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Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): On a point of order, Madam Deputy Speaker. Can you tell the House whether you have received representations from the Leader of the Opposition, wishing to correct the comments that he made about Titian? Or is it enough, in this modern technological age, for his staff simply to alter Wikipedia?

Madam Deputy Speaker (Sylvia Heal): The right hon. Gentleman, who is an experienced Member of the House, knows that that is not a point of order for the Chair; but his comments are on the record. [Interruption.] Order. Will Members who are not staying for the next debate please leave the Chamber as quickly and quietly as possible?

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Royal Mail

4.18 pm

Mr. Kenneth Clarke (Rushcliffe) (Con): I beg to move,

I regret that I am not the spokesman for my party on the subject of Titian or any other great Venetian painter. I am, however, addressing a serious issue, and presenting what I hope the whole House will consider to be a helpful motion. I am aware that over the years I have acquired a slightly clichéd reputation as a rather combative politician, and I sometimes weary of being described as a bruiser, so I decided to table a constructive and helpful motion as the first Opposition motion on the subject of a DBERR responsibility.

Lord Mandelson—Peter Mandelson—has rightly described himself as an old political friend of mine. I thought I would table a motion that agreed with an important statement that he had made in December last year, supported his announcement about the future of Royal Mail and urged him to proceed with that policy. My hon. Friends and I will have to ask some very important questions—in two months the Government have failed to clarify aspects of the policy, so there will be serious issues for me to raise—but I had assumed that the motion, as drafted, would stand alone on the Order Paper.

Rob Marris (Wolverhampton, South-West) (Lab): Will the right hon. and learned Gentleman give way?

Mr. Clarke: I will in just a second. First, let me explain the slight puzzlement that I am currently experiencing.

If one tables a motion that appears to be supportive of what a Government spokesman said on a subject only two months ago, one rather expects the Government to join Opposition Members in any Division that is called; we might expect to see whether there are Members who have failed to be persuaded by Lord Mandelson and who wish to hold out against this wide consensus, and perhaps expect an informative debate, particularly for those interested in the serious subject of Royal Mail, to then take place—but no. On the Order Paper has appeared a long, convoluted and almost impenetrable amendment, which someone has decided to table to correct our simple support for Lord Mandelson, and it actually arouses more mysteries than it solves.

So there will be other questions. Will the Government explain whether they are sticking to their policy? What do they mean in seeking to qualify an endorsement of what the Cabinet Minister with responsibility for Royal Mail was committing the Government to two months ago, as was the Minister for Employment Relations and Postal Affairs, who repeated the same statement and agreed to the policy?

Rob Marris: The problem with the right hon. and learned Gentleman’s motion is the adverb.

Mr. Clarke: I have never seen a longer amendment to remove an adverb in all my life. I think that those who drafted the Government amendment had more on their minds than an adverb.

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Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): Will the right hon. and learned Gentleman give way?

Mr. Clarke: I will give way shortly, but I do not want to be drawn on to Titian now. Let me make a little more progress first, as we must get on to the serious substance of the debate.

When Lord Mandelson made his statement on the Hooper report on 16 December, which was repeated by the Minister now present, he could not have been clearer about what the policy would be. He accepted the three main recommendations of the extremely good Hooper report. There were questions on pensions, regulation and, most importantly, part-privatisation. He and the Minister were clear—there was clarity in both Houses—that they were committed to bringing in a partner through a minority stake in Royal Mail. They made it clear that that would not apply to the post office network, so Post Office Ltd would have to be separated out, as it was Royal Mail that was having private sector capital and a private sector partner introduced. We have reflected on that and waited for the details, but as our motion shows, we are prepared to agree that that needs to be proceeded with with some urgency.

I realise that there were some difficulties at the time; not everybody agreed with what the Ministers said then. Indeed, the Minister for Employment Relations and Postal Affairs suffered a considerable misfortune, because on the following day, 17 December, his trusted parliamentary aide—his own Parliamentary Private Secretary, the hon. Member for Dundee, West (Mr. McGovern)—resigned. He left the Government, saying—I am relying on the BBC online site—

I do not blame the hon. Gentleman for saying that it looked like partial privatisation of Royal Mail, because what had been announced was partial privatisation of Royal Mail. I thought that that was what we were going to debate, but I shall now have to wait and see what we are going to debate.

