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Post Office Bill

Volume 385: debated on Thursday 14 July 1977

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3.40 p.m.

My Lords, I beg to move that this Bill be now read a second time. We have before us today a short and simple Bill whose very brevity will, I am sure, be welcomed by the House. Its effect is to increase the maximum number of members of the Post Office—in other words, the Board—from 12 to 19, in each case excluding the chairman. This new arrangement will be for an initial period of slightly more than two years, after which the permitted size of the Board will revert to 12 unless the Secretary of State orders otherwise, with the approval of both Houses of Parliament.

The purpose of this two-year enlargement of the Board is to enable the Government to give effect to agreed proposals from the Post Office and the Council of Post Office Unions for an experiment in industrial democracy in the Post Office. It might be helpful if I were first to outline the history of those proposals.

In 1974, the Government asked the Post Office management and unions to consider all aspects of industrial democracy in the Post Office and to produce agreed proposals for its extension. Following this initiative, my honourable friend the Minister of State for Industry, Mr. Kaufman, invited the Post Office and its unions to a tripartite meeting last July to discuss the way forward. It was then agreed that the Post Office and its unions should seek to negotiate agreed proposals for an experiment in industrial democracy in the Post Office. After much hard and dedicated work by those concerned, they submitted a joint report to the Government earlier this year. The report forms the basis of the proposals which this Bill will accommodate and I have accordingly seen that copies have been placed in the Library of the House.

This Joint Study Group's report recommended that there should be a two-year experiment in industrial democracy in the Post Office. At the end of that period, the working of the experiment should be subject to a thorough and detailed review by the Post Office, the unions and the Goverment. It proposed that there should be an enlarged Post Office Board, consisting of an equal number of full-time executive management members and employee members, with a smaller number of independent members. On this basis, there would be 16 seats plus a chairman, with six management, six employee and four independent members. The chairman would be independent of all three groups unless he also had a specific and titular management role, in which case he would count as one of the management group.

The Government welcome these proposals. They represent a significant and constructive contribution to the extension of industrial democracy in the Post Office. But, after consultation with interested parties, the Government concluded that there existed a strong feeling that the consumer should have a more specific voice on the Board and that the proposals should be modified to accommodate this. The new Board structure will, therefore, consist of 19 members plus a chairman, with seven management members, seven employee members and five independents. Two of the independent members will be chosen specifically for their experience of consumer affairs and will be able to speak from a consumer viewpoint. Such a Board structure will allow for adequate employee representation as well as a strong and widely experienced independent membership. It cannot of course be contained within the present statutory maximum of 12 members, and that is why the Bill is before us today.

But the Bill is not in quite the same form as when it was originally introduced in another place. It was the intention of the Post Office Management/Union Joint Study Group that the experiment should last for a period of two years. It was accordingly the intention of my right honourable friend the Secretary of State for Industry to appoint the members of the new Board for a period of two years only; any extension of the experiment was then to be considered in the light of the review which all parties considered an essential feature of the experiment. However, honourable Members in another place proposed to write the two-year limit into the Statute, and this Amendment was made with the wholehearted consent of the Government. The Bill now states that the maximum of 19 members shall remain in force initially until 31st March 1980. This allows for an experiment lasting two years plus three or four months in which the experiment can be reviewed.

Essentially, this review will take place in two parts. First, the Secretary of State will ask the chairman of the Post Office to provide, in consultation with his Board and with the Post Office unions, a report on the experiment. This will enable the Government fully to review the progress that has been made. If it is considered that the experiment has been a success, then it may be the wish of all those involved to make the new arrangements permanent. To do so will require the approval of both Houses of Parliament; this will be the second and equally important part of the review. Ann, to enable Parliament to be properly informed when it comes to consider this question, my honourable friend the Minister of State has undertaken in another place to ensure that the report on the experiment is made available to Parliament. The Government and the participants want to see the fullest possible review of this experiment and I think the House will agree with me that the arrangements I have described will certainly achieve that end.

