Postal Services Bill

As I understand it, there is an existing IBA. The question is: what is the timetable for the privatisation of the Royal Mail? How much of the existing IBA will be left? If we are arguing that an existing IBA can be carried over, surely an existing IBA of a different length could also be carried over. Although we currently have one that is worth probably a couple of years at most, by the time the privatisation procedure has gone through, there could be a new and different IBA. Indeed, there could be a 10-year IBA. We have already heard from the Minister that it is possible to have all sorts of businesses entering into agreements. We know that there are 10-year rail franchises, for example. There are all sorts of different takeover bids—when companies take over other companies, they have all sorts of contractors working for them—so there can clearly also be a takeover of an inter-business agreement. We are asking the Minister for a guarantee that it will be a 10-year agreement. What we are asking for is not rocket science; it is something that I am sure he will want to do. Indeed, if we can be persuasive enough, I am sure that he might even consider it, but we shall see. If that can be done and a privatised Royal Mail can be expected to honour the existing agreement, what has the Minister done to explore the option of putting in place a longer-lasting inter-business agreement, such as a 10-year agreement? Perhaps he will be able to tell us later what he has done. What will he do to put that in place before privatising the Royal Mail? Has he looked at examples of business takeovers where the buyer has taken over the existing commitments of the company that it has acquired? Simply telling the Committee and now the House that it cannot be done, albeit without exploring the options, suggests a fundamental unwillingness to take every possible step to secure the future of the post office network. The Minister seems to think that it would be good enough to rely on the good will of those concerned. Indeed, he tried to assure the Committee by saying:"““I refer the Committee to what the chief executive of Royal Mail, Moya Greene, and Donald Brydon, the chairman, said. Moya Greene said it was unthinkable that there would not be a long-term relationship between Royal Mail and Post Office Ltd. Donald Brydon said that he wanted to have the longest possible legally permissible agreement””.––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 121-22, Q244.]" However, what has the Minister done to turn that good will into practical action? Has he had talks with the chief executive and chairman of Royal Mail about securing a longer inter-business agreement between Royal Mail and Post Office Ltd before privatisation? What mechanisms has he explored for doing that? It also has to be said that Moya Greene may not be there for ever. What happens if we have a new chief executive or chairman? I have every belief in the sincerity of their words, but we all know that words are not enough. What we need in business are agreements in writing, so that we know what we are talking about. The Minister also said that consideration had not been given to the matter before. No, it has not, quite simply because when we were in government, we always intended to keep Royal Mail in majority public ownership, so it would not have been separated from the post office network in the way that it will be if the Government privatise it. Therefore, there was simply no need to consider the future of the IBA in that way. The National Federation of SubPostmasters is clear that it needs a 10-year IBA as an absolute minimum. That will be fundamental to providing security, so that business will be viable for the 97% of post offices that are owned by a sub-postmaster or sub-postmistress. They are the people who have taken on post offices, investing considerable amounts of their own money to set them up at a time when the inter-business agreement between Royal Mail and Post Office Ltd was taken for granted. They would never have dreamt that post offices could face losing Royal Mail business and, with it, the money that accounts for a third of their revenue. Sub-postmasters and sub-postmistresses will have welcomed the Government announcement to continue the subsidy of the post office network. Indeed, they may be hoping to benefit from some of the money that is being put aside for the refurbishment of post offices. However, they will also be scrutinising the BIS document ““Securing the Future of the Post Office in the Digital Age”” to see whether they can find anything that guarantees more Government business to post offices, when we have PayPoint challenging the Post Office for the Department for Work and Pensions contract for benefit checks. Sub-postmasters and sub-postmistresses will also be looking carefully to see whether there are any strategies for channelling new types of business through the Post Office, now that the Government have abandoned Labour's plans for a people's bank at the Post Office—yet another Lib-Dem manifesto promise broken. Most of all, however, sub-postmasters and sub-postmistresses will be worried about the future of the IBA, because they know how much the future viability of their business depends on their continuing to provide services for Royal Mail. Indeed, the IBA covers more than just the counter services. As the hon. Member for Northampton South (Mr Binley) pointed out, it deals with sorting facilities in shared premises in some areas. Specific guarantees that business with the Royal Mail will continue are wanted. If someone has invested considerable amounts of money in a business that included Royal Mail services, they would be concerned about whether they could sell their business as a going concern when they decide to retire or move on. They would be very worried about the price they might get if there were no IBA with the Royal Mail, and there would be a real problem in attracting new entrants. Even without considering the potential loss of the IBA, the Rural Shops Alliance, in the winter edition of its journal Rural Retailer, expresses this view of Government plans to convert post offices to the Post Office local model:"““The logic of this is obvious, but it will involve a reduction in product ranges, longer PO opening hours and a reduction in income—not a model that will encourage subpostmasters to remain as part of the network. It is great that the Government is promising a no closure programme—it cannot however promise that it will be financially worthwhile for anybody to provide PO services.””" That is the case even without considering the catastrophic effect that the loss of the IBA would have on the prospects of post offices and the chances of attracting new