Second Reading

Part of Postal Services Bill [HL] – in the House of Lords at 4:30 pm on 10th March 2009.

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Photo of Lord Haskel Lord Haskel Labour 4:30 pm, 10th March 2009

My Lords, I, too, pay tribute to Lord Dearing. He was a good friend.

I thank the Minister for explaining this Bill, but I am not sure whether I should congratulate or commiserate with him. This is a difficult time to introduce a Bill to reorganise the Royal Mail. The noble Lord, Lord Hunt, spoke of uncertainty in the Labour Party, but he is wrong; the uncertainty is everywhere, even on the noble Lord's Benches. These are difficult times. All our principles are being tested—economic, social and political—but this is no reason why we should not get on with reorganising the Royal Mail. The Hooper review is right, and I agree with the Minister that, in accepting it, the Government can get on with the job in spite of all the turmoil. But the turmoil cannot be ignored, and neither must the lessons learnt from it be ignored.

One thing that precipitated my decision to speak in this debate is the amendment of my noble friend Lord Clarke. I listened to him with a great deal of care and respect, because his long experience in the industry demands that. We are all products of our experience; I probably started work at about the same time as my noble friend. I started in the textile industry, which is another industry with a history of traditions and pride. When I started work there, we did not have a monopoly like the Royal Mail, but we had import quotas and a lot of energy went into keeping them. Inevitably, some of the new blood thought that their energy would be better directed towards style and design, new technology and good management, clever marketing and slick service—towards providing what the customers wanted. Of course, you know who survived and you know who disappeared. It is because of that experience that the Hooper report rings true to me; it chimes with my experience.

Let us look at what is proposed—a universal service in the public sector, enshrined in law and regulated by Ofcom, and a public service with a private sector company to provide modernising management, with the owner taking a back seat. That is the kind of mixed economy solution that we used to discuss in the 1980s, but important lessons have been learnt since then.

One political lesson coming loud and clear is the need for good governance—the noble Lord, Lord O'Neill, touched on this. Good governance is hard to pin down; in the recent past, we have favoured self-regulation in business because the alternative has been box-ticking and because too much regulation puts a brake on enterprise and initiative. The answer lies in transparency. The Bill will need to insist on ways of offering even greater transparency—better information, broader knowledge and more and deeper explanation—to avoid the secrecy made acceptable in recent years by hedge funds and other financial operators. With transparency, agreement on accounting standards is also important.

The current banking crisis is teaching us other lessons. If an organisation is not to be allowed to fail, regarding it as a commercial operation may be politically right but commercially wrong. You have to deal with what others have referred to as the ambiguity of authority. It seems to me that the way to do this in the Postal Services Bill is to lay down that the first objective is not to maximise shareholder value—a concept that is probably now discredited—but to operate entirely without government support. Until that happens, the interests of the shareholders must be secondary and employee shareholding would have to be delayed. In that way you also remove the Royal Mail from the casino of share trading while it is renewed and reformed.

Next, you have to insist on good behaviour in the environment. That is becoming an important part of public trust. For the Royal Mail, this will be tricky. Greener ways of distributing packages and mail are being introduced. To save carbon and delivery charges, customers are collecting goods ordered over the internet at local depots. Local contractors are billing and invoicing to avoid long journeys for the mail. The environmental challenge will reduce the need for some Royal Mail services. I am sure that the Government will have to insist on other community values, which may affect the Royal Mail business.

On the other hand, I would be a little sceptical of the dire warnings about the disappearance of paper mail. The Minister spoke about this. He will remember a time when the big question was what we were going to do with all our leisure when the new technology did all the work. The belief that all our shopping, reading, communication and leisure would take place over the internet led to the dotcom bubble. In reality, the internet has enabled a lot of these things to grow as well as to change.

Fairly soon my noble friend will have to react politically to some fairly tricky economic decisions. You cannot legislate for the energy and the creativity that economic renewal demands. However, it seems to me that we can and should deal with these governance and political matters now while we are preparing the Bill. If we do not, they will cause only ambiguity and difficulty when the reorganisation of the Royal Mail is taking place. Many of the old orthodoxies are now being questioned and nobody is sure where we are going. When there is more certainty, these matters of corporate governance will be clearly laid down. Meanwhile, they should be in the Bill as an indication of the kind of economy that we want when this crisis is behind us.

I turn to the pension scheme. The chairman of the pension fund trustees points out that Royal Mail is unlikely to be able to afford the deficit to provide full value benefits. As my noble friend reminded us, sadly many pension fund trustees fail to take account of the fact that we are living longer and that managers can and do perform badly.

The Minister says that if the taxpayer is going to pay for the pension fund deficit, in return the taxpayer has to get an improved letters service. I am afraid that I find this interrelationship less than convincing. If the Government are going to fund the pension scheme deficit, they should do so because it is morally right because of responsibility and because of undertakings given in the past. I should like to see a clear line drawn to show that instead of funding the mistakes of the past, we are a party that invests in the future and we keep our promises.

Generally, therefore, I support my noble friend's Bill. There is certainly a need for it and the Minister deserves our support for tackling it at this testing time. I have tried to point out some of the lessons that these testing times are teaching us, lessons that should be incorporated into the Bill and debated when we get to Committee stage.