Postal Services Bill

Lord Razzall Excerpts

Tuesday 17th May 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, I hope my noble friend will in the end decide to resist the blandishments that have been advanced across the Floor of the House. The noble Lord, Lord Stevenson of Balmacara, gave the game away at the end of the speech when he said, “We are not asking to legislate for the terms of an agreement”. These are complex agreements and it is much better that they should be left to the two companies—both of which are now under competent and trustworthy leadership—to determine the terms of the agreement. As the noble Lord, Lord Stevenson, said—the noble Lord, Lord Rogan, made the same point—there is an existing agreement between the Post Office and Royal Mail and there needs to be, in one way or another, a continuing agreement.

The noble Lord, Lord Stevenson, said that the two organisations could not exist the one without the other. Without being an expert in this area, I do not know how far that would be true in perpetuity but it certainly would be true for the time being. Therefore it is very much in the interests of both Royal Mail and the Post Office that there should be a workable agreement between the two. It is for them to negotiate, decide and then sign; it cannot be a matter of Parliament legislating and telling them what to do. Otherwise, what is the point of having the present leadership of these two organisations? Why should it not be in the Civil Service?

But, of course, they are commercial companies. They are facing the problems we have debated at some length over recent weeks and they have to be given the trust to do what they consider is in their best interests and the best interests of their customers and employees. I used the word “blandishments” earlier; I was being fairly kind. Parliament should not interfere in this area in the way the amendment suggests and I hope my noble friend will feel able to resist it.

[Lord Razzall]

My Lords, everyone in the House would entirely endorse the remarks made by the two noble Lords who have brought forward amendments in relation to the importance to our national life of the post office network. That is a given on all Benches and I suspect that no Member of your Lordships’ House would disagree.

I have two propositions, which I hope your Lordships’ will accept, which are totally germane to why the two amendments should be rejected. First, from a commercial point of view, it is virtually inconceivable that any operator of the Royal Mail with a universal delivery obligation to deliver mail six days a week would not wish to avail themselves of the services of the Post Office. There is no other network in the United Kingdom that would enable that obligation to be fulfilled. There is, therefore, an essential logic as to why any owner of the Royal Mail would wish to continue to use the post office network.

Secondly, the noble Lords who have brought forward these amendments have to take on board that, were their amendments to be carried and the requirement placed in the Bill, there is a significant concern that the European state aid rules would come into play. The whole transaction could be held up for a year or two while the European state aid issue was resolved, during which time the Royal Mail would get into further financial difficulties.

In my view, it is inevitable that any operator of the Royal Mail is bound to use the Post Office to deliver the universal service obligation. At the same time, I would not wish to risk the hold-up of this transaction, thereby jeopardising the future of Royal Mail, because of the operation of the state aid rules.

[Lord Whitty]

My Lords, I was not going to intervene in this debate because I agree with much of what has been said by the noble Lord, Lord Rogan, and my colleague on the Front Bench and I have intervened in this area at earlier stages in the debate. Parliament has a huge responsibility here as two great parts of the nation’s infrastructure are in trouble and both require a new start. The Government have concluded that, in respect of the Royal Mail part, the new start shall be under private ownership. As the noble Baroness knows, I do not entirely agree with that, but nevertheless that is where we are. Everybody who has contributed agrees that there has to be some sort of stable relationship between the two parts, as we move into this new world. The Government’s difficulty is that they have to find a buyer for Royal Mail, the logistics part of the operation. Nobody is saying, and indeed my noble friend Lord Stevenson explicitly said, that Parliament should lay down the terms of that relationship, but Parliament has a right to know that that relationship will exist because it will determine the nature of both sides of that organisation—in terms of this amendment for the next 10 years. Clearly both sides may have an interest in ensuring that such an agreement is established prior to this Bill being implemented and the privatisation going through.

If I can be a little rude, I want to talk about the elephant in the room. The suspicion on this side is that if an amendment of this nature is not passed then the issue will not be the nature of the negotiations between Royal Mail and the post office network but the nature of the discussions between the Government and a potential investor. The Government will not find it easy to find an investor. The last Government did not find it easy to find an investor for a rather smaller proportion of Royal Mail and, if the interests of Post Office Ltd were sacrificed by untying some of the responsibilities of Royal Mail towards its Post Office Ltd partner as part of the deal, the interests of both sides and particularly those of the post office network will have been sacrificed. I hate to put it this way, but I have a degree of suspicion not of Royal Mail or the post office network but of the Government’s need to induce an investor in Royal Mail in the first place. If one of the terms of that inducement were to prejudice the future relationship with the post office network then the suspicions could be justified.