Skip to main content

Royal Mail

Volume 712: debated on Wednesday 1 July 2009


Asked By

To ask Her Majesty’s Government what are their latest plans to secure the future of the Royal Mail.

My Lords, market conditions have made it impossible to conclude the process to identify a partner for the Royal Mail on terms that we can be confident would secure value for the taxpayer. There is therefore no prospect in current circumstances of achieving the objectives of the Postal Services Bill. When market conditions change, we will return to the issue. We remain convinced that Hooper’s combined package offers the best chance of securing the universal postal service while protecting Royal Mail pensions.

My Lords, in thanking the First Secretary of State and Lord President of Council for that statement, may I say that it is sad that, not for the first time, we have learnt of a major change in government policy not here in Parliament but through the media? By shoving this critical Postal Services Bill into cold storage to suit their short-term political ends, despite the Conservative Party still standing ready to help see it on to the statute book, does the Secretary of State not realise that he and his colleagues are putting the trustees of the Royal Mail pension plan in an impossible position given the revaluation that took place on 31 March last? What does he intend to do to restore confidence and certainty to everyone involved with the Royal Mail and its pension plan?

My Lords, I can assure the noble Lord, Lord Hunt, that this House is the first to learn of this. Whatever spin may be put on any remarks that I make in an interview is a matter for the newspaper concerned. I take this opportunity to say to noble Lords that the time spent on the Postal Services Bill in this House has strengthened and improved it. I thank noble Lords for their contributions in Committee, on Report and at Third Reading which have helped to achieve that.

We have thoroughly tested the market to see who is interested in partnership, but economic circumstances, I need hardly point out, are extremely difficult. I have always been clear that we would do a deal with the private sector only if it represented value for money for the taxpayer—indeed, I said so at Third Reading on 20 May. Our market testing has shown that now is not the time to sell a minority stake in Royal Mail. The pension remains a matter for the company and the pension trustees. The Government have been clear about the basis on which they would be prepared to take on the pensions deficit. They do not intend to cherry-pick the implementation of the Bill.

My Lords, given that the Secretary of State has paid tribute to the work done in this House in getting the Bill as far as it went, although there were many warnings about the climate of selling shares at that time, perhaps I may ask him two specific questions—he may have dealt with one of them, but I should like to be clear. Workers and management in the postal services country are living with uncertainty. My first question is: will the Secretary of State urgently get down to talking about the pension fund deficit? My second question is on the regulator. There was almost unanimity around this House about the unbalanced approach of Postcomm. That was clear; it is accepted. Will the Secretary of State now take steps to see that the yoke of Postcomm is removed and move Royal Mail over to a balanced and fair regulator?

My Lords, as we discussed during the Bill’s passage through this House, the pensions deficit is a huge and growing burden on the Royal Mail. Annual payments to pensioners in the plan currently run at around £1 billion. However, government have to be fair to taxpayers. They cannot expect them to take responsibility for the deficit if the other challenges facing Royal Mail are not also addressed. As I said, it would be irresponsible for the Government to cherry-pick implementation of the Bill. It would be irresponsible in respect of the taxpayer and impossible in respect of the European Commission, which would have to give state aid approval. As for the regulator, Postcomm will continue to regulate the postal market for the time being. It will not do so in a vacuum. Its powers will remain the same, but it will have to take full account of developments in the postal market, where volumes are falling at unprecedented levels.

My Lords, as I have made clear from the beginning of my statement, market conditions have made it impossible to conclude the process to identify a partner on terms that would give value for money for the taxpayer. When market conditions change, as I said at the outset, we will return to the issue.

My Lords, I was going to say that we seem to have come half way up the hill and ask the Minister whether he was going to carry on or stay where he is. However, we now seem to be collapsing from the position that the Government put forward in support of the Bill. There are big issues—the Minister has spoken about pensions. The justification for the Bill was that it would allow the pensions issue within the European Union to be solved. There is an issue about modernisation, which the Minister talked about in the course of the Bill. Will that proceed? There is also concern about the post offices themselves; we hope that there will be some gains for them.

My Lords, there will be no adverse impact on post offices, no. But the noble Lord is right: the need for modernisation in the Royal Mail has not gone away. We have heard from both management and the union that they are up for change; they have to put that rhetoric into action and it is time to see it being delivered. In the coming months, we will look for full delivery of the changes to Royal Mail’s operations and working practices envisaged in the 2007 pay and modernisation agreement between the company and the unions. Endless industrial relations problems must stop in the Royal Mail, and we will look for evidence that there really is an appetite for modernisation in the company.