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Ardmore Peninsula, Sutherland (Mail Deliveries)

: I am tempted to begin by saying that we must stop meeting like this, Miss Widdecombe. I am delighted to serve under your chairmanship and all the more so because I know of your keen interest in the rural post service. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on doing exactly what a constituency MP should do: representing the needs and concerns of his constituents in a matter that is exceedingly important to them. He has done that clearly and set out proper concerns about mail deliveries in his constituency. I hope that I shall be able to address all his points. It might be helpful if I begin by setting out the background to the restructuring of Royal Mail over the last four years, the universal service obligation, which the hon. Gentleman mentioned, and the framework for UK postal services. My right hon. Friend the Member for Leicester, West (Ms Hewitt), then Secretary of State for Trade and Industry, made two statements in the House in March 2002 and June 2002 following the announcements by Allan Leighton, the chairman of Royal Mail, then known as Consignia, about the company's three-year plan to restructure its postal services. Nobody could have disputed that restructuring of Royal Mail was needed. The company was showing a pre-tax loss of £1.2 billion in 2001–02. Even allowing for exceptional costs from restructuring, there was still an underlying loss of £318 million on day-to-day operations. The company was losing more than £1 million every working day. The aim of the company's three-year renewal plan was to reduce costs by £1.4 billion a year, wipe out these losses and return the business to profit by April 2005. I am pleased to say that Royal Mail has returned to profitability and the management have got to grips with costs and reduced overheads. The latest figures published last week for the half year to 30 September 2005 show that Royal Mail Group made an operating profit of £159.3 million. These interim results show a 20.5 per cent. improvement on the previous year's figure. As hon. Members will have seen, that performance was tempered by the 1.2 per cent. fall in mail volumes and by the size of Royal Mail's pension deficit. Nobody should underestimate Royal Mail's achievement. The chairman, board, management and particularly the work force should all be congratulated on their efforts to turn the company around. However, Royal Mail still faces a huge challenge to build on this success and secure long-term sustainable profitability in a liberalised postal services market. It was unfortunate, although perhaps not surprising, that Royal Mail's quality of delivery dipped for a while during the implementation of the renewal plan. There was a lot of media interest and justifiable concerns were expressed by customers about the poor performance they were receiving. However, it was a period of great change for Royal Mail—certainly the largest in its recent history and one with few parallels in British industry. Major changes were made simultaneously across Royal Mail's huge operational infrastructure—transport, sorting and delivery. Allan Leighton and Adam Crozier, Royal Mail's chief executive, held up their hands and apologised for the dip in service. Both gave personal assurances to the Government that they would give quality of service top priority. The quality-of-service figures for the first half of the year were published last week and they are very encouraging indeed. The delivery of first class stamped and metered mail stands at 93.9 per cent. and is thus running at record levels. That performance beats the newly increased target of 93 per cent. as well as any performance that Royal Mail has ever achieved in the past. In northern Scotland, the figures for the most recent period indicate that Royal Mail delivered more than 96 per cent. of first class letters the day after posting. Royal Mail believes that 11 of its 15 quality targets are achievable this year. We welcome those figures, which show a continued improvement in Royal Mail's quality of service results. Royal Mail and, in particular, the dedicated postmen and postwomen up and down the country, should be congratulated on their performance. However, the company recognises that it still needs to do a great deal. Market developments and changing customer needs continue to stimulate service improvement. Put simply, Royal Mail cannot take its customers for granted. Quality of service remains the board's top priority, because it cannot compete in a fully liberalised market if it does not get that right. The Government are confident that the company remains committed and determined to raise the quality of its service and that it will continue to focus special attention on those areas of the UK where local problems still undermine customer confidence. The Government believe that they have established the right framework for the postal services market and Royal Mail. We have given Royal Mail greater commercial freedom in the public sector, established independent regulation as required by the EU postal services directives, and strengthened consumer representation. That policy was clearly set out in the White Paper ““Post Office Reform: A World Class Service for the 21st Century””, which was published in 1999 and implemented through the Postal Services Act 2000. Underpinning the framework is the continued provision of the universal service at affordable prices. That is my first assurance in response to the questions asked by the hon. Member for Caithness, Sutherland and Easter Ross. That is why the obligation is enshrined in primary legislation in the Postal Services Act—the first time that any Government had done that—and why Postcomm's only statutory duty is to ensure the provision of a universal postal service at an affordable uniform tariff. The universal service as written into the law—in section 4 in part I of the Postal Services Act—guarantees the following: a delivery every working day to homes across the UK, a collection every working day from access points throughout the UK, and a uniform and affordable price for posting letters and parcels up to 2 kg. In layman's terms, the universal service means that anyone in the UK can post letters and parcels to any other part of the country at the same affordable rates. It guarantees one delivery of mail for every UK household and business six days a week and one collection of mail six days a week. The Government aim to ensure