Lord Young of Norwood Green
Main Page: Lord Young of Norwood Green (Labour - Life peer)Postal Services Bill
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Lord Young of Norwood Green
My Lords, the Government propose to sell off 100 per cent of Royal Mail, which may be regarded as one of our oldest public services, dating back to the 17th century. It will be the sale of one of our greatest and most cherished national institutions. It has a noble history in the development of the culture, social cohesion and economic strength of this nation, and today it still provides a vital public service. Richard Hooper has described the sale as a momentous step by any standard, as I am sure the whole House appreciates, whether or not they support the move.
We and fellow Peers of several and no party affiliations have submitted amendments which seek to ensure that, if the sale of Royal Mail goes ahead, it meets four main objectives: first, that it is done in a timely fashion that does not present the prospect of an endless cloud of doubt hanging over the future of the company; secondly, that proper measures are taken to ensure that value for money is gained for the taxpayer and that the company is not sold at too low a price; thirdly, that there is greater clarity and greater accountability than the Bill currently provides; and, fourthly, that a privatised Royal Mail is put on a secure footing and is not subject to the ravages of asset-stripping and disintegration or doomed to failure because of the circumstances that the Bill creates.
The amendment to make provision for a sunset clause aims to meet the first of those objectives, ensuring that any sale takes place in a timely fashion without a long-lasting aura of uncertainty besetting the company. Sunset clauses are well recognised. Indeed, Members, regardless of party affiliation, have argued for them in the past in various pieces of legislation, as I well remember. In fact, the Minister for Culture, Communications and Creative Industries, Ed Vaizey, stated in another place in June 2009:
“I also welcome the fact that there is a sunset clause. As other hon. Members have pointed out, sunset clauses are, in principle, a very good thing to include in any legislation”.—[Official Report, Commons, Holocaust (Stolen Art) Restitution Public Bill Committee, 10/06/09; col. 13.]
If the Government had provided for a sunset clause in the Bill, there would be no need to debate this amendment. As they have not, perhaps a few examples of sunset clauses and their use would help the Committee. In 2009, interestingly, the Conservatives in Scotland argued that sunset clauses should be added to all Scottish legislation. I am sure that Conservative Members of this House will support that position, given that it was stated in their party’s manifesto in 2007. The debt relief Act 2010 has a sunset clause which expires on 7 June 2011, which neither of the coalition parties voted against. In the Budget of June last year, regulatory sunset clauses were announced—a well tried and recognised tool for Parliament and, indeed, the Government to use.
How would the amendment assist in the progress of this Bill? The answer is fairly straightforward: it would add clarity. The Labour Party’s position on 100 per cent privatisation of Royal Mail has been made clear. However, if the Government’s proposals to privatise Royal Mail completely were approved by this House and the other place, the amendment would put a time limit on the Government’s ability to sell off Royal Mail. Setting a relevant date would add certainty for the business and, indeed, for the workforce—certainty that is currently lacking in the Bill.
As it stands, the Bill empowers not only this Government but future Governments to sell off Royal Mail. That process could go on and on. The Minister in the other place has made it clear that he would not intend to sell Royal Mail however low the price. That is a sound position and one with which we would agree. The Bill permits a period of uncertainty to continue not just into next year but possibly into the year after and even longer. That would be an intolerable position for Royal Mail, its management and its workforce. It would place the chief executive of the company in a perilous and uncertain position, which perhaps could be compared with that of a modern-day Premier League football manager at certain clubs, where team continuity has little value. It would damage the morale among the workforce too.
If the amendment were passed, it would not, of course, rule out a future disposal of some or all of the company; but it would require the Government to return to the House if they failed to dispose of Royal Mail by 31 December 2012. We deliberately selected a date which we felt is achievable and viable, rather than a date that could lead to this being characterised as a wrecking amendment.
As we proceed we shall put to the Minister other proposals that outline other areas where we would want them to come back to the House in order to do certain things. This amendment would not prevent the Government selling Royal Mail at another point in the future provided that the sunset clause is repealed. However, the Government have given no indication of a timetable for the sell-off. These amendments—one of which I hope the Government will accept—would enable this Government or a future Government to sell off Royal Mail and also ensure that the matter is not drawn out over many years. Without a sunset clause, the business, the employees, the partners in the Post Office, not to mention its business customers and the public, would be left in a strange limbo-land with no conclusion in sight. That would create massive uncertainty for the business. That could not be seen as an attraction to potential employees and customers, who could be driven away from the business by such massive uncertainty.
