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Postal Services Bill [HL]

My Lords, as the Secretary of State said in Committee, the Government believe that Royal Mail’s employees should be incentivised to deliver modernisation in the business and improved performance. As I said in Committee, Royal Mail’s workers are the backbone of the company, so where those employees contribute to business success, they should rightly share in the benefits it delivers. There was broad agreement across the House on this point, suggesting that employees should receive a stake in Royal Mail as part of the partnership proposals that we are currently considering. As the Secretary of State has explained, the Government believe that it is vital that the workforce has a serious stake in Royal Mail’s success, and that is why we have the existing Colleague Share scheme. That runs from 2007 to 2012 and includes for each worker up to £1,600 in profit-related bonuses payable over the life of the plan—half of which has already been paid—plus up to £3,700 for the "capital" value of the shares payable in 2011 and 2012. This could give each employee up to £5,300 in total. The noble Lord, Lord Hunt, pointed out that this could be swapped from phantom shares into real shares but, because this would not be a listed company, the net effect of its transferability would be exactly the same, so we do not believe that it would make any significant difference. We will not at any point entertain changes to the existing incentive arrangements that would be to the detriment of the workers. The company has commitments which it will have to keep. But we do wish to discuss the future of the existing incentive arrangements and any alternatives with any partner before reaching a view on what best incentivises performance and delivers value for money going forwards in the modernisation plan. This might be continuation with the current scheme, or the introduction of new arrangements that offer better returns to workers, company and shareholders alike, whether through an employee share scheme or otherwise. Whichever route is chosen, the goal has to be a strong workforce with a stake in the company’s success. The Government therefore believe that it is very important that this legislation allows for an employee share scheme to be introduced. There was some confusion in Committee about whether this was the case. The new clause introduced by Amendment 22 makes it clear that the establishment of an employee share scheme for Royal Mail employees is permissible under the provisions of the Bill. However, it also importantly ensures that any scheme must not breach the requirements in Part 1 of the Bill that the Crown must own, directly or indirectly, more than half of the company. Amendment 18 would make it possible under legislation for the Government to control less than half of the shares in Royal Mail. This is not something that can be dealt with by amending this legislation, as the noble Lord, Lord Razzall, suggested. The classification of the company, whether it is public or private, is determined independently and not by legislation. Amendment 18 would therefore stop the company from being publicly owned, which is not something that the Government are willing to countenance. Given that the existing Colleague Share scheme is only part-way through and that our discussions with potential partners are ongoing, now is not the time to debate or commit to the precise nature of future incentive arrangements. That is why the Government’s amendment is permissive without being prescriptive. I ask the noble Lord to withdraw his amendment.