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Hooper Report

Oral Answers to Questions — Business, Enterprise and Regulatory Reform – in the House of Commons at 10:30 am on 19th March 2009.

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Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale 10:30 am, 19th March 2009

What recent assessment he has made of the findings of the Hooper Report on the future of Royal Mail.

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The Secretary of State announced in December that the Government accepted the analysis set out in Richard Hooper's review of postal services and that, to maintain the universal postal service, the Government intended to implement his recommendations. I repeated that statement in the House of Commons on the same day.

The Postal Services Bill has since been introduced into the House of Lords, and received its Second Reading on 10 March. The Bill proposes a new regulatory framework for postal services, enables the Government to tackle Royal Mail's pension deficit, and ensures that Royal Mail remains in public ownership, while supporting modernisation through a strategic partnership.

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Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

Are the comparisons in the report made on a like-for-like basis in terms of prices and the services provided? Does the report not fail to identify either the cause of the pensions deficit or the devastating effect that unfair competition has had on Royal Mail?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The report covers all the issues relating to pensions, pricing and regulation. It is entitled "Modernise or decline", which is an accurate description of the choice that we face. If we do not act to turn Royal Mail around, the decline in mail volumes will decide the issue for us. For every 1 per cent. decline, the company loses £70 million. There has already been a decline of 7 per cent., and a further 7 per cent. decline is forecast. That demonstrates the urgent need to transform and modernise the company. If we do not take that action, Royal Mail will end up cutting services, which is not a solution that we want it to apply to its current problems.

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Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

In 2007, 637,000 days were lost at Royal Mail as a result of industrial action. That is 60 per cent. of the number of days lost to strikes in the entire United Kingdom. Does the Minister accept that the Communication Workers Union must become far more realistic about modernisation if industrial relations at Royal Mail are to improve?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Richard Hooper identified industrial relations as a significant problem for the company, and it is not just the industrial action and the strikes that have taken place, but the regular threat of industrial action—such as, in recent months, over changes to the pension scheme and the closure of a number of mail centres. A fresh start for industrial relations is, therefore, needed in Royal Mail, and I would say to the CWU that the current relationship is not what it should be and that bringing in a new partner may present a possibility of improving industrial relations, given their current very poor state.

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Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Will the Minister confirm that the argument in previous answers to questions has been that the Government will privatise Royal Mail and a foreign firm will come in? Can he explain to me how it is that now that we have an economic tsunami lapping on every shore, in Holland, let us say, Dutch TNT can find money that nobody else can find? If the economic recession is hitting everybody, where is the magic wand in Holland to find the money that we cannot find here?

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P

The Mail Service in Holland is one of the most expensive in Europe, they will probably take a Government backed loan to be repaid from the excessive profits they anticipate. The delivery service of TNT itself, is not reknowned for Service Excellence. Is there no-one in the UK that can...

Submitted by Paul Rutherford Continue reading

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I have great respect for my hon. Friend, but he is not right to say that we are privatising the Royal Mail. The Bill clearly says that we will keep Royal Mail in public ownership, so it is simply not true to say that we are privatising it. He questions why the Dutch postal service may be in a better position than Royal Mail; that is precisely because it has carried through the transformation and modernisation that Royal Mail has not yet managed to achieve. I cannot comment on any particular potential partner, because there has to be a proper process to get the best agreement for Royal Mail and the taxpayer, but if there is a partnership with another European postal company, I remind the House that liberalisation of postal services will be introduced in 15 members of the European Union by the end of next year. That will also give Royal Mail the opportunity to be a major European player, and that is not an opportunity that we should shy away from.

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Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland)

I welcome the clauses in the Postal Services Bill that allow a levy to be placed on the large private mail operators that are not fulfilling the universal service obligation to compensate Royal Mail, which is fulfilling the USO. There is an urgent need for those clauses to be implemented, because Royal Mail is facing unfair competition at present. Will the Minister give a commitment to a rapid introduction of those clauses?

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Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Those clauses, like all the other clauses in the Bill, will be implemented if the Bill is passed by Parliament, but the hon. Gentleman raises a very legitimate point with regard to regulation. That has been a subject of considerable controversy in this House and more widely, and we propose in the Bill to put at the heart of the regulatory system the maintenance of the universal service—of the one price goes anywhere, six-days-a-week universal postal service. That is the foundation of our postal system. We want to legislate to maintain that, not to leave Royal Mail alone to have its finances eaten away by the fall in mail volumes, which is costing it £70 million for every 1 per cent. of decline. That is no future for Royal Mail, but the Bill that we have presented is.

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Photo of John Heppell John Heppell Labour, Nottingham East

The Government seem to have accepted the Hooper review in total. The official Opposition have accepted, and are supporting, the sale of some shares. Are they also supporting other measures in the review, including regulation—

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