The House will be aware that, under the Post Office Act 1969, the power of appointment of the members of the Post Office lies with the Secretary of State, in consultation with the chairman of the Post Office. This experiment will not alter this situation and complete responsibility will remain with my right honourable friend. But he will of course take reasonable and sensible steps to ensure that he appoints the right people for the job. He intends to invite nominations for the seven worker director posts from the Council of Post Office Unions. The unions will arrange to allocate the seven seats among themselves and will choose their nominees by the same machinery that is used for the election of national officials.

The Unions/Management Study Group Report, on which, as I have explained, these proposals are based, envisages that union members will be of the standing of Executive Council members or full-time officials of the unions. They will not be mandated by the unions but will be expected to report back to their membership by a procedure to be agreed by the new Board. Noble Lords will agree that it can only be to the advantage of the Post Office that employee members of such experience and standing should be nominated.

In accepting these arrangements as right and appropriate for the Post Office, the Government have borne in mind the very high degree of union membership in the Post Office, which is well over 90 per cent., and most of the unions of which Post Office employees are members have no membership outside the Post Office. The Government thus concluded that the particular circumstances of the Post Office make the existing union machinery wholly appropriate for the nomination of the employee members. My right honourable friend will of course not be obliged to accept the union nominations he receives. He will, however, normally expect to be able to do so and, if a problem arises, he will attempt to resolve it in consultation with the union concerned.

When choosing the independent members, my right honourable friend will bear in mind both that they must be truly independent of the other two groups and that they must be able to make a significant and wide-ranging contribution to the work of the Board, bringing with them considerable skill and experience from outside the Post Office. I have already said that two of the independent members will be chosen for their experience of consumer affairs. The Secretary of State will of course consult the Secretary of State for Prices and Consumer Protection in making these appointments. He is also prepared to consider for these five independent posts suitable people nominated by the Post Office or its unions, although he will not confine his considerations to such nominees or feel bound to accept them. He will also be prepared to consider reasonable objections to any candidate from either management or unions, but the final decision will, of course, remain his.

During discussion of the Bill in another place, concern was expressed that the employee members of the Board, as representatives of the workforce, might be unable to accept the normal responsibilities of a Board member. Let me clarify this by quoting the Secretary of State during the Second Reading debate on the Bill in another place:
"All members of the Board, to whichever category they are appointed, will share full corporate responsibility for the running of the Post Office, and will be expected to play their full part as Board members. There will be no restricted category of membership".—[Official Report, Commons; 16/5/77; col. 111.]
I should also like to make quite clear to the House that this experiment is unique to the Post Office. It arises, as I have said, from proposals produced by the management and unions of the Post Office. It is a one-off experiment, and the Government's endorsement of these arrangements in no way prejudices any more general decisions, or policies, which might arise from the Bullock Report on industrial democracy. It is, of course, completely in line with the Government's stated policy to encourage agreed industrial democracy schemes wherever they arise in industry.

While this Bill has been progressing through Parliament, those actually involved in the experiment have gone ahead with appropriate preparations in the hope that it will be passed, and that the experiment will be able to go ahead. Two of the unions, the Union of Post Office Workers, and the Post Office Engineering Union, have ratified the proposals at their annual conferences, and I understand that the other unions have chosen to hold special conferences to consider these proposals later this year. Noble Lords will appreciate the keenness with which these unions view the experiment and their enthusiasm to get on with the job.

Before I close, I hope the House will permit me to echo my right honourable friend the Secretary of State in paying tribute to those in the Post Office management and unions who have worked so hard, and so fruitfully, to produce the agreed proposals. And it is no small matter to which they have devoted so much time and energy; it is a matter of very great importance. The Post Office, the largest employer in the country, has decided that it wishes to embark on an experiment in industrial democracy. It is the first experiment on such a scale in this country, and it will be closely watched, not only by proponents of industrial democracy, but by its enemies as well. It will be an open experiment, whose results will be subject to close scrutiny, both here and outside these walls.

We have heard much of late from many Parties on the subject of industrial democracy. We have before us today legislation which will enable the Post Office to embark on a great experiment in this field—one which management and workforce are agreed is the right course for the Post Office. I commend this legislation to the House, not only as of great importance to the future of the Post Office, but also as an opportunity to move out of the theory of industrial democracy into its practice. The Government have moved as quickly as possible to introduce this Bill, and to assist its passage through Parliament. I hope that your Lordships' House will join with another place in giving this experiment the opportunity to go ahead and succeed, and that noble Lords will give their wholehearted support to these proposals. My Lords, I beg to move.

