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Royal Mail

I am delighted to have an opportunity to vote today against the part-privatisation of Royal Mail. I am not too sure that I could vote for the Minister's speech, if there was a vote on it, as he also seemed to be talking about part-privatisation, but the Government have tabled a sensible amendment and I will support that. There is great strength of feeling about this matter. One hundred and thirty Members of this House, most of them Labour, have signed an early-day motion opposing postal privatisation, but the strength of feeling is not confined to Parliament. An independent public opinion poll recently found that 75 per cent. of people who had heard of the possibility of Royal Mail being privatised opposed the idea. When respondents were asked about the possibility of foreign ownership, the proportion strongly opposing the partial privatisation of Royal Mail rose to 89 per cent. I represent a large rural constituency, and people there realise that part-privatisation means higher prices and reduced services. The actual cost of sending an item from London to the Isle of Skye is £28, so I can understand why the Scottish National party has concerns about partial privatisation. There has been talk of dinosaurs, but the only dinosaurs are those people who do not realise that privatisation is going out of fashion. We have had to rescue the fat cat bankers who got us into so many difficulties and we are nationalising the banks, so privatisation is not the British public's flavour of the month. The Hooper report is flawed. Hooper admits that there is no agreement between Royal Mail and the regulator about the business's basic operating costs, but at no point does he seek any independent costings. How can he reach conclusions on a business when he does not know the cost of providing the service? Earlier the Minister said that the universal service obligation was making a loss, but the regulator said that it was making a profit. Between 1981 and 1999, Royal Mail was forced to hand over £2.4 billion in profits. The then Conservative Government starved it of investment at a time when other European countries were investing in their postal services. They were modernising and automating their postal operations while the British Government were taking profits away from the business. Moreover, contributions holidays meant that the employer did not contribute to pension schemes for many years. Recently, the UK has gone ahead of the European Union with postal liberalisation. We have allowed private postal companies like TNT to come in and cherry-pick all the best business, yet Royal Mail cannot enter those markets because they are closed. TNT has retained a monopoly on mail of less than 50 g in weight: Royal Mail cannot touch that, but TNT can come in and take our profits. We need a fair pricing policy for Royal Mail. The Hooper report acknowledges that prices in the UK are low, relative to many other European countries. For example, to send a first-class item weighing 100 g, Post Danmark charges three times the Royal Mail price. Sweden's Posten and Belgium's La Poste both charge more than twice that, while Deutsche Post and TNT deliver a letter of 100 g for around three times the price charged by Royal Mail. So we know what is going to happen to postal rates for the general public in this country when the private sector gets involved. The UK is also the only European country to operate a peculiar form of downstream access arrangements that have led Royal Mail, and therefore the British taxpayer, to subsidise the businesses of private competitors. Royal Mail delivers items at a loss: what business with true commercial freedom would be obliged to accept that it made a loss on every item? That is nonsense, but the regulator fixed a price, and what the regulator knew about postal services could be written on the back of a postage stamp. Some £2 billion has been lost in revenue in the past five years, because during the price control period postage rates were held at an artificially low level as a result of Postcomm's mistaken forecast about the failure of mail volume growth. Postcomm got it wrong and, as a result, Royal Mail lost £2 billion, but Hooper refuses to take a view on pricing. He just defers the decision, and no one seems to be mentioning the issue. Pricing has not been taken into consideration, and what Royal Mail really needs is a fair pricing policy. Despite all those challenges, this year Royal Mail has managed to make a profit of £255 million; that is just for one quarter. That is compared with a figure of £162 million for the whole of 2007 and 2008. What is the solution for Royal Mail? First, the Hooper Report has taken no account of the impact of the recent 3p tariff increase in assessing future profitability; that has not been reflected in the costing. Changes to downstream access are certainly needed. That could stem the loss of revenue to private competitors, and turn Hooper's projected profit forecast from red to black. If the Government took responsibility for the pensions deficit, as they have said they will, Royal Mail would save an additional £280 million a year for the next 15 years. Keeping the company wholly in the public sector would mean that the money could be used for future investment, rather than just profit taking. Finally, there needs to be greater investment and modernisation. That can be achieved if Royal Mail starts spending the £600 million that it has already borrowed from the Government to modernise. I actually speak to postal workers; I spoke to a Communication Workers Union area delivery representative, and found that no one had even approached him about walk sequencing. As for the CWU nationally, the unions have not been approached about all that new technology. When they have been approached, agreements have been reached. In the past few years, 40,000 Royal Mail jobs have been lost, so we are talking about a union that is prepared to make hard choices. We need a bit of information in this debate. Too many people are making statements who know very little about the operation of the British postal service. As for new, fresh, British top management, I think that the gene pool is wide enough for us to find those people in this country; we do not need foreign managers. Is my right hon. Friend the Member for Leicester, West (Ms Hewitt), suggesting that we employ 11,000 new managers—that we sack all the existing management and bring in Dutch managers? What does she mean? What are the practicalities? It is nonsense. We need British management—