Examination of Witnesses (Questions 1-19)
RT HON
LORD MANDELSON
14 JANUARY 2009
Q1 Chairman: Secretary of State, welcome
to your second visit to this Committee. We are very grateful to
you for the promise you gave, and have kept, to come to us regularly.
I am sorry about the slightly overcrowded room, which was a feature
of our last meeting, but there is competition for rooms in this
place and other committees had booked into the other rooms. We
will try and make sure we have more space for your next appearance.
I am also sorry that one or two colleagues are not here this morning,
one has had a bereavement and one has another parliamentary engagement
he cannot get away from, so it is no discourtesy to you but competing
pressures of personal and parliamentary life. We intend to structure
today's session in this way: we would like to begin by asking
you some questions about the structure of the Department and the
new ministerial appointment made this morning; then we would like
to do the Royal Mail Group; and then we will turn, as it were,
to the main agenda, the economy, and in that we are particularly
looking at the automotive sector and your announcement this morning
about a new support scheme for small business. That is the structure
we hope to follow, if that is helpful. I think you have indicated
you have got two hours with us, which is much appreciated, so
we will see how it goes. Can I begin by saying that I am very
pleased about this morning's announcement about Mervyn Davies
as a minister because I was concerned about pressures on your
time. We know you are doing a lot to help your party ahead of
the next election, you have got a very major economic crisis on
your hands as well and you promised us that you would be a Trade
Minister flying the world selling UK plc. Those are three full-time
jobs, so I am glad you have given up one of them. I think you
are going to India next week, is that right?
Lord Mandelson: I am in India
next week, yes.
Q2 Chairman: I am glad you are giving
up one of them, but I am concerned that another Lords minister
has been appointed. I do not want to be too prissy about this,
in a time of economic crisis I am glad that UK plc will have another
effective salesman, but we have four Lords ministers, three Commons
ministers, two full-time Lords ministers, one full-time Commons
minister. This is not the USA, this is the UK, and ministers are
accountable to the Commons above all. I welcome the appointment
in the sense it gives more resource to a very important subject
but I am concerned about the issues of accountability it raises,
which we raised in our report after our last meeting that we are
waiting for a Government response to when it was only three Lords
ministers.
Lord Mandelson: I hope that when
you assess the ministerial team you will look at the quality rather
than the quantity of Lords ministers. I think that Mervyn Davies
joining the Government is a huge boost for us in a whole number
of different ways. Mervyn Davies, Chairman and previously the
Chief Executive of Standard Chartered, more than any other person
made Standard Chartered what it is today. I think it is interesting
to note that the bank has weathered this storm better than some
others. He will bring a wealth of experience and expertise on
economic, financial and banking matters. He has a huge international
network. He will be joining my department as Minister for Trade
and Investment, he will be flying the flag for Britain around
the world, but he will also be putting at our disposal his expertise
on banking and, as we know in view of the global banking crisis,
that expertise is at a premium, so I really do welcome him. Can
I just say it means that Gareth Thomas, who was filling the trade
promotion spot, will be freed up in his time to concentrate more
both on the consumer affairs and other activity that we are doing
to support business and to get firms through the economic downturn
and, of course, will be more available to spend more time in the
Commons, so I am sure you will welcome that.
Q3 Chairman: Yes, but he is a shared
minister with DFID and I think he was outrageously overloaded
before. He is not a full-time Commons Minister. We had Pat McFadden
as the one full-time minister. At a time of economic crisis we
Members of the Commons need access to ministers to discuss our
concerns and we need to hold you to account on the floor of the
House of Commons. You now have a very unbalanced ministerial team.
Lord Mandelson: You have Ian Pearson,
who, yes, is shared with the Treasury.
Q4 Chairman: And will be very busy
when the Finance Bill begins.
Lord Mandelson: Yes, but it brings
a big advantage, I must say, for my Department to have a shared
minister with the Treasury. It means that co-ordination is undertaken
more efficiently and seamlessly between these two Departments,
which is always welcome.
