HC Deb 26 July 1999 vol 336 cc87-97W
Rev. Martin Smyth

To ask the Secretary of State for Trade and Industry how many appointments to the Post Office within the last 12 months have been made before the final date of(a) trawl and (b) external application was reached. [91001]

Mr. Ian McCartney

I understand from the Post Office that it does not use a trawl system for job vacancies. All vacancies filled internally are subject to an open resourcing policy, which enables anyone in any grade in the organisation to apply. Closing dates for the receipt of applications for all posts filled internally or externally are strictly adhered to, and the Post Office is not aware of any appointments made within the last 12 months before the final dates for either internal or external applications were reached.

Mr. Fallon

To ask the Secretary of State for Trade and Industry, pursuant to his answer of 25 June 1999,Official Report, column 474, on Parcelforce, if the loans to Parcelforce have been repaid; and if they are repayable at commercial rates of interest. [91178]

Mr. Ian McCartney

[holding answer 13 July 1999]The loans to Parcelforce from the Post Office Group Centre have not been repaid.

It is Post Office normal practice to charge its constituent businesses, including Parcelforce, interest at a commercial rate on their in-year funding requirements. As Parcelforce is not a legal entity and therefore has no share capital, other loans to Parcelforce from the Post Office Group Centre are treated within the Post Office Group as a surrogate for equity and, as such, do not carry an obligation for interest payments.

Mr. Reed

To ask the Secretary of State for Trade and Industry if he will make a statement on the future of Crown post offices; and when he will lift the moratorium on conversion of Crown post offices to agency status. [91314]

Mr. Ian McCartney

As announced in the White Paper "Post Office Reform: A World Class Service for the 21st Century" published on 8 July, the Government have agreed a strategy for the future of Crown post offices, which reflects proposals put by the Post Office to the trade unions, of retaining a core of directly owned and managed Crown offices at which at least 15 per cent. of the total business transacted by the counters' network will be done. The lifting of the moratorium on the conversion of Crown offices to agency status was announced on 7 December 1998 by the former Secretary of State for Trade and Industry, my right hon. Friend the Member for Hartlepool (Mr. Mandelson).

Mr. Swayne

To ask the Secretary of State for Trade and Industry if he will make a statement about the future of the powers of entry, search and arrest currently enjoyed by the Investigation Branch of the Royal Mail under his proposals for a limited company. [91481]

Mr. Ian McCartney

Consolidation of the reform package in primary legislation will involve changes to a range of existing powers in order to reflect the new framework which separates Government ownership from Post Office business operations and introduces new, independent regulation. The future of the powers of entry, search and arrest, currently available to the Investigation Branch of the Royal Mail will be considered in this wider context.

Mr. Swayne

To ask the Secretary of State for Trade and Industry if(a) the postal archives and (b) the Post Office Museum will become part of the public limited company under his proposals for the Post Office. [914801

Mr. Ian McCartney

The Post Office is currently looking at plans for the future management of its heritage collection in the light of the recent closure of the National Postal Museum. No firm decisions have yet been reached but we will be assessing the impact of public limited company status on any proposed plans.

Mr. Swayne

To ask the Secretary of State for Trade and Industry what discussions his Department has held with the Department for Culture, Media and Sport regarding the future of the Post Office Archives and the Post Office Museum; and if he will make a statement. [91479]

Mr. Ian McCartney

There have not been any discussions between Departments, but the Post Office is considering proposals for the future management of its heritage collection in the light of the recent closure of the National Postal Museum in London. I understand that the Public Record Office and Museum and Galleries Commission guidelines continue to be met.

