High Speed Rail (Preparation) Bill

Lord Lea of Crondall Excerpts

Tuesday 19th November 2013 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, in following the noble Lord, Lord Cormack, I doubt very much that he will reflect that he might be mistaken on the basis of the arguments that I will put forward. On two things, he ought to reflect on whether he might have got them wrong. I shall begin with his phrase “a small island”. Actually, that is the argument for railways, compared to larger countries. It is undoubtedly the case that as the economy grows, there is a propensity for the coefficient describing how fast passenger miles grow to increase. People have more discretionary expenditure which, as family dispersion proceeds, produces more family passenger miles as well as more business passenger miles, so these extra passenger miles will be generated. There is a positive coefficient in relation to economic growth. No one now flies between Heathrow and Manchester as they used to some time ago, and so the alternatives are much greater congestion on the roads or more capacity on the railways.

Higher speed attracts and is part of the equation. So is the fact that the size of the country is shrinking, if we think of economic geography in terms of how long it takes to get somewhere. We see as a cluster the whole city region of Manchester—where I was born—West Yorkshire, South Yorkshire, East Midlands and West Midlands. It is less than an hour all the way round. I ask the Minister whether the department ought to produce a study of a regional cluster compared with some European and other ideas, because this is a way in which we can learn from each other. I think that the answer will be that we are talking about an economic transformation.

I remember when Alastair Morton, the visionary chief executive of Eurotunnel, described economic geography as the basis of economic development. I am an economist myself. That is what I did for my first few years, and I think that the Channel Tunnel has produced a very interesting answer; namely, that it is very easy now to jump on a train in Paris and be in London or Brussels in two hours, and this is transforming so many things in terms of an economic growth model. So is the regeneration of Kings Cross. Even the Shard is on London Bridge station. Whether we have stations on the edge of cities or not, there will be different patterns of demand which fit.

Heathrow is not in the centre of London, but on the Surrey-Hampshire border where I live, we are part of the Heathrow economy. The noble Lord, Lord Howard of Rising, has got things 180 degrees wrong. There is no contradiction in talking about the need to deal very quickly with 98% of Heathrow’s capacity already being full—national scandal that that is—and getting on with HS2. The scandal of not doing HS2 would be very similar to the scandal of not building the two extra runways, which should probably be to the west of the two runways at Heathrow.

I say to the noble Lord, Lord Cormack, that we can learn from the experience of Kent in another way. My noble friend Lord Adonis, who is not in his place at the moment, knows that I convened a meeting about four years ago because I happened to know some of the people in Kent who had been in consultations there. I got the National Association of Local Councils to bring together all the local councils in the Chilterns at a meeting here in the House of Lords to find out about all the stages of the consultation that had been gone through in Kent. The people from Kent confirmed what I think the noble Lord, Lord Berkeley, and others have said, that they had been very satisfied with the experience of the consultation. Although they never became what one might call protagonists, they all agreed that the noise envelope from HS1 is nothing like the noise envelope from the M2 and the M20. Those are the alternatives that we have to look at.

The noble Lord, Lord Howard of Rising, tried to ridicule the idea that £50 billion should be spent on a project of this kind. I do not know what goes on in his mind when he talks about £50 billion being spent on this, as if it is spent on social welfare in some sense, but it is value added in the supply chain in the west Midlands and other parts of Britain. It may well be that we have to look to our laurels to make sure that the tunnel boring machines are not all from ThyssenKrupp or whatever in Germany, but that is a slightly different question, about our industrial capacity. I put a second question to the Minister: has the Business Department joined up in Whitehall, as on Crossrail, to make sure that British industry gets the great share—the lion’s share if I may call it that—of the £50 billion that we are looking at? That is the wages, salaries, profits and engineering progress that are entailed.

I can only echo what the noble Lord, Lord Heseltine, of whom I have always been a fan on these matters, said:

“It is 120 years since we built a new railway north of London”.

It is a bit of a shock when you say it like that. Why should we not have built another railway north of London for 120 years? It is not as if railways, à la Beeching, are now a thing of the past. Ending—in due course—where I began, the argument is precisely that we are a small island. We should not be frightened of this because we are a small island.

We seem to have the idea that the Victorian era was some sort of golden age. I think Wordsworth wrote a poem about the Ribblehead viaduct or something—these exact arguments took place during Victorian times, even though we now all talk about the Victorian railways. The noble Lord, Lord Cormack, whom I greatly admire, is exactly the sort of person who probably has a society for the admiration and better understanding of the Ribblehead viaduct. I would not be at all surprised, and the noble Lord is nodding his head. He probably is the president because he is the president of everything like that. But it was not exactly top of the pops at that particular time.

I am also reminded of when, exactly 20 years ago, in the presence of Her Majesty the Queen, President Mitterrand said, with a straight face: “Having travelled at 300 kilometres per hour across the plains of northern France, we came through the Channel Tunnel and reduced our speed to 100 kilometres per hour, to better admire the beauty of the Kent countryside”. I did not know that the French were up to that sense of humour, but President Mitterrand somehow put his finger on a fallacy of our national psyche at that time.

In conclusion, I believe that we could be running the risk of another procrastination by having endless procedures which, in other circumstances, I could only call red tape. The Government are very committed to a bonfire of red tape—apart from when it comes to tying up the trade unions in red tape, although that is not the question we are discussing this evening. I suggest that, side by side with a statement about when we are going to see the next stages of legislation, we have a clear timetable, like the Olympic timetable, so that the thing does not slip and so that the people who are looking at the new patterns of economic geography can have some confidence. Many of the stations will not be in the middle of cities—I do not think that is necessarily a bad thing but more work can be done in the city clusters study that I recommend to look at the consequences of some of the stations not being in the centre of the cities and the connectivity there. That may have the upside of what I call the Heathrow Airport type of economic geography, as well as what you might call the downside, given that we all want to arrive at Kings Cross. There is a lot of very exciting work to be done and I have very little doubt that the Government and the Opposition are, on this issue, speaking for the nation’s future and, also, for the environment on the small island on which we live.

High Speed 2

Lord Lea of Crondall Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Mandelson (Lab)]

My Lords, I strongly welcome this debate and congratulate the noble Lord, Lord Greaves. Like my noble friend who has just spoken, I have been an ardent pro-railway supporter all my adult life but it is precisely for that reason that I do not support HS2, because its sheer cost will suck the very lifeblood out of the rest of the country’s rail system.

Originally in government, I, along with my colleagues, took the default position in favour of anything with an engine at its beginning, a guard’s van at the back and a lot of sleek carriages planned in between. However, I think that the Labour Front Bench is now right to have become more sceptical of the project. I am not going to dwell on how we reached that decision as a government but, frankly, there was too much of the argument that if everyone else has a high-speed train we should have one too—regardless of need, costs or alternatives. As a party, to be frank, we did not feel like being trumped by the zeal of the then Opposition’s support for the high-speed train. If anything, we wanted to upstage them.

