HC Deb 12 May 2004 vol 421 cc98-120WH

2 pm

Mr. Andrew Turner (Isle of Wight)(Con)

The Royal Mail Group is in a mess; there is little doubt about that. The number of post offices that have been closed and the number of post offices that remain under threat show that our constituents have reason to be greatly concerned. According to the pre-tax profit figures, Royal Mail made a profit of £750 million in 1997–98. However, in 1999 it made a loss of £184 million, in 2001–02 it made a loss of £1.1 billion, and last year it made a loss of £600 million.

It is not only those loss figures that concern our constituents but the recent changes both to the post office network and to delivery arrangements. I do not intend to spend a lot of time on the post office network, because the Minister and I have exchanged views on that on a number of occasions. I simply wanted to put my concern on the record. I know that many hon. Members share that concern. I have received a letter from Jonathan Sheppard, the prospective Conservative parliamentary candidate for Bassetlaw, who is worried about the threats to the rural network, and the fact that no guarantees are available for its future.

The Government's policy is that the Post Office should move over to a single delivery. A written answer from the Secretary of State for Trade and Industry, dated 6 May 2004, reads: "Once the single delivery changes have been made, the target will be for everybody to receive his or her post by lunchtime. Many households will receive their post at the same time as before; others, however, will receive their post later in the morning."—[Official Report, 6 May 2004; Vol. 420, c. 1730W.] The single delivery is leading to great inconvenience for both my residential and my business constituents. I have been receiving an increasing number of letters recently and I shall quote from a few of them. Mrs. Janet Carr of Ningwood Hill writes: "I wonder if you are aware just how discontented your constituents … are with the postal services … We are now getting letters at about 1pm, 2:30pm, 3pm even twenty to four (twice). It is outrageous of the P.O. to say that people don't mind what time their post arrives … We do care, we do have urgent matters to deal with—how can we get a letter at 3:40 and get a reply in the post the same day?" Mrs. Carr has since informed us that most days she does not receive her post until 2.40 pm. Mr. Terry Nigh of Shanklin writes: "Our own situation is causing us considerable problems at present. Deliveries over the past two or three years have become more and more erratic but it now appears that the Post Office is hell bent on committing commercial suicide." Miss Claire Goldsmith of Yaverland writes: "I feel annoyed about the letter received from Royal Mail about two weeks ago re: changes to mail deliveries. I have no recollection of there being a second daily delivery in Yaverland since 1975 when I became a resident here. Now it appears we will have to accept another inconvenience of one delivery (LATE) but costs remain the same." Mr. Paul Garbett of Garbetts Accountants in Brading writes: "Until recently we had a very good delivery service with a delivery between 9am and 10am every morning … I appreciate that public sector entities need to restructure to meet the competitive challenges of the 21st Century … surely this should only be done in a controlled manner which is going to improve service levels rather than demonstrably reduce them as has happened … In addition to the late delivery times we are also experiencing delays in transit of items in the post." An example of that is a warning letter to a client about unpaid tax, issued on 21 April 2004 and received on 27 April 2004. "The time of receipt was after 10 am so it gives less than 24 hours before the loam on 28 April deadline given in the letter. To give someone a seven day warning and then take six days to deliver it seems to be worthy of the best despotic practices from more dubious states". When I received those letters I wrote to Postwatch on 8 March, and received a reply on 19 March, dated 18 March, saying that the matter had been taken up with the Royal Mail Group. On 6 April, Postwatch wrote to me again, saying that it was "still waiting for the Royal Mail Group to reply" to its inquiry. I received that letter on 13 April. On 14 April, I received a reply from Royal Mail, which told the customer—that meant me—that I could expect to receive my post between 9.15 and 9.45 am. However, my concern was not only for myself but for my constituents.

Without writing individual letters on behalf of all my constituents, I could not get answers for my constituency. I therefore tabled a parliamentary question: "To ask the Secretary of State for Trade and Industry if she will make electronically accessible the Royal Mail's estimates of delivery times for the Isle of Wight under the single delivery reforms, broken down by postcode."—[Official Report, 30 April 2004; Vol. 420, c. 1365W.] It was clear from the letter that the Royal Mail had sent to me that it could plug in a postcode and bring out a delivery time. The Minister said that he would ask the chief executive to reply, but so far the chief executive has not done so.

I did not realise that this was anything more than a local problem untilThe Southern Daily Echo newspaper in Southampton carried a report on 26 April headed "Get this chaos sorted say MPs." It referred to one MP who had received nearly 60 complaints from disgruntled residents and was "now gearing up for a head-to-head meeting with under-fire Royal Mail bosses." Since I do not speak in Sunspeak, the article reports me as being merely "staggered when the organisation admitted it could not deal speedily with his inquiries—because the Royal Mail's own reply had become stuck in the postal backlog." I then raised the matter with the Leader of the House—I did not realise that he used to work for the Union of Communication Workers. He told me that "most union members argued that the second delivery was a protection to ensure that the first delivery arrived on time."—[Official Report, 29 April 2004; Vol. 420, c. 1018.] I suspect that the Minister would agree that it seems extravagant to have staff on stand-by just to ensure that they get back in time to deliver a second delivery in which only 4 per cent. of post is delivered. I accept that the Post Office may therefore think that it can use its staff more effectively.

However, I fear that the changes that have been made have been for the benefit more of the staff than of the customers. Customers do not like receiving their letters at lunchtime; most prefer to receive them earlier. Most customers do not like misdeliveries either. I have forgotten the figure—I am sure that my hon. Friend the Member for Lichfield (Michael Fabricant) will have it—but there are something like 14 million—

Michael Fabricant (Lichfield)(Con)

14.5 million.

Mr. Turner

Yes, 14.5 million letters are misdelivered every year. The consequence of late and misdelivered letters is that business orders are cancelled, birthday cards do not arrive on time, operations are missed, appointments are not kept, giros are not received, postmen get a lot of unjustified abuse and their morale is therefore, justifiably, low, and frustration is felt by many.

I shall give two examples of misdeliveries. One is from an adventure holiday firm in Gwynedd, which claims that losing vital mail in the post could have cost the company up to £150,000 in potential business. Rhys Davies of Outlook Expeditions in Bethesda claims that a mailshot campaign reached only half the addresses it targeted. He said: "Following up leads by phone, we discovered that about half our letters had never arrived … Out of 70 letters, 40 to 50 wouldn't turn up, people were sending them out again and they still wouldn't turn up." Peter Carr, of Postwatch Wales, said: "Our message to customers is that if Royal Mail do not know about the problem they cannot fix it." However, the problem is that customers do not know about the problem of undelivered post either, unless they ring up the person who is supposed to have received the letter and ask them whether they have received it. Most of us have better things to do with our time than that.

My second example is from an article inThe Sunday Times of 2 May. It concerns patients in Newtownabbey, who missed hospital appointments because people in neighbouring blocks of flats had received each other's mail for more than a year.

