 Mae'r mersiwn amlo gan ei d entertaineb iawn yn y gyfamwyrон pwrwyr, ies�annerio'r ffbfiann Llywodraeth mewn agor dr pardon dau i chi. accustomed, fe oedd ddir i chi yw'r gallu dliwol DACFysig, ond mae hefyd defnyddio'r parlwyr neswr. Medodaeth y gallu y cyf defensive ondやってcadau y wir. Hi, writes, am dangos gwlad anhy nhw— seven in the name of Hugh Henry, on end-to-end competition and the universal postal service. The debate will be concluded without any questions being put and I'd be grateful if those members who wish to speak in the debate could please press the request to speak buttons now. I call on Hugh Henry to open the debate around seven minutes please Mr Henry. Thank you, Presiding Officer. The Royal Mail is truly a British institution which has embedded itself into British society and British culture. It's one of these institutions that everyone loves. Sure, there will be times when we mourn about late delivery or lost mail or indeed the price of postage, but its services are something we have all come to value, whether it's private individuals or businesses the length and breadth of Britain. And we've always supported the standards imposed on our behalf on Royal Mail. We'll be tied to the politician who threatens to end the universal service obligation which requires Royal Mail to deliver a letter anywhere in Britain for the same standard price and to do so six days per week. That's 29 million addresses which Royal Mail is required to serve, and this obligation is one that is particularly important here in Scotland, given our geography and widely spread small communities. And to some extent we take for granted the fact that my constituents can post a letter from Linwood to London or Barhead to Bristol for the same cost as posting a letter from Linwood to Barhead. And that becomes an even more valuable benefit if you live in Orkney or Shetland or the Western Isles. And we also take for granted the logistics and the efforts involved in next day working delivery for first class mail and two to three day working delivery for second class mail. And it's not just householders who value the delivery of mail six days per week. This is an important service for businesses all over the country. But just stop to think for a moment about the economics of all of this. It clearly makes no economic sense to charge the same price for a letter from Linwood to London as from Linwood to Barhead. But it does make sense if we look at it as a social obligation which helps to contribute to our quality of life and our sense of wellbeing. And of course it doesn't take long to work out that the risks and costs of sending and receiving mail are spread over customers large and small all over the country. And if it were left to an open market Scotland would surely suffer. It's also important to remember that the royal mail relies not just on investment and organisation. It relies on tens of thousands of dedicated staff who take great pride in making sure that our mail is delivered efficiently and economically. Many of these staff are out and about to the crack of dawn in all sorts of weather, hail, rain or shine and that's just the summer where in Scottish winters and ice and snow they make sure that we receive our mail. And it's important that they are fairly rewarded for their work. Thanks to the efforts of the communication workers union CWU the pay terms and conditions of staff has improved over the years. It hasn't always been easy as the union has faced challenges about new technology and new working practices. But what the CWU has achieved in pay pensions, health and safety, which is important and general conditions at work, I know is the envy of many workers who don't have the protection of a strong campaigning trade union. This is a workforce and a trade union which has adapted to modern demands but never lost sight of fundamental values and purpose. And at the heart of the service which we know and value is that universal service obligation which I mentioned earlier. The royal mail has fulfilled its obligation by introducing new technology and working methods to help cope with the challenge of increased competition. But it has also done so by being able to cross subsidise the cost of low volume, high distance, un-economic mail from the profits made from the high volume, profitable business or short distance mail. But all of this is under threat from the encroachment of TNT post-UK or Whistle without an EE as it is bizarrely branded. And it beggars belief that some marketing agency somewhere will have been paid a fortune to come up with this. But forget the name, it's what they are doing that's a problem. Royal mail and its staff are not complaining about competition. They have had to adapt and rise to the challenge even though that hasn't always been done fairly. But what has now been done is not just unfair in the extreme but it also brings dangers which threatens the very existence of that service which we all know and cherish. In the onward march of TNT, Whistle started off in London and has now steadily moved across the country and will shortly be operating in Edinburgh and Glasgow. Now, it wouldn't be so bad if Whistle had to legally provide the same standard of services as Royal Mail but Whistle has no interest in developing services in hard to reach high cost areas. Whistle will not have to bother with the cost of sending mail from London to the Western Isles or to Orkney or Shetland. Whistle will not have to deliver mail six days per week. It can pick and choose the days in which it delivers. By cherry picking the high volume, low cost, more profitable areas, Whistle deprives the Royal Mail of the revenues that it needs to deliver to those remote areas