Since then, I have had a lot of time to think about this decision and to face the fact that no empirical case has been established for HS2, despite repeated attempts. The so- called business case, when the original justification for HS2 was all about speed, duly collapsed under scrutiny when it was discovered that in real life people actually work on trains, and sometimes even better than when they are in the office. Now the whole justification has shifted to assumptions about increased overall capacity, reduced crowding and the economic benefits to a handful of the nation’s cities—none of which assumptions, I might say, have been authoritatively quantified or verified, academically or otherwise. They all depend on forward projections of passenger loads which are uncertain, famously unreliable and greatly affected by the future price of tickets and elasticity of demand.

What has been forgotten in all this debate is that in 2006 the then Labour Government asked Rod Eddington to undertake one of the most comprehensive studies ever of transport in the UK. That study, after a great deal of very thorough examination, firmly rejected HS2. Eddington concluded that Britain’s transport infrastructure needs would be much better met by a wide range of incremental improvements rather than a few high-profile extravagances. He ended with one very important point of wisdom:

“The risk is that transport policy can become the pursuit of icons”.

I fear that HS2 has become precisely that—a political trophy project, justified, on flimsy evidence, as being about modernity and prosperity, with, I might say, a lot of pressure being put on those conducting the cost-benefit analysis to come up with the answer that Ministers want.

Even so, I would be prepared to put up with a lot of the uncertainties of the case if I thought that HS2 stood a reasonable chance of helping to rebalance the UK economy, lifting regional growth and creating jobs outside London and the south-east, but there is absolutely no conclusive evidence that any such things will happen. It might give some short-term boost to those cities on the line of the route but, equally, the easier you make it to get to London, the more people are likely to end up working and living in London. The readier the access to the facilities provided in the capital, the greater the likelihood that facilities in provincial cities will be undermined.

It is not surprising that KPMG, on a closer examination of its research—as the BBC did last week—found some very patchy results indeed for the benefits of HS2 for the regions. More places stand to lose than gain from HS2. That is hardly surprising. Indeed, £50 billion spent on HS2 is £50 billion—or anything like it, for that matter—that will not be spent on upgrading the east coast main line, which serves Humberside, Teesside and the north-east, and on lines to Bristol and the south-west or to East Anglia. Importantly, it will not be spent on the links between cities outside London. This is something on which we need to focus.

Having represented a constituency in the north, and now having the privilege to serve as the high steward of Kingston upon Hull, I know the difficulties that people have in using public transport not just between conurbations outside London but into and out of any northern city, and in particular in getting to a job within any extended travel-to-work area outside London when depending on public transport. There are literally dozens of rail and public transport projects urgently needed across the country that would make a significant economic and social impact. All these and more could be extracted for the price tag of HS2.

I will say one last word on the capacity arguments that, it is claimed, will be magically solved by HS2. Rail demand may increase substantially or it may not. However, we know that if HS2 goes ahead, the economic case put forward—

[Lord Lea of Crondall (Lab)]

My Lords—

[Lord Mandelson]

I would like to continue, but I will give way to the noble Lord.

[Lord Lea of Crondall]

My Lords, it is a question of clarification of what the noble Lord has just said. Does he think it a normal part of cost-benefit analysis on a project to say that you count against it? For example, can you say that if it does not go to Cambridge that is a cost to the project? Is that the noble Lord’s view on how cost-benefit analysis is normally done?

[Lord Mandelson]

Yes, of course it is part of it. However, my point is that the Government’s own economic case, if HS2 goes ahead, has made clear that this will involve nearly £8 billion-worth of cuts to existing intercity services. That means, for example, that Coventry’s services to London will be cut from three to two per hour, Stoke’s from two to one per hour and Stockport’s from three to one per hour. All Wilmslow’s intercity services to London will be axed, and journey times from Oxenholme, Penrith and Carlisle to London will be lengthened. So much for the capacity case for HS2. If it goes ahead, we will see a shrinking of the rail network in this country, and that should be the very last thing that pro-rail supporters in this House should want to see.

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[Lord Lea of Crondall]

My Lords, this debate produces a most unfortunate degree of polarisation among people who are normally much more sober in their analysis. I am on the same track as my noble friend Lord Rooker. When we talk about £8 billion being a lot of money, we are not talking about a project that will last for only 10 or 20 years; HS2 is going to be there for 100 years. Does anyone think that the Channel Tunnel will not be around then? The Victorian railways are still in place and HS2 will still be there. It would be interesting if a few leading Victorians were around today to look at what has happened over the past 200 years.

Let us put this into some sort of context. First, what is our national income and how does it grow? At the moment, our national income is £1.5 trillion per annum, or £1,500 billion—so in 10 years’ time it will be £15 trillion and in 100 years it will obviously be £150 trillion; that is without any underlying rate of economic growth. Secondly, can the rate of return capture all the benefits? Of course it cannot. I hope that the noble Baroness, Lady Kramer—I, too, very much welcome her appointment—will take on board the comparison with Crossrail on this. We do not expect Transport for London to capture all the benefits that accrue at Farringdon or Tottenham Court Road. It would be nice if it could, but it cannot. The benefits for everybody in London are huge.

In my first job with the World Bank in Africa I was involved in transport infrastructure investment. I know that there are rules—cost-benefit analysis is just one of the ways of describing what is done—but there are private benefits and externality benefits. As Alastair Morton, the first co-chairman of Eurotunnel said, economies are created through transport infrastructure. Therefore, you cannot capture all this with just one figure, and I am not surprised if people come up with very different numbers. It is easier to demolish the figures than to be absolutely dogmatic about how the arithmetic should be done.

Although I am an economist, I do not have any difficulty in having an act of faith and saying that this project is a good idea. I know that capacity cannot be increased by building more motorways any more easily than it can by building more railways—it is far more difficult—but I ask the noble Baroness, Lady Mallalieu, to think about the alternatives. She may be a zero-growth person but I do not think that the rest of us are. We are 2% growth people around here, as you should be if you do not want unemployment and if you want to keep up the growth in technology and productivity. We are running out of capacity on the motorway system at a devastating speed. As well as road closures, we as a nation are facing a crisis from pollution on the motorways. A bit like Heathrow Airport, the railways need some new capacity.

All the points have been made about trying to further improve the west coast main line and so on, but why should you want the trains to go at 100 miles an hour when they can go at 200 miles an hour? That is absurd. It is said that this is a densely populated island. However, it is no more so than Belgium, and Belgium has four high-speed train services. It is precisely because we are a densely populated island that we need HS2, and it is not counterintuitive to say that. Many speakers for whom I have the most enormous respect, including the noble Lord, Lord Alton of Liverpool, talks as if we will not be improving journey times from Birmingham to Sheffield, but actually we will be.

No one is challenging the fact that the cluster of Midlands and northern cities—I come from Manchester originally and have lived in Nottingham—will be the area receiving the most remarkable improvements. As any transport economist would tell you, the most dramatic changes are in the 3-4 hour zone. If you halve travel times in the 3-4 hour zone, you can have a mega economic success story for the whole of the Midlands and the north, which is not possible with the motorway and railway systems that we have now. We shall see what happens in the next 30 years—only time will tell.

I hope that we can have something like an infrastructure commission where people can give evidence and make sure that the cost-benefit analysis is done in the correct way. However, it is difficult to argue that there is only one way to capture the externality benefits.

