Postal Services Bill

Public Bill Committee, 16 November 2010.

Clause 1

Gordon Banks (Labour, Ochil and South Perthshire)

I beg to move amendment 13, in clause 1, page 1, line 7, after ‘repealed’, insert ‘but the restrictions in sections 65 to 67 of the Postal Services Act 2000 will be reverted to if any sale is not completed by 31 December 2011.’.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss amendment 14, in clause 1, page 1, line 7, after ‘repealed’, insert ‘but the restrictions in sections 65 to 67 of the Postal Services Act 2000 will be reverted to if any sale is not completed by 30 June 2012.’.

Gordon Banks (Labour, Ochil and South Perthshire)

It is a great privilege to be in Committee under your guidance, Mr Hood, as we start line-by-line scrutiny of the Bill. I am sure that you will keep us all in check if we wander from our areas of reference today. Amendments 13 and 14 would both provide a similar outcome, and I shall make little discrimination between them in my remarks. The purpose of our amendments is to be helpful to the Government. Indeed, I am sure that my hon. Friends and I will have that at heart throughout all our actions in Committee. The Minister and his colleagues might not be able to see that at the moment, but I am sure that he will recognise as the Committee proceeds that we really do have concerns for his political well-being.

Sunset clauses are well recognised and, indeed, the Conservative party has argued for them in the past in various pieces of legislation. In fact, the Communications Minister stated in Parliament in June last year that

“sunset clauses are, in principle, a very good thing to include in any legislation.”––[Official Report, Holocaust (Stolen Art) Restitution Public Bill Committee, 10 June 2009; c. 13.]

It would seem that the hon. Gentleman is not living up to his job title. If he was, he would have communicated his view to his hon. Friends and we would already have a date for such legislation, and we would now be debating new clause 2. However, we are not, so perhaps a few examples of sunset clauses and their use would help the Committee.

In 2009, the Conservatives in Scotland argued that sunset clauses should be added to all Scottish legislation, and I am sure that Conservative members of the Committee support that position, given that it was stated in their party’s manifesto in 2007. The Debt Relief Act 2010 has a sunset clause, which expires on 7 June 2011, which none of the current coalition parties voted against. Indeed, the Minister with responsibility for postal affairs has voted for sunset clauses in the past. In the Budget of June this year, regulatory sunset clauses were announced—a well-tried and recognised tool for Parliament and, indeed, the Government to use.

I am sure that the hon. Gentleman is waiting with bated breath to learn how our amendments would help him. That is fairly straightforward. They would add clarity. In essence, Labour Members object to the core of the Bill and believe that the Royal Mail should be retained in public ownership, a matter that will be debated when we discuss new clause 2. However, if the Government’s proposals to privatise Royal Mail completely are approved by the Committee, the House and the other place, the amendments would put a time limit on the Government’s ability to sell off Royal Mail. If either of the amendments is accepted, the relevant date would add certainty to the business and, indeed, the work force—certainty that is lacking in the Bill, as currently drafted. As it stands, the Bill empowers not only this Government, but future Governments, with the ability to sell off Royal Mail.

David Wright (Labour, Telford)

One of the benefits of amendment 13 is that it would require the Government to come back to the House if they fail to dispose of the Royal Mail by 31 December 2011. One of the deficiencies in the Bill is that it does not require us to return to the House in such circumstances.

Gordon Banks (Labour, Ochil and South Perthshire)

My hon. Friend makes a good point, and as we proceed we shall obviously put some proposals to the Minister containing other ways in which we want him to come back to the House to do certain things. He is also right that the amendment would not prevent the Government from selling Royal Mail at another time in the future provided that the sunset clause is repealed.

However, the Government have given no indication of a timetable for the sell-off. The amendments, one of which I am sure the Government will accept, enable this and future Governments to sell off Royal Mail, which means that the matter will be drawn out over years and perhaps decades. Who knows? The business, employees, partners in the Post Office and the public would be left in a strange limbo-land with no conclusion in sight. That would create a massive degree of uncertainty for the business, which could not be seen as an attraction to potential employees and customers, who could be driven away from the business by such massive uncertainty. The unrestricted time limit could also act as a mechanism to drive down the price for the business.

We are told that letter volumes will continue to fall and that the business can modernise only with private investment. Will the Minister tell us what the impact of an extended period of uncertainty will be on the value of the business, and therefore the value to the taxpayer? What will be the impact of falling value for employees of the share participation scheme if the legislation is approved? As I think the Minister simply forgot to put a date in the legislation, we are trying to help.

Michael Weir (Scottish National Party, Angus)

I thank the hon. Gentleman for giving way. He makes an interesting point. I totally oppose the privatisation of Royal Mail, but is there a danger of the opposite effect of what he proposes with a sunset clause? The Government might go for a fire sale of Royal Mail to get underneath the time limit, and that is my concern with his amendments.

Gordon Banks (Labour, Ochil and South Perthshire)

I fully recognise the challenge posed by the hon. Gentleman’s concerns, but as the Bill progresses he will see that we have also introduced measures that would empower both the House and the other place to hold the Government to account to prevent such a thing happening. So, we have a sunset clause as part of our wish list of amendments, and other amendments that will address the hon. Gentleman’s concerns.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am now extremely confused. The hon. Gentleman’s amendments want us to speed up the process of selling Royal Mail, but he also wants us to come back to the House however many times to get its approval. Can he explain how those two positions are consistent?

Gordon Banks (Labour, Ochil and South Perthshire)

They are perfectly consistent. It is called holding the Government to account. The legislation timetable is in the Government’s control. If the Government have the will, we will encourage and support the Minister, as we expect him to support our amendments. We will support him in bringing matters to the House and dealing with them as quickly as possible.

Karl Turner (Labour, Kingston upon Hull East)

I wonder whether my hon. Friend would agree with this situation. As it stands, the Bill provides for a situation such as a retail outlet having a perpetual sale. There is no rush to get to Currys or Dixons or wherever to buy a new electrical good, because we all know that the sale does not really exist; it is perpetually going. Does my hon. Friend agree with that?

Gordon Banks (Labour, Ochil and South Perthshire)

I understand fully my hon. Friend’s point about a perpetual sale driving the price down. I will come to another analogy that I want to present to the Minister in a moment or two. I expect the Government will be ready and willing to accept one of the amendments to preserve the value of their own legislation. Indeed, with the potential changes to the way in which Parliament is elected in future as a result of the Deputy Prime Minister’s desire to move to the alternative vote, and his willingness to trade this off with a gerrymandered boundary review, the prediction of the make-up of future Governments must be very uncertain. Indeed, if the Minister is so committed to a sell-off, may I suggest that he get his skates on quickly, because if the Lib Dem part of the coalition carry on backtracking on their positions at the current rate, we will see the Minister in a short space of time arguing against his own Bill and trying to preserve Royal Mail as a publicly owned operation. In fact, that was his party’s manifesto position, from which he has deviated significantly in the coalition. If he changes heart from his current flip-flopping, we will welcome it. As I have said several times, I have the Minister’s best interests at heart, and I am sure he will recognise my intentions.

As I read it, there appears to be nothing in the Bill that prevents the piecemeal sell-off of Royal Mail over an extended period, as I have already mentioned. Even the Minister must agree that that cannot be an acceptable solution. If the Government cannot complete a sale by one of the dates stipulated in the amendments, my hon. Friends and I believe that it is right and proper for the sunset clause to be enacted. That would allow the Government of the day—it may well not be the current Government, if they carry on in the fashion of their first few months—to take forward a future plan for Royal Mail within public ownership.

The amendments would impose a requirement on the Government to focus on their ambitions, which, as I have said, are contrary to mine and those of my hon. Friends. The alternative of death by a thousand cuts would wreck the Royal Mail and the improvements made recently, which even Richard Hooper could not envisage happening in 2008, at the time of his first report. The second Hooper report showed that such good progress can be made with state control of the Royal Mail, and it is vital that that is not unpicked and allowed to fall into disarray. The Bill, however, creates the opportunity for that kind of uncertainty to happen.

It was the second Hooper report’s recognition of the progress made on modernisation that redoubles my hon. Friends’ and my desire to retain Royal Mail as a publicly owned operation. If the Minister and the Government are so sure that selling it off is a good thing, they should tell the Committee about the dangers of an extended period of sale.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Does my hon. Friend agree that an extended sale period for Royal Mail might lead to a dutch auction of sorts, which may suit some potential buyers more than others?

Gordon Banks (Labour, Ochil and South Perthshire)

Through these and other amendments, the Committee will see that the Opposition have the best interests of Royal Mail and the post office network in this country at heart, as I know my hon. Friend will agree. We would not want to see anything done to them that puts in jeopardy the very things that they stand for—through the universal service obligation, the inter-business agreement, access points and the social benefit provided to us by post offices.

I bring my hon. Friend’s attention to another analogy, to compare with his dutch auction. I am sure that the Minister has sold a house or two in his time—he has probably bought one or two as well—and we can apply the logic of that scenario to the sale of Royal Mail. Anything that is up for sale for a long time and does not sell only attracts a buyer when the price is slashed. Is that what the Minister wishes to see? If not, he should support the amendments; if it is, that will damage the business.

My hon. Friends and I will continue to fight for the retention of Royal Mail in public ownership. As I have said, no doubt this will be debated when we come to new clause 2, but we firmly believe that, if the Government cannot bring Royal Mail to market and secure a deal by one of the stipulated dates in the amendments, a stable future for it must be delivered by removing their ability to sell off the business. The Government will be able to prove—[Interruption.]

As I was saying, the Government will be able to provide proof to those who may doubt the Minister’s ability to secure a good, strong and long-lasting future for Royal Mail in the private sector by striking while the iron is hot and driving up the interest by putting a closing date on the sale. I am sure that the Minister has done that with the house sales to which I referred. Indeed, during her evidence to the Committee last week, Ms Greene, the chief executive of Royal Mail, in response to a question asked by my hon. Friend the Member for Telford, was bullish about the possibility of a sale. She said:

“Should we wait? I think we should sell the company and get it the capital that it needs as soon as we can. I hope that that will be some time in 2012”.––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 12, Q25.]

I am therefore asking the Government to show their support for the aims and aspirations of Ms Greene, the chief executive of Royal Mail. She believes that a sale can take place during 2012. Inserting an end date into the legislation would focus the minds of all involved to either bring forward the conclusion or admit failure. The Government can show their support for Ms Greene by inserting a date of no later than 30 June 2012.

Mr Brydon, the chairman of Royal Mail Group, told the Committee in response to my questioning during an evidence sitting, that he believed it would be easier to attract investment after the sale to carry on future modernisation. Indeed, I took it from his evidence that a 2012 sale was imperative to the future of the business, because he felt that the negotiation period to get us to the current modernisation programme was too extensive. He said:

“You have to be flexible and quick. A system that takes a year and a half to agree to get capital to do things just does not work.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 15, Q32.]

As I understand it, Mr Brydon is also advocating a sale, in line with Ms Greene’s aspirations, because a failure to attract capital will be significantly detrimental to the business.

It is not only the Minister’s best intentions that the amendment has at heart, but those of Ms Greene and Mr Brydon. I am asking the Government, through the amendment, whether they actually support the aspirations of Royal Mail’s management and, in particular, whether they agree with Mr Brydon that we need to be quick and flexible. There is nothing quick about the legislation. Moreover, the Minister may claim that there is flexibility in the Bill, but the clause’s omission of a date jeopardises the quickness advocated by Mr Brydon.

On continued investment, what will the Minister’s position be if no sale occurs before the end of the current modernisation period? Will he commit to further investment of capital or not? In their evidence to the Committee, Mr Brydon and Ms Greene recognised the need for continued investment to modernise the business. Ms Greene commented that a further £2 billion will be needed. I hope that we will be able to see some of those projections before the Committee concludes its business, because those numbers will be vital. If a further investment of £2 billion is required for the business and the sale has not been concluded on time, will the Minister commit to providing that funding stream? If not, does he think that such a lack of investment could mirror the period bemoaned by people when no investment was made into the business?

Will the Minister comment on what difficulties could be encountered in a future sale process if Royal Mail has been starved of cash for a period after the end of the current modernisation programme? Does he believe that the insertion of a date in the legislation would also have an impact on our post office network? If, as the Minister has been at pains to point out, he sees the post office network as the natural partner for a privatised Royal Mail, does he see any difficulty from the network’s point of view as a result of a completion date for the sale of Royal Mail? If he sees such difficulties for the post office, how will they be eradicated by a piece of legislation without a date?

I ask the Government to accept the insertion of an appropriate date by which the sale should be completed, because to do anything else would be damaging to Royal Mail. The Royal Mail management seem to believe that a 2012 date is acceptable; why does not the Minister? I am sure that he will reflect on the strength of presentations that are put before him. I know that he is a good man, which he can prove today by accepting the amendment. I wait with significant interest to hear his response.

Michael Weir (Scottish National Party, Angus)

I listened carefully to what the hon. Member for Ochil and South Perthshire said. I am attracted in some ways to his amendment, but I have some concerns about inserting a sunset clause. He made the analogy of selling a house and having a closing date, which, as a former solicitor, I know something about. In that circumstance, there is a closing date only if several people are desperate to buy a property; that is not necessarily the case with Royal Mail.

The hon. Member for Middlesbrough South and East Cleveland talked about a dutch auction, which, if TNT and Deutsche Post were the two interested parties, would be an interesting prospect. I do not think that a huge number of people will be looking to buy Royal Mail. Indeed, shortly before the election, the then Labour Secretary of State was considering a part-privatisation. One of the reasons that he gave for abandoning that was that market conditions were not right for the sell-off of part of Royal Mail. I fail to see how such conditions have particularly improved since then; I suggest that they have got worse. I suspect that there will not be a queue of people waiting to buy Royal Mail, but that one or two large foreign companies, as I have mentioned, will line up to do so.

My concern about a sunset clause is that I suspect the Government are desperate to offload Royal Mail. I am concerned that such a clause would not be a stopgap measure for Parliament to influence the sale of Royal Mail, but would have the opposite effect, and we would find the Government rushing to sell it as quickly as possible. A forced sale is never the best way to get the best price.

Karl Turner (Labour, Kingston upon Hull East)

Does the hon. Gentleman agree that if the sunset clause were to form part of the Bill, it would concentrate the attentions of interested parties, who would get their act together and put an offer together quickly if they really were interested?

Michael Weir (Scottish National Party, Angus)

That may be the case, but the hon. Gentleman assumes that there will be several interested parties in an auction for Royal Mail. The other scenario is that if there are one or two such parties, who see that the Government need to have a sale by a set date, there is an incentive for them to do exactly the opposite. They might wait until nearer that date and put in a lower bid for a rushed sale. Such a sale is not in the interests of the consumer, the taxpayer, or the employees of Royal Mail, all of whom would lose out seriously if that happened.

My position is that we should not sell Royal Mail at all, but if it must be sold, we must get the best deal for everybody. I understand the argument of the hon. Member for Kingston upon Hull East, and I understand what he is trying to do, and there is some merit in that, but there is also a huge danger. I am trying to find where the balance of danger lies in the process. Is it best for Royal Mail that we have the sunset clause and, perhaps, delay a sale indefinitely; or is it best not to have it and, if a sale goes ahead, get the best possible deal for all concerned? I shall listen carefully to the rest of the debate, because I am in two minds about which way to go on the matter.

Karl Turner (Labour, Kingston upon Hull East)

I support amendments 13 and 14 in the names of my hon. Friends the Members for Llanelli and for Ochil and South Perthshire. I will concentrate my concluding remarks on the latter amendment, since the evidence from the chief executive of Royal Mail, Moya Greene, appeared to suggest 2012 as the most likely time for a sale to be reasonably secured. In supporting the amendments I shall reiterate the points made by my hon. Friend the Member for Ochil and South Perthshire. Hon. Members might think that I am bound to agree with hon. Members on this side of the Committee, but I hope that my points will persuade hon. Members from all parts of the Committee that there is evidence—and therefore good reason—to support the amendments.

My hon. Friend was right to point out that the new Government have supported the idea of providing for sunset clauses in other pieces of legislation and he gave some good examples of that. That in itself is not the only reason why hon. Members should support the amendments. There is a good reason to include a sunset clause in the Bill and I will develop my arguments as to why it will benefit from such a clause in the time allowed. I respectfully argue that to include a sunset clause in the Bill provides for certainty in a company that has suffered from some uncertainty in recent years. For that reason, my hon. Friend was right to say that the amendments add clarity and a much-needed degree of certainty for both employees and the business.