six days a week, and those are areas that Whistle will ignore. That's not the only unfairness. The hard-won wages and conditions of Royal Mail staff are not available to Whistle employees until recently, Whistle operated on zero-hour contracts with pay below the living wage. No wonder Whistle operations have had a high staff turnover. By driving down wages and conditions, Whistle hopes to undercut Royal Mail in more lucrative markets. Thus denying Royal Mail the revenues needed to sustain the universal service obligation of a standard price and standard and six-day service. It will also deprive the Royal Mail of the revenue that it needs to sustain the wages and conditions that are won by the CWU for its members. The workers who work in mail delivery deserve decent pay and conditions, and Whistle should not be allowed to undermine that. When we talk about competition, we are not talking about fair competition, nor are we talking about a level playing field. Whistle will not have to deliver six days per week, nor will it have to collect from post boxes. There will be no redirection service, and of course Whistle will not have to bother with the cost of mail delivery to remote communities across Scotland. What we have here is the biggest threat that we have ever seen to the postal service as we know it, and we need to take a stand. The Scottish Government and its agencies, councils and other public sector bodies need to carefully consider the implications of giving contracts to Whistle. Above all, the Scottish Government and the others have mentioned that, along with this Parliament, we need to make it clear to Ofcom that action is needed to protect the Royal Mail. Ofcom needs to set aside its complacency and to wake up to the threat posed by Whistle to the universal service obligation. Ofcom needs to undertake an urgent and full review of end-to-end postal competition, and Ofcom needs to consider regularly to changes to protect the universal postal system. The British public will not thank us if we sit quietly and watch the salami slicing and destruction of our much-valued postal service. It is time to tell TNT to go Whistle, and that is with an E. Thank you very much. We now turn to the open debate speeches of Four Minutes. Please, Kenneth Gibson to be followed by Gavin Brown. Thank you, Presiding Officer. I would like to congratulate Hugh Henry, my co-convener of the Cross Party Group, on postal services for securing this debate and bringing this important matter to the chamber. I also thank the CWU for its briefing. There is a growing threat to postal services provided by Royal Mail from businesses such as Whistle, formerly TNT Post UK, and the universal service obligation, specifically for poor and rural areas. For decades, we have enjoyed a win-price goes anywhere six days a week postal services operated by Royal Mail. The flat rate universal service was economically possible because profits from welfare in densely populated areas helped to compensate for the cost of servicing poor and more remote areas. The balance of working across the country is vital for the system to work and for everyone to have equal access to high-quality low-cost six days a week postal services. In October 2011, Westminster passed the Postal Services Act, which enabled the UK Government to sell shares in Royal Mail, leading to the privatisation of Royal Mail. That opened up Royal Mail to create a competition. Whistle, which is not beholden to deliver universal service, utilised this unfair advantage, leading in effect to an undermining of Royal Mail's ability to do its job. Whistle began its rival service in April 2012 in West London, at which time, using downstream access competition, it collected and sorted mail from businesses before handing it to Royal Mail to deliver the final mail. Since 2013, Whistle has expanded its business into delivery, establishing end-to-end postal service and direct competition with Royal Mail, and now delivers to 1.2 million of Britain's 29 million addresses through 23 delivery units, delivering three days a week. The firm is also a new co-investor to support expansion to additional parts of the UK, and has since expanded to north-west, south-west and parts of central London, as well as Manchester and Liverpool. As Hugh Henry pointed out, it will soon be doing so in Glasgow and Edinburgh. Complaints are being made at the poor quality of Whistle services. In July of this year, the London Assembly passed a motion calling for a review of Whistle's end-to-end services. Labour Party Assembly member Murad Qeshe, who proposed the motion, commented and I quote that, "...delivery companies repeatedly provide poor service and cherry-pick the most lucrative areas to deliver posts, undermine the quality of universal postal services and raise questions at the standard of a privatised postal delivery service." The increased number of poor postal service cases, rising costs of delivery and unfair competition in the market has emphasised the need for government to bring the national postal service back into public ownership. Delivery volumes of Whistle remain small compared to Royal Mail's at less than 0.4 per cent of the addressed mail market. However, Royal Mail makes a strong case for such companies to be exposed to the same universal postal service obligation based on the fact that, while smaller in scope, Whistle's delivery rounds are in the most profitable areas. Not being held to the same standard of service companies like Whistle are able to pick and choose areas that they want to collect from and deliver to, so naturally they consume the profits generated from more densely populated regions, damaging the financial sustainability of the universal