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This speech was given during a debate on post office services on 29 January 2002

Mr. Richard Bacon (South Norfolk): I have enjoyed listening to the debate.

First, there is the nature of the market that we are facing. It has been said that the Post Office is facing competitive threats from new technologies, industrial relations and heaven knows what else. Although that is the case, it is important not to forget that there is a growing market. Growth was not as large last year as was predicted, but as the sub-postmaster at Mulbarton in my constituency said this morning, 15 years ago there would be six or seven sacks in the morning, and now there are 30 to 40. So there is a growing market with an exciting future.

The Post Office has 28 million footfalls through the doors of its premises every week. Most retailers would kill for that. In the over 350 g market, more than 4,000 companies are competing. We have seen the improvement in service that has resulted from that. We do not necessarily have anything to fear from greater competition so long as it is handled in the right way.

Secondly, there are some serious questions to ask about the management of Consignia. The hon. Member for Croydon, Central (Geraint Davies), who is no longer in his place, said that the income of the Post Office has risen considerably, from £6 billion to £8 billion. He could have added that Consignia's management has let the costs of the business run out of control. Costs are up by £1.2 billion, and that is the main reason why Consignia is in a hole. The problem arises not because there is no market or because Consignia is not getting increased revenues, but because the management is completely unable to control costs.

Reference has been made to poor industrial relations. I am not surprised that they are poor, given that 30,000 people were told just two weeks before Christmas that they would be sacked. My experience is that companies with good managements tend to have good industrial relations, and that companies with poor managements tend to have poor industrial relations.

My third point is that there is only one shareholder—the Government. The NAO report referred to several times in the debate states:

"The relationship between the Department and Consignia may affect the company's commitment to improving efficiency"

Later on, the report continues:

"It is highly unusual for a shareholder to direct a company's management to pay a guaranteed minimum dividend."

In most businesses, the management decides whether to pay a dividend, and the amount involved. I accept that, during the 1980s, the Treasury sucked a lot of money out of the Post Office, but the Post Office was at least making a profit at the time. I should prefer the people working in the Post Office to have more control over the amount of money to be paid in dividend.

The hon. Member for Croydon, Central referred also to the fact that maintaining a universal service would cause conflict in a profit-maximising organisation. No one in his or her right mind would suggest that a universal service delivering light letters at a uniform price was a profit-maximising activity. It has been argued that having a universal service obligation could provide a market attraction to some players, but no one would suggest that such a service was, in itself, a profit-maximising activity.

I was interested in the speech of the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz). It was interesting that he did not refer to his own private Member's Bill on employee share ownership. I speak for no one but myself, and I certainly would not want to commit my Front-Bench colleagues on the matter, but my contention is that the best way to transform the business, which has potentially exciting prospects, is to hand it over to the 200,000 people who work in it. If they became the majority shareholders of the business, they could help it find its feet—and the markets that would ensure prosperity.
 



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