Examination of Witnesses (Questions 100-119)
COMMUNICATION WORKERS
UNION
18 JULY 2006
Q100 Mr Wright: That is the theory,
Billy!
Mr Hayes: Well, I am looking to
you people to say yes, but politicians nonetheless determine public
policy, so we would question that. That was done in response to
our poll actually. We did a poll of the workforce, but we were
stopped at every stage of the way in terms of consulting and we
were told that our ballot was a political ballot because we mentioned
privatisation, but their poll or their letter was not a ballot
and it was not political because it did not mention privatisation,
it only mentioned shares. Now, I am sure that the dormouse in
Alice in Wonderland would be very impressed with that kind
of logic, but we went round and we were blocked every step of
the way. I refer to what you said at your Committee at the very
end in terms of privatisation. You said, "If Royal Mail management
still wish to pursue commercial ways of motivating their employees,
we believe there are less controversial ways to do this, such
as the current profit share scheme". We are up—
Q101 Mr Wright: I did want to ask
you about that, or perhaps Jeremy who is the research person.
Adam Crozier this morning, I think, was fairly clear and so was
Allan Leighton that they have all kinds of, what they call, empirical
research, totally empirical, in terms of the man on the top of
the Clapham omnibus. I do not know if Crozier has got better stuff
about how employee share ownership schemes around the world incentivise
people, blah, blah, blah, I hope they will send us that evidence,
but I wondered what evidence the CWU had got comparing employee
share ownership schemes as an incentive mechanism for improved
performance in contradistinction to profit-related pay schemes
or bonus schemes. You have already got a bonus scheme, I think,
though I do not know if it is profit related, but you have already
got a bonus scheme. Has the union done any comparative work on
the share model or the bonus model as incentives?
Mr Baugh: The evidence is patchy.
Like you, my ears pricked up when I heard there was going to be
clear, empirical evidence because I do not think there is any.
It is very hard to draw any direct correlation between any pay
input and an outcome to the performance of the business. It is
a notoriously difficult area and with shares it is even more difficult
because it is an even more roundabout way of incentivising. The
bottom line is that we are the recognised trade union and if they
want to talk about incentivising and rewarding staff, talk to
us and we can come up with an agreement. We have got proposals
which are less costly than the share scheme being proposed. The
shares will not do anything for pensions, will not do anything
for investment and it is questionable whether they will incentivise
staff, so why throw £1 billion in that direction? If you
have got that amount of money to spend, we can really make some
progress in agreeing schemes that will be agreed with the union,
agreed with the staff and can incentivise. The bottom line is
just improving quality of service—
Q102 Mr Wright: I understand that,
but just to oversimplify something, which is what happens in these
committees, I am afraid, can you explain in two or three sentences
what your proposals are on incentives?
Mr Baugh: We have said that if
they want an incentive scheme, they should adapt the current share
in success scheme which is a straightforward profit-sharing scheme.
We would actually propose that, in addition to that, they could
include other factors, such as quality of service measures which
would help trigger the payments which would add another level
of performance improvement, so we think there is a far more straightforward,
less costly and agreeable way of moving forward without this great
share scheme with all the costs and the problems that come with
it.
Q103 Mr Wright: Have you got any
evidence that your proposal would be more effective than their
share ownership proposal?
Mr Hayes: I think from other companies
we have.
Q104 Mr Wright: Yes, I am looking
for comparative work.
Mr Hayes: Yes, do we have evidence
based on real events?
Q105 Mr Wright: Yes.
Mr Hayes: Other companies, and
I have not got this to hand, but other companies that we negotiate
with, because we negotiate with somewhere in the region of 40
companies now, we have evidence that profit-related schemes have
actually improved the performance of the company, yes, we have.
That is why it is tried and tested and we can dig that out, the
point being whether it incentivises the workforce. The thing about
the share scheme and linking it to quality, I do not think the
public want to know about how profitable the company is or the
Post Office is; they want to know how healthy it is in terms of
the service it delivers and getting the workforce keyed in on
quality, because it matters both to us, to the people we represent
and to the people who do the job, so it really matters, so getting
people focused in on the quality of the service, not on a rate
of return for the company, is a key thing for us.
Q106 Mr Wright: Could you perhaps
send us some abstract of the research to which you have access
on the efficacy or otherwise of a kind of bonus scheme in contradistinction
to the efficacy or otherwise of a share ownership scheme and I
do not mean necessarily in your sector.
Mr Hayes: Perhaps I can just give
you one off the top of my head. In the 1980s the Monopolies and
Mergers Commission went into London to look at quality of service
and bonus schemes, and the productivity and quality of service
went up almost, not literally, but almost overnight. We have stuff
on that as well even within the Post Office which we can send
you.
Mr Baugh: Just a final point I
would make is that we have got chronically low basic pay rates.
Our members receive £80 a week below the national average.
If you want to incentivise people, pay them a decent basic wage
and a decent pension. I think that is the best incentive that
you could possibly provide.
Q107 Anne Moffat: Would you consider
a joint consultation with your proposal and their proposal going
directly to the members?
Mr Hayes: Why would we want to
do that when we have a commitment from Her Majesty's Government
which says they will not privatise the Post Office? The Government
said it would not privatise the Post Office, so why would we test
the issue of privatisation with the workforce? I cannot see why
we would do that?
