News Release

6th July 2004

POSTAL SERVICES CAUSING HAVOC FOR BUSINESSES AND INDIVIDUALS ALIKE

Michael Fabricant opened a wide ranging debate main debate in the House of Commons Chamber yesterday (Monday 5th July) on postal services. Michael, speaking as the Shadow Minister for the Royal Mail, said that the failure this year of the Post Office to meet any of the 15 targets set by Government "is damaging both to businesses and individuals alike".

While praising most postal workers and their management who "take their job seriously and are highly professional", he said "too many aspects of Royal Mail's operations are failing and that is a matter of grave concern to both sides of the House"

Michael pinpointed problems with lost mail, late deliveries arising from a change in shift patterns by abandoning the second delivery, the closure of post offices in villages and main towns, and the difficulties pensioners are experiencing in opening Post Office Card Accounts. He also said that democracy had been affected when an individual set up a mail diversion to another address yet most of the mail, including a postal ballot form, had not been sent on. He was then denied a vote. "How many others were similarly unable to vote because of a late delivery or non-delivery postal ballot forms?" Michael now asks.

"We raised this issue as a main debate in the House of Commons" says Michael Fabricant "because so many people are affected by the standard of service of Royal Mail. The Government owns the Royal Mail and ministers have to accept responsibility for falling standards.. I hope that this debate which was supported by MPs on both sides of the House will buck the Government up. They have got to start delivering services rather than just throwing taxpayers' money at the problem".

The full text of Michael's speech - including interventions from Government Ministers and other MPs - is reproduced below.

Michael Fabricant (Lichfield): You will have heard of the Midas touch, Mr. Speaker. Unfortunately, the Government seem to have the Frank Spencer or Del Boy touch. No matter how much taxpayers' money they throw at a problem, it all goes horribly wrong. No wonder, then, that so many people feel let down by Labour. And so it is with our postal services, which we must never forget the Government own. Too many aspects of Royal Mail's operations are failing and that is a matter of grave concern to both sides of the House. Of course, many thousands of postal workers and management take their job seriously and are highly professional, but a minority are not.

On 6 May this year, the Secretary of State for Trade and Industry apologised to the House and to the people of this country for Royal Mail's failings. She accepts that the buck stops with her, and I give her full credit for that. However, it is not unreasonable to say that an apology is not enough. The Government have a duty to ensure that standards rise.

In 2001, the Royal Mail Group recorded a huge loss of £1.1 billion. I might add that that was £1.1 billion of taxpayers' money. With fresh management, that has been turned around to some extent, to a profit of £220 million in 2003. That is without question a considerable achievement, and a welcome one at that. It came, however, at considerable cost.

In order to prevent the company from haemorrhaging money at an alarming rate, a tough restructuring process was announced by the Secretary of State in March 2002. I am not here today to argue that many of the tough decisions that have been made were not necessary. They were, but their implementation and the methods employed have been immensely damaging.

Mr. David Cameron (Witney) (Con): Does my hon. Friend agree that one of the ways in which the Post Office has cut its costs is by getting rid of two deliveries in a day? Is he aware of the problem that some businesses, especially in rural areas, are facing, which is that the single delivery is now coming too late for the banks' cut-off time for same-day cheque crediting? For small, growing businesses in constituencies such as mine, that is calamitous and it needs to be sorted out. If we are to have one delivery a day, it needs to be made in good time.

Michael Fabricant: My hon. Friend, who is an assiduous Member and constituency MP, raises an important point. The problem to which he refers is creating difficulties not only for growing businesses, but for well-established mail order firms, as I shall mention later. The biggest problem of all, which I shall also mention later, is uncertainty. People could plan ahead if they knew precisely when the delivery was going to be made, but in so many areas-not only rural areas, which he mentioned, but urban areas-the time of the first delivery seems to differ from day to day.

Mrs. Gillian Shephard (South-West Norfolk) (Con): My hon. Friend and my hon. Friend the Member for Witney (Mr. Cameron) mentioned the problems caused for businesses by a single delivery postal service. Will he comment on the extraordinary case of 49 packages sent to East Anglian MPs labelled "Postwatch misdelivery campaign" and posted on 13 May, none of which was delivered to Members of this House? It is indeed a mysterious occurrence, on which the chairman of the Post Office can throw no light, save to ask me what the turnaround time is for letters in my office. Does my hon. Friend have any points to make about that?

