Postal Services Bill

Earl Attlee Excerpts

Wednesday 4th May 2011 Lords Chamber

[Lord Clarke of Hampstead]

I shall speak to Amendment 36 standing in my name, dealing with trade union recognition. Again, I declare my interest: 65 years ago this month, I joined the then UPW and I am still a member in the retired members’ section.

My amendment directs the Secretary of State to ensure that in any relevant disposal there will be a guarantee that existing rights of workforce recognition are maintained. That is very important, and I very much hope that the Government will see the benefit of the amendment.

I shall make two main points. First, the workforce, by its own efforts, has unionised the industry to such an extent that recognition of the union was achieved more than a century ago, when the Fawcett Association became the Union of Post Office Workers, founded in Finsbury Circus. Long before the existence of recognition rights, postal workers came to agreement with the employers and, behind them, the Government, on the existence of workforce trade unions. This has shaped employment relations in the industry. Both workforce and management have seen the benefit of organised bargaining and representation. We are now looking at a Royal Mail and its staff who have a mature attitude to industrial relations. Both parties know of each other's interests and concerns and are usually able to reach accommodation.

Despite the media caricatures, the reality is that organised industrial relations have created ways of working which make the industry productive and safe. Every day, many thousands of hurdles, small and large, are overcome by timely recourse to the recognised framework of industrial relations in the industry. Both management and union representatives know that the job gets done better if the workforce is convinced that it is being done in a right and fair way.

The media are interested only when those relationships break down. They turn an ordinary little conflict in the sorting office or a pillar box into a massive federal case, as the Americans would say. They love that. The media will attack unions just for the sake of it. The reality is that countless efforts by management and union reps ensure that, every day, smooth running of the industry takes place.

The first theme of the amendment is to ensure that the hard-won legal recognition of union organisation is protected in any share disposal. Recognition has been won not just as a legal right; it has been established by the efforts of generations of postal workers and managers. Any new owner must begin by recognising that they are buying into an organised workforce.

As an aside from the comments that I have drafted, I have one recollection. After the Second World War, when the Control Commission of Germany was setting up Germany’s new industry on the basis of industrial democracy, it was the British TUC and the UPW, as it then was, who took part in helping that country rebuild itself. As we know, that led to worker participation on boards, which was the subject of the lead amendment.

Being unionised does not mean being unproductive. On the contrary, many studies demonstrate that unionised workforces are productive. If any new owner may be in doubt, the Secretary of State should be obliged to dispel that doubt, as a new owner must learn to live with a unionised workforce.

My second point is that bargaining is a natural part of recognition and relationships. It may be argued that under TUPE the transfer of the workforce will carry across existing terms and conditions. That is true but it is insufficient. It is an organised workforce that will address any new employer with the expectation of its bargaining rights remaining intact too. This is not just about what is currently earned or currently an entitlement, such as annual leave, allowances and so on; it is also about the right of the workforce to address its future conditions with the confidence that it can resolve its problems through negotiations. The past couple of years have shown that after a long period of unhappiness these changes can be negotiated.

Any new employer that buys into Royal Mail on the assumption that it will simply impose its vision, priorities or methods on the workforce will be in for a rude awakening. I do not say that with any sense of a threat, but people who have given their lives to the industry will not just roll over while their conditions are reduced and made much more difficult. The workforce expects any changes to be negotiated, and that is why the amendment is necessary. It is not a conflict-ridden process; on the contrary, the only cost in the vast majority of agreements has been the time and patience of management and union reps. Such rights are valued greatly by the workforce.

Postal workers know that the industry is constantly changing. As a postal worker, I have had to recognise that. Being in attendance at this funeral of our great Royal Mail over the next few hours does not give me any happiness but I have had to come to terms with it. The vast majority of workers have understood that it is constantly changing and that working arrangements and conditions also change, but that is on the understanding that postal workers will buy into the changes by helping to shape them.

We expect the Secretary of State to be entirely clear with a new owner of Royal Mail that recognition of the workforce and its union involves a negotiated and bargained framework for employment relations in the workplace. This fact of life will have to be addressed. It is best that we make this clear in the legislation to any potential investor or buyer of the industry, and carrying this amendment would do exactly that.

[Earl Attlee]

My Lords, this group of amendments covers matters relating to the employees of Royal Mail, without whom of course there would not be a Royal Mail. These matters are employee representation on the board, union recognition and employee training.

