---

Royal Mail

I am sorry, but I must end my remarks shortly. Let me tackle stamp prices. It has been suggested that another solution to the company's problems could be to increase stamp prices sharply. The price of a stamp will go up by 3p in April, and it increased by 2p last year. We must remember that customers have a choice nowadays, and steep price increases are likely to accelerate the decline in the volume of mail. Such steep increases do not, therefore, offer an easy answer to the challenges that Royal Mail faces. Royal Mail must take modernisation further and faster than it has done. It must diversify its operations against a background of volumes of mail falling between 5 and 8 per cent. each year. To achieve that, it will need investment over and above what it has been allocated. The debate rightly concentrates on the merit of Hooper's proposals, but let me make one thing clear: if we do not act, the pension trustees, in the face of the new valuation, could ask for changes such as vastly increased company contributions to recover the deficit, thus placing further strain on Royal Mail, or vastly increased amounts of money from the Government for the escrow account, which acts as insurance and security for the pension fund. The Government cannot simply sign such a cheque without knowing that Royal Mail is on a more sustainable track for the future. Unless modernisation happens, the company will be ill equipped to deal with its challenges. It will be faced either with increasing prices, thereby worsening e-substitution, or a decline in the quality of service, possibly with the same result, and threatening the universal service obligation, which we are trying to protect. Of course, it would be nice if we could make the issue go away, but that would not present a solution to the Royal Mail's problems. There has been a pattern in the past of settling rather than resolving difficult issues. That is why it is important to have a coherent package for the problems that Royal Mail faces, and that is what we have set out. We will not fall for the less-than-canny motion from the Opposition, which is silent about many of the company's challenges. Instead, we have set out a plan, which says no to the privatisation of Royal Mail; yes to keeping it as a publicly owned company; yes to pension security; and yes to a new system of regulation with the USO at its heart. Any legislation to implement those proposals will be fully and properly debated by the House. On that basis, I ask my colleagues to reject the Opposition motion and support the Government amendment.