Examination of Witnesses (Questions 60-79)|
22 OCTOBER 2007
Q60 Mr Wright: At the outset of the
dispute Royal Mail had asked Postcomm whether or not they would
take into account the dispute in their delivery targets. Do you
know whether this has taken place?
Mr Hutton: I do not know the outcome
of that. I think that is still a matter for discussion between
the Royal Mail and Postcomm.
Q61 Mr Wright: Finally, one of the
concerns that the CWU has expressed, and indeed it was mentioned
early on in the dispute, was over the question of the loan that
was given by the Government to Royal Mail, that it was not being
spent effectively. As a matter of fact, I think as late as June
it had not been spent at all. What measures have you got in place
to ensure that the £1.2 billion loan given to Royal Mail
is going to be used quickly and effectively in bringing about
Mr Hutton: The package has not
been approved yet by the European Commission under the state aid
rules. I think you are right that none of it has been drawn down
yet by the Royal Mail. The precise sequence in which that resource
will be drawn down I do not have in front of me but I am very
happy to set it out for the Committee if that would be sensible.
Q62 Mr Wright: So you have got no
Mr Hutton: I am not sure I can
give you a specific answer in relation to the timescale on that,
but what is certainly true, because of the industrial action,
is that the Royal Mail are behind in terms of the modernisation
that they wanted to see in place, the improvements in technology
and so on. There is a delay now, I am afraid, in getting that
investment in but I hope it can be made up.
Q63 Mr Wright: When those discussions
are taking place will you communicate with us?
Mr Hutton: Yes. I am very happy
to do that.
Q64 Chairman: Can I just clarify,
Secretary of State, that point about the state aid procedure?
Your predecessor expressed confidence that there would not be
a problem with the state aid procedure. I cannot remember what
timescale was envisaged by him but I am slightly concerned that
here we are in the second half of October and it has not been
approved yet. Am I right to be concerned?
Mr Hutton: No, I do not think
so. I think it is imminent, but again I would be very happy to
write to the Committee setting it out.
Q65 Chairman: I would appreciate
that very much indeed.
Mr Hutton: We remain confident
that it does satisfy the state aid rules.
Q66 Chairman: There is no indication,
informal or otherwise, that there might be a problem with that
state aid procedure?
Mr Hutton: No. I have received
no indication of that.
Q67 Chairman: Just to clarify my
mind, you are going to consider what timescale and what mechanism
to use for your manifesto commitment to review the Royal Mail
in the light of all this?
Mr Hutton: Yes.
Q68 Chairman: Because already Postcomm
have done a lot of work on the redefinition of the universal service
obligation, I see, so you will have to dovetail with Postcomm's
work, presumably, on the different aspects.
Mr Hutton: Indeed. We will obviously
have to take that into account.
Q69 Chairman: Can you just clarify
one point of detail for me? The report and accounts, have they
been published yet?
Mr Hutton: I think they are going
to be published this week.
Q70 Chairman: It is a little later
than might have expected. I would have thought it might be well
to have had them during the industrial dispute rather than after
Mr Hutton: I think it will be
later this week. It has to be later this week.
Q71 Mr Binley: Can I just ask a supplementary
to that because the commercial agreement reached between the Government
and Royal Mail is in reality a commercial loan with the investment
from Government having to be repaid over a defined period with
interest charged on the money loaned to Royal Mail. Would you
be prepared to release the commercial agreement for this Committee
Mr Hutton: I will have to think
Q72 Chairman: We can do that on a
confidential basis if necessary.
Mr Hutton: If it is on a confidential
basis it might be possible, but let me have a look at that.
Q73 Chairman: This has had a huge
impact on the economy and our society, so to speak. We have talked
a lot about the impact on Royal Mail and business lost to its
competitors and business lost to the internet and so on as well,
but what impact have you made yet with regard to the impact on
the wider economy of this dispute? You say we have been raking
over the coals a bit. It is true, we have been. It is to make
sure that lessons are learned to make sure this kind of damage
is not repeated.
Mr Hutton: There is a place for
raking over the coals, I do accept that, and this is the place,
obviously, for that to be done. We have not, as I said, yet made
a quantitative analysis on what we estimate the cost of this dispute
has been. It has been significant, I do not think there is any
question about that, but in relation to the Royal Mail we will
not be clear about the damage and how permanent it has been for
some time. My very earnest hope is that now that there is an agreement
in sight both sides share this common agenda that I referred to
about doing all they can to help the Royal Mail succeed. Without
that common bond of trust between staff and management that task
will be made very much harder.
Q74 Chairman: The impacts have been
very wide and varied. Charles Kennedy in the House last week or
the week before put down questions about loss of blood samples
in the post. I was hearing about a care home that has not been
able to employ its staff because the post is all held up in Liverpool,
which is always a bit of a problem for the post. Whether it is
wise to put government offices in Liverpool I am not quite sure
when you need a reliable postal service, but never mind; it is
one of the more difficult areas for industrial relations in the
Royal Mail Group. It is not just an economic impact. It is often
a very serious social impact as well.