Railways: Crossrail

Lord Lea of Crondall Excerpts

Wednesday 5th June 2013 Lords Chamber

[Earl Attlee]

My Lords, it is not resolved yet. The noble Lord is quite right that there are two signalling systems. One is needed in the central portion in order to meet the productivity requirements. Engineers are working through the issues of transitioning from one system to another, but the trains will not need to stop in order to transition the system.

[Lord Lea of Crondall]

My Lords, the Minister referred to the six tunnel-boring machines. Is he aware not only that all six machines were imported but that the reason they were imported is not that in a competitive tender they were more competitive than British tunnel-boring machines but that there is no such thing as a British tunnel-boring machine? Would it not be useful to ask the Department for Business to do a study of why, in this potentially hugely growing market world wide, we have no capacity in this country?

[Earl Attlee]

My Lords, the noble Lord is right that the tunnel-boring machines were not made in the UK. Each one costs about £10 million, which is a relatively small proportion of the overall project. UK businesses have benefited from the award of 97% of the contracts in the Crossrail supply chain, with 58% of contracts awarded to SMEs and 43% awarded beyond London and the south-east.

Roads: Roadworks

Lord Lea of Crondall Excerpts

Wednesday 28th November 2012 Lords Chamber

[Earl Attlee]

My noble friend is quite right. The main tool for local authorities is the permit system which, as I say, has been taken up by about a third of local authorities. Some local authorities do not need to use a permit scheme because they do not have congestion problems; others are developing their schemes. In addition, we are looking at lane rental, which has been piloted in London, and at one or two other lane rental schemes as well.

[Lord Lea of Crondall]

My Lords, would the noble Lord like to express his condolences to Hampshire County Council for every time that it has done a major job—

[Lord Barnett]

My Lords—

[Lord Lea of Crondall]

I started first; he is a Privy Counsellor—okay.

[Lord Barnett]

Is the noble Earl aware that the disruption outside this House over the past couple of days has caused great difficulty for Members who have to come and go by car or taxi? I declare an interest as one of those. That disruption is as nothing compared with what Black Rod has done to Members of this House with the system that is now in place. Will the Minister ask the Leader of the House to have a word with Black Rod to revert to the previous position where Members could come and go rather more easily?

--- Later in debate ---

[Earl Attlee]

My noble friend makes an important point: reinstatement is an important issue. There are guidelines and local authorities should normally check that the whole reinstatement process is being done correctly.

[Lord Lea of Crondall]

My Lords, will the Minister express his condolences to Hampshire County Council, because every time it does a wonderful job in resurfacing a major road, either gas, electricity, water or telephone companies dig it up again? Are there any statistics that suggest that the Government have any reason to be complacent that we are making improvements in co-ordination rather than going backwards?

[Earl Attlee]

My Lords, I am sure that we are making improvements. The previous Government introduced a permit system that allows local authorities to co-ordinate roadworks as much as possible to ensure that they do not interfere with each other and that we do not have more works than are necessary. However, noble Lords have to understand that that is quite difficult when you have got telecoms going alongside water pipes and gas pipes.

Olympic Games 2012: Traffic

Lord Lea of Crondall Excerpts

Tuesday 17th July 2012 Lords Chamber

Asked By

[Lord Lea of Crondall]

To ask Her Majesty’s Government what contingency plans they have made to deal with heavy traffic on key London roads when the Olympic route network becomes operational from 25 July.

[Lord Lea of Crondall]

My Lords, could I ask the noble Earl, Lord Howe, the Answer to the Question standing in my name on the Order Paper?

[Earl Attlee]

My Lords, I think the noble Lord got slightly confused there. The Olympic route network—the ORN—has been established to ensure the Games family get to events on time. Games lanes will operate flexibly and be open to all traffic when possible. Motorists should avoid central London and, like everyone, plan their journeys at the Get Ahead of the Games website. We have comprehensive traffic management plans in place and will be focused on getting people to their events on time and keeping London moving.

[Lord Lea of Crondall]

I thank the Minister for that Answer, which means that there is no contingency plan. There is no plan B. I will give an example of a major artery, and I declare an interest shared with many thousands of people in central London: I live on Southampton Row, a continuation of Kingsway, where there is one bus lane alongside one Olympic lane. In other words, it is a no-go area. The Evening Standard reported last Friday that Transport for London said that everyone could use the bus lane in those circumstances, but local officials say that is not the case. Is there not likely to be great confusion, at least after 25 July, leading to gridlock—which is of great concern for shops, buses, taxis and everyone in that area, and in similar areas around London—with no contingency plan in place?

[Earl Attlee]

My Lords, the noble Lord suggested that there is no contingency plan. There are very detailed contingency plans. For instance, Transport for London has designated alternative Olympic route network roads in case the primary Olympic route network becomes inoperative. As regards the problem that the noble Lord describes, I suggest that he consults the Get Ahead of the Games website. My officials tell me that I have to say “Get Ahead of the Games” in every single supplementary question I answer.

Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Lord Lea of Crondall Excerpts

Wednesday 28th March 2012 Lords Chamber

[Lord De Mauley]

My Lords, this first order permits but does not oblige judges to sit alone rather than, as at present, with two lay members on unfair dismissal cases. It is part of the wider package of reforms. It is not a silver bullet, standing on its own, but neither is it a risk to the just handling and disposal of cases.

As I said in Grand Committee, when we debated these orders on Monday last week, the order seeks to replace prescription with flexibility, and helps to secure value for money. It will allow employment judges to sit alone in unfair dismissal cases before an employment tribunal. It will provide discretion for judges to decide whether to sit with lay members, where appropriate. The criteria against which such decisions must be made are set out in primary legislation. It has been tried and tested for years in relation to other types of case to which it already applies.

Many of your Lordships here today were also present in Grand Committee last week. Noble Lords who then opposed the measure did not argue against flexibility for its own sake. Indeed, it is difficult to see how flexibility per se could be easily argued against in this context. Instead, some noble Lords, and some who debated the matter in the other place, seemed to distrust the motives underlying this reform. The perception seemed to be that this is the thin end of the wedge. Fairness, independence and justice must not be compromised. However, proportionality is key to all those concepts, and the Government have a duty to ensure that value is secured.

The safeguard of judicial discretion is real. As noble Lords themselves cited in Grand Committee, academic research demonstrates that employment judges value the input of lay members. Judges tell us that too. We have good evidence therefore—something noble Lords were rightly keen on drawing out in Grand Committee—to explain why we think panels will continue to sit where they are appropriate, and where they will add value. That is as it should be. There is also evidence of support for the proposal. Some, such as the British Chambers of Commerce, say that we should go further and abolish lay members altogether. Some say that we should row back and drop even this order. Some think we have got the balance right. We have considered the numbers, considered the substance of the arguments put, and made sure that we have listened carefully to all parties with an interest. Our conclusion is clear, and I am confident that it is right.

The Government value the role of employment judges, just as the Government value the role of lay members. Each group brings significant expertise and experience to the system. Judges are well placed to make decisions about how best to manage a case to hearing, including about how and where the respective expertise and experience is best deployed, and with what value. Employment judges are trained in active case-management techniques and to deal with cases in the unique fora of employment tribunals. The safeguards are real. The objective of securing value for money is important.

