Royal Mail
Debate between Lord O'Neill of Clackmannan and Viscount Younger of Leckie
Viscount Younger of Leckie
I thank my noble friend for that comment. In harking back 25 years, he makes an extremely good point; hindsight is very nice. I cannot remember exactly where we were with Royal Mail 25 years ago, but I am delighted that we are where we are at the moment. I believe that the conditions are right to privatise. The chief executive of Royal Mail has done an excellent job in turning the business around, with profits of over £400 million. The climate and the time are right, and I believe that there is an appetite, but let us see what investors think about it.
Lord O'Neill of Clackmannan
My Lords, some of us on this side of the House who supported a minority shareholding did so because we wanted an improvement in the quality of the management. Frankly, we had despaired of that ever happening. That is because it takes particular skill for a manager to run a monopoly in a capitalist system at a loss, but that is what the managers of the Post Office succeeded in doing for a number of years. Circumstances have changed because the nettle of parcels has been grasped by the Post Office in a quite spectacular way. However, at the same time we now have day-by-day diminution in the volume of postal mail that requires to be delivered. The fact is that the length of the walk, the final mile that postmen have to go, is exactly the same regardless of the number of letters they have to carry. That is the most vulnerable part of the operation. It is not the parcels that will be the problem; it will be the cost of delivering letters. Frankly, the assurance that the Minister has given us this evening does not in any way give us comfort. All we can see is a weakening of the universal postal service when it becomes too expensive to subsidise under the economics of this flawed scheme.
Viscount Younger of Leckie
The noble Lord may not be surprised to hear that I do not agree with his assessment. It is true, however, that since 2006, the fall in letter volumes has been as much as 25%. The market is changing and we need to keep ahead of it. I would remind the House again that Germany and Belgium are ahead of the game. The injection of private capital into Royal Mail will help with the change, but there is a double benefit in that, through legislation, the universal offering remains strong. It is set in stone, which is a very important point to make.