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Mr. Drew: When I visit my sorting offices, I never cease to be amazed by how little discretion the management have. They have to refer virtually every decision up the line, which causes frustration in the work force, who feel that they are never listened to.

Mr. O'Neill: I accept that. A number of able people at the lower levels cannot break through because they want to live locally and the structures are such that, in many respects, they inhibit best use of the talented management in the postal services.

All that the new broom has produced so far is a new cheaper headquarters outside London, perhaps fewer management layers and the contracting out of services

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such as fleet maintenance. Those required neither courage nor imagination, nor, for that matter, much innovative management thinking, but we must be careful not to go down the subcontracting road at will. If one aspect is responsible for creating the problems in Railtrack, the Atomic Energy Authority and British Nuclear Fuels, it is the extent to which subcontracting, either as a precursor or an alternative to privatisation, led to lack of management control.

My hon. Friend the Member for Stroud (Mr. Drew) alluded to control that is too centralised, but often nobody knows what is going on. That problem was created in Railtrack. My worry is not that there could be a financial disaster, but that management may not be able to appraise or understand what is going on in the business for which they are responsible.

I have criticised the management and the mail service, but there have been improvements: 91 per cent. of first-class mail is delivered the next day, which is up on 86.5 per cent. in the first quarter of last year—and second-class deliveries have also improved—while the figures for first-class mail in France, Ireland and Spain are only 81, 87 and 70 per cent. I accept that the figures for Germany and the Netherlands are 95 and 92 per cent., but, as the hon. Member for Twickenham said, mail is not delivered to every household or six days a week in those countries.

On costs, a first-class delivery weighing under 60 g is 27p in Britain and just under 30p in France, while a 60 g delivery is 45p. In the Federal Republic of Germany, the cost is 37p first class and 74p up to 60 g. In Italy, a first-class letter costs 50p while in the Netherlands a delivery weighing over 20 g costs about 54p. Let us not talk down or, as some would like, condemn UK postal services, which are doing a first-class job of work in a number of respects.

I am not arguing that postal charges should necessarily go up. In the first instance, we may have to consider removing the dividend obligation in the next financial year, as the hon. Member for Eastbourne (Mr. Waterson) suggested from the Opposition Front Bench. Let us first consider the new pricing system and what the regulatory system offers, but let us also remember that, as the National Audit Office report suggests, if there is liberalisation there will be cherry picking, not in the domestic delivery market but in commercial sectors.

Significantly, when I asked the shadow spokesman, the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), about the split between commercial and domestic deliveries, he was unable to give me an answer. I do not have the answer, but I do not suggest that liberalisation will at present be anything other than very difficult for Royal Mail, given the constraints. I wish Royal Mail well, but we need a vast improvement in the quality of management, and continuing but non- interventionist Government sympathy. The Government are no longer allowed to intervene under the law, so they must look benignly on the postal services. We must also dramatically improve industrial relations so that strike threats are not used to get poorly paid workers a decent wage.

If all that happens, establishing the Post Office as a plc with the Government as the single shareholder will succeed. This is a novel, bold and innovative attempt to

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sustain the public service and the universal service obligation, so let us hope that it does indeed succeed. I look forward to the Minister's reply.

6.49 pm

Mr. Richard Page (South-West Hertfordshire): One of the advantages of having been here for a number of years is that I have observed the same scenery coming round more than once, and the same problems appearing again and again.

I can tell the hon. Member for Ochil (Mr. O'Neill) that I plead guilty: I was the Back Bencher who tabled the amendment whose effect was to release on to the streets of London all the motor cycle couriers who frighten the heck out of people. At the time I could not work out why Ministers allowed me to do so, but when I saw the motor cyclists whipping through traffic I realised that I was the fall guy. Anyone who complained would be told, "It wasn't me, guv; it was that chap Richard Page."

I think I can fairly claim a long interest in this sector, stretching back not only to the amendment I just mentioned but to the early 1990s when the then Government were moved to introduce some commercialisation. We now observe the collective amnesia of the Labour party—led by that of the Secretary of State, who seems to have forgotten that the Labour Government opposed any move towards commercialisation. It must be said that they were joined by 12 to 15 of our own misguided Back Benchers.