The purpose of the second order, the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012, is to extend the qualifying period for unfair dismissal from one to two years for individuals beginning work on after 6 April this year. It also extends in the same way the minimum period an employee must have been with the employer before being entitled to request a written statement of reasons for dismissing. The purpose of the statement of reasons is essentially one of evidence when making a claim for unfair dismissal. It is therefore closely linked to the right to claim unfair dismissal and it is logical that the qualifying period for both is kept consistent.

The Government are committed to reviewing all aspects of employment law over the course of the current Parliament. We are doing this because we are serious about rebalancing the economy, supporting job creation and achieving strong, sustainable growth. We want new and growing businesses to thrive and feel confident about taking on more staff.

The legal framework of employment law today is quite different from that which obtained when unfair dismissal rights were first introduced in 1971—by a Conservative Government. In 2012, employees additionally have a wide range of day-one rights: the right not to be discriminated against; the right not to be dismissed for asserting a statutory right, such as asking to be paid the minimum wage; and the right not to be dismissed for making a protected disclosure, otherwise known as blowing the whistle.

The change we seek to make will not affect any of those day-one rights, but it will reduce the fears that many employers have—until a few years ago, I was one of them—that a minor procedural slip-up might land them with a tribunal claim. As the British Chambers of Commerce has noted, a single claim can wipe out a whole year’s profits for a small business. That is a burden that many small businesses are simply unable to bear. The British Chambers of Commerce also reported—this is particularly shocking—that 48 per cent of larger firms have been threatened with an employment tribunal claim in the past three years.

This change will have a relatively small impact on employment tribunal claims and individuals who might seek to bring a claim. We have made a conservative estimate that the increase in the qualifying period will bring about only a 4 per cent reduction in unfair dismissal claims. Furthermore, we have not taken account of the fact that employers will not be under such pressure to let employees go, as my noble friend Lord Razzall pointed out in our debate in Grand Committee on Monday of last week. They will have the extra time to give them a chance, to coach them and to train them. Also, as set out in the impact assessment, we estimate that more than half of unfair dismissal claims currently made by those with one to two years’ service are part of multiple claims, so we would expect them still to go ahead under one or more other jurisdictions.

The Government are taking other measures that will help employers and employees to resolve disputes outside the tribunal system. I am sure that many noble Lords will agree that this is most often preferable for all parties. We are increasing the role of ACAS in conciliating disputes before a claim is made. We are piloting a scheme to boost access to mediation among small businesses in Cambridge and Greater Manchester, and we will be considering how we can deal more quickly with straightforward employment tribunal claims.

Looking back over the history of unfair dismissal rights, a two-year qualifying period has existed for most of the past 30 years, so it is hardly an unprecedented measure, but it is one that we, and large numbers of businesses, believe will make a positive difference to employer confidence.

As I said, our top priority is to achieve strong, sustainable and balanced growth. We are tackling youth unemployment by ensuring that more and higher-quality apprenticeships are available. We are taking steps on issues such as tax, planning rules and access to finance to boost enterprise. Critically, we have a credible plan to reduce the deficit and tackle the UK’s debts, as set out in the Budget.

The extension of the qualifying period must be seen in the following contexts: the greater employment rights that individuals now enjoy; the Government’s measures to encourage early dispute resolution; and our focus on growth and business confidence.

The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of the businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce—

[Lord Lea of Crondall]

My Lords—

[Lord De Mauley]

My Lords, perhaps the noble Lord will allow me to make my case. There will be plenty of opportunity for him to speak later.

The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of those businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce, the Institute of Directors and the CBI. During the consultation, the CBI expressed the view that,

“the extension of the qualifying period will have a positive impact on marginal hiring decisions, particularly in smaller firms”.

That accords with my own experience as an employer in an IT company, which I ran for six years. I cannot emphasise enough how much time is needed for training and assessing people. I can categorically say that a year is not enough in every case, and it is a view that the Government share. There is a credible body of opinion that employers will have greater confidence to recruit as a result of this measure. I assure noble Lords that the Government will do everything practicable to monitor and assess the impact of increasing the qualifying period.

As set out in the impact assessment, we are committed to a post-implementation review of the Resolving Workplace Disputes policy package, including this measure, in 2016. The amendment laid by the noble Lord, Lord Young, calls for a review after 18 months. With respect, this will be too soon to be able to make an assessment of the policy’s effect, not least because the qualifying period will be two years and will apply only to those starting a new job from 6 April. No employee will therefore have reached the end of their qualifying period in 18 months’ time.

While respecting and preserving the important employment rights that have been established over the years, we must give proper weight to those currently outside the labour market: the school leaver looking for the first job, the long-term unemployed striving to get back into work, and the person who was let go during the first year of employment because the employer was unsure whether they would come up to scratch. These are the real beneficiaries of this order, and I commend the orders to your Lordships.

Amendment to the Motion

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[Earl Attlee]

My Lords, this is not a time-limited debate, but I suggest that we hear from the noble Lord, Lord Lea of Crondall, and then the Minister.

[Lord Lea of Crondall]

My Lords, I have three points. First, perhaps I may pick up on the points made by the noble Lord, Lord Razzall, if I have his attention. He made what I would call a Sudetenland remark—the one made by Neville Chamberlain about “peace in our time”. If only that were so. Does he want a guarantee, a white piece of paper in his pocket that he can wave, promising that there will be no more legislation if this order is passed? Well, we shall see.

I also congratulate the noble Lord, Lord Jones of Birmingham. His joke about crèches is the worst joke I have heard in the House in the 12 years that I have been here.

My first substantive remark is about the evidence base. In Committee, I pointed out that the evidence paper presented to us as part of the background material did not give evidence as you would normally understand that term—that it was clear what would happen if you moved from one year to two years; instead, it was evidence about perception. It is probably worth repeating that the Minister said that perception is as powerful, if not more powerful, than evidence.

Today, having been given the challenge that if you have a problem of perception, your job should be to counter perception by evidence—to change the perception by talking to people—the noble Lord said, “Exactly. That is what we are trying to do”, which caused an intake of breath on these Benches. The Minister has reinforced that today by saying, “I want to meet the challenge that there is evidence of perception”. I am sure he has evidence of perception—that becomes a circular argument—but there is still no evidence.

My second remark is that noble Lords repeated three or four times the Americanism about how many people we should let go. I do not think I am alone in finding that American usage distasteful. I deplore the idea that these people want to be let go. Do they come up and say, “Please let me go”, to which the answer is, “All right, I will let you go”? They are being sacked, they are being dismissed, they are being thrown out, they are being put on the scrapheap. That is the language. I have never heard in a pub in Burton upon Trent anyone saying, “I think they’ll let me go”, when they mean that they are going to be dismissed. Does the Minister appreciate that that is not the industrial language in this country?

Finally, I echo the remarks of my noble friend Lord Whitty, supported and reinforced by my noble friend Lord Monks. If legislation through statutory instrument as deep-cutting as this goes on and on, one is cutting the legs off primary legislation. We have a growing problem in the role of the House of Lords—second only, perhaps, to the Money Bill question. We are seeing more and more statutory instruments which are not playing around with minor detail of the primary legislation but, bit by bit, salami-wise, cutting the legs off primary legislation. Does the Minister think that we can go on taking 3 million, another 3 million and another 3 million out of the scope of primary legislation without making nonsense of the conventions about the use of secondary legislation?

