Royal Mail — Statement

Part of the debate – in the House of Lords at 3:26 pm on 16th December 2008.

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Photo of Lord Razzall Lord Razzall Spokesperson in the Lords, Department for Business, Enterprise and Regulatory Reform 3:26 pm, 16th December 2008

My Lords, I am somewhat amazed by the contribution of the noble Lord, Lord De Mauley. I was under the impression that for the past 10 years Royal Mail had been under its own board of management. It would worry me if the Government had been responsible for management. I thought that that was Mr Crozier's job.

We welcome the Statement. It is obviously, as the Minister admits, work in progress and much further work will be required before we get the Government's detailed recommendations on how they will implement elements of the Hooper report. Noble Lords from all sides of this House welcome the Government's firm commitment to the continuation of the universal service obligation. The Minister should stress that this is six, not five, days. We welcome the commitment to the obligation for six-day deliveries.

We were one of the first countries in the European Union to allow liberalisation and competition in the postal services. There are now 22 licensed operators competing with the Royal Mail in the UK. One of the problems that the Royal Mail has had is that almost all of them operate in an upstream manner vis-à-vis the Royal Mail. They tend to be access providers targeting the large business mailers in order to build volume quickly. In 99 per cent of these cases, the access providers sort the post themselves and then pay the Royal Mail to deliver it, with the Royal Mail levying a charge. In those circumstances, does the Minister think it appropriate in the liberalisation and reform of the Royal Mail for those upstream providers to make a contribution towards the cost of the universal service obligation?

The noble Lord, Lord De Mauley, made great play of the pension deficit, but the Minister's comments came straight from the Hooper report and the recommendation that the Government should take over the historic pensions liabilities in the Royal Mail. He very carefully said that this recommendation would be implemented only as part of a "coherent package"—I think that was the phrase he used—for the reform of Royal Mail. However, is he prepared to give a commitment today that, if a coherent package is implemented and agreed by all sides, the Treasury has consented to the Government taking on that pension deficit? That would clearly be a significant commitment by the Government, which he may not be prepared to make today.

Of course, the real fun in these recommendations comes from the third major area, which is what will happen to the future capitalisation of Royal Mail. Today, we read with interest in the newspapers, which are presumably getting their information from the normal sources in Whitehall, that the Government are contemplating the sell-off of a minority stake in Royal Mail. That, noticeably, was not mentioned in the Minister's Statement. Indeed, there is no reference to it, despite the fact that the Hooper report states on page 13:

"By contrast, private capital is generally more flexible and more tolerant of necessary risk. It can be raised more easily, faster and for a wider range of purposes and does not come at the cost of competing public priorities".

Is the Minister prepared to indicate today whether the Government are contemplating private capital going into Royal Mail? If so, why is that not in the Statement? I wonder whether there is a clue in the noble Lord's remarks on page 5 of the Statement:

"We will fulfil our manifesto commitment to 'a publicly owned Royal Mail fully restored to good health, providing customers with an excellent service and its employees with rewarding employment'".

That is from the 2005 Labour Party manifesto, but it is interesting that the first sentence of the manifesto commitment is not included. It states that,

"we have given the Royal Mail greater commercial freedom and have no plans to privatise it".

Is the omission in the Statement of that sentence from the manifesto deliberate? Are we to believe what we read in the newspapers today and yesterday regarding government plans to privatise either a minority or all of Royal Mail? I should welcome the Minister's comments on that point.

I turn to the Post Office. Since the Minister took up his new office, significant progress has clearly been made in the department on plans for the development of—or perhaps a better word would be "saving"—the post office network. Clearly, granting the card account to the Post Office was a significant development.

Finally, is the Minister prepared to answer the question that I put to him the last time that we discussed this matter in your Lordships' House? Bearing in mind that a number of sub-postmasters and sub-postmistresses will be looking at whether to continue trading after the Christmas holiday or whether to close, can the noble Lord give them any comfort?