We have debated at length the issues around revealing the Government’s internal estimation of the value of Royal Mail shares prior to a disposal. Amendment 2 would not require the Government’s estimation of the value to be revealed, but would require us to publish the methods and criteria for making that valuation. Our expectation is that we will apply a range of valuation methodologies to our assessment of the business’s value.
I reiterate what I said on Report—that we would, of course, expect that both the National Audit Office and the Public Accounts Committee will wish to review the sale process, including the valuation methodologies that we have applied. They would both provide their own independent view to Parliament on whether the Government had achieved value for money for the taxpayer. This is consistent with the reporting requirements for previous sales of government assets. What should matter is not the technical valuation methodologies that we may apply, but whether we have the right objective for the sale. In that respect we have committed to report back to Parliament prior to a sale process beginning, and this report will confirm our objective for the proposed sale.
I reiterate a further point with regard to valuation. As your Lordships will fully understand, we cannot, and should not, reveal our estimation of the value of the company. Doing so would be giving the whip hand to the potential investor and would severely undermine our ability to negotiate the right deal for the taxpayer or for the company. Put simply, it does not make good business sense.
The noble Lord, Lord Young, raised a point about the taxpayer losing out through undervaluation at previous privatisations; noble Lords have a great deal of knowledge about them. That is one of the great assets of your Lordships’ House, but I am afraid that I cannot answer for why those privatisations were done in the way that they were or what their objectives were. What I am absolutely clear about is that our intention will be to secure the best deal for the company and the taxpayer, consistent with the objectives. We will ensure that, whatever form private sector investment takes in this instance, it will be done with those objectives in mind.
Finally, I remind your Lordships that the previous Government’s Postal Services Bill in 2009 did not include a requirement, as this Bill does, for the Secretary of State to report to Parliament before a disposal of shares. That Bill required a report after a sale and there was no requirement on the Secretary of State to report on the criteria or method used to assess the value of Royal Mail shares. The previous Government did not therefore believe that this was necessary or appropriate then, and I do not believe that the case has been made for it now. I therefore ask the noble Lord to withdraw his amendment.
With the indulgence of the House, I should like to make a few further remarks. Throughout the passage of this Bill, your Lordships have requested information about the Government’s timetable—for example, in relation to the state aid application. We have endeavoured to be transparent about our plans. In this spirit, I should like to set out briefly our plans for taking forward the provisions in the Bill, following Royal Assent.
On the specific question raised by the noble Lord, Lord Young, about the state aid timetable, I can provide the following reassurance. As he will know, the state aid approval process is highly complex; however, we intend to submit our notification shortly, and hope to conclude the process by March 2012. I will come forward with more details when we have notified. However, I can reassure the noble Lord that we remain on track.
The Bill provides for the regulatory responsibility for postal affairs to transfer from Postcomm to Ofcom. We intend for the transfer to take place in the autumn, at which point the bulk of the regulatory powers will also come into force. This will enable Ofcom to establish in spring 2012 a new regulatory framework that reflects the new regulatory regime, including the overarching objective of securing the provision of the universal postal service and having regard to its financial sustainability.
We will then need to implement the pension solution as the next step in the process towards a sale. I believe that all noble Lords will agree that the sooner the company is relieved of the crippling burden of its £8.4 billion pension deficit, the better it will be for the company and for the pension plan members. For this reason, it is the Government’s intention, subject to state aid approval, to relieve Royal Mail of its legacy pension deficit with effect from March 2012.
I know and respect the noble Lord, Lord Whitty, from the time when he was a Minister and I was in opposition, and from when he took over as the chairman of what was the National Consumer Council, which became Consumer Focus. I would always do my very best to reach an agreement with him. However, once all these changes have been implemented, we will be focused on that final, critical piece of the jigsaw—securing private capital for Royal Mail. As I have said throughout these proceedings, we are committed to doing the right sale at the right time, consistent with our objectives, to secure the future of the universal postal service. We have brought our talents to bear, including our knowledge of the City and business. We have been able to build on the previous Bill that the previous Government worked their way through. I hope that in the light of that the noble Lord, Lord Whitty, will have a little more confidence in our ability to fulfil what he would like to happen, without us telling him beforehand how we are going to do it. I hope that your Lordships will find this information helpful.
Postal Services Bill
Proceeding contribution from
Baroness Wilcox
(Conservative)
in the House of Lords on Tuesday, 24 May 2011.
It occurred during Debate on bills on Postal Services Bill.
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Proceeding contribution
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727 c1688-9 
Session
2010-12
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