[Lord De Mauley]

My Lords, perhaps I may start by agreeing with the noble Lord, Lord Jones of Birmingham, most strongly about the quality and value of debate in your Lordships’ House. Today is no exception. We have had a good debate today, as indeed we had a good and full debate in Grand Committee on Monday last week, in which nine noble Lords from the opposition Benches participated, as did two from the Cross Benches and four from the coalition, as well as me.

Many of the questions and issues raised today were debated when we discussed the orders on that occasion, and my answers have not changed much since then. I am also well aware that noble Lords on all sides want to get on with the next business, so I hope that they will forgive me if I focus on the key issues.

The words flexibility and discussion have been deployed liberally throughout our debates, particularly by noble Lords on my side of your Lordships’ House, and my noble friend Lord Risby used those words today. Those concepts are at the heart of what the first order, the tribunal composition order, is about. The amendment of the noble Lord, Lord Young, suggests that the order will reduce the justice and fairness of employment tribunals and risk increasing costs through a greater number of appeals. These concerns are unfounded. I explained in this debate and in Grand Committee last week why they are unfounded but perhaps I may repeat what I said.

Aviation: UK Civil Aviation

Lord Lea of Crondall Excerpts

Monday 23rd January 2012 Lords Chamber

[Lord Lea of Crondall]

My Lords, I, too, congratulate my noble friend Lady Gibson of Market Rasen, on initiating this debate at this opportune moment. The decision to look at expansion, including the “Boris Island” project, and to exclude a third runway at Heathrow, is the most disgraceful piece of misgovernance that I can remember in transport economics in my lifetime, and I did postgraduate work in transport economics after doing economics at Cambridge and have worked for the World Bank in this field.

With no cost-benefit or origin and destination analysis, this is banana republic demotics. Suddenly you have a so-called review of hub airports without being able to expand Heathrow. This is a disgraceful way to conduct business, and I ask the Minister how he can possibly justify it. Will he take note of some of the things that have been said in this debate that make it clear—if I can mix my metaphors—that this is no way to run a railway?

I have no axe to grind for the British Airports Authority, but Mr Colin Matthews, its chief executive, hit the nail on the head the other day when he said that London cannot have two hubs. How, other than by closing down Heathrow, can you say that Boris’s island is going to be the hub? It is absurd, ridiculous—I do not know how many more adjectives one needs to use to get the absurdity of this understood.

This is not a question of transport and economics versus the environment. I am going to be personal: I have always been involved both in transport economics and in the environment—I started a sustainable environment project—and for many years I have tried to see how the two can be reconciled. I think it was my noble friend Lord Soley who made the point that many people make these “green” remarks about terrible things going on with planes in the sky, but it is exactly like the car—when you ask people, “How many miles did you drive last year when middle-class people were opposing a bypass?”, the answer is normally 10,000 miles. That is how things are; there is a lot of middle-class versus working-class nimbyism regarding Heathrow and Richmond going on here.

My final remark is about how a proper inquiry should be carried out. The costs that have been mentioned in the press would mean that if the Government are going to claim—as a Conservative Government believing in the market economy—that we should have regard to commercial principles, how is it that they are not having regard to commercial principles about how to make a profit rather than trying to subsidise the outcome, if you are going to have a Thames estuary site with a cost as high as £70 billion, without any clue why these so-called sovereign wealth fund investments are more than just wishful thinking? Will the Government reconsider the basic fallacy of having two hubs or closing down Heathrow, and will they, even at this stage, put Heathrow and the expansion of its third runway—Schiphol and so on, as my noble friend Lord Monks and others have said—back into the mix?

--- Later in debate ---

[Earl Attlee]

My Lords, I start by congratulating the noble Baroness, Lady Gibson, on securing this evening’s debate, in which we have heard articulated wildly opposing views. As all noble Lords know, aviation makes a huge contribution to our economy and our society as a trading nation, as pointed out by the noble Baroness. It generates economic output of up to £9 billion a year. The noble Lord, Lord Rosser, suggested that it was £11 billion; I do not know which of us is right. It supports thousands of jobs, drives our tourism sector and gives British businesses a vital gateway to the global marketplace. If this country is to grow and prosper in the future, aviation must be able to grow and prosper. I think all noble Lords are agreed on that.

Aviation provides regular connections not only to today’s major world economies but to the emerging economies. However, we recognise that there is a price to pay for every flight—a price that is measured in noise, local air pollution and carbon. To continue enjoying the benefits of a growing aviation sector, we need to make sure that growth is sustainable. That is exactly why the Government are developing a new sustainable aviation strategy. However, in answer to the noble Lord, Lord Rosser, we cannot do this overnight. From the very start, the Government made clear that unsustainable aviation growth was unacceptable. We have maxed out on what the people surrounding Heathrow Airport can tolerate.

Instead, we have been working hard to make our airports more effective. We have a range of initiatives under way to deliver that ambition. For example, last week the Civil Aviation Bill was introduced to Parliament. This will give the CAA more flexible powers to respond to passenger issues and better target issues such as airport resilience. Our South East Airports Task Force, which was set up to improve operations at major airports, has explored measures for improving punctuality, tackling delay and strengthening resilience at Heathrow, which are being trialled. It has also endorsed plans to improve the current aviation security regime, on which we have consulted and are developing. We are also looking at how we can tackle delays and reduce the need for aircraft stacking through the CAA’s Future Airspace Strategy and the Single European Sky.

As well as these initiatives, we still need to address the bigger question over future demand and future connectivity. The National Infrastructure Plan we published last year was clear that we must maintain the status of the UK as an international hub for aviation. We recognise that it is vital to maintain the UK’s connectivity to improve our links to the emerging economies and promote inward investment and inbound tourism. That is why we are planning to launch a call for evidence on options for maintaining the UK’s hub status alongside our draft framework. Through this we aim to reach an evidence-based conclusion on how to meet the UK’s long-term connectivity needs. The noble Baroness called for rapid and firm decisions. However, the Government will consider these matters very carefully and make the right decisions, not necessarily rapid ones.

In the shorter term, we welcome the recent launch of new routes from Gatwick to Ho Chi Minh City and Hanoi, and the announcement that Air China will launch a Gatwick-Beijing route. These are the sort of global connections that British businesses need, and not just from London. We know how crucial our regional airports are in helping to balance growth across the country and to relieve crowding, where possible, at our south-east airports. We also recognise the importance of connecting the regions to London by air and rail to maximise the benefits.

To make this growth sustainable, we need to find new ways to decarbonise aviation. We will work with the industry to boost investment in and research into low-carbon technologies and fuels. For example, we welcome the research that countries such as the US have done in the use of algae-based sustainable fuels. Developing innovative fuel sources will be the key to enabling aviation to grow in a sustainable and successful way. We want to see Britain at the forefront of delivering greener air travel. The inclusion of aviation in the European emissions trading system from 1 January was an important step. Now we need to push for international agreement in ICAO on aviation emissions to get the level playing field that will ensure that aviation is able to grow globally in a balanced and fair way.

