Postal Services Bill

Lord Sawyer Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Sawyer]

My Lords, I also begin by congratulating the noble Lords, Lord Empey and Lord Dobbs, on their very good maiden speeches. They were delightful to listen to and I look forward to hearing much more from them in the future.

There was an inevitability about some kind of privatisation of the Royal Mail because, given that the previous Labour Government were intent on that, it was not unexpected that this Government would follow suit. I remember when Patricia Hewitt was the Secretary of State at the DTI, she got very close to a deal with TNT for privatisation, but a small number of factors—including, sadly, the then not very satisfactory industrial relations—prevented TNT from taking it forward. Some kind of privatisation was always going to be on the cards and I guess this Bill in some form will go through.

My noble friend Lord Mandelson then took on the next Bill for the Labour Government. He was thwarted by the votes in the House of Commons and certainly laid some of the blame—if that is the right word—on the CWU and its lobbying. However, the CWU had an absolute right to lobby and members of the Parliamentary Labour Party would claim their independent judgment when making their own political decisions. I am sorry that the noble Lord, Lord Mandelson, is not in his place to hear me say that.

I am slightly disappointed about the Government’s decision simply to dust down the Hooper report with some added modifications. I was hoping, based on the Liberal manifesto, that we might see a wider look at how we might own—or who might own—the Royal Mail. I was also, to be honest, quite interested in the things that David Cameron has said about ownership and different forms of ownership and about the involvement of charities and not-for-profit organisations. Perhaps between the synchronisation of those two points of view we might have had a slightly different approach, which Members have spoken of this afternoon—for example the not-for-profit approach of the kind that was suggested by the noble Baroness, Lady Kennedy, in her speech. Nevertheless, time is very important and the business has to modernise and go forward. Maybe there has not been time for that longer consideration.

One of the things that disturbs me most of all is this idea that the Royal Mail should be separated from the Post Office completely, and that the Royal Mail should be sold to a private buyer and the Post Office should perhaps be some kind of a mutual. In the medium to long term, this could have very serious consequences because they would become very different kinds of organisation. Although there is an intention in the Bill to make sure that they co-operate for a period of time, if you think several years ahead, the Royal Mail could be owned by a very aggressive private company, which might or might not be British—we do not know—but the Post Office could be a very British mutual with mutual values. The standards that would be held very dearly inside both those businesses would be very different.

There is a little bit of a problem on the government Benches in that they have little or no experience of what it means to run a mutual. I was for many years, although I am no longer, the director of a big mutual, and I can tell you that your job is to guard the mutual ethos. You are looking for trading partners who are going to think, act and behave in the same way as you do. If you are faced with a multinational company that has very different standards and approaches—as may well be the case—towards investment, to where it invests its pension funds, to how it treats its staff and to who it trades with, you could be in some difficulty trying to get those two organisations to work together in five or 10 years’ time. You need to think not just about what is happening today but what it might be like with a fully privatised Royal Mail and a fully mutualised Post Office. That is something that we need to think about.

I have listened to both Moya Greene and Paula Vennells, the respective chief executives of both businesses, on platforms saying that they support the idea of separation. However, I personally did not feel that their answers to questions were really wholehearted, or that their total support was there for the idea. I hope that Ministers might be able to look at this again and possibly think about keeping both parts of the business together, perhaps even in some kind of mutual or not-for-profit ownership.

On the privatisation of Royal Mail, I accept that we need to keep modernising and going forward. I do not know whether that is possible with the present ownership, but I would like to think that it is. I have read extensively about Moya Greene’s contribution. I have never had the pleasure of meeting her, but she has a tremendous reputation and she seems to have done a really good job. Of course, her board of directors is almost totally out of the private sector and has massive private sector business experience. I do not know what you would expect the board to look like in a privatised company, but it might not look very different from the one that we have now.

My view on where to go with the privatisation of Royal Mail remains open. I would like to see Royal Mail remain in the public sector. I am impressed by the modernisation agreement that the unions and management have been able to agree. They are going forward, and some of the processing that they are doing now is some of the best in the world. Industrial relations have improved, with people working together. There is not as yet a satisfactory answer to how to access capital. Noble Lords have said that that may be possible under different forms of ownership, but I would need to be convinced that any model that was not in the private sector to some extent had the ability to access the capital that it needs to go forward. I certainly hope to think and learn more about that as the Bill makes its way through Parliament.

My final point is on culture change, which is something I have always been interested in with regard to the Royal Mail. I had an opportunity to work with both sides on that for some time. Regardless of whether Royal Mail or the Post Office are public or private, the good industrial relations are to be welcomed, but the real question is whether the control and command management that dominated the industry has really changed. Has Moya Greene got hold of that and made significant progress? I do not know the answer—nobody does—but I hope that that is happening. It is fundamentally important, wherever the business ends up, that we continue to build trust between the people who work in the industry and those who manage it and that the two sides work together on problems. That is something that has not happened in the past, which has often frustrated the management. Ways need to be found in which people can work together and sort out problems jointly. If we do that, we will make the right progress.

Lots of noble Lords have talked about the share ownership issue. The noble Lord, Lord Brooke of Alverthorpe, has greater knowledge and experience of it than I have. His point about engaging with the union and seeing whether we can get the unions on board with some kind of scheme is a very good one and well worth taking on board. We must not write off the union or think of it as a backward-looking organisation. I tried to persuade the union, as did others, that it should come to an agreement with the Labour Government on the last attempt at privatisation, but it chose not to do that. That was the union’s business. In a funny sort of way, the union is more open to reaching an agreement now than it was with the Labour Government in power. There is a certain irony about that, but I think that it is true. Also, if you are going to offer shares to the workforce, you should ask the workforce whether it wants the shares. It is untenable to give people shares when they have never been asked whether they want them. There should be some kind of mechanism for doing that, along with talking to the trade union.

I have listened to noble Lords with business experience in this Chamber and the politicians who have spent a lot of time trying to remedy the wrongs, and a lot of emphasis is placed on capital and modernisation. However, the postal service is about engaging with people; it is massively a people business. We must not lose sight of the fact that, no matter what we say about things, it is people who really matter. Capital, the commercial aspect and discipline are all very important, but at the end of the day it is a people business and we must ensure that we never lose sight of that.