Michael Fabricant: If the issue were not so serious, it would almost be a laughing matter. I wonder whether the problem arose because of unreliability in the postal service or whether it could be connected-perhaps the Minister will expand on this when he replies-with the question of deliveries during the general election, when some items of mail were not delivered. It is not for Post Office workers to decide whether a Post Office item should be delivered, so the question is whether it was incompetence or deliberate action by Post Office workers that prevented what was issued by Postwatch from being delivered.

Mrs. Shephard: I thank my hon. Friend for giving way again. The chairman of the Post Office, to whom I obviously wrote, replied:

"We have no trace of the letters being posted, as they were reportedly posted over a post office counter. The most likely place of loss would be at that post office . . . which is one of our best with no previous problems."

Michael Fabricant: My right hon. Friend makes a serious point. If the Post Office and the Minister have doubt themselves about the service of Post Office Counters Ltd., it is a clear indication of how far standards have fallen in the past few years.

Mr. Martin O'Neill (Ochil) (Lab) rose-

Michael Fabricant: If I may, I shall move on, but I shall give way later.

First, I shall examine post office closures. As urban and rural post offices continue to close across the country, the needs of our local communities and the vulnerable people within them are not being adequately met. In urban areas, the urban reinvention programme-in truth, the urban post office closure programme-is occurring at breakneck speed. Of the 9,000 urban post offices operating at the start of the programme, 1,211 have already closed, and that figure is set to rise to 3,000 by the end of this year.

Mr. Humfrey Malins (Woking) (Con): I am following my hon. Friend's argument with great care. The post office is a vital part of any community, and not only rural post offices, but urban post offices are under threat, including five post offices in my constituency. Does my hon. Friend, like me, believe that post offices, which are an important social addition to any community, should be preserved?

Michael Fabricant: I agree that post offices should be preserved and that they play a vital part in the fabric of life in our constituencies. Like the National Federation of Sub-Postmasters, however, I "regretfully and reluctantly" accept the need for some closures, which so many people feel are badly handled. Local characteristics are not being taken into account; local communities are not being properly consulted; the long-term planning is inadequate; and a co-ordinated framework has not been implemented.

On 13 January this year, I made those points at the Dispatch Box, and it must be said that the Government acknowledged the problems-again, I welcome that acknowledgement. In a written ministerial statement, the Minister for Energy, E-Commerce and Postal Services stated:

"In particular, the consultation arrangements have been criticised. There has been mounting evidence that in too many cases Post Office Limited has not handled them appropriately, or with sufficient sensitivity."

He went on to announce changes to the consultations, which would:

"make them more inclusive and appropriate to achieve a viable network to serve the public after the programme is concluded."-[Official Report, 5 February 2004; Vol. 417, c. 49WS.]

I thought, "Hooray! The Government are finally getting a grip," but I was just too trusting.

Gregory Barker (Bexhill and Battle) (Con): Does my hon. Friend agree that the issue concerns not only the nature of the closure programme, but the transparency of the process? When my constituents have campaigned to save post offices, they have been unable to get round the Post Office, which will not make available the business case on which the closure of local services is based. My constituents understand that hard economic decisions must sometimes be made, but, given that the Post Office does not reveal what its decisions are based on and offers cash incentives to close post offices, my constituents are sceptical about whether the process is anything more than closure by diktat.

Michael Fabricant: My hon. Friend is renowned for having his finger on the pulse, and he is right to say that the process is not transparent.

Postwatch remains critical. It states:

"there is little evidence of Post Office Limited attempting to mix and match 'leavers' and 'stayers' to produce a smaller but optimised network as envisaged by the Performance and Innovation Unit Report of 2000".

Postwatch issued that statement after the Minister released his written ministerial statement that all things would change. I was gullible to believe that things would change-they have not.