Lembit Öpik (Montgomeryshire)(LD)

Does the hon. Gentleman accept that one of the problems is that when constituents complain to us as their representatives, it is hard for them to prove the non-existence of a letter that they thought that they were going to receive? Often, the Post Office asks questions such as: is the constituent sure that the letter was ever sent? Sometimes, trying to pursue these cases is like trying to convince the Post Office that it needs to deliver to a postal address on Mars.

Mr. Turner

I agree with the hon. Gentleman. Being able to persuade someone that a letter has been sent and lost in the post requires all one's ingenuity and credibility.

Postwatch responded in a letter toThe Daily Telegraph on 30 April headed, "The postman only rings once, if at all". That letter was about the pilot schemes that have been undertaken. According to Kay Dixon, the chairman of Postwatch Greater London: "In east London, the only pilot for Greater London, it became clear that there were major problems, ca using disruption and inconvenience to the local community." I am sure that the Minister, whose constituency is in east London, will be familiar with that, as will my hon. Friend the Member for Cities of London and Westminster (Mr. Field), the shadow Minister for London. The letter continues: "Following discussions and representations, Postwatch Greater London received assurances from the Royal Mail that it had learnt from the experience of the pilot schemes." Kay Dixon goes on to say: "We are disappointed that, despite more than two years of planning, the Royal Mail's implementation of single deliveries is causing problems for customers." Stephen Robinson, also writing inThe Daily Telegraph, said: "In our corner of north-west London we have lost not our second delivery, but our first. The post no longer comes at 8.20 am over the first cup of tea, as it used to, but around noon … We have lost the benefits of overnight mail delivery." On the evening of 30 April, there was a programme on Channel 4 called "Dispatches". It was partly in response to that programme that I raised that question with the Leader of House. Again, I quote: "On camera, the programme captured letters lying on the floor, untrained staff wandering lost through the streets as they tried to deliver mail, untrained managers, and working practices reminiscent of the 1970s. One worker tells the undercover reporter that he is working too hard, saying 'make it stretch', meaning he should sort letters more slowly. Managers are alleged to have to pay 'ghost overtime' to get people to work the eight hours they are supposed to, otherwise they go home three-and-a-half hours early. Postal workers are caught on camera playing football in the office, one running a business selling mobile phones and SIM cards while he is supposed to be working, and another allegedly selling counterfeit trainers." According to a report inThe Daily Telegraph on 3 May, residents of Southwark have formed a protest group in response to the quality of service. We have heard about the problems of late delivery, of misdelivery and of sorting offices being used for illicit recreational purposes. Now we move on to the quality of the service. According to the article, several of the victims who spoke toThe Daily Telegraph feared reprisals from the criminals involved in the theft of cheque books, credit cards, parcels and letters in what they describe as a "Third World postal service". I will provide brief examples. One person was telephoned by his bank to ask if he had written a five-figure cheque. Another person said that electricity bills and mortgage documents had not arrived for eight months. Someone else had had envelopes embossed with the logo of design houses, such as Change, opened.

I congratulate the Secretary of State on rightly apologising to the House on 6 May, echoing the apologies of the chairman of Postwatch. Among others, the hon. Members for Burnley (Mr. Pike), and for Leicester, South (Mr. Marshall) intervened to outline the difficulties that they and their constituents had experienced. Adam Crozier, the Royal Mail chief executive, announced the following day that he would take day-to-day responsibility for the letter business.

I suspect that the problem is that the Royal Mail has been asked to go through a long-overdue change far too quickly and is having difficulty in implementing it—and I ask whether there is a regulatory failure as well. For example, I asked the Secretary of State for Trade and Industry on 26 March about the times at which postal deliveries were received. The Minister for Energy, E-Commerce and Postal Services replied that the licence granted by Postcomm does not specify the time at which the daily delivery to every household has to be made. Consequently, "data on delivery percentages at particular times of the day are not available."—[Official Report, 26 March 2004; Vol. 419, c. 1110W.] Earlier this week, it was suggested that money should be withheld from the Royal Mail Group if it failed to meet the delivery time, with which I wholeheartedly concur. The hon. Member for Ochil (Mr. O'Neill) suggested that a reduction in the managers' salaries would be appropriate, and the Chairman replied that that was a matter for shareholders. But there is only one shareholder: Her Majesty's Government, who are represented in this debate by the Minister, who should respond to his hon. Friend and say who should lose. I hope that it will not be the customer.

I gave notice to the Minister about my final point: the need for guarantees of the resilience of the postal service in the northern and east midlands regions, where all-postal ballots will take place early next month. It is absolutely essential that all the ballot papers—every single on—are delivered to the correct address and that every ballot paper posted back to the returning officer is delivered on time, including those posted by close of play the night before the election.

It is also essential that Postcomm monitors and reports the Post Office response to those requirements very carefully, so that improvements can be made in time for the regional government referendums planned for later this year. I hope that the Minister will guarantee that that will be done.

Anthony Trollope is probably the most famous former employee of the Post Office. In his autobiography, he described "bringing everywhere with me an earlier, cheaper, and much more regular delivery of letters." However, we now seem to have returned to pre-Trollopian times, and a horse-and-cart service cannot compete in the electronic age.

Mr. Deputy Speaker (Mr. John McWilliam)

Order. I have not been an employee of the Post Office since 1970.

2.17 pm
Mr. Mark Field (Cities of London and Westminster)(Con)

I congratulate my hon. Friend the Member for Isle of Wight (Mr. Turner) on securing this important and timely debate. From the Minister's point of view it will perhaps be a difficult debate to respond to, as many of the issues raised will be operational. However, we hope for guidance from his perspective on the strategic importance of Royal Mail and on ensuring rapid improvement.

As my hon. Friend said, there has been a catastrophic catalogue of continuing financial calamity in Royal Mail in recent years, many instances of which, it may be churlish of me to point out, have happened since 1997, and the Minister will expect me to concentrate on that, but it cannot be a coincidence that to many of its commercial and residential customers Royal Mail appears recently to have rapidly lost its way. I hope that the Minister will set out a timetable for its improvement in the years ahead.

I represent a central London seat and residential customers are of particular importance to me. Every day, about a million people come to work in my constituency, in hundreds of thousands of businesses, both large and small, that have suffered as a result of the Royal Mail service. I suspect that there is a particular problem in London. My hon. Friend made it clear that there has been a London bias in most of the national press coverage of the issue, although I appreciate that there are problems in the Isle of Wight and across the Solent in Southampton.

The "Dispatches" programme was shocking; all hon. Members appreciate that investigative journalism ensures that we see only the worst, and I often remark to friends who are asked to go on fly-on-the-wall documentaries that for every 30 or 40 hours of footage that is filmed, only a few minutes actually appears on the television screen. Much of the "Dispatches" programme was fairly shocking, though.

I shall mention some anecdotal evidence shortly, but it was apparent to me from the day that I was elected that there was a big problem with post in central London. In my constituency there are many depots, and there were some ongoing cases from my predecessor, Lord Brooke of Sutton Mandeville, from constituents who had expressed great concerns about postal services. Those complaints, which have run on for several years, continue. My hon. Friend mentioned Kay Dixon, who does a sterling job as the director of Postwatch in London; I have regular correspondence with her, not only on day-to-day matters, such as those under discussion now, but on the urban reinvention programme.