Moved, That the Bill he now read 2a .—( Lord Winterbottom.)

3.52 p.m.

My Lords, the House will be grateful to the noble Lord, Lord Winterbottom, for introducing this Bill this afternoon, and many of your Lordships will also be grateful to him for stating quite clearly that the Bill does not predispose any decision, or policy, by the Government in respect of industrial democracy generally and, in particular, the recommendations of the Bullock Report which, alas! have not found favour with very many of your Lordships, and upon which we have yet to hear the Government's definitive view, at any rate so far as future legislation is concerned.

The Bill, limited as it is in scope to the Post Office, receives a guarded welcome from my noble friends and myself. I am assuming that there will be no Committee stage on the Bill, although that depends upon whether any noble Lords put down Amendments, but, so far as I know, it is not expected that there will be a Committee stage. Therefore, I propose to take this opportunity of putting one or two points to the noble Lord, and if he cannot answer them today, perhaps he will be able to do so at Third Reading, or in correspondence.

As the noble Lord said, this is an experiment, and we on this side of the House are happy that it should be so. We really have no criteria by which to judge any operation of this nature, and we shall be looking at the results of this exercise carefully, and no doubt, critically. We shall want to examine any White Paper or other document that comes forward at the expiry of this experiment and I am happy to hear, and to read in the Bill, that the extension of the experiment will need a Resolution of both Houses of Parliament.

I believe that the Government's reluctance to give the Post Office a carte blanche in this matter is good and, as I have said, we shall be happy to join in the scrutiny come the day. I want to ask about the selection of the five independent members of the newly-formulated Post Office Board. We know that two of these will come from the consumer lobby, and I wonder whether the noble Lord can be a little more specific. Will they be members of any of the consumer bodies and, in particular, what will be the position of the Post Office Users' National Council, which is presently under the chairmanship of the noble Lord, Lord Peddie? It may be that the noble Lord, Lord Peddie, himself, or at least the chairman of the Post Office Users' National Council, will have an ex-officio place on the newly-constituted Board. I hope that the noble Lord will be able to tell me whether or not that is the case.

I also want to ask about the position of the seven worker directors. As the noble Lord has explained, these are to be union nominees. The noble Lord told us that they are to be of high calibre, and of the same standing—I think he said—as the officials of the Post Office unions. I am not aware what procedures are used in the major Post Office unions for the selection of officials, but it would be helpful and interesting to know whether the Post Office unions, for example, have provision for postal ballots, or at least secret ballots of some kind. The selection of union officials is a matter which has exercised noble Lords on this side of the House, as well as our honourable and right honourable friends in another place, because we have sometimes found that, in some of the unions, the officials are elected by such a tiny percentage of the membership, due to the fact that the elections are conducted at meetings of the unions which are not always attended by more than a small percentage of those entitled to do so.

If it follows, therefore, that the worker directors of the Post Office are elected by a similarly tiny percentage of the membership of the union, I hardly think that it would be a very valid experiment in industrial democracy. I hope that the Government will at least use their influence to secure some form of electoral system within the Post Office union, which will bring about a wider percentage of votes when these worker directors are elected.

We would not normally seek to interfere in the internal workings of the Post Office union, or any other union, but in this case, where the union procedures are being used to appoint directors to the Post Office Board, I believe that we have a right at least to inquire into the system which will be used, and to make our comments on it. Of course I recognise that the Secretary of State is not bound to accept the nominations of the Post Office union, but clearly he will have to produce very good reasons for not accepting any nomination, and I think that he would find it difficult to reject a nomination simply on the grounds that the system of election was unsatisfactory.

My Lords, I am also wondering whether the worker directors will be part-time or whole-time directors, and whether they will be salaried as whole-time or part-time directors, because there is a very real difference. There is also, of course, the question that the salaries themselves have to be approved, as I understand it, by the Secretary of State. I should be interested to know what procedure he will use when considering salary proposals, or whether they will simply be implemented in accordance with the standing arrangements in these matters, which we have debated in your Lordships' House quite recently. My Lords, this is an interesting Bill which we shall all, I know, watch with care and interest. I hope that, when the time comes for its review, which I see is in 1980, whoever may be the Minister responsible for initiating that review, we shall conduct it sympathetically and thoroughly. I hope your Lordships will approve this Bill.