Viewing of the philatelic collection is available by appointment, as has always been the case. The artefacts collection is currently not on public display, but is accessible through written application to:

  1. The Post Office Archives Centre
  2. Freeling House,
  3. Mount Pleasant Complex,
  4. London.
Mr. Gibb

To ask the Secretary of State for Trade and Industry if, under the proposal for the Post Office outlined in the Post Office White Paper, the Government will underwrite any debt issued or raised. [91739]

Mr. Ian McCartney

As the White Paper sets out, the Government believe that borrowing by the Post Office should, on value-for-money grounds, be from the National Loans Fund, but at a commercial rate without a Government guarantee.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if he will list the studies carried out in Europe by the European Commission referred to on page 19 of the Post Office White Paper regarding the need for greater competition in postal services. [91747]

Mr. Ian McCartney

The European Commission had the following studies carried out in accordance with Article 7(3) of the Postal services directive 97/67/ECStudy of the impacts of liberalisation in the postal sector: Liberalisation of incoming and outgoing intra-community cross-border mail (Price Waterhouse Coopers) Study on costing and financing of universal service obligations in the postal sector in the European Union (NERA) Study on the weight and price limits of the reserved area in the postal sector (Ctcon) Study on the liberalisation of clearance, sorting and transport (Ctcon) Study of the impact of liberalisation of direct mail (Arthur Andersen) Modelling and quantifying the scenarios for liberalisation (MMD).

The first five of the above are available on the internet at http://www.ispo.cec.be/ under "postal services". We understand that the sixth will be available shortly.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if the Post Office Regulator will be required to publish details of internal transfer pricing arrangements under the proposals in the Post Office White Paper. [91736]

Mr. Ian McCartney

The Government are committed to a transparent regulatory regime. The new postal services Commission will therefore not only have powers to require information, but to publish information for the benefit of consumers and in the interests of good regulation. They will, therefore, have the ability to publish details of internal transfer pricing arrangements. The Government do not propose to require them to do so.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if, under the proposed public limited company status for the Post Office, it will be possible for the company to be put into(a) receivership by creditors, (b) voluntary liquidation and (c) compulsory liquidation. [91740]

Mr. Ian McCartney

Once the Post Office has become a public limited company under the Companies Acts, it will be subject to the full range of company law.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if the Post Office's power to acquire land by compulsory purchase order will apply to its non-monopoly services following its conversion to a public limited company. [91745]

Mr. Ian McCartney

Post Office privileges which have been granted in the past, including the Post Office's power to acquire land by compulsory purchase in certain circumstances, were provided to facilitate the universal service obligations (USO) placed on the Post Office. The USO is not limited to services within the monopoly area. For example, it also covers standard parcels and the registered letter service. The Government have decided that these privileges should remain for now but that they should be kept under review by the Regulator.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what assessment he made of the compatibility of his proposals relating to the duties to be owed by the directors of the Post Office plc with the provision of the Companies Acts. [91751]

Mr. Ian McCartney

The intention of transforming the Post Office into a public limited company is to underline the clear separation of the functions of ownership and management. In particular it will make it absolutely clear that the Directors owe their duties to the company and not directly to the Government as owner. This will reinforce the new arm's length relationship between the Government and the Post Office Board.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what measures he has implemented to ensure that the transfer of Royal Mail Priority Services to Parcelforce does not result in any monopoly services being delivered by Parcelforce. [91735]

Mr. Ian McCartney

No monopoly business is carried by Parcelforce. However, as set out in the White Paper, under the transfer of Priority Services much of the operational activity, at least initially, continues to be carried out by Royal Mail. This raises the possibility of the Post Office monopoly business improperly subsidising wider Parcelforce business in the competitive arena. The Government therefore asked its auditors for the Post Office to look at the business case for the transfer; at the basis on which revenues and costs would be treated under the new arrangements; and, in particular, whether this was on a defensible basis from a competition point of view and with accounting transparency. In the light of the advice from the auditors, the Government have confidence that the arrangements are satisfactory. They will continue to be monitored by the auditors until the Regulator has its own arrangements in place.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what additional Government services the Government plans to deliver through the sub-post office network. [91748]

Mr. Ian McCartney

The unrivalled reach of the nationwide network of post offices, and the trust in which it is held by its customers, make it ideally suited as a delivery channel for a wide variety of Government business. As at present, Post Office Counters Ltd. will remain free to bid for this business.

