---

Postal Services Bill [HL]

My Lords, first, I join others in paying tribute to the late Lord Dearing. He was a wonderful man and of great help to me when I first came to the House. I always remember the joy of reading about him in Gerald Kaufman’s book, How to be a Minister. It is absolutely magic to read how he came across "Mr Dearing" and the memos that he used to get. I wish to make a couple of preliminary points. First, I say to my noble friend that it is pretty crucial that the questions asked by the noble Lord, Lord Neill of Bladen, receive an answer before Committee. Secondly, could a note on the separate pension arrangements for Ministers be placed in the Library? I asked about them but the only ones that I have been able to discover are the A, B and C schemes. I know that there was another one but I have no details. I should like to be able to read about this special scheme for 150 people. The parameters of any of our old industries are old-fashioned attitudes, a monopoly service, a cosy—perhaps I could say "sweetheart"—relationship between the employer and the unions, and a lack of automation. The history of other industries tells us what will happen: a lack of investment and high labour costs. As the noble Lord, Lord Desai, said, and as is set out on page 52 of the report, underfunded pension schemes is a theme that runs throughout other industries. Restrictive working practices take place to defend the lack of investment. I shall not turn to the list on page 51 but the items there put some of Fleet Street’s practices to shame, and they are still happening in 2009. All these factors come together and you end up with a lack of profit in a monopoly. You then get strike losses and wonder why you are losing business when people say they are going somewhere else. That is exactly what happened a few years ago, and it happened in the big strike many, many years ago. All those old attitudes in our old industries lead to all those factors. You can see them in industries that have long since gone or have been modified following great shocks. We have tried the supermarket way of running the Post Office and it has clearly failed. I just question, as others have done, something that I saw for myself as a Member of the other place. Why do posties spend two to three hours every day putting their round together? Ours is the only country in modern Europe where that happens. The argument that we hear is, "We don’t have the machinery. It is on order", but others have had the equipment for years. It is a joke. The other thing, which only one person—my noble friend Lady Gibson—mentioned, is that postmen spend two to three hours putting the mail together in the sorting office, but where do they spend the majority of the day? I will tell noble Lords. They spend it walking up and down the paths of private properties. They are not walking between properties but up and down the paths. I reckon that in my former constituency the front doors of about 20 per cent of my constituents are on the pavement, but for everyone else the postie has to walk to the letterbox. Why should the postal system waste time and money delivering to the Fairmile estate, the Little Aston private estate or the semis in Middle England? In other countries, residents have to put a receptacle at the entrance to their property and that is where the post is delivered. I think that in Spain post is delivered at the end of the road, and that also happens in parts of France. I am not proposing that; I am saying that we are looking for ways of reducing costs but others have already done it. We do not have to do things in the same way as we have always done them. Therefore, posties spend most of their day either putting the round together or walking up and down gardens, but that is not a very effective use of more than 130,000 people’s time. Then we wonder why we have problems. I am an experienced leaflet deliverer, as are many in this House, and I can tell noble Lords that it is a lot quicker delivering to properties, as opposed to letter boxes, so I do not need any lessons on cutting costs. I say to my friends in the trade unions that it is no good looking back to a bygone age with romantic views. I am sorry; the people of this country need a really useful delivery postal service and not the romance of the chocolate box lid, which is not relevant any more. I think that the pension trustees should all be removed lock, stock and barrel. They have let down all the postal workers, as have the trade unions and, indeed, the management. The fact is that the pension deficit built up over the years and it has almost nothing to do with the pension holiday. The scheme was overfunded, and if a pension scheme is overfunded by more than 105 per cent, the trustees are required to use that money to pay higher benefits—which in a downturn such as today’s would make matters even worse—or to use it elsewhere in the business. It is tax-free money, and the Treasury is not going to allow any company to do what they like, willy-nilly, with tax-free expenditure. Of course, during those years it was wrong for the Treasury to take back the money that should have been used for investment. The trustees did not ensure that they switched on payments quickly enough; they waited until they knew that the scheme was in deficit again before starting negotiations. Furthermore, you cannot run a final salary scheme, or indeed an average salary scheme, with employee contributions of 6 per cent. What is more, if you say that you can, you are being absolutely dishonest. You cannot say, "I’ll get you low payments and keep your pension high". That cannot be done today, and it has not been possible to do it for years. Contrary to what was said by one Member of this House, Members of the other place do pay for their pension, although I do not think that they pay enough. I paid 10 per cent, which I know was not 6 per cent; nevertheless, they are paying, although the implication was that they are not. I turn to the letter from the chair of the trustees. We have to get this out of the way. I defend my noble friend the Secretary of State because I was present when he said that he did not leak it. He published it, and I do not see a problem with that. From what I have read—I do not talk to too many people these days because you do not have the contact that you had when you were in the other place—and as my noble friend said, a lot of the work and many of the recommendations have been ignored where it really counts: on the shop floor. There is no question about that. If they had not been ignored, we would not be in the mess that we are in now. I have not read any briefings, although I have read good briefings on the pension scheme and what has arisen there, but having read the reports I am left with the impression that it is almost too late to save Royal Mail as it is. We have a combination of 100 per cent public ownership, a letter monopoly and the universal service obligation, which means that the public will virtually always be held to ransom. That is why I very much agree with one of the points made by, I think, the noble Lord, Lord Bradshaw. At some point, we are going to have to look at compulsory arbitration, because the sanction of lifting the letter monopoly has never been used. I want to keep the universal service. That, to me, is the number one priority. I do not care who owns the service or delivers it but letters have to get to every dwelling in this country every day at a price that can be afforded. That, to me, is the number one priority above all others. The other factors can be changed, which is why I have no problem about the 100 per cent ownership, but you cannot keep all three because they are contradictory. There have to be some brutal changes which we had better not gloss over; sugar-coating this would mislead people. The postal workers are the champions; over the years, they have been misled by the management and by their trade union leadership into believing that they can have their cake and eat it. That has caused part of the problem. We need brutal management changes at the headquarters of the Post Office. It is clear that we will have such changes at the regulator, where there have been serious difficulties. There must also be major management changes at the local level. I am told that some of the promotion rules are quite outrageous; "merit" is almost an obscene word. The key to reducing costs and achieving greater efficiency is at that level. If we have duff management, we need brutal changes at that level. We need everyone to come to the table and walk away with some successes. This is not victory or defeat. The workers, the management and the public have to feel they are getting something out of this. If that is the case, it is important particularly with partial ownership by the workers. I have already said that the pension trustees should go. The Whitehall attitude, which took the profits during the pension holiday and stopped investment in automation, has to change. The same management culture was left in place; there was, for example, a lack of automation and a defence of restrictive practices by the union and the management because they knew there was no money to do anything else. I have not heard of a plan B, which is why I have no problem whatever in supporting the Bill. My noble friend will be under greater scrutiny on this Bill than he ever would have been in the other place. We have a good chance to send to the Commons a Bill that we have scrutinised, based on experience of life, which is much wider here than in the other place, although they are the elected representatives of their constituents. With the Bill starting in this House, we can do a much better job and we can send a Bill to the other place which will make people think about what we have done and why. That is crucial. We need to stop the knee-jerk reaction from the Members of Parliament and the trade unions and we need to make it clear that a radical change is needed throughout the system. As there is no plan B, I think everyone should get behind the Bill.