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Mr. John Whittingdale (Maldon and East Chelmsford): May I first thank the Secretary of State for giving me an advance copy of her statement?

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This afternoon's statement is a humiliation for the Government. Less than two years ago, the then Secretary of State, the right hon. Member for Tyneside, North (Mr. Byers)—who will have his own humiliation later this afternoon—said of the Postal Services Bill:

Since then, the business has gone from recording a profit of nearly £400 million to losses currently running at £1.5 million a day. It has seen 547 more sub-post offices close last year alone, and 63,000 days lost in industrial action. Its performance has deteriorated so that it is failing to meet its delivery targets, and estimates put the number of lost items of mail at 1 million every week; although that may be less surprising, having discovered that the Secretary of State thinks that Harrogate is by the sea.

The Secretary of State, incredibly, has tried to claim that somehow it is all the fault of the last Conservative Government, yet this devastating decline has happened in the last two years. Her statement has signally failed to offer any proper explanation for what went wrong in the time since her predecessor was predicting such a golden future for the business.

Is not the truth that the structure for the Post Office created by the Postal Services Act 2000 was, in the words of the Chancellor's then spin doctor, "a dog's breakfast"? Have not the Government failed to give Consignia the full commercial freedom it needed so that, as a result, it has been unable to take the action necessary to modernise due to the constant interference from Ministers, while at the same time, its competitors in Germany and Holland, having been given that freedom, have gone on to become global players? Is not the result that the restructuring and job losses announced this afternoon have been made worse by the Government's abdication of responsibility and failure to act before now?

Turning to Parcelforce, the Secretary of State has said that its business model has failed. Will she confirm that the business model was approved by the Government, who are the 100 per cent. owners of the business? Is it not the case that Parcelforce is operating in a market that is already open to competition? Is it not the case that while its competitors have built up very successful businesses, it has pursued a strategy consisting of a series of disastrous acquisitions costing nearly £750 million over the last five years, in each case approved by the Government at the time the necessary finance was obtained from the Treasury's national loans fund?

Consignia's announcement of 15,000 job losses represents, we are told, just the first phase of restructuring. In her statement, the Secretary of State referred to further unavoidable job losses over the next three years. Can she confirm the reports that the total number of job losses required under Consignia's plans will in fact number anything up to 40,000? Will she say whether any of those will be compulsory redundancies?

The right hon. Lady's statement devoted just three lines to the regulator's proposals to introduce competition into the delivery of postal services, yet that issue will be crucial to the future of the Post Office. It is simply not good enough for the Government to pretend that they have no responsibility for this matter.

Will the right hon. Lady say whether the Government support the introduction of competition? Does she believe that the timetable set out by the regulator is realistic?

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Will she consider delaying the full opening up of the market to competition until the restructuring of Consignia has been completed? Will she confirm that whatever happens, the universal service obligation will remain the first requirement on the Post Office, with an affordable uniform tariff?

There have also been reports that the restructuring of Consignia will require the closure of up to 10,000 urban sub-post offices, yet that was not even mentioned by the Secretary of State. Will she say whether that figure is correct? She will also be aware that the majority of those businesses are privately owned small firms that are struggling to survive. Will compensation be paid to those who lose their franchise? How does she intend to deliver on the Prime Minister's pledge that all those who wish to continue to receive benefits in cash will be able to do so if more than half the sub-post office network is closed?

Finally, will the Secretary of State confirm the one bit of good news that has been reported—that the name Consignia is to be consigned to oblivion and that the business will revert to being called the Royal Mail? Is it not the case that the problems of the Post Office are summed up by the time and money that has been spent on rebranding the business with a name that is neither respected nor understood while the fundamental weaknesses have been left unaddressed? Is that not why the Secretary of State had to come to the House today and why 15,000 post office workers, with perhaps another 25,000 to come, are having to pay the price for her and her Government's incompetence?

Ms Hewitt: The hon. Gentleman has worked himself up into a great lather of synthetic fury. He fails to acknowledge that, precisely when the German, French, Dutch and Swedish Post Offices were getting commercial freedom, his Government refused to give the Post Office the commercial freedom in the public sector that the management and unions demanded and Labour Members supported. If the Post Office had been given commercial freedom in the public sector years ago, it would have been able to make the changes and investment that other European postal services were making, yet the Conservative Government refused to allow it to do so. That is the fundamental cause of the problems that have built up over years—years when the Conservative Government failed to invest and reform.

Parcelforce has lost money every year in its 10 years of existence. The Government enabled Parcelforce to make the investments that it needed to make, including the creation of the new distribution hub in Coventry and the track-and-trace technology that will form the basis for the renewed and strengthened company.

There is a great deal more work to be done to deal with the very deep-seated problems in other parts of the business and in our postal services. Allan Leighton has made it clear that, as chairman, he and the management will be taking forward those discussions with the unions and examining every part of the business to see what needs to be done to improve the service for the public, which is fundamentally what we all want. Future job losses will depend on the work that has to be done with the business.

Of course the Government believe first and foremost in the universal service obligation. As the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) should

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be aware, Postcomm's primary duty as the independent regulator is to maintain that obligation. Of course, we believe in competition too, and subject to the duty to maintain the universal service obligation, the regulator's job, as established in the Postal Services Act 2000, is to promote greater choice and competition. The Government support an independent regulator, as did the Communication Workers Union in its submission on the White Paper. It seems that only the Conservative party does not know whether it supports an independent regulator.

Today's statement has nothing whatever to do with the network of post offices, and I am very sorry that the hon. Gentleman has repeated some of the scaremongering that we have heard before from him and some of his colleagues. I again remind the House of what Colin Baker, the general secretary of the National Federation of Sub-Postmasters said:

We are investing both in a compensation scheme for sub-postmasters and in schemes to improve local services.

On the hon. Gentleman's final—and least important—point, the name change was proposed and decided on by management, with the support of the unions, a couple of years ago. I entirely agree with the new chairman's view that the sooner the name goes, the better.

Mr. Martin O'Neill (Ochil): I thank my right hon. Friend for her statement and agree that consideration of the future of Parcelforce is long overdue. It should have been sorted out a long time ago, perhaps being sold off and dealt with once and for all. I welcome the forgoing of the dividend, which will provide the Post Office with additional resources to secure the most flexible redundancy arrangements that can be achieved.

Will my right hon. Friend confirm that the extension by Postcomm of the review period is largely due to the inadequate and inaccurate advice and information provided by Consignia accountants about the nature of the savings that could be achieved, and that Allan Leighton really needs to come in and sort out the Post Office, because most of us are sick and tired of an inadequate and incompetent management that cannot even produce proper financial information to enable the regulator to act effectively?

Ms Hewitt: I entirely agree, especially about the need to sort out Parcelforce. The proposal that the regulator made for opening the market to bulk mails above a certain limit was indeed based on information provided by the company, which has now decided that the figures were wrong. The important issue is that the regulator must, above all, make proposals for market opening that secure the maintaining of the universal service obligation, which is the No. 1 duty under the Postal Services Act. I hope that Allan Leighton and his colleagues will quickly sit down with the regulator to ensure that there is an exchange of accurate information to enable the regulator to make sound and sensible decisions that will secure the universal service obligation.

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