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3.18 pm

Lord Hunt of Wirral: My Lords, I welcome the fact that the Secretary of State is here today to make the Statement, but my, what a bleak picture he paints. We share his hope that this unfortunate dispute will be resolved quickly and with as little damage as possible to the Royal Mail. He did not mention the fact that the Communication Workers Union has invented a new pretext for industrial action: namely, the decision of Royal Mail management to take on more temporary workers than usual this autumn. Quite rightly, managerial decisions are managerial decisions, but anything that reduces inconvenience to the customer is surely to be welcomed.

I note that the Secretary of State uses the language of regret. Sadly, as I have pointed out previously, he cannot bring himself to apologise for 12 years of apathy and inaction on the part of the Government. These strikes against modernisation are the inevitable outcome of that ministerial vacillation which he vainly attempted to end.

There is far too much finger-pointing in politics, but we are here to hold Ministers to account. Everyone agrees with that. Although the Secretary of State's words will be carefully weighed in the official record,

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as one would expect, we could all hear in his voice in this Chamber today, and see etched on his face, the raw frustration of someone who knows what needs to be done but has not been allowed to get on with the job.

It is now almost a year since the publication of Richard Hooper's authoritative report on the future of postal services in the United Kingdom. In response to that excellent report, the Secretary of State produced a Postal Services Bill in February, closely modelled on the Hooper proposals, and we in this House spent five days in Committee and a day on Report during March, April and May. The Secretary of State rightly observed that all three parts of the Bill-the injection of private capital and expertise, a rescue package for the pension scheme, and regulatory reform-had to be taken together or not at all. As he will recall, he said at Second Reading that the Royal Mail and its people,

The Secretary of State was gracious enough to remark that, in due course, our efforts in this House had helped to improve the Bill considerably, in particular by opening the door, as we did, to the chance for employees to own shares. Yet on 1 July, he came to this House to advise us that his and our efforts had come to naught. The Postal Services Bill has now been dumped, as I understand it, into cold storage by a Government of the walking dead.

The only Statement that is worth the Secretary of State making to this House today is one to the effect that he will personally ensure that the Postal Services Bill proceeds to Royal Assent as soon as possible. In speech after speech, he has emphasised the urgent need for action on the Royal Mail and rued the fact-I remember him doing this vividly-that legislation to modernise the organisation had not been brought forward 10 years earlier. The Conservative Party has supported him all the way, both here and in another place, and I am personally authorised to reassert here, today, that our views have not changed and will not change. We all know that the views of the Secretary of State have not changed. How it must pain him to see this country transported back into the dark days of the 1970s when trade union officials could pay a visit to No. 10 and stop a major industrial reform in its tracks. The sad fact is that, as it succumbs to strike action, the Royal Mail finds itself unable to deliver, and the Secretary of State cannot deliver either.

I suppose this is all too symbolic of a wider failure in government. I also begin to suspect that many of the Secretary of State's colleagues are behaving like an army in chaotic retreat. It is little wonder that the employees of the Royal Mail are unsettled. Their organisation is beset with uncertainty, their pension scheme is on the verge of insolvency and the Government offer nothing but regrets. Yes, this strike is suicidal, but it is a case of assisted suicide. The Conservative Party takes nothing for granted, but the Labour Party seems already to have the cloying smell of defeat in its nostrils. We all sense the Secretary of State's simmering frustration, but I do not think he is a man to give up so easily, and I am sure he does not share the wan, supine, feeble defeatism that so many of his colleagues evince

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about the future of the Royal Mail. To use his words again, the Postal Services Bill,

Where is that optimism now? Where are these sunlit uplands? Today, we have heard an apology of a Statement when what we deserved was a Statement of apology. The Royal Mail is now in crisis, and I reaffirm what we on these Benches have always said: the Secretary of State may not be able to count upon the support of his own party in the other place for the Postal Services Bill, but I repeat today the unstinting support from the Conservative Party for the passage of that legislation. We hope to see it complete all its stages in another place at the earliest opportunity because we are proud to support the conclusions of Richard Hooper and the Postal Services Bill. It is just very sad that so few of the Secretary of State's colleagues can make the same assertion.

3.24 pm

Lord Razzall: My Lords, as is so often the case, the noble Lord, Lord Hunt of Wirral, clearly hit the nail on the head when he described the position in which the Secretary of State now finds himself.

