Postal Services Bill

My Lords, here we are on day three eventually at the issue of the Post Office and all the concerns that have been expressed today. The noble Lord, Lord Whitty, raised a number on the future of the post office network, as did the noble Lord, Lord Cameron, the noble Baroness, Lady Howe, and the most reverend Primate. These will be covered by a number of amendments that follow and I ask noble Lords if I may respond to those points in those debates. On the future relationship between the Royal Mail and the Post Office, I hope that my commitment to the noble Lord on Monday to consider his amendment to include information on that relationship in the Clause 2 report provides him with some comfort. This group of amendments relates to the circumstances in which the Secretary of State can transfer his interest in the Post Office to a relevant mutual and the information which should be furnished to Parliament in connection with that transfer. This Government believe that mutualisation of the Post Office could be ideally suited to the particular economic and social role it plays up and down the country. We understand that sub-postmasters, sub-postmistresses and other stakeholders would highly value the opportunity to have more of a say in how this well loved institution is run. We envisage that a mutual Post Office Ltd could allow communities to tailor services to their needs and give those who know the Post Office best a greater stake in the future of the institution that they value so dearly. Indeed, the many community-run post offices across the country demonstrate that this can work. Clause 7, which we will discuss in due course, ensures that any mutual must act for the public benefit. No Post Office mutual will exist solely for the financial benefit of its members. Clauses 4 and 7 work together to set clear parameters within which a transfer to mutual ownership could be made, but they do not oblige such a transfer to be made. That is because developing the appropriate model for a mutual Post Office must not come from the top down. Amendments 21A and 22ZD seek to ensure that Post Office Ltd is on a secure financial footing before any move to a mutual model may be made. The network must of course be on a secure financial footing before any move to a mutual model is made. Indeed, it would not be in the interest of any Post Office Ltd stakeholders to take on the running of a company that was not in a suitable position to sustain itself. Nor indeed would the Government consider handing over control of the Post Office if they were not satisfied that the company could flourish in the absence of the levels of subsidy that are currently provided. The £1.34 billion in funding that we are providing to the network over the next few years will do more than just guarantee that at least 11,500 post offices will remain working. It will ensure that the network can be modernised, offer an improved customer experience and so be in a better position to compete for new business. We believe that the Post Office could be in a financial position that would allow for the possibility of mutualisation by the end of this Parliament. I hope that goes some way to answering the question put by the noble Baroness, Lady Donaghy. This funding will ensure that the Post Office services across the United Kingdom on which so many people rely, particularly the most vulnerable in our communities, are protected exactly as the noble Lord, Lord Cameron, so eloquently explained is needed. Whether or not this move to a mutual structure happens, we envisage that the Government would still need to provide a small amount of subsidy to ensure that offices remain open where they might not otherwise survive, such as in rural or deprived urban areas; yet Amendment 21A would not permit a mutual to operate in these circumstances. However, it is important that there is transparency about improvement in the financial position of the Post Office, as, for example, the noble Lord, Lord Whitty, seeks under his amendment. That is why this Bill introduces, at paragraph 17 of Schedule 12, a new requirement that the annual accounts of the Post Office be laid before Parliament every year. We aspire to a vibrant and flourishing Post Office in the future, which does not simply rely on government handouts, but which can provide a wide range of services across a nationwide network. The markets in which the Post Office operates are highly competitive. It would not be in the interests of the Post Office, the future members of the mutual or the Government if the business plan being relied on to continue fostering that vibrant and flourishing Post Office were published, as envisaged by Amendment 22ZD. I turn to Amendments 21C, 22ZA, 22ZB and 22ZC. These amendments all seek to require a further parliamentary approval process prior to any transfer of the Secretary of State’s interest in the Post Office to a relevant mutual. Amendments 21C and 22ZB do this as stand-alone amendments, while Amendments 22ZA and 22ZC combine to the same effect. Clause 5 introduces an important means by which Parliament can hold the Secretary of State to account for a decision to move towards a mutual ownership model for the Post Office. However, we do not believe it would be appropriate for Parliament to have a veto right over any subsequent move to mutual ownership that is within the statutory parameters being debated today. The reason is that developing the appropriate model for a mutual Post Office must not come from the top down. I am grateful to the noble Lord, Lord Borrie, for his observations. He may be interested to know that, subject of course to the strict statutory parameters set