Examination of Witnesses (Questions 60-79)
MR RICHARD
HOOPER CBE AND
MR JONATHAN
BOOTH
20 JANUARY 2009
Q60 Mr Hoyle: Can we clarify? It
is not the Government's view but the Secretary of State's view.
Mr Hooper: It is the recommended
view of the Secretary of State with the support, presumably, of
the Cabinet.
Q61 Mr Hoyle: So we have got this
right, you will not give us a feel for how much.
Mr Hooper: How much shareholding?
Q62 Mr Hoyle: Yes.
Mr Hooper: No, I absolutely will
not; I refuse to do it.
Q63 Mr Hoyle: You refuse? So you
do have a figure.
Mr Hooper: It would be silly for
me to constrain Government's negotiation with a strategic partner
and they have actually answered the question for you anyway.
Q64 Mr Hoyle: They did not really
because I posed that it was 30%. He wobbled around it and would
not give a straight answer.
Mr Hooper: I am not in the business
of giving you that.
Mr Hoyle: So you are coming before this
Committee and refusing to tell us. So we can put that on the record
that you are refusing.
Chairman: A slightly uncharitable interpretation.
Q65 Mr Hoyle: Mr Hooper said "I
refuse" so I accept that he has refused, unless he wants
to reconsider.
Mr Hooper: It is not appropriate
for me to constrain the negotiation and decisions of the Government
on this matter.
Q66 Mr Hoyle: How much money do you
believe? You have quoted once again the Secretary of State's suggestion
to my question previously that an investment of hundreds of millions
is required. Is that about right?
Mr Hooper: We have not put a figure
for the capital requirement in the report. We have made it clear
that it needs capital and yet again I would just like to emphasise
that I do not think it is the business of the chairman of the
review, with his team, to try to run the modernisation of the
Royal Mail. That is what we are talking about.
Q67 Mr Hoyle: Okay. Let me just get
it correct. You have a private paper with confidential information
that we have not seen. The Secretary of State said to this Committee
that it would take hundreds of millions of investment within Royal
Mail. That is what is required. Do you disagree with that statement
or do you agree with it?
Mr Hooper: I absolutely neither
agree nor disagree with the Secretary of State.
Q68 Mr Hoyle: Do you think he has
misled this Committee then?
Mr Hooper: Who has misled this
Committee?
Q69 Mr Hoyle: The Secretary of State?
Mr Hooper: Why would he have misled
this Committee? That is his view.
Q70 Mr Hoyle: You have the information
that I do not have. You know whether it is correct or not.
Mr Hooper: That is his decision;
that is his view. I cannot be drawn on giving you an answer to
the question of how much capital the Royal Mail requires.
Q71 Mr Hoyle: Does anybody know what
is actually needed?
Mr Hooper: I believe that the
strategic plan has capital requirements in it.
Q72 Mr Hoyle: So let me get it right.
We have £600 million of taxpayers' money for modernisation
sitting within Royal Mail unspent. We are going to take the pension
fund and dump that on the taxpayer and then you say you will find
a partner. Of course you will find a partner. All the liability
has gone, the taxpayer is going to invest in it, so what gain
are we going to get except to give the profits to a competitor
at the expense of the British taxpayer. I come back to my original
question: do you believe in state-owned businesses? Do you believe
the taxpayer should run the Post Office? Yes or no?
Mr Hooper: We say quite clearly
in the report that Post Office Limited should remain 100% in public
ownership.
Q73 Mr Hoyle: Royal Mail?
Mr Hooper: I also believe that
Royal Mail would modernise with a strategic partner. That is a
key recommendation and it brings to bear on the problem of modernisation
the very issues we are talking about.
Q74 Mr Hoyle: I think you are driven
by dogma and you do not like Royal Mail and you want to see them
break up. When you are happy for the taxpayer to take all the
liabilities but not keep the profits we have a danger here.
Mr Hooper: With respect, this
is not a dogmatic document. It is not an ideological document.
It sets out the case; it sets out the issues which are holding
back the Royal Mail from modernisation, one of which is industrial
relations.
Mr Hoyle: You do not even believe in
partnership. You are saying they must have a stake in this business
and they are going to have a profitable business because all the
liabilities have been taken away. You are giving taxpayers' money
away or your suggestion is that the Government should give taxpayers'
money away to a competitor. It is not good enough and I do not
accept your report.
Q75 Lembit Öpik: I understand
why you would not necessarily want to specify a percentage ownership
because you do not want to involve yourself in that kind of negotiation
by proxy.
Mr Hooper: Correct.
Q76 Lembit Öpik: Am I right
therefore in assuming that you are supporting and recommending
the concept of a strategic partnership with a private company
or private companies not on the basis of a principle but on the
basis of observed results in other similar industries around Europe
where you have seen this done?
Mr Hooper: Yes; correct.
Q77 Lembit Öpik: Moving from
that then, and we have already touched on this, you are saying
basically that an increase in private ownership and a reduction
therefore de facto in public ownership will lead to improved
business effectiveness and operational competence of the Royal
Mail. It seems to me that the exact opposite had been done with
the banks where there has been an increase in public ownership
and a reduction in private ownership in order to increase the
business effectiveness and operational competence of the banks.
The similarity seems to me that there is a political imperative
to increase lending of banks in the same way that there is a political
imperative to maintain the universal service obligation in the
Post Office. Looking at it empirically, there seem to be two opposite
directions, one for the banking sector and one for the Royal Mail.
Do you have any observation on why they might be going in opposite
directions?
Mr Hooper: It is again inappropriate
for me to comment on the banking situation. I was asked by Secretary
of State John Hutton almost exactly a year ago to look at and
study the postal services sector and particularly Royal Mail within
it. That is what the team and I have concentrated on. We have
taken a large number of submissions from many parties, we have
taken a lot of suggestions, we have had a lot of debate and we
have come up with our conclusions on the basis of a way forward
for the Royal Mail. Incidentally, those are conclusions which
have had quite widespread acceptance as well. I am not commenting
on the banking world out there. I am very conscious of what is
happening in business markets obviously, but this is about the
postal services sector, the regulation of it and about the future
of Royal Mail and saying we must, as a society, modernise Royal
Mail much more quickly than at the moment otherwise it faces a
significant decline.
Q78 Lembit Öpik: To summarise
the answer the core proposition you are making is that having
private sector involvement in the Royal Mail would drive efficiency
and effectiveness in the way we want to see.
Mr Hooper: It would bring the
requirements we analysed in the report; it would allow them to
happen and to modernise.
Lembit Öpik: The debate we need
to have is to decide whether we conclude that can be achieved
without private company involvement or whether that private company
involvement is necessary.
Q79 Mr Clapham: You identify industrial
relations as being the crucial issue.
Mr Hooper: A crucial issue, not
the crucial issue; one crucial issue.
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