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Royal Mail Takeover
16 December 2024
Lead MP
Justin Madders
Debate Type
Ministerial Statement
Tags
EconomyEmployment
Other Contributors: 22
At a Glance
Justin Madders raised concerns about royal mail takeover in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
With permission, the Minister for Employment has made a statement regarding the takeover bid of International Distribution Services plc by EP Group. Royal Mail, an iconic institution, is currently facing financial challenges with a loss of £348 million in its most recent fiscal year and failing to meet quality service targets set by Ofcom, resulting in fines. The Government's objectives are to strengthen Royal Mail’s sustainability and protect customers, workers, and the brand. They have secured legally binding undertakings from EP Group that include a golden share for the Department of Business and Trade ensuring that Royal Mail cannot move its headquarters or tax residency without government approval. Additionally, value extraction is subject to financial and quality tests; there are commitments to prevent indebtedness and poor service performance. The agreement includes modernisation funds over three years, debt restructuring, retention of essential assets, adherence to regulatory obligations, brand protection, continued international responsibilities, and facilitation for future discussions between the government and any new owner. Copies of the deed will be placed in both Houses' Libraries.
Harriett Baldwin
Con
West Worcestershire
Question
The MP thanked postal workers for their hard work during challenging weather. She highlighted the importance of Royal Mail, acknowledged its financial challenges and poor service delivery leading to Ofcom fines. She questioned the guarantees on service provision, job commitments, employee ownership percentage, clarification on tax residency duration, ongoing government role with Ofcom, universal service obligation reform discussions, risks of takeover, impacts on Post Office branches at risk of closure, and concerns raised by Royal Mail over recent Government policies.
Minister reply
The Minister confirmed the agreement includes financial and quality tests for value extraction, preventing indebtedness and poor performance. There is a commitment to modernisation funds, debt restructuring, adherence to regulatory obligations including universal service delivery, brand protection, international responsibilities, and facilitation of future discussions with government. The golden share will ensure headquarters and tax residency cannot be moved without approval, lasting in perpetuity except for limited circumstances. Specific details on employee ownership percentage and post office impacts were not provided.
Harriett Baldwin
Con
West Worcestershire
Question
Acknowledging Royal Mail's importance, Harriet Baldwin questioned the Government about guarantees on service provision, job commitments, and whether employees will have a say in governance. She also raised concerns about the universal service obligation and tax residency guarantees.
Minister reply
The Minister responded by thanking Ms Baldwin for her comments and acknowledging the need to improve Royal Mail's performance. He confirmed that the universal service obligation is not contingent on this deal, but commitments will be secured to improve standards.
Liam Byrne
Lab
Birmingham Hodge Hill
Question
Byrne inquired whether the Government intends to seek a six-day delivery service for Royal Mail beyond the initial five-year period.
Minister reply
The Minister clarified that discussions about the universal service obligation will be determined by Ofcom next year, as this is a fast-moving market.
Sarah Gibson
Lib Dem
Chippenham
Question
Gibson raised concerns about rural services and requested assurances on delivery days and charges to the public purse.
Minister reply
The Minister assured the hon. Lady that there is no intention to reduce the number of delivery days as a result of this sale, and any changes will not be charged to the public.
Gregor Poynton
Lab
Livingston
Question
Poynton asked for assurance regarding ongoing regulatory oversight to ensure new owners meet their obligations.
Minister reply
The Minister confirmed that discussions have been held with Ofcom and Royal Mail about performance, indicating a shared determination to improve service quality.
Edward Leigh
Con
Gainsborough
Question
Thirty-one years ago, when I had the Minister’s job, I was trying to privatise the Post Office, but I was stopped by rebellious Tory Back Benchers—nothing new there. I was sacked a week later. So I warn him that this is quite a difficult issue. What people were worried about was the universal service obligation—it costs so much more to deliver in rural Lincolnshire than in central London—so I think that what we are all worried about is that, as the Royal Mail moves ever further away from public ownership, this new private company will try to chip away at the universal service obligation, particularly in rural areas. Can the Minister reassure us that he is really on the case?
Minister reply
I thank the right hon. Member for his question. Is he now the rebellious Back Bencher, I wonder? We all share those concerns about the universal service obligation. This deal is not contingent on the universal service obligation. We have had discussions on how we improve the current state of affairs, because it is clearly not good enough. I hope that his constituents will see an improvement in service as a result of this deal.
Peter Swallow
Lab
Bracknell
Question
Barely a week goes by without a constituent reaching out to me to express frustration at the quality of service they receive from our local Royal Mail delivery services. What will the announcement mean for them and for the quality of service that they receive?
Minister reply
We hope that the deal will lead to an improvement in service. Specific investment commitments are being made as part of the deal, which we hope will be used to drive up standards. I think that everyone is committed to seeing an improvement on where we are at the moment.
John Lamont
Con
Berwickshire, Roxburgh and Selkirk
Question
I have eight Royal Mail delivery offices in my constituency, staffed by a team of hard-working posties who cover a vast rural area around the Scottish Borders. Will the Minister tell them, and me, what commitment the new owner has given to maintaining those offices and staff levels?