I first want to clarify my position. I firmly share my hon. Friends’ view that Royal Mail should be kept in public ownership. At the same time, I accept that continuing investment is absolutely necessary. The Bill provides for complete privatisation, which marks the end of an outstanding service, which the public have come to rely upon. As my hon. Friend the Member for Ochil and South Perthshire made clear, there is a distinct lack of certainty in the present form of the Bill. It strikes me that the Bill is void of direction, because although there is a determined offer to sell, there is no timetable for sale. Without that, there is a possibility that the value of the business would be vastly undermined. The Bill affords the Government the mechanism to sell Royal Mail, but that is without the amendments that my hon. Friend has helpfully suggested. The Government are duty bound to provide the taxpayer with value for money, so the Bill should strive to secure the optimum price for the company. That lack of certainty may lead to the mischief of the proposed legislation, by failing to insist on a timeline for the sale. We know that the business has experienced a fall in certain areas, such as letter volume. I am concerned that any further reduction in business will only deter interested parties from purchasing at the highest possible price—that seems obvious to me.

I must reiterate my hon. Friend’s point that if the Government fail to secure the sale, the amendment allows this Government or a future Government—hopefully a Labour Government—the opportunity to consider plan B. That would be the retention of Royal Mail in public ownership. We have heard from all sides that the recently undertaken modernisation programme seems to have benefited the business. That was a surprise even to Richard Hooper. The Communication Workers Union was very keen to highlight in its evidence that what is needed is modernisation, not privatisation. That may well be the way forward to more fully protect the service that we and, more importantly, all our constituents heavily rely upon. The amendments will focus the Government’s attention on pushing for the sale that they are intent on, but significantly, if a buyer cannot be secured, the amendments prevent the process being dragged out to a point when any price will do, simply to satisfy the Government’s agenda.

There are hidden dangers in the Government’s allowing an extended sale period. I hear the points made by hon. Members. My hon. Friend the Member for Ochil and South Perthshire drew the analogy of selling a house, which I think hon. Members on both sides will appreciate. His point is absolutely right; it is true that the longer a commodity is up for sale, the likelier its value will decline. If a property is for sale for two, three or four years, the price will go down. I have very recent experience of buying a property. The price not too many months ago was almost £30,000 more than the price that my wife and I paid for it. The price goes down; there is no question about that.

David Wright (Labour, Telford)

The other point that I was making earlier to my hon. Friend the Member for Ochil and South Perthshire was that we need to ensure that within the legislation, Parliament gets to hear about the process; it is crucial. The amendments would ensure that Parliament gets to know what is happening, because the Government would have to bring back further proposals if they do not reach their target date or achieve a sell-off within the time frames proposed by the amendment.

Karl Turner (Labour, Kingston upon Hull East)

I am grateful to my hon. Friend, who makes the point that I was about to come to, which is accountability. It is about just that: bringing the matter back to the House if necessary.

Michael Weir (Scottish National Party, Angus)

What is the hon. Gentleman’s view on the point that I was trying to make—that, as it stands, all the amendment seems to do is to put in a sunset clause, so the Government are given the power to sell Royal Mail by a specified date? There is nothing in the amendment that says that they have to come back to Parliament, unless they fail to reach that date. Is not the danger that there could be a rushed sale to beat the date, and the Government would not have to come back to Parliament if they were to do that?

Karl Turner (Labour, Kingston upon Hull East)

I disagree with the hon. Gentleman. The amendment would concentrate attention and focus the mind of interested parties. His point is absolutely right; if the Government do not sell by, as my hon. Friend the Member for Ochil and South Perthshire suggests, 30 June 2012, then we come back to Parliament and take another look.

Moya Greene’s evidence seems to suggest that regarding the sell-off, speed is of the essence. However, my reading of the Bill provides the opposite effect, and I think I might have clarified that point. That is not all though, because the Bill, as currently drafted, could facilitate a situation where potential buyers may prefer to sit back and wait. That, for me, is the real worry; they sit back and wait for the value to be decreased dramatically, and then move in to snap it up for a bargain-basement price when pressure is mounting on the Government to facilitate a sale. By then, in my respectful submission, pressure will be mounting on the Government. The amendment in the name of my hon. Friend the Member for Llanelli seeks to prevent that situation, and at the same time fits well with the likeliest timetable for sale envisaged by Moya Greene.

I urge hon. Members to support the amendment for the reasons that I have emphasised, and in doing so, provide some certainty by inserting into the Bill the deadline of no later than 30 June 2012. If Moya Greene is correct, the sale would be complete by that time, so where is the worry? If she is not, then in my view, the value of the company would be heading in the wrong direction, and the sale of Royal Mail simply for the sake of it would be at a price that is not in the interests of the taxpayer.

Nia Griffith (Labour, Llanelli)

I rise to support the amendments in my name and that of my hon. Friend the Member for Ochil and South Perthshire. As the Committee will understand, clause 1 asks us to repeal legislation from the Postal Services Act 2000. That is important because that legislation is of considerable significance. We have a previous Act that prevents the sale of Royal Mail; the current clause 1 of the Bill will allow that. The problem is, as my hon. Friend said, the huge uncertainty that that creates. That leaves open a door and we are not at all sure what will happen. We all know how terrible it is for some poor soul in the middle of a huge great roundabout trying to work out which of the exits they should take. Sometimes it is better to go in a direction that one does not really want to travel in, simply to be safe and not go round for ever and ever on that roundabout. That is certainly the case in my constituency, where Cross Hands has a six-exit roundabout. They tell me that, because of the dangers on that particular roundabout, they feel more confident in London. The Bill is exactly the same. While Opposition Members do not want to go in a particular direction, we nevertheless accept the fact that, if we go that way, it is better to get on that road and be there, rather than to remain in a state of uncertainty.

Let us have a look in more detail at what the impact of that uncertainty could be. Uncertainty leads to paralysis. It leads to the inability to make any definite plans for the future. It leads to the shelving of plans. It leads to one postponement after another. Decisions are continually deferred—“Oh well, we’d better not decide that at this meeting, because we don’t know what might happen”—and so it goes on, month after month. All of that is against the challenging background facing Royal Mail, with the huge technological changes of which we are all very aware.

Let us look at the different types of uncertainty. First, in respect of access to capital funds, we all know that the current, very successful, modernisation programme is fully funded. Indeed, the union representatives told us last week about that and that that programme is progressing very well. Of course, we need to think about where we will go, after the completion of that programme, for the next tranche of capital. In terms of securing capital, if we do not know whether Royal Mail is to be privatised, there will be a real reluctance to use the powers in the existing Act to raise funds. It seems to have been totally forgotten that, under the 2000 Act, Royal Mail has access to fast-track finance. Specifically, it can, with the approval of the Secretary of State and the Treasury, borrow several billion pounds from the national loans fund.

As Hooper told us, that facility has not been used very effectively in the past. The real danger is that if we do not have some sort of sunset clause, there will be a tendency to not even look into whether a Government-type loan could be of tremendous benefit to the Government, as well as to a company such as Royal Mail, because a slightly higher interest rate can be charged to Royal Mail than the rate at which the Government borrow. Nobody will be even looking at that. Then we will hear complaints that we cannot get anything sorted because it will take us ages to get to Brussels to sort out the EU state aid rules. But if no one is thinking of doing that, because all the time they are thinking, “Oh well, it is going to be privatised,” in the end all the blame will be put on Brussels if we have to come back to a situation where we are looking for Government finance and we are looking to okay everything with Brussels in terms of state aid. So if we go down the route of a completely open door, there will be no focus by the management, or indeed by Government, on whether there are any other alternatives to keep Royal Mail in public ownership, or on providing some sort of public finance to help it out.

If the Government think that Royal Mail will be sold, there will be absolutely no incentive whatever to investigate those options. Similarly, it will be difficult in the private sector, because private investors will want to see what a fully fledged privatised Royal Mail looks like before they make any definite commitments with their money. They will want to see whether this much-maligned ugly ducking will turn out to be that beautiful swan on which they will put all their hopes. Uncertainty is likely to mean that there will be little incentive to make arrangements with the Government or investors.

What about the morale of the work force? We all know what it is like when one’s job is under threat. There is no doubt that that when people think about privatisation, they immediately think about job losses and higher prices. The work force—not only the postman or postwoman who delivers people’s letters, but those high up in the management hierarchy—will think, “Is my job safe? Should I be staying here? Should I move on to something different? I do not know what will happen to this company; I could be out of a job next year. I could go to something a bit better down the road.”

Gordon Banks (Labour, Ochil and South Perthshire)

My hon. Friend is right to draw the Committee’s attention to the point that I touched on, and to develop it in relation to the impact on the work force. Does she agree that that degree of uncertainty, which could come from the death by a thousand cuts that I referred to, will have an effect not only on the work force and the partners within the business, but on the businesses that use Royal Mail? If we are worried about the declining letter market and about Royal Mail keeping its market share, we have to do something that protects that.

Nia Griffith (Labour, Llanelli)

Indeed. My hon. Friend is absolutely right. Many people across the country who look to Royal Mail to provide essential services will be very worried. The morale of the work force will be affected too, because people will leave—if they can find another job, given the Government’s current growth strategy. Nevertheless, they will be extremely worried and they will be concerned about spending money, making investments and looking after their families for the future.

Of course, it is not only Royal Mail staff who will be living in a state of anxiety. Pensioners like to have everything settled. By that, I do not mean that pensioners cannot accept change. We have seen some fantastic examples this week of the lifespan of the veterans, the different changes that they have been through and the way that they have embraced change and moved with the times. I have an 89-year-old friend who sends me text messages. The latest one said: “Whatever you do, Nia, please do not go on ‘Strictly Come Dancing’.” I do not know where she got that idea from.

Older people are very much into modern technology. They certainly move with the times, but they like security. They like to know exactly what is happening and they will be asking, “What is happening with the pension fund? What will happen with the Royal Mail pension plan? Will that be taken over by the Government? Is it dependent on the sale of Royal Mail? When will that sale happen?” All those questions will be on their minds, and they will feel insecure. They like things to be laid out neat and tidy. They want to know who the letter about their pension will come from. Hon. Members might think that that is an exaggeration, but one of the pensioners’ groups has made a specific request for an amendment to the Bill to ensure that they are fully informed of what is happening.

Priti Patel (Conservative, Witham)

The hon. Lady paints a bleak picture of the scenario ahead of us. Does she not have any confidence in the ability of the management of Royal Mail to carry employees and the pension fund with them in communicating what the future may hold to the various stakeholders?

Nia Griffith (Labour, Llanelli)

The difficulty is that no matter how well organised they are and what good will there is, if they do not have a clear plan for the future, they do not have a plan to communicate. That is why we need the certainty. Indeed, last week Ms Greene told us that Royal Mail wants to look towards 2012 as a date on which it might be able to move on. She clearly wants progress to be made—she wants to move on and see something happen. That is why one of our amendments suggests a date that might be compatible with her views.

The other group of people who are very much affected are the sub-postmasters who run our post offices. They will want to know exactly what is happening and they are already anxious, because they are unsure whether the Government will live up to their promise about Government services coming to post offices. They see that PayPoint is snapping at their heels in respect of the Department for Work and Pensions contract. Already there is disappointment among sub-postmasters about the Government’s idea of making post offices more viable through introducing new services. They feel that perhaps that might not happen, because there was no mention of a post bank in the announcement.

With the threat to the reliable and trustworthy source of their income—which is the third that comes from the inter-business agreement with Royal Mail—what is there to stop sub-postmasters trying to get out as soon as possible and salvage their savings and what they can from the hard-earned capital that they have invested in their post offices? The uncertainty is likely to erode whatever is left of the inter-business agreement. The longer it takes to sell Royal Mail, the easier it will be for any prospective purchaser to beat down the requirements to have any such agreement at all with the Post Office.

Without the sunset clauses, which provide a limited time frame, we might see a mass exodus of sub-postmasters, with virtually no prospect of enticing anyone to take over. Why would they?

Gordon Banks (Labour, Ochil and South Perthshire)

May I bring my hon. Friend’s attention to a concern that I raised in a question to Ms Vennells in the evidence session? It is not only about what will happen to sub-postmasters and outlets that might leave the business now, but there are places, such as Bankfoot in my constituency, that should have a post office and do not. Does my hon. Friend agree that if the uncertainty continues, such places will have no chance of ever getting one?

Nia Griffith (Labour, Llanelli)

Sadly, I do. I am sure that many other hon. Members will also recognise that scenario. In my own constituency, in the village of Ponthenri we had an excellent postmaster. Sadly, when he was not well, he had to take early retirement and took his premises with him. That posed an enormous problem, because there were no other premises in the village for a shop—the only other one was an outlet suitable for, perhaps, a chip shop. After a considerable amount of struggle and bringing people together in public meetings, we eventually identified a side room off a village hall and made all the necessary arrangements to obtain an outreach service. That service is not as wonderful as people would like it to be, because it runs on only a couple of mornings a week, the computer terminals do not always work and it does not provide as much as the local people would like it to. We hope to get something better in future.

Another area in my constituency is Felinfoel, which is most famous for its brewery. If hon. Members have not tasted the delights of that brewery, I invite them to come to Wales to do so. It is also the European home of the first canned beer—the Americans claim that theirs was the home of the first in the world, as they always do, but we are definitely the first in Europe. My home town is Llanelli, for those who can say it, but the nickname is “Tinopolis”, because we are great world producers of tin. The canned drink of Felinfoel was the first canned beer in Europe.

More important to the debate, however, is that Felinfoel is a viable community, which has lost its post office. The postmistress took early retirement—again, through ill health—and kept the property, because it was her home. We have enormous difficulties—we have already had 18 months of trying to entice somebody to come to a viable post office, which has very good turnover, and yet the uncertainty is there. It is difficult to find somebody who has the necessary expertise and qualifications, who is prepared to go through training or who has the necessary capital to set up a post office.

In Wales, we benefit from having excellent grants from the Welsh Assembly Government to help set up post offices. Nevertheless, it is already proving extremely difficult to find anyone to take one over; it is a real problem. I have had a constituent on the phone: “Jackson of Felinfoel here—still no post office.” I hasten to add that Mr Jackson spent a long time living in London, and has recently returned to Wales. He finds it extraordinary that he has to take a bus and walk a mile across town to get to a post office.

The real problem is who would take over a post office with no guarantee of new government business and no obvious indications that there will be new business streams for post offices. There is the chance of the poorest of poor deals on the future of the inter-business agreement with the Royal Mail—there may only be a couple of years to go at the tail end of whatever is now left in that agreement. There is no possibility of having any certainty about the future.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

My hon. Friend paints a bleak picture of the future for the post office network. Was she as surprised as I was that Paula Vennells put on the record that 8,000 of the 11,900 post offices are currently economically unviable?

Nia Griffith (Labour, Llanelli)

Indeed, it was sad to hear her confirm what many of us might have suspected, but that underlines the fact that without Royal Mail the Post Office is doomed. It would be a Post Office without postal services, which is absolutely surreal. It is really worrying that unless we have something firm—the National Federation of SubPostmasters has stated that there must be a minimum of 10 years for the IBA—frankly, I cannot see anybody wanting to stay in the business, and new entrants will need an even longer period than that to want to come in.

Priti Patel (Conservative, Witham)

Does the hon. Lady not have a sense that the rather grey and bleak picture she presents about post offices is a legacy of the previous Government and, specifically, of the post office closure programmes? I say that because, yesterday morning, I opened a new post office in the village of Coggleshall in my constituency. I pay tribute to the entrepreneurial spirit of our sub-postmasters there, who, in the face of adversity over several years, have gone out to fly the flag for local communities, providing social services as well as the actual business to those communities.

Nia Griffith (Labour, Llanelli)

I congratulate the hon. Lady on having the tremendous pleasure of seeing somebody set up a new post office, which is certainly what we want to see. We want to see post offices survive and have the business—Royal Mail business—to ensure that they can provide for their communities. We want that to be through an IBA which is meaningful and which has not been eroded by the beating down of the price or by the determination to do a deal at any cost. It is, therefore, very important that we try to get the very best for our sub-postmasters and sub-postmistresses, so that they have certainty as soon as possible about the future.

Graeme Morrice (Labour, Livingston)

I apologise for my dreadful cold, which hon. Members can no doubt hear.

I have listened carefully to my hon. Friend. She has covered many points in this whole debate, and I am certainly convinced by many of her arguments. The problem of uncertainty is a very powerful argument for supporting the amendment on a sunset clause. In describing her own experiences and the situation in her constituency, she made references to roundabouts, “Strictly Come Dancing”, tin and beer. The only thing she did not mention was “The X Factor”. I am reminded of the famous contestant, Susan Boyle, who is from my constituency.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I must tell the hon. Gentleman that interventions should be short. Speeches are different.

