Postal Services Bill

Public Bill Committee, 18 November 2010.

Clause 2

Gordon Banks (Labour, Ochil and South Perthshire)

I beg to move amendment 16, in clause 2, page 1, line 16, leave out subsection (2) and insert—

Jimmy Hood (Labour, Lanark and Hamilton East)

With this it will be convenient to discuss the following:

Amendment 17, in clause 2, page 1, line 16, leave out from ‘after’ to end of clause and add

Amendment 18, in clause 2, page 1, line 16, leave out from ‘after’ to end of clause and insert

Amendment 15, in clause 2, page 1, line 17, leave out ‘a report’ and insert

Gordon Banks (Labour, Ochil and South Perthshire)

With amendment 16, I am asking the Committee to agree to leave out subsection (2) of the clause and replace it with the words on the amendment paper in the name of my hon. Friend the Member for Llanelli and myself. I am sure that if we stray from that during our deliberations, you will use your good offices to keep us in check, Mr Hood. I hope that our deliberations today meet with greater approval from the hon. Member for Braintree than our efforts did on Tuesday. He made a contribution about that via a tweet that merits inclusion in Hansard, so I shall read it out for the record:

“Sitting in v v dull Postal Services Bill Committee.”

Shock, horror! Well, it is not my fault that the hon. Gentleman thinks that his hon. Friend the Minister’s Bill is so dull.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I don’t think it was the Bill.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister says from a sedentary position that he does not think it was the Bill. It could not possibly be the contributions from the Committee that were dull, because I am sure that they were not. We had references to Sebastian Vettel and rally driving in Scotland and an entertaining debate about the ownership of Deutsche Post.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I am sure that the contribution on Twitter was quite amusing, but it is not relevant to the amendment. I invite the hon. Gentleman to keep that in mind.

Gordon Banks (Labour, Ochil and South Perthshire)

Thank you, Mr Hood. I was trying to stress that I did not think that the Committee was dull.

The objectives of amendment 16 are many and varied, and I think that it will be useful if I take the Committee through them one by one. First, proposed new subsection (2)(a) would secure the placing of at least one representative from those directly employed by the privatised Royal Mail or its successors on the board of the new company. I am sure that the Minister will agree with the sentiment that that would be a beneficial step for the new company and that it must be secured in the negotiating stage with the prospective bidders. If the amendment was accepted, it would become a requirement in law and it would be necessary for the agreement to be effective immediately in the construction of the new management set-up. It is appropriate that the Secretary of State should have the power and responsibility to police and approve such a contract and satisfy himself that the aims and objectives of the legislation have been met to allow him to comply with his other responsibilities under the amendment.

Including a representative from the work force directly employed by Royal Mail or its successors would provide an opportunity for a close working relationship at board level, which would be a real advantage to the company. From the employees’ point of view, it would provide an opportunity to ensure that their concerns and suggestions were raised, and that they had input into the company at the highest level. It would be a natural avenue for developing a relationship between management and work force in a way that would only strengthen the company in what we have been told by the Government and the witnesses in our evidence sessions will be an ever-challenging set of circumstances. Employees would be able to have greater faith in the management decisions of the new company as it moved forward into that uncharted territory if such an arrangement was in place and they could be part of the decision-making process.

I would expect a clear set of regulations to be worked out by the company to ensure that there was a precise set of channels to allow a two-way flow of information, to and from the work force and the board, through the directly employed representative. On the employer side, such an arrangement would be a sign of faith that the work force are one of the biggest assets that a company can have—the other, of course, being the customer. Furthermore, my hon. Friends and I would not object to the appointment of a customer representative on the board. Perhaps the Minister will think about that suggestion and draft a Government amendment to incorporate such a proposal. We will wait with bated breath.

If such representation existed, the board would be able to make quicker and clearer decisions. As Mr Brydon, the chairman of Royal Mail, said in his evidence:

“You have to be flexible and quick.”––[Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 15, Q32.]

The amendment would allow quickness and flexibility, which would be lost if such representation did not exist in the company, which has had several problems in the liaisons between management and work force in the past. I am sure that the Minister and the board of the new business agree that good working relationships are vital. They will be extremely important in the new business so I firmly believe that the amendment would be a great step forward. It would compel the management to invest and show its faith in the work force. My hon. Friends and, indeed, the work force would expect the representative, if the amendment were accepted, to have the same power and responsibilities of other board representatives to ensure equal representation. It would not be acceptable to have anything less.