I thank the Secretary of State for the Statement, which gives an excellent summary of the problems arising from this strike. He gives the game away towards the end of the Statement when he urges both sides to make every effort to avoid damaging industrial action and resolve this dispute. Of course, he already said in his Statement that he will continue to encourage a settlement but he cannot impose good industrial relations on the company.

The Government's problem now over the strike is the antithesis of Baldwin's description of the newspaper proprietors of the 1930s: that they had power without responsibility. In this case, the Secretary of State, in the eyes of the public, has responsibility without power. Quite rightly, he will take the view-no doubt he has said so-that the strike is nothing to do with him: that this is for the management of the Royal Mail to deal with, and that it is dealing with it as best it can. Given that that is clearly the Government's position, I have only two specific questions on the strike. I will then get into the wider issues, which the noble Lord, Lord Hunt, has raised.

The Secretary of State's statement that it will be far easier for ACAS to play an effective role if the threat of a national strike is lifted ought to be a test for prospective civil servants when they take their Civil Service exams: how to write a euphemism. What that actually means, as I understand it, is that, contrary to what the union wishes-to involve ACAS-the Royal Mail management is not prepared to agree to ACAS being involved unless the threat of the strike is lifted. I would be grateful if the Secretary of State could explain that euphemism and confirm that that is currently the case.

The second point about the strike follows on from the interesting debate, in which the Secretary of State did not participate, on the Question from the noble Baroness, Lady Gardner of Parkes. There is a lot of

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concern about Treasury deadlines being met on income tax returns, and about credit card deadlines, as my noble friend Lord Newby indicated. The general sense seemed to be that, so long as these things are posted before the required date, all will be well if they do not arrive. However, as I understand it-no doubt the Secretary of State will confirm this-all post boxes will be sealed up if there is a strike and it will not be possible to post anything. I am therefore not quite certain how the answers that were given can actually meet the point that is being made. Perhaps the Secretary of State will deal with that in his final remarks.

There is a wider point to make, and the noble Lord, Lord Hunt of Wirral, was quite right to raise it. Those of us who considered the Postal Services Bill in this House are well aware of the Secretary of State's commitment to the Bill-a commitment that was not, if I may say so, entirely shared by his colleagues right at the back of your Lordships' House; it clearly was not shared by a large number of his colleagues in another place, which is why the Bill had to be withdrawn. However, given that we are in this strike situation, it behoves him to tell us what the Government propose to do about the key issues in that Bill.

What does the Secretary of State propose to do about the pensions deficit? There are some mealy-mouthed words in the Statement about the trustees looking at this, but we all know that there is a massive pensions deficit. What are the Government going to do about it? What do they think will happen to the modernisation process, which fed into the government proposals to bring in a minority stake? Will the Government endeavour to bring back a Bill to enable third parties to come in with capital and their expertise to improve the modernisation process, or has that proposal been dropped? What are the Government going to do about the changes in regulation that were enshrined in the Bill? I think that everyone, across the parties, agreed with the proposed changes of regulation. I understand that the CWU was keen for that to be brought in. What are the Government going to do about that?

Finally, and most crucially, the Postal Services Bill enshrined in legislation, for the first time, confirmation of the universal service obligation. Are the Government, without that Postal Services Bill, still totally committed to the universal service obligation? What are they going to do to ensure that when we get past this strike that USO is enshrined in our life?

3.30 pm

Lord Mandelson: I am grateful to the noble Lord, Lord Hunt, for his support, if support it was. We all agree that none of us would like to be in the place in which we find ourselves. As a Government we would like to have successfully taken through the Postal Services Bill. We remain of the view that Hooper got it absolutely right. In recent time, I have not read such a well analysed, well argued report of its kind with recommendations that were so obviously, patently correct for the future of the Royal Mail, which is precisely why we introduced the legislation in the first place. Had we done so, and were we successful in introducing a minority strategic partner from the private sector into the Royal Mail, I have no doubt that that would have

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introduced a new perspective to this company, which would be linked to the real world in which people have to work hard and flexibly for every customer and every job. That is what people have to do when they are running a business rather than a social service, and the Royal Mail is a business. It is not a social service. It operates in a market and faces competitors.

The Postal Services Bill, if it had been enacted, would have helped to pave the way for a transformation of this business. But, of course, as the noble Lord knows, the state of the markets defeated us. In reading my Financial Times today, I notice that the Conservative opposition and their spokesmen are making it clear that they would not rush to introduce this legislation were they to be elected. I gather from that newspaper that they would wait and see, and test the markets first, before deciding what course of action to take. Read the Financial Times. We have to live in the real world. The fact is that for all the considerable, misconceived and misplaced opposition that was mounted to this Bill, at the end of the day it was the markets that defeated us and not the political opposition.