Graeme Morrice (Labour, Livingston)

Apologies.

Nia Griffith (Labour, Llanelli)

Thank you, Mr Hood. I look forward to hearing my hon. Friend, who I am sure will speak again and tell us more of his findings. Let us get on to the issue of what a sunset clause is. We are told on the Department for Business, Innovation and Skills website that

“Sunsetting is a way of ensuring that legislation is reviewed, kept up to date, and not left on the statute book after it has served its purpose.”

Well, I am going to check “sunsetting” in the “Oxford English Dictionary”. Since when was sunset a verb? As far as I am concerned, the sun sets. It can be used as an adjective, as in a sunset clause, but I reject the idea that we can sunset something. I wonder what the past tense is—the sun set, the sun has set. Is it sunsetted or sunset? Is it “We sunsetted the legislation”? I am glad that the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey) agrees with me. Obviously, coming from so near the home of the “Oxford English Dictionary”, he will have understood, as I have, that that verb is reverting to the irregular past tense.

The website suggests that we

“should look for opportunities to use a ‘sunset clause’ for new policies where appropriate. In these cases, the post–implementation review will inform decisions about renewal.”

We are told that sunset clauses are particularly appropriate for

“proposals designed to solve a time–limited problem or where specific requirements might become out of date”.

They might be specifically used for

“measures based on a particular set of market conditions or giving powers of economic regulation that can be removed as markets develop”

or

“where there is considerable uncertainty over what the costs and benefits of action will be”

or

“the policy area characterised by fast–moving events or technologies;”

All those are highly relevant to the matter before us, and for that reason I support the amendments in my name and that of my hon. Friend.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is a real pleasure to begin addressing the amendments on our first day of scrutinising the Bill in Committee, Mr Hood. I look forward to serving under your and your colleague’s chairmanship.

When I spoke to the Chief Whip about taking the Bill through Parliament, I made it clear that I was looking forward to Opposition amendments, so that we can ensure that the Bill is improved, if possible. I look forward to listening to the arguments and doing a serious piece of work. I hope for some enjoyment in that process, doing something of value and also listening to anecdotes. Today we have heard about “The X Factor”, “Strictly Come Dancing”, “Tinopolis”, someone called Jackson and the six-exit roundabout at Cross Hands, so we have certainly covered a lot of ground. That has helped me to get my thoughts together. I was thinking about what we should call the amendments—either the Red Bull or the spivs amendments. After I have made my speech, I will let colleagues decide which term they think is best.

I want to explain to the Committee that the amendments are not as helpful as the hon. Member for Ochil and South Perthshire has suggested. Indeed, I will invite him and his colleagues to withdraw them.

I was intrigued by the amendments in the group and the other amendments tabled by Opposition Members. Taking them at face value, it is not absolutely clear what Labour’s policy on Royal Mail is; it is a smorgasbord of policies.

Karl Turner (Labour, Kingston upon Hull East)

Will the Minister give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am very happy to give way on smorgasbord.

Karl Turner (Labour, Kingston upon Hull East)

I am obliged to the Minister for giving way. Does he agree that his position now has changed since before the election? I think I am right to say that the position advocated by the Liberal Democrats before the general election was similar to the Labour party’s plan.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I do not agree with the hon. Gentleman. He is absolutely wrong.

I was saying that the amendments and new clauses tabled by the Opposition were a smorgasbord. Let me explain. Some of the amendments suggest that the Labour party is in favour of full public ownership, and others suggest that it is in favour of majority public ownership. Quite amazingly, in the amendment that we are discussing, the Opposition support the Government policy of selling Royal Mail—they want a fire sale and to get on with it as quickly as possible. The position that the Opposition have got themselves into on the very first day is quite extraordinary.

Graeme Morrice (Labour, Livingston)

I shall try to be a bit more focused this time, Mr Hood. Apologies for my last intervention; I am new and learning very steeply.

Ed Vaizey (Conservative, Wantage)

Hurry up!

Graeme Morrice (Labour, Livingston)

Thank you for that intervention.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. The Chair will advise Members.

Graeme Morrice (Labour, Livingston)

I am grateful, Mr Hood. Perhaps the hon. Member for Kingston and Surbiton could spell out what the Liberal Democrat policy was before the election.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am very keen and happy to do that because, as the hon. Gentleman ought to know, we argued for selling Royal Mail in our manifesto. I am happy to detail that for him and give him copies of the policy papers and the manifesto. I am slightly worried that that would take me off the debate of the amendment before us, but I am happy to be tempted.

Gordon Banks (Labour, Ochil and South Perthshire)

May I read to the Minister what his manifesto says? It states:

“Give both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership. 49% of Royal Mail will be sold to create funds for investment. The ownership of the other 51% will be divided between an employee trust and the Government.”

That is massively different from the position that he is now arguing for.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I do not agree with the hon. Gentleman. I believe that what we are doing in terms of giving shares to employees and getting private capital is very much consistent with our manifesto. Given the lack of consistency in the hon. Gentleman’s proposed policies, he has rather more problems on consistency; we have about four positions from the Labour party on one day in one Committee, which is quite extraordinary.

That is extraordinary for a serious reason. We heard, in the evidence sessions last week, what a serious position Royal Mail is in. The Labour party, after 13 years, has left one of our great British institutions in an extremely serious position. We have seen a lack of investment; we have seen the financial position of Royal Mail deteriorate; and we have seen letter volumes and the underlying health of the business get worse and worse. Given the seriousness of Royal Mail’s position, the fact that the Labour party has four positions today is quite extraordinary. I hope, therefore, that we will hear through the debates in Committee that the Opposition have something serious to say about what they believe the policy on Royal Mail should be, and how they want to address the position that they have left Royal Mail in.

Nia Griffith (Labour, Llanelli)

Does the Minister wish to join me in congratulating Royal Mail, both management and the work force, on the tremendous progress that it has made on the modernising programme in the past two years, about which we have heard glowing reports?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Of course. I have, on many occasions, welcomed aspects of modernisation, particularly the agreement struck between Royal Mail and the CWU; tributes should be paid to both sides. The hon. Lady must accept however, not least because her Government commissioned Richard Hooper in 2008 to look at the problems facing Royal Mail, that what he found and told the Committee about last week were grave problems. Yes, progress has been made with modernisation. No one is seeking to deny that but, even despite that progress, there are still huge problems for Royal Mail and for its letters business in particular.

Graeme Morrice (Labour, Livingston)

Whereas no one disputes the fact that we need to inject substantial capital into Royal Mail, does the Minister agree with Ms Greene’s comments last week when she gave evidence? She was particularly upbeat about the current service. She talked about world-class services and the success of modernisation during the past couple of years. Indeed, the Minister has mentioned that. Royal Mail has a five-year plan to take modernisation forward, and that is before privatisation. Does the hon. Gentleman concur with the views of the chief executive of Royal Mail?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman knows that I concur with the views of the chief executive of Royal Mail, Moya Greene. We were delighted to play a part in her appointment on the recommendation of the chairman, but I refer him to her thoughts about the notion of the Government as a shareholder, when she said that

“there are real problems with having Governments as providers of capital to big companies such as this one.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 5, Q4.]

She made it very clear in her testimony that she supported the Government’s approach. I am not surprised that she was positive about Royal Mail, because it has a great future.

Karl Turner (Labour, Kingston upon Hull East)

Will the hon. Gentleman give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

In a second. Moya Greene was positive about the future of Royal Mail, because of the policies that the Government are putting forward that the Opposition seem to be opposing.

Karl Turner (Labour, Kingston upon Hull East)

What Moya Greene said is right in relation to the points that the Minister has just made, but will he admit that that position has changed? Prior to the election, as my hon. Friend the Member for Ochil and South Perthshire rightly pointed out, the Liberal Democrat manifesto stated:

“Give both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership. 49% of Royal Mail”—

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Interventions must be a lot shorter than that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think that we got the general gist of what the hon. Gentleman was saying as he was repeating what had been said previously. Let me help him and his hon. Friends because, no doubt, such sentiments will be repeated time and time again.

If we consider what we were arguing for and add together what we were saying should be sold and what would have been provided for employees, that would have made Royal Mail a private company. That is what we are now pursuing. We believe that privatisation is a good thing for Royal Mail. It is not just us who are saying that, but a whole range of the witnesses who appeared before the Committee last week, such as Moya Greene, whom I have just quoted. Interestingly, the chief executive of Ofcom made it clear that such action was the right approach, as we have said in opposition and in government.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

My reading of the Liberal Democrat manifesto was that the Liberal Democrats wanted to retain a Government stake in the Royal Mail. The Minister can correct me if I am wrong. Moreover, I suspect that the Liberal Democrat manifesto had that in it because there are few examples throughout the world of countries that have fully privatised their postal services network.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

An increasing number of post administrations are in private hands. It is interesting when we consider them because they tend to be the most successful post administrations. We obviously think of the Dutch and the Germans, but there are also Singapore, Malaysia, Austria and others. I must tell the hon. Gentleman that the evidence is against the position that he and his colleagues are adopting. I recommend that he studies the trend in postal market reform and in post administrations, because it is certainly is the same as that that the Government are advocating.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

A list of the nations with a fully privatised postal services network would be helpful. The Minister suggested that it was a developing trend. Any information on that point would be helpful.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I hope that when the hon. Gentleman reads the record, he will find that the previous answer goes some way to giving him what he wanted.

David Wright (Labour, Telford)

Will the hon. Gentleman give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am going to make a little bit of progress before I take more interventions.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. May I try to guide the Committee? We seem to be moving into debates which would be more appropriate for clause stand part, and are not necessarily focused on the amendment before the Committee. I advise colleagues that if they want to raise points away from the amendment, they should leave them to the stand part debate.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Thank you, Mr Hood. The argument that I was trying to develop, before taking a number of interventions, was that Royal Mail faces serious problems, which have to be addressed. The idea behind the amendments before us—that the Government are delaying taking action—is quite an extraordinary charge to make. The last Government failed to take action, and indeed Parliament and the country have failed to take action, on the issue for many, many years. This Government, within six months, have presented the House with a Bill to take action, and we are pressing ahead rapidly with that action. So it is quite extraordinary to have that accusation; there can potentially be many accusations, but that certainly does not hold any water. If one looked at what the Labour party said when it was in government, one would see that it was trying to reform Royal Mail. It failed—it laid a Bill before Parliament, but failed to even take it through Parliament. It was using the sort of evidence that we have used to create our Bill, so it is in an increasingly extraordinary position.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The Minister has just indicated that Deutsche Post is fully privatised. Is it not the case that Deutsche Post is 42% publicly owned?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

No. That is not the case. I believe that the majority of shares are listed, and of those listed, 30% are held by UK investors. I am happy to give the hon. Gentleman the full breakdown. I have some figures in my mind. Quite a lot of the investors are American, and there are also Brits and Spanish investors. I can get back to him with the full breakdown, but it is not true to say that it is a mostly state-owned company; it is mostly in the private sector.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The question was not whether it is mostly state-owned. I think I am right in saying that the Minister suggested that it was wholly private. My understanding is that Deutsche Post is not wholly private, and I would appreciate some information on that point.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am very happy to give detailed information. I believe that there are a tranche of shares still held by the Government, but it is certainly a minority stake.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

There are.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Will hon. Members who have made their interventions listen to the reply without commenting on it?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

If one looks at the Dutch post office, I believe that one will find that 100% of its equity is in private hands. If one looks at Singapore Post, one will see that it is 100% in private investors’ hands. I am not quite sure what argument the hon. Member for Middlesbrough South and East Cleveland is trying to pursue with reference to Deutsche Post.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Will the hon. Gentleman give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Mr Hood, I think I am already getting a reputation of being generous in accepting interventions, and I would not want to spoil that reputation by not giving way yet another time.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

In all seriousness, I do thank the Minister for giving way. So far, he has provided us a list with the Dutch—he has taken the Germans back, because it is not private as he suggested—and the Singaporeans. That is not an enormously long list of fully privatised postal services. I say to him again: Deutsche Post is not fully private. I think the Minister has himself admitted that, and I thank him for that concession.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Let me make it clear: there is no concession at all. I think the hon. Gentleman is in serious trouble with his argument. For a start, Deutsche Post is mostly owned by private investors, and I think anyone trying to suggest that a minority shareholding gives the German Government control is absolutely wrong; we will undoubtedly come to this in our debate. If he looks at how Deutsche Post is managed—its investment, access to capital and so on—he will see that it acts and behaves like a private company, and therefore I think one could say that it is a private company. The same goes for the Dutch and in Singapore. I do not know if he is aware, but the Austrian Government still have slightly more than 50% of the shares in their Post Office. I suspect that that will change in due course, but they have sold a large shareholding. I believe Malaysia Post is mostly in private hands, but I do not have the figures to hand. I am not quite sure what argument the hon. Gentleman was making, to be brutally honest.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

My argument is very simple; it is that Deutsche Post is not fully private. If the Minister wants to turn it round and say, “It is not fully public,” that is not the argument. As I understand it, the Bill will fully privatise Royal Mail. That is a different position from the one the Germans are in. He is reduced to citing Singapore, Malaysia and bit of Austria, but it seems to me that most mail services in the world have a significant aspect of public ownership. Is that fair?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman is absolutely right that, traditionally and historically, postal administrations have been in public hands. If one treks back through their history, they started from monarchs’ control of the letters that were sent round their kingdoms. Eventually, to raise cash, those monarchs allowed private individuals and corporations to use the royal networks. Traditionally, monarchs prevented private mail companies from being set up, because the kings and queens of Britain and Europe wanted to prevent private individuals escaping from the royal control of the messenger system. Given that history, it is interesting that the hon. Gentleman takes the position that he does.

I would be happy to lend the hon. Gentleman one of the books I have here—“Handbook of Worldwide Postal Reform” edited by Michael Crew and Paul Kleindorfer. They are two very interesting postal economists; I attended a conference they held in 1994, I think. They set out the trend in postal reform, which is to greater commercialisation and, indeed, increasingly, to looking at private sector involvement—in several ways, but increasingly by privatisation of postal administrations. That is an established trend, and I cannot understand why the hon. Gentleman cannot accept those facts. I know he wants to come back to me, because he is very keen.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The facts, which the Minister says I do not accept, I am unclear about, because the point is about whether Deutsche Post is fully privatised or not. He may be right about the trend, and I was interested in his run-through of monarchs, kings and queens, but I would mention a country that has never had a monarch, or got rid of it very quickly—the United States of America. Is its postal service fully privatised? No kings or queens allowed.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. Hon. Members have been tempted away from the amendment, which is quite focused. I have heard comments that are better suited to the stand part debate, not this debate. So I invite the Minister not to encourage any other comments.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I will try to be less generous in the next few moments, Mr Hood.

To focus on amendments 13 and 14, I tempted the Committee to decide whether they should be called Red Bull or spivs amendments, and I am torn between those two names. They are Red Bull amendments because they would fast-track the sale of Royal Mail. Although that may be tempting, I am surprised that the hon. Member for Ochil and South Perthshire wants to be the Sebastian Vettel of this Committee.

Gordon Banks (Labour, Ochil and South Perthshire)

He is world champion.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

He is German as well. It is interesting that the hon. Gentleman wants to force the Government to sell Royal Mail even more quickly. On one level, one might be tempted by that, if it was not such a bad idea. It is a bad idea for this reason—we have made it clear that the objectives behind the Bill are to secure the universal postal service, to ensure that Royal Mail has a bright future and to get value for money for the taxpayer. I invite the Committee to think of a commercial logic behind the position that the Opposition are seeking for us to adopt. They are effectively suggesting that we have a legally mandated fire sale, which would undermine the position of Royal Mail and value for the taxpayer.

It was the hon. Member for Angus who put his finger on it. I know that he is not a supporter of the Bill, but I share his analysis of the amendments. They would play into the hands of those investors who want to get their hands on Royal Mail for a knockdown price. If there was a date by which the Government had to sell, that would be very much in the interests of those who want to get Royal Mail on the cheap, which would not be in the taxpayers’ interests. I find it odd that the Opposition are trying to do that, setting artificial deadlines, seemingly picked at random, and enshrining them in primary legislation. I cannot think of anything more unwise in the sale of a publicly owned asset.

