Postal Services Bill

My Lords, I shall speak to Amendments 21C and 22ZA to 22ZD, and comment on the other amendments in the group, Amendments 21A and 22. This is a large group of amendments and I ask the Committee to bear with me. Generally, this Bill pumps questions on issues of accountability, considering the enormous step that it proposes for one of our most cherished institutions and the number of vague answers that we have to questions about the sale of Royal Mail and the future of the post office network. With proposals relating to the disposal of shares in Royal Mail, to the nationalisation of the pension scheme, to the regulatory regime and to the mutualisation of Post Office Ltd, greater accountability to Parliament should be built into the Bill before it receives Royal Assent. The Bill instructs the Secretary of State to lay a report before Parliament once he has taken a final decision on the transfer of the Post Office Counters business to a mutual body. Once again, there is no promise of an oral Statement, no debate, no chance to amend and no vote. These amendments offer the House an opportunity to scrutinise the Government’s later proposals in detail, including their plans for mutualisation. Several years may elapse between the Bill receiving Royal Assent and the transfer to a mutual organisation, but it is important that Parliament is able to scrutinise and approve the proposal when it comes into effect. Are we being denied the opportunity to scrutinise fully because to do so might cause real difficulties for the Government, or will the cold forensic light of parliamentary scrutiny undermine the foundations on which this Bill was laid? We will not know the answer to that unless Parliament is able to consider future important actions and their implications more fully. So many questions remain unanswered. We are asked to take a leap in the dark about how Royal Mail will be sold, about what sort of Royal Mail will emerge in the private sector, and about what obligation a privatised Royal Mail will be under to utilise the post office network. A great deal of concern has already been expressed about the nature and continuity of an inter-business agreement. In the case before us, of Post Office Ltd, we are also asked to take a leap in the dark about the type of mutual body or range of mutual bodies that might end up owning our post office network. What will the rules be? What will be the extent of the mutual? Who will be eligible to be a member? Are all to be equal or will some be more equal than others? How will the board be constituted? Could the mutual sell off assets? Could the owner sell on to another mutual, such as a building society, store group or a mutual set up for that purpose? Could mutualisation end in disintegration? How will a mutually owned Post Office ensure that it is on a sound commercial footing? What tests would a potential owner have to pass? It might be far fetched, but what is to stop Rupert Murdoch’s family or someone else associated with a communications company setting up a mutual body as a vehicle for running the Post Office? Is the Minister setting a timescale by which the Government intend to complete the mutualisation process, or is this an open-ended process? Who will be accountable for the success of the Post Office when it is in mutual hands? There is a provision for an annual report, but what about a Secretary of State annual report? I hope that the Minister will take the opportunity to make clear whether the Secretary of State will be responsible and, if he will not be, who will be? What are the safeguards to prevent a mutually owned Post Office Ltd from suffering commercial decline or even catastrophic financial collapse? Will the Government remain the lender of last resort should a mutualised company go into bankruptcy? Will the borrowings of a mutualised company continue to count against the Government’s borrowing requirement? Will a mutualised business be given full commercial freedom, including the freedom to borrow capital on the markets? Will any mutualisation plan include a detailed business plan for the long-term relationship between Post Office Ltd and the Government in respect of the services that it provides for various departments, including the DfT and the DWP? I must admit that the recent decision on awarding the green girocheques contract leaves us more concerned rather than less, despite the Government’s protestations that they are committed to future government services being provided by the Post Office. Does Royal Assent for the Bill mean that Parliament has no further role in scrutinising the proposal, even if it is delayed for some years? These amendments seek to ensure that if the Bill goes on to receive Royal Assent, the Minister will at least be required to return to the House to seek approval for the next step that he wishes to take on the Government’s plans for mutualisation. That is very important, as the Bill is significant. Its provisions will have a major impact on users of the postal service, and even more so for the employees and agents of Post Office Ltd. It will also have a significant impact on the Exchequer. Such