Minister reply
The hon. Member must be busy at Christmas time if he has eight offices to visit. He makes an important point about the Royal Mail’s vital role in rural constituencies. We have got commitments to improve standards, and hopefully the deal will deliver on that through the increased investment that has been agreed.
Christopher Vince
Lab Co-op
Harlow
Question
Postmen and postwomen in my constituency were shaken to the core a couple of months ago when one of our postmen was brutally attacked and hospitalised while doing his rounds. I am sure the Minister will join me in sending my sympathies to him and his family for that terrible incident. When I visited the depot in my constituency—fortunately, I only have one—the postmen were concerned about the long-term future of Royal Mail. What assurances can he give me and postmen in Harlow that he has done all he can to protect Royal Mail and ensure that any future takeover does not lead to a running down of services?
Minister reply
First, I extend my sympathies to my hon. Friend’s constituent who was attacked. We all feel abhorrence when public servants are attacked doing their job.
My hon. Friend can be assured that services will be protected. This is an opportunity to get investment. We have commitments that were not in place previously post privatisation, so we are in a better place than before.
Christine Jardine
Lib Dem
Edinburgh West
Question
On Friday I will be visiting the delivery office in my constituency. Like other Members, I am concerned to reassure those who work there about what this privatisation will mean for them. We have talked a lot about services and universal obligations, but what reassurances can the Minister give that jobs will not be lost down the line?
Minister reply
It is not a privatisation—that began under the hon. Lady’s party’s time in office. This is an important step forward, getting commitments that were not previously in place to protect the Royal Mail brand and delivering the investment that we all clearly see is needed.
Johanna Baxter
Lab
Paisley and Renfrewshire South
Question
Our posties go above and beyond 12 months of the year, but especially at this time of the year. I welcome my hon. Friend’s statement, but I particularly welcome the support that it has garnered from the workforce. Can he say a little more about his conversations with the trade unions during the negotiations about the industrial relations reset that has been discussed by the general secretary of the Communication Workers Union? What steps have been taken to ensure that any future owner of Royal Mail does not run it into the ground?
Minister reply
The Secretary of State and I have regularly met the Communication Workers Union. As my hon. Friend rightly points out, there has been considerable industrial unrest in recent years, so it is extremely good news that the Communication Workers Union has talked positively about the groundbreaking deal that it has signed with EP Group. I agree with the union that it is time for a fresh start and a complete reset of employee and industrial relations. We want good industrial relations across the whole economy, so we welcome the constructive way that EP Group has engaged with the trade unions. We hope that that spirit carries forward into the future.
Simon Hoare
Con
North Dorset
Question
As many have mentioned, many rural communities will be concerned to know how this could affect them. I spoke to postal workers in Blandford Forum in my constituency on Friday; they can be the best advocates, so can the Minister ensure that they are well primed to explain to their customers—who they are very proud to serve—what this means for the universal service obligation? Likewise, the Royal Mail has such a crucial job in delivering elections, particularly but not exclusively with postal votes. There is growing concern about the resilience of Royal Mail to meet the growing demand. I appreciate that it is outside the Minister’s brief and he may need to write to me, but can he provide some assurance to the House that the contract that the Government give to Royal Mail will be honoured in full by the new owners to ensure that our democracy can still function?
Minister reply
The hon. Member may have noticed that I was sitting next to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali), before the statement and we had a brief conversation about that, because we all agree on the importance of Royal Mail delivering our democracy. I assure him and his constituents that it is our intention to see that the universal service obligation is complied with and improved on in future.
Lee Barron
Lab
Corby and East Northamptonshire
Question
I start by thanking postal workers across the country for the magnificent job that they do all year round. I remind Liberal Democrat Members seeking assurances that it was under the coalition Government that the Royal Mail was privatised in the first place, with none of the assurances that we have currently have. I refer Members to my entry in the register, and I declare that I started my working life on a Royal Mail apprenticeship. It is a proud part of my life—28 years of service, and I am proud of all of it. The Royal Mail has been run into the ground and is currently broken. Through the golden share, the Minister has been able to get this Government back in the room, because we have been locked out ever since privatisation. That represents a breakthrough, and ensures that Royal Mail does not carry on as it has. The current board is responsible for the biggest failure in quality of service, the biggest attack on its workforce and the creation of a two-tier workforce. Can the Government give us some assurances that those responsible will not walk away filling their wallets, but will turn around and apologise for what they have done?
Minister reply
I thank my hon. Friend for his questions and his service in the Royal Mail. Clearly, arrangements for those currently in the Royal Mail are a matter for the new owners once the deal goes through, and I am sure that that point will be discussed. He is right that the performance has not been good enough, and we are very pleased to have secured a number of commitments in the deal that were not previously in place.