Michael Weir (Scottish National Party, Angus)

I thank the Minister for giving way on the rare occasion that we agree. The point made by the hon. Member for Llanelli that struck me as having merit is about investment in Royal Mail. Can the Minister tell us what will happen in the interval? Will it be encouraged to draw down on the funds available to continue a strong modernisation programme, pending a sale, if the sale goes ahead?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

There are funds that are yet to be used that have been made available to Royal Mail. No doubt it will continue with its modernisation programme. I do not want to give the Committee any indication that we want to be slow in our approach, because we have made it clear, not least by putting it in the Queen’s Speech, putting the Bill before Parliament and pressing on rapidly, that we do not intend the grass to grow under our feet. We are approaching the sale with one clear principle in mind, which is flexibility. The idea that we would put chains on ourselves by passing into law a deadline for the sale is commercial nonsense. If one was selling a house—a popular theme of today’s debate—one would not have a deadline, because it is against the interests of the person selling the asset. I am staggered that the Opposition think that it is a sensible idea.

We have heard a huge amount of justification for why the Opposition referred to the amendments as sunset amendments and how the amendments would remove the uncertainty in Royal Mail. There has, however, been uncertainty in Royal Mail for decades. That has been the problem and that is why it is in the mess that it is in. That is why the previous Government failed so dramatically, because they did not have the sense of purpose or the clarity of policy and they were not prepared to do the things that are required. Rather than creating certainty, the amendments would undermine the future of Royal Mail that I have set out. It would be a one-way bet for investors.

I was surprised by the way that the hon. Member for Ochil and South Perthshire introduced the amendments. When he talked about death by a thousand cuts, I thought that he was describing what had happened under his Government. Royal Mail had a torrid time, as did the post office network, under the previous Government, because they had no clear, sustainable policy. The Opposition—I think it was the hon. Member for Ochil and South Perthshire—quoted Donald Brydon and Moya Greene in support of the amendments, but any reading of their testimony goes the opposite way. They were talking about the need for speed of access to capital and they were supporting the sale.

Given that we are talking about Royal Mail, I am sure that the Committee would like to know that Prince William has just announced his engagement to Kate Middleton. On behalf of the whole Committee, we send the royal couple our best wishes.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I do not think that that good news is relevant to the amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I believe in being flexible about how we sell Royal Mail and in being flexible in this debate.

Priti Patel (Conservative, Witham)

Perhaps, upon hearing that very good news, Royal Mail could produce a set of celebratory stamps.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

When I am doing my red box, it is one of my great pleasures that I often have to send letters to Her Majesty’s staff concerning Royal Mail’s proposals for different stamps. I may well have to sign such a letter in due course.

David Wright (Labour, Telford)

As this is my first opportunity to approach a Minister on hearing that excellent news, could he tell us whether the Government will give us a bank holiday?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

One of my jobs, as the hon. Member for Castle Point knows very well, is Minister for time, but I am not sure, without advice from officials and a discussion with the Prime Minister, that I could possibly make such an announcement, interesting though that idea is.

The hon. Member for Kingston upon Hull East, who supports the amendment, has suggested that the Government might sell Royal Mail at any price. That is absolutely not the case, but the amendment would force the Government to sell Royal Mail at any price. Our approach to flexibility ensures that we get good value for the taxpayer; it is only his approach and his party’s approach that would undermine the taxpayer and the future capital investment prospects for Royal Mail.

Karl Turner (Labour, Kingston upon Hull East)

Will the Minister tell us how much Royal Mail is up for sale for?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman clearly enhances the enjoyment of the Committee with his comments, because, let us be clear, until the Bill receives Royal Assent we do not have the authority to put Royal Mail up for sale. Even when we receive Royal Assent, we will not know exactly how much we are likely to get, for the simple reason that we will not know until we engage in an initial public offering, a flotation or an auction. That is called commercialism, it is called doing business, and the Opposition’s comments, including this amendment, suggest that they do not quite understand how that works.

The hon. Gentleman has talked about the excellent service that Royal Mail currently provides, and I note from my own constituency how hard Royal Mail employees work. When one goes round a local delivery office at Christmas—as I go around the Villiers Road delivery office in Kingston, or the delivery offices in New Malden and Chessington, which serve my constituents—one sees how many sacks Royal Mail employees are taking out and how hard they work. Despite all their hard work, the service is not as good as it needs to be, because of the lack of investment and the many other problems over the years.

Given that some 60,000 Royal Mail employees have lost their jobs over the past 13 years, and given that we have seen losses and rising prices, the picture that the hon. Gentleman is trying to paint, that Royal Mail is a fantastic success story, is simply not the case. I do not think that Richard Hooper could have written the report that he wrote for the previous Government, or his update for this Government, had that been the case.

Karl Turner (Labour, Kingston upon Hull East)

The Minister seems to blame the previous Government for the entire demise of Royal Mail. Does he not accept that there has been a natural diminution of business for Royal Mail? Postage is an example of that. My hon. Friend the Member for Telford whispered during the Minister’s earlier comments that we are very proud of a great deal of our achievements. Does the Minister also blame us for the creation of the internet? Are we to claim credit for that?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I said that the Committee would be amused by the hon. Gentleman. Of course I do not give the previous Government any credit for creating the internet, because that was certainly beyond them. The internet was created by a private individual and by entrepreneurs, so there is no way I would give the previous Government credit for that. They failed to ensure that Royal Mail and other companies were able to respond to the challenge of the internet. That is what we are doing; the hon. Gentleman and his Government failed miserably to do so.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The Minister may be ignoring Moya Greene’s testimony in the first evidence session, when she said:

“In two short years, we have introduced world-class mail, and believe me, they are truly world-class facilities.”

She went on to say:

“Do I think that the company has value? I think that the company has huge value, and I have been so impressed.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 11-12, Q25.]

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I often agree with Moya Greene; I am sure that we will find the odd thing on which we disagree, but she provides great leadership for Royal Mail. Her evidence showed that a real need exists for the deal before us and that, with the Bill, Royal Mail has a great future.

The hon. Gentleman mentioned world class mail, which is a project in Royal Mail. I referred to it in my testimony, and I have seen evidence of it on my visits to the sorting centres at Gatwick and Cardiff. I am deeply impressed by the progress that has been made through world class mail. The problem is that it is being rolled out only in a rather small part of Royal Mail. Plans exist to roll it out further, but the problem with modernisation in Royal Mail has always been that it seems to take an awfully long time.

Modernisation has come rather late to Royal Mail. Other postal administrations are, in many ways, years ahead of some of the investment and practices that we have in this country. We desperately need to catch up. I believe that only by freeing up Royal Mail, and giving it freer access to the capital markets by taking away the dead hand of the Government, can we see the sort of renaissance that we have seen in countries such as Germany and Holland.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

In her testimony, Moya Greene also referred to the fact that the modernisation programme in Royal Mail has been far better than the one at Canada Post.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Yes; I have heard a number of stories from Moya Greene and other postal experts about the difficulties, trials and tribulations of Canada Post. Moya Greene gave great leadership when she was its chief executive, and she took it forward. No one asked her whether she would like to have privatised Canada Post and, if she had been asked, no doubt she would have said that that was a question for Canadian politicians. I am struck, however, by her strong support for the Bill, which Labour Members cannot deny.

In her speech, the hon. Member for Llanelli likened our situation to driving around a roundabout, and suggested that we were not quite sure about which exit we were going to get off at. We are absolutely sure of the exit, and we want to ensure that a third party is not gripping the wheel and preventing us from going where we want.

The hon. Member for Telford expressed his concern that, if we were not careful, we would end up in Swindon, having set off from the Cross Hands roundabout in the hon. Lady’s constituency. We know exactly where we are going, however. It will be a successful Royal Mail, a continuing universal postal service, good value for the taxpayer and a good deal for Royal Mail employees. That is something of which I am proud.

Graeme Morrice (Labour, Livingston)

The Minister seems to be saying that he believes that privatisation will result in a good deal, and in good value for the taxpayer. However, my hon. Friend the Member for Kingston upon Hull East has asked specifically how much we will get from the flogging off of Royal Mail to the private sector, and the Minister did not answer that. Have the Minister’s departmental officials even made an estimate of what income would come from the sale?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is tempting to give the hon. Gentleman figures. He will know, however, that for many years, Ministers who sell public assets and want to take them either to an auction in a trade sale or to flotation never give such estimates. That would obviously undermine the potential for the taxpayer to get the best possible value, so I am certainly not going to be tempted to do so.

The amendments would be damaging to the Bill; they would not help in any way. Fast-tracking the sale could undermine value for the taxpayer. I welcome the fact that Opposition Members now seem, through the amendment, to accept the removal of the restrictions to the Postal Services Act 2000, to allow the sale of Royal Mail—that is the gist behind the amendments. I believe, however, that the proposals are entirely unworkable and against the interests of all our constituents. I ask the Opposition to withdraw the amendment. If they are not prepared to do so, I ask my hon. Friends to resist.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister’s remarks have been interesting, as have those of other hon. Members. The hon. Member for Angus expressed concern about the insertion of the sunset clause and the rush to sell at a knock-down price. My hon. Friends and I have made the point already that the proposal’s effect would be quite the opposite of that. The power lies with the Government, because they would have the ability to return to Parliament if the sale were not completed by the sunset clause date. In my estimation, the sale price will be driven down further the longer Royal Mail remains on the market without a buyer. The proposal’s purpose is to focus minds and attention on the concept of the Bill.

The Minister must have selective deafness if he has not heard the Opposition’s position on Royal Mail loud and clear. Our stance is not too far from the Lib Dem position in their manifesto, which has been read out and in which the Minister believed earlier this year. We have not changed; the Minister has, and he—not Opposition Members—needs to wrestle with that.

On the comments that were made by the hon. Member for Angus, I believe that damage to the business will be created without the sunset clause. Such damage will be created by the way in which the Bill is drafted—in many ways. If Royal Mail is to be sold, there will be damage because the sale could be extended and, as I mentioned in my opening remarks, could go on for years or decades, from Government to Government.

Michael Weir (Scottish National Party, Angus)

Does the hon. Gentleman not accept that the law of unintended consequences might apply here? I understand the intention behind the amendments, but I fear that they would produce the opposite effect and that there would be a fire sale of Royal Mail to get it out of the way. Does he not accept that that would be a real danger if the amendment were accepted?

Gordon Banks (Labour, Ochil and South Perthshire)

I recognise the hon. Gentleman’s right to have that concern. I have tried in my opening remarks—and other hon. Members have tried in their contributions—to convey that we see quite the opposite effect. We see the knock-down price for Royal Mail being delivered. When the “For Sale” sign has been in the garden for two, three, four or five years, you don’t get top notch for your dollar. I am sure that the Minister recognises that, and the hon. Gentleman will recognise it in my analogy about house sales. The real damage is manifold in the Bill. As for the date of the sell-off, there is a lack of clarity and swiftness on the part of the Government.

I am grateful for the support of my hon. Friend the Member for Kingston upon Hull East. I shall repeat the point that we have both made in case the Minister did not grasp it: Royal Mail should be retained in public ownership. That policy is not too different from that stated in the Liberal Democrat manifesto on which the Minister was elected in May this year. As my hon. Friend said, without a timetable the value will fall, a point I have been making to the hon. Member for Angus. We see difficulties with the sale. It could last for years and go beyond the current modernisation period.

It was asked last year what would happen if the sale went beyond the current modernisation period. I asked the Minister in my opening remarks where Royal Mail would obtain the money for a continued modernisation period. He has not answered me. He has not told me what would happen to ongoing investment in Royal Mail if the sale were not completed by the end of the period. My hon. Friend the Member for Kingston upon Hull East voiced our continued commitment to keep Royal Mail as a publicly controlled operation, and he agrees that the extended sale period will drive down the price.

My hon. Friend the Member for Telford highlighted the accountability to Parliament if the Government cannot sell by 30 June 2012, the time that we are arguing about. It is within their power to come back to Parliament, revise the sunset clause date and continue the sale mechanism. That approach is not designed to preclude the sale, but to focus minds—if the flawed Bill is enacted—on the fact that the inclusion of the date of 30 June 2012 would give impetus to the Minister to get his skates on, probably before he changes his mind and goes back to the Lib Dem policy that he stood for in May. In some ways, the amendment would empower the Government. I said to the hon. Gentleman that I wanted to be helpful. I do, and I shall continue to be so throughout our proceedings.

My hon. Friend the Member for Telford made a valuable point, an issue that I tried to tease out when my hon. Friend the Member for Llanelli was speaking. It was about the pressure that the Government, through the lack of clarity, will place on people who use the business and on those in the business if the sale period is drawn out. I go back to my opening remarks about the coalition Government’s support for sunset clauses. Indeed, the hon. Member for Wantage, the telecommunications Minister who is at present telecommunicating with his party’s Front Benchers, showed strong support for sunset clauses.

My hon. Friend the Member for Llanelli tried to clarify the position when she quoted from the Department for Business, Innovation and Skills website and put forward the view about sunset clauses. It was not her fault that there was a mix-up in the grammatical content of the website. She painted a good picture with the roundabout analogy, saying that we never get anywhere if we do not get off. We are giving the Minister the opportunity, through the amendments, to move forward, instead of going round and round and eventually disappearing.

Uncertainty would lead to operational difficulties and delays in the decision-making process that has got us where we are today. I tried to make that point to the Minister in my opening remarks. My hon. Friend the Member for Llanelli did so in her contribution. If we do not have clarity and focus, we run the risk of the next period being compared with the previous period, when people bemoaned the lack of investment in Royal Mail. I do not think anyone in the Committee would like to see that situation develop again.

My hon. Friend spoke well about how Royal Mail can in its current form attract capital funds. I do not wish to tempt your patience, Mr Hood, by going into the clause stand part debate, but suffice to say that the Minister did not respond in any way, shape or form to several issues that my hon. Friend raised. One of the issues concerns preserving the post office network. Perhaps I have selective deafness, but I did not hear the Minister give us any information about what he felt the impact of a sale date—or no sale date—on the post office network would be, so I am a little disappointed.

My hon. Friend discussed the grammatical content of the Minister’s website. She usefully pointed out what sunset clauses should be used for, according to BIS: where there are concerns about market conditions; where there is considerable uncertainty; and where there are fast-moving events in technology. The Minister’s own website tells us why we should have a sunset clause in the legislation. I am disappointed that the Minister has not seen fit to grasp that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Does the website refer to regulations or privatisation?

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister has me at a disadvantage, because I am referring to the contribution by my hon. Friend. A contribution stating that the website refers to sunset clauses in relation to market conditions, uncertainty and fast-moving events in technology seems to match the structure of the company that the Bill is about. The points made by my hon. Friend were extremely valuable.

I will move on to the Minister’s contributions. He posed this rhetorical question: is it possible to improve Royal Mail within the current mechanism? We believe it is possible to improve it and to retain public control of the company. Opposition policy is clear, and it has been reiterated by three, four or five members of the Committee. If necessary, we will keep saying it—we will say it in the debate on clause stand part and new clause 2. We want to stand by what we said in our manifesto, unlike the Liberal Democrats, which have reversed their manifesto position.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Now the hon. Gentleman is talking about his party’s policy, can he tell us whether it is the same as it was in the Postal Services Bill 2009, which his party put before Parliament last year?

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister needs to grasp that we are talking about his Bill now, not the 2009 one. This Bill sells off Royal Mail, which is very different from the 2009 Bill. As the Opposition, we have a duty to probe the Minister, the Government and the Bill. That is what we will continue to do, and that has been remarkably well achieved by the contributions of my hon. Friends this morning. The problem of how we want to view Royal Mail is serious, but the issue is what the Bill does. We have made our position clear. Many Members have made the point about retaining public ownership, and, as I have said, that is similar to the Minister’s position before the election.

The Minister has also mentioned the decline of Royal Mail under the Labour Government. I do not know which of my hon. Friends made the contribution—perhaps it was more than one—but we sat in the Committee Room and listened to evidence, especially the evidence from Moya Greene, who waxed lyrical about the progress that had been made by Royal Mail under the Labour Government and about the expertise, the movement forwards, the brand and the dynamism of Royal Mail. If Royal Mail is such a basket case, nobody will buy it anyway. The chief executive of Royal Mail, quite rightly, told us how she found Royal Mail, and she is the exact person to be able to make such statements, because she has a raft of experience and can make international comparisons. My hon. Friend the Member for Cumbernauld—I will not say the rest of it, because I do not want to take up too much space in Hansard—also pressed the Minister on international issues and comparators. Moya Greene said that Royal Mail, because of what has been done in the past 18 months to two years, is a top-class company with a top-class future. That did not happen by accident; that happened because of a deliberate plan by the previous Government.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman confirm that Moya Greene supports the Bill, and that she made that clear to the Committee?