My constituency has been relatively unscathed by that programme, although there were a number of closures during the latter part of the 1990s, following commercial reorganisations, particularly in the City of London, and in the more commercial areas of my constituency. However, it is fair to say that, in the course of urban reinvention, some post office closures in the countryside have caused great pains to many Members of Parliament of all parties. However, in my constituency, there has been only one closure, on Vauxhall Bridge road. Inevitably, many constituents felt that having a post office so close to hand was very much part of the day-to-day glue of their lives, and wrote in dismay at the closure of that long-standing post office.

My hon. Friend also rightly pointed out that there has been concern about fraud: the Post Office and Royal Mail have clearly been unable correctly to address that, and there is little doubt that a small minority of employees are abusing their position and stealing credit cards and various other items of value. Although most individuals are insured and most banks take the view that that is part and parcel of the problem that they must face, it is clear that it is a multi-million pound problem, which I fear has worsened, rather than improved, in recent years.

I should like to put on the record a few examples, although I appreciate that other hon. Members who wish to speak will f resent their own anecdotal evidence, and, I hope, some projected solutions. There is a large delivery office—probably the nearest large delivery office to the House—a fairly long stone's throw away, in the direction of Victoria in Howick place, about half a mile from here. It is a large depot, and most residents of south Westminster needing to get hold of parcels or recorded deliveries. when they are not at home, will go to Howick place, because it is a major sorting centre. I understand that there are problems there, and I am indebted to a number of local residents, particularly Mr. Martin Shaw, who has been in touch with me on this matter.

Only last week, some 18 postmen from Howick place depot failed to turn up to deliver because of a works do the previous night. We probably all understand that, after Christmas parties in our own offices, attendance is not perhaps what it might be, but apparently that was not a one-off affair. As a result, casuals were called in, many of whom had not delivered in the area before, so they were dismissed immediately; only casuals who had delivered before were used. Many people in the immediate vicinity of Buckingham gate and Artillery row did not have post delivered that day. Many residents in the Ashley gardens area have not had post for several days, and residents are now making special arrangements with the local post office to pick up their mail directly from the sorting office in Howick place. It is obviously a major problem, which underlines the concerns that were set out in the Channel 4 programme to which I referred.

Some of the more major problems involve businesses. All Members of Parliament know that an increasing, and often perhaps a distressing and irritating amount of our mail arrives electronically rather than through the post. It is fair to say that many businesses can run on that basis. I suspect that a significant number of businesses in my constituency that are in the media industry rely very much on virtual and electronic delivery of messages and the like, so they have less of a day-to-day concern about the operation of Royal Mail. However, that is not always the case.

My hon. Friend the Member for Isle of Wight referred to an accountancy firm in his constituency. This morning, I received a letter from a constituent, Mr. Franks, who is a partner in a small Mayfair-based accountancy firm called Badger Hakim. With your indulgence, Mr. Deputy Speaker, I shall quote in full one of his concerns. He says that his business and doubtless the business of other companies operating in the area is being jeopardised by the "appalling service" of the Royal Mail. He says that accountancy firms such as his "are required to deal with numerous regulatory deadlines, not least, the payment of VAC on time, the payment of PAYE on time, the payment of personal and corporate taxes on time, the delivery of documents according to specific time scales set by law or other regulations. In all of there matters, our business in common with every other business in the UK, and every resident in the UK relies completely upon the Roy al Mail to deliver documents. These documents include payments… official forms and other important correspondence." As a result, there is a feeling that the failure of Royal Mail is completely unacceptable.

I understand that one client of the firm received an incorrect determination from the Inland Revenue—and we all know the importance of getting things right with the Inland Revenue, or indeed Customs and Excise. The Inland Revenue has entered a county court summons for the collection of approximately £1 million of tax against the taxpayer, whose real liability is no more than £10,000. He has paid the proper amount of tax and, without getting into the intricacies of the case, I understand that forms that were sent from the accountants' office a week ago have still not arrived. The problem, as my hon. Friend said, is not only with arrival but with the delivery of documents from certain parts of central London. The client cannot enter a defence against the county court summons without the forms being submitted to the Inland Revenue.

The Minister will see that that is a grave problem for anyone in the business community. I hope that he will give considerable thought to the concerns that are being set out. I appreciate that many of them relate to day-to-day operations, but he has made a statement in the House on Post Office matters in recent weeks or months. As my hon. Friend said, Adam Crozier, the Royal Mail chief executive, has made a pledge to take much more day-to-day control of the situation. However, I should be interested to hear what the Minister has to say about the longer-term future. Where does he see Royal Mail going in the years ahead?

In the mid-1990s, when my party was in government, there were proposals for privatisation, but the actions of many Back Benchers in the Conservative party ensured that we did not take that route. There is a grave danger because, in essence, the past 10 years have been entirely wasted. There is no sense of a strategy on what the organisation should be doing, other than trying jealously to protect its monopoly. Inevitably, there are commercial pressures in relation to many parcel deliveries and the all-embracing threat to the letters market from electronic mail.

Where does the Minister believe that the Royal Mail will be in 20 or 30 years' time? What sort of market must it appeal to? How will its profitability be affected? Those are strategic decisions. Inevitably, it would be wrong of the Minister to step on the toes of those who have been charged with fulfilling the responsibilities, but I hope that he, too, has at least some vision of where the service should go.

It is a great tragedy that 164 years after the beginning of a universal postal service in this country, many individuals and businesses needing letters and parcels urgently delivered are turning to pre-1840 solutions. They have to organise for delivery privately because they cannot rely on a service of which we should be and have been rightly proud. There is little doubt that our mail service has been a template for those that have developed in other countries, but I fear that many of those nations have a more reliable service than we currently do.

I hope that the Minister will give some thought to my words and those of other hon. Members present, to ensure that we have the rectification required, so that we can be proud of our mail service in the years ahead.

2.31 pm
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)(PC)

I congratulate the hon. Member for Isle of Wight (Mr. Turner) on securing the debate. As he well recognised and eloquently put it, it is an important issue.

The situation in Wales is not good. Some five of the seven postcode areas covering more than 75 per cent. of Wales failed to meet their minimum targets for delivery of first class mail according to figures recently issued by the Royal Mail Group. The statistics reveal that the NP postcode covering Newport, LD covering Llandrindod Wells, CF covering Cardiff, SA covering Swansea and SY covering Shrewsbury and mid-Wales all fell below their minimum targets for next-day delivery of first class post in the first three quarters of the 2003–04 financial year.

Needless to say, those figures are disappointing and speak for themselves. The majority of postal users in Wales are getting a sub-standard postal service. At the end of last year, seven areas were meeting some of their targets, but most were not and a great deal more should be done in Wales. Plaid Cymru thinks that postal services should come under the authority of the Welsh Assembly Government. That would not exclude managerial autonomy, but it would introduce some democratic accountability.

