Postal Services Bill

I shall take your advice on the matter, Madam Deputy Speaker; I believe that the hon. Lady should stick to the amendments on the Order Paper. This first group of amendments concerns the sell-off of the Royal Mail and the splitting up of the Royal Mail Group into a privately owned postal service and a publicly owned network of post office counters. It is against that background that we should consider Lords amendment 1, which requires that when the Secretary of State lays before Parliament a report on the disposal of a Royal Mail company, it should include"““information about the expected commercial relationship…between the Royal Mail company in question and any Post Office company””." We genuinely welcome the inclusion of such information in the report, but no one should be under any illusion that this in any way constitutes an inter-business agreement between the Royal Mail and the post office network. Hooper recommended in his report that there should be a long-term agreement between Royal Mail and Post Office Ltd, and the National Federation of SubPostmasters has asked for an IBA of a minimum of 10 years. We have repeatedly called on the Government, at all stages of the Bill, to include an inter-business agreement in the legislation, and have tabled amendments to that effect. One third of Post Office Ltd's revenue comes from the Royal Mail. Without that revenue, Post Office Ltd would be unable to keep many post offices open. With the greatest of respect to Moya Greene, the current chief executive officer of the Royal Mail, who has talked about a privatised Royal Mail continuing to use the post office network, it is no good simply having fine words. Those fine words need to be translated into a proper bankable contract—a proper agreement. Other countries manage to put agreements into their legislation, but the real difficulty in this case is an intense obstinacy on the part of the Government, who have set themselves against enshrining any protection for the post office network in legislation. A profit-hungry privatised Royal Mail will be looking to cut costs and maximise profits. That could result in the Royal Mail drawing up an agreement for part or even all of its services with providers other than the post office network, such as a supermarket chain or a high street store. A privatised Royal Mail may well wish to continue to have some sort of agreement with Post Office Ltd, but that agreement could be for a much reduced service from that which the Post Office currently provides. It could involve just a small proportion of the current network of Post Office branches. That could give rise to the surreal spectacle of some post offices being places where people could hand over their parcels or register their letters, with other post offices not offering postal services. It sounds a bit like a children's riddle—““When is a post office not a post office?””—but it would be no joking matter for our post office network or for the public, who want easy access to postal services, if such services were available at only some of the current post office branches. Any decision by a privatised Royal Mail to reduce the number of branches that it uses would have a catastrophic effect on the income of the post office network, and threaten the viability and very existence of any branches that the Royal Mail chose not to use. It is therefore regrettable that the Government have refused to include a clause in the Bill requiring an inter-business agreement and that Lords amendment 1, which requires a report on such an agreement, is the nearest that they are prepared to get. The amendment does, nevertheless, mean that the report that the Secretary of State lays before Parliament must include some mention of the expected commercial relationship between the Royal Mail company and any Post office company, and for that reason we welcome it. Let me turn to the part of Lords amendment 1 that deals with shares. We accept the principle of employee shares, and appreciate the benefits that such schemes can bring, but in this instance employees will need to know a lot more about exactly how any scheme would work. We have pressed for greater detail about the scheme, so we welcome the proposal in the amendment that a report be laid before Parliament setting out the detail of a proposed employee share scheme before the disposal of the Royal Mail takes place. In Committee, we pointed out that the Bill as it stands requires employee shares to be offered only when the last Crown share in the Royal Mail has been sold. We argued the case for a trigger that kicks in when the first shares are sold. The Minister for postal services has suggested that, despite the wording of the Bill, the Government would, in fact, make available some employee shares when the first disposal is made. I very much welcome his confirmation of that point today, so that employees will not have to wait until the last Crown share is sold before being able to apply for any employee shares. There remain, however, a number of unanswered questions, on which I hope the Minister can give us some guidance today. Would shares be held on an equal basis, with equal voting rights for each shareholder and an equal distribution of dividends, or would some shareholders be more equal than others? In Committee, we made the case for more than 10% of the shares to be in the employee share scheme; we have suggested up to 20%. That case is backed by specialist bodies that gave evidence to the Public Bill Committee, including the Employee Ownership Association and ifs ProShare. Is there any chance that the Government might consider that? We would also like greater certainty about the eligibility criteria. Who would be entitled to shares or share options, and what would that mean in practice? Would employees be able to act to influence the strategic direction of the company to some extent, albeit from a minority position? In particular, what is to prevent shares from going to employees one day and being sold within a year or two? We all know of previous examples of where that has happened, with shares being rapidly sold on to big institutions. What mechanisms are the Government considering to prevent that from happening? We hope to hear from the Minister the extent of the detail that the Government intend to report and how much time they will provide for Parliament to consider the report. We