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Royal Mail: Industrial Dispute

My Lords, I wish to make a Statement 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 being 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 being transformed as people switch to text, e-mail and direct debit, and as the growing area of mail, which is parcels, has a variety of alternative operators from which to choose. Royal Mail has to respond to the fact that 10 million fewer letters are being posted each day than three years ago and 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, this company faces terminal decline. Following a previous national strike two years ago, in 2007, the union—the CWU—and management reached a national agreement on pay and modernisation. That 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, as I will come to shortly. The changes have involved the introduction of more walk-sorting machines and new working practices, including employees being expected to do the full number of hours that they are paid to work. Phase 4, 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. This 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 1 to 3 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 Outdated working practices have been replaced and efficiency is being improved.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, management is unilaterally imposing change that goes beyond the 2007 agreement’s first three phases. Management contests this, pointing out that London is being asked to accept only what everyone else in the country is delivering under the first three phases. These local disputes have now escalated into the threatened national strike. I very much regret what is happening. Candidly, I think it is totally self-defeating for our postal services and those who work to deliver them. Taking industrial action will not resolve this 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 letters, it will lead to a further twist in the downward spiral of mail volumes. Business will be quick to recognise that while you can picket a delivery office to stop the service or refuse to deliver letters, you 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 are 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, the company, out of a £6.7 billion mail business turnover, made less than 1 per cent profit. One thing this 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 also 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: the Government’s policy on the pensions deficit will not be dictated by strike action. The Government were prepared to take on the pension deficit as part of a package of modernising measures set out in the Postal Services Bill. Sadly, 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, and they have continued talking today. 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. They should put behind them, once and for all, the endless cycle of disputes. I will, of course, continue to encourage a settlement, but I 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 to 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. The Department for Work and Pensions will, if necessary, 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 there were prolonged disruption, the Department of Health and NHS trusts would, if necessary, use alternative arrangements to transport appointment notifications, blood samples and test results. I 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.