The National Assembly has helped to arrest the decline of rural post offices. It recently announced a £1.1 billion fund to support 11 post offices throughout south Wales from Abercwmboi and Abertridwrr to Mountain Ash and Merthyr Tydfil. There is a problem with post offices closing down. An elderly lady who ran a part-time post office in Mallwyd in my constituency gave 10 months' notice that she was giving it up. The local garage proprietor, who had run his business for three years, with a turnover of about £1.7 million a year from the garage, café and shop, applied for the post office franchise. Despite three requests, he was ignored and ultimately given a flat rejection by the people in power. I intervened and asked why. Breaching confidence, as one would expect an amateur outfit to do, the Post Office said that it was not sure whether he was responsible enough. I said, "Responsible? With all that money flowing through his business? He is very responsible. I know him personally." I had a row with Ms Carol Davies of the Post Office. She went on sick leave and he was subsequently given the right to run the post office.

If anyone tells me that there is no underlying scheme to close down rural post offices, they are daydreaming, because there definitely is. I have seen it so many times, and good luck to the National Assembly for recognising the problem. Despite the matter not being devolved, the Assembly recognises the importance of having a good rural post office system.

Michael Fabricant

Is the hon. Gentleman aware that the situation is even worse than that? The current system of Government funding for rural post offices throughout the United Kingdom ends in 2006. Whereas at the end of last year it was expected that money would be announced to see post offices beyond 2006, rural postmasters and postmistresses, and, more importantly, perhaps, their customers, are still waiting to hear from the Department of Trade and Industry and the Treasury.

Mr. Llwyd

The hon. Gentleman is absolutely right. I was going to mention that, but shall not now. The £301 million of funding, or whatever the amount was, finishes at the end of April 2006. I am sure that the Minister will give some assurances on that funding because the hardworking men and women who run the sub-post offices deserve it. How else can they plan for the future? I am grateful to the hon. Gentleman for making that intervention.

Here are some facts about the Royal Mail Group. A £55 million profit was made in the six months to September 2003. The chairman of the board, Allan Leighton, is now proposing to donate £1 million to London's bid to host the Olympic games in 2012. Some may say that it is an abuse of his position to spend customer's money in that manner, particularly when Royal Mail is cutting staff to save costs. Surely £1 million would be better spent on enhancing its services.

The profits confirm the union's view that Royal Mail has talked up the plight of the industry and exaggerated its losses to justify a cost-cutting strategy and make the need for restructuring appear more urgent than it is. The postal industry continues to expand. Mail volumes continue to grow and, in many areas, work force productivity has increased.

Last year, Wales lost the travelling post offices network. Management did not even place a tender for mail dispatches to and from Cardiff airport. So the mail for south and west Wales is now transported by road from Bristol airport by Bristol staff. All mail from mid-Wales and north Wales is conveyed by road to towns in England for processing. I am not making a political point, but a common-sense one. Surely mail processing should be done nearer home. The Royal Mail plans to reduce the number of mail centres in the UK. That will inevitably mean greater concentration away from mid-Wales towards Wolverhampton and Birmingham, making later deliveries and the concentration of mail from mid-Wales further east probable.

The official consumer watchdog, Postwatch Wales, published a report earlier this year that claimed that most of the 14.5 million domestic letters that are lost each year are delivered to the wrong addresses. That figure of 14.5 million is Royal Mail's estimate and some say that it may well be conservative. A recent MORI survey of 2,000 people carried out for Postwatch found that householders are becoming so used to the problem of late and wrongly delivered mail that they do not complain. However, the point has been made, and I think that I should reiterate it, that, if we are moving towards postal votes, that situation clearly has to be put right. Otherwise, we are, among other things, undermining democracy.

During the last Assembly elections, I know for a fact that 11,000 leaflets with the election addresses of Plaid Cymru candidates on them were not delivered in Conwy, but were found in a sorting office in Chester after the election. An apology was forthcoming, but that was not very useful to candidates who lost by a couple of hundred votes. That happened in another two constituencies in Wales, so there is cause for concern. I am not a union basher, but I wonder whether it can be persuaded to be a bit more careful with election addresses, particularly those of our party.

Of course, I appreciate that mail delivery is a difficult job, especially in rural areas, and that the universal delivery that we have all been led to believe will happen for ever may well be under threat. In June 2002, the Secretary of State was pleased to announce a liberalisation, which she supported, of the bulk mail market. She cited the experience of Germany, but I am not altogether sure whether that is a cause for universal acclaim because, at the end of the day, Deutsche Telekom, Deutsche Post, TPG Post and others may well be eyeing up the market with a view to cherry-picking some of it. Inevitably, in a cherry-picking situation, other services will have to go by the board. I am not a Europhobe, but I am concerned about other companies coming into the market and cherry-picking, which might leave the universal service obligation in tatters.

I represent a rural seat and am very concerned about so-called liberalisation. I hope that the Minister can slow down the process because it seems to be going hell for leather. I understand the benefits that greater commercial freedom can bring, but the Communication Workers Union and I are saying, "For heaven's sake, let's slow the process down to see how it is working; otherwise we might be heading for a disaster." I repeat what was said earlier on whether the Government have a vision for the Royal Mail: I am afraid that we are heading as quickly as we can towards commercial freedom and competition that may be unfair.

I reiterate the point raised by the hon. Member for Lichfield (Michael Fabricant) about the subsidy. One of the most notable components of the postal service is the universal service obligation. Are its days numbered? Rural Wales is already quite badly affected. For example, I used to be able to guarantee that the post would be delivered to my home before 8.30 every morning; now, it never arrives before 9.45 am, when I have long since departed.

More to the point, commercial entities and professional firms such as accountants and solicitors in Dolgellau, Bala and various other places in my constituency now have to wait until at least 10 or 10.30 am to receive a delivery. Often the practice among lawyers who did court work, as I did, was to deal with the post first and then leave the office at about 9 or 9.20. That is no longer possible, so making life far more difficult. It is hard for those lawyers to deal with urgent inquiries, which, believe it or not, still come by post rather than by electronic means. That means that such firms, even in rural areas, will turn in droves towards document exchange, which will further undermine the service and imperil the universal service obligation.

The vast majority of firms in Wales are in the small and medium-sized enterprises sector. It has been estimated that 90 per cent. of all employees in Wales work in the SME sector. That is a huge chunk. Many of those people live in smaller towns and rural areas. They will suffer—indeed, they are already suffering. Some people in my constituency do not even get a delivery by 11.30 or 11.45 am, and it is likely that that will get worse. I certainly cannot see that it will get any better in the light of the cherry-picking.

The definition of "urban" in the urban reinvention programme needs to be clarified. For example, Upper Cwmtwrch in the south Wales valleys is apparently urban, but Lower Cwmtwrch is not. On a serious note, the definition refers to "a settlement of 10,000 population". What is a settlement? The population along the Meirionnydd coast is about 10,000. Is that a settlement? The scheme has almost been completed in Wales, but we have had to contend with that complication.

I recently spoke to Mr. Eifion Pritchard, the chair of Postwatch Wales, who reminded me of other concerns. What is to happen to the rural network after April 2006? I am talking about the £300 million to which I referred. I want an assurance on that. There is also the issue of definitive Welsh and Scottish stamps. Many thousands of people in Wales signed petitions last year calling for such stamps. They are being produced, but the problem is that they can only be purchased in loose form, not in booklet form. The Royal Mail says that there is not enough demand for them. It does not shock me to know that there is no demand for them if people cannot buy them in booklet form. I ask the Government to bring some pressure to bear on that situation in Scotland and Wales if they can. It seems a very simple thing to do.

