Postal Services Bill

My Lords, we welcome government Amendments 19, 22, 24, 28, 29, 31 and 32. They are a very positive response to the representations made inside this House and beyond for greater accountability before Post Office Ltd is made a mutual. They also deal with the case of that mutual disposing of Post Office Ltd subsequently in whole or in part to another mutual or set of mutuals, and we are very pleased to see them. We are particularly pleased that provision has been made for the Secretary of State to come back to Parliament to provide details and seek approval of an order under the affirmative procedure before it is too late to influence events. We welcome these amendments and support them. I shall speak to a number of the amendments in this group that we have tabled, but I have taken comfort from what the Minister has said in her response and will give her some assurance that we will not press the amendments to a vote. However, one or two points need to be made for the record. Amendments 25 and 26 seek the safeguard of maintaining Post Office Ltd as a single entity before and after the creation of a mutual. From what the Minister has said, that is probably not necessary. Amendments 21 and 23 seek to ensure the Government give proper consideration to the case for a post bank. We have heard from the Minister that she has looked hard at that proposal. Given that that is the case, would it be possible for the Minister to share some results of the investigation with us? That would put our concerns beyond all doubt. Perhaps she could write to me with as much detail as she feels she can. What I am left with is to reiterate the comments that we made earlier but to add more flesh to the suggestion about the volume of government business being transacted at post offices before the disposal takes place. We should be given more information about that, and a report should be provided to both Houses. On the amendment in the name of my noble friend Lord Kennedy, who is not in his place at the moment, I understand the wish to avoid unnecessary sloth over creating the mutual, but I agree with the Minister that the overriding consideration must be to have Post Office Ltd in good shape before mutualisation. That is why we put in Amendment 33 a call for a sustainable development plan for Post Office Ltd before any change of ownership is mooted. It would be nice to see the Co-operatives UK report when it comes. It was promised in April but has still not been delivered. When it does come, we would like to have a look at it as well. The Minister said that she would publish it, and we are grateful for that. That will get us only to the stage where we understand better what the options are. We will need to know what the Government intend to do; as we have discussed, the Government intend to provide a full report on that before any proposals come through. I hope that in preparing a report for both Houses of Parliament, the questions that we have about what obligations a privatised Royal Mail will be under to utilise the Post Office network will be answered and, in the case of Post Office Ltd, what type or range of mutual bodies may end up owning our post office network. What will the rules be and what will be the extent of its powers? Who will be eligible to be a member? How will a board be constituted and could the mutual-owned post office have ownership and nationality tests that would be appropriate for a company-owned Post Office Ltd? Those are all questions that we will want to come back to at that time. I turn to Amendment 23 and government business. The amendment puts in context some of the difficulties facing those who run the network of post offices throughout the United Kingdom. The Post Office is a trusted and traditional outlet for government services on the high street, and the future of the service lies in the redevelopment of that role. The post office network needs new sources of revenue to survive without subsidy; the Government need a reliable means of communicating with and serving the public directly in their local communities and, in this time of economic downturn, access to government services is more crucial than ever. The Government should consider making the Post Office a first-choice provider of local and national government services on the high street. A systematic policy of using the Post Office as a shop front for government services could help the Government reach vulnerable and marginalised members of society in rural and urban deprived areas. Moreover, it could further the Government’s regeneration agenda, tackle the financial exclusion that is rife in communities across the UK and, in so doing, ensure a future for the post office network. Despite some of the removal of government services over recent years, post offices remain a massively popular and a reliable source for information and assistance to the public. If the Post Office is to survive as a mutual, it cannot continue along its current trajectory. This can happen only if it keeps the work that it gets from two major clients—Royal Mail and the Government. Already there is concern about the Post Office’s business relationship with Royal Mail. A survey by the Communication Workers Union this week, widely published in the papers today, found that nine out of 10 sub-postmasters said that they could not survive without Royal Mail business. Assurances from the Minister about that relationship do not hide the fact that the Bill contains no real protection for Post Office Ltd in that regard. Equally, there are reservations about the so-called locals model of franchised post offices, which by their nature make it difficult for customers to interact with staff on anything other than the most superficial transactions. A recent report by Consumer Focus highlighted some of the problems in this regard. The Post Office is dependent on Royal Mail’s business for its survival. Over one-third of its revenue, £343 million, and one-third of its sub-postmasters’ pay, £240 million, is generated by selling Royal Mail products and services. If the two businesses are forced to separate, a privatised Royal Mail will be likely to look elsewhere for retail outlets to sell its products. There is no guarantee that it will use post offices to the same extent. The loss of accounts such as TV licensing and the ““green giro”” was a bitter blow, particularly for those post offices operating at very tight margins. Taking those contracts away was a classic case of the Government’s left hand not knowing what the right hand was doing. Having said all that, we think that the move to mutualisation is highly welcome, but employees and managers within Post Office Ltd will be concerned that the business they inherit has a real future. They will want to know that future revenue streams from the Government are secure and that business planning can proceed accordingly. Our amendment provides that assurance by setting out which government business will be transacted through post offices. Such a report will also enable the Government to consider what other types of their business the Post Office might be able to develop. We have a range of thoughts about that which echo many of the points that the Minister made, and we will be happy to exchange views on that, perhaps outside this discussion today. We think that the Post Office banking remains a prize that could help sustain the future of the network. I heard what the Minister said about it not stacking up, but it is surprising that many of Post Office Ltd’s overseas equivalents have developed comprehensive banking services to offset losses of other traditional services which have made substantial contributions to the viability of those national post office networks. Even if they are not like-for-like comparisons, they are useful examples of where the future might lie. The post office network, mutualised or not, can prosper as a standalone business with the Government and Royal Mail as key customers. Our amendments do not seek to force that choice upon the Government but ask them to consider what business they intend to transact via Post Office Ltd over the next few years so that the people who run our post offices, whom the Government want to take ownership of the business, can do so with certainty and security.