Mr. Gibb

To ask the Secretary of State for Trade and Industry when he plans to introduce legislation to create the Post Office as a public limited company. [91752]

Mr. Ian McCartney

As soon as parliamentary time permits, primary legislation will be brought forward to consolidate the reform of the Post Office and the postal market.

Mr. Gibb

To ask the Secretary of State for Trade and Industry over what periods the Post Office will be permitted to borrow under the proposals in the Post Office White Paper. [91750]

Mr. Ian McCartney

The precise terms, including maturity of any borrowing, will depend on the investment concerned and will be discussed with the Post Office as part of the notification and approval process.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if debt incurred by the Post Office under the proposals in the Post Office White Paper will be accounted for as Government debt. [917431

Mr. Ian McCartney

Under national accounts definitions, as the Post Office is in the public sector, Post Office debt will score within the Public Sector Net Cash Requirement (previously Public Sector Borrowing Requirement) which is closely related to changes in Public Sector Net Debt.

Mr. Gibb

To ask the Secretary of State for Trade and Industry by what mechanism the company referred to at paragraph 18, page 51 of the Post Office White Paper will enforce the duties which it is proposed the directors of that company will owe to that company. [91734]

Mr. Ian McCartney

Once the Post Office has become a public limited company under the Companies Acts, it will be subject to the full range of company law. Its directors will be subject to the legal duties imposed on directors under those Acts.

Mr. Gibb

To ask the Secretary of State for Trade and Industry how the non-monopoly services of the Post Office will account for the cost of capital tied up in its fixed assets; and how such fixed assets will be valued under the arrangement proposed in the Post Office White Paper. [91737]

Mr. Ian McCartney

The Postal Services Directive 97/67/EC lays down specific requirements about transparency of accounts which address these issues. My right hon. Friend the Secretary of State has instructed the Post Office to comply with these requirements and will be ensuring that they do so. How the non-monopoly services of the Post Office will account for the cost of capital tied up in its fixed assets, and how such fixed assets will be valued, will be a matter in the first instance for the Board of the Post Office. These accounts will be independently audited and, in due course, will also be subject to scrutiny by the new independent regulator, the Postal Services Commission. All services will be included.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what power the proposed Post Office Regulator will have to ensure fair competition by the Post Office in the area of those non-monopoly services which are still subject to the universal service obligation. [91744]

Mr. Ian McCartney

The regulator will have a range of powers to ensure that the Post Office competes fairly and does not act anti-competitively, including in the competitive area. It is proposed that the Postal Services Commission will have concurrent powers with the Director-General of Fair Trading to apply competition rules in respect of the Post Office (and other licensed postal operators).

Mr. Gibb

To ask the Secretary of State for Trade and Industry if the Post Office will be included in the proposed Utilities Bill. [91741]

Mr. Ian McCartney

No. We intend to bring forward separate legislation on the Post Office as soon as Parliamentary time allows.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what plan he has to ensure that following its conversion to a public limited company Ministers remain accountable to Parliament for the Post Office. [91757]

Mr. Ian McCartney

The current arrangements will remain in place and in fact be strengthened. The Post Office is currently required by the Post Office Act 1969 to provide my right hon. Friend the Secretary of State with its accounts and annual reports and my right hon. Friend is required to lay them before each House. This arrangement will continue. An obligation will also be laid on the Regulator to report annually to my right hon. Friend and this report will also be laid before each House. In addition, the Government have undertaken to report annually to Parliament on the progress of the reforms set out in the White Paper, and particularly on the functioning of the arm's length relationship. The aim will also be to report once the Strategic Plan has been approved, though commercially confidential details of the Plan will not be revealed. But the Government will not be involved in the day to day management or detailed issues, as noted on pages 44-45 of the White Paper.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what safeguards will be incorporated in the measures proposed in the Post Office White Paper to ensure that the terms of the loan arrangement, other than the rate of interest, are on an arm's length basis. [91742]

