Postal Services Bill

Lord Jenkin of Roding Excerpts

Wednesday 4th May 2011 Lords Chamber

We have approached this Bill in a constructive way. We have sought to strengthen the safeguards of the universal service and to make regulation fairer. We have argued the case for greater public accountability and have pressed for guarantees on the future of the post office network. We strongly support modernisation and we are not opposed to the injection of private capital, but we feel obliged, as we consider the initial clauses of this Bill, to point out the significant difference of opinion on the fundamental question of overall majority ownership of Royal Mail and the risks that come with 100 per cent privatisation. I beg to move.

[Lord Jenkin of Roding]

My Lords, it was interesting to hear how the opposition Front Bench justifies the amendment. The noble Lord, Lord Young of Norwood Green, has not disappointed us. It took him 18 minutes to do it, but he has done it and he has made the case that he said. However, I think he is wrong and I shall explain briefly why.

During the debate on the previous amendment there was a question about what the objective was, for instance, of the privatisation of British Telecom, which I mentioned briefly at Second Reading because I was the Secretary of State who published the White Paper and put the Bill before Parliament. The objective there was absolutely clear: the chairman of British Telecom, Sir George Jefferson, came to me early on after I had become the industry’s Secretary and said, “We are not going to be able to develop this business without access to a great deal more capital investment”—and he mentioned very large figures indeed. I had previously been the Chief Secretary to the Treasury and I said, “You do not think you are going to get it from the Treasury, do you?”. He said, “We need it”. I said, “The only way you are going to get it is for 51 per cent, at least, of shares in the BT company to be in the private sector”. He was quickly persuaded that that was an overwhelming argument for privatisation and we moved ahead from that.

It is exactly the same with Royal Mail—it needs capital for investment. I have discussed this with Moya Greene, the chief executive of Royal Mail, and she is very clear that we cannot develop this business unless we have a greater introduction of new capital. She is very clear, too, that this has got to come from the private sector. The amendment requires that a Royal Mail company shall at all times be in the public sector. I do not know whether the noble Lord, Lord Young, recognises that, if it is, it cannot then borrow without the borrowing going on to the public sector borrowing requirement—and that, in the present circumstances, would be totally impossible. British Telecom, by becoming 51 per cent privately owned in its initial stages, was immediately able to go to the market and borrow money without having to bother the Treasury at all. For that reason, the majority of shares being in the private sector was an integral part of the process of getting new capital into British Telecom.

Exactly the same applies to Royal Mail. If the majority of Royal Mail is going to remain in the public sector, as the amendment requires, then the Government can say farewell to any suggestion that they will be able to raise substantial capital sums from the market. It will be difficult enough to sell the company anyway, but to require that a majority of shares should remain in the public sector is a complete nonsense. I listened carefully to what the noble Lord, Lord Young, said. He marshalled his arguments, as he always does, with considerable skill but they were totally unconvincing. If he decides to call a Division on the amendment, I hope my noble friend will advise the House that we should vote against it.

--- Later in debate ---

[Lord Kennedy of Southwark]

My Lords, this is a similar amendment to one that I tabled in Committee. I was not convinced by the Minister’s response then and said I would bring it back. I hope that the Minister has had time to reflect on this. As I said before, people do silly things all the time and doing nothing is, in my opinion, unwise. This amendment would only require the Secretary of State to report on how the name “Royal Mail” will be protected. If the noble Baroness is not minded to accept the amendment, can she explain how we avert another Consignia debacle? Saying that this is such a well-known and recognisable brand name that no new owner would ever consider getting rid of it just does not stack up—Consignia proved that. Future owners may decide to change the name to some other well-known name and Royal Mail as a brand would be lost. That, I contend, would be a matter of much regret. I beg to move.