The noble Baroness, Lady Gibson, urged the Government to reconsider the issue of aviation taxation. The Government accept that the current economic climate is very challenging both for consumers and the aviation sector. However, if the Government are to meet their overall fiscal projections, we must balance the risk of growing competition from abroad with the Government’s need to raise revenues from the sector. The rise in APD rates announced in the Autumn Statement does no more than keep pace with inflation and will give certainty to the industry for the two-year period to 2013. It is also worth remembering that it is important to look at the country’s taxation as a whole. Unlike other countries in the EU, the UK charges no VAT on flights. My noble friend Lady Kramer talked about the favourable taxation status of the aviation industry.

We continue to believe that tackling climate change is one of the most important challenges we face and that all sectors, including aviation, should contribute globally to the 2 degrees Celsius goal. The Government continue to support emissions trading as one of the key instruments for reducing CO₂ emissions from aviation.

Many noble Lords talked about the proposal for a Thames estuary airport. We are interested in innovative proposals for maintaining the UK’s aviation hub status and we will consider all proposals submitted that meet the criteria set out in our call for evidence. A new airport in the Thames estuary is one idea that has been put forward in response to our recent scoping exercise, but we need a much more detailed level of evidence, in particular on costs, funding and wider impacts, before we are in a position to develop which approach the Government should support. That is why we need the call for evidence.

[Lord Lea of Crondall]

I am most grateful to the Minister for giving way, but I take it that he is not going to leave this point before answering the question: how can he possibly justify a review of the hub in Britain while excluding Heathrow? Is that not rather like, as someone said, reviewing the expansion of supermarkets without including Tesco?

[Lord Shutt of Greetland]

My Lords, the noble Lord has made his question clear.

[Lord Lea of Crondall]

I have and I am sitting down.

[Earl Attlee]

My Lords, first, I have explained that we have already maxed out on what the local people around Heathrow can tolerate.

[Lord Lea of Crondall]

That is not true.

[Earl Attlee]

Secondly, this Government have an open mind, which is the right way to go into a consultation. The noble Baroness, Lady McIntosh of Hudnall, effectively asked whether we are going to do a U-turn on Stansted. The commitment in the coalition agreement still stands.

Railways: High-speed Rail

Lord Lea of Crondall Excerpts

Tuesday 10th January 2012 Lords Chamber

[Earl Attlee]

My Lords, I do not know the answer to the noble Lord’s question, but I shall write to him.

[Lord Lea of Crondall]

My Lords, I convened a meeting six months ago between all the local authorities and villages affected by HS1, which had been through all this process with the Channel Tunnel link, and the local authorities and campaigners involved with HS2. What surprised some of the people in the line of HS2 was the degree of political satisfaction obtained by all the villages along the line of HS1, so that they can now say that there is nobody in Kent who will say that it was the disaster predicted. Nobody at that meeting said it, and I think that it was a penny that dropped. Although some of the changes to this route might seem disproportionate—for example, the proposal on page 98 to avoid Kenilworth Golf Club—they should be paid for, because at the end of the day, in 10 or 15 years’ time, I suspect that public opinion will generally see the benefits substantially outweighing the costs, including the benefits for the people along the West Midlands line and the Y extending to the north. Will the Minister comment on that?

[Earl Attlee]

The noble Lord makes an important point. I referred earlier to the work that both Houses did on the Channel Tunnel Rail Link Act. Local people were able to petition if the developers had not privately met their needs. The effort expended during that planning process has clearly given us long-term benefits. However, it is important not to short circuit the approval process of this project, otherwise we could face serious problems when we try to start the construction phase. That would be much more expensive than doing it properly in the first place.

Postal Services Bill

Lord Lea of Crondall Excerpts

Wednesday 4th May 2011 Lords Chamber

Moved by

[Lord Lea of Crondall]

1: Before Clause 2, insert the following new Clause—
“Restriction on disposal of shares in a Royal Mail company by Initial Public Offering
A relevant disposal by an Initial Public Offering may only issue or transfer shares representing no more than 30% of the value of a Royal Mail company within the period of one year after this section comes into force.”

--- Later in debate ---

[Lord Lea of Crondall]

My Lords, if the Bill reaches the statute book in its present form, in a year or so we will almost certainly have a repeat of the public interest being prejudiced by the modalities of the sale by merchant banks, as has happened some times before. However, as all noble Lords are surely aware, Conservative Governments have form on the modalities of sales of public assets—in effect, selling the family silver on the cheap. As Harold Macmillan remarked, you can only do that once. How do we then protect the public interest?

During the debate in Committee on the sale of Royal Mail, whenever noble Lords sought to ensure that value for money for the taxpayer would be achieved if Royal Mail is sold, the response came that it would be foolhardy to reveal a valuation, because once the bidders got to hear of it they would never exceed it. One could of course imagine arrangements whereby an independent valuation was obtained and not published for the world to see. It could even be shared on a strictly confidential basis with, for example, members of the Public Accounts Committee. However, that is not the main point. As these arguments flew back and forth, I realised that in some noble Lords’ minds was a fixed picture of a set of competing companies bidding to buy Royal Mail as though it were a valuable silver cream jug at Christie’s—in other words, what is known as a trade sale.

However, I ask noble Lords to consider the scenario that the company will be put up for sale in an IPO—an initial public offering or a sale of shares to the public. From Richard Hooper’s 2010 report, this certainly seems to be a possibility that he has in mind. However, after that report and in our previous debate on 14 March, the noble Lord, Lord Razzall, who I am glad to see in his place, declared that,

“anybody who thinks, in the Royal Mail's current circumstances, that there can be an IPO, is living in a total fantasy world”.—[Official Report, 14/3/11; col. 102.]

Richard Hooper and Ministers, however, have repeatedly included that option. In his most recent report Richard Hooper stated that,

“there are now greater options for introducing private sector capital and disciplines. It does not have to be a sale to a partner. The much needed equity capital could, for example, be raised by means of an IPO (Initial Public Offering), turning Royal Mail into a publicly listed company. The company’s need for cash, and the timing of that need, will influence the choice of preferred option”.

More recently, in oral evidence to the Public Bill Committee in another place, he said:

“There are various ways of getting private sector capital. One is a trade buyer and another is a private equity player”.

He went on:

“There could, of course, be an initial public offering”.—[Official Report, Commons, Postal Services Bill Committee, 11/11/10; col. 109.]

Coalition colleagues are also open to an IPO. At Second Reading the Conservative noble Baroness, Lady Wheatcroft, in a well-considered contribution, stated:

“I hope that as the sale of Royal Mail approaches the possibility of an IPO will be top of the list of favoured options. I know that the Government's position is that the sale is open to all comers, but an IPO would get my vote”.—[Official Report, 16/2/11; col. 743.]

In the BIS document, Delivering for the Future: A Universal Mail Service and Community Post Offices in the Digital Age, published in October 2010, paragraph 2.6 states:

“We will retain flexibility so that we can negotiate the best possible outcome, including keeping options open as to whether a trade sale or initial public offering is more appropriate”.

Let us consider the possibility of an initial public offering. There is a very strong case that shows that in the heyday of privatisations in the 1980s and 1990s, privatised companies were consistently sold at too low a price. For British Airways, British Gas and British Telecom alone, the undervaluation on the first day of trading amounted to more than £2 billion. Indeed, it has been estimated that for 1986 alone the average share issue premium on major share issues was 7 per cent, but on privatisation issues the average premium on the first day of trading was 77 per cent.