Gordon Banks (Labour, Ochil and South Perthshire)

I would say that Moya Greene supports the Bill, but I also took from her evidence that she supports a sale by 2012. I have given the Minister every opportunity to support the chief executive in her aspirations, because it was clear in her evidence that she thought that a sale by 2012 was doable.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Can my hon. Friend think of any reason, beyond management expertise, why directors and other members of the Royal Mail board might favour privatisation?

Gordon Banks (Labour, Ochil and South Perthshire)

I will leave that as a rhetorical question. I am quite sure that if my hon. Friend wants to stand up and make a comment, he is big enough to do so.

People will make their own judgments, but Moya Greene has waxed lyrical about the value and success of Royal Mail, and those, as I have said, did not arise through any accident.

Priti Patel (Conservative, Witham)

Does the hon. Gentleman recognise that, in Moya Greene’s evidence to the Committee last week, she made it abundantly clear that it is not sustainable to have taxpayers’ money propping up Royal Mail, hence the need for private capital?

Gordon Banks (Labour, Ochil and South Perthshire)

I do not think that anybody on this side of the Committee has said this morning that there may not be a need for private investment in Royal Mail. Nobody has said that. Moya Greene is perfectly able to comment on how she views the business, but how she views the business, how the Minister now views the business and how the Minister viewed the business in May or April seem to be three different things.

I want to take the Minister back to that issue, because he seems to think that the proposals in the Bill match his manifesto. They do not. In his manifesto, he argued for 49% of Royal Mail to be sold off, and 51% to be retained by the Government or in employees’ trust ownership. The Bill will sell off 90%. I am quite simple. I did not do a maths higher or A-level when I was at school. However, I did arithmetic and I can count—90% and 49% are not the same thing. They are quite close if we reverse the four and the nine in 49, but that is about as far as we get. The Minister, in trying to defend the structure of the Bill in relation to his manifesto, is left floundering at every turn.

If the Government are not delaying the sale of Royal Mail—the Minister commented that he did not want people to think that he was delaying and taking an extended period of time—why does he not just tell the Committee what the timetable is? That would be most helpful, and perhaps some people would be moved by it and support him. As long as we have no timetable, we do not know what the Minister sees, calendar-wise, as the future of Royal Mail.

We return to the question of what happens with an investment or a modernisation period after the end of the current period, if the company has not been sold. The Minister has had an opportunity and perhaps he will tell us later in Committee what the timetable is. The Committee would find that very helpful and Royal Mail and the businesses that use it would find that very helpful. It would be a positive step if we could just understand which day on the calendar has a big X on it. If the Minister could tell us, that would be great.

We heard the comments of my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East—incidentally, that must be the longest title of any Member of Parliament. I thought that I was quite fortunate—or unfortunate—with Ochil and South Perthshire, but that title beats mine hands down. My hon. Friend harried the Minister well on a range of issues, especially in relation to international ownership. That is very important, because the Minister is saying in the Bill that Royal Mail cannot survive in an international market unless it is 90% owned by the private sector.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The Minister also said this in the evidence session:

“With regard to flexibility specifically for employee shares, we will want to discuss with Royal Mail and, indeed, its employees and any future vendor, how that should be set up.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 125-6, Q249.]

Would a date not allow the Minister to know the time frame that he would have to discuss with any potential buyer and with employees exactly what share employees could expect to buy into?

Gordon Banks (Labour, Ochil and South Perthshire)

My hon. Friend’s point is very good and valid. The contributions that he has made on other issues throughout this short debate have been, like those of my other hon. Friends, extremely well placed and valuable.

The Minister likened me to Sebastian Vettel.

Mr Davey rose—

Gordon Banks (Labour, Ochil and South Perthshire)

I shall give way and do the Sebastian Vettel bit afterwards.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman has told the Committee that he did not do higher-level maths, but I recall from his biography that he was a business man. When he was a business man, did he ever put an asset up for sale and tell any potential vendors that he would definitely sell it, come what may, for whatever price, by a particular date? Was that the way in which he carried out his business?

Gordon Banks (Labour, Ochil and South Perthshire)

For the third or fourth time, I reiterate that the sunset clause does not preclude a sale in 2013, 2014, 2015, 2020 or whenever the Minister wants, provided that he comes back to the House and convinces the House of the need to amend the sunset clause. [Interruption.] The Minister says from a sedentary position that it does not say that, but he knows perfectly well that the Government have the power to come back and amend any legislation. They would have the ability to amend this legislation.

The Minister asks about my experiences in business in the private sector. There are two fundamental cornerstones of a business: customers and staff. If business people do not value their customers and staff, their businesses will go down the toilet, and the Bill in its present form values neither the customers nor the staff of the organisations that we are talking about. That is now and always has been my prime concern in business. Those are the fundamental building blocks that everybody in business should relate to and use as a foundation to go forward.

I must get back to the topical issue of Sebastian Vettel, who is now Formula 1 world champion. [Interruption.] Perhaps the Minister has a history in motor sport. I am grateful for him for allowing me to get that on the record in Hansard. I spent many years rally driving in Scotland. It was enjoyable and costly, although not as costly as Formula 1. My ears pricked up when I heard the comparison to Sebastian Vettel.

The Minister called this the Red Bull amendment and said that a sale by 2012 would be a bad idea. However, the point that we have made—I have laboured it time and again—is that a Bill without a sale date in it is more damaging than one with a sale date. We return to the comments that I made in my opening remarks. One alternative could be death by 1,000 cuts. There could be a sale in 2015, 2020, or who knows when? The Bill does not tell us. The Minister has not yet told us. I give him the opportunity again to tell the Committee his understanding of the time scale and say which day on the calendar has the big black cross through it. We might disagree with him on the date, but we will stop asking about that if he will just come clean.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is not the hon. Gentleman whom I do not want to tell; it is potential vendors. If they were told, that would undermine the value for the taxpayer and the future prosperity of Royal Mail. That is why we will not give a date in a public forum—in Hansard.

Gordon Banks (Labour, Ochil and South Perthshire)

But at some point the Minister will have to tell somebody. The day after the Minister tells the first business that comes to him about his aspirations on a completion date it will be in the Financial Times and we will all be able to read it. Everybody will know.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I refer the hon. Gentleman to clause 2(3), on the report that the Secretary of State will have to make, which states:

“The report must state…the expected time-scale for undertaking it.”

That refers to the transaction.

Gordon Banks (Labour, Ochil and South Perthshire)

I do not disagree that the clause deals with the report. We will return to various amendments on that. I am saying that, for the benefit of the Committee, we are appropriately asking for something that would help in our deliberations. It would help if we knew what the Minister’s aims and ambitions were. As I say, it will not be a secret the day after the date is divulged to anybody, whether in Parliament or in a private conversation; it will end up in the FT or The Independent the next day.

The Minister suggested that a sunset clause would produce a knock-down price. The hon. Member for Angus made that point, but I need to come back to it. I have to say that the longer a product is offered for sale without a buyer—the point has been well made by my hon. Friends—the lower the price that will be obtained.

Michael Weir (Scottish National Party, Angus)

I appreciate what the hon. Gentleman is saying, but does he not appreciate that, with a desperate seller and a deadline, the opposite to what he intends will happen?

Gordon Banks (Labour, Ochil and South Perthshire)

If we have a desperate seller and potentially only one buyer, the desperate seller is going to have to make a decision on whether he sells anyway. The alternative to not selling is keeping us all—parliamentarians, Royal Mail, the work force and everybody involved—in this unacceptable state of limbo. I keep coming back to the point that it would be appropriate for a date to be set.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I want to ask my hon. Friend about current market conditions, if we are talking about a sunset clause on selling. We all know that bond yields on sovereign debt are at historically low levels, and that money is swishing around the financial system just looking for a decent rate of return. That cannot be had in British sovereign debt because the bond yields are so low. There are going to be lots of investors keen to buy into a successful company, as Moya Greene clearly laid out to us. Surely that means there will be a number of bidders very quickly.

Gordon Banks (Labour, Ochil and South Perthshire)

My hon. Friend, who has considerable experience in this matter, makes a valued contribution. The top listed companies in the City are currently hoarding money; they are not investing it. Whether they are hoarding money for the date when the Minister is going to tell them that they can spend it on Royal Mail, who knows?

I want to try to come to a conclusion, but I need to take the Minister to task on one point. He said that we seemed to pick dates at random and out of thin air. The 2012 date is by no means picked out of thin air; it was picked out from an evidence session that was given by the chief executive of Royal Mail. That is the basis and strength of the 2012 date in the relevant amendment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman remind the Committee? Maybe I did not hear Moya Greene when she gave evidence, but I do not believe that at any stage she said that Royal Mail must be sold by the end of June 2012. Will he enlighten me if I did not hear that said?

Gordon Banks (Labour, Ochil and South Perthshire)

I would not put words in the Minister’s mouth, or in Moya Greene’s mouth. That is not something that anyone in this part of the Committee has said today, but it was alluded to. If the Minister wants, he can read Hansard tomorrow, because I read the quote out. For the benefit of the Committee, I will not read it again. In essence, Moya Greene says there is every opportunity for the sale to go through by 2012. I am just trying to be helpful to the Minister, to allow him to support the chief executive of Royal Mail.

Finally, I want to go back to the issue of continued investment. Everybody in this part of the Committee recognises the need for continued investment; the evidence sessions told us that there was a need for continued investment, but I have concerns, raised also by the hon. Member for Angus, about the investment should a sale not go ahead after the current modernisation period.

I do not think that how the Bill is drafted gives the focus or flexibility. The amendment would allow the Government to come back to Parliament to revisit the sunset clause. We have had a good run around the houses on this issue. It has been a good debate on something to which we might wish to return on Report. I beg to ask leave to withdraw the amendment.

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss new clause 2—Government to retain majority shareholding in Royal Mail Holdings plc and subsidiarie s—

Nia Griffith (Labour, Llanelli)

Thank you, Mr Hood, for giving me the opportunity to speak on this extremely important new clause. Part 1 of the Bill is headed

“Restructuring of Royal Mail Group”

and the first clause is headed

“Removal of restrictions on ownership of Royal Mail Holdings”.

I submit that when we read the clause, the simplicity of the language is matched by the breathtaking consequences of what it contains. That is why we are proposing a new clause that would keep Royal Mail in public ownership. To be precise, we are saying that the Government must retain a majority of shareholdings in Royal Mail Holdings plc and its relevant subsidiaries.

The debate over whether to privatise Royal Mail is about what kind of postal service the public wants. A strong, universal, six-deliveries-a-week, one-price-goes-anywhere service, and a network of post offices at the heart our communities—all that will be at risk if we go down the privatisation route. The universal postal service is a public service of vital infrastructure that supports the UK economy. Though the postal market may be changing, it remains central to businesses in the UK.

A private company will not want to invest in a business burdened by a costly universal service. Private shareholders will seek to unpick that universal service; they will argue that it is unsustainable and too costly, and that will undermine the universality of the service. Rural areas that are costly to reach will see their service decline, with fewer deliveries every week. Hooper already recommended a review of the universal service, alongside the privatisation of Royal Mail, in his most recent report.

The Government’s proposals also put the future of the post office network in danger. The Post Office and Royal Mail depend on each other to provide the universal service. Post Office Ltd depends on Royal Mail for a third of its revenue, but despite that, the Government seek to separate the post office network from the rest of Royal Mail. That will undermine Royal Mail’s ability to provide the universal service obligation, because post offices are the key point of access to mail services, and it will threaten the post office network. Post offices will become more dependent on Government subsidy and, in these austere times, closures will be inevitable.

Royal Mail can flourish in the public sector. Its position is already improving; its modernisation programme is fully funded, and it expects to be making normal profit levels within the next few years. It will benefit from the Government’s proposed action on pensions and from changes to regulation, which will provide a more substantial buffer during the current difficult economic climate. The company could benefit from access to additional capital in the medium term to grow the business. That is perfectly possible within the public sector, and I would like to explore that at length.

Gordon Banks (Labour, Ochil and South Perthshire)

Does my hon. Friend agree that the progress over the past 18 months to two years strengthens her point that future progress can be made within the public sector, built on the strength of that progress? There is evidence.

Nia Griffith (Labour, Llanelli)

Indeed, we heard evidence last week from the trade union representatives and from the CEO and chairman of Royal Mail Group, saying that modernisation had been successful, and we have evidence from Hooper in his summary report, produced in September. The evidence all points to the tremendous progress that has been made, with good prospects for the future.

In his 2010 report, Hooper argued that privatisation is needed to generate the cash to complete modernisation. In his latest update, he goes further than the previous proposal and suggests a full share sale. In fact, we know that Royal Mail’s modernisation programme is fully funded. We know that the company expects to be making healthy profits by the end of the programme in 2012-13. We must recognise the importance of the business transformation agreement reached between Royal Mail and the Communication Workers Union. The agreement is, without doubt, the most significant ever reached between Royal Mail and the CWU; it underpins the transformation of the business and is key to enabling Royal Mail to flourish. The agreement addresses the challenges of modernisation and enables Royal Mail to respond to the digital revolution.

Hooper also pointed to falling mail volumes and the contraction of the mail market. Royal Mail’s fully funded business plan takes account of projected mail volume decline. Royal Mail expects to complete its modernisation and to be making healthy profits by the end of its business plan in 2012-13 despite that mail volume decline. No one has really explained how a privately owned Royal Mail will be better placed to deal with that mail volume decline.

Hooper argues for the urgent need for private capital to complete modernisation, but he acknowledges that he is not, and never has been, able to estimate the exact extent of that capital requirement. He cannot do that, of course, because he has not been privy to Royal Mail’s five-year plan. It would be helpful if the Minister could expand on what capital the Government are looking for and what investment might be required.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Over what time period is the hon. Lady thinking about capital requirements?

Nia Griffith (Labour, Llanelli)

As we understand it, the modernisation programme is to go through to 2012-13, and we believe that there may be a need for some capital in the medium term.

I want now to look at the Postal Services Act 2000. Under the Act, Royal Mail already appears to have access to fast-track finance. Specifically, it can, with the approval of the Secretary of State and the Treasury, borrow several billion pounds from the national loans fund. Given the Government’s superior credit rating, those funds are available to Royal Mail at far more favourable rates than it could achieve independently, which is an important point. They would also be loaned to Royal Mail at a higher interest rate than the Government pay, thereby generating revenues for central Government.

As Hooper notes in his updated review, this facility has not been used effectively to finance modernisation. Government-backed lending to Royal Mail must occur on terms that satisfy EU state aid requirements. At present, that may slow down the lending process, but there is no reason why the Government could not improve performance on that or amend the fast-track facility to provide capital to Royal Mail on commercial terms.

In this case, state aid approval would be trivial. Royal Mail would have rapid access to substantial capital, and the Debt Management Office would profit from its position as lender. Given that, what analysis have the Government conducted of the current functioning of the fast-track facility? More importantly, what analysis have they conducted of proposals to amend that facility to meet state aid requirements?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Does the hon. Lady accept that when a company borrows money on commercial terms from a bank, it normally requires security in the form of assets or future income?

Nia Griffith (Labour, Llanelli)

The issue is that legislation and mechanisms exist. We know very well that many other countries manage the situation with the EU extremely successfully, but we do not seem to have taken an exploratory look at what could be done to provide additional capital for Royal Mail.

Gordon Banks (Labour, Ochil and South Perthshire)

Does my hon. Friend agree that it is the easy option—although perhaps not the quick and easy option going by the last debate—to have a sell-off and not to look at what can be done under state control, nor build on the success of the past 18 months? It is just being hived off because that fits with the coalition’s objectives.

Nia Griffith (Labour, Llanelli)

This proposal may be being rushed through. It may be a knee-jerk reaction because there has been no in-depth study of the alternatives.

Priti Patel (Conservative, Witham)

Is the hon. Lady saying that hard-pressed British taxpayers should provide funds for the Royal Mail indefinitely?

Nia Griffith (Labour, Llanelli)

I am suggesting the absolute opposite, and for two reasons. First, we have heard about the excellent progress that has been made to date. A lot of taxpayers’ money has gone in and just as we are getting to the point at which Royal Mail will become profitable, taxpayers are going to lose out because the sale will be made and it will be privatised. There will be no return to the taxpayer. Secondly, the kind of finance that I am discussing is loan financing, from which the taxpayer stands to gain, because the loan will be repaid at a commercial rate. The Government coffers, and therefore the taxpayer, will be repaid with interest. That is an important point. I agree that we do not want the taxpayer to lose out.

