Postal Services Bill

My Lords, it is intimidating to follow a Lord who has the postal services in his DNA, but I am delighted today to be able to welcome this Bill. Like, I suspect, many in this House who hugely value the whole range of services provided by Royal Mail and the post offices, I have watched with dismay over the last decade as the Post Office and the Royal Mail seemed to go into a slow death spiral, watched over by a Government unable or unwilling to intervene. I commend the Government and Ed Davey, the Minister in the other House, for their courage in tackling what was always regarded as a step too far. Matters have been left to the point that the Royal Mail and the Post Office have been left in an utterly precarious financial situation such that action is vital and urgent. So many remarks have been made on the floor of this House—it has been a comprehensive debate—that I will confine myself to commenting on three particular areas. First, on the post office network, I understand that the Government have committed themselves not to have a new closure programme. I want to ask whether they agree that it is necessary to reopen or re-establish post offices in some areas—I am not talking wholesale—given that 7,000 post offices have been closed over the past decade. In the early years of the closure programme, very little attention was paid to the impact on coverage, on need or on the service provided in the community because of where other post offices were located. In effect, as we know, sub-postmasters who were willing to close were offered a bounty—of about £40,000 on average, I think—which was taken by people who were close to retirement or who had a buyer for the premises. The consequence was random closures across the country. For example, in my old constituency of Richmond Park, the most deprived ward of all—the Ham ward—lost all its sub-post offices in that period, so there is now not a single post office in the entire ward. I remember very clearly a meeting with senior officials from Post Office Counters who proudly produced a map and pointed to a post office in nearby Teddington, which they explained people in Ham could go to. However, they failed to recognise that the blue line separating Ham and Teddington was the River Thames. While I greatly admire the citizens of Ham, their ability to walk on water is extremely limited. That kind of nonsense was repeated, and elderly and vulnerable communities now have no post office service as a consequence. There have frequently been discussions around the needs of rural communities, as we have heard again today, but I remind the House and the Government that these issues can apply just as much to urban and suburban communities. If a post office cannot be reopened, the kind of project that is being discussed—of integrating post office services into, say, shops or other kinds of enterprises—should be just as available in urban and suburban areas as is beginning to be the case in rural areas. I put down a marker on that issue. The second issue I would like to address very quickly—this is now switching over to the Royal Mail side—is that of regulation. On this, I can be very brief because the noble Lord, Lord Low of Dalston, who left just before I got to my feet but who is respected by all for his wisdom, clearly raised some of these issues. Many of us are concerned that, historically, the regulator has in effect required Royal Mail to subsidise its competitors in the bulk sorting business in the way that it has set the headroom price for delivering letters over the last mile, which of course is done only by Royal Mail. That is one example of where regulation has had the effect of undermining the financial viability of the universal service provider. All of us, I believe, see that as a situation that cannot continue. I am very positive about the shift of regulatory responsibility to Ofcom, which has a much broader commercial experience, but it will be novel for Ofcom to regulate a business in which the underlying activity is in decline. Therefore, there are some real questions around that. I very much recognise that one task of the regulator is to protect the consumer and to keep prices as low as possible, but the financial viability of the universal service provider has got to be a significant and major consideration. While that is mentioned in the Bill, there is some scope to discuss how we might strengthen the regulator’s role in the Bill. That might be particularly urgent given the importance of engaging new investors as early as possible and given that uncertainty is the enemy of new investment. To be able to engage with new investors to make sure that money can be brought to Royal Mail as early as possible to achieve the modernisation that we all want, we have to make sure that regulatory uncertainty is constrained as much as possible. Again, that was an issue that I wanted to underscore and bring to the attention of the House. My last set of issues is around what I think is a lost opportunity. A number of people have spoken of their regret that nothing in the Bill brings forward a Post Office bank. We now recognise that the post office has a community importance, which will be supported financially by the Government, but that role has not been used to fill a gap that exists in our financial services. Members of this House will be well aware that everybody has the right to a basic bank account, but most banks on the high street provide that facility on sufferance. Such facilities are currently extremely limited and do not seek to draw individuals who are in more vulnerable financial circumstances into genuine financial inclusion. That role could be picked up by the Post Office. Ed Davey, the Minister, has talked about the importance of using the Post Office to link much more with credit unions. ABCUL, which is in effect a trade group for the credit unions, has been positive about that. If that moves forward, individuals will be able to join a credit union through their post office and perhaps have a small line of credit with a credit union that they could then access through the post office, and there would be some services. That would be beneficial. However, the credit union world in the UK is highly fragmented, with extensive services in one area and none in another. In each neck of the woods, credit unions are different in how they are constructed, in what they offer and in their remit. Therefore, what has been suggested is hardly a comprehensive solution. A post bank could offer a much more comprehensive solution. Consumer Focus has done some good work—I commend it to the House—in both consulting and reporting on that option. I understand the difficulties because of the relationship with the Bank of Ireland, but we should pursue this. Consumer Focus comes to the conclusion that at least 1 million people who are financially excluded could be included through a Post Office bank. The Post Office is an institution that people trust, and that trust is worth a great deal. Also, a post bank could have the kinds of accounts that no major bank would ever consider, such as adapted versions of accounts that allow people on low incomes to do direct debits. That would let people access the best rates for electricity, gas or other services, from which they are currently excluded because, as noble Lords will know, basic bank accounts offer no direct debit capability. There is a whole range of options that the Post Office could offer because of its trust, its customer base and its reach, if we wanted to bring new financial services into it. Financial inclusion was an important issue for the last Government—I assume that it is still for the Labour Party—and it is certainly important for my party and, I understand, for the coalition. Here is an opportunity to pursue that goal, so I hope that the Government will consider it seriously. During this period of change, I hope that this opportunity will not be lost.