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However, my amendment makes it clear that it is not just financial services which will ensure the long-term future of the post office network, but also the business which government departments are able to put the way of the Post Office. The report we are now talking about would be a very useful way of seeing whether the enthusiasm which the Secretary of State has said that the Government have for post offices leads to revenue being sent their way. The amendment in my name and that of my noble friend would ensure that there is some scrutiny of how the reorganisation of the Royal Mail group will affect the post offices. Even with a wealth of financial services and government business crossing their desks, post offices will, of course, always be about post. Any weakening of that relationship, especially when it leads to a reduction in the most secure and reliable of Post Office revenue, needs to be known about and acted on.
I was pleased that the Secretary of State fulfilled his commitment to this House to publish the Government’s response to the Select Committee in the other place before we reached Report stage. It may have been a fine line—it was published today at 1 pm—but the House is grateful for that commitment being fulfilled and the response being published much earlier than would otherwise have been the case. That shows a tremendous amount of respect for this House and I am grateful to him for it. In that light, I hope he will accept my amendment.
5 pm
On the amendments tabled by the noble Lord, Lord Razzall, I agree with the noble Lord, as I did in Committee, that it is very important that the Post Office company has its own board of directors. I would welcome any assurances that the Secretary of State can give on the Post Office’s freedom from political interference in the future. I also agree that the Post Office network should be given the government support it needs, including, if possible, for the reopening of post offices that were shut down in the face of so much public opposition in recent years.
However, there must be no further delay to this Bill. It has already come several years later than we would have liked and Royal Mail needs sorting out immediately. Although I completely agree that many improvements could and should be made to government policy towards post offices, I do not agree with holding Royal Mail hostage as a method of getting them, as I am afraid Amendment 63 does. I therefore have much pleasure in urging on this Chamber Amendment 24.
Lord Hoyle: My Lords, the noble Lord’s Government had a record of closing post offices, but the House has heard him say that he would like to see those reopened. We know where the Secretary of State stands on
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Lord Hunt of Wirral: My Lords, I do not think that the noble Lord’s noble friend has said there will be no more closures. There may well be individual closures for all kinds of reasons but there is no more planned programmes of closure. I certainly agree that that should be the case and I am happy to put that on record. If the noble Lord reads carefully what I said, he will note that I went further and said that there should be a reopening of those post offices that have already been closed despite huge public opposition. It is about time we acted on that.
Lord Mandelson: My Lords, I shall respond first to the noble Baroness, Lady Byford. The Government announced in November that the Post Office would be awarded the successor contract for the Post Office card account and that this will run from 2010 to 2015, with the possibility of a two-year extension beyond that. So the card account is now safely re-anchored and the Government do not encourage any failure to use it in smaller or rural post offices. The noble Baroness is right that the Post Office is the leading provider of foreign exchange in the UK. That goes to show that it has an untrumpeted role and record of achievement in this area which it is as well for us to recall from time to time.
This group of amendments covers a variety of important issues which need to be addressed individually. The requirement in Amendment 3 concerning the Post Office board is already met through the current Post Office board. Since Post Office Ltd was incorporated in 1987, it has been subject just like any other private limited company to company law requirements about the minimum number of directors it should have. Company legislation subject to detailed scrutiny in this House and the other place is the right place to define the appropriate corporate governance principles for companies, and Post Office Ltd’s current board far exceeds statutory requirements. It has nine directors, including Donald Brydon, whom we recently appointed as interim chair. This amendment would not require nearly as extensive a board for the Post Office. It would, in a sense, mark a step back.
Nevertheless, we have committed to reconstitute this board with a full complement of non-executive directors, starting with the permanent appointment of a non-executive chairman. The new board will benefit from the operational expertise of the existing management and the combined wisdom and experience of the new non-executive appointees.