That attitude was aided and abetted by an excellent campaign on the part of the union. Let me add, for the benefit of those collecting trivia, that the union was involved in a television documentary. I suggest that those who want to know how to run a campaign in the future watch that documentary, from which we can all learn many lessons.

The point is that because our majority was not as great as that of this Government, we could not proceed. The Government should know that they prevented us from going ahead with commercialisation some 10 years ago.

Mr. Challen: By "commercialisation", does the hon. Gentleman mean privatisation? That is what the debate was about in the early 1990s.

Mr. Page: I am afraid the Labour party erected a rigid wall between it and any change in the ownership or operation of the Post Office. No Labour Member told us, "We will resist this, but we will go along with that, that or that." One reason for our present troubles is the refusal of the then Opposition to recognise that competition was stirring in other European countries.

Conservative Members saw then that Royal Mail's monopoly could not be guaranteed for ever. We saw that it would run into trouble, and we greatly regretted that we could not go further. That is why some of us began to express concern to this Government as soon as they were elected, only to be given what I can only describe as a series of brush-off answers. In fact, my most recent contribution was made in DTI questions just before Christmas, when I listed a host of shortcomings and worries relating to Consignia. I was given what I considered a rather waspish reply by the Secretary of State, who said that she would take no lectures from me. A few days later, she demonstrated her fingertip control of Consignia by presiding over the announcement of 30,000 job losses.

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The hon. Member for Ochil is a nice chap—I like him very much—but, as an old hand, he must know that no chief executive of any company suddenly lets slip from the side of his mouth that there could be 30,000 redundancies. In a state-owned industry, a chief executive is not allowed to breathe unless given permission by the Secretary of State. Whatever this Secretary of State may say, that is the truth: I know, having been there and done that. Her reply to me can only be described as misleading.

On top of all that came rumours of the possible closure of 1,000 or more sub-post offices. The Secretary of State's response that any such rumours were completely false was, in each case, less than convincing. I wish she had been more forthcoming and had said, "I know nothing of this, I have received no such reports, and I would wish to resist such moves, because they would be devastating to, in particular, our countryside."

In view of the pressures on her, I forgive the Secretary of State for her waspish reply. I am like that—I have a kind and generous nature. We can imagine the scene in the DTI just before Christmas, when the Consignia executives march in and say, "I am sorry, Secretary of State, but we have bad news. Consignia has made a thumping trading loss." I can imagine the thoughts flashing through the Secretary of State's mind: "Oh no, gosh. We've had the problems of the Dome, and the problems of Wembley stadium and the athletics track. We have not yet sorted out the tube, the national health service is in a mess, Railtrack is costing us a fortune, and now we have this. What to do?" The executives will have turned round and said, "It's quite simple. You must put up the price of a stamp, or you must face redundancies."

We all know that the regulator must have a hand in any increase in the price of a stamp, and that the Chancellor must be consulted. I think that the Chancellor's involvement with prudence would forbid such a move, so what must happen? Sadly, redundancies.

A number of Members have pointed out that Consignia has to pay the Government a dividend. It happens under extreme pressure, and there are good arguments against it. Indeed, it may be a further reason why no moves can be made in any direction which do not address fundamental structures—and fundamental efficiencies—in the Post Office.

Moreover, during past months a realisation has built up that the universal bank plan does not look healthy and cannot replace the income of sub-post offices following the introduction of ACT. I have no doubt that Post Office Counters executives have mentioned that to the Secretary of State and have said, "Do not look to us for a living, from one side or the other, because we are losing money: we have no money at all." As I have said, given all the problems that are falling on the poor Secretary of State, I forgive her for her waspish reply. I knew that the problems were building up and I knew they were serious, but I did not realise that they were as bad as they are, according to the way they have been presented to us.

