Postal Services Bill

Debate between Lord Whitty and Lord Razzall

Tuesday 24th May 2011 Lords Chamber

[Lord Whitty]

My Lords, I support this amendment. The Government have to recognise that despite the hours which this House and another place have spent on this Bill and the very protracted proceedings, to which the noble Baroness replied in a very courteous and often very helpful way, the central fact of this piece of legislation, which deals with one of our national institutions and an essential part of our national infrastructure, is that nobody—not the Government, employees, customers, competitors or potential investors —knows what Royal Mail will look like once this legislation is passed. We do not know who the prospective buyers are. We do not know what mechanism the Government are intending to use for the sale, and therefore we do not know who will call the shots in Royal Mail’s future decisions once the privatisation is complete.

In those circumstances it is not entirely surprising that the basis for valuation causes concern. This is what lies behind my noble friend’s amendment. He is right that, historically, assets were sold off at a price that proved to be less than their value. However, in the 1980s, at least it was clear how we were going to sell them, which were going to IPOs and which were to be sold directly to particular bidders. This is not the case here. It is therefore even more important that this great national institution is not passed to an unknown process of sell-off, or to an unknown buyer, without Parliament and the public as a whole being confident about the basis on which that valuation is carried out.

As my noble friend has said, the amendment does not say that we should publish a valuation and therefore undermine the Government’s negotiating position, but it does say that we ought to know the criteria in the Government’s mind on which the valuation is based. This is a fairly minimal requirement. I hope that the Government, who are determined on this course, will at least have the self-confidence to make the public feel confident that this great asset will not be seriously undervalued. I hope that my noble friend’s modest proposal would go some way to achieving that objective if at this late stage the Government were to concede that such a measure should be included in the Bill.

[Lord Razzall]

My Lords, I have some sympathy with what the noble Lord, Lord Whitty, describes as a modest proposal. However, I completely endorse the remarks of my noble friend Lady Kramer. What worries me about the amendment, were it to be carried, is that the most likely outcome would be a sentence in the report simply saying, “It was the best price we were offered”.

Postal Services Bill

Debate between Lord Whitty and Lord Razzall

Tuesday 17th May 2011 Lords Chamber

[Lord Razzall]

My Lords, everyone in the House would entirely endorse the remarks made by the two noble Lords who have brought forward amendments in relation to the importance to our national life of the post office network. That is a given on all Benches and I suspect that no Member of your Lordships’ House would disagree.

I have two propositions, which I hope your Lordships’ will accept, which are totally germane to why the two amendments should be rejected. First, from a commercial point of view, it is virtually inconceivable that any operator of the Royal Mail with a universal delivery obligation to deliver mail six days a week would not wish to avail themselves of the services of the Post Office. There is no other network in the United Kingdom that would enable that obligation to be fulfilled. There is, therefore, an essential logic as to why any owner of the Royal Mail would wish to continue to use the post office network.

Secondly, the noble Lords who have brought forward these amendments have to take on board that, were their amendments to be carried and the requirement placed in the Bill, there is a significant concern that the European state aid rules would come into play. The whole transaction could be held up for a year or two while the European state aid issue was resolved, during which time the Royal Mail would get into further financial difficulties.

In my view, it is inevitable that any operator of the Royal Mail is bound to use the Post Office to deliver the universal service obligation. At the same time, I would not wish to risk the hold-up of this transaction, thereby jeopardising the future of Royal Mail, because of the operation of the state aid rules.

[Lord Whitty]

My Lords, I was not going to intervene in this debate because I agree with much of what has been said by the noble Lord, Lord Rogan, and my colleague on the Front Bench and I have intervened in this area at earlier stages in the debate. Parliament has a huge responsibility here as two great parts of the nation’s infrastructure are in trouble and both require a new start. The Government have concluded that, in respect of the Royal Mail part, the new start shall be under private ownership. As the noble Baroness knows, I do not entirely agree with that, but nevertheless that is where we are. Everybody who has contributed agrees that there has to be some sort of stable relationship between the two parts, as we move into this new world. The Government’s difficulty is that they have to find a buyer for Royal Mail, the logistics part of the operation. Nobody is saying, and indeed my noble friend Lord Stevenson explicitly said, that Parliament should lay down the terms of that relationship, but Parliament has a right to know that that relationship will exist because it will determine the nature of both sides of that organisation—in terms of this amendment for the next 10 years. Clearly both sides may have an interest in ensuring that such an agreement is established prior to this Bill being implemented and the privatisation going through.

If I can be a little rude, I want to talk about the elephant in the room. The suspicion on this side is that if an amendment of this nature is not passed then the issue will not be the nature of the negotiations between Royal Mail and the post office network but the nature of the discussions between the Government and a potential investor. The Government will not find it easy to find an investor. The last Government did not find it easy to find an investor for a rather smaller proportion of Royal Mail and, if the interests of Post Office Ltd were sacrificed by untying some of the responsibilities of Royal Mail towards its Post Office Ltd partner as part of the deal, the interests of both sides and particularly those of the post office network will have been sacrificed. I hate to put it this way, but I have a degree of suspicion not of Royal Mail or the post office network but of the Government’s need to induce an investor in Royal Mail in the first place. If one of the terms of that inducement were to prejudice the future relationship with the post office network then the suspicions could be justified.

Postal Services Bill

Debate between Lord Whitty and Lord Razzall

Wednesday 4th May 2011 Lords Chamber

[Lord Whitty]

My Lords, I support the amendment in the names of the noble Lords, Lord Rogan and Lord Laird. The Minister will be well aware of my past engagement with Consumer Focus, the statutory body for postal services, which operates as separate entities in Scotland, Northern Ireland and Wales. It has become apparent, when assessing the needs of domestic consumers of postal services and post offices, and also those of small businesses in using those services, that there are somewhat different considerations relating to the firm commitment to the network and the universal service, particularly in rural areas and in those countries.

In Northern Ireland, there are particular issues relating to the north and the south, to An Post, and to getting mail across the sea. While preserving the universal service, the body of the post office and the body of Royal Mail as parts of our United Kingdom national infrastructure, it is important that we recognise that any dilution of the service or differential treatment of the parts of the United Kingdom would be particularly detrimental to those countries. It is therefore important that the devolved Administrations are fully involved in any changes.

Perhaps I may gently say to the noble Baroness that it has been obvious that her department in Whitehall has not always been the best when consulting devolved Administrations on a whole range of issues, including this one. The department is getting better, but acceptance of at least the principle of the amendment would be appreciated and would help the Government’s approach. It would meet the fears of many businesses and individuals in those countries, particularly in rural areas and small towns.

[Lord Razzall]

My Lords, I was not going to intervene, but because the noble Lord, Lord Low of Dalston, raised the point I made in Committee, we should put on the record that after the noble Baroness looked into this point she wrote to both of us and said that we were actually both right. As the noble Lord indicated, the cost of delivering items of mail in London is more or less the same as the cost in rural areas, and is significantly greater than the cost in other United Kingdom cities. The point that I was trying to make, obviously inelegantly, was that if I was really worried about what would happen I would worry about London. It is not only that the cost of delivery in London is greater, but London is such a huge element in the costs of Royal Mail, which has huge overheads, any third party looking at the overall cost of the Royal Mail—rather than looking at the Orkneys and Shetland—will have to look at the costs in London. It is Hackney that ought to worry, rather than the Orkneys and Shetland. That was the point I was trying to make.