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Postal Services Bill [HL]

My Lords, the Second Reading debate gives me the opportunity of sharing some of my experience in working with the Royal Mail and the CWU over several years. There is no doubt that this is a difficult business with some huge challenges, but also some significant achievements that, because of the rhetoric and political posturing that has taken place around the Hooper report and the Bill, are often not fully appreciated and sometimes overlooked altogether. The Hooper report could have been a bit more generous to the existing management. In the past five years, Alan Leighton and Alan Crozier have achieved things on behalf of the customer, as have Billy Hayes and David Ward of the CWU achieved things on behalf of their members. Of course, there is always an absolute need for constant change and improvement, but there is also recognition of the need to accept and give proper credit for what has been achieved. In 2001-02, the business was bedevilled by unofficial strike action, losing more than £1 million a day and failing every single quality standard. In six years, that loss has turned into a profit of £255 million in the first nine months of this year. The business is on track, as the noble Lord, Lord Clarke, has already said, to stay in profit. Customer quality of service is the highest in a decade. Negotiated agreements between the business and the union have improved efficiency remarkably. It is almost impossible to comprehend 50,000 people having left the business through voluntary redundancy and natural wastage; that is an alarming figure. Parcelforce itself went from having 11,500 employees to 5,000 in one year; that is one hell of an achievement. The pay and technology modernisation procedures, always arising from the union agreements, have also been implemented—not completely, but in the main. There is now another £2 billion of investment in new technology by 2011, and another £1.2 billion, a government loan, will be invested by 2011. This all serves to balance the impression given by commentators and newspapers that nothing has been achieved. That is not true. The present regime has made considerable achievements that would be explained further if time permitted. They could have been enhanced if industrial relations had been conducted through channels of greater co-operation and involvement instead of the general command-and-control and confrontation that have existed for such a long time in the business. I understand that the CWU is sometimes difficult to deal with; I know that it is. However, the problem was essentially that Adam Leighton failed to see the union as a potential partner. From the beginning, he did not use his considerable talent and energy to forge a strong and productive relationship with it. He believed that he could do it all himself: he had a flagship programme to change the culture of the business called "A Great Place to Work". He did not talk to the unions about it; he did it himself. He implemented all the strategy’s strands and the union, right from the beginning, felt sidelined. That does not exonerate the union and say that it was blameless, or that it was not difficult to work with; sometimes it is. However, the lead must come strongly from the top. If the chief executive and the chairman will not hold a hand out to the trade unions, then you cannot really expect to get to where you want to be. Going forward, there needs to be a change. The new leadership of the business needs to genuinely reach out to the CWU, and the union must respond in a positive way. It needs to come into line with established trade union practices, particularly moving away from annual executive elections to a term of office that gives more stability to the national executive and, consequently, more comfort to the business in dealing with it on an ongoing basis. Also going forward, the legislation’s proposal to move the pension deficit from the company to government is a significant benefit for both the business and the union, and should be recognised as such—although, as has already been pointed out in the debate, the details and further questions need to be worked out. On the crucial and controversial issue of part-privatisation, I would have preferred the Government to say, "Yes, we made the Warwick agreement on a wholly owned public service in good faith, but in our opinion circumstances have changed and we now feel that a private stake is essential". That is a credible position. People have to say that they have changed their mind and explain why they have done so. I have friends in the business who think that a private stake would be beneficial, but I have, understandably, more friends in the union and PLP who are strongly opposed to that. Obviously, in a democracy both positions are legitimate. I am interested in the Hooper report’s concept of access to corporate experience. However, the weakness of the report’s arguments, and possibly of the concept, lies in the fact that—noble Lords have indicated this—if it is to be taken forward, we need to know a lot more about it and we need to be convinced that it could make a difference. The risk in that respect is quite high. In recent times Royal Mail appointed a New Zealander, Mr Elmer Toime, to lead the letters business—that is the business we are all talking about—who was said to have an outstanding track record in industrial relations. I think that Mr Toime lasted about 12 months. I do not think that he really wanted to understand the existing culture of the business; he just wanted to change it, and that is not good enough. By its culture, I mean essentially the way in which the management, unions and the workforce interact and work together, or do not work together, as is sometimes the case. That cultural change is massively important and must take place from the top down. The command-and-control culture that is locked in 50 years of history has produced conflict and adversity. The business needs to move on from that to a culture where the management and unions work together and do things jointly and openly, and, above all, build trust with each other. The word "trust" is so simple to say but so difficult, and important, to achieve. Sadly, it is often lacking. The chairman or chief executive officer who really believes in making the union a partner and working with it and the workforce, and who believes in building trust, will be the person—from whatever sector he or she may come—who will finally succeed. Will this change come about through access to corporate experience? I do not know. I have worked on this culture aspect for some time. The leaders of Royal Mail’s HR department understood pretty much what needed to be done, but, sadly, it was not always understood or supported by those at the top of the business. That needs to change. The Prime Minister has put his authority behind the Bill. My noble friend the Secretary of State is a genuine believer in the need for change. These things need to be heavily weighed when people make their final decisions. This is a critical time in our history, when the previous seemingly unassailable role of the private sector, with its profit-driven shareholder culture and overpaid managers, is under very serious threat. I do not know whether this is the time to promote that culture in a public business. Perhaps it is; perhaps it is not. I hope that our debates on the further stages of the Bill will reflect people’s concerns about the shape and direction of the wider economy. In particular, we need to work out the best position for this business to be in within that wider mix.