The 1999 White Paper stated:

“The Post Office will be expected to finance investment in the core business from retained earnings. But this is unlikely to be sufficient to allow the Post Office to grow into new markets and provide new products. Borrowing will therefore be permitted for growth investment.”

We said that more than 10 years ago. Indeed, the amounts that were specified were realistic and generous. It stated that

“for cases costing more than £75 million a fast track, but rigorous, Ministerial approval process will be required. Ministers will complete this process within 28 days…The Government will approve Post Office requests for borrowing for investment cases which are consistent with the Strategic Plan, commercially robust, and pose no undue risk to the taxpayer”.

It is important to recognise that those borrowing facilities were outlined in the 1999 White Paper.

The notes on the 2000 Act state that the legislation

“empowers the Secretary of State, with the approval of the Treasury, to lend to the Post Office in any currency once it becomes a company, and authorises the necessary funds to be provided from the National Loans Fund.”

That power is therefore contained in existing legislation. The notes continue:

“The section provides for lending either to the Post Office company or direct to any of its subsidiaries on terms to be agreed (with the Treasury’s consent) between the Secretary of State and the Post Office company/subsidiary, except that interest rates are to be as directed by the Secretary of State with the approval of the Treasury.”

It is quite clear that the options that we are discussing are already available. The Government might want to look into whether they have not been used as effectively as they might have been and whether better use can be made of them.

Hooper accepts that point:

“The current policy framework set out in the 1999 White Paper on postal reform, and implemented in 2001, made a number of significant reforms. It established Royal Mail Group as a public limited company operating under a new financial regime, and recognised the need for greater commercial freedom based on a new ‘arms length’ relationship between the Government as shareholder and the Board.”

He goes on to say in paragraph 142:

“This was an important step forward. But greater commercial freedom has proved to be difficult to realise in practice.”

I shall come back in a moment to his comments about political involvement and interference, and operating in a highly political environment, because they are important. However, I want to spend a couple of minutes on EU state rules.

Some people have raised that issue and have suggested that the EU might regard loans and financing of the Royal Mail to be in contravention of the rules, but, like so many things that we hear, that is, in fact, a bit of Euro-scaremongering. We know very well that elements of our press will seek at any moment to make a bogeyman of the EU in Brussels. Indeed, Opposition Members may do such things. I am sure that none of the Members present here today would indulge in such tactics.

I reassure the Committee: if anyone thinks that this House will be affected by Euro-creep, they should have more faith in the hon. Member for Stone (Mr Cash), who watches every comma and full stop. There is nothing that could possibly happen in Europe to which he will not alert us. Indeed, Mr Hood, you will remember his presence when you were Chairman of the European Scrutiny Committee. You will remember the care with which every possible escape route for any tentacle of the octopus of Europe coming and grabbing a power to which it had no right was carefully examined.

Ed Vaizey (Conservative, Wantage)

Build him a statue.

Nia Griffith (Labour, Llanelli)

Indeed. Let us get back to the rules for state aid and obtaining approval.

Like everything else, it is a matter of getting behind the Eurospeak and finding out what is actually happening. I shall not give another linguistic sermon, but there are times when even I get tired of Eurospeak. We find words such as “concrete” appearing all over the place. It is a terrible translation from the French: everything will be concretised, and there are concrete objectives. We like to talk about things that are real, realistic, genuine and so on. Let us be clear about what we can actually do in terms of Europe.

Loans made to the Royal Mail by the Government are subject to EU state aid legislation. If the EU suspects that such loans are occurring on preferential and non-commercial terms, they may be subject to lengthy investigative delays and even blocked entirely. However, the EU’s competition commission has extensive experience in assessing what counts as commercial terms, and it even publishes its methodology.

If the Government were to discuss lending to the Royal Mail with the European Commission in advance, it is very likely that a lending facility could be agreed that would not require lengthy investigation by Brussels. In essence, the fast-track finance that was intended in the 2000 Act could be made genuinely quickly with a little negotiation in Brussels.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I thank the hon. Lady for giving way and for her discussion on how easy it would be to get the okay from Europe for fast-track capital. Why did we hear from the chairman, Donald Brydon, in his witness session last week that it took 18 months for his company to negotiate its current financial and capital arrangements with the previous Government and the EU?

Nia Griffith (Labour, Llanelli)

That is clearly something that the Minister will want to go into in more detail. He will want to look at whether there was reluctance on the part of the company’s management, the Government or the EU. I suspect that it was not simply a matter of regulation but of how people went about getting the issues sorted, and when the decision was actually made to go ahead.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Does the hon. Lady think that the fact that it took 18 months was the fault of Royal Mail, the EU or Ministers in the previous Government? Who does she think was to blame for that long delay?

Nia Griffith (Labour, Llanelli)

I wonder why anyone would think that 18 months is a hugely long time, when one thinks about the time that it takes to set a Budget, or to go through all the different issues that one might have to go through. It may well be that a lot of information was required, or that there were discussions in the company as to what kind of aid and what amount was wanted. To say that because something has not been effectively done—

Sir David Amess (Conservative, Southend West)

I remind the Committee that with this we are considering new clause 2—Government to retain majority shareholding in Royal Mail Holdings plc and subsidiaries—

‘The Government must retain a majority of shareholdings in Royal Mail Holdings plc and its relevant subsidiaries.’

Nia Griffith (Labour, Llanelli)

We were discussing the merits of the European Union state aid—[ Interruption. ] I am glad to hear great enthusiasm for the European Union from Government Members. As we saw, it is perfectly possible to deal with Royal Mail’s capital needs and not fall foul of EU state aid rules. Perhaps the Minister will tell us what recent inquiries he has made about Government lending to a publicly owned Royal Mail.

Between the 2008 Hooper report and the 2010 update, Hooper’s calls for a partnership seemed to disappear. He tells us that there is no longer a need for the managerial skills and expertise that could be brought in through a strategic partnership. The fact that Royal Mail could give access to capital under more or less the existing arrangements calls into question the need to privatise. Even if we accept Hooper’s assertion that there is a need for private sector discipline, in his 2008 report he seemed to think that selling a minority stake was sufficient to instil it. It seems strange that in his 2010 report he is insistent about selling off a rather larger stake, though not with a great deal of explanation.

We heard about capital last week from Dave Ward, the deputy general secretary of the CWU. He said:

“When it comes to the question of the need for further access to capital, I think we would accept that the company clearly needs to be able to access capital. Our point is that there are other ways of achieving that. If you are going to proceed with this type of Bill, the starting point of that debate needs to be a bit clearer about how much and what for. I do not think that those questions have been properly answered at the moment. What we hear is the company saying that there is volume decline. Let us be clear; yes, there is volume decline. Sometimes, we disagree on the extent of it, but the fact of the matter is that the modernisation programme takes it into account. It is built on an agreement that will produce profit margins of something like 7%, where currently it is 1% over turnover. That agreement delivers significant new profits for Royal Mail over a period of three or four years.”––[Official Report, Postal Services Bill Public Bill Committee, 9 November 2010; c. 25, Q64.]

The initial clauses of the Bill repeal sections of the Postal Services Act 2000, which allows for the raising of capital. Furthermore, it is possible to set interest rates at a rate that is acceptable under EU state aid rules. Added to this, the removal of the pension deficit should mean that Royal Mail has more money available for investment, anyway, and therefore the need for capital is more moderate.

Some people question the issue of capital even further. In the Consumer Focus written evidence, we read:

“Consumer Focus is not convinced that a privatised Royal Mail needs to amass capital for merger and acquisition activities, as set out in the original Hooper report…There is no compelling reason why USO consumers should bear the risk of this through inflated prices or reduced services.”

That is a clear message.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

While the hon. Lady is on the subject of the capital needs of Royal Mail, does she believe that post administrations in general, particularly Royal Mail, are becoming more or less capital-intensive? How does she think that trend will go over the next few years?

Nia Griffith (Labour, Llanelli)

It all depends on what they want to do and what returns they get for what they put their money into. If they invest wisely and sensibly, of course there will be capital input, because we would expect any modern service to try to maximise its efficiency and get the best possible equipment. However, they must also consider which fields to invest in and the ways in which they will be most successful.

Let us consider Swiss Post, for example. As we know, Switzerland is a great haven for private capital, yet it has a publicly owned postal service, which has been very profitable because it has looked into different types of activity, such as digital-age activity and the types that Richard Hooper mentioned last week. There are openings that can be explored. It all depends on what the organisation decides to do and what returns it gets on the capital.

Let us consider current financial performance. What sort of state is Royal Mail in? We have heard lots of doom and gloom, but last week people were very upbeat. They seemed to think that there had been a significant change from 2008 to 2010. That was echoed by Richard Hooper, Moya Greene and the trade union representatives. There definitely seemed to be a significant improvement.

In 2009-10, Royal Mail Group made £404 million in operating profit. That was up 26% from £321 million in 2008-09. In 2008-09, all four main business units were in profit for the first time in almost 20 years. They remained so in 2009-10. In 2009-10, Royal Mail Letters made £121 million operating profit. That was up 108% from £58 million in 2008-09 and compared with a £3 million loss in 2007-08. The rise in profits came from increased efficiency, with £206 million of cost savings made in 2009-10 following significant savings in 2008-09.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Lady tell the Committee what the after-tax performance of Royal Mail Group was in 2009-10? Will she confirm that it lost more than £300 million?

Nia Griffith (Labour, Llanelli)

The Minister is trying to bring in what is on Royal Mail’s books in terms of the pension deficit, in addition to its current activity. They have to be separated out, which is what we are trying to do. We are talking about looking at Royal Mail as a viable enterprise without its pension legacy, which—let us be honest—is not the fault of the people currently running it. Something does need to be done about the pension legacy, but once Royal Mail is freed of it, that will free up a lot of money to help to make the business go round and keep the books in the black.

Richard Fuller (Conservative, Bedford)

If the hon. Lady looks at the six months statement for Royal Mail and at the cash flow rather than the profit, she will see that the net cash flow from operations is negative £229 million, which includes net capital expenditures of £187 million. Will she accept that those are significant cash-flow demands that, unless we look for private capital, will have to be covered by the taxpayer?

Nia Griffith (Labour, Llanelli)

As I mentioned this morning, Royal Mail is working towards a situation whereby in the next three or four years it will be profitable. That is the tragedy of privatising it at this stage: just as the taxpayer has put in a lot of money and might be getting something back, it might be hived off to the private sector, with no opportunity for the taxpayer to share in those returns.

Richard Fuller (Conservative, Bedford)

Does the hon. Lady recall that the chief executive of Royal Mail asserted, although she had not fully worked this through, that at least £2 billion to £3 billion of additional capital would be required? The cash outflow that would have to be borne by the taxpayer has not yet stopped but is likely to continue and increase. Does the hon. Lady accept that that is what the chief executive was saying?

Nia Griffith (Labour, Llanelli)

If we take into consideration all the evidence from last week, we understand that the current modernisation programme has been fully funded. What is not clear is exactly what is in the five-year plan for the future. We requested more information about that and we would certainly want to look into it.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Can the hon. Lady tell the Committee in which year since 2001 Royal Mail Group paid a dividend to the shareholder?

Nia Griffith (Labour, Llanelli)

I am sure that the Minister can ask his officials to provide him with that information.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is my fault and I beg the hon. Lady’s forgiveness. That was a rhetorical question. In not a single year since 2001 has there been a dividend paid to the shareholder. If the Royal Mail Group was in such a healthy financial state over that period, surely the hon. Lady would agree that it would have done so.

Nia Griffith (Labour, Llanelli)

That is the whole point. From 2008 to 2010, we have seen a significant transformation. We have seen a modernisation programme and things have gone forward as they have not before. There has been a step change, so we are looking towards the situation in 2012-13.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I raised the point in an evidence session that the Business and Enterprise Committee stated that if the pension deficit were removed it would give the Royal Mail Group an additional £280 million a year, and if access to pricing were set at a level that covered Royal Mail’s overheads as well as its marginal costs, that would give it another £100 million a year. Moya Greene mentioned the ballpark figure of £2 billion to £3 billion, but there was no clarification about what capital spending that would be on. Richard Hooper was referring to the diversification of Royal Mail beyond the services that it already delivers.

Nia Griffith (Labour, Llanelli)

I agree with my hon. Friend. We are reaching that turning point for Royal Mail. The changes that the Business and Enterprise Committee suggested in 2009 would make that turnover begin to be apparent.

All in all, we are seeing a tremendous improvement. We may argue about individual figures, but there is no doubt that things have improved in general. We must also remember that it has been a particularly difficult time in the economic sphere and it has been a time of continued falling volumes of mail. If we consider foreign competitors, we will see that even those wonderful privatised institutions that are so often held up as great enterprises to which we should aspire—such as TNT—have experienced significant difficulties. It is not the case that every time something is privatised, it is automatically profitable and every time something is public, it is automatically loss-making; that is not borne out by the evidence.

Damian Collins (Conservative, Folkestone and Hythe)

Given the hon. Lady’s remarks, does she believe that there are any formerly nationalised industry utilities in the UK that are currently in private hands that should go back into public ownership?

Nia Griffith (Labour, Llanelli)

That is an excellent question, which we could spend many hours debating. Indeed, the hon. Gentleman’s predecessor spent many, many hours debating nationalising this, that or the other—practically anything that moved could be nationalised. That must be a great topic of discussion in the pubs of Pendle.

Damian Collins (Conservative, Folkestone and Hythe)

On a point of order, Mr Amess. My constituency is Folkestone and Hyde. My predecessor was Michael Howard, and I assure the hon. Lady that I never had such a debate with him.

Nia Griffith (Labour, Llanelli)

My sincere apologies to the hon. Gentleman for confusing him with the hon. Member for Pendle, whose predecessor I was referring to, and not to Michael Howard, who came from my home town.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

He supports Liverpool.

Nia Griffith (Labour, Llanelli)

We could have done without knowing that.

Whether or not we can agree on every figure, we must agree that Swiss Post has done an excellent job. It is publicly owned and has a good track record. My hon. Friend the Member for Middlesbrough South and East Cleveland mentioned the Business and Enterprise Committee. Its interesting report was careful in its approach to privatisation and clearly there are some different views in Committee. On capital, however, it was clear that, with progress being made and modernisation taking place and with the idea of taking away the pension deficit being made clear, if there were some regulatory changes—particularly to the access point payment—there could be significant differences for Royal Mail. It would, in effect, end up being some £400 million a year better off. That is close to the annual level of investment spent by the company each year while drawing down on the Government’s loan facility as part of the current modernisation programme.

I move now to issues that we talked about a lot last week. One main reason that we have been given about why it might be necessary to privatise Royal Mail is that it needs modernisation and that, somehow, that can be achieved only by privatising it. Yet in our evidence sessions last week, we heard how successful the modernisation programme had been, from none other than the Royal Mail’s CEO, Moya Greene. In contrast to what Hooper implied in his 2008 report, in which he gave the impression that the Royal Mail was lagging behind other countries in its modernisation programme, Moya Greene said that it was well out in the lead in comparison with mail services overseas. She painted a glowing picture of the transformation that had taken place in the Royal Mail.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I refer the hon. Lady to what the chairman of Royal Mail said about modernisation at that same evidence hearing:

“The modernisation that has taken place so far is a remarkable achievement, but it is very late. Compared with any other postal operator of quality or substance in the world, the Royal Mail is at the end of the queue in its modernisation”.––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 14, Q31.]

That is a direct quote. I have to say that that is nearer reality.

Nia Griffith (Labour, Llanelli)

That is interesting, because it confirms what we have been saying: things were not good in 2008, but by 2010 there had been a significant change. Moya Greene said, in her self-deprecating way, that she thought Canada Post was doing quite well and then she came over here and saw that things were that much further ahead. She is effectively saying, “I came from an organisation I thought was jolly good, and then I realised I was in a different league when I came over here.” That is significant.

We are talking about two sides of the same coin. Hooper was saying that things were not good in 2008, but by 2010 the picture was more positive. The chairman is probably right to say that it might have been better if some of the modernisation had happened earlier. Nevertheless it is now taking place. That is the important point.

Moya Greene spoke enthusiastically:

“I took the opportunity to visit other postal services around the world that had planned and implemented modernisation programmes. I feel like I have seen what other countries have done. I look at what Royal Mail has been able to do in just two short years, when they finally got access to capital, and it has been amazing. We have been able to consolidate 10 mail centres. We have been able to introduce innovations, such as 47,000 new PDAs for all of our letter carriers. We have been able to introduce 10 new world-class mail sites. I invite you all to come and visit them—they are now being recognised internationally as some of the best mail processing centres in the world.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 8, Q11.]