The person I feel most sorry for, however, is the Under-Secretary of State, the hon. Member for Edinburgh, South (Nigel Griffiths). He has just been dropped in it. I envisage his life stretching ahead interminably, with Adjournment debate after Adjournment debate in which Members ask why this or that sub-post office is closing. He should look on the bright side, however: he can make the

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same speech to each of them, as long as he remembers to change the name of the sub-post office. That will cut down his work load.

Where does Consignia go from here? Let us consider Post Office Counters. The Secretary of State tried to give us some reassurance, but if we look at answers given by Ministers over the past few years we can only call them—let us be kind—misleading. Let me pull from the hat an answer given to the hon. Member for Newbury (Mr. Rendel) on 14 May 1998. The hon. Gentleman had asked:

The right hon. Member for Makerfield (Mr. McCartney), as he now is, replied:

And so it goes on.

I made a small contribution a moment later, expressing concerns about the issue of setting the Post Office free. They were dismissed by the Minister with a comment about my own shortcomings—which, of course, was completely and utterly justified. However, that again gave the impression that the Labour Government were rebuilding the Post Office from the wreck that the previous Government had left. If we compare the current organisation with the Post Office of some five or six years ago, I know which is the healthier—and it is not the former.

The scene now shifts to Standing Committee B on the Postal Services Bill; I had the privilege of leading for the Opposition. The then Minister with responsibility for the Post Office, the hon. Member for Hull, West and Hessle (Alan Johnson), responded to anxiety about the number of sub-post office closures by saying he could reassure the Committee that the decline had ceased and the rate was again normal. He said:

He was right. That year, 382 sub-post offices closed. However, in the subsequent year, the figure broke the 500 barrier with 547 closures.

It is worrying that, despite all assurances, 441 closures occurred in rural areas. My hon. Friends have reeled off dozens of sub-post offices that are closing in their constituencies. The closure of a rural post office means the death of a rural community. We are therefore exceedingly worried. Although it is not appreciated, there is a subsidy within Post Office Counters, whereby a great deal of money passes from urban to rural post offices to keep them going. They have different rates of funding transactions, but all that could be put at risk.

I shall leave aside the fact that some aspects of proposed Government funding may require EU approval. To some extent, I shall follow in the footsteps of the hon. Member for Twickenham (Dr. Cable). I agreed with much of his speech, in which he gave a thoughtful summary of the problems that many Post Office activities face.

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The Government have earmarked some funds for rural post offices. The Department of Trade and Industry has a start-up capital subsidy scheme of some £2 million, limited to £20,000 per application for rural sub-post offices. Will that be enough to influence someone to take the risk of putting a lot of money into a scheme? If I were in that position, I should have grave doubts.

The Government are working on the details of the universal bank service—combining the basic bank account and the new post office card accounts—that is due to begin in April next year. That is barely 15 months away. When will the Government share their plans for the migrating 16 million people who get their benefits from sub-post offices? The Government make statements about the cost to individuals of using the new accounts. What research have they undertaken into the numbers that might migrate from existing banking systems to the new one? If the costs of running the new account are cheaper and people can operate at a much lower cost, will not that put a strain on the universal bank service that will make it even more unviable?

The Government are working on the assumption of 3 million post office card accounts, but the figure is uncontrolled. Some hon. Members have already asked what will happen if the limit is exceeded. What will happen if more than 3 million people want POCAs? Who will pay? I shall not travel further along that path, but the sooner the Government make a definitive statement about their vision for sub-post offices, the better. It would reassure and give confidence to those who run sub-post offices. The Government appear to have forgotten that we are considering private individuals, who have put their savings into their sub-post office. Every closure represents a loss to the individuals involved.

I want briefly to consider the Royal Mail. In 1992, we had probably one of the most efficient services in the world. Even now, despite the effect of competition from e-mails, other distributors and mobile phones, our Royal Mail continues to measure up well. The hon. Member for Ochil did a good job in outlining the advantages. As he said, our first-class stamp is cheaper than the equivalent in the countries of our major European competitors. Our speed of delivery is better and door to door. However, Royal Mail has not moved on at the same speed as our competitors. I do not understand how it can compete if it is shackled by state ownership, which is not the quickest way to achieve success.

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