An unrestricted time limit could also act as a mechanism to drive down the price of the business. We are told that letter volumes will continue to fall and that the business can modernise only with private investment—so how would a long delay be helpful? The Minister needs to address that issue. Market conditions would likely get worse, and a period of uncertainty would surely make it very difficult to succeed in modernisation or to make proper investment decisions. Can the Minister tell us what impact an extended period of uncertainty would have on the value of the business, and therefore on the value for taxpayers? What will be the impact on employees of the falling value of the share participation scheme, if the legislation is approved?
As for the counterargument that a sunset clause would lead the Government to go for a fire sale of Royal Mail to get ahead of the time limit, the Government have already said that they will not sell Royal Mail at “any price”. As I said, that is a sound position. It would show very little faith in the current Government to think that they would put making an expedient sale before gaining best value for money.
This amendment is reasonable and necessary. It is called holding the Government to account. The legislation timetable is in the Government’s control. If the Government have the will, we will encourage and support the Minister—as we expect her to support our amendments. We will support her in bringing matters to the House and dealing with them as quickly as possible.
The Bill currently provides for the creation of a situation which is similar to the perpetual “sales” at retail outlets. As we all know, there is no rush to get to Currys, Dixons or wherever to buy new electrical goods because the “sale” does not really exist—it is perpetual. A perpetual sale drives down the price. Nothing in the Bill seems to prevent Royal Mail being sold off piecemeal over an extended period, as I said. Even the Minister must agree that that cannot be an acceptable solution. If the Government cannot complete a sale by one of the dates stipulated in the amendments, my honourable friends and I think it right and proper for the sunset clause to be enacted.
The amendments would impose on the Government a requirement to focus on their ambitions—which, as I said, are contrary to mine and those of my honourable friends. The alternative of death by a thousand cuts would wreck the Royal Mail and the improvements made recently, which even Richard Hooper could not envisage happening in 2008, at the time of his first report. The second Hooper report showed that good progress can be made with public ownership of the Royal Mail. It is vital that that is not unpicked and allowed to fall into disarray. The Bill, however, creates the opportunity for that kind of uncertainty. If the Minister and the Government are so sure that selling it off is a good thing, they should tell the Committee about the dangers of an extended period of sale. Indeed, it could be said that an extended sale period for Royal Mail might lead to a Dutch auction of sorts, which may suit some potential buyers more than others.
Lord Young of Norwood Green
My Lords, I have obviously reflected on the range of answers and it is no surprise that I do not agree with all the analyses. What is past is past but perhaps there will be a new dawn, to paraphrase the noble Lord, Lord Hunt.
I agree with my noble friend Lord Hoyle that the amendment is justified. I was confused by the contribution of the noble Baroness, Lady Kramer. I was not sure whether or not she was supporting the amendment but, at the end, I gathered not because she tended to concur with the noble Lord, Lord Jones, that, apparently, no one is going to do anything at all and they are going to wait until 20 December, or whenever it is. I find that unlikely.
As regards the contributions of the noble Lord, Lord Skelmersdale, and my noble friend Lord Borrie, I quite like the idea of the Bill being drafted by committee. It would take a long time and I doubt whether it would be any more elegant or inelegant than it is currently. From my experience of dealing with parliamentary draftsmen, it is a painful and tortuous process to sort out what is required or what they tell you is required. I wish the Minister the best of luck in sorting out that particular problem.
I agree with my noble friend Lord Christopher; I am sure the Government will be involved in the sale. The Minister pointed out the possibilities and I cannot conceive of a situation where the Government will hand this over lock, stock and barrel to Royal Mail. She did not answer the question posed by my noble friend Lord Christopher about whether it could be sold to a hedge fund or a sovereign wealth fund and the dangers of asset-strippers.
I made clear at the outset that this is not intended to be a wrecking amendment; that is why it refers to 31 December 2012. As to whether the situation is much worse, it is challenging but, in one respect, it is better because we have an agreement on Royal Mail transformation with the union and modernisation is going ahead, which is a profound step forward. I will not say that mistakes were not made but there is now a good foundation and a good relationship between management and the union, which is fundamentally important to long-term success.
As to the deadline giving buyers the advantage, that depends on whether you believe that everyone will wait until the end. I find that unlikely.
We will obviously reflect on what has been said by the Minister. However, we would ask her to reflect on whether or not there should be any timescale at all in relation to the projected sale. Nevertheless, in the light of the debate, I will withdraw the amendment.
“Royal Mail companies to be publicly owned
(1) Each Royal Mail company must at all times be publicly owned.
(2) Accordingly—
(a) any issue or transfer of shares in a company will have no effect if it would cause a Royal Mail company to cease to be publicly owned, and(b) any issue or transfer of share rights to a person will have no effect if the acquisition by the person of the shares to which the share rights relate would cause a Royal Mail company to cease to be publicly owned.”