4.1 p.m.

My Lords, we on these Benches give support to this Bill with certain reservations, and perhaps I may deal with the reservations before dealing with the reasons for support. The first point I should like to make is greatly to regret that this reorganisation is taking place before we have had the opportunity to read the Carter Report. It seems a peculiar method of procedure that, a report having been commissioned and a great deal of work having been done, a very important side of reorganisation takes place without any of us having the benefit of knowing what the Carter Committee is going to say. Indeed, presumably the Carter Report will shortly be published, and not only the Government but all of us who have given support to this reorganisation are going to look somewhat foolish if it is then found that what the Carter Committee recommend has very considerable bearing on the changes which are taking place under this Bill. It surely should have been possible for us to synchronise the proposed changes with our knowledge of what the Carter Committee has found. I would say also that it seems curious to ask expert and very busy people to prepare a report of this kind and then apparently not to take it into account, in the way in which this reorganisation has not taken the report into account since it has gone ahead before the recommendations have been made public.

My second reservation has to do with the method whereby the employee representatives find their way on to the Board. This is, in this case, a somewhat academic point since, as the noble Lord, Lord Winterbottom, pointed out, well over 90 per cent. of all employees in the Post Office are in fact members of the trade union. My honourable friends in another place have accepted this arrangement, but I should like to make it quite clear that this is not to be regarded as in any way confirming the principle that appointments to boards in industrial democracy schemes should be handled through the single channel of the trade union.

As I think your Lordships may be aware, the Liberal Party is strongly of the view that industrial democracy should develop through the direct election, by all employees, of the people who are to serve as employee representatives on the Board, and in our view any other method is indeed normally a contradiction of the idea of democracy. It is only the fact that so high a proportion of the employees —virtually the total number of the employees—are trade union members which makes it possible for us to accept this way of proceeding in finding employee representatives.

Having said that, we are glad that this experiment is going forward, with the accent on the word "experiment". The noble Lord, Lord Winterbottom, referred to the theory of industrial democracy. It is a very murky theory. Nobody really knows what it means—let us be frank about that—and the more we proceed on the assumption that everybody understands what it means, the more trouble we shall get ourselves into. What we need is experiment and the review of experiment, to get ourselves into learning situations and to be prepared to learn from the experiments which we try; and because this is such an experiment it can indeed be very valuable in furthering our knowledge of how to make industrial democracy work. It is the experimental character of this which recommends itself to us very strongly indeed.

It was also good to hear the noble Lord, Lord Winterbottom, say that the worker directors would not be mandated and would accept the same responsibilities as other members of the Board. Can we underline our belief that an industrial democracy board with employee representatives on it, or indeed the representatives of any other interest, must be able to act as a unified board, and that any idea that a board which has on it representatives of various interests is simply going to be a negotiating body raised to the highest possible level in the organisation can spell only disaster.

Finally, we welcome it very strongly because of the inclusion of consumer and independent members on the Board, for two reasons. It is quite obvious that, in a monopoly situation such as that of the Post Office and of nearly all the nationalised industries, it is of the greatest importance that the consumer interests should be adequately protected. The market simply does not protect the consumer in industries of this kind, and we urgently need some more effective mechanism for seeing that the consumer is properly protected. It remains to be seen whether the presence on the Board of five independents, two of them specifically selected to represent consumer interests, is an adequate way to look after consumer interests, threatened as they undoubtedly are by what can so easily become a "gang-up" of the producer interests against the consumer, however nicely this is smothered by kind words. This is one of the things we hope we shall learn in the course of this experiment.

If I read the Official Report of another place correctly, it is interesting to see that the way in which the consumer representatives and the independents are to be appointed is somewhat novel. Perhaps the noble Lord, Lord Winter-bottom, can tell us a little more about this when he replies. But I gather that the list of the great and the good is to be abandoned for once, and that there is to be access to these positions on the Board by a much wider range of people than has been common in the past. This is in itself, I think, very interesting, and part of the experiment that we shall all watch with the greatest possible interest.

