Royal Mail

rose to call attention to the case for a government policy towards the Royal Mail which best reflects the national interest in all respects; and to move for Papers. The noble Lord said: My Lords, at this early stage I ought to declare an interest. Normally when I speak about the Post Office, I simply say that I am a former postman and very proud of it, but I ought to expand on that. My association goes back to the age of 14 when I joined as a telegraph boy and went through until April last year. That is almost 60 years of continuous involvement with the Post Office as an employee, a union representative and a trustee of the pension schemes. I just wanted to put that on the record because my concern is not one in the normal political sense. It is driven by a desire to try to protect a very valuable public service that has served this nation of ours for so long. May I say why I consider that questions should be put to the Government and answers provided—not just to the House but to the public the Post Office seeks to serve? The first question must be this: do the Government believe that the Post Office is a publicly owned organisation that has a responsibility and duty to provide an efficient service to every household and business in the United Kingdom? When the Government announced their plans for the reform of the Post Office in July 1999, many interested people, myself included, thought that at long last after years of neglect, lack of investment and interference, efforts were going to be made to tackle some of the difficulties that the Post Office had been faced with for such a long time. The leaflet issued by the DTI at the time was informative. It set out a statement from the DTI and talked about,"““creating a world class service for the 21st century””." Some noble Lords will remember this wonderful document. The announcement was described as a ““visionary statement”” and the then Secretary of State said:"““We will maintain your existing postal services . . . We will improve postal services for all customers through greater choice, better quality and falling real prices . . . We will support a Post Office network which ensures you have access to public and private sector services . . . We aim to ensure the UK Post Office can compete in the fast-moving domestic and international postal market””." The Secretary of State went on to say that he would,"““establish clear and accountable relationships between the Government, the Post Office, the regulator and POUNC””—" the Post Office Users National Council, later replaced by Postwatch. Any examination of what has happened since that visionary statement was made by Stephen Byers shows quite clearly that the vision has not been realised. Perhaps the débâcle of the costly and completely unnecessary creation and destruction of Consignia caused some blurring of the Government’s vision. When this House debated the Postal Services Bill in May 2000, I repeated what I said in my maiden speech in December 1998. My view then, and it is unchanged today, is that the freedoms referred to in the Bill—commercial freedom; freedom to borrow and invest; freedom to enter into acquisitions, joint ventures and strategic alliances; and freedom to allow the workforce to share the success of the Post Office—would have been possible without the need to create a plc.  The evidence bears that out. Any debate about the Post Office, Royal Mail, the Counters and Parcelforce Worldwide would be lacking in content if due recognition was not given to what has been achieved by implementing the strategic plan that has been executed by the Post Office board over the past few years. That achievement has been made at a cost of reduced numbers of deliveries, later deliveries and 33,000 jobs lost between March 2002 and March 2005. It is a record of achievement—it is also a record of job losses and reducing services. The achievement was assisted by the limited changes in pricing policy which were late in coming and, in my view, are still inadequate. They are nowhere near the levels charged by most, if not all, other postal administrations in Europe. A situation of limited resource has resulted from decades of under-investment. The situation is compounded by the under-pricing for the service it has to provide for its competitors—those organisations that, as confidently predicted by not only myself but others, would cherry pick from business customers. They are allowed to collect and sort 4,000 items or more and then put them into the Royal Mail system. Not for them the collection from street pillar boxes; not for them the requirement to deliver a universal service to the 27 million addresses in this country, a figure which is likely to arise by another million by 2009. For the benefit of the cherry pickers, they pay 13p per item. We are told, and no doubt will be told again, that the whole question of tariffs and pricing is the responsibility of Postcomm, the regulator. I was going to quote its remit, but I see that time is racing by, so I shall simply say that Postcomm is supposed to be looking after the public interest and to provide an efficient service. It opts out of any suggestion that it should make recommendations about closures of offices whether in rural or urban areas. The approach by Postcomm, supported by the Government, is that Royal Mail directly subsidises its competitors, who make no contribution to the necessary support for the unprofitable parts of the business that arise from the universal service obligation. In effect, Royal Mail carries the cost of maintaining the infrastructure required for the obligation—at the same time it has to lose volume to the cherry pickers. My view, which is shared by many others, is that the regulator has misinterpreted its remit and seeks to undermine the Post Office and promote the interest of Royal Mail’s competitors at the expense of Royal Mail. I am not alone in my concern at the way that Postcomm operates. During the past couple of days I have learnt of the concern of the magazine industry, which I would not normally be in touch with. It is concerned about recent recommendations in connection with the posting known as Presstream 2, the service which will have its regulatory protection removed from price control from next April. This, in the industry’s opinion, will lead to discrimination between one level of traffic and another, and Postcomm is directly responsible. Rather than bore the House with the details of these representations, I undertake to pass the papers to my noble friend the Minister. So much could be said about the universal service obligation; suffice it to say that Royal Mail accepts the challenges that the obligation places upon it. It has demonstrated for more than 300 years its ability to fulfil that requirement. I suggest to my noble friend that it is time there was a proper review of the regulator. After five or more years of its operation, nothing can be lost in getting people together for a review. On the major issue of liberalisation, I shall confine my remarks to asking my noble friend if he will comment on why the liberalisation of the postal service was advanced