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Baroness Miller of Hendon: My Lords, the matter has been sorted out. I was referring only to the future.

Lord McIntosh of Haringey: My Lords, I am delighted to hear that; I shall make no further comment.

As for the name, I am told that it cost about £2 million to change to Consignia. It will cost a great deal less to go back to Royal Mail Holdings.

4.7 p.m.

Lord Dearing: My Lords, may I say in particular as a former Post Office worker that this is a very sad day, possibly the saddest day in the history of the Post Office? I welcome the frankness with which Allan Leighton has addressed the issues and acknowledged management faults. However, I should also like to say that John Roberts, who is resigning later this year as managing director, is a man who contributed massively to the profits of those earlier years.

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I have some questions for the Government. Allan Leighton has confessed management mistakes to which the Secretary of State referred in her Statement to the House, saying that with the freedom that had been given, mistakes had been made by the Post Office management. I refer to the Horizon project, which cost £1 billion. Mr Leighton says of it:

"The incremental costs of running the Horizon system has turned the counter services into a fundamentally unprofitable operation—a position that will be exacerbated by the move of Benefits Agency transactions away from the counters network after April 2003".

Does the Minister acknowledge that the Government had their hand very much in the decisions of the Horizon project and transferred the Horizon project to the Post Office with a write-off of £571 million? Was there no government hand in that decision?

I shall limit myself to one other question. If there are all these commercial freedoms for the Post Office, how many officials are there in the department dealing with the Post Office—10, 20, 30? How many? And what do they do all day if there is all this commercial freedom?

Lord McIntosh of Haringey: My Lords, I do not dissent from anything that the noble Lord, Lord Dearing, says about John Roberts and his responsibility in the early years. However, I think that it is true to say that he is retiring rather than resigning later in the year.

Lord Dearing: My Lords, I understand that he was asked to stay on but decided to take retirement.

Lord McIntosh of Haringey: My Lords, the Statement makes clear that there have been many mistakes by the Post Office, probably before but certainly during the period of greater commercial freedom which has taken place since the Government took office. In so far as that greater commercial freedom is constrained, the Government must bear their share of the responsibility.

I do not know how many officials in the Department of Trade and Industry are dealing with the Post Office. I doubt whether a large number are dealing solely with the Post Office rather than having it as part of their responsibilities. My strong hunch is that the number would be considerably fewer than when the Post Office was itself a government department and there was nothing like the degree of commercial independence for the Post Office. As has been made clear, there is a price to pay for that commercial independence. One of those prices has been the Horizon project to which the noble Lord, Lord Dearing, refers with his great knowledge of the subject.

Lord Carlile of Berriew: My Lords, will the Minister assure the House that one of the consequences of this humiliating Statement about the Post Office's business will not be the further dilution of already skeletal services in many rural areas?

Lord McIntosh of Haringey: My Lords, we have imposed a duty on the Post Office to protect the rural

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post office network. That has had some results already in the sense that there are unavoidable losses when a sub-postmaster or sub-postmistress retires and no one can be found to replace them. If we talk of avoidable losses, those have been substantially reduced this year compared with last year. The Government, the Post Office and Postcomm have this matter very much in mind.

I can now give an answer to the noble Lord, Lord Dearing, about the number of officials. Apparently 30 officials are involved. The costs of the Horizon project will be covered by the use of the gilts.

The Lord Bishop of Guildford: My Lords, the House will welcome the frankness with which the Statement has been made. Will the Minister comment further on the significance of the return to a Royal service? That surely means not only that it is managed and run financially in a first-class way but also that the people of our country have a first-class service. We have heard that we are losing the second delivery—that may be financially justified; that private households may not receive their mail until the middle of the day; and that private enterprises with a mail of fewer than 20 items will not receive it until later in the day. Many people are anxious about the loss of rural and urban post offices. Will the Minister give us more of a steer about how the use of the Royal name will lead to a better service for the people?

Lord McIntosh of Haringey: My Lords, Allan Leighton replied rather effectively this morning to that point on the "Today" programme. I think he said that we have terrific brands, an unrivalled network, still a monopoly position for a large part of the service, and a dedicated workforce; and if we cannot make money in due course from that then we should all go home. The right reverend Prelate is right. The Royal name brand is a very valuable brand in marketing terms, as the noble Baroness, Lady Miller, would agree. It is very good news that we are going back to it with the approval of Her Majesty the Queen.

