Postal Services Bill

Lord Skelmersdale Excerpts

Tuesday 8th March 2011 Lords Chamber

[Lord Jones of Birmingham]

My Lords, I concur with the noble Baroness. If this amendment was passed, there would be no activity whatever until about November 2012. As noble Lords will know, I spend a lot of my time in the corporate private sector, and I can tell the House that a lot of companies would just wait. There would then be a lot of activity in December 2012, and the Government would find themselves selling this at a price that none of us would want.

[Lord Skelmersdale]

My Lords, I must be the only person in this Committee, certainly in the House, who regrets not having spoken on this Bill at Second Reading. I did not do so because I was pursuing my day job as a director of a mail-order company. There is a temptation on these occasions to give a Second Reading speech, but I have no intention whatever of doing that. On this amendment, however, I agree with both my noble friend and the noble Lord, Lord Jones, that putting a final date into this legislation would make things even more difficult for the Post Office management. I have been advised that the point that I really want to make about Clause 1, and would have made on Clause 1 stand part, is deprecated by Standing Orders. Therefore, I am sorry to disappoint the noble Lord, Lord Hoyle, but I will speak no more about my reactions to this amendment.

I bring to the House’s attention Clause 1(2), which is gratuitous. The nuts and bolts of this Bill are contained in Clauses 1 and 4. Clause 1(1) removes from the statute book Sections 65 and 67 of the Postal Services Act 2000, and Clause 4 replaces them with a new formulation. My contention is that it would be far better drafting of this legislation if those two clauses were combined and we therefore left out Clause 1(2).

Over many years, I have been interested in the size and length of the statute book. Anything we can do to reduce the number of words or even the number of pages we should certainly do. I do not expect an answer on this conundrum that I have set myself from the Minister today. She has already instructed officials to give me some sort of answer, which I do not find particularly convincing. I would be happy to have discussions with her and them between now and the next stage of the Bill.

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[Lord Lea of Crondall]

As someone who is not directly involved in this, perhaps I may make an observation. It is plain common sense for the noble Baroness to say, in the light of the remarks made by the noble Lord, Lord Skelmersdale, and my noble friend Lord Borrie, that it is no big deal, but this is not language appropriate to an Act of Parliament. Quite simply, will she agree to think about some answers on the back of a postcard before we move on to the next stage of the Bill?

[Lord Skelmersdale]

My Lords, I would not put it quite as rudely or as crudely as the noble Lord opposite has just done. However, I did suggest in my few words that the draftsmen ought to look at combining Clause 1(1) with Clause 4 and then putting that at the very beginning of the Bill. I noted that my noble friend did not respond to the suggestion, but as I said, I do not expect her to do so now. I am sure she has many more important things to do, such as responding to the amendment moved by the noble Lord, Lord Young of Norwood Green, which I am sure she will do in her usual adequate fashion. All I am asking for is future discussions, and from what my noble friend has just said, I am sure that she would find that acceptable.

[Baroness Wilcox]

I thank my noble friend and of course I will be happy to speak to him afterwards, at any time that is convenient to him. I should now turn to the amendment tabled by the noble Lord, Lord Young, otherwise we may be here for much longer than we anticipated.

I believe that Clause 1 exposes the real difference between the previous Government’s approach as set out in their 2009 Bill to the fundamental problems facing Royal Mail, and the approach that this Government are taking to secure the company’s future. Setting aside the ownership issue for a moment, I think it is clear to everyone that the powers in the Bill to tackle the pension deficit and regulation are either the same as or very similar to those provided in the 2009 Bill. This is perhaps not surprising as we have based our Bill on the same evidence, that of the Hooper report, as the previous Government. However, we have not simply produced a cut-and-paste Bill. As we will discuss during this Committee stage, we have included new regulatory measures to safeguard the universal postal service and introduced fresh ideas on employee ownership and the potential of a mutual ownership structure for the post office network.

All sides of the House agreed with the analysis contained in Richard Hooper’s 2008 report. We all agreed that the current framework was untenable and that urgent action needed to be taken if we were to secure the universal postal service for the benefit of all postal service users, both business and social.

Richard Hooper’s recent update showed that the situation is now much worse than it was in 2008. In fact, he described the Royal Mail’s current position as being “even more precarious”. The noble Lord, Lord Young, asked about the effect on the value of Royal Mail of prolonged uncertainty. I would say to him that it was the failure of the previous Government’s Bill that has caused prolonged uncertainty for Royal Mail and all other postal operators. That is what is putting the universal postal service at risk.

The Bill addresses those problems and creates a framework that will help to secure the future of Royal Mail and maintain the universal postal service. Part 1 sets out provisions relating to the restructuring of the Royal Mail group of companies. The Government committed in the coalition agreement to injecting private sector capital into Royal Mail, including opportunities for employee ownership. We also said that we would retain Post Office Ltd in public ownership, on which the noble Lord, Lord Young, raised a number of points. We will have plenty of opportunity to discuss the Post Office when we debate those clauses dealing specifically with it.

