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Royal Mail

Oral Answers to Questions — Trade and Industry – in the House of Commons at 10:30 am on 21st July 2005.

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Photo of John Grogan John Grogan Labour, Selby 10:30 am, 21st July 2005

If he will make a statement on the future of the Royal Mail.

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

We will not privatise Royal Mail. We will pursue our ambition of a seeing a publicly owned Royal Mail fully restored to good health, providing customers with an excellent service and its staff with rewarding employment. I am pleased to announce that I am today appointing Professor Sir George Bain to support me in working on Royal Mail issues.

Photo of John Grogan John Grogan Labour, Selby

Can my right hon. Friend assure the 100-plus Labour Back Benchers who have signed early-day motion 548, which supports our manifesto commitment on a successful, publicly owned Royal Mail, that 100 per cent. of the shares will continue to be owned by the Government?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I will certainly reiterate our manifesto commitment on privatisation. My hon. Friend makes a point that I think is directed at whether there should be an employee share trust. I am not ruling that out, and as a former employee of Royal Mail for many years, I do not think that the House should rule it out. It is worthy of examination, and it is certainly something that we should look at on the basis of seeking to restore Royal Mail to full health and to take it further along the road that it commenced upon in 2002.

Photo of David Evennett David Evennett Opposition Whip (Commons)

Is the Minister aware that closures of several sub-post offices in my constituency have caused inconvenience and concern to many, including pensioners? Does he agree that Royal Mail should consider its Post Office subsidiary and try to get it to diversify, so that more post offices can remain open as community facilities?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

That is an important point, which was highlighted in the performance and innovation unit report in 1999 on the post office network, which gained broad support across the House. Part of the report was about the transformation of the Post Office as it loses its traditional customer base. Some 40 per cent. of its work was paying out pensions and benefits, but more and more people have those paid into their bank accounts. There is an enormous opportunity for the network to move to new forms of work, including community-based work. There is an awful lot going on, with the support of the National Federation of Sub-Postmasters, in order to make that work, but the simple message is that people have to use the initiatives and use the post offices. Post offices have to get the footfall because if they do not, they will be commercially unviable for the independent small business men who run them.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

I believe that the partial sale of the Post Office through an employee buy-out would be privatisation by the back door and I am alarmed to hear my right hon. Friend say that he has not ruled it out. When will he end the speculation? We find out information because Allan Leighton makes statements in the national media; indeed, there was a statement only last week. We need the matter cleared up. If my right hon. Friend is not ruling it out, is he ruling it in? When will he make a proper statement on this issue?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

My hon. Friend is another former employee of Royal Mail; there seem to be a lot of us around today. I disagree with her on the issue of employee ownership. In all my time as leader of the Communication Workers Union, I looked for ways in which employees could have a bigger stake and involvement in the company that, day in and day out, they helped to make successful. I am surprised that from Labour Benches people are asking me to rule out employee involvement. Our manifesto commitment was to look carefully at the impact of full market liberalisation on the Royal Mail, the universal service obligation and the uniform tariff. That is a job of work that cannot be done with one statement to the House. It requires a thorough job of work. It will involve Royal Mail, the unions, the regulator and now Sir George Bain to help me to bring those different factors together.

Photo of Norman Lamb Norman Lamb Shadow Secretary of State (Trade and Industry), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Spokesperson (Trade and Industry)

We are told that Royal Mail requires £2 billion to £3 billion to invest in automation to catch up with its continental rivals. We are also told that there is a deficit of about £2.5 billion in the pension fund. We have full liberalisation on 1 January. What plans does the Secretary of State have for Royal Mail to obtain the money that it needs to invest in automation and to remove the pension deficit?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

Those are the very issues that we need to look at. Royal Mail has gone from a position in 2002 when it had losses of about £360 million to a position this year in which it has profits of £500 million. So the organisation is moving forward. I reject completely the argument that the only way to create a successful, profitable Royal Mail is to privatise it. A public sector success story with full commercial freedom is within the grasp of Royal Mail. We intend to tackle the very real problems that the hon. Gentleman mentions and ensure that we make Royal Mail an exemplar across the world of a successful publicly owned company.