Lord Skelmersdale: My Lords, perhaps I may—

Lord Clarke of Hampstead: My Lords, my views are well known and clear. It is a Labour Government who have destroyed the British postal service. I shall not repeat what I have been saying over the past couple of years and before the Postal Services Act. Like the noble Lord, Lord Razzall, I view today as a sad day. It is terribly sad for the 17,000 people and those from Parcelforce, and their families, who face redundancy, whether or not it is voluntary. We all know how voluntary redundancies can be achieved. Is the Minister aware that the cream of the postal service workers will probably go? Because they have given longer service, they will take redundancy leaving the service the poorer. I hope that every effort will be made to keep those workers.

I am glad that Allan Leighton has been able to say, as we have heard in the Statement, that £1.8 billion is available to assist at this difficult time. That gives the

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lie to those ill-informed people who believe that the Post Office has received money from the Government from increased tariffs. That has never been allowed because of political interference. I am glad that that idea has been put to bed. The £1.8 billion is rightly to be used by the Post Office. I hope that the Minister welcomes that demonstration of how profitable and good our postal services were.

Does the Minister agree that the structure announced will assist in bringing about the long-awaited introduction of better working conditions? For the first time it includes a five-day week for people who get up at 4.30 in the morning to walk about in the rain. I should declare an interest. I was a postman. My former boss sits on the Cross Benches. He will understand that those people deserve that consideration. Allan Leighton has referred to low pay. I hope that the restructuring will bring about a better remuneration package for those who have suffered for so long.

At this dreadful time, perhaps we can avoid any suggestion that the chief executive who is to depart is in any way culpable for what has happened. I believe—it is not an ill-informed view—that John Roberts has performed his task admirably, dedicatedly and with great integrity given the political interference to which I have referred on a number of occasions. He has never had the freedom to manage his business that he should have had. We should put on record our gratitude for the job that he has done.

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Clarke, is too modest to say, as he is entitled to do, that during the passage of the Postal Services Bill he indicated that what has been announced today would occur. He was right; there can be no doubt about it. He is right to say that the loss of a further 17,000 jobs is tragic for those concerned, including their families. Whether that means that the cream of the workforce will leave is an issue of human resource management. I think he would agree that there have been severe deficiencies in human resource management as identified by the noble Lord, Lord Sawyer. But it is a challenge now for the management of the Post Office to ensure that that is not the case.

I am grateful for his welcome of the release of the gilts. I confirm what he says about better working conditions: a five-day week is now available although a six-day service is part of the universal service obligation which will be adhered to.

I agree with what the noble Lord, Lord Dearing, said about the early stage of Mr Roberts' career as chief executive and the fact that he ran a profitable Post Office at that time.

Lord Skelmersdale: My Lords, I am glad that I gave way to the noble Lord, Lord Clarke, because in essence he has made a point that I wanted to make. Occasionally, I meet a former chairman of the Post Office, who is not a Member of this House, at the bridge table. The other day he made a passing remark

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to me: "There is no such thing as a bad workforce, only bad management". Like other noble Lords, I welcome the frankness of the Statement in that respect.

However, I am confused by the Minister's partial explanation of the paragraph that refers to customers who regularly receive 20 or more items of mail a day and that they will receive their delivery between 7 a.m. and 9 a.m. I believe that I understood the Minister to say that that had no bearing on first and second-class posts, although he is looking at me rather woodenly. Perhaps I can take that as a nod. On this subject I regularly declare an interest as a director of a rural mail order and mail delivery firm. It occurs to me that our address is the only one for about four miles around to receive on average well over 20 items of mail a day, which means that the sorting office will send a special delivery to us between 7 a.m. and 9 a.m. However, the next door house, which receives perhaps on average three, four or five items of mail a day, will not have its mail delivered at the same time but, by definition, the mail will be delivered as part of a postal round that will take place later in the day. I cannot see the management logic of that. Can the Minister explain it?

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