The Earl of Effingham (Con)

My Lords, I thank the noble Lord, Lord Pack, for securing this important debate and I look forward with great interest to hearing the maiden speech of the noble Lord, Lord Sarwar. It is right that we reflect on the mounting issues within this country’s national postal service and highlight the potential solutions. I will be brief, and I appreciate the opportunity to speak in the gap. Royal Mail has been hit hard by the impact of the Government’s tax increases. Earlier this year, it warned that the increase in employer national insurance contributions announced in the Budget would cost the business some £120 million. For a company that is expected to balance the books while providing a complex, expensive and reliable weekly service, that is not a trivial sum. It is yet another burden placed upon a business whose quality of service was regrettably already in decline. Royal Mail has missed its first-class and second-class delivery targets for the Government’s first two years in office. Additional national insurance tax could otherwise have gone towards these delivery targets but, instead, the public are feeling the effects of a worse service caused partly by taxes that they are having to subsidise. Now the bill is being passed on again. From 5 October, Royal Mail wholesale prices—the mail that carries marketing communications, household bills and medical appointment notices—will rise by an average of 25%. To put that in context, the NHS alone spent over £100 million posting letters last year. A rise of this scale will land squarely on public services and ordinary households alike. We should not impose new costs and taxes on essential providers with one hand, while expressing dismay at declining service and rising prices with the other. What assessment has the Treasury made of the impact of the national insurance rise on these universal service providers? What discussions has the department had with Ofcom about protecting consumers, particularly the elderly and vulnerable, from these compounding pressures?