One case illustrates the point very well. British Telecom shares were sold in three tranches. It was difficult to establish a correct sale price. There had not been a market by which to establish a clear and correct opening share price, as there will be for Royal Mail if its sale comes about. After the first tranche of shares was sold, the share price rose. Over the course of a year, the BT shares increased in value by 84 per cent. Several factors could conceivably have caused that increase, very sharp though it was. All share prices could have been rising, or there could have been an improvement in the company’s prospects, but what if I tell noble Lords that on the day after the original flotation anyone who had bought the shares at the offer price saw the value of those shares increase by some 90 per cent in 24 hours? The obvious conclusion is that a higher price could have been achieved for the taxpayer—in other words, the shares were underpriced and the taxpayer was short-changed. Fortunately, not all the shares had been put on the market on that fateful day.

Having regard to that experience, with the second tranche there was still an increase the next day but it was 5 per cent, rising to 22 per cent a year later. In the third and final tranche, the shares rose by just 5 per cent the next day and were still just 5 per cent higher a year later, so the pricing was much closer to the right level and the taxpayer was saved a very large sum. That is not surprising as the offer price in the new tranches could be judged against an existing traded price of shares from the original tranche. Therefore, this amendment proposes that in the event of the sale of Royal Mail by means of an IPO or general sale of shares, the sale should be phased in tranches, with no more than 30 per cent being sold before 31 July 2012 and no other shares being disposed of before 31 July 2013.

--- Later in debate ---

[Lord Lea of Crondall]

I thank the noble Baroness for her courteous reply. I am obviously very pleased to have heard the three contributions from these Benches but I want to pick up on the point made by the noble Lord, Lord Razzall.

Of course, nothing is exactly the same as it was 20 or 30 years ago but it remains the case that the only way that the Government can get a very high price is to say that there will be no universal service obligation. I do not know whether the noble Lord, Lord Razzall, and others would generally agree with that, but clearly the less you guarantee a universal service obligation, the more you can get, whether through an initial public offering, Deutsche Post or anything else. Furthermore, we are still waiting to see the guarantees on the inter-business agreement.

The public interest—that is, the public in cities, towns and villages—is at risk, as is, by the way, the workers, and if I say “by the way, the workers”, noble Lords will know where I am coming from. Later in our debates on the Bill we may hear something more specific and concrete from the noble Baroness in terms of commitments on the universal service obligation or the inter-business agreement. That is the context in which we are talking. As regards arbitrary deadlines, I am not the first person to mention dates with regard to the Bill. Indeed, it is self-evident that you have to mesh what we are talking about today with all the other dates that are flying around.

I do not think that noble Lords should be denied the opportunity to express their opinion on this question and I therefore wish to test the feeling of the House.

Postal Services Bill

Lord Lea of Crondall Excerpts

Wednesday 4th May 2011 Lords Chamber

Moved by

[Lord Lea of Crondall]

46: Clause 11, page 6, line 28, leave out “and”

[Lord Lea of Crondall]

My Lords, Clause 11 provides for the annual report on the post office network. The amendment seeks to include information in the report on,

“any major change in contractual terms affecting sub-postmasters as a result of the change to the ‘Post Office Local’ model”.

The document produced by the Department for Business, Innovation and Skills in November 2010, Securing the Post Office Network in the Digital Age, claimed success for the local pilots in the Post Office Local model. Under pilot schemes, Post Office Local branches have offered longer opening hours of up to six hours per day. Services have been restricted to core services, with what are described as more complex and time-consuming transactions being channelled through main post offices. Post Office Ltd reports that Post Office Locals are being trialled in around 60 locations across the UK. Many operate a small counter located within the premises of another business such as a supermarket. Some have replaced sub-post offices that have closed and some have been set up as new branches. The physical layout of the counter-based model has been replaced by more open-plan arrangements alongside the retail till.

The BIS report says that over the next four years, 2,000 small sub-post offices will convert to the local model, either on-site or in neighbouring premises, with what is described as a major rollout in 2014 following further piloting. It is unclear whether the rollout will be to reach the figure of 2,000 Post Office Locals—or essentials, as they are called—or whether this marks an intention to roll out beyond 2,000. It could be a precursor to a much wider application of the model.

The paper proposes two key strands of the network. The Government have asked POL by 2014 to have about 4,000 main post offices in towns and city centres and to convert about 2,000 sub-post offices to the local model. The 4,000 main post offices and 2,000 new locals will leave more than 5,500 branches in the current network untouched. However, the BIS paper states that, under POL's commercial strategy, the Post Office Local model will become the mainstay of the smaller post offices over time. This will mean a fundamental change to the current network.

Consumer Focus, which represents post office customers, has said that the conversion of 2,000 sub-post offices into Post Office Locals will be a major change. For millions of people, it will mean a shift from what they know and trust. The problems that people have experienced with pilot Post Office Locals—some of which are known as essentials—include benefit capping, where branches limit the amount of money that people who are collecting benefits such as pensions can withdraw in a single day. This is to prevent the branch running out of money. Other examples of problems which people have experienced with Post Office Essentials include not being able to access counters if in a wheelchair, staff with inadequate knowledge of services and a lack of privacy when carrying out transactions.

A more recent investigation by Consumer Focus, in March 2011, concluded:

“While consumers are likely to welcome the convenience and extended opening hours provided by PO Locals, without clear improvements to the in-branch experience, some consumers will be likely to perceive the shift in provision negatively … In particular, our research has found worrying evidence of examples of cash and benefit withdrawals being capped; temporary breaks in service because there are not always trained staff on hand to serve at the counter; and the inconsistent provision of parcel services, which in many instances seems to vary from one PO Local to the next”.

Just over half of customers—53 per cent—have had to use an alternative post office because their Post Office Local did not offer the product or service they wanted. Some 43 per cent of customers say that the privacy available is poor, especially for banking or financial transactions. Finally, 61 per cent of customers said that their overall experience was good, but a large percentage —38 per cent—said that it was average or poor.

The Post Office Local model clearly has the potential to impact on the terms under which sub-postmasters operate sub-post offices, and the terms and working arrangements of the staff working in them are also significant, not least the significantly increased opening hours. Those issues therefore deserve a word or two.

The changed physical working arrangements in the open-plan post offices envisaged by the pilot carry implications for the terms, safety and well-being of staff members which need to be taken fully into consideration. Some postmasters have expressed concern that they will see a major shift in their contractual terms away from secure payments to income based largely on commission. That is not just a rumour; I think it has been confirmed by the Post Office. While existing sub-postmasters may have their current income protected for a limited time, this would not last. At the same time the range of services on offer under the pilot is restricted to core services, meaning that customers needing to access a more time-consuming or complex transaction will need to go to the main post office. The report does not envisage restrictions being imposed on which services may be regarded as core by a local post office, and which may be dispensed with. Over time this would mean a high percentage of the population having to travel further to access the full range of post office services. I think that I am touching here on some of the points made by my noble friend Lord Whitty.