For these reasons, my Lords, we are glad that this experiment is being made. We are particularly glad that the consumer and independent interest is to find its way on to the Board. We hope that this is a precedent for seeing that the nationalised industries will be more concerned with consumer affairs and with the needs of the consumer, and that the consumer voice will be heard far more effectively than it has been possible for it to be heard in the past.

4.8 p.m.

My Lords, may I intervene for two minutes, perhaps, to ask the noble Lord, Lord Winterbottom, two questions? One is: will any of the independent members come from country districts? Because, as many noble Lords must know, there are several country districts in England which are now suffering terribly from the changes which have recently been made in the system of deliveries. Deliveries are in many cases made much later; and in certain cases sub-post offices have been closed and old-age pensioners and others have to travel miles and miles under the most difficult circumstances. So the first question I want to ask is: Will the independent members include some people representing country areas? The second question I want to ask is this. Will sub-postmasters be represented among the union members? I may be wrong, but I think the sub-postmasters have a union different from that of others. If the noble Lord, Lord Winterbottom, would be good enough to answer those two questions, I should be very grateful.

4.9 p.m.

My Lords, may I also ask the noble Lord to answer one question when he replies? What remuneration is it proposed to pay to the members of the new Post Office Board? We are told that this is an experiment. I would respectfully suggest to him that if this is to be a real experiment it is necessary to follow what I believe to be the good trade union principle of paying the rate for the job. As the noble Lord will be aware, what was the rate for this particular job in December 1974 was recommended by the Top Salaries Review Board presided over by my noble friend Lord Boyle. As the noble Lord will also recall, the Government of which he is a distinguished member have done absolutely nothing to implement those recommendations.

I should be grateful if he could tell the House whether, in conducting this experiment, the Government intend not to go as far as to pay a fair rate as independently assessed today but, at least, to compromise to the extent of paying to the gentlemen they appoint what was thought to be a fair rate three years ago. I suggest to the noble Lord that, apart from the injustice to individuals of doing otherwise, he will not get a satisfactory experiment if he ignores that very important element in the experiment.

4.12 p.m.

My Lords, I am grateful to the noble Lords who have spoken, for their guarded support for this measure. I think the noble Baroness, Lady Seear, was right to underline what I had said; namely, that this is an experiment and, as many of us know, one never knows quite how an experiment is going to work out. I think that this measure is receiving a comparatively easy passage through both Houses because noble Lords here and Members of another place realise clearly that we are not trying to impose something of a permanent nature upon our industrial system; we are doing, in fact, what was suggested to me several times during the discussions on the Shipbuilding and Aircraft nationalisation measure when we were talking about organic industrial democracy.

Noble Lords asked me, "Why not try an experiment in an existing nationalised industry?" I think that they were entirely right to ask that question. This is just what we are doing. I think that the choice of the Post Office is a particularly happy one because its birth was not brought about in an atmosphere of controversy. It is not really a nationalised industry but a national industry, because it was, I suppose, one of the first created State industries which was born under State control and which has developed into the sort of administration common to the other nationalised industries. It is also fortunate in so far as its unions are, so to speak, in-house unions, so that the conflicts that might have arisen if another general workers' union involved in industries other than the Post Office were involved are not likely to arise for the reason that the Post Office unions are of long standing, of great responsibility and are greatly loyal to the organisation in which they are working.

I note what the noble Baroness said: that she welcomed the fact that they were not mandated—and I think this is of great importance—and that the attitudes and methods of work of all the directors on the new Board will be of a normal directoral nature. No one is coming mandated, but all are bringing, one hopes, a specialised knowledge of the industry and of the society which they have to serve to the deliberations of the highest management body of the Post Office which, as I have said, is the largest employer of labour in the whole country. The noble Lord, Lord Trefgarne, raised a number of points which I thought were the right ones to pick upon. I think that I can answer all of them. If not, I shall make certain that an answer is given at Third Reading. I hope that the noble Lord, Lord Clitheroe, will forgive me if I do not answer him today, but I will undertake to answer the two points he made, which I think are important ones, at a later stage of the Bill, presumably at Third Reading.