I turn to Amendment 1. The disposal of shares in Royal Mail will be a commercial transaction. The Government’s objective is to ensure that the transaction represents value for money for the taxpayer and secures the future of Royal Mail. In doing so, our overriding objective is to secure the future of the universal postal service. I cannot understand, therefore, why the noble Lords have brought forward this amendment, the substance of which was fully debated in the other place.

By setting a deadline for a disposal, all the commercial advantage would be given to the buyer if we were selling the business by auction. The buyer would know that the Government were up against a deadline, giving him the whip hand in any negotiation, and all sorts of demands could be made as the deadline approached. The amendment would not therefore allow the Government to ensure that they could get value for money from a sale and secure the best future owners for Royal Mail; in our view, it would do the opposite. When I was on the opposition Benches, I was very keen on sunset clauses in legislation and I am not opposed to them now—in fact, in most cases I encourage them—but the proposal set out in this amendment is simply not appropriate to the circumstances.

A failing of the previous Government’s policy on Royal Mail was that it tried to do too much at the same time by running the legislative and the sale processes in parallel. We have decided to take a staged approach; our first priority is passing the Postal Services Bill to allow the framework for action. The Government will then bring into force the new regulatory regime. Only then will we start the process to introduce private sector investment, including the employee share scheme and the pension solution.

The noble Lord, Lord Young, asked what the Government would do if they could not sell Royal Mail before the end of the current modernisation plan. Through this Bill, the Government are taking the preparatory steps necessary to enable Royal Mail to attract the private capital that it needs. As noble Lords will appreciate, the timing will depend on when we can best secure our twin objectives of the best outcome for Royal Mail and the best outcome for the taxpayer. The Government are focused on ensuring that Royal Mail can attract private investment, not on putting new obstacles in its way.

An integral aspect of the Bill is that it allows flexibility, because that is what any sensible commercial shareholder would retain for themselves. Such flexibility enables the Government to decide when to conduct a disposal of shares and how to do it, either through a trade sale or a flotation. I agree with my noble friend Lord Hunt, who said, as did the noble Lord, Lord Jones, that we want no artificial deadlines. Although I do not agree with everything that the noble Lord, Lord Hoyle, said, I do agree that we want the right price and the right company, and for that we must wait our time until the right moment. I thank my noble friends Lady Kramer and Lord Eccles for their support.

I say to the noble Lord, Lord Christopher, that I hope we will be flexible, get a really good deal for the taxpayer and make sure, as always, that we support the universal service. The proposal in the amendment is, I fear, impractical and would risk the future of the very universal postal service that we are all trying to save. I therefore ask the noble Lord, Lord Young, to withdraw his amendment.

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[Lord Cotter]

This amendment is a direct attack on the fundamental principles of the Bill and, indeed, on the necessity of addressing the serious situation of declining turnover and decline in the use of the mail service. The Bill needs to be effective to attract fresh capital and, as has frequently been said, to achieve the spin-off of securing the post office network at the same time. Surely no one can forget—the public certainly cannot—the continuing programme of closures in the post office network over the past few years. That is what the Bill is needed to address. The important part is for the Bill to bring in capital to address not only the issue of the mail service but the matter of the post offices. The input of private-sector capital is essential and the Bill, as it stands, is vital to secure this for the country.

The noble Lord, Lord Young, said that the Bill is being pushed through with breathtaking speed. He also described the attempts over many years to address the concerns about the mail service. Surely he can see that this is not breathtaking speed. Surely he will agree that we cannot afford to lose any more time. We must proceed to get a solution to our need for a universal mail service in this country.

[Lord Skelmersdale]

It strikes me that if you juxtapose the first amendment of the noble Lord, Lord Young of Norwood Green, and this amendment, they are diametrically opposed.

[Baroness Turner of Camden]

I support my noble friend who introduced this amendment. He is quite right: we are talking about a major public institution which—despite what some noble Lords have said—has a great deal of public respect and support. It is always assumed by the present Government that if there is anything wrong you have to privatise. Privatisation is supposed to produce greater efficiency and more investment. That is not always true. I speak as a consumer of several recently privatised services. The first thing that a privatised company does is usually to economise in order to increase the share price for shareholders. That often involves decreasing the number of staff so that when you phone them, instead of talking to a human being, you talk to an automated voice, which says, “If you want this press 1, if you want the other press 2, if you want something else press 3, or hang on to talk to an adviser”. Twenty minutes later, you are still hanging on. That has been my experience of a good many privatised companies. I would not like that to happen to the Royal Mail.

We are talking, as I said, about an organisation that has a lot of public support. I very much hope that the full statement which my noble friend made from the Front Bench will receive intense investigation from the Government, because it is worth considering. This is an important issue and a major one for this Bill.

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[Lord Skelmersdale]

Not only that, but the Post Office could do the same thing under the current arrangements and no one would complain.

[Baroness Kramer]

Is it not correct that in negotiating the sale of the shares, the value of property that could be disposed of would be considered as part of the mechanism for valuing the company?