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Royal Mail

With permission, Mr. Speaker, I wish to repeat a statement made by my noble Friend the Secretary of State for Business, Innovation and Skills about the decision of the Communication Workers Union to take national industrial action later this week. No one is in doubt about the damage that such industrial action will cause, but those who advocate strike action have not been clear about why it is threatened. The dispute at the Royal Mail is about modernisation, which has been the subject of localised strikes, particularly in London, for many months. We know from the Hooper review on postal services about the company's need to change and reform in the face of a postal market that is being transformed as people switch to text, e-mail and direct debit, and as the growing area of mail, which is parcels, offers a variety of alternative operators from which to choose. Royal Mail has to respond to the fact that 10 million fewer letters are posted each day than were posted three years ago, and that total mail volumes have fallen by a further 8 per cent. in the first half of this year. In other words, if it stands still, the company faces terminal decline. Following a national strike two years ago, the union—the CWU—and management reached a national agreement on pay and modernisation. The agreement set a framework of four phases for bringing essential change to Royal Mail. The first three have been introduced throughout the country but are being resisted in some places, which I will come to shortly. The changes have involved the introduction of more walk-sorting machines and new working practices including expecting employees to do the full number of hours that they are paid to work. Phase four, the next phase of modernisation, is yet to be agreed in substance rather than outline and will be about a new framework for improving industrial relations. That will include introducing walk-sequencing machines to sort the postal delivery round and developing new business opportunities along with a new system for rewarding employees. In the majority of Royal Mail's workplaces, phases one to three of the national agreement have been implemented without any local industrial action being mounted. Outdated working practices have been replaced and efficiency is being improved, but in other parts of the country—most notably in London—there has been repeated non-co-operation and industrial action to frustrate the agreement's implementation. It is claimed by union representatives that in London the management are unilaterally imposing change that goes beyond the 2007 agreement's first three phases. Management contest that, pointing out that all that London is being asked to accept is what everyone else in the country is delivering under the first three phases. It is those local disputes that have now escalated into the threatened national strike. I very much regret what is happening and, to put it candidly, we think that it is totally self-defeating for our postal services and for those who work in them. Taking industrial action will not resolve the dispute; it will serve only to drive more customers away from Royal Mail. In the delivery of parcels—where there would otherwise be a prospect of growth—Royal Mail's reputation for reliability could be irrevocably damaged and in the delivery of letters such action will lead to a further twist in the downward spiral of mail volumes. Business will be quick to recognise that, while one can picket a delivery office to stop the service or refuse to deliver letters, one cannot picket the ever present internet. Royal Mail's small business customers will look on with anger and exasperation. Just as there are signs of the economy recovering and the prospects for their businesses improving, strikes now will set them back and put their businesses in jeopardy. Royal Mail's finances will be plunged into the red. Last year, out of a £6.7 billion mail business turnover, the company made less than 1 per cent profit. One thing that the company cannot afford is strikes and industrial action. Change in a big organisation is never easy, but for the Royal Mail it is unavoidable. Let me make it clear that, contrary to what some may say, the dispute is not about pensions. The trustees are engaged in their periodic assessment of the pensions deficit and, lest there be any doubt, let me make it clear that the Government's policy on the pensions deficit will not be dictated by strike action. The Government were prepared to take on the pensions deficit as part of a package of modernising measures set out in the Postal Services Bill. Sadly, however, the CWU did not support those proposals. When it comes to financing, the Government and the taxpayer have not held back. We have made available £1.2 billion to finance a modernisation and investment programme, and that remains on the table. We are, of course, in frequent contact with both management and the union. They have continued talking today, and we strongly welcome that. Our message to them has been clear: put your customers first; strikes are not the way to resolve differences or safeguard the future of our postal services. The Royal Mail needs management and unions to have a relentless focus on turning it into an efficient, modern postal company, protecting as many jobs as possible and providing customers with the services that they need. Both sides should put behind them, once and for all, the endless cycle of disputes. We will, of course, continue to encourage a settlement, but we cannot impose good industrial relations on the company, or disinvent the internet. An independent third party may well be needed to help the two sides resolve their differences. ACAS is engaged, but we have to be realistic: it will be far easier for ACAS to play an effective role if the threat of a national strike is lifted. The Government are ensuring that vital services to the public, especially those who are most vulnerable, are maintained. If necessary, the Department for Work and Pensions will implement plans to ensure that the small minority of pensioners and others on benefits who still receive their cheques in the post will be able to pick them up from their nearest post office. If the disruption is prolonged the Department of Health and NHS trusts will make alternative arrangements to transport appointment notifications, blood samples and test results. We urge both sides to make every effort to avoid damaging industrial action and to resolve this dispute. That is what is in the interests of the Royal Mail, its employees and its customers. I commend this statement to the House.