Amendment 63, concerning an investment fund, talks about opening up new post office branches where there is a defined need. This already happens. The access criteria that we have set ensure that all areas will continue to have reasonable access to post office services. At the end of March, 93.3 per cent of the total population across the UK were within one mile of their nearest post office outlet and 99.7 per cent were within three miles. There is also a criterion that prescribes access to post offices in each and every post code district. When the access criteria were introduced exactly
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On investment capital, as part of the discussions that we will shortly have with the Post Office regarding its next funding deal, we will consider the case for new investment in both Crown and sub-post offices to modernise and improve the quality of service for customers, for example by reducing queuing times. I hope that the noble Lord, Lord Razzall, will welcome that, because it is potentially a very important commitment which I discussed only last week with the National Federation of SubPostmasters. Such investment might help attract more business, strengthening the viability of individual branches. I hope that noble Lords will agree that it would not be appropriate to commit to a particular type of investment in isolation from considering the broader needs of the network.
This amendment also calls on us to put more government services through the network. Since Committee, there has been yet further evidence of the Government’s commitment to the network, as the noble Lord, Lord Hunt, was kind enough to acknowledge. The Identity and Passport Service has announced that it is working with the Post Office to ensure that people can apply for new biometric passports and ID cards at their local branch.
On financial services, as I said, we need to think carefully about whether we are in danger of reinventing the wheel. On 21 April, Alan Cook, managing director of Post Office Ltd, told the Business and Enterprise Select Committee in another place that, in effect, a post bank already exists. As he set out, Post Office Ltd already offers an extensive range of financial services products: savings, insurance, mortgages, credit cards, and more than 1,400 free-to-use cash machines providing further access to cash across the network. The Post Office also supports work to increase financial inclusion by providing access to basic bank accounts from 17 different providers. The Post Office therefore plays a vital role providing access to financial services through its network of 11,500 branches.
We are keen for the Post Office to increase its financial services offering and to use its unrivalled network to put a wider range of services within reasonable reach of the whole population. So we are currently exploring new possibilities on financial services with the Post Office. As part of this, Alan Cook, the managing director, has said that it has an aspiration to expand its mortgage business and—as the noble Lord, Lord Razzall, said—to launch a current account which is available in every branch next year. The Post Office is also in discussion with the Association of British Credit Unions to see what opportunities there might be for the two organisations to work more closely together to increase financial inclusion.
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Finally, we must also consider the wider effect that this amendment would have on Royal Mail’s transformation. The amendment would prevent implementation of this Bill, and therefore the transformation of Royal Mail, until the Government made an order describing the detailed terms of its future investment in the Post Office. However, if we are unsuccessful in reversing the decline in Royal Mail’s business, the Post Office’s business will decline too. The two things are connected. It is in the interests of both Post Office Ltd and its network of post offices to see Royal Mail’s finances turn round and its business transformed. Therefore, to hold up the transformation of the Royal Mail in the way that we are currently seeking—for the sake of the Government setting out even more clearly on top of what they have already stated and described as their investment plans and commitment to the Post Office—would have a detrimental effect on the Post Office itself and would not be desirable.
The Government have already provided funding of £3.5 billion to Royal Mail. In spite of this, the company has failed to transform fast or far enough adequately to respond to the ongoing digital revolution. The market within which Royal Mail operates has changed irrevocably and continues to evolve. Action—not to build in delay, as is conceived in this amendment—is needed now. It would be irresponsible of the Government to allow delays to the suite of measures needed to reform Royal Mail and secure the future of the universal postal service.
The Post Office’s current comprehensive £1.7 billion funding deal lasts until March 2011. While discussions about the next funding deal will begin shortly, their completion should not hinder the drive to transform Royal Mail that this Bill would bring. The sooner these are implemented, the sooner Royal Mail will be modernised and the sooner the risks to the Post Office of Royal Mail declining in the mails market will be removed. Any delay would merely serve to threaten the sustainability of the network.