I hope that the Minister will deal with my points in detail and, if he cannot, I ask respectfully if he will write to me about them.

Mr. Adrian Flook (Taunton) (Con)

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Lembit Öpik (Montgomeryshire) (LD)

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Mr. Deputy Speaker

I will manage to fit both hon. Members in, but only if they are quick.

2.46 pm
Lembit Öpik

In a spirit of cross-party friendship, and in case I forget to tell the hon. Gentleman when I intend to visit his constituency, I will endeavour to be quick.

I would like to say how extraordinarily impressed I am with the overall performance of the Post Office through the years. It really is some achievement to create a system so effective that, on the whole, it can deliver a letter pretty reliably from one end of the country to its destination at the other at relatively low expense. I am also impressed by the individual commitment of those who work for the Post Office.

As the hon. Member for Isle of Wight (Mr. Turner) rightly said, there is plenty of anecdotal evidence that we can all bring to bear in this discussion. A couple of examples of particularly impressive service come to mind in my area. For example Mr. and Mrs. Jones, who run a care home called Bryn y Graig, were receiving post at their house despite the atrocious condition of the road leading to it. Ultimately, the post office van actually broke its sump in an effort to get to the house. Another example is the feeling one gets from visiting postal workers at Christmas time. While everyone else is settling into the festive spirit, they are working at 5 or 5.30 in the morning, often in very cold conditions, to ensure that the Christmas post arrives on time.

On the whole, the criticisms that we may have of the Post Office cannot be levelled at the overwhelming majority of staff who work there. Nevertheless there are issues. We have already well rehearsed the problems of non-delivery. Once again, let us remember that while the percentage of letters lost or not delivered on time is relatively small, it is very important to those who are receiving late post or not receiving it at all. I have had recent business dealings with the NatWest bank in Newcastle upon Tyne and one of its staff, Diane Simpson, probably would not mind my mentioning her frustration at the changes to the postal service. They seem to be delaying the arrival of post and making it more difficult for her to do her job as she used to when she could rely on the post arriving earlier.

A fellow called Oswald Pugh spoke to me as recently as last weekend about the non-arrival of post, which was another incentive for me to come and speak here today. He sent a recorded delivery letter about a speeding ticket he received, and there seems to be no evidence of its having arrived. I should warn that it may not turn out to be the Post Office's fault, but the fact that that is one of the lines of questioning shows a need for the Post Office to reassure people that it will improve its standards of delivery in relation to that small proportion of letters that go amiss.

In defence of the Post Office, I must remind people that we must recognise the economic pressures that have been forced on it. Without going into too much detail—we have discussed the matter before—let me say simply that the Government have been over-zealous in the privatisation of some services, and almost dogmatic in their demands for the creation of a greater competitive environment. Let us remember, as the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) has pointed out, that private companies will cherry-pick the most profitable elements and leave the rest to the existing postal service. That simply drives down the profits on the mandatory services that it must provide. It is a great shame that that is taking place.

Incidentally, I too had an experience with leaflets going astray at election time. Leaflets selling the benefits of voting for me were delivered in error in a neighbouring constituency. That was distressing for me, but it would be difficult to measure how distressing it was for those members of the public who received my leaflets in error, and realised after the election that they were not to be represented by me after all. I never put a claim in for that, but something might come in the future, in our litigious society.

What can be done about all that? I am interested in hearing from the Minister how he and the Government intend to ensure that the Post Office is not put under unreasonable competitive pressure. In other words, the Government have a responsibility to ensure that cherry-picking does not make it impossible for the Post Office to maintain a universal service at a reasonable price. It would not be acceptable for the Minister to say that that is a matter for the free market, as the Post Office is an essential service, never more so than in rural areas such as Montgomeryshire.

The other thing that I hope to get from this debate probably cannot be provided by the Minister but by the powers that be who read these debates. I hope that they will give some indication as to how they intend to ensure that standards are improved. I stress again that the standards are extremely high. There is a very low level — a tiny, minuscule level—of criminality in the Post Office. Nevertheless, the service could be improved by making it easier for the public to make a complaint and by treating complaints with great seriousness. When a letter of mine—once again, to NatWest—was delayed recently, I felt that I was brushed off by the Post Office. I was told that there were all kinds of restrictions before I could make a complaint—cold comfort when one has paid in advance for a service that has not been provided.

We all benefit from having an advanced postal service. Perhaps Britain has to pay the cost of having had, as far as I know, the first postal service in the world. Modernising is more difficult for those who go first. Nevertheless, the Minister has an opportunity to give us some specifics as to how he will give the Post Office the latitude to maintain a universal service. After this debate, I shall be watching my postbag for what the Post Office itself can proactively offer in the interests of the collective postal good.

2.53 pm
Mr. Adrian Flook (Taunton) (Con)

First, I congratulate my hon. Friend the Member for Isle of Wight (Mr. Turner) on his diligence in securing this debate. His diligence is matched only by that of the excellent and hard-working local postmen and women in the Taunton constituency. My home is only 100 or 200 yards from the sorting office on Chip lane, as it is known. I often see the postmen and women as they cycle back, wearing the helmets that they have been obliged to wear as of last June. I am on at least waving terms with the vast majority of them, and I know that they go out in all weather.

It is important that I acknowledge in this Chamber that in my area, the problem is not local. It appears that the problem is the lateness of postal deliveries to Taunton; I know that from my constituency office. I was there on Monday morning when the chap who normally delivers the mail that comes down from my Westminster office arrived—all mail addressed to Adrian Flook MP is directed straight through to Taunton via the House of Commons. That mail is now consistently not arriving in Taunton until after 12 o'clock. The postman is as exasperated as are my two diligent members of staff. They cannot begin their working day properly until they see all the post.

The Post Office is not helping itself in Taunton. It is at this difficult time, the very month when working practices have changed so much that the local sorting office is in huge turmoil, that the Post Office, which is part of Royal Mail and which we as taxpayers all own, has announced that it will sell the Crown post office to Spar, which will then operate eight counters for the same number of hours, if not more—we were told that it would be open on Saturday afternoon. We acknowledge that the Post Office is trying to improve the quality of service, but somehow I doubt that that will happen.

Some lady in Watford or further afield has decided that the main post office on Fore street in Taunton should be given to the private sector. There is no problem with that in itself, except that she has not realised that, day in and day out, queues snake around the large concourse in front of the eight counters. If Spar plans to sell various kinds of chocolates, crisps, sandwiches and soft drinks in the shop, where will the people go? Will they snake around the aisles? Or, as happened recently, will they fall out on to the street, which is the busiest in the centre of Taunton? Where will the people queue to get their first and second-class stamps, car licences, postal orders and pensions?