The problem is likely to be particularly acute in rural areas, where the distance to a main post office is likely to be greater. Although commercial terms between Post Office Ltd and individual sub-postmasters is confidential, it is reported that sub-postmasters converting to the essentials model are seeing a worsening in the terms of their contract and a larger reliance on commission on sales. I shall not cite the many examples from the local newspapers and so on, but Ministers could reassure sub-postmasters by stating that they will not be compelled to move to the Post Office Local model.

The sub-postmasters’ fears are summarised in a survey which was commissioned by the Communication Workers Union and reported in today's newspapers. It says that up to 9,300 post offices could close as a result of the Government’s sell-off. This prediction is worrying for people living in villages whose post office is the only shop that provides a vital service, particularly for those without cars. Perhaps I may read one or two bits of information from this survey; I do not think that anyone doubts the quality of the very well known company which was invited to undertake this research.

More than 90 per cent of sub-postmasters told researchers that they are very unlikely or unlikely to survive without Royal Mail business if it dries up. This clearly overlaps with all the other questions about the interservices agreement and the universal service obligation. Billy Hayes, the general secretary of the CWU, has said that it clearly demonstrates the fears of sub-postmasters about the fate of the network, which faces a greater threat than anyone previously dared believe.

John Denham, the shadow Business Secretary, has said that postal services policy is now in utter disarray. I am sure that the Minister has a brief prepared to read out on all this, and I look forward to hearing it. Then we will have to consider where this question rests before we come to Third Reading.

[Lord Young of Norwood Green]

My Lords, I shall be brief because my noble friend Lord Lea has covered the waterfront, as they say. He raises a key point, which I referred to in my previous contribution. There are some concerns about the quality of the service offered by locals, but we have had some useful assurances from the managing director, Paula Vennells, about the nature of pilots that will genuinely seek to improve the level of service. The concerns about the quality and range of services have been adequately described by my noble friend Lord Lea.

On the transition arrangements in converting those sub-offices to the local model and what the payments are likely to be, I do not know whether the Minister is in a position to reiterate the statement made by Paula Vennells, who said that broadly speaking the fixed and variable income ought to be more or less on a par with the income at the moment.

I wish to pick up on what my noble friend Lord Lea said when he talked about the importance of government business and it being a key part of the future of these offices; and my final point is that it would be useful if the Minister could confirm that remote rural offices that need a fixed income to survive will not be moved to the local model on a compulsory basis.

[Baroness Wilcox]

My Lords, Amendments 46 and 49, tabled by the noble Lord, Lord Lea, require the Post Office to provide details in its annual reports of major changes in its sub-postmaster contracts from the introduction of the Post Office Local model. In Committee, I spoke at length about the Post Office Local model, but I would like briefly to reiterate some of the key points. The Post Office Local model was introduced under the name Post Office Essentials in September 2008, and I know that the noble Lord, Lord Young, is therefore familiar with the format. The Post Office Local does away with the impersonal, screened-off, fortress post office counter that requires separate staff. Instead, it provides open-plan access to post office services alongside the retail till for the hours the shop is open. This will involve a significant increase in opening hours for the customer while also providing a much more flexible and lower cost operating model for the retailer. The Post Office Local model currently provides 97 per cent of post office transactions by volume and there are over 50 Post Office Local pilots operating across the country right now. Customer satisfaction with these pilots has been excellent with 94 per cent of customers being very or extremely satisfied with the local model. Some noble Lords will have been unable to hear Paula Vennells, the managing director of the Post Office, speak last week, although I know that the noble Lord, Lord Lea, was there when she spoke. Paula explained very eloquently that it is plainly not in the Post Office’s interest to introduce a model of contract that is not viable for sub-postmasters.

The model will involve pay being rebalanced from fixed to variable pay in those outlets affected. But this cannot be accomplished simply by eliminating fixed pay without evaluating rates of variable pay to ensure the model works for sub-postmasters and Post Office Ltd alike. Over the next two years, there will be continued and widespread piloting to develop understanding of the locations in which a Post Office Local may be viable and the services that may be offered from one.

In 2014, we expect a larger scale rollout so that by 2015 around 2,000 of the network of at least 11,500 will have converted to the local model. To give some perspective over the same period, the Government’s £1.34 billion funding package will enable the Post Office to invest in around 4,000 main post offices in towns and city centres across the country. These will more closely follow the traditional post office model. Of course, that will leave almost 6,000 post offices whose operating model will remain unchanged. I understand that any change in sub-postmaster contracts is of great significance for the many independent businessmen and women who operate post offices up and down the country. But I do not think that a public annual report is the appropriate place for a business to detail its contractual terms with its agents. That is certainly not something that one would see any competitors of the Post Office doing.

I hope that I have provided sufficient explanation and reassurance to the noble Lord to encourage him to withdraw his amendment.

[Lord Lea of Crondall]

I thank the Minister. However, the competitors of the Post Office may not do this, but they are not the Post Office. They are not what the British people understand to be the service of post offices right across the country. They do not cherry-pick like their competitors, which is why they are part of the fabric of the community. Perhaps one could agree the terms of reference of a public opinion poll whereby all the facts are on the table, as spelt out by the managing director of the Post Office, the noble Baroness and the unions. I include the national federation and George Thompson who, according to the Independent yesterday, said:

“The NFSP has made clear that a minimum 10-year inter-business agreement … between the Post Office and Royal Mail is required if the companies are separated, both to allow the public and business to continue to access Royal Mail services at their local post office and to secure the large proportion of subpostmasters’ income which comes from carrying out work on behalf of Royal Mail”.

Parliament is the backstop if something goes wrong with these negotiations. I am not saying that it is a negotiation between an elephant and a mouse. But the idea that the negotiations have as much leverage on the part of the sub-postmasters as on the part of the Post Office under the plans in this Bill is rather fanciful. We will just have to consider where we are. I asked the noble Baroness whether she would comment on the interesting study which says that sub-postmasters believe that 9,000 post offices could close under the Government’s plans. I should like to know what was wrong with the methodology of this study. The Government have had 48 hours to look at it. I do not know whether the noble Baroness would like to take this opportunity to say more about that.

[Baroness Wilcox]

Is the noble Lord, Lord Lea, speaking about the CWU’s recent survey on the future of the Post Office?

[Lord Lea of Crondall]

I am referring to the survey conducted by an opinion research company, which was commissioned by the union.

[Baroness Wilcox]

I understand that the National Federation of SubPostmasters said in response to recent claims by the CWU:

“We (the NFSP) have played a pivotal role in ensuring that both companies are working well together towards securing a mutually beneficial arrangement and we are confident that a 10-year commercial deal will be achieved”.

It continues:

“Scaremongering about the future without an IBA and the forced introduction of the Post Office Local model does nothing but harm to the post office network and to subpostmasters”.

[Lord Lea of Crondall]

I thank the noble Baroness for reading out what I have in front of me as well. I was asking whether she thinks this so-called scaremongering is actually the survey of the membership of the national federation. It is all very confusing and I do not know any more than the noble Baroness does how one reconciles these two things. But before we get to Third Reading, it is incumbent on BIS to make a more considered evaluation of this remarkable survey.

[Baroness Wilcox]

I will be only too happy to write to the noble Lord.

[Lord Lea of Crondall]

That is all that can usefully be said at this stage, and I beg leave to withdraw the amendment.

Amendment 46 withdrawn.