All this modernisation has been undertaken while the Royal Mail has been in full public ownership. That fact does not seem to have prevented the transformation from taking place.

Damian Collins (Conservative, Folkestone and Hythe)

As it seems to be open season on quoting Moya Greene, I want to draw the Committee’s attention to what she said last week:

“I think that if the Bill does not go through, you will see a continuation of what have been chronic problems for Royal Mail.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 4, Q3.]

Is not her support for the Bill and privatisation pretty clear?

Nia Griffith (Labour, Llanelli)

With all due respect there may be more than one way of approaching the problem. Perhaps other solutions could be looked into. Perhaps it would be useful if Ministers considered other possibilities, apart from privatisation.

Hooper mentioned several times the idea that there has to be privatisation because of political interference. Hon. Members know about that. The vision is that every time anybody suggests a change in working practices, every working person dashes along to their union rep and every union rep dashes to their leader, and all the union leaders dash to Westminster, where there is lobbying, letters, e-mails, phone calls, meetings, including meetings with Ministers, and so forth. All of that, apparently, stops one change being made in one little office somewhere miles away in the north of Scotland. I do not think that all the modernisation could possibly have taken place if that had been the case. It means either that political influence is rather a myth, or that MPs are not as effective as they like to think they are. Nevertheless, the modernisation programme has gone ahead, and it seems, if anything, to have improved the relationship between the union and the management in the past few years. It is probably a chicken-and-egg situation: the management’s and workers’ situations have improved, and therefore people are more willing to look at change. Change goes well, so people are more willing to respect each other.

Michael Weir (Scottish National Party, Angus)

I, too, was most taken with what Richard Hooper said about political interference. It occurs to me that such interference is more than just with the work force and modernisation. There is political interference even in the Bill. As it is a universal service, it is ultimately a political decision that will be made by Parliament, and which will need Parliament to ensure that it continues.

Nia Griffith (Labour, Llanelli)

Indeed. We would hope that we might even be able to strengthen the role of Parliament and the powers of the regulator that are currently in the Bill. There is a significant danger that if the thing was completely cut loose, privatisation rampant would lead to higher prices and less service being delivered, because only that which is profitable would be desirable, whereas obviously, those of us who believe firmly in the universal service obligation want to see intervention by the Government to ensure that it is there, and for that clause to be strengthened. It would be much easier to help the regulator if there was Government ownership, because a regulator trying to regulate a privatised monopoly would be up against extreme pressure.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Does the hon. Lady think that that is the case in other privatised industries where there is a regulator looking after economic and social issues? Does she think that one can only regulate for social and economic issues and have public ownership? Is that her position?

Nia Griffith (Labour, Llanelli)

There are always going to be pressures on a regulator, but the pressures in this case are particularly significant because of the monopoly status that is part of the network and the final mile. It is difficult, and we have seen with Postcomm the difficulties that it got into trying to regulate. Obviously, we all accept that Ofcom has a broader range of experience, and that not having a one-to-one relationship will be an improved situation. Nevertheless, there will be distinct pressures on the regulator, and I think we see them now. We see a terrific pressure between what the regulator would like to impose and what the industry is saying it would accept. We can name a number of examples where it is not always easy to see that the balance is where it should be.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Is the hon. Lady’s position therefore that there is likely to be more pressure on independent regulators set up by statute than on a Secretary of State operating in a political dimension?

Nia Griffith (Labour, Llanelli)

The difficulty is that although the regulator is that bit removed, effectively, in many ways, it is in a similar position, because it will always be reporting back to the Secretary of State. None the less, there are significant pressures, and there will be all the more pressure if the body being regulated has been fully privatised. It would not have any sort of cushion or other obligation apart from trying to make a profit for its shareholders.

Richard Fuller (Conservative, Bedford)

To separate political interference in the regulatory part from other political interference, what I heard were some concerns about access to capital and political interference on the Government opening their cheque book for the much-needed modernisation programmes. Would the hon. Lady give absolute priority to the Royal Mail and its capital requirements at a time of major cutbacks in other areas? Would she say, “No, open cheque book for Royal Mail”, because that is what it needs to get rid of political interference?

Nia Griffith (Labour, Llanelli)

We were talking specifically about loans and loans from Government sources, rather than giving over something wholesale. That is the distinction that I would make.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

It seems to me that there is confusion here. I hope that my hon. Friend will agree that there can be access to private capital without fully privatising Royal Mail.

Nia Griffith (Labour, Llanelli)

Indeed, my hon. Friend makes a good point. Let us not forget the scale of the modernisation; it has been considerable. In fact, Billy Hayes, the general secretary of the Communication Workers Union, told us that Adam Crozier, the previous chief executive of Royal Mail, estimated that there had been some 60,000 job losses. That is an extremely large number, so we are not talking about some minor changes, but a significant attempt to move the organisation forward, cut costs and bring in modern equipment.

What has the modernisation achieved? Last week and this week, we all heard of the groundbreaking business transformation agreement—an agreement between the management and the CWU—which is undoubtedly one of the most significant aspects of the modernisation. It was designed to address the challenges of modernisation, as set out in the Hooper report, and it completely changed the shape of the company, enabling Royal Mail to respond to the digital revolution while providing employees with improved job security and terms and conditions. There has been a very significant programme of modernisation, and it is a tremendous tribute to the work force and the management that it has been achieved.

Moving on from that—accepting that it has moved forward despite the job losses—it is difficult to match up that glowing report of modernisation with the idea that political interference is preventing change. In the 2010 update to his report, Hooper comments on the much improved industrial relations since his first report. He told us:

“A final aspect of modernisation—culture change towards employee engagement—has begun to make good progress in a growing number of mail centres and delivery offices. This is as a result of the World Class Mail (WCM) initiative which began in Gatwick Mail Centre in late 2008. Employees are encouraged actively to make proposals about new working patterns that save money, increase efficiency and reduce accidents. As a result it has been found that costs are down, productivity is up, accidents are much reduced, employee engagement is vastly increased and management/workforce/union engagement is much better. The benefits of modernisation are clearly visible in the Royal Mail locations where the World Class Mail initiative is being rolled out. The modernisation agreement between the management and the CWU is also a huge step forward in terms of the level of trust between the two. There has been an increase in information sharing and discussion on the strategic future of the company. This should be built upon so that management and unions can”

work together

“to ensure that Royal Mail has a sustainable future.”

As others have mentioned, we also heard from Don Brydon, the chairman of Royal Mail. He said,

“there has been a step change in relationships between the management and the unions at Royal Mail. There is a fundamentally different relationship. The hard-won, difficultly negotiated but nevertheless extremely impressive pay and modernisation agreement that we reached at the beginning of the year has the unions working in partnership with us to modernise the business. That covers the whole expanse of working conditions, numbers and so on. It would be difficult not to say that there is full co-operation.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 9, Q14.]

Union leaders were a little more cautious. Although they would echo the opinion that national level relations were much improved, they still had concerns about some local management problems. Dave Ward, the deputy general secretary of the Communication Workers Union, told us:

“I think that the relationships are improving at a national level, because we are sharing better information, we are debating issues and we are trying to resolve problems. We are trying to deal with the deployment of modernisation, which is not easy. I do not think that that is yet visible at local level, and we could do more to make those relationship improvements visible to employees.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 24.]

Overall, not only does that modernisation seem to be progressing nicely, but it has been at a considerable pace. It has involved what must have been some difficult decisions over the loss of 60,000 jobs. Yet, particularly in the past few months, relations between the trade unions and the management have been improving. That change in industrial relations calls into question the assertion that modernisation cannot take place because the Royal Mail is in public ownership. It can and it has.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Lady is quite right to say that industrial relations have improved. That is something that we welcome, and I pay tribute to both sides involved. She has quoted Richard Hooper’s report in that respect, and I refer her to page 16, where he discusses that. He says:

“There nevertheless remains a risk that the new agreement”—

between the unions and the management—

“fails to be fully accepted and implemented at all levels in the CWU and in all areas.”

That points to the risks that remain. I am sure that she would want to ensure that that is on the record too.

Nia Griffith (Labour, Llanelli)

Indeed. That was very much echoed by the comments of the trade union member himself. He said that there is concern, but clearly management and trade unions are working on that and are aware of those problems.

Perhaps it is time that we moved on. I will not describe all the wonders of modernisation, as described by Moya Greene, because she really did wax lyrical about the number of centres that had been improved and the terrific task that had been undertaken. We will move on and tell the Committee about the worries that we have about the effect of privatisation of the Royal Mail on the post office network. I promise that I will not repeat all the joys of Felinfoel and Ponthenri, because the Committee heard about those this morning. It is essential that we put on the record the considerable concerns that we have about the future of the post office network, if the Royal Mail is split off and made into a privatised company.

The problem is that, no matter how many fine words we hear—and we have heard wonderful words from everybody; everybody loves their post office and everybody speaks warmly of the sub-postmasters—we do not have any concrete, specific proposals. We are being told that the current inter-business agreement will last a little longer. We are told that there will perhaps be some sort of agreement in the prospectus for the sale, but the National Federation of SubPostmasters is clear that it needs a 10-year guarantee as an absolute minimum. One can see why, because there has to be some sort of security that the business will be viable for the 97% of post offices that are owned by the sub-postmaster, who has put in a lot of money and is hoping to realise those capital assets, perhaps to help in his retirement.

While we had great razzamatazz last week on the announcement of the great strategy for post offices, those sub-postmasters will be looking very carefully through that document to see if they can find anything that guarantees Government business to the post offices, when we have PayPoint challenging for the Department for Work and Pensions contract. They will be looking carefully to see whether there are any ways in which more viable business channels can be channelled through the Post Office, when they see that the opportunity to have PostBank has been ignored. They will be even more worried about the third of their business that comes from Royal Mail, and they will want a very specific guarantee that, because of the money that they have already invested, they will be able to sell on their assets as a viable going concern at the end of their time. It is a problem for many of them. The real problem will be attracting new entrants, but as I have said, we have mentioned some examples of that this morning and it was wonderful to hear the hon. Member for Witham describing the opening of a post office. Let us hope that there will be many more of those.

I am not the only one saying this. Consumer Focus says in its written evidence that,

“following privatisation of Royal Mail, subsequent contracts would require a competitive tender process with no guarantee that POL would retain this contract”,

and that,

“for the foreseeable future, the loss of the mails contract, even on a partial basis, would significantly undermine the integrity of the post office network. Even if Royal Mail continued to use the PO in rural areas only, the ability of the network to cross-subsidise from its profitable urban branches would be lost. The future of many post offices, particularly the 6,515 post offices in rural areas, would therefore be in doubt. This would not only threaten access to mails services but also the range of services of economic and social interest available through the PO network.”

As we have heard, Mr George Thomson, the general secretary of the National Federation of SubPostmasters, recently warned in a newspaper article that

“many sub-postmasters are hanging on by their fingertips.”

The Bill proposes to cut those fingertips off altogether. They may be clad in beautiful new gloves due to the investment money announced last week, but the chopping off of the vital contract with Royal Mail, without a guarantee that it could be renewed, is a major blow.

We are all aware of the postal system’s financial difficulties and no one denies the challenges posed by the shrinking customer base. Nobody in the world knows of a postal operator that does not face such challenges. We are all affected by the digital revolution and people are changing their habits. Everybody faces those challenges, so they are not unique to us. Wholesale privatisation, as outlined in clause 1, will have some significant and undesirable side effects in terms of both the post office network and the universal service provision. We have to be sensible. We cannot let short-term interests dictate the fate of such a vital economic and cultural fixture of British society.

We have heard how technology has impacted upon the way in which people use Royal Mail, but we also have to remember that a lot of people do not necessarily have the same easy access as us to some technologies. As I said during a Westminster Hall debate, many people in lower-income groups, particularly women over the age of 65, do not have access to electronic mail and are therefore dependent on their local post office. Moreover, many of them do not have bank accounts, so they collect their pensions from the post office and complete their various transactions there, too. It is easy for us to think that everybody can do all sorts of other things, but for those people the post office is particularly important. The problem is that privatisation will lead to a situation in which coverage, service and prices will be entirely dictated by the profitable. The Bill has the potential to deprive those who need it most of access to postal service.

We are not, of course, the only country with a postal service. We know of Switzerland, but the United States of America is also a great bastion of private enterprise. However, although 80% of its public have their electricity supplied by a private supplier, its mail service remains in public ownership. In fact, it is enshrined in article 1(8)(7) of the constitution, which empowers Congress to

“establish Post Offices and post Roads”.

The US has had its difficulties, too. It has had to make $9 billion-worth of efficiency savings and cut job numbers, which has led to about 100,000 job losses. It is struggling and has the same sorts of challenges and difficulties as us. Nevertheless, there is no suggestion that it will be privatised.

I think we are well aware that private firms have felt the pinch very much in the past couple of years. The same is true of TNT. TNT is always held up as a wonderful saviour which will come along and do everything that Royal Mail ever wanted. In fact, it too has struggled and had difficulties in the past few years.

The challenges that have faced Royal Mail recently have not only been about falling mail volumes. They have been a reflection of the weaker global economy as a whole, rather than a specific problem related to Royal Mail. Clearly, we have examples of private firms having difficulties too. There is a commitment among the public in this country to a proper universal service the length and breadth of the country at a uniform price. We know that European legislation will protect a five-day service. We know that it will protect what is called an affordable price, although quite how that is defined is an interesting question. The issue of a uniform price and the issue of a six-day service—Consumer Focus would like to see a six-day service for packets as well as for letters—are what we might call gold plating: things that we, in this country, want to do over and above the EU directive. They will not be easy to protect if the service is privatised.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

While the hon. Lady is on the subject of six-day and five-day services, is she aware that the US postal service recently applied to Congress to reduce its six-day service mandate to five days, because it is losing billions of dollars?

Nia Griffith (Labour, Llanelli)

As I say, there is considerable pressure on all postal services throughout the world. Last week we heard suggestions of alternate-day services. We know that some remote areas of Canada, for example, would not expect to have a service every day, so of course services are looking everywhere to try to cut corners, save money and push down costs. In the United Kingdom, we have a very clear idea of what we would like that universal service provision to be. We want to make sure that we do our very best to keep it.

The idea of privatisation seems to have a sort of mythology about it, a quick fix—just go for privatisation with a massive bond and everything will be all right—but I am not so sure that things are anything like as simple as that. We have to be careful not to be blinded by a purely economic perspective in our debate. We have been presented with all those pictures of how technology can take over and how it has affected the viability of Royal Mail, but we still have to remember those people who are dependent on a proper mail service six days a week and who like to have a local post office that they can go to.

We need a way forward that combines the existing postal system’s experience and commitment to public service, while still allowing it to absorb the best ideas and practices from private enterprise. There is no reason why one cannot learn from the other; it does not mean that that has to be privatised.

As we have explained, significant pressures will be put on the regulator and those were very clearly outlined to us by one of the witnesses last week. We invited representatives of rival organisations to Royal Mail. One of the clearest indications of the future pressures on a privatised Royal Mail was given in the evidence from Alan Halfacre of the Mail Users Association. His organisation represents mailers whose postings, he said, make up at least 80% of the volume that goes through Royal Mail in any day. Of course, as he suggests, those big posters have an important stake in seeing a successful Royal Mail, but their interests are not identical to those of domestic customers or small or medium enterprises.

It is also important to note that large posters have formed an important lobby on the direction of Royal Mail and the postal industry generally. Indeed, as has been noted by Postcomm, the benefits of post liberalisation have been largely registered by the large posters. Small and medium enterprises and domestic customers have received rather less liberalisation up until now. In comparison, large posters have experienced liberalisation primarily as a route to very substantial price reductions as a result of Royal Mail’s competitors being subsidised, in a way, through their access headroom regulations imposed by Postcomm.

It would not be unfair to say that the large commercial posters have been the most effective lobby in the regulation of the industry since liberalisation, and since regulation was introduced following the passage of the Postal Services Act 2000. No one can blame the lobby for being effective or for looking after its own interests; that is what it is there for. However, we must take on board how the lobby will continue to exert pressure on a privatised Royal Mail.

In Alan Halfacre’s opinion, a reduction in universal service is inevitable. Last week, he said:

“I believe that if you were allowing Royal Mail to make some significant change now, then its cost structures would change substantially, and that would provide a better baseline for the provision of the universal service. You are only delaying the inevitable, is really what I am saying and I ask you to consider doing it now if you have the courage.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 61, Q130.]

He is speaking on behalf of a lobby that does not need a delivery for six days. For much bulk posting, the tie-up is with advertising campaigns and other media. A great deal of it can be delivered without any significant time deadlines. It is not time-sensitive. It does not matter whether it is Tuesday, Wednesday, Thursday or even, indeed, Saturday when people actually receive the item.