Mr. Mark Field (Cities of London and Westminster) (Con): I agree with my hon. Friend's line of argument on the urban reinvention programme. Does he agree that such decisions too often involve a deal being cut between the Post Office and the long-standing-or, perhaps, short-standing-local postmaster, rather than their being according to community need or finance? As my hon. Friend the Member for Bexhill and Battle (Gregory Barker) says, such a lack of transparency does not make local residents think that the process is being run fairly or firmly.

Michael Fabricant: As ever, my hon. Friend raises an important point. He refers to the compensation programme that is made available to post office operators-postmasters-who give up their post offices. That compensation is very generous and equates to around 30 months of profit, which is more than someone would normally get. The Minister may correct me if I am wrong. That is why Postwatch said that there is no real effort to mix and match to ensure that services are provided to those who need it in a given locality.

Mr. O'Neill rose-

Michael Fabricant: I give way to the right hon. Gentleman.

Mr. O'Neill: I am not right hon.-I may well deserve to be, but that is for others to decide.

I have two points for the hon. Gentleman. First, he made some very serious allegations about the nature of postal deliveries during elections. If those allegations are of any substance, they should have been referred to the Electoral Commission much sooner than today, with the appropriate evidence. If he did so, perhaps he could tell us about its findings.

Secondly, although it is true that compensation is generous and that there are problems in relation to mixing and matching, the hon. Gentleman is not telling the full story. I understand that between one in three and one in four of all applications for early premature closures has been refused-in other words, of the 2,500 to 3,200 applications that have been made, around 800 to 900 have been refused. A substantial number of people who have tried to get out of the postal services for financial reasons have been refused. The hon. Gentleman is not giving the whole picture.

Michael Fabricant: The hon. Gentleman, who is Chairman of the Select Committee on Trade and Industry, should be a Privy Councillor, but sadly he is not.

I tabled a question to the Minister about deliveries to which he gave a full and comprehensive written reply, so I can at least say that the matter is in the public domain if the Electoral Commission wishes to take up the matter.

As regards post office closures, I am merely repeating what Postwatch says. I quote it again:

"there is little evidence of Post Office Limited attempting to mix and match 'leavers' and 'stayers'".

Postwatch was established to watch the Post Office as the guardian of the consumer. I would not make a statement of such importance were it not for the fact that Postwatch has made it.

Postwatch also expresses particular concern about the future of post offices in deprived urban areas where there is nothing in place to discourage sub-postmasters from quitting and taking a generous golden goodbye from Royal Mail, thus creating gaps in the network. That point was echoed by my hon. Friend the Member for Cities of London and Westminster (Mr. Field). Indeed, the compensation offered by Royal Mail is often an encouragement to do just that. I think that Members on both sides of the House remain of the view that consultation remains inadequate.

Let us take a constituency at random. When I was in Leicester, South last week, I learned that 10 post offices are due for closure in the city. More than 15,000 people signed a petition to keep them open. Mrs. Gladys Kenney, who is 86, is very worried about the closure of the West Knighton post office on Aberdale road. Her nearest post office is a 20-minute uphill walk away; and, like many other post office users, she is old and infirm. Why does the Post Office still refuse to take such factors into account? Fortunately, Chris Heaton-Harris, the Conservative parliamentary candidate in Leicester, South, is fighting to keep the post office open. He told me:

"I want to retain the excellent local services provided by the post offices at West Knighton and Boundary Road and I am determined that other possible closures including the Knighton Church Road Post Office just don't happen."

I support him in that fight. Chris has collected thousands of names on a petition, and I hope that the Post Office will listen to him and to other post office users.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): Will the hon. Gentleman give way?

Michael Fabricant: I shall give way to-is she the "right hon." Lady?

Mrs. Dunwoody: No. The hon. Gentleman should know that we Select Committee Chairmen are the foot soldiers of Parliament.

I have listened to the hon. Gentleman carefully but I am not clear about whether he is saying that the Post Office should not offer compensation to someone who runs a business and discovers for various defensible reasons that it is no longer viable or whether he simply suggests that that person should be forced to continue until inevitable bankruptcy.

Michael Fabricant: I am sorry if I have not made myself clear. I shall do so now. As in all things, it is a question of balance. Over-generous compensation that creates gaps in the network must be wrong, but no compensation at all would be equally wrong. My point-perhaps more important, that of Postwatch-is that the balance should be even to ensure that there are no holes in the network.

