Postal Services Bill
Debate between Viscount Eccles and Lord De Mauley(13 years, 7 months ago)
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Viscount Eccles
My Lords, I thank my noble friend very much for an extremely clear exposition. We started the group with an extremely clear and well expressed amendment from the noble Baroness, Lady Drake. I want to ask a question that perhaps cannot be answered this morning: namely, what information has been conveyed from Royal Mail either to Postcomm, as it is at present, or to the Government about the expected experience under the new pension scheme? Pension schemes are very difficult to keep in surplus or in balance if the number of employees is declining or their average age is rising. Royal Mail recently declared that it was going to reduce its staff and workforce and I think has further plans that might lead to that happening again in the future. In my submission it is likely that the new scheme, which is entirely properly set up under the arrangements as described, nevertheless could be threatened with going into deficit at an early date. In looking at that subject, I hope that the Government are also taking account of the comparative costs of pensions to Royal Mail and to other postal operators. As I say, I am not looking to receive a detailed assurance today as this is a new and rather complex point. Nevertheless, at a later stage I might consider it right to revert to this subject.
Lord De Mauley
My Lords, my noble friend makes an extremely important point. The terminology is confusing but I think that he is talking about the RMPP scheme, the old liabilities and assets having been transferred out into what is rather confusingly called the new scheme. Therefore, he is concerned about the ongoing liabilities in the RMPP scheme. I will write to him, but I can tell him that £1.5 billion of funding will be left in the new scheme specifically to cover what is known as the salary link. However, I had better expand on that in writing, if I may.
Postal Services Bill
Debate between Viscount Eccles and Lord De Mauley
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.