Royal Mail

My Lords, I am sure everyone is glad that my noble and long-time personal friend Lord Clarke has brought forward this debate. It was not my original intention to speak but, as my noble friend Lady Pitkeathley who is currently on the Woolsack will confirm since we all share an office, he talks almost as much about the Post Office as he does about Arsenal Football Club every week. Nothing happens that we do not hear about. What really disturbs me about what is happening was set out in an article that appeared in the Financial Times a little before Christmas, to which I shall return. I am even more concerned now, having listened to the remarks of the noble Lord, Lord Dearing. He really has put his finger on issues which have not been touched at all—I do not mean just here, but anywhere. We seem to be interpreting ““liberalisation”” in a way which, in my opinion, lacks any clear indication of what is the goal we are after. I simply do not where it is we hope that we are going. The way we are interpreting liberalisation and a universal service suggests that they are in fact incompatible. I have read the last Postcomm report. Unusually, while it gives the period it covers, the document is not dated so we do not know when it was issued and it does not give its terms of reference. Whether what it says is in accord with the short version given to the House by my noble friend Lord Clarke, I am not sure, but to me it reads like a very odd document. The virtue is competition, competition, competition. A few more doses of it and we will all live in a postal paradise. That is what the report says. To be frank, I do not believe it. What first sprang to my mind was the bizarre regulation-directed performance on liberalising the telephone directory service. We ended up with a dozen or more companies, all giving us directory inquiries less well and more expensively. I find it hard to believe that we can deliver a modern postal service as cheaply as we are today and I shall indicate one or two reasons for that. While we should not attack competition or the private sector, we need to think about how we use those in the operations we are seeking to liberalise, to use the current word. We assume that we use words like ““privatisation”” and ““competition”” on the basis that everyone understands them. They have a common meaning and purpose, so we can just go ahead and use them. But it is not like that. Perhaps it is a ludicrous comparison, but while you can have competition in having your hair cut, I do not see how you can have competition in providing probation services. They are totally different operations. If we want the probation service to work better, we have to say, ““We want to do this in a different way. We want it to be more efficient and less costly””. What we cannot say is that we will get Tesco to do it for us. I am far from certain that Postcomm has thought this through. There is no indication of where it wants to get us to. Here we are with pretty much the cheapest service in Europe—the first in the field. What was the reason for the rush into liberalisation? It has not been explained. Its own reported survey shows that nine out of 10 users said the Post Office was important to people, and 96 per cent said that they trusted the Post Office. Where on earth did the pressure come from? We are taking some very serious risks and we are even being foolhardy. I do not wish to be patronising but there is merit in some of the arguments of my noble friend Lord O’Neill. Management could not have been the only answer—it was not the only answer—to the position the Post Office was in. We would not have such a cheap postal service if that was the case. In the current situation, why is it that 14 people want a bit of the action? If the Post Office had had the capital to make the investments to produce the economies of scale which presumably these other companies are able to make, 14 people would not be looking for the work. They are looking for it because it is a cash cow and they are able to get it on the cheap. There are some fairly aggressive dogs out there. Perhaps I can read three short extracts from the Financial Times article of 29 December. The first is a quotation from Nick Wells, the chief executive of TNT Mail. He said:"““The UK is a very important market for us. Mail volumes are in decline in Holland and we’ve got to expand internationally. The UK is the second largest market in Europe, it’s very strategically important for us; it’s critical that we’re successful in it””." The article goes on to say—and perhaps my noble friend Lord O’Neill did not see this—that:"““TNT intends to take on Royal Mail head-on with a new end-to-end service. ‘We do have a stated ambition to create an alternative final . . . delivery’””" service. So much for ““universal”” if it does so, but I doubt that he is talking about Brixton, the Welsh valleys, the Scottish Highlands or rural East Anglia. That means that the service will effectively have to be subsidised by the Post Office. Alex Batchelor, the Royal Mail’s director of marketing, said:"““Does bypass [end-to-end delivery] potentially pose a much more dangerous risk longer term than access? Answer, yes””." None of this is being dealt with at all and I hope that the Government will begin to address it. I shall pose one or two questions to the Minister later. I think that the noble Lord, Lord Hoyle, mentioned the question of VAT. This is an extraordinary situation. They want a level playing field on VAT. They say that if it is 5 per cent for each, it will come out with no consequence. But that is 1.5p off the present stamp and nearly 2p off the proposed new one. What an extraordinary way to produce a more valuable consumer service. Perhaps I may ask my noble friend one or two questions. What authority do the Government have in directing what Postcomm is doing? Is it so independent that it can do anything, or have we got some control? Are the Government content with the way that Postcomm is performing and the outcomes? What is the ultimate goal that we hope to see? Do the voters know what that goal is and do they know what is happening from the 1st of this month? It may not lose an election, but the Post Office will affect votes at the election.