from the date contained in the European guidance and why major competitor nations in Europe have delayed introducing their own liberalisation. The Netherlands and Germany—very serious competitors—will not introduce liberalisation until next year, and the French will introduce it in 2009, if we are lucky. Perhaps they are waiting to see what happens here. Perhaps they will get the benefit of our early introduction, but I would like the Minister’s views. A large part of my life in the Post Office was spent dealing with industrial relations. I had intended to speak about the markedly improved industrial relations within Royal Mail and the Post Office as a whole, which I welcome perhaps more than most people here because I have been through some of the most difficult times of industrial relations in the Post Office. However, I see that my noble friend Lord Sawyer is listed to speak in this debate so I will confine my remarks at this point simply to say a sincere ““thank you”” to my noble friend for the hard work that he has put in with all parties to bring about this improved situation. The nation, not only the Post Office, owes him a debt of gratitude. The pension fund deficit is serious and large. However, it is not a matter for rash and hurried decisions. For many years, I had the privilege of being a trustee of the Post Office’s main scheme and the shared cost scheme that was introduced later. I am confident that the current trustees, together with the Post Office board and the Government, can produce a strategy that spans a number of years to provide a solution to the deficit problem. However, what will be required is a recognition of the payments that were made from the Post Office to the Treasury during the 1980s and 1990s of more than £2 billion—money that went directly to the Treasury from the Post Office’s revenue. Certainly, the Government should extend the period of a nil dividend from the Post Office while the deficit remains. There is so much to be said about the relationship between the Government and the Post Office. Unfortunately, 15 minutes does not give me time to cover much of what I would like to share with the House. The question of ownership of the Post Office has been the subject of much media comment and a lot of heart searching among the staff. I am sure that my noble friend the Minister knows that the question that I would like to pose to him now is serious. It concerns the appointment of the chairman of the Post Office, Mr Allan Leighton. Will my noble friend help to clear up a matter that has troubled me for some time? It concerns the method of selecting Mr Leighton for the job of chairman. Two years ago, I was told by a very reliable friend who witnessed what was going on that, when the shortlist was prepared and presented to the board, Mr Leighton’s name was not on the list. The information that I received went further. It was said that a call was made from the DTI to the Post Office board to have Mr Leighton’s name added to the list. The rest is history: he got the job. Is that factual? I do not expect a reply today, but I would like a reply in writing at some stage so that if my information is wrong at least that myth can be dispelled. If it is right, somebody should be saying something about what happened. It is important to know a little more about the appointment of the chairman and about any assurances that were given to him about what he could do with the Post Office. That is a deliberate question. For some time now we have had a chairman of the Post Office who, at almost every opportunity, talks about how he wants to have a share-based scheme—shared ownership. I am worried. We have a government pledge that there will not be a sale of shares in the Post Office and the Labour Party conference decision was that no sale should take place. A Warwick agreement was made. There is a manifesto commitment that the Post Office will not be sold off and just before Christmas 210 Members of Parliament in the other place were signatories to the Early Day Motion opposing any form of share sales—195 of them were Labour MPs. However, on 20 December we received the Trade and Industry Committee report on the Royal Mail after liberalisation. The report stated:"““Whatever view this Committee were to take on the full privatisation of the Royal Mail we recognise that this Government has a manifesto commitment to keep the company in the public sector””." The report also said that the explanations offered to the committee by the current management of Royal Mail were ““far from complete”” and that no coherent process for how shares would be transferred or traded had been presented to the committee. The report further concluded:"““We believe there are less controversial ways to this such as the current profit sharing scheme””." If the idea of sharing the success of the business is to be considered—and I believe that it should be—perhaps the idea of an overall productivity scheme, linked to savings, could be looked at. What I mean is that any productivity payments to staff should be an equal share of what could be allocated to staff after the annual results are made known, after recognition of pension fund deficit and reinvestment costs. Payments were made to staff last year. I believe that those payments could be linked to a savings scheme and put into a personal account, where staff could take their bonuses or share of the profits; they could leave those savings there with management adding interest. That would serve two purposes—it would save a complete drain immediately of the funds, and would give people an investment for the future. With respect to the current chairman of the Post Office, I suggest that if he has difficulty in coming to terms with the decisions that have been taken, he should either keep quiet and avoid further controversy or, if he cannot do that, he should do the honourable thing and resign. I have the greatest confidence that there is a good future for our world-renowned postal service. I understand that Sir George Bain is considering how the Post Office should evolve in the next few years. It is my hope that he will address the chronic underinvestment that has dogged the Royal Mail for so long. I suggest that he addresses the vexed problem of low pay attracting the wrong applicants for employment; why are postmen and postwomen paid £80 per week below average pay? He should look at ways in which to give post officer workers the status in the community that they had for so many years, and which many still have. He should make firm recommendations about recruitment and training and the taking up of references before staff are allowed to handle people’s correspondence. I have not time to comment on what has happened in recent scams which have left the Post Office with a lot of egg on its face. Above all else, he should recommend that the parties—that is, the employer and the unions—sit down together to plan for the future together. They need to strain every sinew to meet the challenges of competition, liberalisation and to build for the future. The British public and business community deserve nothing less. I beg to move for Papers.