Postal Services Bill

Baroness Donaghy Excerpts

Wednesday 16th March 2011 Lords Chamber

[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.

[Baroness Wall of New Barnet]

I, too, support the amendment. In my experience, where employees have a stake in the business—such as being shareholders—the greater the influence they have in that business, the bigger the responsibility they take. It is a win-win situation. The presence of employees on the board means that they react differently. The evidence from when that has happened where I have been involved as a trade union official is that their ownership of the business and its success has been reinforced. The whole workforce engages in the business as a result of that recognition.

--- Later in debate ---

[Lord Cameron of Dillington]

My Lords, the profitability of post offices, touched on by the noble Lord, Lord Whitty, and the need for a sustainable business plan, as set out in the last amendment, is important to me. It will come as no surprise that I come at this from the perspective of rural post offices, and it is here that I wish to probe the Government’s plans. Amendment 22ZD, on a sustainable business plan, seems to me the best place to raise all my questions. Although I considered spattering them into a whole series of amendments that we have yet to come to, I hope that your Lordships will allow me to put them all under this one umbrella.

Rural post offices are a key thread in the web of rural communities. If you can imagine a web on an old barn door, you cut a key thread and the web collapses. It is the village shop that is the key, but the post office represents the cornerstone of viability to that shop as it can greatly increase the footfall in these shops. Research shows that it can increase the footfall by 15 per cent or more. Quite apart from the invaluable services that local shops provide—particularly to those in rural areas without transport, which includes the very old, the young and the poor—it is the footfall in those shops that is the key benefit to the community. It is a place where old Mrs Jones can meet up with the young Master Smith. That seems a strange request, but the old and the young have different groupings in rural villages and it is really important for the sustainability of that community that there is a cross-fertilisation between the groups within it. That can only happen in a village shop.

I am keen to probe the Government on how they intend to keep the current network of rural post offices profitable and the sort of sustainable business plan they have to ensure that they can keep to the promise that they made in the November document, referred to by the noble Lord, Lord Whitty, which states:

“We will maintain the network at around its current size”.

That document sets out how the new flexible service will attract new customers, and claims that it has already done under the new post office local programme. I have my doubts that this will be enough in the long run to give the much needed boost of confidence to potential sub-postmasters to pick up the gauntlet to invest in a new business in a rural area that will probably give a very limited return, that requires a huge degree of skill in accounting, stocktaking and people skills and that involves very long hours. Somehow this vital job needs to be made more attractive. A post bank, as mentioned by noble Lord, Lord Whitty, would be a sure way to give that confidence. I endorse all his words on the subject, especially with reference to the huge success of such a scheme in New Zealand. A firm commitment in this area would give confidence to potential sub-postmasters.

How are the Government going to ensure, in that crucial plank of their sustainability plan, that government departments will deliver their services through post offices? There is no way in which that will happen if there is a cheaper route. Once the £1.34 billion that the Government are putting in has run out, in four years’ time post offices will once again start to close. I suspect that most of those closures will be in rural areas. The noble Lord, Lord Whitty, has already referred to the DWP's reluctance to use post offices and to its closing down the contract on the green giros, which brought about £15 million per annum into the post office chain.

The trouble is that the DWP and other departments will always follow the cheapest route. Of course, the cheapest route might be the internet. It is not necessarily cheaper for a lot of people, because it ignores the cost of owning a computer and accessing the training if you happen not to be part of the computer age. Some people in remote rural villages find that difficult. As an aside, I put in a plea, vis-à-vis long-term sustainability, that the Government use part of the £1.34 billion to equip post offices, where necessary, as mini-internet cafes and to pay sub-postmasters to help the digitally excluded in rural areas to access government services via the internet. That would be a helpful service for the Government to invest in.

It is typical that where post offices are most threatened—in remote rural areas—internet broadband connections are all too often non-existent. To put it the other way around, post offices are essential in the delivery of services where no broadband exists.

My question remains: how will the Government persuade their departments to use the Post Office? Local government services are another possibility, but under the current cuts and financial stringency how can the Government twist enough arms to make local authorities deliver through post offices as opposed to the cheaper option of using their sparse and increasingly rare local authority offices? I say that that is the cheaper option, but it is not really cheaper; it is certainly not cheaper to the consumer, who has to pay increased transport costs to get to the outlet. We should bear in mind that all too often the consumers who want to access those facilities are those who can least afford such costs.

All the recent trends in this area seem to be for the Government to reduce their use of post offices for the delivery of government services. What are the Government going to do to reverse that trend? How will they maintain the network at its current size? Do they have a sustainable business plan? I hope that the noble Baroness will be able to answer me.

While we are discussing Clause 4 and the possible mutualisation of the Post Office, do the Government intend in the near future to introduce a majority of sub-postmasters on to the board of Post Office Ltd as a trial run to see whether sub-postmasters running the Post Office company helps? I think it would. I realise that that is a bit of a googly to throw at the Minister, so I would be happy for her to answer that question in writing.

[Baroness Donaghy]

My Lords, in supporting the amendments, I want to deal with the potential political fallout of getting it wrong. The Government gave a reassurance in an earlier debate that there would be no programme of closures. We all know that you do not need a programme to have a continuing and worrying number of post office closures. The Government may well succeed in being hard-headed—and, dare I say, hard-hearted?—about the role of employees and in their business-first approach to Royal Mail. However, when it comes to the Post Office, the potential fallout is another matter. There was a huge loss of good will for the previous Government, my Government, because of the number of post office closures. As noble Lords know, 900 post offices are up for sale, and a significant proportion would not be considered financially viable unless there was an inter-business agreement with teeth. It might sound strange coming from me, but I would like to praise the Daily Mail’s post office campaign, which has been one of the most effective for any political party in its dedication and coverage.

I do not think we should underestimate the amount of political capital which will be used up by any Government who fail to ensure a successful future for the Post Office. It may be more valued by the older person, but it is the older person who votes. So in supporting these amendments, we are looking for an assurance from the Government that whatever pattern falls out—whether it is a mutualisation or whatever—a very strong effort will be made to have an inter-business agreement which protects the future for sub-postmasters and for as many post offices as possible.