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Lord Sainsbury of Turville: I have no great difficulty with the notion that the memorandum and articles of association of the Post Office company should be published. But I am opposed to a requirement for such documents to be approved by both Houses of Parliament. I shall explain why in a moment.

Equally, I have no great problem with the notion that the Government should make public anything relevant arising from the consultation with the Post Office that is required prior to nominating the company in accordance with subsection (3). But, again as I shall explain later, I have doubts about the usefulness of such an exercise.

With regard to the memorandum and articles of association of the future Post Office company, we will be looking for the company to have provisions akin to any other comparable modern company. The conversion of the Post Office to a plc is a fundamental element of our reforms of the Post Office, aimed at underlining its increased commercial freedom. We do not want the memorandum and articles of association to constrain its commercial freedom.

The memorandum and articles of association will become publicly available in due course as they will have to be filed with the Registrar of Companies. But I can say that the Government are minded to publish them in advance and lay them before Parliament once we have had a chance to discuss them with the likely directors of the new company and have settled the terms. Our willingness to publish the documents is part of our desire for there to be a clear, arm's length relationship between the Government and the Post Office company, as emphasised in our Post Office Reform White Paper. The relationship between the Government (as shareholder) and the directors of the Post Office company will be transparent from the memorandum and articles of association. But the suggestion in Amendment No. 61 that the memorandum and articles of association should be approved by resolution of each House is quite excessive and would run totally against the grain of giving the Post Office greater commercial freedom.

The memorandum and articles of association need to be capable of being amended by the shareholders, after discussion with the directors, as and when the situation may demand. We could not contemplate having to come to Parliament for every change that might be needed. If (as the amendment seems to suggest) only the initial documents need be approved, I can see no great value for the House. A less benign

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government could secure that approval and then amend the documents the next day without consulting Parliament, and the effect of this amendment would be totally circumvented.

As regards publication of a report on the nature and content of consultations between the Government and the Post Office, I could well imagine the Government making a statement that they had consulted the Post Office about the proposed nomination of a company and the transfer, and confirming that everything was now ready for a named company to be nominated and for the transfer to take place. But anything further than that might well stray into areas of commercial sensitivity, which the noble Baroness quite properly seeks to exclude from prying eyes, or be of such detail as to bore noble Lords to death.

So with the promise that the Government would seek to be open about these matters, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Miller of Hendon: I do not know whether it is the lateness of the hour which prompted the Minister to go a little way towards what I wanted, and it may be the lateness of the hour that makes me not wish to push him to go any further. Under the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 62 not moved.]

10 p.m.

Baroness Miller of Hendon moved Amendment No. 63:

Page 39, line 22, leave out ("the Treasury or").

The noble Baroness said: In moving Amendment No. 63, I shall speak also to Amendments Nos. 65 to 68, 68A and 68B. These amendments relate to one line in Clause 62, two lines in Clause 63, two lines in Clause 65 and two lines in Clause 66. Despite relating to four different clauses, all the amendments refer to one matter and all would have the same effect.

The Bill provides for the sole shareholder to be the Government, and Clause 66 actually precludes disposal of any of the shares without the sanction of Parliament. But throughout the four clauses to which I refer, the legislation provides for the shareholder to be the Treasury, the Secretary of State, or both. This may be wrong in law; but it is absolutely wrong in principle. I cannot be sure about the law because I am not a lawyer. However, as I understand it, the Treasury is neither a person nor a corporation; in other words, the Treasury is not a legal entity and,

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therefore, is unable to be a shareholder. I shall not spend any further time on that technicality because it is late. I am sure that the Committee will appreciate it if I just stick to the point. I shall leave it to the Government's lawyers to sort out that problem. They should look into it.

More important is the matter of principle. The Government are asking us to allow two different departments to have fingers in the same pie. What a recipe for dispute and back-biting that will be, to say nothing of the confusion if two different departments are pulling in different directions and trying to follow two different policies. That leads me to my next point.

