Royal Mail
Debate between Vince Cable and Baroness Hoey(11 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Vince Cable
I do not think that a great deal of elaboration is necessary. As I said, the shareholding will be free of charge. In addition, workers will have priority, should they wish to buy an additional shareholding. The principle under which the share scheme will operate is that it will be locked in for three years to give the arrangement longevity. I imagine that most postal workers will want to hold the shares for at least five years to take full advantage of the tax incentives available, for example the absence of capital gains tax, under the current scheme.
Kate Hoey (Vauxhall) (Lab)
The Secretary of State might be sincere in what he says, but does he not realise that the vast majority of the public, particularly in the countryside and in rural areas, just do not believe that the universal service is guaranteed, because they know what has happened in other privatised industries? How can he ensure that it really will be guaranteed? I do not believe it, most Opposition Members probably do not believe it, and Conservative Members who fought against it last time, when Margaret Thatcher was against it, do not believe it. This is a very wrong decision.
Vince Cable
The best way of reassuring the public is to demolish some of the myths. The fact is that the universal service obligation was clearly underwritten by Parliament; it is embedded in legislation and cannot be removed. I hope the hon. Lady will pass that message on to her constituents.
Postal Services Bill
Debate between Vince Cable and Baroness Hoey
Vince Cable
If hon. Members want to make the same point, there is no point in pursuing their interventions, but if the hon. Lady’s is on a different point, I shall take hers.
Kate Hoey
If everything that the previous Government wanted to do was so good—and many Opposition Members opposed what they wanted to do—why are the coalition Government not simply taking up where they left off? Why are they going even further and totally privatising Royal Mail rather than leaving a majority share in the public sector?
Vince Cable
I shall take the hon. Lady through the arguments step by step, but the situation has deteriorated badly. I think that she lost seven post offices in her constituency, so she will know that the situation is not satisfactory and that the status quo cannot be maintained.
Vince Cable
We certainly do not have any doctrinal or other objections to foreign ownership. I spend a lot of my time trying to attract foreign investors to the country, but, as far as the royal charter is concerned, it is clear that the association with the monarchy is probably the most powerful brand that the company can possibly have, and there will be every interest in the new owners continuing to maintain it.
We need to be careful of specific issues. We need to be careful that the new owners do not abuse the royal association, and we are discussing with the palace how we build in those protections. The monarch will continue to have the right, which we are also building in, to ensure that any new stamp, for example, is cleared by the palace. So, the royal interests in the matter are fully protected. We are very sensitive to them and to their importance.
Let me return to the core of the argument, which is the sale of shares in Royal Mail. That is a departure from the previous Government’s Bill, but I should remind the House that the purpose of the Bill before us is not the sale of shares in Royal Mail for its own sake, but rather, as I pointed out to the right hon. Member for Croydon North (Malcolm Wicks) a few moments ago, the protection of the universal postal service and Royal Mail as the only company capable of providing it.
It is therefore right that we allow for the flexibility to seek the investment required to secure the future of Royal Mail and the universal postal service. So, we see no reason at this stage to set an arbitrary target for how much we must sell, by when and by which method. Those are critical decisions that need to be taken with proper advice and in the full knowledge of market conditions, assessing both value for money and the company’s needs.
Of course, Parliament will be kept informed of those decisions, and the Bill requires a report to Parliament once a decision has been taken to begin a sale process. I hope to be in a position to report to Parliament on the sale process in the first half of this Parliament. In the longer term, I do not believe that there is a need for the Government to keep a stake in Royal Mail, but I will ensure that the Government have the flexibility to ensure the right outcome for taxpayers, for Royal Mail and for its employees.
Let me turn to the interests and concerns of the employees. The employees are critical to Royal Mail’s ability to modernise and thrive, and it will come as no surprise to Members when I say that Royal Mail has a history of poor industrial relations. Members may have noticed that Unite announced two days ago that it would ballot Royal Mail managers on industrial action. That recent development aside, I have been heartened by some of the positive steps that have been taken to improve industrial relations—in particular, the agreement with the Communication Workers Union on the modernisation of the business. The agreement accepted that, unfortunately, job losses would be associated with the modernisation. It accepted, too, that there would need to be changes to working practices, and that mail centres would close. The plan has already been agreed with the CWU, and the company is implementing it now.
Kate Hoey
One depot that has been suggested for closure is the very large one at Nine Elms in Vauxhall. There has certainly been no agreement in London that it should close, and everybody will fight its closure very hard, because it would be just crazy for everything—lorries and vans—to go in and out of London, adding to pollution.
Vince Cable
I am not familiar with the details of the argument in that case. I was referring to the fact that there has been a constructive relationship between the union and management on modernisation, but such issues do exist, and they are essentially commercial ones that must be dealt with by management and their employees in the normal way. None the less, I would be interested to know whether there is a specific role in the matter for the Government, and I shall respond to the hon. Lady on that.
So, I acknowledge that there will be job losses. The company is losing money and the market is declining, and that is regrettable, but it is unavoidable. The question that we need to pose is, what happens if we do not take action? What happens if Royal Mail fails and the market collapses? That is the current trend. I know that the CWU has been in Parliament today, talking to many hon. Members about their views, and I and my hon. Friend the Under-Secretary, who has responsibility for postal affairs, met the CWU to discuss Royal Mail. We look forward to continuing to talk to its representatives as the Bill goes through Parliament.
However, I have one thing to say to the union directly today: the worst thing for its members, Royal Mail’s employees, would be to do nothing, because that is the real threat to jobs in Royal Mail. The employees of Royal Mail also deserve better than constant battles between the union and the management. They deserve to be properly engaged in the business that they work for, and to have a real stake in its future. That is the only way in which we will break for ever the cycle of antagonism and mistrust that has bedevilled the company. The Bill therefore requires the creation of an employee share scheme, which will hold at least 10% of the equity in Royal Mail in future. That is very far from being a token gesture; it is nothing less than the largest employee share scheme of any major privatisation.
The employees of Royal Mail will also be concerned about their pensions, and they have good reason to be, because Royal Mail’s pension deficit is huge, growing and volatile. Put simply, it is not sustainable. Even the recent agreement between the pension fund trustees and the company is fragile. It requires that Royal Mail pay off its deficit over 38 years, which is at least twice as long as any other UK company’s repayment plan, and the pensions regulator has already said that it has substantial concerns about the agreement.