Lord Young of Norwood Green
Under Clause 1, the Government have made it clear that they propose to sell off 100 per cent, albeit with 10 per cent employee shares, of Royal Mail—which may, as I have already said, be regarded as one our of oldest public services. It is the sale of a great public institution; it has a noble history in the development of the culture, social cohesion and economic strength of the nation and still provides a vital public service.
For 350 years, Royal Mail has been, to all intents and purposes, a public service and is seen as a huge and valuable asset run in the national interest. One should not underestimate the importance of a trusted, secure and relatively efficient means of common communication for our economic and social development as a nation. Indeed, it became a template copied around the world. The penny post introduced by Rowland Hill was arguably as vital to this country’s development as the railway or the electricity grid.
Turning to the modern day, I also pay tribute to Richard Hooper, who described the Royal Mail and the service it provides as part of the UK’s “economic and social glue”, binding communities together. That is an elegant and apposite description. Many noble Lords have praised the work of the Royal Mail and the social value of the country’s 11,900 local post offices. Let us also remember that, despite the fact that we send fewer letters than we used to, in common with people in developed countries around the world, the Royal Mail still delivers some 70 millions letters a day to the 28 million homes and businesses in the United Kingdom.
The 100 per cent sale of one of our greatest and most cherished national institutions is therefore a momentous step by any standard, as I am sure all noble Lords appreciate, whether or not they support this move. We on these Benches will ensure that the Bill receives the line-by-line scrutiny at which this House excels in order to gain greater clarity and provide greater assurance for the future.
It is a pity that the noble Lord, Lord Hunt of Wirral, has disappeared from his vantage point because at Second Reading he remarked that the debate seemed to him a little like Groundhog Day. My noble friend behind me has explored the relative merits and demerits of Groundhog Day and I am not going to go through that again. He said the debate had,
“a remarkably similar feel to it to many others that we have had. Of course, we had the Second Reading of a Postal Services Bill on Tuesday 10 March 2009”.—[Official Report, 16/2/11; col. 734.]
Yet perhaps his mind was wandering back to an earlier era because the history of attempts to privatise the Post Office goes back much further than just two years. The noble Lord was a serving member of the previous Conservative Government as Secretary of State for Wales from 1990 to 1993 and then in a number of positions. He earned a great deal of respect across the political spectrum for the way in which he conducted himself during that time but I must remind the noble Lord and the House that, for a good deal of that period, the privatisation of the Post Office was a burning issue of debate, especially between 1992 and 1995.
On 30 July 1992, the Financial Times reported:
“In a departure from previous policy, Mr Michael Heseltine”—
as he was at that time—
“trade and industry secretary, put privatisation of the Post Office on the political agenda”.
Some 18 months later, on 14 December 1993, the Independent newspaper reported under the headline,
“Post Office in ‘crisis’ over Tory delay”,
that,
“the Government came under a barrage of criticism yesterday over the year-long delay in deciding whether to privatise the Post Office”.
Delay and privatisation has an honourable—or dishonourable—history. There have certainly been a number of attempts to resolve this problem.
On 2 February 1994, the Independent reported that full-scale,
“privatisation of the Post Office is still on the political agenda, Michael Heseltine said last night … after it had been shelved by the Cabinet in the face of opposition from ministerial colleagues”.
There is certainly a sense of déjà vu about that.
On 19 May 1994, a Green Paper on postal reform was at long last published. It proposed 100 per cent privatisation of the Royal Mail with a Stock Exchange flotation to the public and employees, and another option of 51 per cent privatisation of Royal Mail. The Post Office network would be kept under the existing arrangements and the Post Office management supported a 100 per cent sale. However, the records show that that met with considerable opposition from much of the public and Back-Bench Conservative MPs. That is an interesting scenario.
In November 1994, a newspaper reported that:
“Michael Heseltine put a last-ditch compromise to leading Tory backbench rebels”.
It certainly was the last ditch; although he did not die in it, the attempt to privatise certainly did. So there are certainly a few echoes in that report.
There was a further twist in the tale. The Cabinet considered the privatisation plan and decided against it. Some members of that Cabinet at the time are Members of this House today. I feel sure that the noble Lord, Lord Hunt, will remember why they concluded that privatising the Royal Mail was a privatisation too far. Maybe these thoughts were in the noble Lord’s mind when he was experiencing his bout of déjà vu and teasing the Opposition Front Bench today.
I make these remarks not only as a mild riposte to the comments of the noble Lord, Lord Hunt, about the 2009 Bill but to illustrate that the future of Royal Mail and the Post Office network is an important issue that has prompted heated debate for many years. What a shame we cannot rewind—but Hansard will reveal all.