Gregory Barker: I am especially interested in my hon. Friend's comments because I was in Leicester, South last week. People there are angry, as are many Conservative Members who have heard the extent of people's anger about post office closures. The initiative to close those vital community assets does not come from the postmasters or people who run the post offices saying that they are not viable, but from Whitehall. Lucrative packages are being offered to bribe postmasters to close services in the full knowledge that that amount of money is unlikely to come the way of people on such incomes again. They are left in an invidious position. The initiative to close the post offices comes from Labour in London.

Michael Fabricant: My hon. Friend makes his point powerfully. The Secretary of State was right to accept responsibility. The way in which Post Office Ltd. and the Royal Mail Group were set up means that the Government own 100 per cent. of the shares. She accepts that the buck stops with the Government, who must ensure that the post office network remains viable.

Mr. Michael Weir (Angus) (SNP): I have never been to Leicester, South and I have no intention of going there in the next week or otherwise. I am interested in the hon. Gentleman's comments and I agree with him up to a point, but given that post offices also closed under the previous Conservative Government, how does he define the gaps in the system? What would he put in place to ensure that gaps in the network did not occur?

Michael Fabricant: It is not a matter of how I define the gaps but how the Post Office defines them. The Post Office says that the distance from one post office to another in an urban area should be no greater than 1 mile if that can be avoided. Moreover, the Post Office is meant to take into account obstacles to people walking from one area to another. There is no point in the presence of a post office a few hundred yards away if a major motorway, canal or possibly Ben Nevis are in between. The Post Office must take that serious issue into account given that so many customers tend to be elderly. That is the point about balance that I made to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) earlier.

My hon. Friends have mentioned the position in urban areas and I shall now move on to that in rural areas. Uncertainty about the future of the rural post office network hangs over it like the sword of Damocles. Sub-postmasters continue to leave in large numbers. Indeed, the number of closures in rural areas last year was up to 149 from 115 the previous year, despite Government support. An uncertain future means that it is difficult to find people who are willing to take over rural post offices that are for sale. The Government have provided a three-year funding programme to support rural post offices, and I applaud that. However, that finishes in 2006 after the next general election. What will happen then? Nobody knows, and that is the problem. It is essential that the Government make it clear how these businesses are to be made viable in the longer term, but they have consistently refused to do so. I hope that the Minister will step aside from that uncertainty when he responds to this debate, and make it clear what the future of rural post offices is to be.

This uncertainty is having a devastating impact on rural communities throughout the country. Rural post offices play a critical role in sustaining the social and economic fabric of our society, and their closure has far-reaching consequences. Closures cause considerable anxiety to many people, particularly the elderly and the disabled and those who do not, or cannot, use private transport to get into larger towns. The Government have caused enough damage to rural communities, and they must now make the future of rural post offices clear. I hope that the Minister will do so today.

Leaving aside the issue of post office closures, we have seen a devastating deterioration in the standard of the Royal Mail's delivery service, as my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) pointed out so well. In the latest report on mail delivery, all 15 of the existing 15 delivery targets were not met in the most recent financial year: 15 out of 15. This included a failure to meet the minimum targets for the delivery of both first and second class post. In the year to March, 90.1 per cent. of first class mail was delivered the next day, but the target is 92.5 per cent. Meanwhile, 97.8 per cent. of second class mail arrived on time, which is below the target of 98.5 per cent.

Royal Mail is due to make compensation payments of about £80 million, on top of any penalties that the industry regulator, Postcomm, might impose. That is £80 million of taxpayers' money. Furthermore, there have been desperate problems associated with the decision to abolish the second delivery, as my hon. Friend the Member for Witney (Mr. Cameron) pointed out. In principle, that seemed like a sensible cost-cutting measure. However, the reality is that the one single delivery is now due at any time between 7 am and-well, who knows when? This is causing havoc for mail order companies and other businesses that need a quick turnaround. These failures to meet minimum delivery targets and the switch to a single daily delivery are causing considerable damage to both business and private customers, and need urgently to be addressed.