Q5 Chairman: We might return to that
subject later.
Lord Mandelson: I take your point,
Pat, Ian and Gareth are good House of Commons people, they are
good House of Commons Ministers and, as you have been kind enough
to point out, I make myself available to this Committee, as is
right. I do not think for this reason alone we should deny ourselves
access to that talent pool which membership of the House of Lords
brings when we are able to recruit people of the calibre, quality
and experience of Mervyn Davies, to name but one.
Chairman: I would feel more comfortable
if we had at least one more full-time Commons minister. I should
put on record that this Committee shares a very high appreciation
of the work of each of those ministers. I think you have a strong
team, but an unbalanced one.
Q6 Mr Hoyle: The gene pool can exist
in the House of Commons as well, it is not just something you
keep for the Lords. Much as we do enjoy having you before the
Committee, Lord Mandelson, what we have got to get across is that
the House of Commons is the place for scrutiny and it is about
accountability. There is nothing wrong with the person you brought
in, absolutely correct, the right person, they are going to bring
a lot to the table, but the table exists in the Commons and we
do not feel that we can reach the table in the same way that we
used to be able to do. I just wonder if we can look to ensure
that we have another full-time minister on your team in the Commons
just to get a bit of balance back. That is what we are looking
for and that is what we need. It is about accountability, it is
about scrutiny. We feel that has been taken away a little bit
and we want to bring that back.
Lord Mandelson: I understand that
and I respect the point of view that you are expressing. I think
that to acquire another minister might be challenging. I think
that some of my colleagues think I am already being a bit greedy
with the number I have. What do you do? You have a guy like Mervyn
Davies, who is outstanding, and short of standing in a safe Labour
seat at the next General Election or at an early by-election how
else do you bring him into the service of the Government and of
the nation when he wants to do that other than bringing him in
via the House of Lords? I know that this has an implication for
the Department's relationship with the Commons, I am very mindful
of that. I hope that we will be able to keep up our level of responsiveness
and accountability to the Commons and if ever you feel we are
slacking in that then you must pull us up sharp.
Mr Hoyle: There may be another way of
doing it, of course. They might claim that you are being greedy
with the number of ministers, but instead of having shared ministers
in the Commons maybe we could reverse that a little bit and have
a shared minister in the Lords and that would give you the same
team but with better representation in the Commons.
Q7 Chairman: Two Lords ministers
are already shared, of course, Baroness Vadera and Lord Carter.
Lord Mandelson: But both doing
tremendous work. What Baroness Vadera does on the small business
competitive side and on the banking side, she is worth her weight
in gold. Yes, in a sense she is shared with the Cabinet Office
and Number 10 but, again, that is a boost for our Department.
Lord Carter, when he produces his interim report on digital Britain,
and I hope you might consider having him before you, you will
see the quality of the work he is undertaking; he really is first
rate.
Q8 Chairman: The Prime Minister certainly
likes using appointments to the House of Lords, does he not, so
he might be changing his mind about reforming the Lords.
Lord Mandelson: He likes getting
the best in harness to serve the country and all these Lords ministers
are doing precisely that, but not to the exclusion of the Commons.
Q9 Mr Binley: Your reputation for
being involved in all sorts of things and being able to carry
them off and work very hard at those things is pretty well-known.
However, my concern is that people are saying that you have been
deputy prime minister to the Prime Minister, and some are saying
you have been prime minister while he has been Chancellor. How
much time do you actually spend on this particular Department?
Could you be honest with us and tell us?
Lord Mandelson: I would say that
I am working on my departmental responsibilities, on the economy
as a whole as a member of the National Economic Council, full-time.
Chairman, you suggested in your introduction that I spend a proportion
of my time, in some people's view as much time, on preparing for
the next election. I am not. Should my call come at some time
in the future I hope I will be able to make a contribution, but
in the meantime I am concentrating exclusively on my day job.
Q10 Miss Kirkbride: The new minister
who is coming to the House of Lords, do we assume that he is a
member of the Labour Party this time?
