Royal Mail

My Lords, I thank my noble friend Lord Clarke for initiating this debate. Like him, I, too, declare an interest. I joined the GPO, as it was called in those days, in 1958 as a telecom apprentice, which is most of my background. But I can remember on one or two occasions sitting at the negotiating table opposite the noble Lord, Lord Dearing. So there is a strange sense of déjà vu—““all over again””, as a football commentator once said. I also was the joint general secretary, together with a certain Mr Johnson who now is in charge of the Department of Trade and Industry. This is an interesting debate for me, but it is very important for the country. Royal Mail is now entering the uncharted waters of a new, very challenging and competitive environment earlier than most of Europe, as we have heard many times in this debate. One might argue with my noble friend Lord O’Neill—he has come back now—about the nature of Royal Mail management. He accused it of being sclerotic: I hope that it does not have a fatal heart attack, although probably it needs to improve. You could argue about how full or how empty the glass is, but you cannot deny that over the past few years there has been a turnaround from a £1 million per day loss to a £537 million profit in 2004, which took place against a backdrop of 33,000 fewer workers. As my noble friend Lord Sawyer reminded us, change has taken place. There have been improvements, which we should acknowledge. I listened carefully to my noble friend Lord O’Neill who talked about welcoming liberalisation and a realistic introduction, which is important. It needs to be realistic. There is a crucial debate between Postcomm, which has made an assessment of increases in the price of a stamp over the next few years and how much productivity achievement is possible—I do not know which is right—and the Post Office, which says that the price of a first-class stamp should increase from 30p to 39p over the next four years, and it still would be one of the lowest prices in Europe. I ask the Minister to look at that because it is part of the key to more investment. The Post Office faces huge challenges. We have to resolve the pension deficit. The point has been made that even when looking at the full spectrum of Post Office workers, they are not necessarily the highest paid workers in the country by any means. Certainly, the final salary pension scheme was an attractive part of that package and needs to be sustained. One way or another, the Government, with the Post Office, have to find the solution to that problem. As has already been said, in this competitive environment we face big challenges, which are not theoretical. There is a challenge in competition from Deutsche Post and TNT, which are serious competitors moving into this marketplace. As the noble Lord, Lord Dearing, graphically described, they are very well placed to do it. We need huge investment. It is sad that the Post Office now talks about the need to invest £2 billion. You might ask why that was not done many years ago and why it is so late in the day. The fact and the reality is that that has to be done. Ageing equipment has to be replaced through an investment in new technology. The Post Office has to fully engage all staff in the business in the next round of modernisation. I agree with the noble Lord, Lord Cameron, and the noble Lord, Lord Dearing, who referred to the importance of sub-post offices and crown offices, and made the point that we probably need a debate on that. In relation to the offices, the integrity of mail is perhaps something that we tend to take for granted until it breaks down. Recently, in north London, there was a case of a Crown office being disposed of to a private company, which took a while to investigate. The private company has been registered for about only two weeks and had assets of about £2. Does the Minister feel that that is a satisfactory situation? Just before Christmas, the management—if you could call it that—of an unlicensed company, Mail Logistics, made £2 million from just dumping mail, operating in an area which is completely unlicensed and unchecked by Postcomm. The directors were gaoled. I notice that they cannot be company directors for only one year, which seems a marginal punishment given the amount of mail they dumped and the millions of pounds that were involved. I want to comment on the postal service as a whole. I remember a song many years ago by a Canadian singer, Joni Mitchell, with the words,"““you don’t know what you’ve got""Till it’s gone””." I sometimes think that that is the same for the Post Office and the universal service. We have a stupendous asset, which is the envy, probably, of the rest of the world. We have to be careful that we do not put it at risk. Some people might say that it is already at risk. So this next period is vital. I agree with my noble friend Lord Sawyer on the need to build a partnership approach and a new era in industrial relations in the Post Office. It has improved and it needs to improve further if it is to surmount the challenge of competition and new technology. I do not know the perfect way forward. There appears to be two schemes on offer. My noble friend Lord Clarke informed us about profit sharing and my noble friend Lord Brooke told us about the advantages of the employee share ownership scheme. I agree with my noble friend Lord Sawyer that uncertainty does not help and is a distraction. There probably is not a perfect solution, but I concur with my noble friend Lord Clarke that the profit sharing and productivity scheme could be an alternative way forward. But the Government should encourage, with the Royal Mail, a consensus solution. The success of Royal Mail needs the partnership approach. It also needs a Government who are prepared to recognise the size of the challenge and, if necessary, to direct Postcomm.