The noble Lord reminded us that all the Front Benches were in favour of the Postal Services Bill 2009. Indeed they were, but I remind noble Lords that the Bill before the House at that time did not propose 100 per cent privatisation of Royal Mail. Indeed, it was remarked at the time that no one was proposing 100 per cent privatisation. The Bill stated explicitly that each Royal Mail company must be publicly owned; that is, they must be in overall public ownership. The previous Bill of 2000, still in force today, permits joint ventures between Royal Mail and private companies. That has been a good thing—for example, in relation to GLS. The 2009 Bill permitted a minority partnership. What neither Bill permitted was 100 per cent privatisation, which the Bill before us proposes. That is the nub of the difference and, I suppose, of this amendment.
Amendment 2 is intended to reinsert the provision of the 2009 Bill that each Royal Mail company must be in overall—I stress “overall”—public ownership. As the noble Lord, Lord Hunt, observed, all the Front Benches at the time and indeed the Liberal Democrats supported that proposition.
Perhaps there was a change of heart at the general election. One might find a clue in the manifestos of the two parties that came together to form the Government. If you search for the privatisation proposals contained in the Postal Services Bill in the Conservative or Liberal Democrat manifestos of 2010, though, I am afraid that you will search in vain. The Liberal Democrat manifesto clearly rejected 100 per cent privatisation of Royal Mail. It pledged to:
“Give both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership. 49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government”.
No doubt Liberal Democrat Members will tell us that things have changed fundamentally since they wrote that manifesto, as they have done on a whole range of other issues that I will not refer to today.
Perhaps the Conservative manifesto will be more enlightening. It was enticingly entitled Invitation to Join the Government of Britain. Did we miss something? Was it really an exclusive appeal to Liberal Democrat MPs and Peers? One can scour the contents of the Conservative manifesto from start to finish but there is no mention at all of Post Office privatisation.
During debates in 2009, the noble Lord, Lord Hunt, criticised the previous Secretary of State for introducing a Bill with insufficient consultation, but by comparison this Bill is being pressed through with breathtaking speed. The Government carried out no public consultation on their proposal to privatise 100 per cent of Royal Mail. There was no Green Paper or White Paper. Questioned in another place, the Minister for Postal Affairs did not deny this but seemed unapologetic in the extreme. He said,
“We could, of course, consult again on some other idea. We could consult again and keep consulting. We could never take a decision”.—[Official Report, Commons, 16/11/10; col. 222.]
We are not suggesting that the Government should keep consulting but some consultation might have been of value, given the number of times that I remember receiving criticism when we were in government if there was not enough pre-legislative scrutiny or consultation. Our debates on Royal Mail have been usefully informed by Richard Hooper’s panel producing two reports in May and December 2008, and being asked by the current Government, sitting alone this time, to review his work in 2010.
We all recognise the technological, social and competitive pressures on postal operators in modern times, including new ways of communicating. Last year Royal Mail experienced a drop of 7 per cent in letter volumes. Other operators are taking advantage of liberalisation and what are now regarded as generous terms for access to Royal Mail networks. If I am pleased about nothing else about my ministerial contribution, our prominent pledge that we were going to get regulation right is something that I hope will be achieved.
Baroness Wilcox
I am much supported by my noble friends on this side. They have given every answer that I could give at this stage and I am very grateful to them. I return to Amendment 2 and ask the noble Lord to withdraw it. I am sorry that it is such a long time since I made my argument. I hope that he has kindly remembered it.
Lord Young of Norwood Green
My Lords, I shall address a few of the points that were made. The noble Lord, Lord Cotter, and I do not normally find ourselves so diametrically opposed. We do not see this as a fundamental attack; we see it as a different approach and one that we believe is well worth opposing, given the importance of the decision to privatise Royal Mail 100 per cent. We do not think that putting to the Committee an alternative solution, which was almost unanimously approved by this House, is a fundamental attack.
The noble Lord, Lord Skelmersdale, said that I contradicted myself with Amendments 1 and 2. I do not believe that that is the case. We have to take into account a number of eventualities, depending on how the Bill progresses.
My noble friend Lady Turner reminded us that privatisation is not necessarily always beneficial or effective. My noble friend Lord Lea made an interesting point about undervaluations in previous privatisations, and that should be a warning to the Minister about the importance of getting the sale right.
The sale of shares draws heavily on the Hooper report, and I would not disagree with that. We are not proposing that there should not be any external investment, but there is a fundamental difference between that and a 100 per cent sale. As we go through the Bill, I think that it will pose some difficult problems, one of which—the inter-business agreement and the ability to get satisfactory assurances in that area—we will explore in greater detail.
