Examination of Witnesses (Question Numbers
180-199)
RT HON
LORD MANDELSON
AND RT
HON PAT
MCFADDEN
MP
7 JULY 2009
Q180 Chairman: I am sorry, the Chair's
place has authority, and we have a lot of other stuff to get through.
This could take the whole of the rest of the session, and Adrian
Bailey is sat there, saying nothing. I think we understand that
there is a difference of view.
Mr McFadden: Can I just deal with
the point about the guidelines, without going over it all again?
The guidelines given to Hooper were not narrow; they were broad.
The principal guideline was how to maintain the universal service.
He was not directed to make his recommendations about ownership
structure at all. Those were his recommendations, based on an
analysis of how to maintain the universal service and the challenges
facing Royal Mail. It is not as though Hooper was directed to
his conclusions.
Q181 Mr Hoyle: I did not say that.
I said he worked under very tight ... Do not misquote me. I will
not be misquoted. I said they were very tight guidelines. That
is what I said. Do not misquote me, please, Pat. You are a better
politician than that.
Lord Mandelson: We do not accept
that view, Mr Hoyle. I think Pat has explained—
Q182 Mr Hoyle: It is a different
view from Lord Mandelson.
Lord Mandelson: I think Pat has
explained why that is the case. What I would only add as a postscript
is that the casualty of this is the permanent and fundamental
address of the pension fund deficit in the Royal Mail. It is inconceivable,
in the Government's view, that the public would simply go along
with a bailout of this fund, except in the context of a transformation
of the company.
Q183 Chairman: We are repeating well-worn
passages here.
Lord Mandelson: It is an important
point for the public and for people who depend on it. The taxpayer
cannot be expected to take responsibility for a deficit if other
changes in the Post Office and Royal Mail have not been addressed.
Chairman: This is a story that will run
and run, quite clearly. We will move on. Adrian Bailey.
Q184 Mr Bailey: Lord Mandelson, your
policy of industrial activism—not, I understand, to be confused
with industrial action—as outlined first of all in your
speech to the RSA in December, then in the New Opportunities
White Paper in January, then in others, including New Industry,
New Jobs in April of this year, is very much a New Labour
approach. I quote from your original speech, "No protection
of industry from international competition—because we believe
that competition is in our long-term interests". All very
challenging, both to business, labour and government departments
and, surprisingly perhaps, TUC has expressed support for it. Are
you in support of TUC concerns over discrimination against trade
unionists in different sectors of business?
Lord Mandelson: Yes, we are. Are
you talking about the issue of blacklisting?
Q185 Mr Bailey: Yes.
Lord Mandelson: Today we are publishing
new regulations that will make it unlawful for trade union members
to be denied employment through secret blacklists. We will of
course consult on these, but our strong view is that blacklisting
someone because they are a member of a trade union is totally
unacceptable and we are determined to act quickly to stamp out
this practice. Today's proposals will demonstrate how we intend
to deliver this.
Q186 Mr Bailey: That is very reassuring,
given the fact that this approach is fairly challenging to trade
unionists, and obviously responsible and constructive trade unionism
is very important in delivering it. Can I move on to government
departments? I often have the feeling that, whereas your Department
knows what is necessary to promote business, other departments
have other priorities and do not necessarily deliver on them.
What is your assessment of progress so far in, if you like, changing
both the culture of different departments to be more business-sensitive
and perhaps implementing specific measures that will promote flexibility
in business to respond to the new global challenges that we are
facing?
Lord Mandelson: There are two
ways in which I would like to see government departments more
responsive to business. One is in the decisions they take, the
policies they introduce or the regulation that they launch, which
can have unwitting impact on business. If they were to consult
thoroughly and then listen to what business says to them, they
might be able to take early action to avoid that impact. Secondly,
government departments are responsible for huge procurement programmes.
I would like to see those procurement programmes benefiting the
UK supply chain even more than they are, not by excluding competition,
not by saying "Only British firms need apply", but by
ensuring that British firms are equipped, and properly alerted
and supported in submitting tenders for public procurement; but
particularly in the case of small businesses, where I believe
that we can encourage innovation by those small and medium-sized
enterprises if we work with them sufficiently in advance of the
procurement being tendered, so that they are in a better position
to compete for that business. I attach a lot of importance to
this, and I am reactivating the Government's programme to promote,
through our procurement policies, innovation and successful tendering
by small and medium-sized businesses.
Q187 Mr Bailey: That will be music
to the ears of certainly me, and perhaps may be the first thing
you have said that has pleased my colleague Mr Hoyle today! This
is good news. What progress is being made? I see this essentially
as a medium and long-term strategy. What elements of it can actually
facilitate, if you like, our emergence from the recession?
