week, the consistent failure to hit delivery targets and truly dreadful industrial relations in the Post Office, does she agree with the view of the new boss of Royal Mail, who says that the second daily postal delivery is a "myth" and There is no such thing as a second delivery"?

Ms Hewitt

I have already made it clear that we have given the Post Office the commercial freedom for which it has long been asking and which, I regret to say, the Government whom the hon. Gentleman supported did not give it. It is a matter for Consignia to make firm proposals—at the moment, it is simply floating ideas—and the independent regulator that we have established will decide whether to accept those proposals, bearing in mind the statutory duty that we have placed on him to ensure that universal service s maintained.