What is particularly reprehensible is that the decision has been taken before we have received our network reinvention in Taunton. The Post Office is saying that everything is fine, that it has sorted out the local post offices and that anything else going on in or around Taunton does not matter. Network reinvention was supposed to be introduced in March this year, but has now been put back to June and possibly later. The Minister kindly wrote to me to inform me that June was the date, but I hear now that there has been some slippage. We know that Post Office Ltd. is selling our Crown post office from under us and giving it to Spar to operate. The Minister may not be able to respond today, but I hope that he can answer the written question that I have tabled on it. The main point is that the population of Taunton is being asked to be understanding about the changes, but the Post Office is making life difficult for everyone who uses the main post office.

I have received many letters on the subject, notably one from Trevor Spurway, a highly regarded architect who spends £5,000 a year on sending letters. We do not get a second post, so Mr. Spurway expects to receive his letters punctually early in the morning so that his staff can reply to the letters, pay the bills that he receives and, more importantly, cash the cheques for the money that he is owed. He has been told that if he wants a service by 8.30, he can go and collect his mail. Well, that is great, because if he and all the other small businessmen in Taunton, of which there are hundreds, all turn up at the sorting office in Chip lane, with all the bicycling postmen coming back after delivering their rounds, there will be one heck of a crash as all the cars drive into Chip lane.

The service counter is about 6 ft wide, so that system will not work, yet local businessmen are dependent on the cheques that they receive in the mail. It beggars belief that we are following a system suggested by a lady from Watford or somewhere else. We were told that it would be fine to get rid of the main post office because the new accommodation would have physical attributes worthy of what we had before. The same has happened with our sorting office, which has been undermined as well.

I am sorry for the hard-working Post Office employees, particularly those in the main post office who will be laid off if they do not want to be employed by Spar at a lower wage. All that they can do is to go to Bridgwater or Tiverton. I am sure that the hon. Member for Weston-super-Mare (Brian Cotter) will say that the same thing is happening to his post office, which is appalling. In the view of everyone in this country, particularly those in Taunton and the rest of Somerset, the Post Office is rapidly going downhill.

2.59 pm
Brian Cotter (Weston-super-Mare) (LD)

The debate has been wide-ranging, both geographically and otherwise. We have had contributions from rural Wales, and from towns and cities including London. We should congratulate the hon. Member for Isle of Wight (Mr. Turner) on securing the debate. All the different parts of the country are represented.

Anyone who saw the recent "Dispatches" report on television will recognise the importance of such a debate in addressing the challenges facing Royal Mail. In working to improve the quality of service offered, we need in particular to restore public faith in the company and ensure its long-term viability. I was intrigued by the suggestion that after sending a letter, we would have to phone the people at the other end to make sure that they had got it. I am sure that BT would be pleased about that, but I am not sure that I am.

Hon. Members have raised the problems for business; with my particular interests in Parliament, I am concerned about such issues. There have been late cheques and lost orders. There can also be all manner of trouble in connection with personal matters. If people do not get letters, birthday cards or anniversary cards, they may phone and and say, "Forgotten me again, have you?" One has to say that one has sent the card, which then dribbles in. By that time, words have been exchanged.

The Channel 4 programme exposed an awful lot of concerns about fraud and theft, particularly in London. Viewers will have been shocked by the images and by claims that organised criminal gangs have been involved. The programme exposed incompetence and untrained, ill-managed deliverers. The long established postal workers are extremely competent, but training levels nowadays are perhaps not always what they should be.

It is evident that the Royal Mail must change in practice and drastically improve its service. For thousands of hard-working, honest postal workers, particularly since the exposure of that programme, I am sure that the present situation is a grave disappointment. The reputation of the Royal Mail has been tarnished. Speaking personally, my post in my village in the constituency of Weston-super-Mare is delivered well. Perhaps I am the exception to the rule. I am left thinking, "This chap turns up, he is good and very nice"—but is the chap at the other end equally good? I am sending stuff in the other direction, so that is a concern. One may be lucky, as I am, in having a good service, but what happens elsewhere is also important.

In the long run, we need an open investigation with a much wider remit to consider the day-to-day workings of the Royal Mail, to ensure that they are examined and to improve the quality of service, which we all rightly demand. We also need a coherent and long-term Government strategy on how we can secure Royal Mail's future in the face of an increasingly liberalised market, and we should bear in mind that the company will be open to full competition from April 2007. To achieve that, it is imperative that the Government work together with Royal Mail's management and workers to address some of the challenges that the company faces.

First, we must recognise that there is no quick fix for addressing the problems of a public company that was starved of investment for years. For many years, there seemed to be paralysis and a freeze on doing anything about that, so we are faced with this situation today. There were years of underinvestment in staff training and technology. Adam Crozier, the Royal Mail chief executive, outlined the seriousness of the situation last week when he told a BBC breakfast programme that, in terms of investment, Royal Mail is years behind its main rivals, Dutch and German competitors TPG and Deutsche Post.

Royal Mail has also suffered greatly as a result of unofficial strike action, and that needs to be addressed. Wildcat strikes are not acceptable in this day and age. To be fair, we must acknowledge the fact that it is such strikes that have prevented the company from meeting some of its delivery targets. That has contributed to the imposition of fines and to the general perception of the Royal Mail.

As many hon. Members have mentioned, there is a tremendous impact on small firms. I know from my personal experience of dealing with firms how much they depend on the post arriving. I own up to the fact that over many years, a long time ago when I was running my own business, there were occasions when I would be waiting for a cheque to arrive before rushing to the bank to get it through the door in time to keep my balance—

Mr. Turner

Solvent?

Brian Cotter

Solid, or in trim. I attest to that. There must be a case for the Minister to deal with unofficial action. I hope that the new management are trying to examine relations between the work force and Royal Mail.

The problems that Royal Mail has been experiencing in recent months, which colleagues have very adequately addressed, including the losses from the unofficial action that I referred to, huge fines, and outdated equipment are all weakening the company's ability to provide the full liberalisation of the postal service next year. Although it is welcome that Royal Mail is in profit again for the first time in two years, we must ask ourselves for how long that is sustainable, given the current problems faced by the company in the light of the introduction of full competition.

As a result of the liberalisation programme, many EU member states are already considering the position of their national provider in the face of increasing competition and the likely rationalisation in the European market. The Government will have to consider where future investment in Royal Mail will come from. In the face of increasing competition it is likely that it will, perhaps, need to enter into the financial markets to retain that finance. If it does not receive investment in future, that will also weaken the position of the organisation's employees, who are rightly concerned about their future.

I shall conclude now, because we should give the Minister time to respond to this well chosen debate, as there are serious issues to consider. The days of Postman Pat seem long behind us, although I pay tribute, as we all do, to individual postal workers. The concept of putting something in the postbox and then thinking, "That's that—done and dusted", confident that it would come out at the other end, seems to have gone out of the window.

We used to rely on the little tabs on letterboxes saying when the next collection was due. I wonder how efficient the Minister considers those to be. I wonder, too, whether we can rely on special delivery, for which I believe that people can pay extra. I hope that the Minister will have some figures on that—if not today, later. Perhaps those of us who are prepared to dip into our pockets occasionally for a special delivery will get that service. There must be facts and figures for the percentage of special delivery items that are delivered on time, or delivered at all.