My hon. Friend the Member for Llanelli and I omitted from the amendment the process by which such a representative would be appointed, so I look forward to that being debated in our proceedings, when I shall voice my preference for such an appointment to be in control of the work force in much the same way as the other board appointments will be in the control of the management.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman is making an interesting speech, and I am paying careful attention to it. Will he explain why the previous Government did not put an employee representative on the board?

Gordon Banks (Labour, Ochil and South Perthshire)

We are dealing with a Bill that will sell off 100% of Royal Mail, irrespective of the Minister’s manifesto ambitions. That is fundamentally different from the position of Royal Mail in the past.

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

We all owned the Royal Mail, so it was probably less important to have an employee representative on the board.

Gordon Banks (Labour, Ochil and South Perthshire)

That is a valid point. My hon. Friend has reiterated the strength that Labour Members believe comes from public ownership.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I want to explore the relevance of having an employee on the board just because the organisation is in private not public ownership. The previous Government, particularly through the Postal Services Act 2000, made it clear that Royal Mail Holdings operated at arm’s length from the Government and that they would not intervene. Indeed, the Government did not intervene in the relationships between the work force and the management. It would have been appropriate, therefore, given the hon. Gentleman’s argument, to have an employee representative on the board under the previous Government. Why was that not the case?

Gordon Banks (Labour, Ochil and South Perthshire)

We are debating the Government’s Bill, not what happened in the past. In evidence, Richard Hooper talked about employee representation on Post Danmark and how successful that was. We have heard from the Committee about international competition and how we should learn from what is happening internationally, so we should learn about what is happening internationally on this matter, too.

The amendment would not restrict representation on the board to only one representative, but it would provide for “at least one” directly employed representative. If the management and, indeed, the work force saw real added value in increasing the number from one, nothing in the amendment would prevent that from occurring. However, we always want to provide flexibility and such matters should be for the whole organisation to determine when the work load of the first representative has been evaluated.

Under the amendment subsection (2)(b) would provide that

“the headquarters of the new body will be located in the United Kingdom”.

I am sure that some hon. Members, and perhaps even the Minister, think that that might be a foregone conclusion and that the provision is unnecessary, but let us just put it in the Bill, in case Royal Mail is purchased by an overseas company that wants to incorporate the headquarters of the newly privatised Royal Mail into, say, its own HQ elsewhere in Europe or, indeed, further afield.

The amendment in essence states that Royal Mail is a UK business. The clue may be in our interpretation of the word “royal,” but as the Queen is also the head of many Commonwealth countries the amendment would ensure that the location of headquarters would remain in the UK.

Michael Weir (Scottish National Party, Angus)

It seems to me that the amendment provides only that the headquarters should be in the UK. It does not say that the administration of Royal Mail should be carried out in the UK. There is a danger, even under the amendment—and I understand where the hon. Gentleman is coming from—that we would get a plate somewhere in London or Edinburgh, but nothing else, as has happened with some banks.

Gordon Banks (Labour, Ochil and South Perthshire)

That may be a very valid point. I hope that the Committee will take the amendment in the spirit in which it is intended. We would like not just the HQ but also the operational process to be included. I shall come on to why I think that is important for the work force.

David Wright (Labour, Telford)

I suggest that the Government could accept the amendment and then improve it on Report. That would be an excellent way forward. It would give the Government the opportunity to support the principle of the headquarters being in the UK. Then the Bill could be tidied up in accordance with what the hon. Member for Angus has pointed out.

Gordon Banks (Labour, Ochil and South Perthshire)

I am for ever grateful to my hon. Friend for his interventions. As I said on Tuesday I want to be helpful to the Minister, and constructive. I think that the amendment will be helpful to him, but I look to him perhaps to be helpful in return and do as my hon. Friend suggested, tabling an extended amendment on Report, if the Committee feels that my amendment does not go far enough.

I accept that we live in an ever-shrinking business world and that many businesses move their locations about freely, to suit their needs. However, my hon. Friends and I see the need for a solution based firmly in the UK, albeit within a competitive European and, indeed, worldwide market. That touches on the point that the hon. Member for Angus made. I want the operation to be based in the UK.

The amendment would protect the UK integrity of Royal Mail and would bind any successful bidder to recognise the importance of the location of the HQ as an integral part of the way forward. I believe that the work force and customers alike could take strength from the amendment, and I feel sure that the Minister will want to protect the integrity and history of Royal Mail as a UK institution by agreeing to it and, as we have suggested, possibly even improving it.

It has already been said in Committee, but I will repeat, that the Opposition are inherently against the Government’s objectives in selling the Royal Mail. However, if it happens my hon. Friends and I are committed to keeping the essence of the business in the UK. We believe that the amendment would go some way to doing that.