Mr. Kilfoyle rose—

Mr. Clarke: I shall give way once more, and then I will turn to the substance, which I hope will enable us to unravel this mystery, because it is indeed a mystery, of the Government’s current policy.

Mr. Kilfoyle: I am grateful to the right hon. and learned Gentleman, and I do not want to paint him into a corner, but the only artist he is in danger of becoming is a political con artist, and let me say this to him in all sincerity—[Hon. Members: “Withdraw!”]

Madam Deputy Speaker (Sylvia Heal): Order. Please will the hon. Gentleman withdraw that remark?

Mr. Kilfoyle: I certainly withdraw the remark; I am sure the right hon. and learned Gentleman understands what I am driving at. In his comments so far, he has already made it clear that his strategy is to drive a wedge between Lord Mandelson and the rest of the Government. [Interruption.] Does he accept— [Interruption.] Will he not accept— [Interruption.]

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Madam Deputy Speaker: Order. The House must come to order.

Mr. Kilfoyle: Does the right hon. and learned Gentleman accept that there is a difference between the Conservative and Labour Members: we are concerned about those with a real interest in the Post Office—Post Office users and staff—whereas the Conservatives want to score cheap political points?

Mr. Clarke: I share all the concern about the Post Office—I use it and realise that it is in an important institution—but to say that the Conservatives are the con artists in all this, which is out of order, is ridiculous. Our position could not be one of greater clarity. What is mystifying—what justifies the description that the hon. Gentleman uses—is the complete obscurity of the Government’s position, given what they have gone through.

It is important that we know where we stand, given where we have come from. I was the Minister with responsibility for the Post Office about 20 years ago—I have done the job that the Minister for Employment Relations and Postal Affairs, who is sitting opposite me, is doing—and I faced all the same problems of how to ensure that Royal Mail became a modern service organisation that could have a very strong future and could modernise in line with what was being done in other countries and so on.

At that time, I went to the then Prime Minister, Margaret Thatcher, to try to persuade her that we needed to introduce some private capital and private expertise as part of the programme that we were carrying forward in many of the public services. For reasons of which I am still unaware, I and many others were not able to persuade Margaret Thatcher to proceed with the partial or full privatisation of Royal Mail. I do not want to go too much into the history, but it was widely publicised that Michael Heseltine and I made efforts to persuade the Major Government to introduce private capital into Royal Mail—I am afraid to say that I argued to my colleagues that it would not last 10 years if we did not go down that path—but, again, I was unsuccessful.

The Conservatives’ approach has been consistent and clear. In 1998, when Lord Mandelson was last Secretary of State for Trade and Industry, he put forward some proposals and my right hon. Friend the Member for Wokingham (Mr. Redwood), who was then speaking on behalf of my party, suggested that private capital should be introduced into the business. We offered to support the Government if they wanted to do that, but they were vehement in their rejections. Lord Mandelson was dismissive of our proposal, saying that it

As recently as 2006, the current Secretary of State for Health, who was then Business Secretary, said that he would give an “absolute, unequivocal commitment” that a stake in Royal Mail would not be sold to the private sector.

The Conservatives have been clear in their approach, I have certainly been clear and consistent and the Labour party has been pretty clear about things so far. I congratulate Lord Mandelson on his courage and his success. Who would have thought that after all those years the labour movement would be introducing this proposal, with
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Lord Mandelson, echoed by his Minister for Employment Relations and Postal Affairs, commending it in this House. I welcome and support that.

Several hon. Members rose

Mr. Clarke: I shall give way when I finish this passage.

This proposal is a U-turn. I do not criticise the Labour party for making a U-turn, because all Ministers have had to make U-turns. They should be made clearly and explained, and they should be done with a straightforwardness and elegance. Is that what was done on 16 December? I congratulate the Secretary of State on tearing up his election manifesto commitment, which had been so foolishly given, and on being so explicit—but what has happened now? The Government’s amendment is not a U-turn—it is an obscure wriggle; I have never seen meaning vanish into a burrow before. It is plainly drafted by a committee, probably chaired by a nominee of the Chief Whip. If it were parliamentary for me to use the term “con artist” about anybody in this Chamber, the authors of this amendment would be strong contenders for it.