I turn to Amendments 23 and 24; first to the one that is in my name. I think that we are all in agreement that the post office plays a critical role in our communities; that post offices are vital in providing access to Royal Mail’s postal services; and that the network has a wider social and economic role providing vital access to services throughout the UK, particularly for vulnerable consumers and small businesses. Given this, it is important that both the Government and Parliament receive robust information about the size, location and accessibility of the post office network. Amendment 23 will require Post Office Ltd to provide exactly that. This amendment goes further than the current information duty on Postcomm. There will be a statutory duty on Post Office Ltd to produce an annual report which must contain information about the accessibility of post offices to particular groups of consumers and any other information requested by the Secretary of State. The report must also be laid before Parliament.
I welcome the support from Age Concern, Help the Aged, the Federation of Small Businesses and the CWU for this amendment. I hope that the many noble Lords who have previously spoken on the importance of having such information available, will also support it.
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I turn to the amendment of the noble Lords, Lord Hunt and Lord De Mauley. I agree that the report should also provide information about the critical services offered across the post office network. I would therefore like to consider the noble Lords’ amendment in detail and shall come back to the House at Third Reading.
I therefore propose that my new clause should stand part of the Bill and ask the noble Lords not to press their amendment. For the reasons I outlined earlier, I also ask the noble Lords, Lord Razzall and Lord Cotter, not to press their amendments.
5.15 pm
Lord Razzall: My Lords, the assurances that the Secretary of State has given me on Amendment 3 certainly satisfy me of the importance of the Post Office companies having separate boards of directors. I think that we have unanimity in your Lordships' House on that issue.
As far as our Amendment 63 is concerned, we have a bit of a difficulty. The noble Lord, Lord Hunt, is concerned about it, because he thinks that the Government have delayed for far too long in introducing the reforms that the Royal Mail needs and that this is therefore a distraction, holding back the amendments that are required for the Royal Mail. We think that that is exactly the point, because this is the moment at which we can pressurise Her Majesty's Government to ensure that there are commitments in the Bill for the post office network. It has been several months since the Secretary of State came to this House with his Statement on the post office network and, of course, he is a very busy man. I have no doubt that he is completely committed to trying to sort out what should happen to the Post Office, but I am sure that he could produce a list of 20 other things that he also has to sort out. We are nervous that if we do not force through some amendment of this nature at this time, the issue of how to deal with the Post Office will be kicked into the long grass in the way that the noble Lord, Lord Hunt, has accused the Government of kicking the Royal Mail into the long grass and not grasping the nettle—if that is not a terrible mixed metaphor. We feel that this is the moment for putting in the Bill a commitment as to what the Government are going to do about the post office network.
I accept that this may not be the best amendment, but we shall not get to voting on it—assuming we divide the House—until Wednesday. Therefore, it certainly is not too late for the Government to think whether there is some form of words that would satisfy us, because this is a fundamental point for these Benches. We feel that for far too long good words have been said about the Post Office—indeed, until the Secretary of State came into office, there were post office closures, but we accept his integrity and determination to do something about the post office network. If this is not the right form of words, let us try to find one. There is general feeling on these Benches that we ought to try to find something to put in the Bill to secure the future of the post office network. In the mean time, I am happy to withdraw Amendment 3.
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Clause 3 : Royal Mail companies to be publicly owned
Clause 4 : Meaning of "Royal Mail company"
Clause 5 : Power to direct issue of certain securities
Clause 6 : Government investment in certain securities
Clause 8 : Transfer of employees otherwise than under transfer scheme
Clause 9 : Taxation provisions relating to re-structuring
15: After Clause 9, insert the following new Clause—
“Reporting provisionsReport on partnership deal: achievement of objectives
(1) Before issuing or disposing of any shares or rights in a Royal Mail company to a private partner, the Secretary of State shall lay before Parliament a report.
(2) A report under subsection (1) must give details of—
(a) the price offered by the private sector operator for a minority stake or partnership in a Royal Mail company;
(b) the ability of the private sector operator to finance the investment;
(c) the ability of the private sector operator to add value to Royal Mail as a whole by assisting in the transformation of Royal Mail’s letters business and the modernisation of its network; and
(d) the capacity of the private sector operator to manage stakeholder issues successfully, including relations with trade unions.”
