Postal Services Bill: second reading

21 February 2011

Lord Empey and Lord Dobbs made their maiden speeches in the House of Lords on Wednesday 16 February during the second reading of the Postal Services Bill.

Baroness Wilcox, the Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills opened the debate.

Lord Empey

The Royal Mail and the Post Office are ‘a serious piece of national infrastructure,’ as important as broadband, roads and the electricity grid, ‘vital in bringing our nation together,’ and ‘part of the country's social and economic glue,’ Lord Empey said. Small manufacturing and cottage industries rely on Royal Mail services to distribute their products. Although in rural parts of the country without good transport access, these businesses ‘get on a level playing field through the internet. Then they can distribute their products through the services provided by Royal Mail,’ he said.

However, in large geographical areas where populations are spread thinly, there were additional costs ‘necessary to create a level playing field so that people in those more remote areas can compete,’ Lord Empey said. It was important for the universal service obligation to ‘mean what it says’ when the Government looks at these issues.

It was equally important for Royal Mail to be able to compete on a level playing field Lord Empey said: ‘Royal Mail cannot be left with one arm tied behind its back, unable to compete, while allowing other operators to cherry pick the good bits, leaving Royal Mail as the deliverer of last resort. None of us would want that, because it will lead, ultimately, to a spiral downwards in revenues and profits.’ The universal service obligation needed to survive ‘in a meaningful way that frees Royal Mail from the shackles of debt and allows it to compete with its rivals, which are steadily eroding its current market base.’

Closing his speech, Lord Empey said that to provide the ‘meaningful infrastructure essential for the well-being of the economy’, the Postal Service Bill should seek to ensure that ‘both customers and workforce fully understand where they are going and that the business is set an achievable target that will benefit all of the United Kingdom in the years ahead.’

Lord Dobbs

The suggestion in ‘Post Office Ltd statistics’ that there are more than 11,000 post office in the UK is ‘not correct,’ Lord Dobbs asserted in his maiden speech. ‘More than 800 of that total are not really post offices at all, but what might better be termed "postal outlets"; part of what is called the outreach programme. Many of them are former post offices that have been redesignated as outreach partners. They lack any real security.’ He cited the post office in the Wiltshire village of Wylye: ‘We had a post office one day and an outreach partner the next. It offered almost identical services; the same personnel, the same premises and the same hours-even the same post box. The difference was that the income the shopkeeper received for this work had dropped by more than two-thirds. There is no longer any pension; no sickness pay; no holiday entitlement. In many rural areas, far from the post office subsidising the shopkeeper, it is the shopkeeper who is now subsidising the post office.’

They worked because of ‘their sense of civic duty – a desire to carry on serving the community. In that, they truly are the big society come to life,’ Lord Dobbs said. ‘Yet, the goodwill on which many rural postal outlets survive is evaporating and one day will run out. Close the post office or outreach service and we will be forced to watch the disappearance of all the other associated services – many of which are entirely unpaid but are the sinews of village life.’

The reporting requirements contained in the Bill may not be adequate for rural post offices and outreach services facing closure, Lord Dobbs said. Calling on Baroness Wilcox to ‘strike a blow for the rural big society and help strengthen village life’, Lord Dobbs asked for a 16 weeks’ notice period to be considered to give local communities ‘sufficient time to come up with an alternative solution that might keep the postal outlet open and keep alive the host of other vital associated services. Rural communities are incredibly resilient. They can be very inventive. They should be given the chance to show what they can do to help themselves.’

Further information

The Postal Services Bill provides for the sale of shares in Royal Mail, including an employee share scheme, and for Post Office Ltd to remain in full public ownership except for a possible move to a mutual ownership structure in future. It also makes provision for the transfer of Royal Mail’s historic pension deficit to Government; a new regulatory regime for the postal services sector, including transferring regulatory responsibility from Postcomm to OFCOM, with the primary duty of OFCOM in relation to postal services being to maintain the universal service; and for a special administration regime to protect the continuation of the universal postal service should the universal service provider be at risk of entering insolvency proceedings.

Committee stage  – line by line examination of the Bill  – is yet to be scheduled.

Second reading is the first opportunity for Members of the Lords to debate the main principles and purpose of the Bill.

Image: iStockphoto 

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