Such matters give force to Alan Halfacre’s words when he says:

“You will have to change it. I don’t know when, but you will have to change it, because there will be so much less of it. If you insist on continuing with the full six days and the first and second—the full McCoy, as it is at the moment—it will become intolerably expensive.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 61, Q131.]

There is a degree of exaggeration in that quote, but the essential point is that the lobby he represents believes that the universal service obligation must be reduced. He went on to say:

“It is not a long-term viable proposition”.––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 61, Q132.]

Such voices will be greatly magnified by privatisation. A privatised Royal Mail will also represent a lobby of shareholders intent on maximising shareholder value.

Again, we cannot blame shareholders for behaving like shareholders. That is normal practice. Nor can we blame them for wanting to maximise shareholder value, but we must take into account the many, varied users of Royal Mail, and if we give priority to purely commercial considerations, we can guarantee that universal service in the post office network will suffer. As Alan Halfacre said,

“Having no post office network would be survivable for most of my members.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 65, Q139.]

That is not true for the myriad of users, communities and small businesses that depend on the post office network.

A privatised Royal Mail would have a powerful commercial incentive to preoccupy itself with a well-organised lobby of the big posters. It is difficult to see how the Government propose to provide the necessary protection. The real worry is that, if we privatise the Royal Mail, with all the excellent work that is being done now, just at the time when the taxpayer might be able to enjoy some of the benefits of the profits, it will be sold off so that the taxpayer receives none of the profits and the private enterprise hawks come down and busily strip away all those wonderful goodies. And then what might happen if a service too big to fail suddenly has to be rescued? Does the taxpayer have to go back in when all those private, profit-making vultures have taken away the lovely juicy bits? That is another huge question.

So we are saying very clearly that we oppose the full privatisation of the Royal Mail service because it is not the best way to protect the consumer, the universal service obligation or the post office network. Nor is it the best way to protect the taxpayer, who has put so much in and would now like to get something out. For those reasons, we oppose the clause and we have tabled new clause 2.

Michael Weir (Scottish National Party, Angus)

I should like to make a slightly briefer contribution. I, too, oppose the clause, although I also oppose new clause 2, and I will explain why later.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman tell me how the water, electricity and telephone services for his constituents have deteriorated since privatisation?

Michael Weir (Scottish National Party, Angus)

The Minister should know that water has not been privatised in Scotland. As for the telephone system, I will introduce him to some of my rural constituents, who complain about the lack of broadband services through the telephone system, which has not been invested in. The Minister is on somewhat dodgy ground on those issues.

I represent an area largely composed of small towns and a large rural area. It is rural, but by no means remote. Over the past few years, however, there has been a steady decline in the number of services in much of the area. With the best will in the world, given the current financial climate, it is highly unlikely that there will be much improvement. We have seen the closure of rural service stations, shops and post offices. The banks have retreated from many places, and that is likely to continue.

There have also been major changes in postal services, with a reduction in mail collections and ever later deliveries. I live in town, but I do not get my mail until about 1 pm. In rural parts of my constituency, it can be much later than that. To me, that is a minor inconvenience, but to many businesses in my constituency, it is a crucial matter. The rise of services such as DX and Legal Post is no coincidence; it has come about because of businesses’ need to get mail first thing in the morning.

In his evidence to the Committee, Richard Hooper quoted a point that I made to him right at the onset of his investigation into Royal Mail back in 2008 about the crucial importance of the universal service obligation to businesses in rural areas. I have been arguing that point ever since, and it colours my attitude to the Bill. The universal service obligation is crucial to my area, and to rural areas throughout the United Kingdom. In his evidence, Richard Hooper also mentioned the young lady with a mobile phone and laptop who wondered why on earth she would need anyone’s physical address—perhaps she has now moved on to a smartphone. I can empathise with that view, to some extent. Young people in Angus are no different from young people anywhere else; they communicate by e-mail and text. Indeed, in a world where even the Queen has joined Facebook, the personal letter perhaps really is dying out.

In his first report, Mr Hooper made the startling point that only about 11% of mail is made up of private letters, and the latest Postcomm research says that it is 10%. Of that, about 8% is sent around Christmas. One would presume that most of that is Christmas cards or round robins. That is a sobering fact. It may be a small number of people who still use private letters, but the post remains crucial for those who do.

The business part, however, remains very important. In the research carried out by Postcomm, more than half of businesses surveyed were of the opinion that they will use the internet more in the future, but the vast majority—93%—of businesses believe that they will always need to send some things by post. Half of businesses expect more customers to order products online in the future, indicating a belief that the market will grow further. Interestingly, digging down into the figures, it appears that of those who spend between £100 and £500 a month on mail—basically, small businesses—72% have either stayed at the same level or have increased their usage of Royal Mail in the past year.

The young lady with a phone and a laptop may never feel the need to write a letter, but if she lives in a rural area she will certainly use the internet to order her books, CDs or DVDs, because, to put it simply, since the demise of Woolworths, it is unlikely that there will be any stores in her town that sell those items. That is a growth industry, coming one way, for people living in rural areas. But the process works both ways: not only do people in rural areas use the post to have items delivered, but, crucially, small and medium-sized businesses in such communities also use Royal Mail. In many cases, such businesses do not have an alternative, as most do not have access to alternative providers and they cannot get the benefits of bulk discounts, as the hon. Member for Llanelli rightly said, citing evidence from the Business and Enterprise Committee of a year ago. The universal service obligation is absolutely crucial to them, and to the hope of creating and sustaining businesses in rural areas. In his 2008 report, Hooper noted that 86% of letters are sent by businesses, but 70% are received by consumers. So there is an important market for businesses, particularly small businesses.

I am sure that many Government Members would not disagree with much of what I have said about rural businesses, but they would argue that the provisions on regulation in the Bill are sufficient to enable the maintenance of the USO. It seems to me that the pressures on a fully privatised Royal Mail will inevitably lead to a reduction in universal service. Despite Moya Greene’s evident enthusiasm for the USO, we heard evidence that it was making a loss for the company, although witnesses from Postcomm and the bulk mail users felt that the headroom charge paid by other operators was initially set too high.

One does wonder whether, even after modernisation, carrying mail to many rural and remoter areas can ever be cost-effective. The Library note on the Bill states that the delivery of a letter to the islands of Scotland will cost about £10 in real terms, of which the cost of the stamp will be only a small proportion. I recall that the previous management of Royal Mail tried to introduce a zonal pricing system, even within the current regime. That was eventually rejected, but even they were thinking about how costs are greater in rural areas. The one thing that the USO does is ensure that the same costs apply everywhere, which is vital for the regeneration of our rural areas.

Postcomm, however, has recently announced that it is minded to allow a higher price, even within the current system, and has indicated that a first-class stamp may rise by up to 5p next April, despite the fact that, in his report, Hooper made the point that rising prices normally mean falling volumes. It is difficult to see where the system is going with that.

The ultimate point is that if there is privatisation of Royal Mail, there may well be greater competition in urban areas. I am sure that in London, Birmingham, Newcastle, and perhaps even central Scotland there will be increasing competition, because there is a larger market, although, in passing, I wonder whether a sale to TNT or Deutsche Post would lead to a reduction, because of the removal of one of the existing competitors from the market. However, in rural areas it will be different. As I have said, it is already much more expensive to deliver and collect in rural and remoter areas, and any private company that seeks to cut costs will inevitably look to cut services in those areas.

There seems to be nothing in the Bill to prevent, for example, a privatised company from hiving off profitable pieces, leaving the universal service with a shell company that could later go to the Government and say, “We can’t do it any more; we can’t afford it. We’re looking for a public subsidy or we’re going to abandon it.” We are then thrown back on the regulator alone, and the possibility of other providers having to chuck in some money to keep things going. I do not think that that is sufficient.

The Minister, intervening on the hon. Member for Llanelli, asked about other regulators. I served for some years on the Business and Enterprise Committee and on the Energy and Climate Change Committee, and we spent many happy hours examining the regulation of the energy industry and the role of Ofgem. In the energy industry there were the big six providers, and there were serious concerns about whether the regulator was effective in curbing some of their activity—whether there was sufficient pressure for social tariffs and for dealing with successive rises in energy prices. It was a very frustrating experience, in many ways. The situation in the postal market seems to me to be even worse, because Royal Mail, or whoever takes it over—if it is TNT or Deutsche Post it could be still worse—will be by far the largest provider. The rest are minnows in comparison. I do not feel that regulation is a sufficient means of protecting the USO. We shall debate later the clauses that allow Ofcom to consider the terms of the USO. I have grave concerns about some of them.

In a truly and fully competitive market, the Government will come under intense pressure to relax the terms of the USO, and may find that pressure difficult to resist. I repeat the point that I made on Second Reading: Royal Mail should be seen as part of the national infrastructure and should be kept in public ownership, and I ask the Committee to reject the clause.

New clause 2 also gives me cause for concern. As I suggested earlier, my position is simply that Royal Mail should remain in public ownership. I understand that the Labour party—at least during the previous Parliament—was in favour of part-privatisation. I opposed that stance and continue to do so, as by agreeing to part-privatisation we would be selling the pass and leaving open the possibility of further privatisation. I seem to recall that in the previous Parliament, Lord Mandelson was prepared to sell 49% of Royal Mail. Indeed, if I understood the hon. Member for Ochil and South Perthshire this morning, when he was questioning the Minister about Liberal Democrat policy, it is still the policy of the Labour party to be prepared to sell up to 49% of the Royal Mail.

I am old enough to remember the privatisations undertaken by the previous Conservative Administration. Only on Second Reading, the hon. Member for Gainsborough (Mr Leigh) was bemoaning the fact that he had not been allowed to privatise Royal Mail then, as he had wished to do, and said that if he had, we might not be in the present situation. I do not agree with that point, but it is an interesting observation from someone who was active at that time.

When the previous Conservative Government engaged in privatisation, they included certain attempts to ensure protection for the public interest. In such cases, they kept golden shares in the companies that were being privatised, the classic example being the energy companies to which I referred. I appreciate that the golden share is not quite the same concept as a minority shareholding, but what happened there is indicative of how matters might play out with a partially privatised company.

If we look at what has happened since, all but two of the UK’s energy companies are owned by foreign multinationals. For example, the Government had a golden share in ScottishPower, but the company is now wholly owned by the Spanish firm Iberdrola. The previous Labour Government announced in 2000 that they were giving up their remaining golden shares in privatised companies,

“opening the way for potential foreign takeover bids across a range of industries including defence, telecoms, energy and transport”,

as TheIndependent put it at the time; and much of that transpired. I came across an article from BBC News from 2003, reporting that the golden share in BAA had been ruled illegal by the European Court of Justice, on the grounds that it restricted free movement of capital in the single European market. Under the sub-heading “Political considerations” it states:

“BAA said it would not oppose the government giving up its golden share. But analysts said the possibility of a takeover was remote.”

BAA is now owned by a Spanish company, and it is selling off several of its airports under pressure from the Office of Fair Trading.

That seems to me to indicate that once we go down the road of privatisation—once we sell the pass, once we cross the Rubicon, or whatever analogy one uses—it will inevitably lead to more and more privatisation. The needs of small businesses in rural and remote areas will fall victim to the greater needs of profit in urban areas, which account for the bulk of the business. We cannot allow that to happen to something as important as Royal Mail. The only way forward is to stand firm, keep Royal Mail in public ownership and resist the siren calls to go down that path. We should not agree to clause 1 or new clause 2, but we must reiterate the principle that Royal Mail should remain entirely in public ownership.

Karl Turner (Labour, Kingston upon Hull East)

I cannot support the Bill in its current form, and I oppose clause 1, so I rise to speak in support of new clause 2. The proposals in the Bill will be detrimental to many of my constituents and the businesses in east Hull, and in the UK as a whole. For that reason, I urge all Members to support the new clause.

The removal of restrictions on ownership of Royal Mail holdings will undermine the future of post office outlets. It will weaken the unique service obligation that Royal Mail so proudly boasts, on which the public have come to rely. It will undoubtedly result in job losses, and it will be detrimental to the efficacy of small and medium-sized businesses in my constituency.

The plans threaten to turn a public service into a private monopoly. Post offices play a particular social role in communities up and down the country, and their existence should not be driven simply by profit and loss. The debate must focus on the type of postal service that the public and business require. From the evidence that we have heard, we can appreciate that small business needs a six-day delivery and collection service, and that the general public want good access to post offices, a strong universal service that delivers to their homes and businesses six days a week, a service that dictates that one price goes anywhere, and a network of post offices that fully serves our communities. A situation that allows 90% of decision-making powers to a limited number of private investors can only serve to damage that.

The previous Government established criteria that assessed that a minimum of 7,500 outlets were required to give reasonable access. The minimum requirement has to incorporate approximately 3,500 non-viable outlets. I cannot see any private company being willing to provide up to £150 million a year in subsidies to ensure that those criteria are met.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman give way?

Karl Turner (Labour, Kingston upon Hull East)

In a moment. That leads to the question of whether the Minister has had conversations with potential private investors who are willing to support 3,500 non-profitable access points. If so, I very much welcome his interjection.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am grateful to the hon. Gentleman for giving way. Is he aware that the Bill does not seek to privatise Post Office Ltd, or the post office network, to which he is referring, and that the Bill states that the post office network shall either be 100% Crown-owned or go to relevant mutuals? We are coming on to those clauses, but that is the position. I have not had the conversations that he is suggesting I may have had, because there has been no need.

Karl Turner (Labour, Kingston upon Hull East)

I am very well aware of what the Minister says, but the reality is that there are many non-profitable post offices, and there is nothing in the Bill that protects them. A private company, in my respectful submission, is unlikely to subsidise them. That is the reality of the situation.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think that the hon. Gentleman is also aware of the announcements made by the Government as a result of the spending review, in which they say that, for the next four years, the Government are providing £1.34 billion, as part of the network subsidy payment, to Post Office Ltd, or the post office network, to help it transform.

Karl Turner (Labour, Kingston upon Hull East)

Absolutely, but what happens after that? What happens when all of that runs out? What is the reality of the situation? If we have 90% ownership by private investors, and many access points are just not viable, who is going to support them? That is the reality of the situation.

Damian Collins (Conservative, Folkestone and Hythe)

What guarantees have there been under public ownership, given that we have seen thousands of post offices close, and tens of thousands of jobs lost in Royal Mail over the past few years? I cannot see what guarantees continued public ownership would give those workers.

Karl Turner (Labour, Kingston upon Hull East)

The reality is post offices closed; that is absolutely right. There is a minimum that is required to meet the universal service obligation. From the previous Business Secretary’s assessment, we understand that 7,500 outlets were required to ensure that that continues. The post offices that closed under the previous Government, in my view, were closed under the modernisation programme, which we have heard evidence about. Everybody agrees that it is working. It was difficult for trade unions and other partners to grasp it, but it is actually working now.

We have heard evidence from many stakeholders and interest groups. That evidence shows that they also share my concern. Hon. Members will recall the evidence of the chief executive of Consumer Focus, Mike O’Connor, who said:

“Clearly, you cannot force a private sector company to always do business with the post office network. I was glad to see that Moya Greene could not envisage a situation in which they did not work with the post office network. I can envisage such a situation in the future.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 88, Q175.]

The Federation of Small Businesses stated that the universal service obligation

“must be protected and services must not diminish. Any change to the scope of the USO could have a negative impact on small businesses.”

There must be no more post office closures. We know that 59% of small businesses want to continue to receive mail deliveries six days a week and that 94% want a UK-wide postal service. Billy Hayes, the general secretary of the Communication Workers Union, argues that it is modernisation, not privatisation, that is required, and that Royal Mail can flourish with the majority stake held by the Government. Committee members can be assured that I agree with Mr Hayes’s sentiment and I agree that the Government’s obsession with privatisation is worrying.

I firmly believe that the desire to privatise Royal Mail is about ideology, despite the Minister’s assertion that he is not ideological. He is right to say that he seemingly agreed with me prior to the general election, since he fought the election with his Lib Dem colleagues on the promise that his party would seek to keep the majority stake of Royal Mail in public hands. In that sense, he was ideological in his views prior, of course, to his promotion to Government. It is worth reminding Committee members of the Liberal Democrat manifesto, which stated:

“Give both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership.”

The Minister laughs, but that was in his political party manifesto, on which he fought the election:

“49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government.”

That sounds a lot like what we previously said, plagiarised, in my submission, from this party.

The rest of the debate is in Hansard.