There is an enormous potential conflict of interest if the Treasury is to be allowed to interfere in the affairs of the Post Office, even in the limited way that a shareholder is able to do. The White Paper provides for the Post Office company plc. to invest the equivalent of a commercial dividend in gilts or the National Loans Fund; in other words, it will have to make compulsory loans to the Government. Moreover, in the words of the White Paper:

"Once the Post Office has been established as a publicly-owned plc, it will pay an annual dividend to the Government rather than invest in deposits"--

that is, of course, after the normal tax on its profits that a trading company pays to the Inland Revenue.

There is no doubt that any Chancellor of the Exchequer will regard the Post Office plc, and its cash flow, as a milch cow and try to exert pressure as to the amount of dividend to be paid, rather than spent on developing the business.

Then there is the matter of the subsidy that the Government hastily inserted into the Bill during its final stages in the other place. It is now to be found in Clause 102, which we shall be discussing later. However, I am sure that Members of the Committee will be glad to know that we will do so next Thursday, not tonight.

The Government are seeking to give the Treasury a veto over the provisions of this subsidy. So here we would find the company owned by the Treasury asking its shareholder for a subsidy out of public funds. Alternatively, if a case is made out for the subsidy, the Treasury, in derogation from its duty to do its best for the company it owns, might veto it. Indeed, we might reach the farcical situation of the Treasury as a shareholder, tacitly agreeing, if consulted by the directors, that it should apply for a subsidy and then, wearing its other hat as the holder of the nation's money, refusing to part with any money.

Under Clauses 68 and 69 any borrowing by the Post Office is to be made exclusively by the Secretary of State with the Treasury's consent. The funds are to come from the National Loans Fund and the terms are to be approved by the Treasury; in other words, the Treasury is the lender with the Secretary of State merely being the funnel--or the broker--for the loan; and here, I believe, is another major conflict of interest. The bank is lending money to the company that he controls and

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deciding on the rate of interest, as well as the duration of the loan. Can noble Lords imagine what the banking regulator would say if one of the high street banks indulged in such a practice?

While all of that is going on, the Secretary of State at the DTI is supposed to stand quietly by and watch the Post Office returned to the grip of the Treasury, and its fiscal policy, totally negativing the whole objective of freeing the Post Office from government control and letting it act as a normal commercial company.

There are clear indications of disputes between the DTI and the Treasury over some aspects of this Bill. I shall comment on that matter in much more detail when we reach Clause 102. There is, however, a clear and positive clue in the wording of one of the clauses that we are considering at the moment. Cutting out all the extraneous material, Clause 66(1) states:

"Neither the Treasury nor the Secretary of State ... shall ... dispose of any of the issued shares ... in the Post Office company ... which are held by him".

There is only one "him". That "him" was referred to much earlier as the Secretary of State. It is clear that after the clause was drafted the Chancellor, Gordon Brown, decided that he would not allow a government-owned, money-making organisation to exist without his having a grip on it. The draftsmen clearly made a little slip in not correcting that bit of syntax after the Chancellor was slipped in, like a cuckoo into the nest.

I can imagine the annoyance of the Chancellor at seeing the constant cash flow he currently enjoys from the Post Office slowing down to an annual dividend and the compulsory loans to the Government. However, that is no excuse for putting him in the dominant, influential position of a principal shareholder.

I draw the Committee's attention to Clause 62(7)--which I seek to amend with Amendment No. 63--which allows for the Government's share to be held either by the Treasury or by the Secretary of State. Therefore there is no guarantee that the Post Office, which is normally answerable to the DTI, can be under the legal control of the Treasury. Will the Minister tell us, in his response on behalf of the Secretary of State, that Mr Byers welcomes the possibility of his colleague, the Chancellor of the Exchequer, annexing a major responsibility of his department in the course of Mr Brown's empire building? No department seems to be safe from him, as witnessed by his recent intrusion into the affairs of the Department for Education.

It is the responsibility of this Chamber to ensure that there is one, and only one, government department answerable to Parliament for the Post Office once it is turned into a public company and removed from direct ministerial responsibility. I hope that I have set out clearly what I feel to be the problem. Some of my points were prompted by the meeting I had with the Minister last Monday and the confusion that arose in my mind. I very much hope that the Minister will be able to reassure us that what I think will happen will not happen. I beg to move.

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