postal service. Scotland, having its fair share of rural towns and small businesses, is especially vulnerable to its problem of compromised postal services due to unfair competitive practices resulting from privatisation. Much of my constituency comprises small towns, rural and island areas that are more difficult to access and therefore are more costly to collect from and deliver to, but that problem, while it would have a concentrated effect in many areas of Scotland, is not only a localised concern. It is clear that Whistle is not prepared to offer staff the same terms and conditions as Royal Mail, with low wages and, as we have heard, zero our contracts. Ultimately, its growth can only cost the jobs of Royal Mail workers and ensure a steady decline of Royal Mail employment and, ultimately, the viability of the entire postal service, which inevitably will look to cut costs even more sharply to compete. As of last week, MPs agreed to launch an inquiry into competition in the postal industry, examining universal service obligations and unfair advantages rival businesses have as they attempt to build their direct delivery services, off-con committed to review the direct delivery market by the end of next year. In light of the immediacy of the problem and the rate at which companies like Whistle are expanding and negatively impacting on revenues allocated to universal service, I asked the Scottish Government to join an urging off-com to accelerate this timetable, to determine as soon as possible any regulatory changes needed, such as freezing end-to-end competition at its current level, to ensure that high-quality postal services are maintained and protected for every home in Scotland and across the UK. Thank you very much. I now call Gavin Brown to be followed by Jenny Marra. Thank you, Presiding Officer. I start by congratulating Hugh Henry on securing this debate and on thanking all those organisations who submitted briefs to MSPs in advance of the debate taking place. There are a number of areas where I agree with what Hugh Henry has said, there are a number of areas where I disagree with what Hugh Henry has said, but, ultimately, I think that his call for an urgent review to take place is something that I would support and think that a case has been made for that to happen sooner rather than later. He rightly pointed out just how vital the universal service obligation is to all parts of the UK. It is, I think, a fundamental part of our economy, it is a fundamental part, ultimately, of our society and it is something that people, individuals, families and businesses up and down the country rely on. It is something that I do not think that any politician or any political party would want to lose in any way. There is a UK Government commitment to it but there is a far broader and wider political commitment to it as well. It is right that we have a statutory duty of a universal 60-week service at uniform prices. I would certainly be concerned by anything that can be proven to put this at risk. If I disagree with Hugh Henry slightly on what I think he was driving at, I do not ultimately see competition in itself as something to be afraid of or something that we need to push back against. There can be benefits to it but there are risks with it obviously too. The benefits, as I see it, are that it can strengthen in scent. I think that I made the point in my speech that both Royal Mail and the CWU have accepted and faced up to competition over the years. The complaint is not about competition, it is about unfair competition. I just felt the remarks and made it particularly the end of Mr Henry's speech. It suggested that he was against competition full stop but he may indeed not be. It can offer benefits, Deputy Presiding Officer. I think that it can strengthen incentives on Royal Mail to improve its efficiency and to reduce costs. Ultimately, it can benefit customers through increased innovation and value-added services. Where there are risks put forward and where a case is seriously put forward, we have to look at it quite carefully. Off-corms primary duty, of course, is to secure the provision of the universal service. It has a duty to promote competition where that benefits consumers but, as Vince Cable pointed out some months ago, where the duties are in conflict, the universal service takes precedence. Where we get to or what we have to look at quite seriously is to demonstrate clearly as possible in an analytical way where the current situation pose a risk to the universal service, to what extent does it do so and to put forward as clearly as possible why we believe that to be the case. The Royal Mail formally requested a review from Off-com in July and August of this year. As I understand it, while meetings have taken place, I have been unable to find and I am certainly unaware of any official public response from Off-com in relation to that request. One of the documents put before MSPs in advance of the debate came from the community union who were aligned with Whistle in that regard, stating that, in August of this year, they too wrote to Off-com calling for an early review of the USO on the grounds that such a review would clarify the future of the sector for workers, businesses and the general public. To some extent, we end up in the same place as Hugh Henry. I think that an official response is required to that. I think that the review should be given serious consideration. Anything that jeopardises the universal service obligation is something that would concern me greatly and, as a consequence, I think that Off-com ought to think about bringing the review forward. It is meant to happen by the end of next year, at least to begin by the end of