Chris Law
SNP
Dundee Central
Question
I welcome many parts of the statement, not least the part on quality assurance. I would like to know a little more about that because one issue in Dundee, which has the largest teaching hospital in Europe, is that appointments letters often arrive too late, which of course has an impact on the NHS. I want to focus specifically on the question not yet answered, which is about jobs. In Scotland, 11,000 people are employed by the Royal Mail, and they will be listening today to find out what cast-iron assurances there will be for their jobs. Mr Křetínský recently completed a takeover of a French supermarket, promising in 2023, in the run-up to that deal, that there would be no job losses, but one year later there were plans to cut 3,000 jobs. Can the Minister be very specific today and tell us what cast-iron guarantees he has for the 11,000 people employed in Scotland and those who are employed elsewhere across the UK?
Minister reply
I have no doubt that the Communication Workers Union and the Unite Communication Managers Association would not have spoken positively about the deals that they had struck had they not received sufficient guarantees about the workforce. As I said, the general secretary of the Communication Workers Union has been on the air today, speaking very positively about the commitments that he has received about not just job security but governance arrangements, and about workers having a “meaningful stake” in the success of the business moving forward. This is a really positive deal, and if the CWU is speaking positively about it, I think the hon. Member should be reassured.
Sarah Coombes
Lab
West Bromwich
Question
On Friday morning, I visited the West Brom Royal Mail sorting office and saw the fantastic work that the staff there do. Many of the posties have worked there for decades, and one for as long as 40 years. How will this deal protect Royal Mail and, critically, the postmen and postwomen who are so important to our communities?
Minister reply
My hon. Friend is absolutely right. One of the biggest assets in the Royal Mail is the workforce itself. That is widely understood not just on the Labour Benches but by the EP Group. As I said, commitments have been made between the trade unions and the EP Group on job security. I hope that goes some way to dealing with her concerns.
Jim Allister
TUV
North Antrim
Question
When I visited the two depots in my constituency last week, I noticed how run down and aged the van fleets are. Will there be an upgrade of Royal Mail fleets as part of this deal? Given that the Minister has said that the Government’s golden share does not extend to operational matters, is there no assurance for rural constituents that their service will be maintained at the expected level?
Minister reply
I can assure the hon. and learned Member that there is nothing in the deal that affects the universal service obligation, and it is our commitment to continue ensuring that there is a universal service obligation moving forward. Royal Mail has purchased new vans recently from Stellantis plants, which may help replicate this throughout the country. Additionally, as Royal Mail aims for net zero emissions, an upgrade of the van fleet is anticipated.
Melanie Onn
Lab
Great Grimsby and Cleethorpes
Question
I visited my local depot on Friday and was informed about performance issues, including missed deliveries, due to a lack of staff which can be attributed to the two-tier workforce system. Has the Minister had conversations with Royal Mail, EP Group, and CWU regarding ending this two-tier workforce structure?
Minister reply
I visited my depot last week and we discussed the two-tier workforce variation in terms and conditions. The Communication Workers Union and the EP Group are working on agreements to move away from this system, but details need to be ratified by the union’s executive.
Chris Webb
Lab
Blackpool South
Question
I am proud of my father who is a postie, and I visited my local depot recently where my constituents are asking for reassurances. What can the Minister tell them about ensuring Royal Mail operates to a decent standard again?
Minister reply
The reset in industrial relations proposed by the Communication Workers Union, along with necessary investment in the company, is crucial to improve standards and performance of Royal Mail.
Tom Hayes
Lab
Bournemouth East
Question
Our posties are friendly faces who go above and beyond all year round. How will the Government prevent any future owner of Royal Mail from driving the company into the ground? What assurances can he give that Royal Mail will finally deliver for Bournemouth residents?
Minister reply
There are safeguards in place, such as preventing value extraction unless there is an improvement in performance and limits on debt leverage, to ensure Royal Mail’s stability.
Amanda Martin
Lab
Portsmouth North
Question
I welcome the steps taken by this Minister and his team regarding the workforce involvement and trade unions. Can you provide further information about these negotiation talks?
Minister reply
The deal includes governance rights, profit-sharing incentives, and job security guarantees, marking a better position than post privatisation.
Dave Robertson
Lab
Lichfield
Question
Posties across the country are proud of their work and feel let down by failures to meet the universal service obligation. Can the Minister assure me that the new ownership will not be allowed to sink to the depths of current ownership under the guidance of the previous Conservative Government?
Minister reply
I agree with my hon. Friend about postmen and postwomen not being responsible for poor performance; it is due to institutional failure in the company. We have secured commitments to ensure that the poor performance does not continue.
Shadow Comment
Harriett Baldwin
Shadow Comment
The Shadow Minister acknowledges Royal Mail's importance as an institution and service provider, thanking postal workers for their hard work during challenging weather. She highlights the financial challenges faced by Royal Mail due to declining letter volumes and poor service delivery resulting in Ofcom fines. The shadow questions the minister about guarantees on service provision, job commitments, employee ownership percentage, clarification on tax residency duration, ongoing government role with Ofcom, universal service obligation reform discussions, risks of takeover, impacts on Post Office branches at risk of closure, and concerns raised by Royal Mail over recent Government policies.
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