Mr. Ian McCartney

The Post Office Board will be clearly accountable for running the business successfully on the basis of a rolling five-year strategic plan agreed with the Government. Any borrowing for growth investments will be on commercial terms. The Government will be responsible for approving annually the five-year rolling strategic plan and approving borrowing for major acquisitions and other growth investments, but otherwise will not be involved in normal management and commercial matters which fall to the Post Office.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what powers will be given to the Post Office regulator to ensure that the debt: equity ratio of the Post Office non-monopoly services will be similar to those operating generally in the private sector of these markets, under the arrangement proposed in the Post Office White Paper. [91755]

Mr. Ian McCartney

To place the Post Office on a more commercial footing, and one where it can be better benchmarked against its competitors, the balance sheet will be restructured with the Post Office ceasing to hold, and have access to interest from, the present level of accumulated External Financing Limit surpluses. It is planned that the change will take effect on 1 April 2002. During the interim period, the Government will consider with the help of professional advisers the appropriate shape of the balance sheet.

The Regulator will be responsible for ensuring fair competition and that there is no undue cross subsidy from the monopoly to competitive market, nor an abuse of a dominant position. In particular, it is intended that the Regulator will be able to require the Post Office to provide regulatory accounts and other financial information clearly distinguishing between monopoly and competitive services, and in the competitive area, between Universal Service Obligation (USO) and non-USO services. It is also intended that the Regulator will have a power to impose changes in accounting practices if this would facilitate transparency.

Until we have primary legislation, the Regulator will advise my right hon. Friend on these and other matters relating to the Secretary of State's regulatory duties in relation to the Post Office.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what fee will be paid by the Department of Social Security to sub post offices for administering cash benefit payments under the arrangements applicable from 2003. [91749]

Mr. Ian McCartney

The contractual arrangements between the Benefits Agency and Post Office Counters Ltd. are commercially confidential, as are the contractual arrangements between Post Office Counters Ltd. and certain retail banks under which customers of those banks can access their accounts at post offices.

Mr. Gibb

To ask the Secretary of State for Trade and Industry under the proposals in the Post Office White Paper, what measures will be put in place to ensure that charges between the monopoly service provider division of the Post Office and the non-monopoly service provider divisions are arrived at on an arm's length basis; what services will be included in these arrangements; and how they will be valued. [91756]

Mr. Ian McCartney

The Postal Services Directive 97/67/EC lays down specific requirements about transparency of accounts which address these issues. The Secretary of State has instructed the Post Office to comply with these requirements and will be ensuring that they do so. All services will be included. How they will be valued will be a matter in the first instance for the Board of the Post Office. These accounts will be independently audited and, in due course, will also be subject to scrutiny by the new independent regulator, the Postal Services Commission.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if the Post Office exemption from traffic regulations will apply to its non-monopoly service vehicles under the proposals set out in the Post Office White Paper. [91753]

Mr. Ian McCartney

Post Office privileges which have been granted in the past, including those relating to aspects of traffic regulations, were provided to facilitate the universal service obligations (USO) placed on the Post Office. The USO is not limited to services within the monopoly area. For example, it also covers standard parcels and the registered letter service. The Government have decided that these privileges should remain for now but that they should be kept under review by the Regulator.

Mr. Gibb

To ask the Secretary of State for Trade and Industry how many community sub-post offices there are in the United Kingdom. [91766]

Mr. Ian McCartney

I understand from the Post office that at the end of May 1999 there were 2,082 community sub-post offices in the United Kingdom.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what borrowing limits his Department will propose be laid down by Parliament for borrowing by the Post Office under the proposed arrangements for borrowing subject to Government approval set out in the Post Office White Paper. [91754]

Mr. Ian McCartney

Under the new framework announced in the White Paper, the Post Office will be able to borrow for growth investments up to an annual limit of £75 million in each of the next five years. The Post Office will be free to seek approval for growth investments costing more than £75 million, as necessary, but the approval of Ministers will be required. The Government will approve Post Office requests for borrowing for these larger investment cases which are consistent with the rolling five-year strategic plan, commercially robust, and pose no undue risk to the taxpayer. The precise terms of any borrowing will depend on the investment concerned.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if he will list the possible steps being considered by his Department under its proposals to liberalise further the postal market referred to at page 21 of the Post Office White Paper. [91746]

Mr. Ian McCartney

This is a matter to be considered by the new regulatory body, the Postal Services Commission, not the Department. The White Paper makes it clear that the Regulator should be free to consider all appropriate mechanisms.