The noble Lord referred to the casual workers as a cause for further grievance. I should put it on record that the Royal Mail has given assurance that the 30,000 workers are being recruited on a casual basis and are, therefore, being recruited legally. The temporary agency workers being employed are part of the Royal Mail's usual seasonal recruitment and are not recruited directly to perform the duties of those taking place in the strike. It is as well to clarify that before I am questioned on it further.

In response to the noble Lord, Lord Razzall, I am sure he would agree that it would be very difficult for ACAS to become engaged in this dispute-ACAS would need to be invited in by both sides-while the threat of a national strike hangs over the company as a whole from the union side. For ACAS to mediate and then arbitrate, it would be reasonable to expect the threat of a national strike to be lifted. Of course it will be difficult for many people who depend on the postal service should the strike occur; that is why we deplore the prospect of it happening. But some postal services will be available because not all post boxes will be sealed and the post offices will still be open.

On the pension deficit and the regulatory changes, I will say this. In our legislation, we as a Government were prepared to take on the pension deficit and to make the regulatory changes, but all of us were agreed that it could be done only in the context of a real and earnest commitment to modernisation and change in this company. The fact is that we cannot, I am afraid, help Royal Mail unless the company and its workforce are prepared to help themselves. That is the reality, and we cannot get away from it.

3.35 pm

Lord O'Neill of Clackmannan: I offer my sympathy to my noble friend, as no one has done more to try to improve the prospects of Royal Mail. I also say to him that the sanctimonious Schadenfreude that we have heard from the Benches opposite is no comfort or support to anyone on this side of the House. The case for reform remains. The point about pensions is equally

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valid now as it was then. Given the current climate, were there to be a change of government, I do not think that there would be anything like the support for the pensioners and potential pensioners of Royal Mail that this Government are offering.

Can I just say this to my noble friend? While many of us support him in his endeavours, it would be stretching our loyalty further than many want to go if we were prepared to support and sanction the strike-breaking on the massive scale that is envisaged by the recruitment processes that have been indicated. I know that this is an industrial union and as a consequence it is often very blinkered, but let us not abuse it. The union has been a friend of the Labour Party and the Labour movement in the past. These are our people and we have to give them a chance to come to a deal. I hope that ACAS will be seen as an opportunity and not an obstacle in the resolution of this dispute. I like to think that my noble friend will support me and others who want change and want it quickly at this time.

Lord Mandelson: My noble friend has been utterly consistent in his calls and demands for change, reform and modernisation in Royal Mail. He contributed to many of our debates during the passage of the legislation and I commend him now as I did then for his commitment to a prosperous, successful and viable future for Royal Mail, which, as he has always argued, must come with change and reform, not without them. On his point about casual workers, so far as I can see and have heard from the Royal Mail management, I do not think that there is any desire to recruit an army of strike-breakers. I point out to him that Royal Mail is at liberty to recruit directly employed casual workers-it does so every year at this time-and it is doing so in greater numbers because, if the strike goes ahead, there will be considerable backlogs to clear. It is also allowed to recruit temporary agency staff via an employment business so long as they do not do the work of striking workers. I think that that is the valid point.

Lord Ashley of Stoke: My Lords, the incredible aspect of this situation is the failure of both sides to make a simultaneous declaration of, first, the strike being suspended and, secondly, the employers referring this to arbitration. Why cannot a simultaneous declaration be made by both sides?

Lord Mandelson: I sympathise with my noble friend's frustration. As I set out in my Statement, the point is that there is a national agreement on pay and modernisation which it is reasonable to expect both the management and the workforce and its union to implement consistently. I would like to underline this point: in the vast majority of areas and in union branches across the country, phases 1, 2 and 3 of the national agreement are being implemented. There is no dispute; there is no strike action. They are implementing it-if not enthusiastically, then certainly willingly-because they see that there is no alternative for the future of their business. Unfortunately, a minority of areas and parts of the union-more in London than anywhere else-have decided that they do not want it; they are

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trying to unpick the first three phases and prevent the agreement from going forward to implementation in its fourth phase.

We have reached a situation where the majority of areas and branches, and the national leadership of the union, have to take on those among their own ranks who are very recalcitrant, have dug in and have so far refused to go along with what the majority want in their own union. That has to be resolved and sorted out, and very quickly.

