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Postal Services Bill [HL]

My Lords, I agree with what the noble Lord has just said about the recent improvement in the Royal Mail business. That needs to be underlined. One thing is certain about this debate: had John Major proposed the solution in this Bill in the 1990s, he would have met with total opposition from the Labour Party in the House of Commons. Frankly, no one would have argued the case against these proposals more smoothly or more persuasively than the noble Lord, Lord Mandelson. He would have enthusiastically put many of the points now being put against him, such as back-door privatisation, the indignity of having a foreign operator sort out the Royal Mail and the clashing evidence regarding the efficiency of the Royal Mail. Frankly, the Government have only got themselves to blame if they have stirred up a hornets’ nest of protest on their own Back Benches. If you had read the past speeches and heard the language, you would not have come to the conclusion that a Labour Government were going to sell 30 per cent of the Royal Mail. It is tempting for an opposition politician such as me to congratulate the Government on their change of heart, thus increasing their embarrassment, and simply leave it at that. My reaction to these proposals is rather different. Above all, it is a feeling that over the past 20 years we have lost an enormous opportunity for the Royal Mail. When it could have been developing new markets at home and overseas and when it could have been seeking new opportunities that other companies have taken, it has remained far too confined to the traditional but declining letters market, while its so-called supporters have been far more interested in fighting a defensive battle on the public sector status of the Royal Mail. Privatisation is set out as if it were some enormous threat to the business and all who work there. A few years ago, when I was transport Minister, the 1979 Conservative manifesto had only two pledges on privatisation, both of which were mine, on the National Freight Corporation and the British Transport Docks Board. The NFC has most lessons to be learnt from it. The NFC had a range of interests, the most important of which was what would now be called logistics. When we announced our intention to privatise it, the senior management were alarmed. Why? They thought that it meant we were going to sell the company to TNT. That was their concern at the time. It was then an Australian company, not Dutch. The management proposed a staff buy-out; not a management buy-out but a staff buy-out. I was very interested, in parentheses, to hear what the Secretary of State said about staff shareholding. Obviously, we shall want to pursue that. Perhaps predictably, the staff buy-out measure was opposed by the unions, particularly the T&G, which advised its members not to buy shares. That must rank as one of the worst pieces of investment advice ever given by anyone, rather like the Foreign Office when it resisted the BBC World Service proposal for investment in the internet on the grounds that it would never catch on. I am glad to say that the advice was very widely ignored. When the NFC had its AGMs, they were not hidden away in some secret city hall but were attended by some 2,000 or 3,000 shareholders. The chairman was quizzed not just on the prospects of the business but on the intricacy of drivers’ hours. My point is this: that form of privatisation was supported by the staff. It transformed the business. Middle management started to manage. New brands such as Exel developed. There was an obvious way forward for the NFC in an age when businesses and the public wanted organisations of a size that could look after all their needs: to come together with the Royal Mail and to put together a British company that could compete with the world. I agree with the noble Lord, Lord Clarke, on this; I do not buy the theory that Britain cannot manage to deliver letters and parcels efficiently without the aid of an outside group. The skills are there, and in the past few years that has been shown to be the case. Incidentally, I also do not buy the claim that companies such as TNT are a consistent byword for efficiency. A couple of weeks ago, a package addressed to me sent from Zurich by TNT special express took three and a half days to arrive at my home here. I do not buy all these claims. Before the Minister writes off the NFC as a trip down memory lane, let me come to the final irony of the story. For in the end, the NFC, and Exel with it, did get together with a postal service. The only trouble was that it was with the German postal service—with Deutsche Post—with DHL. Although we had taken the lead, it was the Germans who capitalised on the advance. How similar that is to so many other things that have taken place in our business life. Obviously, there were other opportunities for the Royal Mail, opportunities for diversification and for much greater international expansion; but for that, you needed private capital—privatisation similar to what happened in Germany and Holland. Why did that not happen? My noble friend Lord Hunt has given, in his excellent speech, the answer that, with a wafer-thin majority it was impossible to get any measure of privatisation in this area through, because we were met by the opposition of the Labour Party and the Liberal Democrats, and I have to say one or two Members on our Benches confused the Royal Mail with sub-post offices and, therefore, opposed the measure. It was simply "mission totally impossible". In this Bill we are presented with a not very attractive sales prospectus. It is neither one thing nor another. It leaves a range of questions unanswered. There are questions about where effective control resides. Of course, the Bill states that it resides in the public sector with the Royal Mail; but industrial partnerships of this kind are not problem-free. The noble Lord, Lord Neill, made this important point. The whole point of bringing in an outside operator is that its skill and experience should be implemented; otherwise the exercise is totally pointless and worthless. The idea that by definition this will be smooth is, frankly, nonsense. There are questions about future ownership. I agree with what the noble Lord, Lord Clarke, said about that. I do not believe for a moment that the 30 per cent limit will stay for ever, or that the bar of a new Bill will prevent change. It is clear that in the years ahead public spending will be under unprecedented pressure. The Treasury will be looking for receipts and it will not matter which Government are in power. If they can sell the remaining 70 per cent to the company that already has 30 per cent, they will certainly push for that. Make no mistake, the company that has 30 per cent is in the £1 seats when it comes to future ownership. That is a long way from the kind of privatisation of NFC that I advocated. It is basically the straightforward sale of a company. There are questions about the new regulator, Ofcom. When we said that Ofcom should take over the whole regulation role in broadcasting, including the BBC, one of the defences put by Ministers was that there was a lack of capacity in Ofcom. However, it already had substantial broadcasting experience, and now we are suggesting that it should take over responsibility for all postal services, of which, to my knowledge, it has no experience whatsoever. I am lukewarm about the Bill. Indeed, it is difficult to find any genuine enthusiasts for it, although it is easy to find many passionate opponents. On balance, I am persuaded by one measure—the plan to tackle the £6 billion pensions deficit. It is obviously massive, and it is difficult to see how the business can truly prosper and modernise with such a financial weight around its neck. On that basis, I shall support the Bill. I am not sure that I shall go arm-in-arm or shoulder-to-shoulder with the noble Lord, Lord Mandelson, through the Lobby, but I will, at any rate, support the Bill. However, this will not be the end of the process. It is not a panacea for all the problems of the Royal Mail and, above all, it is not ideally what should have been done. Sadly, the Bill represents another lost opportunity for business in this country.