May I first turn to the important point of the allocation of union seats and the arrangements for nominations which, I think, was the first point that the noble Lord opposite raised. The Government feel that the allocation of union seats, like the arrangements for arriving at employee nominations, should remain a matter for the unions themselves. This view has received the support of the Council of Post Office Unions and the Government have no intention of interfering in any way with either the allocation of seats or the arrangements that the unions will make for nominating members. The Government have been assured that efforts will be made to involve the membership of all the relevant unions. The ultimate decison on whether or not to appoint any nominee, from whichever quarter, will, of course, continue to rest with my right honourable friend the Secretary of State. This is to repeat what I have said earlier. Ultimately, the acceptance of the appointment must lie with the Secretary of State.

My Lords, I am obliged to the noble Lord. I agree that the approval of the nomination lies with the Secretary of State. What I am anxious to know is whether the electoral system in the Post Office Union is one that involves a great majority of the members and not, as so unhappily happens in many trade unions, involves only a very tiny percentage of members in what is sometimes thought a rather unsatisfactory way.

My Lords. I was coming on to answer that point, I am not certain that it is absolutely satisfactory, but it is factual and perhaps the noble Lord may like to think about it and comment on it later. The practices of the various unions in the Post Office are not identical hut, in the main unions, branch representatives elect national officials at annual delegate conferences. This is a practice of long standing to ensure the participation of individual members through their branches. If the noble Lord wants that view to be expanded, I shall try to do so at the Third Reading. At the moment, the branches send their delegates to the national conference of their union mandated presumably to support Mr. A or Mr. B, the decision having been reached at branch level.

May I turn now to the question of the selection of members with consumer experience. The role of POUNC in the new circumstances of the rearranged board—and the noble Lord, Lord Trefgarne, is right to put his finger on it—is a matter of great interest. I have already explained that two of the independent members will be chosen for their experience of consumer affairs, and there have been suggestions that one of these two should also be a member of POUNC. Perhaps consumer affairs should include, in particular, the consumer affairs of country members. That is a point that I have undertaken to answer at a later stage. The consumer members must be able to make a full contribution to all Board discussions and not just consumer matters, and accept all the obligations of Board membership and be full Board members in every sense. It is important that they should not feel bound by the views expressed or the conclusions reached by an outside body. Presumably, in this case, an "outside body" means POUNC. That is why I have referred to the appointment of two persons experienced in consumer matters and able to express a consumer view rather than representatives or delegates of consumer organisations.

I should not like to give the impression that the Government have reached any hard and fast conclusions on the recruitment of two consumer members; but the choice will be made on the basis that I have described. The Secretary of State has undertaken to consult the Secretary of State for Prices and Consumer Protection in appointing the two consumer members and I am confident that they will find members fully qualified to put across the consumer point of view. The Carter Report was raised by the noble Baroness. Frankly we could not wait for it; it was going to take two years to implement any decision on that basis and we wanted to get on with this matter straight away.

May I touch upon the remuneration of worker directors and all directors. This is still an open question. I am certain that the views of the noble Lord, Lord Boyd-Carpenter, will be noted by my right honourable friend the Secretary of State. It is a rather complicated issue because of the position of worker directors, and I should like to say a word about that. Worker directors will be paid for their work as Board members. They will be eligible for the normal salary of a part-time member of the Post Office. Whether they should collect it or not, however, is a matter for each worker director and his union to decide. The general secretary of the Post Office Engineering Union is on record as saying at his union's recent conference that there should be no payment other than for loss of pay and expenses.

That is the only firm statement that I can make on this subject. I appreciate the point that the noble Lord has made: we are conducting an experiment, we want the people taking part in the experiments to be as competent as can be recruited—and there is a North Country saying, "You get nowt for nowt, and precious little for sixpence". You have to pay for what you want. That must apply to this particular experiment.

My Lords, I have done my best to answer the points which have been raised in a very short, valuable debate. I regret that we could not have more of a set piece on this most interesting subject. I hope that I have satisfied noble Lords and, if not, I shall try to cover any missing points at a later stage of the Bill.

On Question, Bill read 2a , and committed to a Committee of the Whole House.