I shall obviously reflect on this debate. I await Report stage with interest, and we shall see whether we return to this subject then. In those circumstances, I beg leave to withdraw the amendment.
“( ) A disposal of the Crown’s interest in a Royal Mail company will not be authorised until the Secretary of State has secured a written contract from the proposed purchaser that at least one representative from those directly employed by Royal Mail or its successors will sit on the board of the new body.”
Lord Young of Norwood Green
My Lords, postal workers already have a major stake in the company, and their livelihoods are dependent on its viability. This is more than just an issue of immediate employment, of course. It is the final guarantee of rent or mortgage repayments. Working for Royal Mail is the means whereby their children will be educated and cared for. I make the point because it is sometimes suggested that postal workers lack motivation because they do not identify with Royal Mail. Postal workers may not always see eye to eye with management, but they are acutely aware that a viable and successful Royal Mail is in their own interests.
Through their own organising efforts, postal workers have achieved a high level of unionisation in Royal Mail. They have also, over many years, secured comprehensive negotiating rights on matters of national and local significance. This has meant that members of the workforce have some elements of control in their own working lives. Management, for its part, has learnt to accept and live with the fact that the workforce does have a say in workplace relations. Sometimes there are conflicts, but 99 per cent of those cases are resolved by the usual patterns of industrial relations which have been established in the industry. This is important because those endeavours have been made by postal workers themselves, and they have made the workplace a better, safer, more comfortable and rewarding place. So we should leave aside any suggestion that postal workers are unable to express themselves, unable to organise themselves, or unable to exercise their rights in the workplace.
Recently there has been a much-trailed comparison on rights of representation or share ownership with John Lewis workers, although we believe that that is misunderstood. In comparison, postal workers have many more rights than John Lewis workers, who are not even unionised. That said, if there is to be an employee share scheme, it is only right that it should be introduced with employee involvement and voice, and placing at least one member on the board would be of benefit both to the workforce and the employer. Members of the workforce would see that it had someone who could reflect their experiences and concerns in the most powerful part of management, and the employer would have an immediate expression of the wider concerns of the workforce in the deliberations of the central management team.
In the past, there has been some experience of trade union involvement on the board. Although not a postal worker, my noble friend Lady Prosser, who unfortunately is not in her place, was until recently a widely respected and influential trade union leader before she became a member of the Royal Mail board. Certainly, management believes that it has benefited from her experience in the working of the Royal Mail board. Failure to introduce representation of postal workers on the board would, in my view, risk missing a real opportunity to create trust and confidence. It is widely known that employee representation exists on management boards in other European countries, and surely it is time that this became more general in Britain. I welcome the coalition Government’s espousal of mutualisation in another part of the Bill, and the requirement that we are suggesting here would strike a chord with that principle and approach. I therefore commend the amendment to the Committee. I beg to move.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall)
I should inform the Committee that if this amendment is agreed, I cannot call Amendments 5 to 7 inclusive by reason of pre-emption.
Baroness Wilcox
I can only repeat that, as we all know, the previous Bill failed. We hope that this Bill will succeed. We want as much flexibility as possible when it comes to selling Royal Mail. We have faith in the fact that the people who have worked for this company for so long should be offered the best possible opportunity. We are offering the biggest ever issue of shares to the employees of the company—over 10 per cent. That is a wonderful voice that they will have. No one is saying that no one will finish up on the board. We are saying that we cannot put this in legislation. We need to keep this as flexible as possible to get the best possible price and the best possible deal. The noble Lord, Lord Myners, of all people, City man that he is, knows what I am talking about. I ask that the noble Lord, Lord Young, withdraw his amendment.
Lord Young of Norwood Green
My Lords, it has been a fascinating debate; I did not expect quite as much of a debate as this. This is an important issue. I agree with my noble friend Lady Turner about the value of employee involvement. It is nice to return to agreeing with the noble Lord, Lord Cotter, in his evaluation of the importance of involving the workforce; I wholeheartedly endorse that. My noble friend Lord Brooke demonstrated the value of his experience as a partnership director in NATS.
Several times in this debate people have talked about there being only one representative. The Minister had trouble dealing with that. In fact, I remind the House that the amendment says “at least one”.
My noble friend Lord Myners made a fascinating contribution. I am glad that he told me what a high-conviction portfolio was; I would have thought it was someone being detained at Her Majesty’s pleasure if he had not explained that. His argument was valid when he talked about the question of risk and the way that other shareholders may be able to diversify their risk, but in many cases those employees are pledging all their working life to the company.
The noble Viscount, Lord Eccles, pointed out that there might be a flaw in the amendment, but I remind him that it says “at least one”.
