---

Postal Services Bill [HL]

I start as I did last week by declaring an interest as a former postman, a former union official, and as having a great love for the British Post Office. I wish that I had thought of the amendments. I did think of one or two, which will appear later on, but the positive feature of Amendment 20 is that it assumes that the legislation must be carried before any agreement is secured with a private partner. This is very important. As well as deciding whether to endorse privatisation, Parliament should be entitled to see what such a deal means. Parliament is surely entitled to a clear view of what a suitable partner may be. Can the Secretary of State explain what discussions are under way with potential partners? My own inquiries and those of union officials—as I used to be—in the Communication Workers Union show that the likely suitors for this bonanza are TNT and CVC. Is the Minister aware of any other companies expressing an active interest? Would he care to explain the criteria that the Government believe are relevant in judging the partner as suitable? The Hooper report suggests that it would probably be another postal operator, or at least a firm with experience of network transformation. Do the Government regard those criteria as essential? The Secretary of State previously suggested that the Hooper recommendations must be taken in total, which was an unusual response from the Government, given that the Statement was made the same day on which the report was published and they can hardly have had much time to consider the recommendations. That being the case, I draw the Secretary of State’s attention to a series of press reports, all appertaining to TNT, one of the potential partners to come up in government statements. On Sunday 8 March, the Sunday Telegraph carried a story concerning illegal acts undertaken by TNT. Those acts involved the falsification and backdating of documents and were of an extensive character. The company was forced to pay back £48 million to the Inland Revenue; that money involved unpaid tax, penalties and interest. Apparently, TNT also had to carry out a similar inquiry into its tax affairs in other EU countries, including Germany, Belgium and Holland, although the company will not say whether these investigations have resulted in further payments or disciplinary action. That remains a void area. The current chief executive of TNT, Mr Peter Bakker, was in post at the company at the time when those illegal acts were undertaken. Does the Secretary of State regard such actions as examples of the expertise that the Government want to introduce into the Royal Mail? Amendment 21 has its own value; it says that any deal involving the Royal Mail would not simply be agreed behind closed doors and that there must be some element of parliamentary scrutiny. The amendment suggests that there would be an independent report, which the Secretary of State would lay before Parliament. Of course, there would be problems with such a report in so far as not all the information would be made available due to commercial confidentiality. It is a strange fact that, since 2001, our understanding of what goes on in the Royal Mail is less complete now than at the time of the passing of the Postal Services Act 2000—sad but true. Commercial confidentiality has been used to hide away information that was previously available in every year that Post Office annual reports were published, up until that time. You could look at such an annual report and get the information that you wanted. Today the Royal Mail’s annual reports shed less light on the economics of the company than we obtained 10 years ago. Be that as it may, I wish to draw attention to proposed subsection (2)(d) in Amendment 21, which refers to, ""the capacity of the private sector operator to manage stakeholder issues successfully, including relations with trade unions"." I am confident that the Secretary of State is already aware of the concern expressed in the Hooper report about industrial relations. The report made it clear that the existing industrial relations in the Royal Mail were poor—and I could go on a long while explaining why they are so poor, but I shall not do so today. The report suggests, too, that one of the criteria on which a new partnership would be measured is the ability to transform industrial relations positively. I am sure that the Secretary of State will agree that management needs to be able to carry the workforce with it through major changes; they need to work together. That can be done only if the rationale of the change is made clear to the workforce. If the workforce achieves some benefit from the change, it has to be able to see it. After all, without the co-operation of the workforce, there can be no future for the company, in my view. I believe that the Minister will agree with my general comments on industrial relations so far, but will he comment on the current problem that TNT—this possible suitor or predator, as one of my noble friends called it in our debates last week—faces with its workforce in Holland? There was a report on this issue in the Guardian on 10 March, from which we learnt that TNT wanted to cut the wages of workers by 5 per cent. Since that time, I can confirm that further information shows that TNT aims to cut the wages of postal workers in the Netherlands by between 5 per cent and 15 per cent depending on status. Does the Minister believe that it is acceptable for a profitable firm to cut the living standard of its workforce in that manner? Does the Minister believe that cutting wages is a necessary part of transforming industrial relations in Royal Mail? After all, we are entitled to ask whether this is the expertise that is lacking in Royal Mail. Is this what the Government are looking for—a company with such a record? Certainly, we cannot say that TNT would bring to Royal Mail better skills at raising profits. After all, a comparison of the final-quarter results in 2008 showed that Royal Mail’s profits are standing up to the recession better than those of TNT. Nor can we say that TNT would bring an extra element of mail security to Royal Mail. After all, TNT famously lost the data on disks entrusted to it by the Department for Work and Pensions. It must be something unique about TNT's approach to industrial relations that makes it attractive to the Government. Surely not; after all, the Government are committed in their manifesto and the Warwick 2 agreement to securing "rewarding employment" for postal workers. Does the Minister agree that cutting wages by 5 per cent to 15 per cent is not the route for securing rewarding employment in Royal Mail? Amendment 22 also has value. It allows Parliament to examine the intentions of the Government on the disposal of any money paid to the, ""Treasury, the Secretary of State or any nominee of either of them"." That is important as we have heard so much loose talk about what the strategic partner is supposed to bring to the assistance of Royal Mail in the way of finance. I very much doubt whether the aim of any strategic partner is to assist the finances of Royal Mail. Certainly, that would not seem to be the case with TNT. On 9 March, a number of newspapers including the Guardian covered a story about the conflict between TNT and Royal Mail. In that story, the Royal Mail's chief executive, Adam Crozier, accused TNT of trying to poach customers from Royal Mail's profitable European parcel subsidiary, General Logistics Systems. Some Members of the Committee who were present last week will recall the exchange that we had about GLS. I know that the Government are aware of the problem. The papers reported that Adam Crozier had sent an e-mail to the Government about it. Will the Minister confirm that the Government have read the correspondence with Royal Mail's chief executive officer? If so, will the Minister explain what the response was? Perhaps, too, the Minister can now understand why my noble friend Lord Hoyle and I raised questions of the noble Lord, Lord Tunnicliffe, in last week's Committee. After all, it appeared that TNT has been trying to get its hands on GLS outside of the process that we have been discussing on privatisation. Indeed, the Royal Mail's chief executive officer claimed that TNT has been trying to damage the Royal Mail's current business. Does the Minister believe that damaging the business of Royal Mail is a sign of a suitable potential partner for Royal Mail? Does the Minister believe that TNT's interest in Royal Mail will result in its further fragmentation? After all, if TNT wants to siphon GLS off now, would it not be likely that TNT would want to strip down other Royal Mail operations? I look forward to the reply from the Secretary of State.