Viscount Eccles
Main Page: Viscount Eccles (Conservative - Excepted Hereditary)Postal Services Bill
Viscount Eccles Excerpts
Baroness Turner of Camden
I support the amendment, which is rather similar to something that I put forward in a previous sitting in Committee. I got the impression then that there was general agreement on all sides of the House that staff representation is a good thing that everyone could support. Everybody seems to agree that the involvement and commitment of the staff are very necessary, indeed essential, for the new company to make progress and for the future of Royal Mail. For that reason, it is necessary to state clearly in the Bill that staff representation is essential. Indeed, rather than just “at least one representative”, I would suggest that it will probably be necessary to have more than one representative, but staff representation will certainly be necessary for the success of the scheme and of the company. Therefore, I hope very much that the general agreement around this idea commends it to the Government. If they do not accept this wording, I hope that they will accept something very similar before the Bill leaves this House.
Viscount Eccles
My Lords, I do not think that any of us could possibly disagree with the thinking behind the remarks of the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Turner. However, I am back with my noble friend Lady Kramer in questioning whether it would be sensible to include such a provision in the Bill. The problem is that we are faced with an enormous quantum of uncertainty about what will happen to Royal Mail and the Post Office when the Bill is enacted. If we were to accept the amendment, we would be piling one uncertainty on top of another. There may well be a share scheme and an entirely separate agreement between the board and the principal shareholder—which is quite likely to be the outcome—as to what the representation on the board should be. That might indeed include employees. Whether they should be people who are also on a trust holding shares on behalf of the employees, if such a trust were formed, is a matter for speculation. While nobody can quarrel with some of the thinking behind this amendment, and indeed some other amendments, it is very difficult to believe that it would be sensible at this stage to put the matter on the face of the Bill.
Baroness Donaghy
My Lords, I was pleased to see the role that ACAS played in helping the company and the union come together to draw up the modernisation agreement in March 2010. That was a culmination of many years’ work and has received praise from the chief executive of Royal Mail, Moya Greene, as well as from Richard Hooper, Ministers, the Opposition and the trade union involved.
Making Royal Mail into a private company is bound to cause anxiety and create disruption for employees and management alike. In those circumstances, measures to improve the atmosphere of co-operation and cohesion are to be welcomed. The proposal for employee shares, if gone about in the right way, could help that process. Assurance on the issue of pension rights, continuity of employment and recognition rights would also be helpful. The proposal for employee shareholders to have representation on the company board is interesting and enlightened. I hope that the Government will consider it seriously.
Deutsche Post has been held up as a shining example of a postal service company. Richard Hooper showered the company with praise for its modern attitude, heavy investment in up-to-date technology and overall efficiency. I readily acknowledge that Deutsche Post, although 20 per cent of the company is owned by a state-owned bank, has been passed from public ownership to private control, but it has a statutory duty to maintain a certain number of post offices. My point is that Deutsche Post has not one, two or three but 10 employee representatives on its supervisory board. If it is good enough for Deutsche Post—a shining example of a modern, go-getting privatised post operator—and for Post Danmark and many other European companies, to have employee representation on the board, why would it be so bad to cater for employee representation on the board in the Government's plans to privatise Royal Mail?
The noble Baroness, Lady Kramer—in a debate on a previous amendment—and the noble Viscount, Lord Eccles, questioned the need to include so much in the Bill. Building trust is an important element in this process. Positive statements from the Government at this stage would give an indication of their intent. Keeping all options open, as has been urged from the government Benches, will not give the reassurance required. I very much support Amendment 20.
Lord Christopher
My Lords, I apologise for having been diverted to another meeting. There are two issues that concern me on which I would be grateful if there were some comment. There is an assumption that there will be a market in these shares, and I am not at all clear that that will necessarily be the case. If there is not, how is it proposed to deal with that situation?
I may have missed the point on the other issue. Assuming that something like the amendment goes through, we have an employee share scheme of this nature and shares are sold back, will we reach a position where all the shares are in the hands of this trust, or whatever it may be called? How will we deal with that situation?
Viscount Eccles
My Lords, both the possibilities outlined by the noble Lord, Lord Christopher, could indeed happen. Again, that reinforces the difficulty of Parliament setting down conditions that will need to be thought through in circumstances that may be very different from those that we in this Committee envisage.
Lord De Mauley
My Lords, Amendments 21ZA and 21ZB relate essentially to the design of the employee share scheme. As the noble Lord, Lord Brooke of Alverthorpe, explained, their broad thrust would be to ensure that shares are placed within an employee share trust. His proposal is helpful and constructive. I thank him and, in her absence, the noble Baroness, Lady Dean, for raising the issue. I know that they both have a wealth of experience in this area.
As the noble Lord explained, an employee share trust certainly has attractions, particularly for its ability to deliver the Government’s objective to ensure a long-standing employee stake in Royal Mail. The Minister for Postal Services has been clear in the other place that he sees these attractions; certainly, he does not discount the matter. However, like my noble friend Lord Razzall, we believe that it is important to keep options open on the design of the scheme until we have reached a firm decision on the form of the transaction. After all, individual share ownership has its own merits, giving the employees a very real sense of ownership.
As I have said, the design of the scheme will in part depend on the type of sale we undertake. For example, individual share ownership could be more appropriate if Royal Mail were floated. In that case, the question of the noble Lord, Lord Christopher, is answered because there would be a public market in the shares. It could also make sense—I think that the noble Lord, Lord Tunnicliffe, touched on this earlier—to have some combination of a trust and individually held shares. I spoke about this area more generally at some length in the debate on Amendments 18 and 19, as I did about the risks of recipients cashing in their shares early, and I am sure that noble Lords would prefer me not to repeat myself.
As I said when we discussed Amendments 18 and 19, paying equal dividends to each employee is a laudable objective. However, there are other sensible methods of allocating shares, and therefore dividends, to employees. I mentioned that in some schemes shares are allocated depending on length of service.
As regards restricting the sale of shares to anyone but an employee share trust, I can again understand the noble Lord’s concerns to ensure that the employees’ stake cannot be diluted by shares being sold to third parties. However, again this would place an undesirable restriction on the design of the scheme and would prevent us allocating shares to individual employees, if we thought that was appropriate at the time.
As I said earlier, it is in fact very unusual for a Government to commit themselves to an employee share scheme on the face of legislation. For example, I believe that—the noble Lord, Lord Brooke, will correct me if I am wrong—there is no similar commitment in the Transport Act 2000 to create the NATS employee share trust. I hope that all noble Lords welcome this upfront commitment to employee shares at Royal Mail but accept that it would not make sense to go even further and prescribe the particular detail of the scheme in legislation. For these reasons, I ask the noble Lord to withdraw the amendment.