entrants. George Thomson of the National Federation of SubPostmasters told us that there are currently 900 vacancies where Post Office Ltd is struggling to find someone to take on a local post office. It is no good dismissing this as just the regular turnover. I know for a fact from my own constituency—I am sure that other hon. Members do, too—just how long some of those vacancies have been there and how depressing it is for those local communities without their post offices, with some pensioners having to face very awkward and time-consuming bus journeys to access their pensions. With the prospect that the Post Office could lose the IBA, how on earth is Post Office Ltd going to attract new entrants? Why would anybody want to undertake the not inconsiderable task of establishing themselves as a sub-postmaster, with all the training and investment involved, with the prospect of the Post Office losing the IBA hanging over them? Consumer Focus has also raised concerns about the impact of the loss of the IBA. It said in written evidence to the Public Bill Committee that"““following privatisation of Royal Mail, subsequent contracts would require a competitive tender process with no guarantee that Post Office Ltd would retain this contract””." It continued by pointing out that"““for the foreseeable future, the loss of the mail's contract, even on a partial basis, would significantly undermine the integrity of the post office network. Even if the Royal Mail continued to use the ""PO in rural areas only, the ability of the network to cross-subsidise from its profitable urban branches would be lost. The future of many post offices, particularly the 6,515 post offices in rural areas, would therefore be in doubt. This would not only threaten access to mail services, but also to the range of services of economic and social interest available through the PO network.””" That is the viewpoint of Consumer Focus, and I am sure we would all agree that it should be listened to. Many hon. Members have made some good and useful points today. My hon. Friends the Members for Linlithgow and East Falkirk (Michael Connarty) and for Blaydon (Mr Anderson), who both have an excellent track record in standing up for post offices, each made a vigorous and impassioned defence of the post office network. The hon. Member for Northampton South mentioned the importance of the social role of the Post Office—how people get help from it and how community networking and social work take place. He also mentioned that it is not only older citizens, but young mums who can benefit from the community and help that can be found through the post office. The hon. Gentleman said, ““Woe betide any elected Member who ignores the importance of the local post office to the fabric of the community.”” He also mentioned the role of the additional 900 post offices that act as mail sorting areas and the problem of post office vacancies and the difficulty of finding new entrants to take on post offices. My hon. Friend the Member for Edinburgh South (Ian Murray) reminded us that there are other countries where the Post Office is protected in law. The hon. Member for Solihull (Lorely Burt) raised the issue of the need for regulatory reform—something on which we would all agree. The hon. Member for Angus (Mr Weir) said that everything simply cannot be left to warm words. He pointed out that we simply do not know how long the current managers will remain in their posts. He also drew attention to the staggering range of products and services that are now available through supermarkets, which would not have been dreamt of only a few years ago. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), supporting his hon. Friend the Member for Colchester (Bob Russell), explained very clearly why he considered it necessary for the Bill to provide for a guaranteed IBA. He cited many examples of agreements, including non-compete clauses, which it was not impossible to provide and to carry over. My hon. Friend the Member for Islwyn (Chris Evans) emphasised the importance of post offices to the community, and the extra mile that so many sub-postmasters and sub-postmistresses are prepared to go to help to look after members of their own communities. My hon. Friend the Member for Glasgow East (Margaret Curran) spoke of the hardship that would be caused by mass closures of post offices in deprived urban areas. The hon. Member for Foyle (Mark Durkan) challenged the idea that it was ““unthinkable”” that Royal Mail would abandon the Post Office. He said that, far from being unthinkable, it was quite predictable, and that it was all about pleasing potential purchasers. My hon. Friend the Member for Glasgow South West (Mr Davidson), the Chair of the Scottish Affairs Committee, reminded us of the recommendation in his Committee's report that the Government should take a more proactive approach to facilitating a long and robust IBA by removing any obstacles—practical, legal or otherwise—that might exist. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) made a comparison with the 10-year rail franchises. The hon. Member for Folkestone and Hythe (Damian Collins) stressed the unique reach of the post office network, as well as the importance of the certainty represented by the IBA. Last but not least, let me refer to the hon. Member for Colchester, who tabled the new clause and who spoke so eloquently in moving it. I take issue with him on only one point: I think that he needs to challenge his own Government about what additional Government business they intend to put through the post offices. We have seen fine words in the document produced recently by the Department for Business, Innovation and Skills entitled ““Securing the Post Office network in the digital age””, and we have also seen a copy of the letter sent by the sub-postmasters to the Department for Work and Pensions. However, we have not heard about any additional business so far, and I think that the hon. Gentleman would do well to pursue that. Nevertheless, I thank him for tabling the new clause, which we shall be pleased to support. Many Members have presented compelling arguments for the inclusion of a guarantee of an inter-business agreement between Post Office Ltd and Royal Mail for at least 10 years. They have pointed out to the Minister that the obstacles are not insurmountable, and that if he has the will to include an IBA in the legislation, he should be able to find a way of doing so. They have said that he really must do that, or he will be remembered as the Minister who refused to take the opportunity to safeguard the post office network, and who left the way open for Royal Mail to abandon it. We will support the new clause, and I hope very much that the Government will do so as well.