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Postal Services Bill [HL]

My Lords, it appears that the Secretary of State has already declared my interest in the Post Office. As a former Post Office worker, I say for the record that in this debate my thoughts are with another former Post Office worker who was mentioned by the Secretary of State—Lord Dearing. I shall miss Lord Dearing, although he would not have agreed with some of the things that I am going to say this afternoon. I expect that I have about 20 minutes, after the Secretary of State’s 23 minutes. Ron Dearing was a great and effective chairman of the Post Office. At his funeral yesterday, I met another former chairman of the Post Office, Sir William Barlow. He is getting old, as I am. He touched my arm and said, "All power to your elbow". That was enough for me to know that I am on the right track in asking that this Bill not be given a Second Reading. Lord Dearing would not have agreed with some of the points that I will make, but I know that he shared the view that our great postal service should be defended, protected, expanded and nurtured until it gets back to the state that it was in when it was a world-beater for so many generations. In moving this amendment, which seeks to deny the Bill a Second Reading, I shall explain why the Bill as it stands is unnecessary and should not be proceeded with. What is being proposed is certainly not in the best interests of the Royal Mail or the British public. If the Bill ever became an Act of Parliament, it would certainly benefit those who can see how the postal system would bring them great rewards in the future. Why else do they want to buy into the Post Office and the Royal Mail? Having rewards for shareholders is not a bad principle if you are dealing with a company, but we are dealing with a valuable public service. Our country would not get the rewards and the economy would suffer even more. There would be more reductions in the quality of service. Just look at some of the competitors that have been quoted in this debate and the service that they provide. It seems that time is always a problem in this House whenever you get up to speak and I would need about a week to tell noble Lords about some of the things that should be done. I have been saying them in this House for almost 10 years; some noble Lords will remember those debates. It is no good now to say that there has been delay; I asked for some of these changes years ago, on the position of the regulator and the downstream access that has cost Royal Mail so much. It would be a daunting prospect to deal with the size of the Bill if it were not for the fact that my desire is effectively—I make no bones about it—to kill the Bill in its tracks now. It should not go any further. The Post Office, in particular Royal Mail, demonstrated success and does not deserve to be treated as it has been over the past couple of months since the sale of shares in Royal Mail was suggested by the Government. The misinformation about management that has been bandied around over the past few weeks requires me to try to allay some of the fears that have been generated by those who should know better. I shall try to be as brief and as clear as possible. There are many facets to the Bill, some of which, in different circumstances, could and would be welcome. Unfortunately, the camouflage and smokescreen that have sought to scare and frighten Post Office workers make it impossible for anyone who believes in the public service to do anything except to stop the Bill in its tracks. This House should decide today that the Bill should go no further. It is my firm belief that much of the Bill is simply embroidery. I say that deliberately. Much of the Bill—its clauses, sections and parts—is there as embroidery on the core issue, which is, to start with, to sell off part of the Post Office. We know where that will lead, because some of us have been there before with the sale of Girobank and the sale of BT. We know what happens. It is no good putting at the end of a piece of paper from the Whips’ Office that if the Conservatives were to get in they would fully privatise. Of course they would; that is their policy. It is not Labour policy. I shall return to the manifesto commitment later. Much has been said and written about protecting the universal service obligation. The security of the USO is already there. The noble Lord, Lord Sainsbury, said at the Dispatch Box to me, deliberately and on more than one occasion, that the 2000 Act gives comfort, support and reinforcement that the USO will be maintained by Royal Mail. Some may recall those debates. Dear Lord Sainsbury, who had the job of pushing that legislation through this House, replied on more than one occasion that the USO was sacrosanct and that the Bill that became an Act would protect the universal service, which we all know gives equal treatment under the Roland Hill principle to every household and every citizen of this country. Ill informed comments about modernisation are grossly unfair to the management and workforce. At present, all four sections of the Post Office—Royal Mail Letters, GLS, Parcelforce and Post Office Limited—are in profit. Royal Mail is making a profit of £1 million a day. These are facts—no fiction and no embroidery. It is making £1 million a day as opposed to the £1 million a day that it was losing at the time of the turnaround. I did not agree with much of the 2000 Act. However, confession is good