Lord Jenkin of Roding: My Lords, I listened to the noble Lord with some interest, but I should have thought that, if ever a brand name would be of immense value to anyone who bought the business afterwards, it is that of Royal Mail. I hope that I am not being indiscreet but when I discussed privatising Royal Mail while I was in the Department of Industry in 1981, I was told brusquely, “It’s royal—we can't touch it”, so it has been delayed for my noble friends to bring to the point now which I would really have liked to have seen a long time ago.

[Lord Boswell of Aynho]

My Lords, perhaps I may comment first on the amendment which has just been moved by the noble Lord, Lord Kennedy of Southwark. We all have an interest in the continuation of the proud name “Royal Mail”, which honours those who have worked in that service over 300 years. All of us here should respect that, not only those who are historians or antiquarians. At this point, perhaps I had better declare my interest in archives and my involvement with the all-party group, of which the House may be aware. However, if the noble Lord looks forward to the proposed new clause in government Amendment 54, which has been grouped with this amendment for convenience, we might have a more substantive discussion. I look forward to the Minister's comments on that amendment, on which I shall speak in a moment.

I make no apology for wanting to see that this is got right because it is not necessary to be a fan of TS Eliot’s poetry—although I am one—to understand that the past is very much part of the present and the future and that it should not be possible, in a mechanistic way as it were, to unpick them or to take no notice of them. It is really important that the heritage and pride which have gone with that name and its tradition are celebrated and maintained, not least because it is a matter of obvious sensitivity in relation to the monarchy. We do not need to speak about that in detail but the monarch’s head appears on our postage stamps and her title attaches to our postal service. We hope that will continue.

However, as I said in Committee, any of us who have been to see the Royal Mail’s museum and archive, which is the subject of the government’s proposed new clause tabled in Amendment 54, will know the richness of what is there. There is complexity and fascination in how designs were considered, modified and put into circulation and that is all part of the tradition which should go with this. It is important that we make these commercial changes—I am not resiling from that—and that we do not spend unreasonable money on resourcing the past, however important it is. I said in Committee that there were some concerns about the resources available for the existing archive.

I thoroughly welcome the proposed new clause in Amendment 54 which is really, if I may say so, a considerable tribute to the noble Lord, Lord Clarke of Hampstead, to his colleague, the noble Lord, Lord Christopher, to my noble friend Lord Brooke of Sutton Mandeville and, modestly, I hope, to the little contribution that I made on a warm early April afternoon when we first discussed this in Committee. We raised it with the Minister, who said that she would go and think about it. She has clearly done so and we should give her a good measure of credit for that.

The proposed new clause which the Minister intends to bring forward in the Government's name is promising. For a start, it is prescriptive as to duty in that the Royal Mail company will have to send a report, which she will have to consider. That report will have to come to Parliament and anyone who has been here for any length of time is aware that that provides a channel for questions, an opportunity for expressions of dissatisfaction and so forth. Yet it does not inhibit the company in the nature and form of what it does, which is the right approach. If we sat there saying, “This is what we will do with the archive and this is the precise specification of the new and successor arrangements”, we might live to regret that and not be able to deliver it, so flexibility is desirable.

However, because these things tend to be forgotten—unless I am under a misconception; if so, my noble friend the Minister will no doubt disabuse me—it is also probably right to record that in creating this new duty, which goes beyond the existing obligation of Royal Mail, there will be obligations in relation to the archive and what we call the state process of the business. The opportunity to retain postal material and the obligation to report on what is being done is a new and welcome duty. However, we are substantially talking about a concern, which we should never forget when the ownership of public assets is moving from the public to the private sector either in whole or in part, to impose the right kind of traditions and conditions to ensure that the element of public service is not overlooked and that a great archive’s future is adequately secured.

Finally, the Government have been wise in not being too precise on the nature of this by providing, in effect, an ongoing and if necessary contingent liability on successor organisations. I do not particularly mind who owns the archive, provided that it is available publicly as a jewel in the crown and an asset that is on display, that it is adequately resourced and that we may long continue to celebrate it despite the ownership changes which are taking place under the Bill.