The Work of the Department - Business and Enterprise Committee Contents

Examination of Witnesses (Questions 1-19)


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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