Additionally, an operating HQ in the UK would make things easier and less demanding for the executives managing the business—who, I hope the Minister agrees, may need our help in establishing the correct support and solutions in relation to the issues we are considering. It is also preferable to retain management jobs in this country, to ensure that the work force can relate appropriately to those in the relevant positions, and so that all workers in the business can have available to them a ladder of development that does not rely on their eventual relocation overseas, with all the difficulties that that would entail.

I have tried to expand on the amendment and on our intentions, which, as the hon. Member for Angus suggested, are perhaps somewhat deeper than the words themselves provide for. If the Minister does not accept the amendment, he is effectively saying to the work force and the UK public that he does not care whether Royal Mail retains a UK identity. I am sure he does not want to create that impression, or indeed the difficulties that may flow from it.

Paragraph (c) recognises that future owners might, if they so desire, move the HQ out of the UK, once it has been established in the UK as a result of our excellent paragraph (b). The amendment simply restricts the ability of the business to do that without the approval of the Secretary of State.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

When the previous Government sold British Energy Group plc, what provision did they make to ensure that the headquarters remained in the UK? Will the hon. Gentleman remind me?

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister keeps referring to the past when we should be looking to the future. We are scrutinising the Bill to make it better. We are not in a position in Committee to make past Bills better.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Last year the previous Government sold off a British company and its headquarters are now abroad. I think the hon. Gentleman needs to be consistent, at least over a year’s passage of time.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister should not talk about consistency, because a few months ago he stood on a platform to keep 51% of Royal Mail in employee and Government control. As we will see, as we debate further, there will be a big fat zero owned by the Government as a result of the Bill.

Graeme Morrice (Labour, Livingston)

The Minister’s talk of consistency is like the kettle calling the pot black. From the Minister’s various interventions, does my hon. Friend get the impression that he is not particularly fussed whether the headquarters of Royal Mail remain in the UK?

Gordon Banks (Labour, Ochil and South Perthshire)

I will allow the Committee to arrive at its own conclusions. The Minister seems intent on trying to prove that there is a precedent for not having the headquarters in the UK. I urge him to listen to contributions to the debate, then go away and ensure that Royal Mail—if and when it is sold off into private hands—retains its HQ in the UK for all the reasons that I have mentioned, including management and work force development.

Damian Collins (Conservative, Folkestone and Hythe)

The Minister referred to the sale of British Energy, which affects the Dungeness nuclear power station in my constituency. Does the hon. Gentleman believe that there is something wrong with the way that EDF is running that business that should be of interest to my constituents? Should it be a lesson to us when considering the Royal Mail sale?

Gordon Banks (Labour, Ochil and South Perthshire)

I would have thought that the hon. Gentleman could make his own arguments about where the HQ of certain businesses operating in his constituency should be. However, we must not deviate from trying to improve the Bill. We are trying to improve the complexities and working arrangements for Royal Mail as we go forward into what proposes to be a very private world for Royal Mail in future.

I am surprised that no one has intervened on whether there would be legal difficulties relating to the amendment. How will the Government be able to tie a successful bidder into an extended inter-business agreement with the Post Office? That is seen as instrumental for the survival of the Post Office. It is an objective that the Minister himself holds. If one can be done, I do not see how the other cannot be done. If none can be done—if we cannot have a long-lasting IBA and cannot have the HQ in the UK, for legal reasons—perhaps the Minister will tell us why.

If the Secretary of State agreed such a plan to allow the business headquarters to relocate overseas, it would be possible for Parliament to question him on the basis of that decision and hold him accountable. That would create a level of transparency and accountability lacking without such an amendment. Indeed, as in paragraph (b), if the Minister thinks that that would never occur, there is little to be lost from his agreeing to the amendment, just as an insurance policy.

Approval of the Committee for the proposed new subsection to clause 2, in its entirety, would be necessary for paragraph (c) to be activated, but if the Minister feels unable to accept all the excellent suggestions put forward in amendment 16, I encourage him to go away, as has been suggested, and think about the bits that he can relate to. I am sure that there must be many and I am sure, as the debate goes on, that there will be even more. However, I encourage him to go away and bring back Government amendments on those areas to allow me, and my hon. Friends, to support him.