a proposal surely deserves closer scrutiny. We accept that the process of establishing a mutual will take time and that an appropriate mutualisation structure will need to be agreed. An external organisation might operate that structure or the employees, managers and agents of Post Office Ltd might run the mutual. Then there is the process of negotiation with the employees and managers, who will be asked to agree the terms of the transfer to a new status. The Government cannot possibly be in a position to share with Parliament the mechanics of that arrangement now, so it is essential that Parliament is able to look at this once again and approve the final arrangements. A transfer to mutual ownership of this kind is extremely rare. It is possible, for example, that the new mutual organisation will be entirely new to the Post Office. It may be in the form of a mutual structure yet know little about postal service matters. That in itself would not necessarily debar such an organisation from owning the Post Office as a mutual, but Parliament will want to be assured that the right organisation has been appointed to run that body and that those who are affected by the outcome have been consulted. Equally, both Houses will want to be assured that the new entity has a robust business plan. As my noble friend Lord Borrie pointed out, the finances of Post Office Ltd are somewhat precarious. Its commercial relationship with Royal Mail is being threatened, as is the value of its work with its other principal customer—the Government. The business is reliant on subsidy to maintain its network of post offices. From the outside, the prognosis is not good. My noble friend Lord Borrie has already quoted from the evidence that George Thomson, the general secretary of the National Federation of Sub-Postmasters, gave to the Public Bill Committee on 9 November. He pointed out that the federation has been working on the mutualisation concept for over two years, saying, "““we are very supportive of the Post Office eventually becoming a mutual company””." He went on to describe its financial status, which I will not repeat as my noble friend Lord Borrie has already detailed his rather graphic language. The general secretary went on to say that, "““there is a lot of work to be done before the funding package really kicks in in April 2012””—" that is, the Government’s funding package— "““because we have 18 months of sub-postmasters being up against very strong headwinds to survive and keep their office alive in the community””.—[Official Report, Commons, Postal Services Bill Committee, 9/11/10; col. 29.]" That was the evidence of the National Federation of Sub-Postmasters: in favour of mutual ownership but really fearful of the financial stability of the Post Office going forward. In those circumstances, a robust business plan, as proposed in Amendment 22ZD, is an essential aspect of any organisation seeking a change of ownership. Parliament must be able to consider the non-confidential aspects of that plan. Amendment 22, in the name of my noble friend Lord Kennedy, asks that the report be made after a period of no more than two years, which is surely a reasonable request. Amendment 22ZA requests that the approval be sought, "““before any transfer is made””," not after the horse has bolted, while Amendment 22ZB specifies that the ““preferred purchasers””, if any, should be identified. The latter also calls for the report to be supplemented by an oral statement and an order, "““subject to the affirmative resolution procedure””." Amendment 22ZC would require that the report is subject to a vote in both Houses of Parliament, and Amendment 22ZD would require a sustainable business plan for the Post Office company to be set out to secure a viable future. I particularly commend the amendment moved by my noble friend Lord Whitty because it would require an independent assessment of the current financial position and projected position of the Post Office company. It would also require that the Post Office company had been profitable for two successive years, excluding payments from government for services of general, social and economic interest. In other words, it needs to walk before it can run. This wide range of amendments would insert a greater degree of accountability at the point when the Government decide to hand over the Crown’s interest in a Post Office company to a mutual of some sort. The mutualisation proposal in the Bill is radical and far-reaching. That does not mean that there is opposition to the proposal, which we support in principle. This is about the magnitude of the decision and the importance of the post office network and the affection with which it is held throughout this country, and the Bill does not provide enough detail. We acknowledge that it is difficult for the Government to set out at this point exactly how mutualisation will work. Nevertheless, the amendments would ensure that if the Bill receives Royal Assent, at least the Minister will be required to return to the House and seek approval for the next step that the Government wish to take in respect of plans for Post Office mutualisation.