that all UK postal users have access to postal services that are efficient, innovative and responsive to their needs. As the only licensed universal service provider in the UK, Royal Mail has the universal service obligation written into its licence. There are exceptions to the universal service daily delivery, but exceptions can be allowed only in very specific and restricted circumstances. The Postal Services Act states that the universal postal service is provided"““except in such geographical conditions or other circumstances as the Commission””—" Postcomm—““considers to be exceptional””. The reason for building that exception into the Postal Services Act is clear. The Act recognises that there are or will be some circumstances in which it may be impractical to deliver and collect mail daily. The responsibility for determining those circumstances was conferred on Postcomm as part of its overall responsibility for operating the regulatory regime. It has approached the issue with proper diligence and care with a view to balancing the needs of the customer and the service provider—Royal Mail. Following a wide-ranging consultation, Postcomm published a policy statement in January 2003, in which it explained the circumstances in which Royal Mail would be exempted from its licence requirement to deliver letters to all homes or premises every working day. The new direction specified two categories for long-term exceptions to the universal service daily delivery obligation: health and safety, and difficulty of access. Long-term exceptions apply to addresses on islands serviced by regular but not daily ferry or air services. In those instances, Royal Mail should provide deliveries on the days on which a ferry or air service is available. Fewer than 1,100 addresses receive mail on fewer than 6 days a week, and three quarters of those are on islands without a daily ferry service. For the few islands and other locations accessible only by boat and without a ferry service, Royal Mail has to provide a postal delivery service not less than once a week, by boat, using local agents. Mail is available to pick up free of charge from the local delivery office on other days, for those customers who can get there. Customers are able to request a temporary suspension of the universal service—for example, if they want delivery only on particular days of the week. Royal Mail has a legal duty to protect the health and safety of its staff. Where that is put at risk—because, for example, access to addresses is possible only across difficult terrain or over treacherous paths on mountainsides—the addresses concerned will be considered for exemption from universal service on health and safety grounds. Royal Mail cannot unilaterally decide not to fulfil its licence obligations on an ongoing basis. Any exceptions to the universal service obligation require authorisation from Postcomm. Postcomm has ensured that there is a four-stage formal process by which potential and ongoing exceptions are carefully scrutinised by the regulator. It involves the attention of the consumer watchdog, Postwatch. The first two stages of the process involve risk assessments carried out by Royal Mail. At stage 3, Postwatch, the Consumer Council for Postal Services, takes a view on the case for exception. At stage 4, Postcomm carries out its own evaluation of the site before making a final decision on the case. The process is rigorous and inclusive and it ensures that all exceptions are properly justified. Postcomm's exceptions policy is designed to ensure that the number of homes or premises exempt from delivery every working day is kept to a minimum. I understand that just over 3,000 addresses out of the 27 million in the UK—about 0.011 per cent., or 1 in 9,000—are exemptions from the universal obligation. The hon. Gentleman has expressed his concerns about the situation facing some of his constituents on the peninsula. I understand that Postcomm has received ““stage four”” universal service obligation delivery exception appeals from the residents of the crofting township of Ardmore, and from Royal Mail The Ardmore residents and Royal Mail have asked Postcomm to reach a final decision on the debate, following the company's decision based on health and safety reasons to suspend daily deliveries to Ardmore. Royal Mail is, as I have mentioned., required by law to provide a safe working environment for its employees. As part of the exceptions appeals process, it has carried out two health and safety risk assessments of the track conditions in the area. On both occasions, it found the track to be unsafe. Postwatch, the consumer watchdog, also came to this conclusion at stage three of the appeals process. Postwatch subsequently proposed a compromise solution: the positioning of a mailbox halfway along the track that Royal Mail had been using to make deliveries, at a point before the track reaches its most dangerous point. Royal Mail has argued that on this occasion, the compromise solution does not eliminate the health and safety risk to its employees, as the delivery officer will still be required to walk along the first part of the track to deliver mail to the box. I understand that the residents' appeal is based on a view that the track is not so dangerous that their addresses should be exempted from the universal service obligation of delivery direct to their doors. In accordance with the agreed process for determining appeals, Postcomm has arranged to visit the site at Ardmore. The visit is scheduled to take place on 1 December. The aim is to gain a first-hand account of the background to the appeals case and to take a view on the specific conditions affecting delivery. In line with its policy on determining USO exception appeal cases, Postcomm will be accompanied by an independent health and safety consultant who will be required to carry out a health and safety assessment of the access track used by Royal Mail to deliver to the properties in question. In due course, the consultant will produce a report summarising the findings from the site visit and recommend what can be done to reduce any identified risks to an acceptable level so that Royal Mail can resume daily delivery. Postcomm will consider that independent health and safety advice and any other relevant facts before a fully informed decision can be taken on the future delivery of mail to these addresses. I am confident that the process that Postcomm has put in place is rigorous, inclusive and robust enough to produce the right decision.