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Postal Services Bill [HL]

My Lords, Richard Hooper, not for the first time, has done this nation a service. He and his colleagues have set out for us all, with lucidity and force, the grim realities that confront Royal Mail. Whatever wholly understandable sentiment we all bring to this issue—in my case, fond memories over many years of hauling the Christmas post as a strapping lad—the cold, hard facts set out in the Hooper report about Royal Mail’s relative performance are stark and unavoidable. The postal services are not alone, however, in facing the onslaught of the digital media. Newspapers, broadcasters, music companies and retailers are but some of the many sectors wrestling with the challenges and opportunities that this technological revolution presents. Now, in cruel addition, there is an overlay of intense financial and economic crisis. If it is to survive, Royal Mail, quite simply, must reinvent itself; it needs to rationalise and to modernise. It must harness the power of new technology to drive a step change in the efficiency and effectiveness of its operations. It must adjust its cost base, particularly its labour costs, to deal with the unavoidable loss of business to e-mail and other electronic communications, as many noble Lords have mentioned. It must focus on the needs of its customers, particularly its heartland business customers who provide the overwhelming bulk of its business. As the noble Lord, Lord Soley, observed, Royal Mail must show real enterprise in grasping the enormous opportunity offered by e-commerce—the distribution of physical products ordered online. It must, in due course, diversify and acquire. However, Royal Mail at this minute is ill-prepared for these tasks; the whole framework in which it operates is unfit for purpose. It has a single-sector union, unversed in the wider world, and a management and workforce who fail to engage fruitfully. It is an organisation constrained by restrictive practices and resistant to innovation—a hangover from a bygone and unlamented era. Negative cash flows are projected in each of the next five years—it is by far less efficient than the European average. It has a small, solitary regulator, which was well described by the noble Lord, Lord Whitty, which is locked in a loveless embrace with a single, large client organisation. There is sluggish action on investment that is typically associated with state aid. There is insufficient distance between politicians and the entity. It is not a pretty picture. Successive Governments have little cause to pat themselves on the back, and none have today. The noble Lord, Lord Fowler, is surely right when he suggests how different the past 20 years could have been. The noble Lords, Lord Brooke and Lord Whitty, reinforced that point. We should, however, support this Bill with relief, if not with celebration, because it offers the prospect of a new beginning. It offers the introduction to Royal Mail of expertise and enterprise, speedy access to capital, and empowered and muscular regulation. The noble Lord, Lord Desai, and the noble Baroness, Lady Morgan, reminded us eloquently that there is a better way; we need not be fearful. The Bill, however, will take us only so far. The next 12 months for the Secretary of State will be exceedingly testing. A new partner for Royal Mail will be demanding, and rightly so, and will surely require binding assurances from government and unions before it will participate and risk its capital. The noble Lord, Lord Neill, who is not in his place, asked some very pertinent questions on that score. The Government, for their part, will need to be crystal clear and steadfast in their intentions if we are to see Royal Mail’s necessary transformation through to a successful conclusion and to a public interest outcome.