Gregory Barker: My hon. Friend is being extremely generous in allowing me to intervene on him again. Does he agree that the abolition of the second delivery effectively means the end of the next-day service for many people who have to leave home at a reasonable time to get into the office? They will no longer be able to have something sent to them in the certainty that they will receive it before they leave for work. That means the end of a proper first class post service.

Michael Fabricant: My hon. Friend is absolutely right. He comes from a business background, and he can anticipate the problems that businesses encounter. This is a serious issue-[Interruption.] I do not know what the hon. Member for Ochil (Mr. O'Neill) just said, but as Chairman of the Trade and Industry Committee he will understand the importance to trade, industry and businesses of a reliable postal service.

Mr. O'Neill rose-

Mrs. Angela Browning (Tiverton and Honiton) (Con) rose-

Michael Fabricant: Before I give way to the hon. Member for Ochil, I shall give way to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning).

Mrs. Browning: I am glad that my hon. Friend has moved on to the subject of businesses in rural areas. I have heard of a lot of problems in that regard, not least from a major company in my constituency which used Royal Mail to send out a coupon that was time-limited, only to find that it had been delivered after the time limit had passed. It was a seasonal matter, and that company says that it is now desperate. My business community is crying out for some competition and reliability so that it can get on with its business, because Royal Mail is unable to assist it any more.

Michael Fabricant: That is an unfortunate fact. Often deliveries are time critical, and when a delivery is not made on time that creates real difficulties for business.

Mr. O'Neill: I understand that, in a previous incarnation, the hon. Member for Bexhill and Battle (Gregory Barker) was a Merchant Banker-capital M, capital B. He probably started work rather early in the morning. Most people who do so never see the mail until they come back home, and there are arrangements whereby businesses can have it delivered at a given time on a regular basis. Once again, I do not think that the hon. Member for Lichfield (Michael Fabricant) is telling the whole story. A lot of businesses can get the mail delivered within reasonable bounds of their choosing. Most of the working population, especially those in the south-east who have to commute, must leave the house long before the mail arrives.

Michael Fabricant: With the greatest respect, I do not think the hon. Gentleman is quite in touch with reality. I have received hundreds of letters from different people who say that the Post Office says to them, "If you want the delivery, you can collect it yourself." However, often it is not practical for businesses or individuals to collect the post themselves. Anyway, what have we come to when the Post Office says, "We can't deliver to you reliably; you've got to go and collect it from the sorting office yourself"? That is nonsensical.

More seriously, Richard Bradley tells me that, in Northampton, despite paying for his mail to be diverted to another address, that did not happen-even after making many complaints. What was the result? His postal ballot paper was lost. As a consequence, he was prevented from voting. Such mistakes have serious implications, not only for business, but for our democracy.

Even services here in Parliament are not immune to the effects of such failures. On 12 May 2004, the Serjeant at Arms informed all Members of Parliament that, for a three-month trial period, starting on 1 June-we all saw that announcement in the all-party Whip-Members' incoming mail that is forwarded from Parliament to an external address would be sent by first-class post instead of by special delivery. He did that for all the right reasons-it would lead to savings to the taxpayer of £500,000 annually. However, on 3 June-just three days, not three months, after the start of the trial-a new message came from the Serjeant at Arms saying that the trial had to be suspended

"until Royal Mail can guarantee a First Class delivery service".

If this were not so serious, it would be the subject of an Ealing comedy. Frankly, the complacency of Ministers is a disgrace.

We have used Opposition time before to debate the Government's direct payment programme; we return to it again, and make no apologies for that, because we recognise the scale of the public's concern at the way changes are being made. The Government, in contrast, have been more reluctant to debate the issue in their own time. I am not surprised.

To those of us across the House, not just those on the Conservative Benches, who suggested that there are too many steps needed to open a Post Office card account, the Secretary of State for Trade and Industry said:

"Let us be clear: there are three steps that individual claimants need to take."

Strangely, online, the BBC set out seven steps; Postwatch listed eight; and a Post Office analysis detailed 20, from the receipt of the Government letter asking for account details to the claimant's receipt of cash through the card account. To those of us who complained that the Government are biased against the Post Office card account in favour of bank and building society accounts, the Secretary of State said that

"about 2 million Post Office card accounts have already been opened. That scarcely bears out the absurd allegations being made about how we are biasing the system, driving people away from the Post Office card account and making it impossible for anyone to open one. That is complete nonsense."-[Official Report, 24 March 2004; Vol. 419, c. 909-10.]