Lord Eden of Winton: My Lords, anyone who cares about the future of the Royal Mail must share the feelings of exasperation to which the Minister gave voice in the Statement. Some 36 years ago, when I was Minister of Posts, matters such as regulatory practices, manning levels and the introduction of new technology were pressing hard on the management and union in the Post Office. In his Statement, the Minister referred to the possibility of Royal Mail being in terminal decline. He also referred to the need to take care to look after the needs of customers. In the event that this proves terminal for Royal Mail, what contingency plans have the Government or the management of the postal services put in place or developed to ensure that customers' needs are fully met?

Lord Mandelson: My Lords, I and other members of the Government are not prepared to throw in the towel and accept that the only thing we can do in respect of Royal Mail is to manage its decline. We have not reached that stage and the majority of the workforce and the union have not reached that stage either. That is why they are co-operating, as I said, in introducing changes such as more walk-sorting machines and new working practices so that employees work all the hours for which they are employed. It is wrong to present this situation as though it were an entire workforce and an entire union that have washed their hands of change; they have not. None the less, there is a hardcore group of those who do not accept what has been negotiated nationally on their behalf. It is they who have to be persuaded before, as the noble Lord said, the downward decline of the business makes it impossible to save.

Lord Hoyle: My Lords, I declare an interest as a member of Unite, which has members in the Royal Mail. I welcome my noble friend's Statement, particularly where he says that it is not in the interests of anyone for this dispute to take place. I also welcome his saying that he will do all that he can and play any necessary role to prevent it from happening. It is very difficult when negotiations are at this stage, but is he really saying that Royal Mail will not go to ACAS unless the threat of the postal dispute is withdrawn by the union?

Lord Mandelson: The management of Royal Mail argues, not entirely unreasonably, that if it decided to go to arbitration with the threat of a national strike hanging over it, those circumstances would not be the most likely to lead to that arbitration being successful. Without speaking on behalf of the management, one does see its point.

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Lord Clarke of Hampstead: My Lords, I am too long in the tooth to comment on the situation that we are in. After a lifetime of industrial relations experience, I think that sometimes things are said that can only exacerbate a difficult situation-but the Statement has been made, and I cannot sit here and not respond in the best way that I can. I declare my interest as a former postman, former union official and former chair of a Labour Party that was the custodian of manifesto commitments. I want to say one or two things before asking a couple of specific questions.

The noble Lord, Lord Hunt of Wirral, true to the form that he showed through the passage of the Postal Services Bill in this place, was straight-he said what his party believed in and what it would do. As I have said on previous occasions, I respect that; if you have a manifesto commitment that gets the support of the people of this country, you have every right to do that. I want to help him on the question of why people go on strike.

The Secretary of State has just said that this is not universal. Even in this day and age, in this economic climate and with the domestic pressures on people, almost 80 per cent of the ballot was in favour of a yes vote-not just from those in the pockets of so-called obstructionists, but throughout the country. Nearly 80 per cent have voted to support their union.

I shall give my noble friend an example. There is an office in this country, nowhere near the capital city, with six workers. They received their ballot forms and all six voted yes, in an area of high unemployment. I shall tell your Lordships why. There is a 20 year-old woman employed in that office who has a child. She did her job but was told to go out, stay out and do more. When she said, "I've got to go to pick up my child at the proper time", they said, "You stay out until you've completed what we've told you to do. Otherwise go out and stay out; you're fired". That is part of the reason for the almost 80 per cent vote.

Your Lordships have heard the union spokespeople say that it is not necessarily about money; it is not. It is not necessarily about modernisation, because the union has agreed to that. What is happening, and this House should know it, is the downright bullying of people. If anyone is in any doubt, please ask me for details about specific instances where management is bullying staff at present. That is why we have this industrial unrest.

The Secretary of State mentioned the Hooper report. At the end of that long session of the Postal Services Bill, there was near unanimity on two sections: the pension deficit and the regulator. The point was the sale of shares, which was in direct contradiction of a manifesto commitment by the Government's party. It is not just the political forces-I see that the noble Lord, Lord Davies of Oldham, wants to stop me. I asked the Secretary of State throughout that debate what he was doing about this. It is the same management that is controlling this dispute that he had very little confidence in when he read the Hooper report. He should get on and sort out the regulator, do something about the pension deficit in a real way, as the noble Lord, Lord Razzall, has asked for, and let these people get on with what needs to be done.

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