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Postal Services Bill [HL]

My Lords, I join in with the tributes that have been paid to the late Lord Dearing. I have no doubt that if he were still with us he would be entering into this debate and I know that he would have been making a positive and useful contribution. We all miss him in that respect. I had better declare an interest: I am a member of Unite, which represents the management in the Royal Mail. Having said that, it is not often that my noble friend and I disagree but we do on this aspect, particularly in relation to the 30 per cent stake. My noble friend Lord Lea asked a lot of the questions that I might have asked with regard to how this is supposed to work or increase efficiency. The point has been made that all sections of the Royal Mail are now in profit; it made £255 million in the last eight months of last year, as has been remarked, and it is hoping to double that in the coming financial year, so it is moving into profit. I notice that all the debates so far have been about efficiency, not about cost. When people talk about a letter or parcel, they want it to be delivered efficiently but at the same time they want to pay a reasonable price for that service. We ought to compare costs. My noble friend Lord Clarke touched on this. As I understand it, having a first-class letter delivered by TNT costs nearly three times as much as it costs for a letter to be delivered here. For letters weighing 50 grams, where it has a complete monopoly of service, it still costs twice as much. The point has been made that we liberalised the service far too early. TNT does not face liberalisation until next month; we ought to bear that in mind when comparing costs. For Deutsche Post to deliver a 100 gram first-class letter costs more than three times as much as it does here, while delivering a second-class letter costs more than twice as much. We should bear these costs in mind when we are comparing so-called efficiency. It has been argued that the Hooper report does not compare like with like in examining the services provided. We must bear that in mind. It is amazing that we are talking about an outdated privatisation of this sector when we are nationalising banks. It seems crazy to me that we are going from one to the other, while still saying that if it is private it is good and if it is public it is bad. I do not think that that is the case. The French privatisation of postal services has been put on hold, while Denmark is already taking back the section—roughly 30 per cent—which was privatised. So other countries are seeing the reverse of what will happen here. There has been a transformation with the Post Office and Royal Mail. There has been a turnaround. It is not quite true that no investment has been made in modernisation. Investment is taking place—the orders have already been pledged. The machinery does not come as quickly as all that; nevertheless, it is there. It is estimated that by 2012 or 2013 we will have completely reorganised the way in which we deliver the post in this country. The 80 per cent to 90 per cent that my noble friend mentioned that applies in Holland—the way in which post is delivered and the walking route taken by postmen—will be implemented in this country. Money has already been spent on modernisation, and some of it is coming in. There has been a reduction in the number of sorting centres, which will continue as new machinery is introduced, and there have been changes in the way in which postmen go about their job. To say that nothing has been done is not completely true. The noble Lord, Lord Fowler, was right that, if you go for 30 per cent part-privatisation, you will end up, at some time, with full privatisation. That will follow. One of the dangers is that we are opening the door to that. It does not necessarily need to happen in the way that is being proposed here. There are other means of bringing in people; there are other means of doing these things. Co-operation has been mentioned. These are things that we need to examine when we debate the Bill. In addition, a new generation of intelligent sorting machines will be introduced by Royal Mail. Why do we say that British management is bad but bringing in imported management is bound to be good? I disagree with that. We should tell the full story, not half the story: modernisation is now taking place. Let us look at another aspect. Why, in the access agreement under the old Postcomm arrangements, does Royal Mail lose 2p on every item that it delivers? It loses £100 million a year, and that must be wrong. There are proposals in the Bill to look at this. If Royal Mail put up the price by 4p or 5p, instead of losing £100 million a year, it would make something like £300 million, £400 million or even £500 million a year. The Post Office would be very profitable. We are a leader in one of the developing areas that comes from the use of e-mails and the rest. We are at the forefront of parcel organisation. There have already been rumours in the press about disagreements. TNT has been accused of poaching. It has been said that TNT has stated that it will take over the parcel side of the postal service, run by General Logistics Systems, one of the service’s most profitable aspects. Is that true or not? As I understand the Bill, the parcel side would remain with Royal Mail. We need clear answers to the questions that are being raised on these matters. We must get away from thinking that everything is bad—a lot of the story is very good indeed. We ought to be building on that service rather than taking part of it away. I hope that my noble friend will put my fears to rest on some of the matters that I have raised, particularly regarding the parcel service. My noble friend Lord Lea asked how a competitor can come in and still compete while at the same time trying to co-operate with the Royal Mail. We need an answer. Does it mean that the two companies will be merged if it is TNT? Will it remain a competitor, receiving a subsidy from the public sector? All these issues need to be examined and answers need to be given. If TNT comes in as a partner, will it favour its own existing company or Royal Mail? We need to examine the Bill carefully. I am extremely concerned about the 30 per cent part-privatisation and ask my noble friend, even at this stage, to reconsider that proposal. We will certainly return to this when we discuss the Bill in Committee and beyond. What the Royal Mail needs is confidence; it needs our support to become one of the best services in the world. I believe that we can achieve that but not by giving up 30 per cent.