Examination of Witnesses (Questions 420
- 439)
MONDAY 25 MARCH 2002
MR JOHN
ROBERTS CBE, MARISA
CASSONI AND
MR STUART
SWEETMAN
420. It is possible they want it back.
(Ms Cassoni) We have to discuss how we would restructure
the balance sheet efficiently in terms of debt and cash.
421. You have got 1.8 billion quid there and
potentially, depending on what Government said, you could go and
use that, is that correct?
(Ms Cassoni) We would have to agree with them how
those funds would be used.
422. How do you account for the fact that Parcelforce
has never made a profit in its ten year existence? There have
been lots of other profitable parcels businesses around the world
but what is it about Parcelforce?
(Mr Roberts) I think it is a number of things. First
of all, it is one of the few parcels businesses that works in
every sector of the market. Many of the ones that have made profits
have concentrated, as we are now doing, purely on the time sensitive,
the express side of the market. I think the history of Parcelforce
over that period is it went through a period, particularly in
the mid-1990s, when there was the whole question of whether it
was going to be sold off, when no investment was being put into
it, that was at around the time of the privatisation debate, and
as a result of that we certainly lost time, we were running a
parcels business not on the kind of model that most of the competitors
were using, we did not have any track and trace technology, which
is now very important for tracking parcels through. We have managed
to get that done and we have made a lot of changes in Parcelforce
in conjunction with the unions over working practices, but we
have still maintained a presence in this slow parcel market, the
more than three day market, which has been the consistent loss
maker. What we have done today is to say that we have got to have
a fundamental restructuring, we are not ever going to make any
money if we stay in that part of the market, so we are refocusing
on the areas where people do make money.
423. You mentioned the unions and earlier you
mentioned you had £137 million of cost for the International
Mail Agreement and you mentioned the union agreement. How much
of the 1.2 billion of the extra cost that you have had was due
to the union?
(Mr Roberts) One hundred and eight.
424. And you have got these productivity and
technical practice changes included in the agreement. Have they
been delivered or not?
(Mr Roberts) They are about 75 per cent through. We
have to make changes in every one of our big sorting centres and
then we also have to make changes in all the individual delivery
offices up and down the country. We have completed all the changes
bar one in the 71 main sorting centres. We are about 60 per cent
of the way through delivery offices. The scheme is due to produce
about £63 million worth of productivity improvement this
year, the year that ends next week.
425. I would like to go back to the question
of the name. You spent half a million pounds, apart from the physical
costs, what was that half a million on?
(Mr Roberts) Basically on consultants, on design consultants,
on all the discussions that went into producing the name.
426. So you had sessions with consultants who
went out and did market research, opinion polls and that sort
of thing?
(Mr Roberts) Yes.
427. You could buy quite a lot of opinion polls
for half a million pounds. A lot of political parties would love
to have half a million to go and spend on opinion polls. How is
it that you got it so hideously wrong?
(Mr Roberts) I do not think we did get it wrong.
428. The Secretary of State does. She said in
the House of Commons this afternoon, "the sooner it changes
the better". How do you respond to her view?
(Mr Roberts) I do not agree with the Secretary of
State.
429. You do not agree with the Secretary of
State?
(Mr Roberts) No, I do not.
430. You do not agree with your Chairman or
the Secretary of State?
(Mr Roberts) No. I think the reason we put the name
in was done for the right reasons but as a name it has become,
sadly, synonymous with all the things that have happened over
the last 12 months.
431. Did no-one point out to you that the word
"Consignia" and the verb "to consign" are
related in a rather negative way potentially?
(Mr Roberts) Yes, although consigning and consignments
are what our business is about, which is one of the reasons why
we used the name.
432. I have read through the Secretary of State's
statement and I have read through Consignia's statement and I
did not see any reference to the fact that the name was going
to change back but it seems to be in the ether, everybody seems
to be saying it is going to change back. How have they got that
idea?
(Mr Roberts) I think they probably got it from the
Chairman's statement that he was not very keen on the name. I
think he has also made it clear that—
433. So you are going to change it?
(Mr Roberts) No. He has also made it clear—
434. You are going to leave it as it is?
(Mr Roberts) Sorry?
435. You are going to leave it as it is?
(Mr Roberts) Yes, for the moment we are going to leave
it as it is. As far as I am concerned I have not got any proposals,
nor has he, to change the name. He has made it clear that while
he does not like the name, the name is not the issue, the issue
is getting the business right. The names underneath, as I have
said before, the names Royal Mail, Parcelforce Worldwide and Post
Office, meaning the network of branches, are the names that we
use, they are the key brands and that is what we are continuing
to press.
Mr Bacon: I am rather inclined to agree with
Mr Osborne that the name is part of the issue because it is symptomatic
of so much more, but my time has run out. Thank you.
Mr Steinberg
436. I feel a little bit sorry for you this
afternoon actually. I am going to be very pleasant to you. Regardless
of the present profitability problems that you have, if you turn
to page two, paragraph eight, of the report, which is what we
are discussing this afternoon, do you not think that Postcomm
have exaggerated your problems because if you read paragraph eight
it says that you have 90 per cent next-day delivery, mainly before
half past nine, it is relatively cheap compared to the rest of
the world and there are high levels of satisfaction, something
like 60 per cent. That sounds quite good, does it not?
(Mr Roberts) Yes, and I think that there are a lot
of things about the organisation that are good and I think they
are being slightly overwhelmed at the moment by a lot of other
things. There is no doubt that if you go back 12 months, Mr Steinberg,
the organisation hit a low point, we had a lot of industrial action
and as a result service was poor. I think since that period, and
Lord Sawyer's study into industrial relations, not only have we
had a much calmer period of industrial relations with both sides
working together very constructively, but service has improved
and a lot of mail that people were complaining about not getting
through is getting through and is getting through to the 91.6
per cent level I talked about earlier. There are a lot of underlying
very good things about this organisation. I do not think it will
take a lot to get it back to the level that it was before.
437. In the Daily Mirror at the beginning
of the month, the 1st of the month, they gave a league table where
it gave the 20 worst performing areas and the 20 best performing
areas. The 20 worst performing areas which were not getting near
targets were basically all in London.
(Mr Roberts) Yes.
438. East London, Uxbridge, West Central London,
South Central London, Harrow, West London, North London. The 20
best performing areas were Lincoln, Sunderland, Bradford, Sheffield,
Leicester, Teeside, Darlington, Durham where I live. Why do you
have major problems in London compared with not so many problems
in the other areas?
(Mr Roberts) I think industrial relations in the big
cities, London in particular, has always been one of the most
difficult areas for us. Because of travel to work patterns and
pay for postmen in London, it is an area where we get probably
the highest turnover. If you get the combination of those two
things then that probably puts the biggest strain on the service.
439. I was going to ask you how the rail service
has affected the service particularly in the North of England
with the horrendous accidents that we have had and problems that
we have had over the last 18 months but it does not seem to reflect
in that. Although the service is bad in London it has not been
affected by the rail service and the service where I live is quite
good so that is obviously not an excuse.
(Mr Roberts) It depends. There is no doubt that post
Hatfield we have probably had something like a one per cent overall
over the whole country hit on the service. Trains going up the
East Coast main line to start with were those which were most
affected. A lot of the service in London is still delivery service,
that is where we have the biggest problem with staff, getting
deliveries done on time, and of course we measure it end to end.
So the transport is only one factor in it. We reckon that the
impact of the rail problems probably cost us about one per cent
on a first class service in the year after the Hatfield disaster.
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