next year. The evidence that I have seen so far suggests that it ought to happen far sooner than that. I thank and congratulate my colleague Hugh Henry for bringing this important debate to the chamber today. Let me start by echoing colleagues' unstinting support for the universal service obligation. It is still in our country a delight and a cherished wonder that you can pop a first-class stamp on a postcard in Ulupool and be confident that it arrives in the thronging metropolis of London the very next morning to be read over breakfast. Indeed, just this morning, I went to the post office to replenish a book of first-class stamps in my purse and who knows where on the islands I will use them and for what purpose. Reflecting today on the wonder of this service, none of us can be in any doubt that it is one of the many important and emotional ties that bind us into the UK, an emotional and practical arrangement backed up by legislation at UK and EU levels. Competition has become mandatory in postal services as a result of the postal services directive from the European Union. Transposed into UK law by the Labour Government, there was and is no opt-out on postal services directive, as long as we are members of the European Union, which all members across the chamber support. The challenge becomes to finely balance competition arrangements to protect and strengthen the universal service obligation, while maintaining the quality of jobs across different employers in the sector. To that end, our trade unions, the communication workers union in the gallery today representing royal male workers and community representing whistle workers are both doing a fine job of working with employers to enhance training and support the modernisation of working practices in the sector, while securing an agreement to end zero-hours contracts of whistle workers, I understand, secure pay increases and improvements in health and safety. Those are measures, which workers across all postal services providers will support, I am sure, to maintain standards across their industry. The job of finally balancing and making fair, as Hugh Henry pointed out, the competition arrangements in the UK falls to off-com. I welcome and support Hugh Henry's call for a review of end-to-end postal competition to determine the regulatory changes that are needed to protect the universal service obligation. An arrangement, as precious and fundamental as the USO, needs to be constantly scrutinised so that we can strengthen, improve and sustain it in a constantly evolving postal market, and that standards in the industry for all workers can be maintained and strengthened by the arrangements put in place. In an industry where we have seen a marked decline in letter delivery, as online billing and emails are cheaper for consumers and business, we have to be innovative within the rules of the EU postal services directive to strengthen and maintain the universal service obligation far into the future. A royal male, as the designated provider of the USO by law, must be allowed a fair playing field to deliver its obligation and maintain standards in their practices. That is absolutely necessary and fair. They are the designated provider by law and they must be allowed to provide it. I understand, Presiding Officer, that a scheduled review is due to take place in 2015, but if it is necessary to bring it forward, then off-com should heed this call to do so. As Hugh Henry said, we must make sure that there is no unfair competition, but finally balance the competition rules. Many thanks. I now call Liam McArthur to be followed by Margaret McAlloch. Thank you, Presiding Officer. I, too, congratulate Hugh Henry on securing this debate. I think that Hugh Henry and Jenny Marra both rightly set the context of the special place that the royal male has in the affections of people across the UK. I think that after two minutes of Hugh Henry's speech, I thought that he was going to break the all-time record of references to Britain in parliamentary speech in this place. It reflects the importance that the royal male has to all of our constituents, but I think that Hugh Henry was also fair to acknowledge the particular significance that the universal service obligation has for constituents in rural areas such as those that I represent, not just for individuals and households, but also for small businesses. If I have time to touch on the issue of high delivery charges, which is related to this and is such a touchstone issue for my constituents, I think that the motion itself is very fair in outlining the concerns that quite demonstrably exist. The proposals, I think, are reasonable, as Kenny Gibson and Gavin Brown indicated. There is a review plan for the end of next year, but, given what we are seeing in terms of the development of the market and the aspirations that Whistle and possibly others have, I think that there is now a pretty compelling case for bringing forward and accelerating that review. It seems to be a view shared by the community union, whose briefing I thought was very helpful, although I would disagree with some aspects of it. I think that there is now evidence that the direct delivery competition is putting strain on Royal Mail's ability to honour the universal service obligation. Whistle argued that the agreements are subject to negotiation with Royal Mail on the basis of costs, but I do not think that those costs reflect the costs of delivering to places such as Orkney and other rural communities across the UK, nor, as Henry indicated, are Whistle bound by the requirements that Royal Mail is as the universal service provider. However, the universal service obligation is critically important as a principle