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Lord Clarke of Hampstead: I have waited patiently to register my firm opposition to Clause 67. The Committee may recall my speech at Second Reading in which I prophesied that this was the end of the British Post Office as we have known it and as the Post Office has known itself for 350 years.
On Monday of this week I heard the Secretary of State address a conference where he said that there was nothing to worry about and that the Post Office would remain 100 per cent in public ownership. He even went further and said that the next Labour Party manifesto would guarantee that the Post Office would remain 100 per cent in public ownership, which is a slightly different kind of democracy from the one for which I had responsibility as chairman of the Labour Party where we used to have to wait for conferences to make decisions. He was able to say that the policy forum would be able to guarantee that 100 per cent.
My problem with Clause 67 is that it still allows the disposal of shares to other organisations. I have asked the Minister on a number of occasions how the Government can part with certain assets of the Post Office and be able to say that it is 100 per cent publicly owned. Clearly, that cannot be so if shares are passed over to another organisation.
I know that there is no chance in this world of anybody listening to me at this time of night, but I did not want Clause 67 to go through without saying how disappointed I am that a Labour Government has brought our wonderful Post Office to this sorry state. In a few years' time I can see it becoming part of a super-Euro post office. It is a travesty that the Government that I support have brought the Post Office that we have known and loved, and where some of us have earned our living--in my case for 51 years--to such a position.
Lord Skelmersdale: Clause 67 is the key clause in the entire Bill regarding the liberalisation and competitiveness of the Post Office. In the White Paper and on many other occasions we have been told that the object is to enable share swaps, joint ventures and so on. Without Clause 67 that simply could not be done.
I sympathise with the view expressed by the noble Lord, Lord Clarke. The Post Office will not be the same. His key question is how can the Government, knowing that they will have share swaps and so forth, continue to say that the Post Office will be a 100 per cent publicly owned company.
Lord Sainsbury of Turville: This clause sets out the procedure to be followed in order to obtain the approval of Parliament to make share issues or disposals, which would otherwise be prohibited by Clause 66. The parliamentary approval procedure is aimed at ensuring that shares are exchanged or sold only in order to cement commercial strategic alliances.
Subsection (1) requires that a motion, to be moved by or on behalf of the Secretary of State, should receive affirmative resolution of both Houses before any shares can be issued or disposed of. It will be a straightforward motion and there will be no need for anything more elaborate.
Subsection (2) specifies the minimum information to be contained in a motion to be presented for the approval of both Houses. Subsection (3) sets out the pre-conditions to be met before a motion relating to the issue or disposal of shares in the Post Office company may be moved. The conditions are based on our commitment that shares would be exchanged or sold only to cement a joint venture or a strategic alliance. Therefore, five pre-conditions are specified: first, that the company has agreed with the other party to take part in a joint venture or other partnership which it considers to be in its commercial interests; secondly, that it involves the issue or disposal of shares in the Post Office company; thirdly, that the Post Office company has recommended to the Secretary of State that the disposal takes place; fourthly, that the Secretary of State is satisfied that the issue or disposal is for the purpose of securing the proposed arrangement and that
it is in the commercial interests of the company; and, fifthly, that the Treasury has given consent to the proposed issue or disposal.Subsection (4) mirrors subsection (3) in setting the pre-conditions to be met before moving a motion relating to the issue or disposal of shares in a relevant subsidiary in order to enable the Post Office company or a relevant subsidiary to take part in a joint venture or other partnership. The pre-conditions in this case are generally similar to those applicable to the issue or disposal of shares in the Post Office company, although in this case it may be the subsidiary that has agreed to be party to the alliance. However, it must still be the Post Office company that recommends the disposal and whose commercial interests must be considered by the Secretary of State.
It has been suggested by some that the Government intend privatisation by the back door. Of course, that is not the case, but we want to give the Post Office company greater commercial freedom. Looking at the scene in Europe today, everyone can see that it is a necessary requirement. This clause gives the Post Office that freedom. Members will note that this process is not triggered by the shareholder or even the Treasury. It is triggered by the Post Office and by the Post Office alone. It is a matter for the Secretary of State, if he believes that the deal is in the best interest of the Post Office, to put the matter before Parliament for debate. Therefore, every case will be considered on its merits.
Clearly, if there is a swap of shares, it could no longer be said that the Government have a 100 per cent shareholding. However, the Government will, to a great extent, still control the company.
Baroness Miller of Hendon moved Amendment No. 69:
- After Clause 67, insert the following new clause--
(" .--(1) Where the Post Office company or any relevant subsidiary proposes to acquire or dispose of an undertaking or any interest in an undertaking and--
(a) the gross assets of that undertaking or attributable to that interest are equal to more than 10 per cent. of the gross assets of the Post Office company or the relevant subsidiary; or
(b) the turnover of that undertaking or attributable to that interest is equal to more than 10 per cent. of the turnover of the Post Office company or the relevant subsidiary; or
(c) the net profits of that undertaking or attributable to that interest are equal to more than 10 per cent. of the net profits of the Post Office company or the relevant subsidiary,
the Post Office company or the relevant subsidiary must as soon as practicable publish a notice in accordance with subsection (2).
(2) A notice under this subsection must be published in the London Gazette, the Edinburgh Gazette and the Belfast Gazette in such form as the Secretary of State may prescribe and must include--
(a) the name of the undertaking;
(b) a description of the business carried on by the undertaking and, where the transaction is an acquisition or disposal of an interest in the undertaking, a description of the business attributable to that interest;
(c) the effect of the transaction and, in particular, the benefits which the directors expect to accrue to the Post Office company or any relevant subsidiary;
(d) the price (or the monetary value of any other consideration) to be paid or received by the Post Office company or any relevant subsidiary and, in the case of a disposal how the proceeds of the disposal are to be applied; and
(e) if any securities are to be issued as a result of the transaction, the nature and amount of those securities.
