Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 80-93)



  80. Coming back to it all happening too early, last year much of the blame for Royal Mail's deficiencies was placed on inadequate rail services. An announcement has just been made where you said you were restructuring transportation based on your reducing your vehicle of road fLeight and using rail more. How will that work?
  (Mr Roberts) The big difference is that the overnight First Class mail would come off rail, because that is the most time critical, and we would replace it by more of the bulk and the mail which has a longer period than just the one day, so it would be a complete switch. At the moment and traditionally, because of its reliability in the past, we have used rail to handle a lot of the First Class mail which has to be there the next day. By changing that and putting it on to road overnight, which is pretty reliable for us, and putting the slower mail on rail, we do not have the pressure on the quality of service on that mail. So we will be putting 18 per cent of mail on rail as opposed to the current 14 per cent but it will be a different mix of mail.

Mr Lansley

  81. Returning to the role of your shareholder in relation to yourselves, one of the rights of a shareholder is to sell. Were you participants in the discussions with the Dutch Post Office about the sale of the Post Office? Can you tell us when these occurred and why they were abandoned, aborted or postponed?
  (Mr Roberts) We certainly were involved. In fact, it was our initiative. We already have two joint ventures with the Dutch: one is with international mail, and the other is around a thing called the postal preference scheme which is looking at the way in which direct mail is targeted in this country. Because of our close relationship with the Dutch, we were talking about ways in which we might merge some of our mail operations—and it's merge or sell, and it did not work out. We were not able together to come to a joint agreement of the kind of terms on which we might put this thing together, and as a result of that we broke off. Like so many of these talks, as you probably know, that was the issue.

  82. But there was no discussion of a plan for a sale of equity in Consignia to the Dutch Post Office?
  (Mr Roberts) We did not get a long way down the track with these discussions because it was clear we were going to fall out over the normal sorts of issues like control and how it was going to be put together. The issue for us was this was not going ahead so we did not get into any detailed discussions.

  83. Staying with the role of the shareholder at the moment, can I move to one other issue which is in relation to the Chairmanship. Can you recall to the Committee the first point at which Consignia sought from the Department of Trade & Industry an indication as to whether Mr Leighton's predecessor was going to be reappointed or not?
  (Mr Roberts) I cannot because that was done by the Chairman and the Remuneration Committee and did not involve me.

  84. Can you recall for us the point at which the Department of Trade & Industry told you, Consignia, that Sir Neville was not going to be reappointed and, therefore, what delay has occurred in the appointment of a Chairman since then?
  (Mr Roberts) I personally knew that Neville was not going to be reappointed I think around about the beginning of December last year, but that does not necessarily mean—I am sorry I cannot help you—that that was the point at which he necessarily knew. Round about that time was the point I knew he was not going to be reappointed and at that point we then started to talk about what would happen after that with the Department, which led to Allan's interim appointment and following the normal procedures, his appointment.

  85. Mr Leighton, the issue of leadership in a company like Consignia in the circumstances to which Consignia has fallen is instrumental. Does it not seem to you, having now taken over this responsibility in the last month, that the Department of Trade & Industry should not have allowed the position to emerge in the latter stages of last year and pretty much right through the winter where Consignia did not have a chairman in post who saw this as a long term obligation?
  (Mr Leighton) That is a question you should ask them rather than me. I think the most important thing for me is that clearly all businesses generally prosper or not based on leadership in those organisations. I think there is a lot of learning out of how we have got to where we have got to, and I think the thing that people should be encouraged by is that has been very much drained up in the organisation. There have been no sacred cows; everybody has been very open about the issues; and most important, and the whole purpose of the three year renewal plan, is to say to the organisation and everybody else that we think there is a way forward for the organisation and that it is our intent to become, again, the best postal service in the world. It is not going to be without its trials and tribulations, and the business is in very poor state, and it is going to take that amount of time to put it right; and it did not go wrong suddenly overnight and does not go right suddenly overnight. But the one thing I am very galvanised by is that generally across the organisation including the people who have a pretty difficult time as a result of this—people voluntarily made redundant—there is a great will within the organisation to turn this company around and there is a great deal of passion in the organisation, and our task is to bring that to the fore and turn it into a positive factor, as opposed to the negative that it has been over the last twelve months.


  86. Just on the point of the appointments, Mr Roberts, you have been involved in this for some time and you have seen people coming and going. I would imagine that the Nolan provisions would have a part to play in this process now that they did not have before, is that correct?
  (Mr Roberts) Yes.

  Chairman: Could you send us a note about that? There has been a lot of speculation and I think that time is against us now and I do not want to prolong proceedings on something which is not really important, but it may be useful to get a note on that to clarify the issue.

Mr Hoyle

  87. Were there any talks on equity stake—yes or no—over the future of Consignia with the Dutch Post Office, and have there been any other discussions with other competitors about the future, and is there a possibility that there could be a flotation of shares within the Post Office?
  (Mr Roberts) On the first question, yes, there was a discussion but it did not get anywhere—

  88. On equity stake?
  (Mr Roberts) Yes, there was, and it did not get anywhere because inevitably with them as a private sector company that was bound to come on to the table at some point. Secondly, yes, over time there have been various discussions with various other players about what we might or might not do, and I would expect those to continue depending on what the circumstances are, but nothing is going on at the moment. We are currently not having any discussions with anybody.

  89. Would it be possible for the Committee to have a list of who you have been in discussions with in the past?
  (Mr Roberts) That is quite difficult because these are various companies, some of whom are listed, some of whom are not, and I think one of the problems about these kind of discussions is that if, after the event, you then start saying, "Oh, we talked to X, Y and Z", it is quite difficult. It is price sensitive information.

  90. So we read it in The Times as they print it?
  (Mr Roberts) I am not trying to be unhelpful but one of the practicalities these days is that we do get all sorts of discussions that we have had over the past few years with various companies—

  Mr Hoyle: Shall we put "serious discussions"? Would that help?


  91. Do you talk to your shareholder when such approaches are made?
  (Mr Roberts) Yes. Obviously.

  92. So could we, in our commentary on today's discussions, ask the Government if they would be prepared to issue for us the names of those companies and organisations with whom they were informed you were in discussion, because in not every instance the discussions I presume get to the point where it is worthy of mentioning to the minister?
  (Mr Roberts) That is absolutely right. With some of them there will be meetings or an odd meeting with somebody and you say, "Well, that is not going to work" or "We cannot do that" or sometimes it will go to a second meeting, so if there was anything seriously happening then certainly the shareholder would know, Chairman, yes.
  (Mr Leighton) I think the only thing I would say is that clearly there is commercial sensitivity around all those things and, therefore, we should not be put at any disadvantage as a result of that. Please bear that in mind. Also, at the moment this business is very mono-focused on a stand-alone basis to deliver the renewal plan. That is it.

Mr Hoyle

  93. So there is no—

  (Mr Leighton) There is absolutely no focus.

  Chairman: Thank you very much.

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