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Postal Services Bill [HL]

My Lords, I welcome some aspects of the Bill, notably what it does to protect pensions and to reform the regulations to make the universal service obligations the objective rather than competition, which would leave, as it does at the moment, Royal Mail carrying high-cost items and the competitors having no such obligation. Considerable progress has been made by Royal Mail recently according to what I have read in advance of this debate, but the central question that I wish to raise is whether the 30 per cent equity route will work better than other possible routes in achieving the same objective. I do not wish to be misunderstood: I think that innovation to raise capital and innovation in ideas from around the world are important, but I have some questions about how this will work in practice and whether there is a different way of doing it. How is it intended that a company such as TNT—I mention TNT because it is the only company mentioned by Hooper, although I could mention hypothetically DHL or anyone else—will be able to, as it were, ignore a conflict of interests if it was reorganising Royal Mail at the same time as competing with it? How does it avoid a restraint of trade in some sense? In asking these questions, I am not trying to be clever and think that I know the answers. It is also obvious that there can be a situation where there is no love lost between Royal Mail and TNT—just look at yesterday’s Financial Times. Under this 30 per cent arrangement there are one or two things that have to be looked at, if we can avoid for one moment saying that the Hooper report is sacrosanct in every detail. In fact I would ask why that should be so; after all, it is not a normal process of government to buy an independent report lock, stock and barrel. I do not know whether my noble friend the Secretary of State is aware that a Minister in the House of Commons said that not only was it a package but it was a package that you could not pick and choose from at all. That is slightly pre-emptive; I still want to see how the partnership agreement would work. For example—I shall think aloud—how many people are we talking about TNT bringing into the employment of Royal Mail? You cannot very well transform management without being part of the employment set-up, unless I have misunderstood company law. Are five, 50 or 500 people needed to deal with a workforce of 200,000? We have always agreed that just one man at the top cannot transform a culture. No doubt we have some geniuses at the top in British industry, but they cannot do it on their own. If TNT took over the Royal Mail, it would bring a swathe of people with it and go through the Royal Mail like a dose of salts—or not, as the case might be. However, I would like to think about the injection of capital, the transformation of management and relations with the workforce, all of which are elided in several sentences in the Hooper report and the White Paper as if they all flow naturally together. My noble friend might want to comment on one or two elements of the following logic. Hooper refers to the way in which the equity injection would help to transform industrial relations. It is interesting that today’s note from the Royal Mail says that the benefit of a strategic partnership will be access to timely and flexible capital and added value in the longer term through combining their strength to develop new commercial opportunities and revenue streams that will support the universal service obligation in the UK. There is not a word in that rationale about the benefit somehow arising from the capability of TNT or anyone else to transform industrial relations or efficiency, and not because the Royal Mail has somehow overlooked an important point. A lot hangs on this assumption, though. I would like to spend a couple of minutes thinking about what hangs on what, and what does not necessarily hang on what, in the elision between these various functions. It is important to compare apples with apples. I know a little about DHL; I was recently in Leipzig on a rail freight visit, and there was the DHL European hub, in a totally transformed old airport. Wilmington, Delaware and Hong Kong are the other two world hubs. All the planes are in around Europe by midnight. Totally automated machinery gets all the parcels into 50 aeroplanes that are ready to leave by four o’clock in the morning and there is a dedicated rail freight line to Frankfurt airport. That is all wonderful and I hope that Royal Mail International can do more of it. But what has that got to do with Bristol, Bradford and Much-Binding-in-the-Marsh? There is an apples-and-apples problem in what we are talking about. The relevant expertise is in greenfield sites. Capital injection has to be thought through, relative to how management would work. I have a point about industrial relations and how that aspect of the partnership agreement would work. When we write memoranda, it is easy unwittingly to use the word "partnership" in two totally different, though not incompatible, ways. One is a partnership such as Star Alliance—that is, between an international airline and some airline in Australia, South America or something. That is a commercial alliance. There certainly could be a partnership in that sense between Royal Mail and all sorts of people. If it is an equity stake, however, people sometimes say, "This could help partnership in industrial relations". I shall say a word about that and about whether companies such as TNT are best able to achieve it. It would be pushing it a bit to say that TNT was the obvious first choice as the organisation to bring in smooth but radical change for the better in industrial relations. In that connection, will the Minister look seriously at a number of different ways in which worker participation could be linked in with this modernisation? The CWU and Unite—that is, the management grades—have not turned their face against this; after all, they are used to bodies in the public sector, albeit smaller ones, such as NATS, which my noble friend Lord Brooke of Alverthorpe knows about, and defence procurement agencies being scaled up. I see no reason why you cannot have three stakeholders including workers’ representatives in the collective bargaining structure. I am old enough to remember the Bullock report; I was on it, and my noble friend the Secretary of State remembers it well as he worked at the TUC at the time. I am not advocating that he says, "Oh yes, that’s the answer—Bullock!", but there is a union member on the board of these public sector bodies, working with private companies and the state. What has that got to do with the price of tomatoes? What has it got to do with TNT and so on? I simply say that, if you began from that end, you would probably say that if TNT was the answer it must have been a pretty silly question. You just would not begin from there. I shall leave these thoughts and hope that in Committee my noble friend can think about some government amendments that would ensure that alternatives to the private equity stake were not ruled out by the Bill, even if the alternative that might tick more of the boxes is not yet ready to be ruled in.