I must admit that I was somewhat disappointed in the Minister’s response. The only argument that she could give us was the need to retain flexibility. Are we really saying that one employee representative—if indeed it were one—would wreck that flexibility? If that were the case, if you wanted ultimate flexibility, then why has she boasted about the 10 per cent employee shareholding? I do not believe that that was a valid argument against the very reasonable suggestion in this amendment.
Having reflected on the debate, I will withdraw the amendment at this stage. We were somewhat puzzled by the pre-emption, but as we are not going to invoke that we can have that argument outside the Chamber. We will certainly return to this subject, probably on Report. In the circumstances, I beg leave to withdraw the amendment.
Lord Young of Norwood Green
My Lords, I am sure that a number of amendments to the Bill will come from all sides of the House as we progress. I am seeking more information about the Government’s plans for postal services in the UK. The purpose of the amendment would be to ensure that the Secretary of State reported back to Parliament on the disposal of Royal Mail. The Secretary of State would have to deliver an Oral Statement and lay an order subject to the affirmative procedure.
There are real concerns about what the Bill will mean for people who live in rural areas, for small businesses, for those who receive specialist services for the blind, for the taxpayer and for the employees and agents of Royal Mail and Post Office Ltd. Rarely can a government Bill have given rise to as many questions as it seeks to answer.
Noble Lords have argued eloquently that it is essential for Parliament to receive more detail about the financial value of Royal Mail, the future of universal and affordable postal services and the impact of privatisation on services in the devolved Administrations. The Government are urged to respond to these concerns with written and oral reports to the House at the time when Ministers decide to dispose of some or all of the Government’s shares in Royal Mail. Only the Government appear to suggest that these concerns are not legitimate, otherwise they would happily accept these amendments and the Minister would produce the reports requested in advance of the sale.
At times the Government appear to be in an unseemly haste to complete all the stages of the Bill. The danger is that, if the Bill is not itself flawed, then there are significant gaps in it that need filling. There are simply too many questions unanswered, too many concerns about the Government’s intentions and too little of substance in the way that the Government have responded to these concerns for Parliament simply to give its assent to this measure and then depart the field. It is the firm belief of the Opposition that the lack of a fully worked-out proposal, linked to a wait of possibly two, three or four years before a disposal takes place, necessitates Parliament being able to review this matter once again.
As the Bill stands, the Secretary of State will make a decision about a full or partial disposal of Royal Mail and then make a report to Parliament. There is no requirement even for the report to be accompanied by an Oral Statement; there is no commitment that Oral Questions should be able to be put to Ministers; and there is no commitment for Parliament to have a vote of any kind. Moreover, the report will be made after the Secretary of State has made the decision. That is, I am sure many in this House would agree, simply not adequate. As I said earlier, it is interesting how often, in dealing with other Bills when we were in government, the affirmative procedure was required and demanded.
The current Postal Services Bill has a number of similarities to the 2009 Postal Services Bill, but the fact that this Bill seeks to privatise Royal Mail in its entirety makes it distinct from the 2009 Bill. One of our difficulties is in trying to grasp the detail to discover exactly what information is in the Bill about whether there will be an initial public offering or a trade sale at auction. The Government have not set a clear timetable. They have not explained whether there will be a general sale of shares to the public, an IPO, a restricted sale to certain categories of buyer or a trade sale by auction to a single buyer, such as a private equity firm or a postal competitor, which might raise competition issues.
Nor have the Government explained any measures to ensure value for money for the taxpayer. They have not explained whether they would sell the whole company all at once—with all the risk involved of selling cheaply, as has been mentioned—or whether they would be prepared to sell in tranches. They have not been clear about how valuable public assets will be allocated among Post Office Ltd, the pension funds and Royal Mail—and thus find their way into private hands. They have not indicated how the board might be consulted. They have not ruled out dismantling the Royal Mail and cherry-picking the most profitable parts, such as Royal Mail’s successful European parcels service GLS and Parcelforce. They have not indicated how they will guard against a buyer with a short-term horizon that seeks to squeeze costs and cherry-pick the assets.
Before any sale takes places, this House will want to be assured about the future of the universal service, the exact regulatory regime and the future of the post office network. What state has been reached in obtaining state aid clearance from the Commission? What is the expected timetable for that state aid clearance?
The other amendments in this group seek to require a further Bill or a super-affirmative procedure to allow Parliament properly to scrutinise and have a say about the method of sale and the sort of Royal Mail that will emerge in the private sector; our amendment provides for a less stringent parliamentary test, but I feel that it is the very minimum that is owed in the name of proper parliamentary scrutiny. Of course there is no wish to constrain the Government unreasonably in carrying out a sale if the Bill is passed with Clause 1 intact. The House will of course recognise the reasonable constraints of commercial confidentiality, but for such a momentous decision as this to be carried to its conclusion without further reference to Parliament, in a way that gives Parliament a proper say, would be highly regrettable.
