Michael Connarty
Labour Member of UK Parliament - Linlithgow and East Falkirk Constituency
Final Attack on Postal Services Privatisation Bill
Michael Connarty (Linlithgow and East Falkirk) (Lab): Despite all these amendments, which have been won by clear arguments put by Labour Members in the House of Lords and the Cross Benchers who supported them, I am still concerned about having a Bill that is fit for purpose.
Lords amendment 1 provides a new requirement that the report made by the Secretary of State will make clear the
“objective intended to be achieved”
by the disposal of shares in Royal Mail. I have followed this issue very closely so I know that everything else falls on that. As you know, Madam Deputy Speaker, I am the secretary of the Communication Workers Union liaison group of MPs in this House and have been so for more than a decade. Despite all the Minister’s warm words, it is not clear what this is meant to achieve that can be achievable under this privatisation model as structured.
Does the “objective intended” include maintaining Royal Mail as an organisation able to deliver to all parts of the UK for a single charge or two varying charges? The Bill and the amendments provide no guarantees that that is the case. Will that be covered in the report given each year by the Secretary of State to the House in order to show just how far the failure has been progressed, and how far my concerns and those of other Opposition Members have been realised? If we were to fragment the Royal Mail—it is entirely possible that that will happen as there is nothing to prevent it under the Government’s privatisation model—a Scottish regional mail delivery service could be given responsibility for meeting that objective under this model. That provider might then find that that particular part of the United Kingdom—the same could happen in places such as Cornwall and elsewhere in the south-west—the sparsity of the population and the diversity of the communities mean that it is not possible to make a profit. This process is about a privatisation and about giving organisations the right to run Royal Mail as an organisation that must make a profit. The Bill would allow them to come back to ask the Secretary of State to allow them to get rid of that universal service obligation.
Mr Davey: Will the hon. Gentleman tell the House which part of the Bill he is worried about? Which part will cause the fragmentation he is describing?
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Michael Connarty: The part of the Bill I am talking about—
Madam Deputy Speaker (Dawn Primarolo): Order. We are not discussing the entire Bill. We are having a time-limited debate about specific amendments. The Minister knows that as well as every other Member of this House, so I am sure that he does not want to tempt the hon. Member for Linlithgow and East Falkirk (Michael Connarty) down that path. Perhaps the hon. Gentleman can focus specifically on these amendments so that the Minister will not be troubled.
Michael Connarty: I was talking about the amendments; the new requirement in Lords amendment 1 is that the report must include the
“objective intended to be achieved”
by the disposal of shares. That is a specific Lords amendment and I am questioning what will be put before the House as a result. Will it be a report on the progress of fragmentation and of these parts in trying to achieve the Minister’s stated aim for his sale of these shares?
The Minister has spoken repeatedly about finding some way of saving the post office network. I know that great steps have been made on the Bill through the amendments won by the diligent efforts of Labour Members and Cross Benchers in the Lords. There will be some sort of inter-business agreement and it will be extended. I know that the Minister is not trying to pull the wool over our eyes, because he is telling us about his aspirations. However, when I hear him talk, I am unsure what his benchmarks for achievement under these amendments will be if it turns out that his idea of having a full network of post offices and post office “locals” does not work, the “locals” fade away and—I believe this will happen—we begin to lose post offices at a faster rate than would have happened under the previous Government’s plans to stop the flood by taking out a number of post offices and hoping to leave enough business for those that remained.
I did not agree with that approach, but I recognised what the previous Government were trying to do. I do not understand how the Secretary of State will report on these matters as a result of these amendments. If the report were honest, it might suggest that we have to do something different. I want the Minister to tell us what he feels his duties now are as a result of these amendments or what he feels the duties will be of whoever succeeds him, should there ever be a change of Minister. I do not wish such a change upon him, because he deserves to come back to apologise for everything he is now bringing about.
Is this about return to the Exchequer? Let us look at the attempts of previous Governments to sell shares and at the way in which they sold those shares. The sale of the first tranche of British Telecom shares achieved a 90% profit in one day for those who bought them, because it was an attempt to get quick money into the Exchequer—or was it just to get British Telecom into the private sector? If it was to get money into the Exchequer, the then Government appear to have greatly short-changed themselves and the country. A better example, also in telecoms, is provided by the sale of level 3 broadband, in which we made a substantial
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profit for the Exchequer because of the way in which we auctioned it off, although that did not please people in the industry.
I would like the Minister to tell us how these things are going to work. Will the judgment be based on return to the Exchequer? I know that the Government will, if they get their way, want to balance that against their willingness to take on any deficit in the pension fund that comes with taking on the pension assets. These matters have to be clearly spelt out by the Secretary of State so that people can judge what he is going to do in the Bill. That is what is accepted in the amendment. People want more clarity because we have not been given a clear understanding of the benchmarks and targets that the Government hope to achieve. We have had warm words and aspirations, but given the backdrop—the person who has given those assurances has previously given assurances that they were against full privatisation of the Post Office—we would like to see something a bit more solid on the ground. Perhaps the Minister could say something about what the intentions are.
The amendment also asks for more information about the purpose and structure of the mutualisation. It has been suggested to the Government that it might be useful to set up a task force immediately, but I do not think they have taken that idea up. The idea is to give share options to the members of a work force who have seen 55,000 of their members thrown out the door already and who have heard from the chief executive in the past few days that another 40,000 are about to go behind them, so there is hardly going to be an atmosphere in which anything can be done mutually unless a lot of hard work is done.
I agree with the points made my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) about the hard work and dedication of long-term Post Office employees. We know that people go and work there in the short term and realise that it is a difficult job with unbelievably hard hours and that they often have to work in the most inclement weather to get the mail through. However, many of the people who have been there for a long time want the company to succeed and want its work force to be secured and modernised. A task force would be useful, and it would be useful if the Minister would spell out exactly what will be the benchmark for mutualisation so that the amendments have some value when they are in the Bill.
Mr Weir: The proposal is for the mutualisation not of Royal Mail but of Post Office Ltd, so the average postie does not come into this. They are the ones who will be subject to whoever takes over. Mutualisation will apply only to Post Office Ltd after it is demerged from Royal Mail some time in the future.
Michael Connarty: That is even more frightening. People at that end of the business are facing the same problems from the same management. If the management model has changed, I would like to think that the Minister would put that forward.
Those are my concerns about the amendments, which have been hard won and which came with a promise from the Government that there would be real changes that would make a difference to the Bill. I wonder
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therefore whether the Minister, if he speaks on this again, will give some idea of what is going on to give us an infrastructure for these matters.
My final point is about the sale of shares to employees. The record is exactly as the hon. Member for Angus (Mr Weir) said. Shares are slowly but surely bought up by large organisations. The famous case is the one with Sid and the idea that Sid had some power, but Sid’s shares are probably now owned by several multinational hedge funds or equity funds or perhaps by insurance companies or a pension fund or two. There is this idea that members of the work force will get shares that will give them some sense of ownership, and I remember the first debates in which this was talked about by Ministers. This is one of the myths that the Liberals like to push—that if someone is given a few shares, that will make them a part of the ownership of the business. It does not do that unless those shares come with some powers. As we have seen from many of the banks’ recent annual general meetings, even having large amounts of shares does not give one any power over bonuses, performance or the behaviour of the people who run the companies. What will come with the deal apart from a few stocks and shares that will be stuck in the bank until they are sold to fund a holiday?
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