welcome Lords amendments 2 to 8, which give Parliament increased control over the mutualisation of a Post Office company. The effect of amendments 2 to 4 would be to subject the disposal of the Crown's interest in a Post Office company to a relevant mutual to the affirmative resolution procedure. That would require the Secretary of State to lay a draft order before Parliament and for it to be approved by both Houses before it could be made. Lords Amendments 5 to 8 require the Secretary of State to lay a report before Parliament before an order directing the issue or transfer of shares or share rights in a Post Office company to a relevant mutual is made. That is an improvement on the original requirement, which was to lay a report after any direction for the disposal of the Crown's interest in a Post Office company to a relevant mutual had been made. These amendments strengthen the opportunity for Parliament to scrutinise any proposals for the mutualisation of the Post Office. This is important because considerable challenges must be faced before any such mutualisation can take place. We welcome the work on mutualisation detailed in the recently produced report by Co-operatives UK, which includes information on various mutual options, and on the ownership and governance of a potential mutual, but we recognise that the real challenge is to make the post office network viable. For all the Government's fine rhetoric, we are concerned about their failure to guarantee business for the post office network. For mutualisation to be a success, we need to see a serious, viable business plan for our post office network. We are fully aware of the Government's plans to spend money on the network, but their accompanying document ““Securing the post office network in the digital age”” does not address the issue of how to generate new streams of business for the network. Post office income can be divided into three main categories—Royal Mail business, Government business and other commercial business—and the Government have failed to provide guarantees of business in any of them. I have just explained how the lack of an inter-business agreement between a privatised Royal Mail and the post office network could result in the loss of all or a substantial part of Royal Mail business from the post office. As for the Department for Business, Innovation and Skills' claim to be making the Post Office a front office for Government business, that message does not seem to be getting across to other Government Departments. For example, we have just seen the Department for Work and Pensions award the contract for benefit cheques, the so-called green giros, to a rival organisation. Apart from a couple of pilot projects, there has been little progress on the proposals for more Government business made in a letter from the National Federation of SubPostmasters to the Secretary of State for Work and Pensions dated 23 September last year. At the moment, the post bank promised in the Liberal Democrat manifesto and mentioned in the coalition agreement looks like just another broken promise and missed opportunity, especially after Labour had laid the foundations for it before we left government. Nor is there any sign of any other substantial new commercial business for the post office network. This complete failure to introduce new streams of business calls into question the wisdom of the way in which the £1.34 billion of taxpayers' money allocated to the Post Office is being used, with the subsidy for running the Post Office and the provision of a few new counters seemingly accounting for the lion's share of the funds. This also raises the question of what will happen when the subsidy runs out in 2015. The Government have stated that they wish to reduce their subsidy, but if there are no new streams of Government business to make the network more viable, the post office network will be in serious trouble. However, the fact that Lords amendments 2 to 8 improve the opportunity for parliamentary scrutiny means that we will support them. We welcome Lords amendments 9 and 10, which clarify that in the Post Office company's annual report to the Secretary of State on the post office network, details of postal services provided under arrangements between a Post Office company and a universal service provider must be included. We welcome any amendments that improve clarity and increase the opportunity for parliamentary scrutiny. Lords amendment 11 would require Royal Mail to report annually to the Secretary of State on its activities in relation to the British Postal Museum collection and the Royal Mail archive. The proposal would also require the Secretary of State to lay the report before Parliament. In Committee, we sought amendments to ensure that the work of the British Postal Museum and Archive—the BPMA—would continue following the passage of the Bill, and that the heritage cared for by the curators of the museum would be protected. That protection needs to be strengthened, because the Bill moves us away from a situation in which one Government-owned company, Royal Mail, is clearly responsible for supporting and safeguarding our postal heritage, to one in which there will be at least two companies with different ownership models. There will also be the potential for a privatised Royal Mail company to be taken over, perhaps by foreign postal administrations or other companies with no interest in supporting Britain's postal heritage. I do not feel that the Lords amendment is as strong as the one that we originally proposed. Nevertheless, anything that we can do to protect our heritage is to be welcomed. The BPMA is the leading resource for British postal heritage. It cares for visual, physical and written records dating back more than 400 years, including stamps, poster design, photography, staff records and vehicles. The BPMA is the custodian of two internationally significant collections—the Royal Mail archive and the collection of the former national postal museum. Together, the museum and archive collections form a unique record of a national institution, and offer a fascinating perspective on the history of British society, design and industry. We want the strongest possible protection for the British Postal Museum collection and the Royal Mail archive, and although we were looking for stronger protection, we are of course pleased to lend our support to that amendment.