Mr. Gibb

To ask the Secretary of State for Trade and Industry if he will list those countries included in his Department's analysis of the postal services of other countries in which the postal services have been reformed in a way similar to that proposed in the Post Office White Paper; and what system of price regulation was adopted, listing in each case the appropriate formula. [91738]

Mr. Ian McCartney

Among the developed countries, Australia, New Zealand, all the Nordic countries, Ireland, Belgium and Austria have now adopted models of a government-owned plc. Of the different systems of price regulation, the information available is as follows:

Australia Australia Post sets charges which are reviewed by an external body, the Australian Competition and Consumer Commission. The Government may disallow a variation of postage rates for ordinary post within Australia.

Denmark In the reserved area the Minister of Transport determines the conditions for the fixing of postal charges for inland letters covered by the exclusive right. Tariffs are determined by Post Danmark and are approved on the basis of a price cap model. This consists of the rates being regulated by the percentage development in the gross price index (consumer price index) with deduction of 1 per cent.

Ireland The Regulator is responsible for sanctioning tariff increases for letter post only.

New Zealand Maintains a relationship between the price of the standard letter and movements in the Consumer Price Index.

Sweden There is a price cap on the domestic letter rate for private individuals. The charge to private individuals for delivery of letters weighing up to 500g may be increased by a maximum of the average change in the net price index over a three year period.

Belgium The postal service provider sets the tariffs and pricing structures for public service activities within the pricing framework laid down in its management contract (with the Government). Price ceilings are subject to the approval of the relevant Government minister.

Mrs. Ray Michie

To ask the Secretary of State for Trade and Industry if he has met representatives of the Post Office to discuss the reduction in the size of the network; and if he will make a statement. [92017]

Mr. Ian McCartney

There have not been any such meetings. The Government remain committed to a nationwide network of post offices, and will be discussing with the Post Office the criteria for access to post offices which we intend to publish by the end of this year. The Regulator will have a duty to monitor performance against these criteria.

Mrs. Ray Michie

To ask the Secretary of State for Trade and Industry how many staff were employed by the Post Office in Scotland for each of the past five years; and what forecast he has made of staff levels for each of the next five years. [92005]

Mr. Ian McCartney

I understand from the Post Office that the numbers of staff employed in Scotland for each of the last five years were as follows:

Post Office
Year Royal Mail Counters Ltd. Parcelforce Total
1995 13,286 1,276 920 15,482
1996 13,675 1,270 930 15,875
1997 14,028 1,203 940 16,171
1998 14,872 1,207 950 17,029
June 1999 14,541 1,152 926 16,619

No forecasts of staff levels in Scotland for the next five years are available.

Mrs. Ray Michie

To ask the Secretary of State for Trade and Industry how many sub-post offices in Scotland were closed on a temporary basis in each of the past five years; and how many of these were subsequently re-opened. [92016]

Mr. Ian McCartney

I understand from the Post Office that the numbers of sub-post offices closed in Scotland on a temporary basis and subsequent reopenings in each of the last five years were as follows:

1994–95 29 temporary closures of which two reopened within the year; nine other offices reopened from previous years' closures.

1995–96 17 temporary closures of which three reopened within the year; three other offices reopened from previous years' closures.

1996–97 41 temporary closures of which five reopened within the year; 14 other offices reopened from previous years' closures.

1997–98 35 temporary closures of which four reopened within the year; eight other offices reopened from previous years' closures.

1998–99 44 temporary closures of which 14 reopened within the year; eight other offices reopened from previous years' closures.