Q108 Anne Moffat: Would you not be
convinced though that your scheme would be best and could you
not sell that to the members? Is that not a better positioning
than anyone proposing a new share scheme which they are going
down the route to do?
Mr Hayes: Allan Leighton has done
his poll and we have done our poll and he got 37% and we got 95%.
We have got a Government commitment on the Manifesto and I would
go back to the point I made earlier, that I do not think it is
for public servants to determine government policy.
Q109 Chairman: You keep on using
this 37% figure and I am very interested in getting the facts
right. I have just done the mental arithmetic. He tells us 60-65%,
on my rough working, say yes to their scheme, so what is this
37%? They say 85,000 responded saying they wanted it.
Mr Baugh: The total workforce
is just over 210,000, so 80,000-odd out of 210,000 and let us
not forget as well that they extended the ballot deadline for
a week because they did not get the right number of returns in
and they included post office managers and we also believe they
may have included subpostmasters as well, so it is a much greater
constituency.
Q110 Chairman: So that is 85,000
out of 210,000?
Mr Baugh: Which is about one in
three.
Q111 Rob Marris: Are you saying that
Adam Crozier, who is your Chief Executive, only realises 75% of
the workers that there actually are in round terms, that he thinks
there are 150,000 and there are 200,000 in round terms? Am I understanding
you correctly on that?
Mr Baugh: You will have to ask
Adam Crozier how he gets his figures.
Rob Marris: But he is your Chief Executive,
is he not?
Q112 Chairman: We will seek clarification
on that.
Mr Hayes: The simple thing, Chairman,
is if we give you our figures rather than like a betting shop,
working out odds and percentages.
Q113 Chairman: I cannot resist asking
this question. From where I sit, as a wicked old Tory, I would
rather see this as a Tony Benn-ite sort of cooperative that Allan
Leighton is trying to impose upon you rather than privatisation.
Why is it not a Benn-ite cooperative?
Mr Hayes: I do not know whether
you are being rude to Allan Leighton or Tony Benn! They might
like to portray it as a benign socialist paradise, but I am not
so sure it will be. The danger is that people trade shares and
eventually those shares will be sold on and it will lead to the
break-up of the company.
Mr Baugh: Also employee ownership
is often associated with greater degrees of employee involvement,
seats on the board, a whole measure of representative things for
the union and the employees, but there is nothing in the proposals
to do with increasing employee involvement or representation.
Q114 Chairman: It is not the John
Lewis Partnership, is it?
Mr Hayes: It is not. It is far,
far from it.
Q115 Mr Weir: Moving on to the Post
Office Card Account, you have also expressed your concern about
the Government's, the DWP's decision to withdraw when the current
contract expires. First of all, were you aware in the first instance
that it was due to expire in 2010 and it was not going to be renewed
after that?
Mr Furey: Simply, no, we were
not. The Post Office Card Account came into being in 2003 and
was only fully rolled out to the whole of the UK from April 2005,
as there was a two-year migration programme, so in reality it
has only been up and running for just over a year. Our belief
was that it was going to be extended beyond the life of the contract.
Q116 Mr Weir: How do you believe
the withdrawal will impact on the urban and rural post office
networks?
Mr Furey: I think it will have
a devastating effect on the whole of the network holistically.
It will certainly have a detrimental effect on the rural communities,
society in general in the rural areas, and also in urban deprived
areas because much of the work that goes across post office counters,
the Crown post offices which I represent or my union represent
are in such urban deprived areas and to lose that volume of traffic,
footfall, revenue and income will be devastating.
Q117 Mr Weir: How do you react to
the suggestion that the banks will take up the slack in this,
if you like, that people can go to the bank rather than to the
post office?
Mr Furey: Well, it is about choice
and the one thing the DWP is not giving is choice to these 4.5
million people or 4.3 million people. These people have chosen
deliberately to have their state money paid into the Post Office
Card Account, so they had the choice previously to have their
money paid into banks and building societies and they chose not
to. They made a conscious decision to say, "I want to collect
my money at the post office via the Post Office Card Account",
so I do not think the banks and building societies will be able
to do this work.
Q118 Mr Weir: From your own experience,
you have talked about rural areas and deprived areas, and are
these not the very areas the banks that have moved out of as well
and is that going to cause a problem from your point of view in
people accessing the services?
Mr Furey: Absolutely. Postcomm's
latest annual report on the network actually says that customers
living in a village or a more rural area are less likely to withdraw
their benefits from a cashpoint or a bank or building society
and they are more likely to withdraw their cash over the counter
at post offices. The stats are that just 4% of rural areas have
a bank, whereas 60% of rural areas have a post office, so it is
a given that people in rural communities will draw their money
at the post office.
Q119 Mr Weir: Have the Government
or have Royal Mail suggested to you that there will be any type
of assistance for post offices after the withdrawal of POCA and,
if so, what is it?
Mr Furey: First and foremost,
nothing has been discussed with the CWU from either the Post Office,
the Royal Mail Group or the Government on this issue. Our concern
is that these decisions have been made by the DWP without having
joined-up government thinking in terms of the DTI. We have a major
concern here that one decision by one government body is actually
impacting detrimentally on another government body, so the bottom
line is that we have not been consulted on this.
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