for the soul: I think that Post Office’s management has done a wonderful job in turning around the business from a deficit on operations to a profit. Instead of talking about how the management is inadequate and about bringing in people from another country, this House should be saying, "Thank you very much". The Government should be saying, "You’ve done a great job and we don’t need people from a failing post office"—if we were talking about the Dutch, because they lost money, or Deutsche Post, because it lost money. Our Post Office is making money. I shall have to cut out a lot of my speech, because time rushes on. In the first nine months of the current financial year, Royal Mail made a profit of £255 million. It confidently estimates that this year it will make double the profits of last year. That should be recognised, even when Royal Mail has been faced with a biased regulator, which, eight years after it was set up, has been found wanting. With great respect to this House, I advised on what would happen. There is nothing clever in being right after the event; I was right at the time. The regulatory framework was designed to give our competitors the right to cherry pick by taking the profitable parts of the Post Office business and then insisting by law that the Post Office had to deliver downstream access at a loss. Every letter delivered by its competitors costs Royal Mail at least 2p. I want to speak a little about the Post Office pension scheme, in which there is a deficit. Much has been said—we have heard it again this afternoon—about the enormous sums of money. The figures fluctuate; some say that the figure is £3.4 billion, from when the scheme was last valued, in 2006, or that it is the £5.9 billion mentioned in the Hooper review. The next actuarial valuation later this year will in all probability add to that figure. Whatever the correct figure, everyone must agree that the scheme’s deficit is serious and has to be addressed. Deficits in pension schemes are not new and nor are surpluses, on which I should like to comment in a few moments. The Post Office first had a contributory pension scheme in 1969. Hitherto, its scheme had been part of the Principal Civil Service Pension Scheme and was non-contributory, whereby the employer paid, as happens down the other end of this building and in the European Parliament. However, in 1969 it moved to being a contributory scheme. In 1973, the first actuarial review of the scheme took place, from which I shall quote accurately: the deficit after four years was £1.092 billion. How much would that be today? I do not have the means to uprate that figure to present-day values but it would be a hell of a lot of money. In those days, we did not run away, throwing up our pennies, but that is how it is going to end up, with our giving away our business to a foreign competitor. However, back then, that was not on the cards, and there is no doubt that we did not run away. The answer was found by the employer, the employees as represented by their trustees and the Government sitting down under the pension scheme rules and finding a resolution. It was such a good resolution that it did not take long before there was a great surplus. I do not have time to go into the detail but, if anyone has any doubts about what I am saying, I recommend GP Olver’s book about the Post Office’s finances and, in particular, chapter 3, which is headed "The Historic Deficit". Mr Olver makes it very clear that the deficit was recovered through a sensible arrangement that led to the years when the scheme was in surplus. I am getting a bit excited about pensions because I went to see a group of Post Office pensioners last Thursday. I was always known as Nobby Clarke. A chap came up to me and said, "Nobby, can they take away my pension?", and he showed me a lurid headline which read, "Posties pensions in peril". Where did that come from? I want to spend a minute examining the origins of that rumour about the hard-earned pensions of hard-working people, who did not deserve to be given that fright. In the final analysis, under the trust deed the Government are responsible for the deficit. Whether we like it or not, that is part of the trust deed, which allowed the Post Office to take almost a 13-year contribution holiday. It is not generally known but I was the negotiating officer at the time. I took it as far as I could with the lawyers but was told, "Tony, you cannot do anything about this because the employer has the responsibility for deficits and therefore it has the responsibility for surpluses". Today, I want the Secretary of State to say clearly and unequivocally that Post Office pensions, which for years were described as deferred pay, earned by hard-working decent men and women, are safe. We know that they are safe. Anyone who knows what is going on knows that they are safe. This is terribly wrong. At a group meeting of the Labour Peers last week, the Secretary of State was able to tell us certain things, and I asked about the letter. The Post Office pension trustees had no knowledge of the letter that was sent to the Secretary of State saying that all the recommendations in the Hooper review had been accepted. Noble Lords may ask what an independent trustee group is doing commenting on other matters in the Hooper review. The letter to the Secretary of State, written on 19 February, was published on 23 February and led to the headlines. The Secretary of State told me last week that he did not leak it