Mr. Boswell

To ask the Secretary of State for Trade and Industry what proposals he has for continuation of free postal services for(a) Braille material and (b) talking books, as part of his programme of Post Office restructuring. [91949]

Mr. Ian McCartney

[holding answer 19 July 1999]As set out in the White Paper on Post Office Reform, the Government believe that there is a genuine need for special services for the blind and has made clear that the Post Office will continue to be obliged to provide them under the reform programme.

Mr. Gibb

To ask the Secretary of State for Trade and Industry what level of losses sustained by non-monopoly services of the Post Office following its conversion to plc status will be regarded as constituting a subsidy from the monopoly services of the Post Office. [92052]

Mr. Ian McCartney

It will be the responsibility of the Regulator to ensure that any cross-subsidy from the monopoly area to competitive activities is the minimum required, in their opinion, to ensure the continued provision of services required by the universal service obligation at a uniform tariff. It will be for the Regulator to determine the extent to which this is affected, if at all, by plc status.

Mr. Gibb

To ask the Secretary of State for Trade and Industry on what date Ministers were advised that the Horizon project should be cancelled. [92134]

Mr. Ian McCartney

The decision to proceed with the Horizon project in a restructured form and without the benefit payment card culminated in an agreement in principle signed between ICL and Post Office Counters Ltd. on 24 May 1999.

Mr. Gibb

To ask the Secretary of State for Trade and Industry which Minister has specific responsibility for the Horizon Project. [92067]

Mr. Ian McCartney

[holding answer 20 July 1999]I have specific responsibility under the Secretary of State for Post Office issues, including the Post Office's interest in the Horizon project.

Mr. Chope

To ask the Secretary of State for Trade and Industry how many sub-post offices in(a) urban, (b) suburban and (c) rural areas are provided with a guaranteed minimum level of income. [92413]

Mr. Ian McCartney

[holding answer 22 July 1999]I understand from the Post Office that, as part of the new subpostmasters remuneration system, all sub-post offices receive some level of guaranteed minimum income. The system, which was specifically designed to help support smaller, mainly rural offices, includes a fixed element and an element which varies according to the amount of business a sub-post office handles. The fixed element is a larger proportion of the overall pay for small offices.

Mr. Kirkwood

To ask the Secretary of State for Trade and Industry what payments are made per transaction to post offices for processing each DSS benefit payment; and what payments will be made where post offices act as agents for banks and individual payments not made via automated credit transfer into bank accounts. [92346]

Mr. Ian McCartney

The remuneration arrangements between Post Office Counters Ltd. and subpostmasters and subpostmistresses are commercially confidential.

Mr. Kirkwood

To ask the Secretary of State for Trade and Industry what is the average number of transactions of DSS benefit payments processed by post offices broken down by category of post office; and what estimates he has made of the forecast decrease in transactions as automated credit transfer is encouraged. [92347]

Mr. Ian McCartney

I understand from the Post Office that the number and percentage in 1998–99 of DSS benefit payment transactions processed by category of post office are as follows:

Number of transactions Percentage
Crown offices 181,469,895 23.9
Sub-post offices 572,503,350 75.4
Community offices 4,555,729 0.6
Other 759,288 0.1

Existing paper-based methods of paying benefits at post offices are to be progressively phased out between 2003 and 2005 in favour of more modern means of payment based on the existing Automated Credit Transfer system.

Mr. Chope

To ask the Secretary of State for Trade and Industry how many(a) post offices and (b) sub-post offices there are in each parliamentary constituency in England and Wales; how many have been opened in each of the last five years; and how many have been closed. [92460]

Mr. Ian McCartney

I understand from the Post Office that it is not possible to provide figures for post offices and sub-post offices opened and closed in each of the last five years in each parliamentary constituency in England and Wales. However, I will shortly be placing in the Library a list of the numbers as at the end of March 1998 of Crown post offices and sub-post offices in each parliamentary constituency in England and Wales. I will forward a copy of this list to the hon. Member as soon as is practicable.

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