Royal Mail

David Anderson Excerpts

Tuesday 25th June 2013 Westminster Hall

[Katy Clark]

The fact that the Government have taken over responsibility for the pension fund has made Royal Mail a far more attractive prospect to anyone who wants to buy shares. I believe that that was why the Government decided to go ahead in that way.

In the run-up to privatisation, price controls have been removed from the cost of stamps. The cost of first-class stamps increased from 46p to 60p in April 2012, and second-class stamps have gone up 36p to 50p, although there is a 55p cap on the cost of those. The Business, Innovation and Skills Committee, of which I am a member, expressed concern, in our report on stamp prices, about the impact that this will have on vulnerable customers.

On 29 May, the Government announced the appointment of advisers to the Government for the sale of Royal Mail. We understand that they are working on a flotation with a value close to £3 billion. This will be the largest privatisation in the UK since the railways in the 1980s. However, the Government have not specified what the form of that sale will be, whether an initial public offering or a sale to private equity, although they have said that an initial public offering is their preference. Will the Minister give an update to the House on the Government’s thinking on this aspect?

The Minister took the unusual step of saying that Royal Mail may be sold to a foreign buyer if the communication workers continue with their campaign against privatisation. Can the Minister say when a decision will be taken as to what the form of a sale will be?

As my hon. Friend the Member for Wigan (Lisa Nandy) highlighted, there has been a great deal of concern about the costs associated with privatisation, which are likely to be huge. Barclays, Bank of America Merrill Lynch, Goldman Sachs and UBS have been employed to work on the sale. It is believed that the banks alone will receive £30 million in fees. No detail has been provided to the House. Will the Minister outline in detail all costs that will be incurred by the taxpayer in the process of this privatisation, and undertake to ensure that all costings are put into the public domain?

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend on securing this debate. She said that the Minister said that Royal Mail could end up being sold to foreign companies. Is that not the case, because as we have seen with railway privatisation this week, 64% of what was British Rail is now owned by foreign companies? Does the Minister, and does my hon. Friend, think that the public in this country are aware that our Royal Mail could be owned by foreign companies?

[Katy Clark]

My hon. Friend is well aware that many parts of the public sector that have been taken into private hands have ended up being owned by both private people abroad and by foreign countries. That is not in the public interest.

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[Margot James (Stourbridge) (Con)]

It is a pleasure to serve under you, Mr Davies. I would like to start by paying tribute to the Post Office and Royal Mail for the hundreds of years of service they have dedicated to the nation. In particular, I would like to pay tribute to the sorting office in Stourbridge. I visited the delivery office early one morning last summer, and it was an eye-opener to see the incredible hard work, commitment, organisation and efficiency that characterised it. I then went with a postman on his delivery round, which topped off the visit for me; indeed, it was one of the most rewarding visits in my constituency calendar last year.

Mention has been made of the price of stamps, and I was on the Business, Innovation and Skills Committee at the time the proposal was made to raise the price of first-class stamps to 60p. The Committee was concerned about that proposal, and I shared that concern, but if we are to guarantee a universal six-day-a-week collection and next-day delivery service, 60p is a fair price, and a favourable comparison can be made with other items we might purchase for a similar sum, such as daily newspapers.

The need for part-privatisation was accepted under the previous Government. Richard Hooper was appointed back in 2008 to conduct an independent review of Royal Mail’s future, and his report under the previous Government made the case for part-privatising the Royal Mail service to guarantee its future sustainability. The former Deputy Prime Minister, Lord Mandelson, was passionate about going ahead with part-privatisation at that point, firmly believing that Royal Mail was not sustainable in the form it existed in at that time. The current Government are merely taking on that unfinished business so that Royal Mail can, as my hon. Friend the Member for Gosport (Caroline Dinenage) said, seek private capital on the stock market. We can surely all agree that we do not want to add in any way, shape or form to the country’s debt if that can be avoided. If private capital can enable the Post Office and Royal Mail to innovate to meet the challenges of the future, that is surely to be preferred to increasing the debt burden on the taxpayer.

On the opportunities for staff, I do not accept that the 10% employee ownership proposal is a bribe. I am impressed by certain models of capitalism—notably the John Lewis Partnership, which is a model many people in the Government respect. Lessons can be learned from that way of doing business. Members of the important staff stakeholder community have an interest in the business for which they work. I think that model will come to be appreciated with the passage of time.

[Mr Anderson]

Does the hon. Lady accept, though, that there has been a full democratic ballot of the work force, with a 74% turnout, which is probably more than for any of us at the last general election, and 96% of the people balloted said they did not want to get involved with these plans? Surely, the Government should listen to them; the people we expect to deliver the service do not want to go down the road the Government are suggesting.