I shall move on to the substance. I anticipated that I would be pressing the Minister to go through the substance of what has been proposed and what interest has been expressed—TNT was said to be very interested. When the stake is sold, will the proceeds go to Royal Mail? In addition, there are the very difficult questions about the pensions and the regulator. However, the Minister now has more questions to answer than simply on the policy, because the Hooper report—which we all find very convincing—compellingly sets out why the status quo is not an option and change is necessary; that more private capital would be welcome; and that some managerial experience of change in this kind of industry needs to be introduced urgently.

Mr. Peter Hain (Neath) (Lab): This is good, knockabout, Oxbridge stuff— [ Interruption. ] That is why all the Oxbridge types behind the right hon. and learned Gentleman are cheering him. But if he welcomes the Hooper report, why does he not support the Government’s efforts to address the pension deficit? The Tories would leave Post Office pensioners in the lurch by pursuing their obsession with privatisation, as they always have.

Mr. Clarke: We have been trying to get the Government to say what they will do about the pension deficit. I trust that we will receive some enlightenment today.

I shall put the issue in context. I have already said that there is widespread consensus about Royal Mail. For example, there is widespread consensus that any proposals for its future should be based on the universal service obligation, which Royal Mail should accept, whatever its form. It is necessary to have a nationwide service, with deliveries to any citizen or household at a uniform price; Royal Mail must continue to discharge that obligation. Indeed, the Hooper report says that the changes that it recommends are above all necessary to ensure that the universal service obligation can be continued.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The right hon. and learned Gentleman makes an important point about protecting the universal service obligation for the sake of all our constituents. Is there
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not a lesson to be learned from the fact that, yet again, the UK introduced competition into postal services faster and deeper than did countries in mainland Europe, meaning that rival companies have a protected home market and are able to cherry-pick in our market? Would it not be more sensible to have a levy on competition to protect the universal service and ensure a level playing field in this country?

Mr. Clarke: There should certainly be a level playing field, and the consumer benefits from such competition. It will be extended across Europe and I hope that Royal Mail will be a powerful contender in wider markets, if it can be modernised and reach the standards of efficiency of its competitors. The Government introduced that competition. We agree that it is of lasting benefit to business and the ordinary user of the service in this country, but competition is not responsible for the present difficulties.

Royal Mail’s long-standing difficulties are being compounded by the change in the medium of communication. Far more revenue has been lost—the threat to the taxpayer from Royal Mail’s current state is considerable—from the introduction of new technology and the steady loss of traffic than has been lost to competition. Hooper is right that the loss of volume—the amount of letters and parcels to be delivered—is speeding up. It could be 7 to 10 per cent. next year without any difficulty, and that is leading Royal Mail in an ever-more downward direction. Other problems include the fact that it has not adopted the modern technology of its competitors in Europe, the enormous pension deficit hanging around its neck like a millstone and the lack of change over the past few years. As Hooper rightly said, it also suffers from extremely bad industrial relations. As we all remember, there was a most unfortunate strike in 2007, which weakened the business still further. Many small and medium-sized businesses joined their bigger competitors in deciding that they could not longer trust Royal Mail, and they turned away from it.

I have merely summarised the analysis set out in Hooper. I have not left myself time to repeat it, but it has been accepted completely by the Government and I think that it is unanswerable. The status quo is not tenable in any way at all.

These problems are familiar to anyone who has ever followed Royal Mail. Similar discussions have gone on for a very long time, and I am sad to say that Hooper’s analysis and the litany of problems that he sets out remind me of when I was the Minister in charge. That was a very long time ago, but the problems have actually got worse and worse in the past 10 or 12 years.

Lord Mandelson’s clarion call to action before Christmas came after 12 years of inaction or pointless action, and when one looks at the state of the business one realises that it is getting nowhere fast. In 2001, the Government gave Post Office Ltd commercial freedom, but none of the reforms that have been tried has worked. Over and over again, the Hooper commission refers to the political background that has inhibited the management’s ability to take decisions. It is obvious that a succession of Ministers—until these men of courage came along—have been intervening, slowing down the management and giving in to pressure in trying to make sure that the changes do not take place.

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