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Mr. Mandelson: On the hon. Gentleman's second point, those options and avenues need careful consideration by the Post Office board. They will certainly receive a sympathetic consideration by me, too. As I have made absolutely clear, we are at the beginning, not the end, of the process of modernisation of the Post Office. Indeed, I hope that those and a number of other options will be entertained in the White Paper that I shall publish early in the new year.
As for pay, it is not for the Secretary of State to determine the individual pay policy of the Post Office. Of course, its management has to be cognisant of the overall
context of public sector pay, but, as I said in my statement, we want to create some flexibility for performance pay to be strengthened. Whether that descends quite to the level to which the hon. Gentleman referred is a matter for the judgment and operation of the Post Office board.
I hope that, as a result of the measures that I have announced this afternoon, there will be high investment, high productivity and rising income levels for those who work in the Post Office, to the benefit of those who work in the Post Office and those who depend on its vital service.
Mr. Paul Flynn (Newport, West):
Does my right hon. Friend agree that the same model should be applied to other state enterprises that the previous Government found impossible to privatise, and would benefit from being turned into operations that combined the strength and security of state enterprise and the freedom of the private sector? Is not one example the Patent Office in Newport, which is highly efficient, but hamstrung by Treasury rules that prevent it from entering sectors that are run by the private sector less efficiently and at greater cost to the public purse? Will my right hon. Friend confirm that his announcement today is a fine example of modern, practical, intelligent socialism?
Mr. Mandelson:
I have no hesitation at all in receiving and accepting that accolade for what I have announced this afternoon. In doing so, I pay tribute to my colleagues in the Treasury, with whom I have had an interesting and useful dialogue, stretching for some considerable time and resulting in the very progressive and enlightened statement that I have been able to make this afternoon, with the full agreement of my right hon. Friend the Chancellor of the Exchequer.
We shall have to see how this new model of public enterprise works, but I am confident that it will work very well. I hope that, in the light of our experience, we shall be able to apply new principles and new practices of public enterprise across the public sector. In that context, we have made a little bit of history in what I have announced this afternoon.
Miss Anne McIntosh (Vale of York):
The right hon. Gentleman referred to the liberalisation of postal services across the European Union. Will he say whether the problem of terminal dues has been resolved? While he is being briefed, may I also ask him to say how the measures that he has announced will enable the Post Office to compete with TNT and the Dutch post office?
Mr. Mandelson:
On competition, I made it clear in my statement that I want to ensure that there is no abuse of the monopoly area of the Post Office's activities or improper cross-subsidy between monopoly and non-monopoly areas. I fully accept that those are important issues for the private sector, as is the differential application of VAT between those in the public and private sectors who are involved in the postal service. As the hon. Lady probably knows, those rules are being reviewed by the European Commission; we are actively contributing to that process and to the review of the other matter to which she rightly referred.
Mr. Dennis Skinner (Bolsover):
Does my right hon. Friend agree that one reason why the Tories are sat over
Mr. Mandelson:
The key issue for us was to give the Post Office more commercial freedom urgently and immediately. Quite apart from the dubious justification for privatisation of the Post Office at this stage of its development, it would have taken three or four years if we had embarked on such a course. In that time, the Post Office would have fallen further and further behind international competition, as it would not have been able to enjoy any of the commercial freedom it needs if it is to compete more effectively with the best in Europe and the world.
The commercial freedom that has been given to the Post Office will be sufficiently extensive to ensure, together with the tough competitive pressures that will operate, a considerable improvement in performance--it will vest the Post Office with the ability to succeed in the future. If the Post Office falls short of that ambition, I shall discuss with it any adjustments that have to be made, although I do not foresee that any further changes will be necessary in the immediate future. The Post Office needs a period of stability and certainty in which to build its business; that is what the measures announced this afternoon will provide.
Mr. Andrew Lansley (South Cambridgeshire):
Does the Secretary of State recognise that the question whether the Post Office continues in the public or private sector is at the heart of the issue? As a publicly owned organisation, it will not be able to set strategy or determine investment. In so far as it is in a commercial marketplace, its competitors will regard it as having the protection of a public sector or taxpayer guarantee. Will the Secretary of State confirm that, in terms of the commercial marketplace, the Post Office will not enjoy exemption from the provisions of the Competition Act 1998, except strictly in respect of its statutory monopoly activities?
Mr. Mandelson:
The newly appointed independent regulator will be extremely mindful of the competition requirements and of the law that operates in this country. That duty will be placed on him or her by the measure that we are proposing. The hon. Gentleman either has failed to notice or has overlooked the fact that I am proposing to reduce the Post Office's monopoly activities significantly, and that matter will be considered further in conjunction with the Post Office. I hope to be able to give a further indication of how far we intend to go in the White Paper next year, so, before the hon. Gentleman and others in the private sector jump to conclusions about our intentions, I ask them to wait a little longer so as to see exactly what we have in mind, which will become clear in the new year.
Mr. Jack:
On a point of order, Mr. Deputy Speaker. The statement that we have just heard from the Secretary of State was clearly of such importance that he felt that
Mr. Deputy Speaker:
Madam Speaker has said what she feels about how these matters should be ordered, and it is to be hoped that those on the Government Front Bench have taken note of that. However, it is impossible to guard against pre-discussion of events that are known about, and it is therefore inevitable that people cannot behave like Trappist monks. The statement was made here in the House of Commons today.
Order for Second Reading read.
The Minister for the Environment (Mr. Michael Meacher):
I beg to move, That the Bill be now read a Second time.
Within three weeks of coming to office, my right hon. Friend the Deputy Prime Minister and I held a water summit and set out a 10-point action plan for a better water industry. Since then, we, the water companies and the Office of Water Services have made substantial progress in improvements in a number of key areas. In particular, we have tackled leakage as a priority, and we are looking for a 20 per cent. reduction in total leakage during the first two years of the Government. One of the Government's commitments at the water summit was to conduct a review of water charging. We did that, publishing a consultation document in April and our response to consultation in November, and we now want to implement our decisions in that area.
4.42 pm
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