Well, if it is "complete nonsense"-[Interruption.] Both Ministers say that it is. Why, then, did Age Concern, Citizens Advice, the National Consumer Council, the National Federation of Sub-Postmasters, the Communication Workers Union and Amicus, the National Federation of Women's Institutes, and members of the public across the country all share our concerns?

If it is "complete nonsense", why did a leaked Department for Work and Pensions document say to staff,

"We need to pay most of these customers into bank accounts which cost 1p, rather than into Post Office card accounts which cost up to 30 times more. You"-

post office workers-

"should be aiming to get nine out of 10 new claimants"

to use

"bank accounts, with a small proportion paid through Post Office card accounts"?

There it is in black and white-concrete evidence that the Government have been determined right from the very start to steer people away from the Post Office card account. I will happily give way to the Minister, who, I hope, is going to apologise to the House.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): No, I am going to set the record straight. As the hon. Gentleman well knows, the memorandum to which he refers was a Jobcentre Plus memorandum, and was therefore aimed at people of working age. As he well knows, the Post Office card account, whatever its other merits, cannot help people to be ready to accept a job, as it cannot be used to accept payments of wages. That is an important message and it would be irresponsible of Jobcentre Plus staff not to get it across to people actively seeking work.

Michael Fabricant: I hope that the Minister is not saying that people of working age should not receive benefits? Is that what he is saying? Is he saying that people of working age should be discouraged from opening a Post Office card account because it would make it easier to get benefits? Of course he is not. The point at issue is that the Government and the Secretary of State denied that they were making it more difficult to open a Post Office card account, but it is clear from the memo that that process is being made more difficult. Besides, if Post Office Ltd. says that it takes 20 steps to open a Post Office card account, is it not difficult? Of course it is.

It is fair to say that many pensioners have chosen Post Office card accounts. Three million have done so, as the Government's amendment to our motion states. I have no doubt that the Minister will quote that number in his response, but the question is: how many more people would have chosen the account if the Government had made the process more simple? There are no grounds to congratulate the Government on card take-up. On the contrary, I congratulate those pensioners who, despite all the hurdles and obstacles that the Government have put in their way, have been able to open the account. It is they whom we should congratulate.

The Secretary of State for Trade and Industry became remarkably aggressive about our many concerns in the last debate. Our claims were described as "complete nonsense" and "absurd".

The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): Yes.

Michael Fabricant: As the Minister confirms from a sedentary position, the Secretary of State said that our claims were absurd.

Yet, in the past few months, we have discovered that the Government have, very belatedly, started to take some steps to improve the Post Office card account process. A written answer from the Department for Work and Pensions, dated as recently as 7 June-perhaps the Minister for Energy, E-Commerce and Postal Services is not aware of this-stated:

"We have already made some improvements to the Post Office card account process where real problems have been identified and continue to closely monitor its operation. We want to make further changes which would include less form-filling and a straightforward process for customers getting account details back to DWP via their postmaster."-[Official Report, 7 June 2004; Vol. 422, c. 84W.]

At last, there is an admission that our concerns were justified. We-and the vulnerable constituents whom we serve-must be grateful for very small mercies. Yet this has taken two years to put right. Even now, Postwatch says that the changes are not as extensive as it would have liked and that they do not tackle the large backlog of applicants who are stuck in the application process.

Finally, I want to ask specific questions of the Minister. We welcome the exceptions service, under which cheques are issued to recipients of benefits, but the Government must do all that they can to publicise it. What steps are being taken to ensure that such publicity will happen? The cheque-based system is vulnerable to periods of disruption such as postal strikes, or even first-class post delivery. What contingency arrangements are in place to ensure that people will continue to receive their benefits in such circumstances? I look forward to the Minister's response.

So there we have it. I suspect that the Government do care about the vulnerable; I suspect that they do care about the elderly; I suspect that they do care about businesses that use the Post Office. But it is what the Government achieve, and what they deliver with taxpayers' money, that will count in the end.