Lord Mandelson: I was just trying
to refresh my memory which are the pilot departments that I have
descended upon to invite them to be the frontrunners in advancing
this approach. I have encountered no resistance from government
departments; I think it just does not occur to them sufficiently,
or sufficiently in advance when they are thinking about their
procurement programmes, how this can benefit the UK supply chain.
Let me give you another example of this, which arose from the
dispute at the Lindsey oil refinery. In the wake of that, I set
up an inquiry into how British subcontractors could compete more
successfully for the work in these major infrastructure and, for
example, civil nuclear bill projects—because what we were
finding was that, where productivity compared unfavourably to
European competitors, fewer British subcontractors and their workforces
were getting this work than we would have liked. Proposals will
be made and published by us shortly to address this issue. I just
repeat, I do not want to eliminate competition. It is certainly
no part of the Government's policy to say that European subcontractors
need not apply. Of course not. All we are saying is that British
companies, British subcontractors, could and should compete more
successfully for this business and that is what I want to see
happen.
Q188 Mr Bailey: Will there be any
need for legislation?
Lord Mandelson: I do not think
so, no. It is a matter more of investing in skills, encouraging
innovation and making sure that British companies are in the right
place at the right time, with the right skills and the right offer
to get the business.
Q189 Chairman: We have four specific
questions on industrial activism. My slight prejudice here is
that "industrial activism" is a wonderful phrase. I
think that Michael Heseltine could easily put his name to this
document just as well as Lord Mandelson—but that is another
matter. Let us look at what this means in practice.
Lord Mandelson: Farseeing in his
approach.
Chairman: Yes.
Q190 Mr Binley: First Secretary,
cash is the name of the game as you will know, particularly for
SMEs. I wonder what proportion of your Department's invoices are
paid within ten days.
Lord Mandelson: We are amongst
the top performers.
Q191 Mr Binley: Tell me what proportion.
Mr McFadden: Well over 90%.
Lord Mandelson: Well over 90%,
which is what I mean by "amongst the top performers".
We are matched by many others in Government, but not all.
Mr Hoyle: That is excellent.
Q192 Mr Binley: I am delighted with
your answer, because a couple of months ago it certainly was not
at that level; so you have probably had an effect in that respect.
Is there still more you can do?
Lord Mandelson: There is more
we can do, making sure that all government departments are amongst
the top performers, but also across the public sector as a whole.
As you know, I wanted to see National Health Service trusts and
local authorities as well as police services operating in a similar
way. I have also launched, as you know, and have recruited a lot
of businesses to support a prompt payment standard. Again, not
as many as I would have liked but we are encouraging more to sign
up and to implement that standard.
Q193 Chairman: Two specifics from
me. Just over a year ago this Committee produced a report on the
construction sector which contained a major recommendation which
we are delighted your Department accepted—the creation of
the post of a Chief Construction Officer to look into the problems
this industry faces in dealing with the complexity of government.
You are still consulting on that. "Industrial activism"?
Can we not have a decision on that quite soon, please?
Lord Mandelson: We released a
discussion document with the Office of Government Commerce in
February and an announcement will be made shortly.
Q194 Chairman: How shortly is "shortly"?
Before the summer recess?
Lord Mandelson: Let us hope that
"shortly" is as quickly as possible.
Q195 Chairman: "Activism"
means getting things done in time as well as doing them.
Lord Mandelson: Indeed. Before
breakfast, lunch and dinner.
Q196 Chairman: Absolutely right.
Let us have a Chief Construction Officer before the summer recess.
Another specific is on trains. If you go to Germany, there are
trains made in every individual Land. We have just lost
a major contract to Japan for the 125 replacements.
Lord Mandelson: No, I cannot accept
that. If you do not mind, that is a very important point to pick
you up on. We have not lost it to Japan. Japan is coming to Britain
to construct—
Q197 Chairman: It is a screwdriver
job.
Lord Mandelson: No, I am sorry,
you have no basis or foundation for making that claim. Therefore,
what we are getting is not just Bombardier but Hitachi as well.
You might say, "We should have gone to the people who are
already here". There is an equally valid case for saying
that we are going to create new productive capability in Britain
through the Japanese coming here.
Q198 Chairman: I think that you are
fooling yourself, Secretary of State. There is one big contract
come on the track—to use the appropriate metaphor—Thameslink.
If that does not come to a British manufacturer, it is the end
of British rail manufacturing in this country. We will have a
repair job there but not a manufacturing job.
Mr McFadden: How do you define
"British manufacturing"?
Q199 Chairman: Located in the UK.
Mr McFadden: If that is the yardstick,
to talk about the contract we have just been talking to, my understanding
is that there are some 1,400 trains involved in this; around 70
will be produced in Japan outside the UK and then there is a factory
established in the UK to produce the others. So if the definition
of a British manufacturer is "located here", then surely
the fact that the vast majority of the trains under this contract
will be made—
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