Mr Hutton: That is undoubtedly
true. I think probably some of the keenest damage has been felt
by small businesses, and that is a matter of very real regret.
There is, in relation to Royal Mail's bulk customers, the prospect
of compensation being paid for failure to deliver, but that, I
think, is a matter that is being discussed between the Royal Mail
and Postcomm at the moment.
Q75 Chairman: And that really helps
the finances of Royal Mail Group as well.
Mr Hutton: Well, it will not,
but look: you do not have this type of dispute and then somehow
imagine that it is going to have a positive impact on the finances
of the company. This has been nothing but a problem for the Royal
Mail and therefore for the taxpayers who have invested in it.
Q76 Chairman: We have spent a lot
of time, implicitly or explicitly, attacking the management of
Royal Mail Group and you have insisted there are two sides to
every argument. Just give me your assessment of the Union's role
in this dispute.
Mr Hutton: I think the Union have
tried to respond to the challenge of change that faces Royal Mail.
I think in the past they have shown a willingness to change and
adapt. My own personal reflection is that I think they found that
the size and magnitude of the change now confronting Royal Mail
quite a difficult and thorny issue to deal with, but I think they
have tried genuinely to engage with Royal Mail. I think they have
tried to find a way forward on this but it has proved very difficult
for them as well. They have their conference and mandates and
so on that they were trying to operate within. With great respect,
Chairman, I am going to try my very hardest to avoid pointing
the finger of blame at anyone. I think we could run the risk of
reopening the discussion we had earlier. My view of all of this
is that this should never have come to industrial action. My own
belief is that it was perfectly possible to find a way forward
on these proposals without industrial action, which I think has
now caused massive damage to the company, huge inconvenience to
our constituents and a lot of financial loss to hundreds of thousands
of thousands of decent, hardworking postal staff who probably
themselves now are left scratching their heads wondering what
all this was about. Clearly, there are lessons to be learned.
I do not dispute that. Management and unions together have to
find a better way of dealing with their business in the future.
Q77 Chairman: I think we are risk
of repeating previous answers. I will just move onto the last
and completely separate area of questioning. This Committee expects,
if we are reborn in the new parliamentary session, as we expect
to be, to do an inquiry into the post office closure programme,
probably in the early spring of next year, to see what progress
has been made. There is one particular issue there now that I
would like to raise with you of which I give you prior notice.
There was concern expressed over the summer that sub-postmasters
and mistresses were not free to express their views, that mystery
shoppers were being sent out to ensure they were sticking by the
Post Office line. Obviously, that is rather worrying because they
need to be able to inform their customers about what is happening
and their views on what is happening. The Post Office assured
me that that was a mistake. They said publicly that it was a mistake.
They withdrew the letter, but the fact that such a mistake was
made in the first place alarmed me very considerably and I have
seen a report in the East Anglian Daily Times from 11 October
which said that a spokesman for the Post Office Ltd is quoted
as saying that sub-postmasters were "encouraged not to talk
about the proposals before they were presented for the consultation
process at the agreed time rather than the information coming
out during the planning process", so they are still being
encouragedand what form the encouragement takes I do not
knownot to be completely frank with their customers and,
as I say, that worries me.
Mr Hutton: It worries me too.
If that is what is happening it should not be happening, it would
be quite wrong to try and gag sub-postmasters and I will try and
make sure, Chairman, that if there are any such examples of that
we deal with them robustly. The company have made it clear that
that letter should not have been sent. They have retracted it
and they have apologised to the National Federation of Sub-Postmasters
for what I can only describe in my termsand maybe it is
too Allan Leighton-like for this Committeeas a cock-up
and it should not have happened.
Q78 Chairman: I think more Adam Crozier-like,
actually. The reason that is important is that in my area the
consultation process will be taking place during the school summer
holidays, the last two weeks of July and the month of August,
which I think is outrageous and I am trying very hard to get the
Post Office to change its mind. This means that sub-postmasters
and mistresses can only tell their customers what they thought
of the plans when they are not there, when they are on holiday,
and that seems a little unfortunate, so I do hope you will do
all you can to ensure there is a maximum degree of openness in
this very important and sensitive process.
Mr Hutton: We will do that.
Q79 Chairman: If no other colleagues
have anything they want to say on that issue, at precisely half
past four, exactly an hour after we began, I can call this session
to a conclusion. Thank you very much, Secretary of State, for
your first appearance before this Committee. I congratulate you
on your appointment, of course. When next we meet, according to
our plans, we will indeed be the DBERR Committee rather than the
DTI Committee, so this is your first and only appearance before
Mr Hutton: It was a great pleasure.
Chairman: Thank you very much.