in spreading and socialising the costs across customers throughout the UK, but it is more than just a principle for people in Orkney and other rural areas. For small businesses in my constituency, for example, it is vital. It is often the way in which the playing field is levelled with competition from businesses in other parts of the country. It goes beyond businesses, too. The recent Citizens Advice Scotland report on delivery charges highlighted the extent of the problem that we have in that area. A third of the respondents from Orkney said that they had been subject to surcharges for goods sent to Orkney. A quarter had found that there were businesses that would refuse to deliver to Orkney at all, and the same applies to many other parts of the Highlands and Islands. I have taken this up with a number of the companies involved. To be fair, some, when confronted with the evidence, are prepared to review their charging policy and to review the delivery charges. Some of them remove them entirely. Often they will reduce them. Some will just be more upfront about those costs right at the outset, but still in too many cases there is an unwillingness to look at alternatives. I think that, while this is a distinct issue from that of the universal service obligation and the concerns that were highlighted by Hugh Henry in his motion, it is related to what we need to avoid, as we are seeing a similar situation starting to emerge in relation to the letter's market. The Royal Mail has adapted to the challenges that it faces, whether in terms of new technology, competition and the affordability of pensions. However, we cannot expect it to continue to do so, while also requiring it to make that fight with one hand tied behind its back. As I said, I congratulate Hugh Henry on bringing this debate to Parliament. I think that the call for an urgent review by Ofcom is an entirely reasonable one that appears to be garnering support across the political spectrum and within the industry itself. I hope to see some progress made on that in the months ahead. Thank you very much indeed. I also welcome the opportunity to speak in this debate this afternoon on our post of services services that are changing, services that are now exposed to new competitive pressures and services that are absolutely vital to businesses and communities, the length and breadth of Scotland. I also like to congratulate Hugh Henry for bringing this motion to the chamber. He does so at a time in the future of postal services across the UK, including the preservation of the universal service obligation, is extremely topical. Not only have we learned that business, innovation and skills select committee has launched an inquiry into the sustainability of the universal service obligation, but it has also been a whole year since the botched privatisation of royal mail. The sale of royal mail was opposed by two thirds of the British public, and the national audit office has confirmed that the Government's valuation of royal mail was too cautious. According to the select committee, the huge undervaluant of royal mail has cost taxpayers well over £1 billion. The communication workers union believed that there are even more consequences arising from the royal mail's sell-off than the Government are prepared to admit. Today, I want to set out what I believe those consequences might be, and I want to explain why I believe that there is a need for swift action to guarantee a good, fair, affordable service for people and businesses at all 29 million of the UK addresses. Firstly, as expected, the privatisation of royal mail has led to competition for end-to-end services, but workers in that sector and those who depend on those services need to be sure that competition in this market is fair. The market share of a company such as TNT posts or whistle, as it is now known, might be small, but it is also growing, whereas royal mail must provide services in both profitable and non-profitable routes, services that are cross-subsidised. Other operators can deliver services that are focused on specific routes. Some, though not all, would say that, effectively, that leads to cherry-picking of the best routes and undermines royal mail's capacity to deliver it universally. Whether there is evidence of cherry-picking or not, there is clearly a need for the regulator to step in and give clarity to those who work in royal mail, whistle and their customers, as well as the trade unions, both the CWU who organise in royal mail and community who organise in TNT. Royal mail's chief executive, Moya Green, is on record as saying that the business model of new operators is striking at the economics of the universal service obligation. When royal mail was being sold off, we were told that the universal service obligation would remain. We were told that one stamp would still go anywhere for six days a week at a price that is affordable to consumers and small businesses. The universal service obligation is up for review next year. It must be sustained, but off-com must also exercise its power as regulator to ensure that competition in this new market is fair for all. There is a statutory requirement in off-com to safeguard the universal postal service, so it must bring forward an immediate review of end-to-end competition. Now that the royal mail has been privatised, there must be a concerted effort from Government and regulators to ensure that the universal service obligation remains intact. The message from this Parliament today must be that our postal services are essential, and so the new market that is emerging must be fair, and it must work for consumers, for workers and for businesses across the country. Thank you very much. I