Royal Mail

My Lords, I must first declare an interest. I am a member of Amicus, which represents the Royal Mail managers. I must tell my noble friend Lord Clarke of Hampstead how indebted we are to him for initiating this debate. It involves an awful lot of expertise. I follow my noble friend Lord Sawyer, who has been involved in industrial relations and played a vital role in developing them. Those who speak after me have knowledge of the Post Office—no one can have more knowledge than the noble Lord, Lord Dearing. We met many times when I was on the Select Committee in the other place. I only wish that some of the things that were said then had been implemented and that the Government had not been quite so greedy in taking back many of the Post Office’s profits, instead of using them for investment. The Royal Mail would then be in a better position to compete in the liberalisation that is coming today. But we are not at that stage. I was also interested to hear from my noble friend Lord Brooke about NATS, because the two of us, along with others in the House, played a major role in setting up a non-profit operating company. I am pleased that it is working so well and that it is now gaining the confidence of the employees. I am sure that my noble friend has had a large part to play in that. That does not get us away from the problems that Royal Mail faces. It is right that today we have been concentrating on the fact that while competitors are coming into the market, the universal service obligation rests with the Royal Mail. We must ensure that the universal service is protected and continues. It is right to refer to places where liberalisation and privatisation have taken place. Sweden is one, but a very expensive service operates there. Another is New Zealand, which is a far more recent example, but which no one could say has been a complete success by any means. As was said by the Select Committee in its report in December, to ask the Royal Mail to prepare for competition at a time of great uncertainty does not seem common sense, to say the least. What are we talking about? We are going for liberalisation when there has been underinvestment and the Royal Mail faces uncertainty about stamp increases and the position of the pension fund, as has been referred to, which of course bothers all employees. They are bothered by the huge hole: not only how it has come about but what will be done to remedy it in future. The Government ought to make a commitment to get the pension fund back on a more equitable footing. Why have we done this when, as has been said, other countries have until 2009 to do it? What are we doing to try to get liberalisation in other countries brought forward? That would create a more equal footing for the Royal Mail to compete on. That is essential. We know that it is coming—as has been said, we cannot resist it—but we know that 2009 is a long way away for other countries. We are suffering the consequences now. Companies such as La Poste or Deutsche Post can now compete in this country, with the terrible effect that that may have on our universal service. It is wrong that we allow that to happen now, while they can shelter behind their frontiers with closed walls to our going into their markets. To have a level playing field, we should press for an earlier liberalisation of the whole of Europe so that we can have fair competition. One concern in the Post Office in the past has been that when there have been rises in the price of stamps, they have often been far too late and the benefits have not been taken. I know that discussion has been taking place with Postcomm about whether there should be easier ways or an agreed formula for rises, rather than their being too little too late so that we start from behind. Are the Government still contemplating—I hope not—putting VAT on postal services? That would be extremely unfair to the ordinary user, especially people on low incomes who need low stamp charges so that they can afford to send post. Are we going down that route—it does help those who are registered for VAT, but it does not help the ordinary customer? I hope that we will not follow that line. On share options, especially as the Government have said that they will not privatise, I think that it would be far better to consider profit sharing. However, if we are going down the route of share options, what discussions has the Minister had with the Royal Mail and what is the Government’s thinking? It has not been clear how that would come about, where they would be transferred from or how they would be traded. Would they be on the open market, which could lead to a form of privatisation; or would they remain within the company, so that the employee would get the benefit if he retired or left the company? I understand from my noble friend Lord Brooke that that happens in the case of NATS. We need more information on that and I hope that the Minister will be able to help us. What is happening with Postcomm? It is being asked stringently to monitor and set standards for private operators. What is being done about that? Is that going ahead? Finally, if we do not follow that policy, we will have creeping privatisation, destroy a service that is respected by most people and destroy a loyal employee base.