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Postal Services Bill [HL]

My Lords, I shall respond first to the noble Baroness, Lady Byford. The Government announced in November that the Post Office would be awarded the successor contract for the Post Office card account and that this will run from 2010 to 2015, with the possibility of a two-year extension beyond that. So the card account is now safely re-anchored and the Government do not encourage any failure to use it in smaller or rural post offices. The noble Baroness is right that the Post Office is the leading provider of foreign exchange in the UK. That goes to show that it has an untrumpeted role and record of achievement in this area which it is as well for us to recall from time to time. This group of amendments covers a variety of important issues which need to be addressed individually. The requirement in Amendment 3 concerning the Post Office board is already met through the current Post Office board. Since Post Office Ltd was incorporated in 1987, it has been subject just like any other private limited company to company law requirements about the minimum number of directors it should have. Company legislation subject to detailed scrutiny in this House and the other place is the right place to define the appropriate corporate governance principles for companies, and Post Office Ltd’s current board far exceeds statutory requirements. It has nine directors, including Donald Brydon, whom we recently appointed as interim chair. This amendment would not require nearly as extensive a board for the Post Office. It would, in a sense, mark a step back. Nevertheless, we have committed to reconstitute this board with a full complement of non-executive directors, starting with the permanent appointment of a non-executive chairman. The new board will benefit from the operational expertise of the existing management and the combined wisdom and experience of the new non-executive appointees. Amendment 63, concerning an investment fund, talks about opening up new post office branches where there is a defined need. This already happens. The access criteria that we have set ensure that all areas will continue to have reasonable access to post office services. At the end of March, 93.3 per cent of the total population across the UK were within one mile of their nearest post office outlet and 99.7 per cent were within three miles. There is also a criterion that prescribes access to post offices in each and every post code district. When the access criteria were introduced exactly two years ago, 18 postcode districts did not comply. The Post Office has systematically introduced new services in these 18 areas so that by 12 May there will be a service available in each of them. That is a remarkable achievement. However, this is an ever-evolving obligation for the Post Office. In some very remote communities the closure of a single branch can lead the Post Office to fail to comply with the access criteria. Post Office Ltd must, and does continue to remedy this in each case by finding ways to re-establish and maintain services in all areas. On investment capital, as part of the discussions that we will shortly have with the Post Office regarding its next funding deal, we will consider the case for new investment in both Crown and sub-post offices to modernise and improve the quality of service for customers, for example by reducing queuing times. I hope that the noble Lord, Lord Razzall, will welcome that, because it is potentially a very important commitment which I discussed only last week with the National Federation of SubPostmasters. Such investment might help attract more business, strengthening the viability of individual branches. I hope that noble Lords will agree that it would not be appropriate to commit to a particular type of investment in isolation from considering the broader needs of the network. This amendment also calls on us to put more government services through the network. Since Committee, there has been yet further evidence of the Government’s commitment to the network, as the noble Lord, Lord Hunt, was kind enough to acknowledge. The Identity and Passport Service has announced that it is working with the Post Office to ensure that people can apply for new biometric passports and ID cards at their local branch. On financial services, as I said, we need to think carefully about whether we are in danger of reinventing the wheel. On 21 April, Alan Cook, managing director of Post Office Ltd, told the Business and Enterprise Select Committee in another place that, in effect, a post bank already exists. As he set out, Post Office Ltd already offers an extensive range of financial services products: savings, insurance, mortgages, credit cards, and more than 1,400 free-to-use cash machines providing further access to cash across the network. The Post Office also supports work to increase financial inclusion by providing access to basic bank accounts from 17 different providers. The Post Office therefore plays a vital role providing access to financial services through its network of 11,500 branches. We are keen for the Post Office to increase its financial services offering and to use its unrivalled network to put a wider range of services within reasonable reach of the whole population. So we are currently exploring new possibilities on financial services with the Post Office. As part of this, Alan Cook, the managing director, has said that it has an aspiration to expand its mortgage business and—as the noble Lord, Lord Razzall, said—to launch a current account which is available in every branch next year. The Post Office is also in discussion with the Association of British Credit Unions to see what opportunities there might be for the two organisations to work more closely together to increase financial inclusion. Finally, we must also consider the wider effect that this amendment would have on Royal Mail’s transformation. The amendment would prevent implementation of this Bill, and therefore the transformation of Royal Mail, until the Government made an order describing the detailed terms of its future investment in the Post Office. However, if we are unsuccessful in reversing the decline in Royal Mail’s business, the Post Office’s business will decline too. The two things are connected. It is in the interests of both Post Office Ltd and its network of post offices to see Royal Mail’s finances turn round and its business transformed. Therefore, to hold up the transformation of the Royal Mail in the way that we are currently seeking—for the sake of the Government setting out even more clearly on top of what they have already stated and described as their investment plans and commitment to the Post Office—would have a detrimental effect on the Post Office itself and would not be desirable. The Government have already provided funding of £3.5 billion to Royal Mail. In spite of this, the company has failed to transform fast or far enough adequately to respond to the ongoing digital revolution. The market within which Royal Mail operates has changed irrevocably and continues to evolve. Action—not to build in delay, as is conceived in this amendment—is needed now. It would be irresponsible of the Government to allow delays to the suite of measures needed to reform Royal Mail and secure the future of the universal postal service. The Post Office’s current comprehensive £1.7 billion funding deal lasts until March 2011. While discussions about the next funding deal will begin shortly, their completion should not hinder the drive to transform Royal Mail that this Bill would bring. The sooner these are implemented, the sooner Royal Mail will be modernised and the sooner the risks to the Post Office of Royal Mail declining in the mails market will be removed. Any delay would merely serve to threaten the sustainability of the network. I turn to Amendments 23 and 24; first to the one that is in my name. I think that we are all in agreement that the post office plays a critical role in our communities; that post offices are vital in providing access to Royal Mail’s postal services; and that the network has a wider social and economic role providing vital access to services throughout the UK, particularly for vulnerable consumers and small businesses. Given this, it is important that both the Government and Parliament receive robust information about the size, location and accessibility of the post office network. Amendment 23 will require Post Office Ltd to provide exactly that. This amendment goes further than the current information duty on Postcomm. There will be a statutory duty on Post Office Ltd to produce an annual report which must contain information about the accessibility of post offices to particular groups of consumers and any other information requested by the Secretary of State. The report must also be laid before Parliament. I welcome the support from Age Concern, Help the Aged, the Federation of Small Businesses and the CWU for this amendment. I hope that the many noble Lords who have previously spoken on the importance of having such information available, will also support it. I turn to the amendment of the noble Lords, Lord Hunt and Lord De Mauley. I agree that the report should also provide information about the critical services offered across the post office network. I would therefore like to consider the noble Lords’ amendment in detail and shall come back to the House at Third Reading. I therefore propose that my new clause should stand part of the Bill and ask the noble Lords not to press their amendment. For the reasons I outlined earlier, I also ask the noble Lords, Lord Razzall and Lord Cotter, not to press their amendments.