Postal Services Bill
Debate between Viscount Eccles and Lord Lea of Crondall
Lord Lea of Crondall
My Lords, unless I have read this Bill wrong, Clauses 28 and 29 leave no doubts about the universal postal service. I shall put the question to the Minister the other way round. We are not debating these clauses now, but because the point has been raised it is worth looking at them. Can we take it that they mean what they say?
Viscount Eccles
My Lords, the Postal Services Act 2000 “liberalised” the postal service. There are now, I think, 49 licensed postal operators in addition to Royal Mail, which is also licensed. If that number of people were willing to become postal operators, they must have expected it to be possible to do that successfully. As the noble Lord, Lord Lea, said, the Bill quite clearly states that there has to be a universal service, so whoever buys Royal Mail in whole or in part, wherever they come from, would not be acting in accordance with the law if they did not maintain a universal postal service. That is not really the problem. The difficulty we are in is that we have had an inappropriate regulation system in which the regulator tended to believe that competition was more important than the universal service and acted accordingly.
The problem with the universal service is that it is a monopoly. As noble Lords will have seen from the lobbying that they have had, it has been said that it will become a privatised monopoly. However, it is not a natural monopoly but a completely artificial one. It is not like a railway line or a water pipe. In my part of England, the so-called final mile is absolutely nothing like a final mile but a final 10 miles. It is running about on the roads, which are a public asset and nothing to do with the assets of Royal Mail or the Post Office. There has been confused thinking about whether the so-called final mile is an advantage or a disadvantage. The private operators are trying to tell us in this House that it is an advantage, an asset that enables people to charge monopoly prices. In fact, that is not what has happened. It has been entirely the reverse. The final mile is a disadvantage to Royal Mail. Therefore, in the progress of this Bill, we should concentrate more on regulation and the prospective system of Ofcom than upon anything else.
Postal Services Bill
Debate between Viscount Eccles and Lord Lea of Crondall(13 years, 8 months ago)
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Lord Lea of Crondall
If the noble Lord will allow me, it was the Hooper report that said that the most likely presumption of going forward was an IPO, and that was very recent.
Viscount Eccles
Hooper said in 2010 that the situation had worsened, although he acknowledged that things were happening at Royal Mail which were a great improvement. The big snag with an IPO is that it does not bring Moya Greene’s £2 billion. The noble Lord, Lord Clarke of Hampstead, would certainly buy some shares, and I might if the price was low enough, but you would not get any part of the £2 billion from either of us.
Postal Services Bill
Debate between Viscount Eccles and Lord Lea of Crondall
Lord Lea of Crondall
My Lords, it is often said that it is a fallacy that the price is much lower than the value soon after privatisation. It is a matter of the scale of the difference. I have some data on the big privatisations that took place under the Conservative Government. In one year, the average share issue premium on major shares issued was 7 per cent. On privatisation issues the average premium on the first day of trading was 77 per cent. That is 10 times more. Is that not prima facie evidence that the public tend not to get a good deal on these big privatisation issues?
Viscount Eccles
My Lords, we are dealing with a very different situation here. Unless and until the Bill becomes an Act and the pension issue is resolved for the time being, it would be a very bold person who said that you could put any value on Royal Mail. In the context of a willing-buyer willing-seller market, I do not think that you will find a willing buyer. Even if the buyer thought that the business was residually worth something, he would not want to enter into the deal. This amendment goes to the same point. In a willing-buyer willing-seller deal, neither the seller nor the buyer wants to know exactly how the sums have been worked out and if they thought that the sums had to be submitted to a third party and debated in this Chamber as a matter of parliamentary interest, I think you would scupper almost any deal.