and of course I believe him. At the same meeting, the piece in the Sunday Mirror about the pension provision and the funding of the senior officials’ pension scheme was mentioned. Again, the Secretary of State was able to say that that was entirely inaccurate. I hope that someone is now telling the Sunday Mirror that it should not have published what it did. Again, it was not down to anyone in the Secretary of State’s department. As a lifelong member of the Labour Party, I was troubled by another point that was made at that meeting. I was told that not one voice in Cabinet was raised against these proposals. Many noble Lords will have read that there have been some reservations but, again, I believe that the Secretary of State said that no one in our Government was prepared to say that what was going on was wrong. There was unanimity in the Cabinet. I would like to say a few words about modernisation. We are talking about the introduction of intelligent optical character-recognition sorting machines. Those sorting machines, together with what are known as walk sequencing machines, are not readily available. Someone may have the impression that you can just go to whoever sells them and take a machine off the shelf. There is a lead time for buying them. There is no need for us to rush, in indecent haste, as I said when we rushed into the liberalisation of our postal services in advance of everyone else in Europe. To date, some countries have not even started liberalisation. If someone comes along with a big chunk of money, will they sit passively in a boardroom? A very senior man in the Post Office wrote to me, in retirement, saying, "It would be like putting Tesco board members on to Sainsbury’s board". I do not understand boardrooms—I am a postman—so I do not know what goes on in the world of high finance. However, it makes you worry when you are told that there are all these wonderful whizz-kids who will take on jobs, some of which are deliberately being kept empty in the Royal Mail for them. I hope that I am wrong and I hope that the Secretary of State says, "You’ve got it all wrong; there is no blocking of posts for these people". We shall wait and see. The House should also know that, at the time of the 2000 Act, I prophesied a loss of jobs. That was nothing clever; it was obvious. When you take away deliveries and collections, such as the Sunday collections, and when you contract what you are giving to the public, that is bound to happen. Recently, I found out from a senior person in the Post Office that 50,000 jobs disappeared in that period. That might have been inevitable, but the Post Office and particularly the Royal Mail say that it has been managed by agreement. There have been hiccups, as there would be with job losses of that size, but the Post Office has done it—those 50,000 jobs have gone. What do we give the public in return? We give them less service, as was confidently published. The Deutsche Post’s figures show that it is losing money. On tariffs, a lot has been said about TNT. We will be told that it has not got the job, that it is not really the main runner and that no decision has been made. Have a look at today’s Guardian to see how the company is run, the allegations of bullying in that company and how casualisation has taken place. In Holland, a letter of 100 grams costs twice as much to send as a letter of 100 grams in the United Kingdom. Is it any wonder that we have fallen behind until this recent recovery? We have never been allowed to charge the right price in all the years of political interference. When we got the 2000 Act, I welcomed the commercial freedom. We are right to go to the market to get money for investment, if that is possible. We should send this Bill back to whoever dreamed it up with a simple message: stick to the manifesto commitment, carry on with the abolition of the biased regulator and allow sensible periodic increases in tariffs. One thing that we can perhaps learn from the Dutch is pricing policy. I have talked about the basic rate. Will the Minister please explain why an efficient Holland is so much more costly than an inefficient UK? That needs answering. People say that these people are so clever, but they are not as clever as the wonderful people who run the British Post Office. I am not just talking about postmen, postwomen, counter clerks and the people who ride their bikes around the villages; I am talking about the whole family of Post Office people from the chairman of the board down. They run a good service. It should be allowed to continue and to have increased borrowing powers. We want some imagination to overcome the present problems. We want to be able to raise money to do the job, as Welsh Water has done, and we want to be able to do it without looking over our shoulders thinking that someone is going to come along and say, "We’re going to take your jobs and your business and suck up the profits later on". Remember National Giro. If I had time, I would quote from Hansard what I told this House, which was that the sell-off was a great rip-off and that the golden shares in BT melted away. You would not think that they were gold; they melted like snow in summer. I am told by experts in the field of finance that there are alternative ways of raising money without selling such a valuable asset. This nation has proved for over 300 years that we can provide a decent postal service, run by decent people. I have pleasure in commending the amendment to the House.