out in Clause 7, the interests of all of the Post Office’s stakeholders—for example, sub-postmasters, staff, business partners and customers—must come first. Co-operatives UK, the national trade body for co-operatives, is talking to those stakeholders and will shortly report to Ministers on some potential options for a mutually owned Post Office, and before any final decision is taken by the Secretary of State, there would of course also be a public consultation. But since, at the conclusion of that process, the ultimate decision to transfer the Post Office to a relevant mutual will rest with the Secretary of State, Parliament must be informed swiftly and in appropriate detail of the decision. Clause 5 sets out those requirements. It specifies the details that must be included in the report and also requires the Secretary of State to lay it before Parliament as soon as reasonably practicable after he has made the relevant direction or authorisation. I should like to set out in a little detail what is meant by ““as soon as reasonably practicable””, which I hope will address the concern of the noble Lord, Lord Kennedy. The Government’s position is that it would not be acceptable for a report to be laid before Parliament as late as two years after the Secretary of State has made the relevant direction or approval, as Amendment 22 envisages. It is important that there is sufficient flexibility in the legislation to provide time for the report to be compiled or to deal with parliamentary recess timings, but the Government envisage that ““as soon as reasonably practicable”” would certainly be no more than a few weeks after the Secretary of State’s direction or approval. We would expect it to be perfectly possible in practice for a report to be laid on the same day as the direction or approval is made. The noble Lord, Lord Young, asked a number of detailed questions about the operation of a mutual Post Office. As I have said, the mutual needs to develop from the ground up, and therefore we will not determine all the answers today. The Government have made it clear throughout that there will be a full public consultation before any move to a mutual. I also take on board the comments of my noble friend Lord Razzall, who has encouraged me to take as seriously as I would have done the important questions put by the noble Lord, Lord Young. I can answer some of those questions now, if that would be helpful. The noble Lord asked whether mutualisation is the first step towards the privatisation of the Post Office. Mutualisation is absolutely not that first step. Our legislation makes it clear that the Post Office will not be for sale and can be owned only by the Government or a mutual that fulfils strict criteria. A mutual will be unable to sell its shares in the Post Office and there will be restrictions on disposals of Post Office assets. It is worth remembering that the vast majority of post offices—97 per cent—are already privately owned businesses being run by sub-postmasters. Our legislation could allow this group of people to be part of a mutual Post Office Ltd, giving them a greater say in how the national business is run. As I have said, we believe that a mutually owned Post Office could be ideally suited to the particular commercial and social functions that the post office network provides up and down the country. In answer to the noble Lord’s question about who will monitor whether the Post Office continues to be run for the public benefit, the Secretary of State will have to be satisfied that the mutual is set up to act for the public benefit both now and in the future by promoting the use by the public of post office services. He must also be satisfied that disposals of property or rights that would be inconsistent with the purpose will be prevented. Safeguards will be built into the mutual’s governance structures to ensure that this is the case, and under Clause 11 Post Office Ltd will be obliged to provide a detailed annual network report to Parliament, irrespective of whether it is owned by the Government or by a mutual. The noble Lord also asked how we will ensure in practice that a mutual structure represents the public interest in the post office network and is accountable to Parliament. The Government will ensure that a mutually owned Post Office represents the public interest in the network and acts for the benefit of the public. Clause 7 ensures this, and before making any move to a mutual structure, we would conduct consultations so that the public can have their say, both as customers and as taxpayers, about how this should best be done. The Bill also imposes clear requirements for the structure of any mutualised Post Office, including on the ownership and disposal of shares. It requires a post office network report to be laid in Parliament each year, detailing the number and location of post offices, the services offered and the accessibility of the network. This will be the case whether the Post Office is mutualised or not. The noble Lord, Lord Young, put other questions to me which, as I have said, may be answered as we go through later amendments. However, I will write to him and, if he feels it appropriate, I will make sure that those answers are placed in the Library. I am sorry to have spoken for so long on this major group of amendments, but it comes right at the beginning of our talks about the Post Office. I am grateful to all noble Lords who have spoken to these amendments. I ask them to be patient and listen to the responses that we will make to other amendments that are to follow. I hope that I have provided sufficient reassurances for the noble Lord to feel able to withdraw his amendment.