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Postal Services Bill [HL]

No scheme has been devised in similar circumstances for my noble friend to have his cake and eat it in the way that he has described. But perhaps he is even more ingenious than those who have previously addressed these issues. This group of amendments relates to the provisions which deal with the public ownership of a Royal Mail company and go to the heart of the Hooper recommendations and the Bill itself. In his moving of the amendment, my noble friend Lord Morgan suggested that it would be much better all round if I simply adopted the approach of my grandfather—the architect, as my noble friend described him, of post-war nationalisation. I think that my noble friend, an eminent historian, should reflect on my grandfather’s character and his approach to these matters. He was no dinosaur, if I may use that term for the first time. His very strong view was that when the facts change, so must the conclusions about those facts change. In other words, he was a pragmatist, a sort of dynamic moderniser and not a static one, whose pragmatic dynamism gave rise to his firm belief that socialism is what a Labour Government do. I think that all Members of the Committee would agree that that is a very dynamic definition indeed. The amendments tabled by my noble friends remove the concept of "publicly owned" from the Bill. They go to the heart of what we are trying to achieve for Royal Mail under this legislation. Before turning to the specifics of the amendments, I therefore remind the House of the importance of a strategic partnership for the future of Royal Mail. As presently organised, managed and financed, the Royal Mail simply is not in a position to sustain its universal service indefinitely, which is why we are seeking changes through legislation. As I made clear at Second Reading, the future of the Royal Mail, and therefore the future of the universal service, is under very real threat from the challenges of the digital age. None the less, despite those challenges, mail is still a critical part of our social fabric, our communication infrastructure and our economy. The Government are therefore fully committed to maintaining the universal service by means of a publicly owned Royal Mail fully restored to good health. Perhaps I may remind my noble friend Lord Morgan that that is what we said precisely in our last manifesto. That is what our policy, if implemented in full through this Bill, will achieve. I want to see Royal Mail modernised and made fit for its future purpose. Previous attempts by this Government and by previous Administrations to achieve this have failed. In spite of the best efforts of management, supported by vast amounts of government funding, modernisation has simply not happened in the way, on the scale and at the pace required in a fast-changing marketplace of the sort in which Royal Mail has to compete. At Second Reading, a number of noble Lords commended Richard Hooper’s excellent report on the postal sector, which is the basis for this legislation. His report clearly identified the constraints faced by Royal Mail. They include that the company has relatively little room for manoeuvre on pricing—the higher the prices, the quicker business will be driven away. Also, he said that industrial relations in the business were strained; I think we are all agreed that that is an understatement. He said that it has a very large and volatile pension deficit—indeed, it does—and it does not make the profits required to modernise its business and, crucially, to diversify, which I think is common ground. Opponents of this Bill, some of whom we have heard today, have simply not addressed these issues and constraints in their contributions with arguments or viable alternatives to what we are doing, which the House might reasonably have expected in their contributions to our discussions today and previously. The Hooper review’s final judgment was that the introduction of a strategic partner will bring the capital, experience and confidence needed to tackle these challenges. No one has been able to counter this conclusion with equal strength or argument. We agree with the review that this dynamic—the best route to accelerate modernisation, and to enable Royal Mail to diversify and expand its operations—is a partnership with a private sector company that has real expertise in transforming a postal or network business. Consultancy or contractorisation, as some have mentioned previously, is simply not an adequate basis for the sort of partnership that Royal Mail needs. A minority sale of shares is needed to give the partner a real stake in the business and a real motivation to generate the necessary drive and synergy to bring not only the opportunity for fresh capital into the company but the much-needed confidence, expertise and dynamic that this business needs if it is to turn around its finances and transform itself as a going concern. Amendments which remove references to "publicly owned" and replace them with, ""owned in its entirety by the Crown"," would effectively prohibit any sale of shares—even a minority of shares—in a Royal Mail company. I have made clear again why this is not desirable and why Royal Mail needs a strategic partner to help transform the business. The details of the partnership have yet to be negotiated. I therefore ask my noble friend Lady Turner to have a little more patience, if she would not mind. I am sure that that generosity will be extended to me. But it is clear that potential partners will be motivated and driven only if they have a real stake in the business, and we want them to have such a stake. As I have said, hiring in a consultancy—sort of McKinsey-style—or contracting out work, as if we are just talking about the transformation of a single operation somewhere in the country, would simply not begin to have the same effect or results. If these amendments were passed it would kill off the partnership arrangements and, in doing so, would threaten the future of the business and therefore the maintenance of the universal service provided by Royal Mail, which it is the intention of this legislation to sustain for the future. Amendment 12 removes the duty on the Secretary of State to designate Royal Mail Group as a Royal Mail company before the current restrictions in the Postal Services Act can be removed. This duty was included in the Bill to give an assurance that Royal Mail Group Ltd would be designated and must therefore at all times be publicly owned. The amendment itself is arguably consequential on Amendment 97, but the provision in question provides an important additional protection that we would not wish to see removed. As I have said previously, the Government are committed to a publicly owned Royal Mail, fully restored to good health, as our last manifesto made clear. In our view, partnership—a real, strategic and integrated partnership cemented through a minority share sale in Royal Mail Group—is the best way to deliver it. Amendments that remove our ability to achieve that would in effect sentence Royal Mail and its employees not to the status quo, because yet further decline would set in, but to inexorable decline and possibly worse. In my view, the employees of Royal Mail deserve better than a sentence of decline. They deserve a future that comes with Royal Mail’s own use of technology and innovation, of it becoming a real player in a wider marketplace. I therefore ask my noble friend to withdraw his amendment.