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Royal Mail: Dispute

Volume 695: debated on Wednesday 17 October 2007

asked Her Majesty’s Government:

What assessment they have made of the effect on small business of the recent dispute in the postal service.

My Lords, the Government believe that the dispute has been damaging for the public, for business and for Royal Mail. That is why we have urged the management and the union to reach an agreement and why we have said that we do not want to see strikes continuing.

My Lords, I thank the noble Lord, Lord Davies, for that Answer. I am rather sorry that the noble Lord, Lord Jones, is not here to answer as our Trade Minister. I understand that he is off with Mr Miliband looking for new business, whereas I would have thought that sorting this out was far more important to the country at this time. Small businesses, as noble Lords know, are 95 per cent dependent on the Royal Mail for delivering their invoices and getting their cheques in. This is a very bad business. I hope that the Minister accepts that the Government sat on the fence for far too long, allowing the dispute to do lasting damage to the Royal Mail. What will they do next?

My Lords, the noble Baroness may know, as the rest of the House will, that the Government do not run Royal Mail, which is a private company.

They may own it, my Lords, but it is set up as a private company with its own responsibilities for management to reach appropriate industrial relations and deals with the trade unions. The negotiations are at a most delicate stage. The negotiators reached an agreement before the weekend. They have gone back to the union executive, which has sent them back on limited points to carry out further negotiations with the Royal Mail. Those discussions took place this morning. They are to be continued tomorrow morning. I do not think that it is helpful at this very delicate stage in the dispute for us to extend the issues too far.

My Lords, would my noble friend care to consider the root problem in the Post Office finances, which stems from the Postal Services Bill, as it was? He will remember my forecast of what would happen; tragically, it has happened. The Government may not want to run the Post Office, but they own it and appoint people who would not be allowed to hand out the pencils in any decent organisation. Does my noble friend have the cost of the final mile of delivery? Lying behind this dispute is the fact that, for 90 per cent of people who collect mail and dump it into the Royal Mail system, the Post Office loses 5p per item. Does he agree that that situation must be brought to an end to allow the Post Office to be run on proper commercial lines?

My Lords, my noble friend is very knowledgeable on these issues and he has raised important points. However, having been present at such negotiations in the past, he will know how restricted I am in commenting on the situation. He will recognise that the environment in which Royal Mail operates today is very different from the one in which it operated a decade ago. Royal Mail is open to extensive, well resourced and technologically advanced competition. It, too, has to change with the times. Effecting that change produces tensions, but we are hopeful that this dispute will end very shortly.

My Lords, the Minister did not answer my noble friend’s Question. She asked what the effect was on small businesses, which means the financial effect. Surely he has some estimate of that.

My Lords, in my original Answer I indicated that of course the Government are concerned about the impact on small businesses. Royal Mail has been able to preserve its special service—not next-day delivery, which is what the special service is designed to do, but still delivery within the second or third day. There is concern about small businesses. We make no bones about the fact that the dispute is damaging to them. There is no doubt about that whatever, which is why we want to see an end to the dispute as rapidly as possible.

My Lords, as the Minister will know, many hundreds of thousands of pounds have been incurred by small businesses in bank charges and the like. Will he have discussions with the British Bankers’ Association to ask the banks to be more understanding and take a softer approach to small businesses in this situation, which is affecting them very badly?

My Lords, the banks are not unaware of the impact of the dispute, which affects their business, too. The noble Lord is right that, at a time when small businesses are struggling with regard to payments, a sympathetic response from the banks is necessary in many cases. I am not sure whether the Government should intervene in those terms, but we all recognise what I think is the burden of the representation from the opposition Benches—the impact on small businesses. Small businesses are not the only ones affected; a great deal of our economy has been adversely affected, because of the crucial role played by Royal Mail. There is no doubt that small businesses are suffering short-term and potentially catastrophic difficulties, and that should be taken into account.

My Lords, I have great concern about the points made on all sides of the House. Does the Minister agree that the imperative is now to shut up and enable this dispute to be settled and then to debate the profound issues that have been raised?

My Lords, does my noble friend agree that there are concerns for small businesses because they both want money in and have to pay money out? In that respect, it probably balances out. However, at the end of the dispute, the only body that will provide a comprehensive service for small businesses will be the Royal Mail. No one else is prepared to go to the obscure, distant areas of the country where little money is to be made from providing services and delivering parcels and the like. The tragedy is that Royal Mail has been unable to communicate to CWU the critical character of the problems that its business now faces. In the ongoing negotiations, we might be able to get something done, but this is not the time to start putting blame on one side against the other.

My Lords, I agree with my noble friend on the last point. On his earlier points, that is why the nation values the Royal Mail and needs it to be efficient and effective. To be efficient and effective requires change in changing times, which is the basis of the present difficulty. I hasten to add that we may be on the brink of an agreement even at this moment, and we should do nothing that jeopardises that.