Postal Services Bill

Lord Brooke of Alverthorpe Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Brooke of Alverthorpe]

My Lords, I congratulate the noble Lords, Lord Empey and Lord Dobbs, on their excellent maiden speeches and look forward to listening to them again in the not-too-distant future.

I was one of those who spoke strongly in favour of the Labour Government’s 2009 Bill, notwithstanding my trade union background. I did so principally because of my experience in working with the NATS public/private partnership—to which I shall return in a moment—but also because the Hooper report demanded that action needed to be taken if all the things that we treasured about the Royal Mail and the post office network were not to be gravely put at risk in the future.

I supported that Bill for several reasons. First, it would have provided much needed private capital investment. Secondly, it proposed to change the regulatory regime. Thirdly, it would have safeguarded the universal service obligation, which is potentially under threat. Fourthly, it would have safeguarded the staff’s pension fund and other entitlements. Fifthly, it would have speeded up modernisation—with capital coming in, as well as new management, which would have injected new approaches. Additionally, there was the opportunity for providing what I felt was a potentially greater chance for more employee involvement and participation than had previously been the case. I bow here to the noble Lord, Lord Hunt, and acknowledge that he was at the forefront of pressing for changes in that regard—indeed, our proposals were modest by comparison with what is before us now.

Those were the overall issues that I looked to be addressed in the 2009 Bill. When I try to make an assessment of the new Bill before us, I see that much of that is being delivered in one way or another. There are concerns in a number of areas where people want further reassurances, on safeguards for the universal service obligation and so on, but I anticipate that, as we take the Bill through its stages in this House, we will move a lot closer to a good deal of agreement on those outstanding issues.

However, one topic which still disturbs me and on which I will pose a number of questions is the difference between what we were seeking in 2009 and what is now on offer before us. In 2009, a part-privatisation, or PPP, was proposed; now we have what I understand will be a straightforward, 100 per cent privatisation. I have not as yet heard the case made for going 100 per cent rather than having a partial privatisation. I looked at the Liberal Democrats’ manifesto when they went to the country. They were elected on the basis that they would go for a mutual and would look for a 49 per cent stake remaining with the state. I looked at the Conservatives’ manifesto when they went to the country. They said nothing on this—quite wisely, since the nasty party, as it is alleged to be by some people, does not go around offering possible privatisations when general elections are coming up. In the Labour Party, we have heard some different views expressed today. As I see it, my Front Bench are broadly as open-minded and as willing to embrace change as they were in 2009. I am not sure, however, that we are convinced that we should go all the way with 100 per cent privatisation.

In 2009, we would have kept the Royal Mail and the Post Office structure as a British business. It was interesting to hear the noble Baroness, Lady Wheatcroft, who I am sorry is not in her place but who made a very radical speech for the Benches from which she comes, touch on the importance of where organisations fit into society, what communities are like and what needs to be done to try to get communities back together again.

I do not think that it is being a little Englander to take this perspective, so I take issue with the noble Lord, Lord Mandelson, on this. I am a European at heart—probably not as much as he is—but I am also interested in what other Europeans do and how they look after themselves, their communities and their businesses. We find that very few of them run at the front with the liberalisation as we do in this country and offer themselves openly for anybody to come and take them over. Among the population at large, there is an increasing resentment at the way in which the political classes sort things out and ignore their views in a given area. We have to be cautious about this.

I return to the subject of NATS, a PPP for which full privatisation is contemplated. NATS has had all the freedom it needed to raise all the capital it wanted; it has brought in people from the private sector to run the show and has been run entirely without the Government interfering in its operations. NATS even has an element of overseas money invested in it. CAA has 4 or 5 per cent of the shares but, as that is now a Spanish company, NATS is not wholly British owned. If NATS, a strategic part of safeguarding this country, was fully privatised, it could possibly end up in the hands of people overseas. If we go that way, I would bet any money that the German air traffic service will take over the British air traffic service. What an irony that would be. I say no more than that.

On Royal Mail, I want to ask my friend the Minister—we are very friendly, and we have exchanges on a number of issues—this question. What will be the difference between going for a public/private partnership, in which the majority of shares go into the private sector and the Government hold 25 per cent—a golden share—and going all the way with a 100 per cent privatisation? The papers are almost encouraging foreign money to come in and take over Royal Mail. That is seen as inward investment and something to be encouraged. What is the difference? I listened to my noble friend Lord Hunt and to my noble friend Lord Mandelson, who described what had changed in his mind between 2009 and now, but I did not hear the total case of why we had been unable to bring in money on the kind of scale that was needed to keep Royal Mail going. He did not say that, because he did not get far enough down the road.

The British public need to be persuaded because a policy is being pursued on which no one has legitimate backing from the public at large. No party went to the country with a manifesto proposing what is now before us. We should recognise the ill feeling that people in certain quarters have towards what is happening with some companies and utilities which, bit by bit, have now been taken over by foreign companies.

CAA is a typical example. Having bought as much as it could of this country’s airports, CAA has over-reached itself and now has to meet phenomenal interest payments and cut corners wherever it can to ensure that its profits are sustained. We saw the results of this before Christmas when Heathrow did not have the equipment it needed to keep this country running its business. Why? If the Government still had a small stake in CAA, they would have been in a position to say, “This will not happen again”. Indeed, they would have been in a position to say, “This should not have happened in the first instance”. That is the kind of approach we should be looking for with the development of these companies. Can the Minister set out carefully the real raison d’être for why a PPP of the kind I am talking about is not appropriate?

If there is privatisation, will subsidies continue to be paid to Royal Mail plc in the future in the way in which we continue to subsidise many utilities which have been privatised? Again, many people feel very unhappy about what is going into these privatised utilities, especially when they see the profits that are being made by them.

On the sale of shares, I shall try to be as helpful and as constructive as possible. I give the Government support for their effort to try to get greater staff involvement, perhaps by selling shares to them at a discounted rate. Whichever way they decide to tackle this issue, I await with interest to see the approach they adopt to the share ownership scheme. A number of options are open but, as yet, their approach is unclear. However, in general terms, I welcome it.

There may be some merit in the Government contemplating serious discussions in an area where, on occasions, there has been great difficulty in moving forward, to see whether they can persuade the CWU to have a stake in the new company. If so, the question is whether they could fund that entirely on their own or whether the Government might make an offer to go in partnership with it into this private limited company, or even offer shares at a discounted rate as with employees. We need a new initiative on that front. Simply bringing in new management with new money may not necessarily resolve some of the problems of the past, even though many people believe it will change it overnight. We need to have a change of attitude within the union too, if we can persuade it, to get it more involved and playing a bigger part, which would lead to growth rather than the continuing diminishment of the operation.