§ 7. Alan Simpson (Nottingham, South)
What action he has taken to promote the use of rail services for the delivery of (a) mail and (b) other freight; and if he will make a statement. 
§ The Minister of State, Department of Transport (Dr. Kim Howells)
The carriage of mail by rail is a commercial issue between the Royal Mail and its contractors. In May, the Strategic Rail Authority published its first "Freight Progress Report" explaining achievements to date in increasing rail's overall share of freight traffic and its future plans. Rail freight is now at its highest rate since 1980. A copy of the report is in the Library of the House.
§ Alan Simpson
I welcome my hon. Friend to his new ministerial position. I am sure that it is a little early for him to want to take full credit for the Government's policy of encouraging the shift of freight transport from road to rail, which has the support of the House and the country. What discussions has his Department held with Royal Mail on what the public regard as the catastrophically irresponsible decision to shift its freight from rail to road? What environmental impact assessment has been made on that decision?
§ Dr. Howells
I have had no such discussions. In the half-hour or so of briefing that I had this morning when it was impressed on me that I was no longer dealing with alcohol licensing, but with vehicle licensing I was not informed of that, and I shall certainly try and find out about it for my hon. Friend.
I heard the same message as my hon. Friend: that Royal Mail is taking seriously the environmental impact of the move from rail to road. We will see about that and test it. It has also expressed the view that it is not disappointed with the performance of English Welsh and Scottish Railway. The issue is about cost. As my hon. Friend knows, Royal Mail recently experienced some major changes. I have no doubt that it has considered its cost base and efficiency and has made 202 serious decisions about how it will operate in future. However, I take his message on board and shall try to discover what discussions have taken place.
§ Mr. Don Foster (Bath)
I, too, warmly welcome the Minister to his new post. However, I must tell him that the information he gave to the House a few moments ago was incorrect. In the calendar year of 2002, the amount of freight on rail sadly declined for the first time in a number of years. That will not be helped by Royal Mail's disastrous decision.
Given that the Minister said that Royal Mail will look at the environmental impact, will he explain why he also said that that factor should not be taken into consideration despite the Government's guidance to Postcomm that environmental matters must be taken into account? It is not just a commercial decision. As environmental considerations are important, will he at least agree, as the hon. Member for Nottingham, South (Alan Simpson) suggested, to knock heads together to sort the problem out and to keep the mail on rail?
§ Dr. Howells
Those are essentially two private companies that are involved in commercial negotiations. I do not intend to interfere in any way in those negotiations. I am, however, interested in the environmental and economic impacts. There is no question about it; they are very important. But I stress that I am also worried about the customers of Royal Mail. Its future in terms of employment and the service that we all receive from it depends on Royal Mail being the most efficient company in what is rapidly becoming a competitive environment. I will give that matter careful consideration and maintain some degree of judgment, which I hope will please the hon. Gentleman.
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
Will my hon. Friend acknowledge that in the long run i1 will not be in the interests of Royal Mail to add vast numbers of lorries to our roads? It must know that. When he starts his inquiries, will he look carefully at the disadvantages that people suffer when they negotiate rail contracts? There are extra problems for rail freight. We should be sympathetic and see what we can do to help.
§ Dr. Howells
Yes, I am aware that there has been a long-running vociferous debate on how we compare freight that is carried by road with freight that is carried by rail. I shall bear my hon. Friend's advice in mind.
§ Mr. Christopher Chope (Christchurch)
I, too, warmly congratulate the Minister on his promotion and on taking on such important responsibilities. Does he accept that he is not correct in regarding the issue as purely commercial? English Welsh and Scottish Railway has written to a number of hon. Members stating:Royal Mail is unable to reclaim VAT as a state-owned entity, while it incurs no VAT on internally provided road services. The resultant 17.5 per cent. cost differential is a principal price issue".Will the Minister accept that that is a responsibility for the Government? Does he agree that it is just another example of a failure to have joined-up government? 203 Does he accept the headline in The Independent today, which says: "Derailed: How transport has become Labour's most spectacular failure"?
§ Dr. Howells
The Independent front page is graphic, dramatic and arresting. I am not sure about the content; I have not had a look at it yet. I shall judge that some other time. It looks a bit conceptual to me.
It is astonishing to hear what the hon. Gentleman says. He knows that I have great regard for him, but he was one of the arch-privatisers of the 1980s. Whether in a passive or actual role, there was no doubt that he was an architect of what turned out to be one of the most botched privatisations in history. He should not be churlish about the fact that my right hon. Friend the Secretary of State has done an enormous amount during the short time in which he has been in his job to try to repair the damage done by that botched privatisation. I am certain that we will have a much better rail system very shortly.
§ Kali Mountford (Colne Valley)
The Royal Mail has made a commercial decision, but we are living in an age of corporate social responsibility. Is it not important to have regard for a key plank of Government policy and encourage freight by rail, not just because of the impact on the environment but because of the impact on the industry as a whole? Two industries are working against one another, but should not a decision be taken in the public interest instead of in the commercial interest?
§ Dr. Howells
I do not regard the two industries as working against each other. The amount of freight carried on the railways is an important part of the total freight carried in this country, but it is a very small percentage. We must get that into perspective. Anything that we can do to relieve congestion is extremely important, but on matters such as corporate social responsibility the Royal Mail has had a very good record until now, as indeed did the Post Office. I am sure that those complex issues have been taken into consideration, but they are not easy to resolve, given the commercial arrangement between two important companies such as the Royal Mail and EWS. However, I am quite certain that their respective boards will have discussed those things.
§ Mr. John Redwood (Wokingham)
Why cannot a nationalised post service do a deal with a Government-regulated industry through the Strategic Rail Authority and a largely nationalised track system under Network Rail to get what we all want—an environmentally sensible answer to carrying the post? Does that not show that nationalisation is bad for the environment, and that the wheels have fallen off the Government's freight transport policy?
§ Dr. Howells
With respect, the right hon. Gentleman is a little out of date on the nature of those companies, which are organisations that operate privately and draw up their own plans. I remember being in the Chamber on many occasions when he argued that one of the great problems with nationalised industry, which he has just raised again, is the fact that it does not have the flexibility and the imagination to be able to respond to changing circumstances. Those companies are taking 204 seriously the difficult problem of moving something as vital as mail around the country, and are trying to work out how the best infrastructure and operating system can be achieved. I should have thought that the right hon. Gentleman would welcome such assessments as a way of providing the best possible value for customers who, in the end, are the people who count. The deliverers are, of course, important, but if the country does not have a good Royal Mail service we are in big trouble.