Now I shall leave it to the Minister to address those issues—the future of Royal Mail, which is so important to us, the improvements that are needed, and its viability for the future. We look forward to his answers.

3.8 pm

Michael Fabricant (Lichfield) (Con)

The Royal Mail Group is in a mess. So said my hon. Friend the Member for Isle of Wight (Mr. Turner), who must be congratulated on securing this debate. Sadly, every single speaker has had to confirm that.

The hon. Member for Montgomeryshire (Lembit Öpik), my hon. Friend the Member for Taunton (Mr. Flook) and many other hon. Members said that many postal workers do a very good job. They work hard and are responsible, but they are being let down by a small minority.

A number of colleagues have mentioned the "Dispatches" programme, the subject of which is a disgrace. I remember that many years ago I used to supply broadcasting equipment to Gosteleradio in Moscow. We could not send anything by post to the Soviet Union. Occasionally I would send the latest Beatles album in the post, but I would find that it had been nicked by postal workers. That is not the sort of thing that we ever expected to see happening here in the United Kingdom, yet if the "Dispatches" programme is to be believed, it is not Beatles albums that are being nicked, but far more valuable things. There is no excuse for that.

A number of colleagues have also spoken about the network reinvention programme. I think that all hon. Members accept that all the 9,000 urban post offices cannot be sustained. However, considerable alarm has been expressed by hon. Members of all parties in Westminster Hall and the main Chamber about the manner in which the network reinvention programme is being implemented. Mark Fox, the prospective Conservative party parliamentary candidate for Great Yarmouth has expressed grave concern about four closures that are happening in that town, where the Post Office says that post offices that are closer than one mile from each other are ripe for closure. Yet, it does not take into account the elderly population in Great Yarmouth and other areas, and the natural obstacles that often exist between different post offices.

Hon. Members have also spoken about the 14.5 million items of mail that have gone missing from the Post Office during the past year. Six and a half million of those were lost and 8 million were misdelivered. I am delighted that Adam Crozier, who did a first-class job as chief executive of the Football Association, has decided, as chief executive of the Royal Mail Group, that he will take personal control over that issue. While I do not expect the Minister to take personal control, I expect the Government to accept some responsibility. We must never forget that the Royal Mail Group is one of the remaining nationalised industries in the United Kingdom where the Government hold 100 per cent. of the shares, appoint the chairman and have a major influence on the names of the directors who are appointed to the main board.

My hon. Friend the Member for Isle of Wight mentioned his concern regarding all-postal ballots, which the Government are so keen to promote. We heard from the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) about election addresses going missing and from the hon. Member for Montgomeryshire about their being sent to the wrong constituencies. That was bad enough, but what if, as my hon. Friend the Member for Isle of Wight said, ballot papers do not arrive with electors? What if the ballot papers that do arrive do not appear with the returning officer in time and such votes cannot be counted? It is most important that the Minister, as a Minister of the Crown, makes representations and gives a clear undertaking today that the very process of democracy in the United Kingdom will not be damaged by the unreliability of the current postal service.

The hon. Member for Meirionnydd Nant Conwy also raised the question of the Government's vision for the Royal Mail Group. Last Thursday, when I asked the Minister's boss, the Secretary of State for Trade and Industry, what vision she had regarding its future governance, it appeared that she had none. One merely has to readHansard to see that there is no vision, or if she has one, it dare not speak its name, because she was not prepared in the past, or on that occasion, to state what it is. Yet, it is true to say that the Royal Mail Group cannot continue as it is at present.

A number of hon. Members, including myself, mentioned rural post offices. There are 9,000 such post offices in the United Kingdom at present. Postwatch estimates that if the £150 million a year grant from the Treasury to the Royal Mail Group ceases at the end of April 2006, 7,000 of them will close. We have read in the press that there is every chance, because of Labour Back Benchers' fears that they might lose their seats at the next election, that the Government will provide that funding. However, it was promised at the end of last year, and I hope that the Minister will use this opportunity to say precisely where it will come from.

The main point of this debate was the question of late deliveries. If I may, Mr. Deputy Speaker, I will quote from a letter that I received from a leading financial adviser in the west midlands. He did not want the name of his company mentioned, for fear that some letters would go missing. He said: "Since 1987 our Post has invariably arrived between 8.00 a.m. and 8.30 a.m. Therefore, staff have been recruited and work rosters set, so that the Mail might be attended to immediately. However, in March, with no consultation and after only two weeks notice, our Postal deliveries started to arrive around 12.30 p.m. This was an impossible scenario because our staff were left under-employed during the morning shift. We, therefore now have to send two staff to collect our Post each day, which is not actually ready until 8.45 a.m., when Postal Delivery staff leave the Sorting Office. Is this progress?" He continues: "How can this country compete with its European and American neighbours with this ante diluvian development? Adam Crozier said that it is Royal Mail's aim to deliver the first post—the only post—in the morning. He accepts that changing rosters have caused a problem. Problems have also arisen because those new rosters mean that post workers do not know their beat. The Communication Workers Union has also stated that there has been insufficient training for postal workers.

I received a copy of an illuminating letter, which begins: "Dear James, As you know the Royal Mail has decided to get rid of the second delivery. As a result, all rounds have been increased from an hour and a half to three hours, sometimes with bizarre results. In Edith Grove, we used to have the best postman in the business. His name was Mike Collier, known to his colleagues as 'Loon', for reasons I never understand; there was nothing Loony about him! I have never known a postman like him. He knew everybody in all the streets he served, he knew everyone's little foibles … he was always good-humoured, he was fast, and as a postman he was faultless. I always knew he was on holiday because I did not receive my own post, and yet received lots of post for other people. A week or two before Easter he went on holiday, and temporary postmen came. But when he came back, they had put him on another round … last week we had a new man who we were told would be our 'regular'. Still I got post which was not mine, still my own post didn't arrive, or if it did, it arrived damaged or opened; on Thursday, nobody in the street received post, as far as I can make out. A week or so ago, a parcel was put on to the dustbin housing of the house next door. I assumed it was theirs. Some days later, a neighbour asked what it was, so I went to investigate—and found that it was post that should have been delivered to my house. It was clearly addressed, but the postman had simply not bothered. When my new credit card did not arrive on Friday, the last day of my old one, I went to speak to the manager. While I was there, someone else came in, from 11 Edith Grove; he runs a business, and was up in arms about the situation. The manager told us that the problem was the unions, that routes had to be worked out on computer and then agreed with the unions, and he could do nothing about it." The writer goes on and on. It is not boring, but sadly I cannot read it all because I will not allow enough time for the Minister to answer all those important points.

I hope that the Minister will answer those points, because Ministers—not necessarily this Minister, but his colleagues—reply to more and more parliamentary questions about the Post Office with, "This is not a matter for me. It is a matter for Postcomm and the Royal Mail." That simply is not good enough. The Government must accept some responsibility for the Royal Mail; they cannot shirk that. They are the 100 per cent. shareholder in the Royal Mail Group and they have to approve the appointment of the chairman.