Lord Mandelson: Yes, he is going
to join the Labour Party, he is taking the Labour whip. It is
not obligatory, but he is very enthusiastic to do so.
Q11 Mr Hoyle: We are learning from
our mistakes!
Lord Mandelson: Not as counterintuitive
as you might think.
Mr Binley: It is the only way you are
recruiting now!
Q12 Miss Kirkbride: Just as a point
of clarification, is he being paid?
Lord Mandelson: No. He is doing
this as a public service.
Chairman: We do not want to labour this
point, there are more important issues to discuss today, but we
have produced a report on the accountability of the Department
for the Commons and we are waiting for the Government's response
to that. What has happened today has increased those concerns,
not diminished them. Royal Mail.
Q13 Mr Hoyle: A great subject. I
think it is top of our agenda.
Lord Mandelson: Certainly top
of yours!
Q14 Mr Hoyle: I am hoping it is top
of yours.
Lord Mandelson: It is vying.
Q15 Mr Hoyle: Okay. Maybe we ought
to drop it down, maybe that is the secret!
Lord Mandelson: No, no.
Q16 Mr Hoyle: What is the timescale
for response to the review?
Lord Mandelson: We have made our
initial response. Richard Hooper and his colleagues made three
principal recommendations. One is to transfer responsibility for
the regulation of Royal Mail from the existing regulator, Postcomm,
to Ofcom in order to place regulation in the wider context of
communications developments, and I think that is right, and the
Government has accepted that recommendation. Secondly, in view
of the burgeoning deficit in the pension fund of the Royal Mail,
the Hooper Review has recommended the Government should take on
a measure of responsibility for that fund and its deficit, and
in principle we have accepted that recommendation and will consult
on how that might best be done. His third principal recommendation
was to attract a minority stakeholder into the Royal Mail, a stakeholder
with a track record in postal operations, with expertise and experience
of turning round a postal operator. We have had an indication
of interest from one such postal operator. This will bring us
not only investment resources, necessary cash, to modernise the
Royal Mail and increase its efficiency and enable it to withstand
competition in the market, but also bring a breath of fresh air—breath,
well, hopefully gale force fresh air—into the management
and culture of the Royal Mail because I think that is needed in
order to continue modernisation. The Government is accepting those
recommendations as a package, we are not going to select from
one at the exclusion of another. We will go forward together and
we will introduce legislation to enable us to do so.
Q17 Mr Hoyle: Obviously there is
going to be some big discussion before we get to that.
Lord Mandelson: Yes.
Q18 Mr Hoyle: Obviously it is about
taking people with you and a lot of people are not convinced with
what you are suggesting today. Can you tell me how much money
is actually needed into Royal Mail?
Lord Mandelson: Hundreds of millions
of pounds of additional investment to modernise.
Q19 Mr Hoyle: So is that more than
a billion or less than a billion?
Lord Mandelson: I am not going
to pluck a figure out of the air. One thing I do know is the taxpayer
alone cannot be expected to foot the bill for that modernisation.
We have got huge demands and calls on the Treasury, on the taxpayer.
We are doing so much to pull Britain through the economic downturn,
to get the banks back on their feet, to do what we can to enable
struggling firms to get through this downturn, that to ask us
to take on both a potential £8 billion deficit in the pension
fund plus provide all the resources needed to bring about much
needed modernisation is too much to ask from the Treasury and
from the taxpayer alone. That minority stake will enable us to
get much needed additional investment resources as well as management
expertise. Let me just emphasise that this will not make a difference
to the fact that the Royal mail is part of the public sector,
will remain part of the public sector, and in my view must do
so if we are going to sustain the Universal Service Obligation,
the delivery to all parts of the country at one price. I do not
believe that it will be practicable at the end of the day to sustain
the universal service provided by the Royal Mail, its letters
delivery in the way it does which is so essential in my view both
to our economy and our society, if a future government were to
privatise the Royal Mail. I think that is a bad idea, it would
undermine the universal service and, as far as I and this Government
are concerned, it is a non-starter.
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