Lord Hunt of Wirral: My Lords, Amendment 15 seeks to impose another reporting requirement, this time on the partnership deal once it has been negotiated. It became clear in Committee that as regards the final shape of the deal, the Secretary of State is keen to keep as much flexibility as possible in the Bill. Although that is understandable, there is a clear need for the details to be made as transparent as possible and to be available as soon as possible, and for the appropriate people to be fully accountable for the way in which they have disposed of shares in a public asset.
The Secretary of State helpfully proposed in Committee that he would make a Statement to this House when the deal is concluded. We welcome that assurance. We hope, however, with this amendment to ensure that the
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There is more to this deal than just the question of how much money was got for how many shares, although this will be one of the critical questions. For example, we have particular concerns over whether the private partner will be able to take the necessary decisions. The Secretary of State has been at great pains to reassure those sitting behind him that the Royal Mail will remain a publicly owned and controlled body. Unfortunately, he has done so much in that direction that we have concerns about whether the private partner will have any power at all to make politically unpopular decisions. Ambiguous words like “a meaningful say” and “shared responsibility” can mean very different things to different people.
As we will be making clear in a later debate today, we are also keen on the establishment of an employee share scheme. We would be extremely unhappy to find that the Government have negotiated away the possibility that one could be set up. I hope, therefore, that the Government will accept our amendment and will also take this opportunity to give this House any further information that the Minister can about what sort of deal the Government are working towards. I beg to move.
Lord Mandelson: My Lords, this amendment looks to introduce requirements for Government to report to the House on the issue and disposal of shares or rights in the Royal Mail company and the ability of the private sector partner to meet certain selection criteria. As I said during debate in Committee, I recognise your Lordships’ legitimate interest in any partnership deal and that you would wish to be assured, and rightly so, that Government are meeting the objectives they have set out for the transaction. I said that we would need to report to both Houses on the deal.
The transaction process is continuing and we remain committed to finding the right partner for this business and ensuring that any deal represents value for money for the taxpayer. I have already provided the House with details on our current intentions in relation to a partnership deal and committed to provide further updates throughout the passage of the Bill. I understand that noble Lords opposite remain keen, however, to have what further detail we can provide. The agreement with any partner will, as I have said, be subject to negotiation and will be covered by a legally binding agreement. I have already explained that this agreement will make clear what the buyer can do, for example on board appointments, and what it cannot do, for example by placing restrictions on sales of its shares.
Perhaps it might be helpful if I outline some of the other areas the agreements will cover. The shareholder agreement will set out those matters requiring shareholder consent. I previously mentioned the company’s future business strategy but other areas are likely to include any acquisitions or disposals, future incentive schemes, future funding of the business, key executive appointments and dividend policy. The detail on the treatment of
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We have seen time and again, when management of the Royal Mail has sought to introduce modernising changes within the business, that the union has approached or politically invited the Government to intervene and operate in a way that, frankly, does not leave the management the proper freedom it needs in order to take the business forward. A partner would not accept that sort of practice, and neither would we.
The agreement would also cover transfer restrictions on the shares sold to a partner. For example, it will ensure that they are tied into the business for an appropriate period to meet our objectives for modernisation.
On the specifics of the amendment tabled by the noble Lord, Lord Hunt, given my commitments to be transparent about the deal, I wholeheartedly support the intention behind the amendment. However, I see two issues with this particular amendment. First, it would require the Secretary of State to report to Parliament before issuing or disposing of any shares or rights to a private partner. There are significant disadvantages to this approach, which could effectively act as a potential barrier to a deal being struck.
The noble Lord, Lord Blackwell, made an important point in Committee, which I believe is relevant here. He highlighted the differing role of Parliament versus the Executive. He said:
“There is a point at which the role of Parliament is to define objectives and give the Government permission to take a course of action ... in some of the things that we are asking to be brought back to Parliament, such as negotiation details and choice of partner ... we might be crossing the line by getting Parliament too involved in executive matters of judgment and discussions”.—[Official Report, 31/3/09; col. 967.]
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