If the Government are not willing to report back to Parliament on the specific concerns set out in other amendments, they should accept our amendment and agree to allow a general scrutiny of the disposal of Royal Mail at the point that that takes place. They should do so under the affirmative procedure, so that there is a genuine opportunity to consider and debate the sale.
There is genuine, non-partisan, cross-party concern about this measure, so it is right that Parliament is given the opportunity to debate the matter again when the Government are in a better position to answer the questions that they have so far failed to answer. I hope that the Minister will take this opportunity to improve the Bill by accepting a more accountable route for parliamentary accountability, which would involve not just an ex post facto report after the decision has been taken. I beg to move.
The Deputy Chairman of Committees
I should tell the Committee that, if Amendment 5 is agreed to, I shall not be able to call Amendments 6 or 7 by reason of pre-emption.
Baroness Wilcox
My Lords, this group of amendments seeks to add to the Bill a requirement for the Secretary of State to make an Oral Statement and obtain additional parliamentary approval before there can be a relevant disposal of shares in a Royal Mail company.
Amendment 5 of the noble Lord, Lord Young, proposes that an order on the disposal should be subject to the affirmative procedure. The noble Baroness’s Amendments 6 and 17 seek to insert into the Bill a requirement for a super-affirmative procedure before there can be a disposal of shares. Like my noble friend Lord Eccles, I congratulate her on the thoroughness of these amendments which set out clearly the process that is required under the super-affirmative procedure. The noble Baroness may be new to your Lordships’ House but from these amendments it is clear that her knowledge and attention to detail will ensure that its business receives proper and close scrutiny in the years to come. I congratulate her on that. From my noble friend Lord Eccles we received a master class in how to buy and sell businesses. I suspect that I shall lean on him heavily as this Bill goes through to make speeches like that again.
I do not believe that further parliamentary procedures should be required before there can be a disposal of shares in Royal Mail. A committee in the other place has fully debated the disposal of shares as set out in this Bill and this Committee of the Whole House is now debating the issue. The disposal of shares to enable an injection of private capital into Royal Mail is part of a package of measures set out in this Bill which should be scrutinised as a package. The disposal of shares should not be looked at in isolation but alongside the other two essential parts of the package—tackling the pension deficit and reforming the regulatory regime. Richard Hooper emphasised the importance of this package when he gave evidence to the committee in the other place. The noble Lord, Lord Young, asked about the timetable for state aid clearance. We have not at this stage notified the European Commission of the proposed aid but we will do so as soon as we are ready. As I said earlier, this Government have learnt the lessons of 2009. We will take a staged approach to all the steps we need to take before a sale can be completed.
The Opposition’s Postal Services Bill in 2009 did not include a requirement for additional parliamentary procedures before there could be a disposal of shares. As noble Lords opposite themselves said in 2009, additional parliamentary procedures would be unwelcome because they would create uncertainty for potential investors. During the passage of that Bill, noble Lords representing the then Government suggested that noble Lords would agree that the appropriate place for commercial negotiations to take place was not on the Floor of the House.
Noble Lords opposite have expressed interest in the value of Royal Mail. The uncertainty that would exist if a disposal is subject to voting in Parliament would only further reduce the value of the business. This would damage the chances of achieving the best deal for the taxpayer and the company from any future disposal. I fail to see how this amendment fits with other amendments tabled by noble Lords where there has been an emphasis to take forward a sale of shares quickly. These amendments would insert time-consuming mechanisms that would add delay to a disposal.
With regard to legislative provision for the Secretary of State to make an Oral Statement, we do not think that is necessary whenever there is a sale of shares. The Bill is setting the minimum requirements for government action. What is important is the principle that information on this sale should be provided to Parliament. The requirement for a report in Clause 2 applies not only to the first sale of shares but any subsequent sale of shares. I fully accept that an Oral Statement might, of course, be appropriate for the first sale of shares, but would it also be a good use of time if, for instance, five years later Ministers decided to put an extra 100 shares into the employee share scheme? We are committing in Clause 2 that there should be a report to Parliament every time the Government reduce their stake in Royal Mail. We will, of course, discuss with the House authorities the appropriate format for such reports at the relevant times, including whether or not an Oral Statement is appropriate.
Finally, the noble Baroness, Lady Drake, asks in her amendments for evidence of consultation and an impact assessment. I point the noble Baroness to the extensive consultation carried out by Richard Hooper in his two independent reviews on the future of the Royal Mail and the impact assessment published alongside the Bill. On this basis, I ask the noble Lord to withdraw the amendment.
