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Lord Sainsbury of Turville: My Lords, I should have said that the regulator will take the form of a commission, made up of a number of people. I am sure that we shall pay very serious consideration to the points the noble Lord has made with regard to that body, so that different parts of the United Kingdom are reflected within it. We shall, of course, continue and, indeed, increase the consultation process, particularly on areas such as Crown offices, so that local people are fully involved.

Lord Clarke of Hampstead: My Lords, where can I find the reference to a plc in Labour Party's manifesto documents? I have with me today all the consultative documents, the preamble to the manifesto and the

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manifesto's precursor. I should like to be directed to where the Labour Party said that it would create a plc for the Post Office.

I should have declared an interest. I spent over 50 years of my life directly associated with the Post Office and in latter years have continued that association as a trustee of the Post Office pension funds. I apologise for not having said that immediately. Anyone who has had a long connection with the Post Office, or even a short connection, will welcome the commercial freedom that is heralded in the White Paper. While being happy about that, I think that today is a sad day for the Post Office. I share the view of the noble Lord, Lord Mackay of Ardbrecknish, who said only yesterday in this House:

    "whatever gloss the Minister puts on it, either today or tomorrow in the Statement, is not the creation of a plc with share capital the first step on the route to privatisation?".--[Official Report, 7/7/99; col. 877.] I listened to the Statement in the other place and heard the assurances that were given. I am still unconvinced that there are enough safeguards.

That brings me to a specific question. Having heard the Secretary of State say today that the concept of an independent, publicly owned corporation was fundamentally flawed, I would welcome the comments of my noble friend the Minister on those fundamental flaws, because the matter of commercial freedom and all the other aspects of the White Paper could easily have been dealt with without the creation of a plc. I would love to know the fundamental flaws in the suggestion for an IPOC, which is an independent, publicly owned corporation.

Finally, I should like to ask whether the Post Office pension fund and staff superanuation scheme are unaffected. As the main one has been in surplus for many years, and the Post Office has enjoyed the benefit of a contributions holiday for so long. I should welcome an assurance that both pension funds are unaffected by the White Paper.

Lord Sainsbury of Turville: My Lords, I do not think the question of a plc was covered in the Labour Party manifesto, but things do happen in this world that were not covered in that manifesto. We said in the manifesto what we would do; we did not say that everything we did in government would be covered by it. There are very good reasons why we should use a plc format in this case. Perhaps I may rehearse them before coming on to why I do not think that an independent, publicly owned corporation is the right way.

As I said, the main argument is that we need to have a model that is clearly understood by people both within the organisation and outside. The plc format is clearly understood, is backed by legislation, and everyone understands it.

The problem with the argument for an independent, publicly owned corporation is specifying exactly what that means. It could mean a body that is exactly the same as the body we have today, with the same lack of definition. It could describe exactly the organisation that

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we are putting in place. We are putting in place a publicly owned corporation which is independent, and to stress the independence we are using the plc format, which makes it very clear that the body has commercial freedom. The argument against an IPOC is simply that it is not at all clear what it is, and if the Post Office is to take, as I hope it will, full advantage of its opportunities and commercial freedom, it must have a structure which everyone understands and which it can use.

As far as I know, the Post Office pension fund is not affected in any way, but I shall write to confirm that that is the case. I am sure that it is.

Lord Crickhowell: My Lords, is not there a fundamental contradiction in what the noble Lord the Minister has said? He has talked a great deal about commercial freedom. He has talked about a company that can compete in world markets. Yet he has also talked about a £75 million borrowing limit, a sum which he would have thought was pretty modest in an earlier incarnation. Does this not suggest that the Government are determined to keep very tight control over the so-called "independent" plc? How will the company operate with commercial freedom in a tough and highly competitive world market if it has to return to the Treasury every time it wants to borrow more than that?

Lord Sainsbury of Turville: My Lords, even in my previous incarnation I thought that £75 million, which is at least the cost of two supermarkets, was a large sum of money. I need to make it very clear that the £75 million is simply the amount that the Post Office can borrow automatically, without obtaining Treasury permission. The fact that the Post Office acquisition of German Parcel for around £300 million took place makes it very clear that this is no paper undertaking, but represents a serious increase in the commercial freedom of the Post Office.

Lord Ezra: My Lords, as someone who has pressed regularly from these Benches for greater commercial freedom for the Post Office, and has expressed grave concern over the large sums extracted by the Treasury from post-tax profits, I am very pleased with the Statement. However, following on from the last question, I should like to probe further about the relations of the Government with the new board; the Government representing the shareholders, the nation. We heard that the Government will agree a five-year, rolling strategic plan. How will the Government call the Post Office to account on this? If opportunities arise for major acquisitions or joint ventures not in the plan, will the Post Office have to go back to the Government? How free will it be to operate in a market which, as the noble Lord the Minister explained to us, is evolving rapidly, globally and technologically, and in which one cannot anticipate in what directions opportunities will arise?

Lord Sainsbury of Turville: My Lords, I totally agree with the noble Lord that this is an absolutely key issue. Clearly, it is important that there is a five-year

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strategic plan and that the Government, as the major shareholder, are confident about that plan. But the whole reason for doing it in this way is that the Post Office would have the freedom, even if a project were not in the strategic plan, to come forward and ask for the money to be made available for it. We have laid down criteria for this. The main one is that it should be a commercially robust project and pose no undue risk to the company. Clearly, if it is in line with the strategic plan, the decision will come more quickly, but we are not ruling out other proposals which take account of specific opportunities that arise in the market.

Lord Stoddart of Swindon: My Lords, is my noble friend aware that I have been in this and another place long enough to know that if the Statement had been made by a Tory Minister there would have been hell to pay in the House of Commons and, indeed, here? That would have been perfectly justified because undoubtedly this is the first move towards privatisation, whether under a Labour government or a Tory government. What the Government are doing is opening the door to privatisation. Make no mistake about that.

I ask the Minister three questions. First, he said that this will not mean privatisation, but he also said that it would be possible for a sale or exchange of equity between the Post Office and private firms. Is not that a sort of privatisation, if private firms can invest in the Post Office and the Post Office in private firms?

Secondly, the Minister said that primary legislation will be needed to dispose of the Government's equity. Is it not possible, as in the case of BP, to dispose of that equity through a Finance Bill rather than a special Bill, because they are very different?

Thirdly, what is there to safeguard the Post Office pensioners and contributors from the same problems that the electricity supply pension scheme had, when pensioners' money was used to pay for redundancies made in that industry?

Lord Sainsbury of Turville: My Lords, if I have not made it clear, let me now do so: this is not seen as a step towards privatisation. It will put in place a clear structure for the Post Office. There is no great virtue in debating whether an exchange of equity between two companies is or is not privatisation. I hope that we can all agree that if the Post Office--in a world which is seeing increasing internationalisation of the market--is to have a level playing field on which to compete against other post offices, it must be able to undertake that kind of operation. It is not the same as privatisation, because the equity will still be held on a majority basis by the Government and, therefore, it will be Government-owned.

The essential issue is that the Post Office should be able to take advantage of this opportunity. Primary legislation will be needed to sell the shares because that will be put into the Bill that sets up the plc.

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As far as the pension fund is concerned, I need to check, but I assume that the money in the pension fund belongs to the people who put it in and, therefore, cannot be taken out or penalised in any way.

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