(3) In this section "gross assets" means total fixed assets and total current assets.").
The noble Baroness said: This amendment is very long because it introduces a new clause, but it is one that is capable of a short explanation. I am very grateful to the noble Lord, Lord Razzall, who, in his speech in the debate on Second Reading at col. 944 of Hansard, alerted noble Lords to the problem which the amendment seeks to redress. I am sorry not to see the noble Lord in his place, given that in this amendment I am attempting to bring forward his suggestion.
The Bill will create a new Post Office. In place of a statutory corporation such as the present Post Office, the BBC or other government-owned corporations before they were privatised, the Post Office will become a public limited company, operating in the same way as many other major public companies, but with one important difference. This company will have only one shareholder: the Government. However, it will have the same financial powers as any other public company and, in many cases, greater powers. However, because it has only one shareholder and because it is not intended that the company should have private or institutional shareholders, its shares will not be listed on any recognised stock exchange.
In turn, this means that the new company will not be subject to the listing and other stock exchange rules governing acquisitions and disposals which apply to quoted companies of a similar size. Many of the listing rules are aimed at investor protection; that is, the protection of existing shareholders as well as potential new investors, whether on the issue of new shares or on the acquisition of existing shares via the Stock Exchange. However, the rules regarding the transparency of acquisitions and disposals, and for relevant information to be brought into the public domain as soon as possible, are also intended to protect the integrity of the market. Furthermore, that makes for good corporate governance.
It should be borne in mind that acquisitions by the new Post Office are most likely to be of an existing publicly quoted company which will itself be obliged to make an announcement at an early stage. As large a corporation as the Post Office will be, with its significant financial power, it should be subject to an obligation to make public disclosure of any substantial transactions into which it enters. This new clause would
Even the most insignificant of private companies, say a company owned by a husband and wife as the only shareholders and directors, is compelled to go through the procedure of publishing annual reports in which the directors tell themselves, in their capacity as shareholders, what they have been doing. Provision has already been made in the Bill relating to the accounts of the Post Office. Those are contained in Clauses 73 to 78. The letter entitles the Treasury to demand information from the new company. The provisions of this clause are designed to supplement those provisions. They will ensure that the real owners of the company on whose behalf the Government, as the single shareholder, holds the shares--the public--will receive the fullest information at the earliest commercially possible time in the same way as if the Post Office was a normal, publicly quoted company.
The key word here is "transparency". Any normal company has to go through this procedure and I see no reason why this new kind of plc should not do so as well. I await with great interest the response of the noble Lord. I beg to move.
10.30 p.m.
Lord Sainsbury of Turville: Whatever its intention, this amendment would risk putting the Post Office company at a considerable disadvantage compared with its commercial competitors. Far from creating a level playing field, it would create an extremely "unlevel" playing field. No other commercial company would be required to publish its intentions to acquire or dispose of an undertaking in the same way. It would immediately place a major hurdle in the way of the Post Office entering into transactions with another party. Not only would the Post Office be forced to divulge potentially commercially sensitive information about itself, but it would inevitably have to reveal information which could well be prejudicial to the interests of that potential partner. Who would wish to enter into negotiations with the Post Office faced with such a disclosure requirement?
Publicly listed companies are merely required, in certain circumstances, to announce acquisitions, once the terms of such a transaction have been agreed. And the test of the size of the transaction in relation to the gross assets, turnover and net profit, apply to the listed company itself. The noble Baroness's extension to relevant subsidiaries does not follow the listing rules.
In seeking to give the Post Office (and the future Post Office company) the greater commercial freedom that everyone agrees is necessary, we are endeavouring to transform the Post Office company into a commercial company, governed by normal companies' legislation. Although the Government will be the sole shareholder
(at least at the outset) and, of course, the Stock Exchange listing rules do not apply, the rules provide a useful benchmark for the relationship between the Government (as shareholder) and the company. Certainly, for completed transactions, it is our intention that the Post Office should provide transparent information on completed acquisitions along the lines of the London Stock Exchange disclosure requirements. Indeed, the Post Office is now doing so. I hope that this gives the kind of assurance that the noble Baroness seeks.I recognise that the Committee may well be interested (on behalf of the nation for whom the Government hold the shares) in the way in which the Post Office company performs, and especially in the way in which it uses money for major transactions. But the amendment serves no useful purpose in any oversight of the way in which the Government manage their shareholding--it does not give this House (or the other place) any power to comment on a proposed transaction. All it does, in the way that it is drafted, is give commercial competitors the opportunity to spoil a major deal, which the Post Office management had considered in the commercial interest of the company. The actual position, as set out in the White Paper, is that the approval process by government of Post Office proposals for acquisitions and similar transactions cuts in at a far lower level than for similar-sized listed organisations; government approval is required when the Post Office company wants to borrow large sums (over £75 million) for new investments.
If the amendment is aimed at enabling the regulator to check whether a major transaction would disturb the balance between the Post Office company and its less dominant competitors, these provisions are equally unnecessary. The regulator will have adequate powers to ensure that the Post Office company does not abuse its market position without having to rely on such public notices of the Post Office company's intentions.
In addition, the amendment would do nothing to enhance the Government's controls on the disposal of shares in the Post Office company or any relevant subsidiary--such disposals (of whatever size) would fall within the provisions of Clause 67 for which prior parliamentary approval is needed.
I hope that, in the light of what I have said and the assurance I have given on the prompt disclosure of information on acquisitions, the noble Baroness will feel able to withdraw her amendment. We both agree that we should try to create a level playing field. I do not believe that these amendments would do that.
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