Lord Young of Norwood Green
My Lords, I thank the Minister for her response to the contributions. It was another interesting debate. I feel that I have been trumped by my noble friend Lady Drake in her forensic analysis of the super-affirmative procedure. She certainly demonstrated her knowledge of it and her diligence.
This issue is a matter of judgment. I did not expect the noble Viscount, Lord Eccles, to leap to his feet and say, “Yes, I agree with this”. He referred to the behaviour of the market and the introduction of more uncertainty. We balance that against accountability and the ability of Parliament to scrutinise but not negotiate. I look forward to hearing from the Minister when she notifies the European Commission, because that is an important point. She rightly pointed out that there was no provision for an affirmative procedure in the 2009 Bill. However, we were not going for a 100 per cent disposal. As the Bill is further scrutinised, we will analyse the issue of whether Oral Statements are required for a range of future share sales.
I will reflect on the nature of this debate and the Minister’s response. I warn that I may well return to this matter on Report but, in the circumstances, I beg leave to withdraw the amendment.
Lord Young of Norwood Green
My Lords, Clause 2 relates to the Government reporting on their decision to dispose of shares in a Royal Mail company. As the Bill stands, the Secretary of State must, as soon as reasonably practicable after making a decision about arrangements for the sale of Royal Mail, lay a report before Parliament on the detail of those arrangements. The report will be made after the decision has been taken. It can also be made after that decision has begun to be enacted. The report must state the kind of relevant disposal that the Secretary of State intends to make and the expected timescale for undertaking it.
As currently drafted, there is nothing in the Bill to prevent the Secretary of State proceeding with a disposal of shares in all or part of Royal Mail before a report is laid before Parliament. The Bill requires only that the report is laid before Parliament as soon as is reasonably practicable. This is a cause for significant concern. Opportunities for proper accountability and oversight are potentially compromised by this arrangement. It does not allow for suitable scrutiny of the proposals. The Government must be accountable to Parliament for their actions. Parliament must have oversight of such important policy before it is enacted.
The amendment provides simply for greater accountability and transparency in the Government’s plans. It does not prevent a sale but restricts it to after such a time as Parliament has had an opportunity to be fully informed of the Secretary of State’s plans. Royal Mail is an incredibly important and valuable asset. It touches the lives of everyone in this country, employs 160,000 of them and has an annual turnover of more than £9 billion.
Royal Mail has struggled with a tumultuous history in recent years. Post Office closures and the impact of competition and regulation have taken their toll on the business and the public’s experience of engaging with the company. It is important that any further change is right for Royal Mail and is implemented correctly. A key way to ensure that this happens is to allow for an adequate level of parliamentary scrutiny of the Government’s plans. It is essential that Parliament follows the detail of the share disposal and ensures that the Government seek to maximise their return on the value of this asset and secure a sustainable future for Royal Mail and the UK postal industry.
I therefore urge support for the amendment, which requires the Secretary of State to lay his report on the detail of his decision regarding the sale of Royal Mail before any such sale takes place. I beg to move.
Baroness Wilcox
My Lords, the amendment seeks to ensure that the Secretary of State lays a report before Parliament before there is a sale of shares. I shall talk quickly, because I am worried about the blandishments of the noble Lord, Lord Hoyle, influencing me before I reach the end. I believe that the drafting of the clause makes it clear that the report should be laid before a disposal of shares is made. The clause requires the Secretary of State to lay a report as soon as reasonably practicable after a decision has been made to undertake a sale of shares.
The arrangements needed to organise a disposal of shares in Royal Mail to a trade buyer through a competition or to conduct a public flotation would take several months. It would not be the case that the Secretary of State would decide over breakfast to sell shares in Royal Mail and then complete the sale by the time we in this House enjoy our evening dinner. It simply would not happen that way. The starting gun for work on the specific arrangements for a sale would be a decision by the Secretary of State to undertake a sale. Under the Bill, the Secretary of State has to lay a report before Parliament as soon as reasonably practicable after a decision is taken to dispose of shares. This would be before a sale of shares. I therefore kindly ask the noble Lord to withdraw the amendment.
Lord Young of Norwood Green
I thank the Minister for her response. I must admit that had I known that the blandishments of the noble Lord, Lord Hoyle, would be that effective I would deploy him more regularly and more often. That way, we might achieve acceptance of at least one amendment. We have gone from considering affirmative and super-affirmative procedures to a report. Blandishments from me or the noble Lord, Lord Hoyle, seem to be of no use whatever. Nevertheless, we still believe that this is a reasonable request. It is part of what we would describe as accountability and scrutiny. For the time being, I beg leave to withdraw the amendment—again, on the understanding that I may well return to this matter on Report.