I hope that the Minister will accept some responsibility on behalf of the Government, and that he will accept that businesses and private customers are suffering from late deliveries or deliveries that simply never happen. I hope that he will agree that the disruption to the mail just cannot continue. Our democracy itself could be endangered by electors not receiving ballot papers and returning officers not receiving returned ballot papers in time. I hope that he will set out how Royal Mail, in partnership with its owners, the Government, will restore itself to become the beacon of excellence that it once was.

3.19 pm
The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)

I, too, start by congratulating the hon. Member for Isle of Wight (Mr. Turner) on securing the debate. It is an important and timely debate, and I welcome the opportunity to air some very serious matters.

The performance of Royal Mail has been sharply criticised recently, and rightly so. My right hon. Friend the Secretary of State has, on behalf of the Government, apologised for the problems. All the specific problems that have been mentioned need to be addressed and Royal Mail management will see all the specific and local points that have been made. There are, without question, problems.

However, I am particularly grateful to the hon. Member for Montgomeryshire (Lembit Öpik) for reminding the House about the fact that, for the most part, the organisation continues to do a good job while at the same time rolling out one of the biggest restructurings ever undertaken by a British business. The hon. Member for Weston-super-Mare (Brian Cotter) made that point about his local service, and my hon. Friend the Member for Preseli Pembrokeshire (Mrs. Lawrence) spoke in another debate about the excellent and recently improved service that she has received.

There are certainly serious problems in many constituencies. Royal Mail has held up its hand and acknowledged those, and it is working hard to resolve them and get the service back to the level that its customers demand. I well understand, as does Royal Mail, how important that is for both domestic and business customers.

At the beginning of 2002, Royal Mail was losing more than £1 million every working day. The hon. Member for Cities of London and Westminster (Mr. Field) suggested rather half-heartedly that that was connected with the change of Government in 1997. To his credit, he was apologetic about making that point. He was right to apologise about it, because that was certainly not what the problem was. He was on stronger ground in pointing to the competition with e-mail and the wider growth of competition in the postal services market. It was clear that losses could not be allowed to continue.

We took action to put things right. We appointed Allan Leighton as chairman, to provide leadership and to turn the company around. We have further strengthened the board since then and we agreed a three-year renewal plan that put in place a financial package of more than £1 billion to support its implementation. We are just into the final year of the plan. At the latest half-year, Royal Mail posted a very small operating profit of £3 million before tax. That is encouraging, but it is clear that the turnaround to sustainable profitability is not yet complete. The final year, which we are now into, is crucial as major changes are made to how the business operates.

There have been problems, as contributions to the debate and recent media coverage have shown. Royal Mail has not met its quality of service targets. It still delivers more than 90 per cent. of first class letters the next day, but it accepts that that proportion is not good enough. It needs to be at the higher levels that we saw in the past.

As we heard, a key element is the move to a single delivery. It is, to the company's customers, by far the most visible change, and its introduction has certainly been accompanied by some problems. The UK is one of the last places to have more than one delivery a day, and that must change if Royal Mail is to be competitive. Royal Mail delivers more than 82 million items to up to 27 million addresses. The amount of mail for daily delivery today is about the same as the highest Christmas peak was 30 years ago. The number of addresses to which delivery is made has also increased significantly. As a result, the pressure on early-morning deliveries has increased hugely.

By contrast, improvements in mail sorting technology and distribution networks mean that second delivery was, as the hon. Member for Isle of Wight said, required for only 4 per cent. of mail, but the cost of providing that service was about 20 per cent. of total delivery costs. Clearly that could not continue.

The change to single delivery means a later start on some routes, in order to sort mail for delivery and put it into route order. As hon. Members have said, the aim is to deliver to the majority of customers by lunchtime. The change is a huge undertaking, but the single delivery has been introduced in three quarters of all delivery offices—1,100 out of 1,450. The process takes six to eight weeks to bed in as staff get used to new and longer delivery routes.

I point out that changes are being made following full consultation between management and employees at the local level. I think that that is a good thing. The debate has clearly shown that many people are anxious about the changes. In the last week, my right hon. Friend the Secretary of State has received Allan Leighton's personal assurance that the company is vigorously tackling the problems that customers in some areas are experiencing while the single delivery is being introduced, and solutions are being found. I will be watching for performance levels to come back up to what was achieved last year, when 93 per cent. of first class letters were delivered the next day.

The problem of lost mail was raised. As I said, Royal Mail handles about 82 million packages a day; estimates vary on how many letters are lost, and the different estimates can be used to support either side of the argument. Royal Mail commissioned consultants, who produced independent figures that estimated the amount of letters lost or substantially delayed at 0.07 per cent. In the first two years of that data gathering, the estimated number of losses fell by nearly a half, but that still means that about 2 million items go missing or are delayed every year. The company's top priority is to improve the quality of services to its customers, and I hope that that figure will fall a good deal further.

The Postal Services Act 2000 introduced a strong regulator to monitor performance: Postcomm has real powers to impose penalties, and last year it showed that it was not frightened to use them when it imposed a fine of £7.5 million, the biggest fine ever issued by a regulator. Postwatch, alongside Postcomm, will continue to monitor the situation closely, and I join the hon. Member for Cities of London and Westminster in commending the work of Kay Dixon of Postwatch in London and Peter Carr, the chairman of Postwatch, and their colleagues.

I was appalled at the unacceptable behaviour on display in the shocking "Dispatches" programme. Royal Mail management will thoroughly investigate the allegations, especially the criminal activity, which was indeed disgraceful. Where appropriate, action will be taken against individuals, including dismissal if necessary. The company have already taken action on a number of those points.

As several hon. Members have rightly said, the vast majority of postal staff do a superb job; they are honest and hardworking, and take a pride in their job. Those responsible for the conduct that we have heard about are a tiny minority. Postal workers are part of the fabric of a community, especially in rural areas where they give people support and assistance, as well as delivering the post.

Michael Fabricant

Will the Minister give way?

Mr. Timms

I do not think so, because the hon. Gentleman has raised the important issue of the postal elections, which I need to comment on. I understand hon. Members' concerns about the impact of the quality of service problems being experienced by Royal Mail on forthcoming postal ballots. Royal Mail is well aware how important it is to ensure that it provides a reliable service during the pilot postal elections in June, which will affect up to 14 million people. Royal Mail will give the handling of the ballot papers its highest priority; electoral mail will be readily identifiable and it will be given priority over other mail.

The Department for Constitutional Affairs, which is overseeing the elections, has had meetings with Royal Mail to discuss the development of detailed national and local plans for the pilots, and it is confident that robust plans are in place for the delivery and return of all electoral mail. The Department's project team will monitor Royal Mail's performance during the election period; it is in regular contact with Royal Mail to ensure that everything runs smoothly.

Finally, the hon. Member for Weston-super-Mare mentioned collection times on post boxes, a matter that is regularly raised with me. He will be pleased to know that in February Royal Mail announced that it had accepted proposals from Postwatch to reintroduce tabs on post boxes that show the last collection time. That announcement will be widely welcomed.

We have had a valuable debate, and work is being done to address with great urgency the problems that have been raised. I am grateful to hon. Members for drawing them to our attention.

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