[Margot James]

I thank the hon. Gentleman for his intervention. No doubt there will be many pressures and issues on the minds of people who work in the Post Office and the Royal Mail, and they came to their conclusion, although I do not know what the precise wording of the question in the consultation was.

I was talking about what would happen in the fullness of time. I think most employees who get a stake in the business for which they work—especially one with a good future, such as Royal Mail, which has a rosy future now that the Government have taken its huge pension obligations to one side—would welcome such participation.

I am impressed by the protections that the Government are putting in place. Royal Mail will still be regulated by Ofcom. There is the second-class postage cap. The VAT exemption will remain. The service will remain free for blind people and those serving in the forces. There is also a commitment on the Post Office side to maintain 11,500 branches. As I said—I am sorry the hon. Member for North Ayrshire and Arran (Katy Clark) thought this was a party political point—I have seen with my own eyes in my constituency what has happened at several post offices. Only last Friday, I opened a branch that had been upgraded and renovated. We are also keen to get a Post Office Counters local service back in an area that had its post office taken away a couple of years ago, and we are close to achieving that.

There is, therefore, great promise for the future. I look forward to Royal Mail staff having the opportunity to take a stake in their business and the taxpayer having a fairer solution in terms of an ongoing commitment in the future.

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[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) on obtaining this debate on a serious matter.

It would be a nice change if in this place we listened to the people who know: the people who deliver a service. The service we are talking about has been delivered for 497 years, and I reiterate what my hon. Friend said: what is happening is bribing people with public money—asking them to take shares in an organisation. As I said in an intervention on the hon. Member for Stourbridge (Margot James), 96% of the members of the union who were balloted said, on a 74% turnout, that they did not want that. Even Boris Johnson, who constantly lectures the unions about ballot thresholds, could hardly argue against those sorts of figures.

I have no doubt that people will say, “It’s self-interest. They want to remain where they are,” but the bosses of Royal Mail said—pigs may fly one day—that the terms and conditions of the workers will not be affected; so they cannot be accused of self-interest on that point. Perhaps their self-interest is based on their pride and faith in the service. They believe that Royal Mail is not just a brand to be bought and sold in the marketplace; they believe in the principles and ethos of public service. So do many other public service workers. In the past 25-plus years the House has ignored their voices. We have always known better. For example, in 1992 the public services trade unions argued against the private finance initiative. Hardly anyone in the House today would speak in favour of PFI as a wonderful success, but for 25 years when the trade unions said anything the response was, “Ignore them—they are just looking after their members.” They were right when they said it would not work: it has not worked.

Likewise, members of the National Union of Mineworkers said, “If you close the mines in this country and privatise them, what will you end up with?” We can see what we ended up with: there are three coal mines left in this country; we import 50 million tonnes of coal from some of the least secure regimes in the world; and the reality is that the lights of this country may go out. Similarly there was the “Tell Sid” debacle: “Tell Sid” to have shares, and we will transfer all the risk to the private utilities. What did we end up with? The voice of the work force was ignored, and the utilities sector is not fit for purpose. There is a £200 billion bill—we will have to find that to make sure we can power our country for the future—and a pricing regime that has pushed millions of people into fuel poverty.

Exactly the same process that is now being suggested for Royal Mail was carried out in the deregulation of bus services. In my part of the world we had something called Busways. We were told clearly, “Sell the shares to the work force—it will be their company.” What happened? In a few short months there was a management buy-out. Four people walked away with millions of pounds; the people on the ground were left with worse terms and conditions, working bad shifts with lower numbers, a poorer service for the public, a worse deal for the work force, and huge hikes for those using the service.

It is not just on the privatisation agenda that the voice of the workers has been ignored. When the Care Quality Commission was mooted, people in the health service said it would not work; and of course they were ignored. We saw what happened last week, but I will tell you what: I bet the two previous Health Secretaries—and probably the present one—wish they had paid a bit more attention to the people who actually work in the service than they did to those who advised them. But our arrogance as the political élite is overwhelming. We assume we know better than those who have dedicated their lives to delivering a service to the people of this country.

I make a plea to the Minister to stop rubbishing the voice of Royal Mail’s dedicated work force and accept the fact that they have been flexible in recent years. They have accepted huge changes to their working practices, shown huge experience and commitment, engaged much better with the modernisation programme and delivered much better industrial relations than in the past. They might just know something that we in this place do not. I ask the Minister to listen to the voice of the workers, and of the public. I am convinced that the people of this country do not know that this is being done, and they will not support it if they are made aware of it.

I look forward to the Minister’s response, particularly to the pointed questions asked by my hon. Friend the Member for North Ayrshire and Arran. I look forward with almost as much keenness to what the shadow Minister, my hon. Friend the Member for Edinburgh South (Ian Murray), has to say, as I know that he is committed to the agenda of not privatising Royal Mail.