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Post Office Closures

Part of the debate – in the House of Commons at 6:14 pm on 15th May 2002.

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Photo of David Borrow David Borrow Labour, South Ribble 6:14 pm, 15th May 2002

I am grateful for the opportunity to speak in this debate. We seem to have a similar debate every few months as we follow the Post Office's progress.

Ministers are well aware of my concerns about the future of the Post Office. Many of its problems can be traced back many years. I want to separate the problems in postal services from those in the sub-post office network, as they are slightly different.

I well remember discussing the structure of the Post Office during the passage of the Postal Services Act 2000. The dilemma that we faced was how to allow the Post Office commercial freedom while retaining its role as a public service. Under the model that we came up with, a Post Office regulator—Postcomm—was introduced. Since then, the frailties and inadequacies of the management, operating under the old nationalised industry model, have become increasingly apparent, and their failure to cope with the change to a commercial freedom role has become increasingly obvious. I hope that the changes that have taken place since the introduction of Allan Leighton and David Mills to the Post Office's senior management will begin to make a difference.

On Postcomm, having a regulator in a public service will remain a problematic issue whether it is a publicly owned company such as the Post Office or a privatised utility. Wherever it is necessary for the public interest to intervene in the markets, and there is a regulator, that imposes a great deal of responsibility on that regulator, which needs to be at arm's length from the Government. I fully recognise the difficulties faced by my colleagues on the Front Bench in intervening directly. The key decisions that Ministers make about regulation concern the brief that is given to the regulator and the individual or individuals who are appointed to regulate. Let us be under no illusion. If Postcomm messes up when it produces its final report, and the universal service is not maintained because it is not financially viable, the regulator will walk away and politicians will be blamed.

I have noticed in discussions with privatised utilities that have moved through several regulation regimes that they are always dependent on the skill and knowledge of the regulator in being able to make a judgment on the degree of competition and, where relevant, of price fixing that it can impose on a monopoly or semi-monopoly. Postcomm has to make decisions on market access from other competitors and on whether to allow an increase in the price of first-class and second-class stamps. The job of a regulator is to make a judgment on whether the industry concerned is capable of making the internal reforms and changes that are required to meet external competition and price restraints. That is what happened in relation to many of the other utilities that were privatised. Getting it right places a great deal of responsibility on Postcomm.

One of my concerns remains the quality of the Post Office's management, because the key information on which Postcomm will make its judgment when it has finished its consultation is that provided by the Post Office. If that information is not robust or is badly put together or inadequate, there will be a grave danger of real damage being done to the Post Office in terms of postal deliveries. I stress to my colleagues on the Front Bench that that is my main anxiety.

I voted for the model that we established, but it depends on a Post Office management that can provide good and adequate information to the regulator, and a regulator who has skill and knowledge and is prepared to seek information to make an adequate judgment on the market in postal offices—on what it is and what it should be.

I want to consider also the post office network. We have debated the matter endlessly, but I believe that the existing network will continue to decline irrespective of what happens to the benefits system. More and more people will transfer benefits directly into their bank accounts, and fewer and fewer will collect them from the post office. The drip, drip decimation of the post office network over the past 20 years will continue.

We must also acknowledge and make it clear to our constituents that the post office network is, to all intents and purposes, a network of private businesses. It is not run, owned and controlled by the Post Office. If it needs to be subsidised, robust and adequate systems need to be in place to assess reasonable and fair amounts of subsidy to ensure that a specific rural post office is maintained.