I thank the noble Lords, Lord Kennedy, Lord Clarke and Lord Christopher, for tabling Amendments 4 and 10 relating to employee representation on the board of Royal Mail or any new successor body. I say this because, when we debated similar amendments tabled in Committee, it was clear to me that your Lordships had concerns about my response. These amendments give me the welcome opportunity to provide more clarity about the Government’s position on this issue.

First, I should make it clear that the Government do not have any fundamental or philosophical objections to employee representation on the boards of companies, but we do believe that the make-up of any company’s board should remain the responsibility of the company and its shareholders.

As many of your Lordships said in Committee and again today, employees will have a pivotal role in the future of Royal Mail, and there needs to be continual and meaningful interaction between the workforce and the management. In the CWU and Unite, the employees of Royal Mail have strong, active and effective unions. The business transformation agreement reached in March 2010 laid the groundwork for a new relationship between the management and the CWU. This was a ground-breaking achievement and, as recognised by the noble Baroness, we do not want to see the improvements set back.

I have looked back at whether the Postal Services Bill 2009 contained provisions requiring an employee representative on the board. It did not. In fact, the previous Government rejected such amendments to that Bill. The noble Baroness, Lady Vadera, said in Committee debates on the Bill that the Government would have to be persuaded that direct worker representation on the board,

“would make a real difference to the transformation and modernisation of the Royal Mail and deliver the change that is necessary for the company”.

She said that the Government,

“do not believe that that case has been made”.—[Official Report, 24/3/09; col. 612.]

While this Government have no objections to an employee representative being on the board of Royal Mail, we do not see that it should be a requirement laid down in statute. I do not believe that there is any precedent for this in any previous privatisation. Under the Bill, the employees will have a shareholding of at least 10 per cent. Whether there should be an employee representative on the board is a matter for the company and its shareholders, not something to be laid down in statute.

The noble Lord, Lord Stevenson, referred to the clear example given in Committee by the noble Lord, Lord Myners, of why large shareholders should not have a representative on a company’s board. The noble Lord, Lord Myners, told us that it is quite customary for a body of investors which has a large shareholding, as will the employees under our Bill, to seek board representation. He gave the example of News International and the BSkyB board, but the lesson to draw from this example is that it was a decision taken by the company and was a circumstance of the size of News International’s shareholding. It was not a mandatory requirement. I do not see why Royal Mail should be treated differently from other companies in this regard.

The noble Lord, Lord Stevenson, spoke also about the experience in Europe. There is a mixed picture there. Some member states have mandatory requirements for employee representation on boards in certain circumstances, but the majority do not. The Government consider that placing such a requirement on Royal Mail, when it is not a requirement on companies generally in the UK, is not appropriate. The wider issue of employee representation on boards is best discussed in the context of company law and not this Bill.

Amendment 11 would place a duty on the Secretary of State to report on Royal Mail’s intended policies on training, apprenticeships and skills once a decision has been taken to dispose of shares in Royal Mail. I thank the noble Baroness, Lady Wall of New Barnet, for raising these vital issues. I know that she brings considerable experience to this debate through her work on the sector skills council and her contribution to the All-Party Group on Further Education, Skills and Lifelong Learning. The Government absolutely recognise the importance of training and believe that skills are key to economic competitiveness. Apprenticeships are our preferred vocational route for people of all ages to gain the skills they need to succeed and progress in their careers and for employers to build a workforce with the motivation and expertise they need to compete globally. We are committed not only to increasing the number and range of apprenticeships on offer but also to improving their quality. We want apprenticeships to become the gold standard for workplace training. We are determined to take real action to improve and expand the apprenticeships programme and create more apprenticeship opportunities than ever before.

It has been recognised throughout the debates on this Bill that the workforce is vital to the success of Royal Mail. The company is introducing new working practices and new technology as it adapts to developments in the postal market. It is clear that, to make the modernisation of the company a success, it will need to ensure that its workforce is properly trained and has the right skills, as pointed out by the noble Baroness.

Royal Mail recognises the importance of training, which is reflected throughout the business transformation agreement between the Royal Mail and the CWU. I have no reason to believe that the new owners of Royal Mail would take a different approach given the importance of the workforce. Why would it? The noble Baroness suggested that cost pressures might be an issue, but surely a business of this size must look to the long term and not take short-term decisions. If it did, it could adversely affect its own share price, sending entirely the wrong signals to the market.