Royal Mail

Lord Martin of Springburn Excerpts

Wednesday 10th July 2013 Lords Chamber

[Viscount Younger of Leckie]

In answer to my noble friend’s first question about the appetite of shareholders, the indications are that there is clear interest in purchasing shares in Royal Mail. I would not want to go further, because it is not my role to speak on behalf of investors, but my noble friend makes a very good point. The most important thing for Royal Mail is to have flexible access to capital to allow it to innovate and capture market opportunities, such as the strong growth in the parcel market driven by online shopping, as I mentioned earlier. That is what an IPO will deliver for Royal Mail. It should not have to come cap in hand to Government and compete with schools and hospitals when it needs to innovate or commit to future investment.

The second question concerns the IPO route as opposed to other methods. It is true to say that, having got to this point over a good number of years, the IPO route was clearly the preferred route. I am certain that other options were looked at. My noble friend’s question was, if the IPO route were to fail, would other methods be used? I do not wish to be drawn on that or to speculate, only to say that it is our firm belief that the IPO route is the right route and that is the route that we will be following.

The final question concerned employees. I am delighted to hear that my noble friend is very much in favour of giving 10% of shares free to employees. I will not be drawn on the actual valuation, because a prospectus will be produced in due course, which will set out the terms of the IPO. The valuation will, of course, depend on investor demand and market conditions at the time. What my noble friend has read in the papers, as he will probably know, is pure speculation.

[Lord Martin of Springburn]

My Lords, I think that the Minister will agree that many of those who retired from the Royal Mail worked very hard to get it into the very good shape that it is in just now. Has any consideration been given to allowing those who are in receipt of a Royal Mail pension—in other words, former sorting staff and postmen and postwomen—to buy shares? My thoughts go to the fact that in my previous constituency—although it is known as Glasgow North East, it was known as Springburn at one time—we have a lovely sorting office, which I pass every week when I come to the House of Lords. It is known as the St Rollox sorting facility. Several hundred people work there. They have changed their hours, adjusted to the new situation and worked very hard. I would be deeply saddened if any organisation took over and vacated the site at St Rollox and went somewhere else, which would mean that the loyal men and women—some of whom I am related to—who perhaps get up at four or five in the morning and walk to their work in the Springburn area, would lose their jobs. Some of the newer delivery companies, such as TNT and FedEx, tend to go into great industrial estates, but the only way to get to these facilities is by private transport and not public transport. Has any consideration been given to securing jobs in the communities in which they already exist?

[Viscount Younger of Leckie]

I thank the noble Lord for those two points. His first question was whether it might be considered that shares be given to those who have worked for a long time for Royal Mail and that their hard work might be rewarded. It is fair to say that the employee share scheme is designed to secure the future success of Royal Mail and the universal service and we therefore consider it appropriate to include only the current workforce, who deliver the universal service and can influence and benefit from the future success of the company. Share awards will be made only to those employees who have been in employment for the relevant qualifying period, which happens to be a number of months. I listened carefully to the noble Lord’s second point; I know Springburn, so it is familiar to me. I am sorry to hear that there has clearly been some disruption to individual lives regarding the transfer of the sorting office. My only response to that is that it is very much up to the Royal Mail management to—

[Lord Martin of Springburn]

Maybe I have given the wrong impression. Everyone is fine in St Rollox. My worry is that, if some of these new companies come in, they might close the facility and move the machinery somewhere else.

[Viscount Younger of Leckie]

It is useful to have the clarification from the noble Lord. In that case, my point is still the same. It is very much up to the Royal Mail management to look very sensitively at those personnel issues. I have no doubt that they will do that if there is a particular move in that way. Change, as we know, is always difficult and it affects individuals. The noble Lord makes a very good point.