now invite Derek Mackay to respond to the debate, minister, around seven minutes, please. Thank you very much. Members will be aware in this very consensual debate that I am not the lead minister for this subject, but Fergus Ewing who apologises that he was unable to make the debate. I know that he takes a very particular interest in the subject. It was largely consensual and I will finish with a recommendation that I believe the Scottish Government can take forward, but I am slightly surprised that the most controversial speech was from Margaret McCulloch in terms of going further on some of the comments on privatisation, comments that we would concur with in terms of the conduct of that sale, but it is about the consequences of that and the other matters that have been raised. We now focus on that. In that sense, I would too congratulate Hugh Henry for securing this debate and ensuring that the issue is raised. We all take the availability of postal services for granted. It is therefore important that those services are scrutinised by this Parliament, even though we do not have a direct control. Postal services are of course a vital lifeline for many of Scotland's communities, both to individuals and to businesses, as we have heard, who rely on a prompt and efficient service. The universal service obligation is particularly important to remote and rural communities and ensures that uniformity of costs and deliveries and uplifts throughout the country irrespective of location. Royal Mail has that statutory obligation to provide that universal service, and it is therefore important to ensure that Royal Mail's ability to provide it is also maintained. That debate reflects the widespread concern over Royal Mail's belief that its ability to continue to provide the universal service is indeed under threat. Ofcom has the statutory responsibility in that area and has powers to regulate postal services even before the review mechanism is in place. It must continue to act to ensure that the universal service obligation is safeguarded. That debate has allowed MSPs of all parties to discuss concerns about the current regulatory regime. On Henry's key point, it is about not necessarily being against competition. That debate has largely been had, but it must be a level playing field in which that safeguarding commitment can be maintained. Kenny Gibson's point about the equality of service across the country is indeed about the impact of privatisation and the nature of cherry picking, a number of members picked up. At that point, a number of members raised the parliamentary review and off-coms monitoring regime. Kenny Gibson and Hugh Henry called for us to accelerate that monitoring. All members agreed on an early review of the situation. I was particularly surprised and glad to hear that Gavin Brown and Liam McArthur also called for that piece of work and that process, so I think that we should certainly take that forward. On the commitment and the duty, of course, it will be undermined by the reality on the ground. We can have the commitment and the duty, but if it is undermined by that unfair competition, then that clearly must be studied. Jenny Marra, of course. I am very grateful to the minister for taking intervention. Given that that is a member's debate, there will not be a vote on it. I am sure that off-coms are watching the proceedings here with great interest, but perhaps there might be an opportunity for a cross-party approach to off-com along with the Scottish Government to make the case for accelerating that review, which I think would reflect the sentiments that we have heard this afternoon. I am a consensual kind of guy, and I was going to commit Mr Ewing to write to the UK Government again, but I am more than happy if we want to do it on a cross-party basis as well. I do think that that would add strength to the point that the member's debate has raised, so I see no reason to take that forward. I was already going to commit the Scottish Government to do that in the light of that debate, and I think that that reinforces the point. Jenny Marra, I think, very helpfully covered the maintenance of wider standards of postal services and royal mail. Of course, Mr MacArthur, you covered the crucial island and rural perspective. In taking the debate forward, it is the position of the Scottish Government to pursue that. Mr Ewing had written to the UK Government, who at that point felt that off-coms were carrying out their duties effectively. There are measures that could be put into place to challenge us, but they felt that, earlier this year, when Mr Ewing did write, that there was no reason to intervene at that point. However, I think that some of the evidence that we have heard today could inform our response and follow-up to that inquiry and accelerate the monitoring and the review with the experience that we have taking into account what the trade unions have said. Although postal services are reserved, the UK Government being responsible does not mean that we do not take action. We do in the nature that, in the way that has been suggested by members across the chamber today, because we expect the Government and off-com to act in the interests of Scotland and our services, and we will take that forward in the consensual way that has been suggested. I think that this debate has highlighted the concerns that exist, and they have to be taken seriously so that we can, effectively, guarantee the universal service here. I have found it a very constructive and helpful debate to have. Thank you very much, minister. That concludes your Henry's debate on end-to-end competition and the universal postal service. I now suspend this meeting of Parliament until 2.30pm.