On paragraph (d), it is vital that such a consultation exercise with those involved in the provision of postal services in the UK be undertaken where the details of the proposal can be made clearly to those with an interest in the provision of services, and in a way that allows a valuable dialogue to be established in the consultation process. I do not want to be prescriptive here as to who “all” is, and I want to provide the Minister with a degree of that word flexibility that everybody is talking about, but I have no doubt that the Minister and his officials would be able to draw together an appropriate list of consultees, ranging from employee groups to sub-postmasters and business provision partners. That consultation would allow all those vital sectors of the organisation, and its service provision, to comment on the proposals of any such transfer, and it would be expected that all possible details not covered by commercial confidentiality would be made available to the consultees, as that would add value to the consultation process.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Will the hon. Gentleman explain which part of Richard Hooper’s consultation, from both 2008 and the update, he thinks was lacking?

Gordon Banks (Labour, Ochil and South Perthshire)

We are not talking about Richard Hooper’s consultation; we are talking about the Bill. We are talking about how to improve the Bill. We are talking about the Bill and about consulting on the offer that the Secretary of State decides he wants to accept for Royal Mail. That is what we are talking about. We are trying to improve the transparency of the Bill to allow everybody to have faith in the Government’s actions, and I think that the Minister should embrace that.

The consultation process would result in the Secretary of State having a clear understanding of the views of the consultees on the proposals. His response to the consultation would allow him to absorb the areas of improvement that may come from the consultation in such a way that empowers him, if necessary, to return to improve, or alter, the disposal arrangements with the preferred successful bidder. I accept that that would become a negotiating matter, but the Secretary of State would be empowered by the strength of the consultation exercise. Indeed, the preferred bidder would also be able to judge the strength of issues coming from the process—a win-win situation. The content of the formal response would, of course, be within the powers of the Secretary of State to determine—again, an example of my acknowledgment of the need for flexibility. I would, however, expect any Secretary of State to take detailed cognisance of the submissions made and have their contributions evaluated fairly before making any response.

After the completion of that process, it would be necessary for the Secretary of State to instruct that a ballot of all employees of the affected Royal Mail company be held on the issue of disposal. That is covered in paragraph (e) of the amendment. It would be necessary for the Secretary of State to ensure a simple majority of the work force to enable the disposal to take place. That restriction on the Secretary of State would be beneficial for the bidder because, if the required majority was achieved, the preferred bidder would be very secure in the knowledge that a majority of the work force was in favour of the agreement that had been reached between them and the Secretary of State. I hope my hon. Friends agree that this would be hugely important to the well-being of relationships within the new company and would be a sound platform for the business to develop in the years ahead.

Michael Weir (Scottish National Party, Angus)

I understand the hon. Gentleman’s argument and I support him to a great extent, but could he explain the slight contradiction between paragraphs (d) and (e)? Paragraph (d) asks for a consultation with all those engaged in the provision of postal services, which is much wider than the workers in Royal Mail itself. I understand that his argument may be that the workers in Royal Mail are the ones who are directly affected by a transfer, but given that Post Office Ltd has been split off from Royal Mail, sub-postmasters and consumers will also be directly affected. Has he thought of any way, other than the consultation, that their views can be taken into account before a sale to a specified bidder takes place?

Gordon Banks (Labour, Ochil and South Perthshire)

The hon. Gentleman has made an interesting point, which I am sure the Minister has noted. He may come back on Report with just such an amendment. The aim of all this redrafting is to achieve a level of consultation and approval for the selling off of Royal Mail that does not exist at present. Our amendments may not be perfect and the Minister and his officials may well be able to improve on them, but there is a process for doing so and I look forward to that debate developing and the Minister coming back with some suggestions of his own.

As I have employed people for many years, I know how vital it is to have a contented work force. As I have said on many occasions and as I will no doubt say again in this Committee, any business has two main assets: its customers and its work force. In an organisation such as Royal Mail the work force are also, partially, the customers so there is an even greater need to have their agreement on such a fundamental change to a British institution. I make that comment in relation to what the hon. Member for Angus just said. In the ballot proposed in the amendment there would be some customer representation because everybody who works for Royal Mail is a customer too.

Of course, there is a possibility that the work force could reject the proposals put forward as a result of the Secretary of State’s deliberations with potential bidders, but if that were the case I would have to conclude that it was not a very good deal for either the business or the employees. In such a case I am sure that the Secretary of State would welcome the arguments made in such a process and use those to his best interests in the future. He could renegotiate and revisit the consultation exercise and work force vote. That would be his prerogative, but it would have to be done in a way that was constructive and showed improvements on any previously rejected proposals; otherwise he would be wasting everyone’s time and my hon. Friends and I do not believe that this or any future Secretary of State would want to embark on such posturing.

However, like Mr Sibbick, the secretary of the Mail Competition Forum, who gave evidence to the Committee, I would like to be optimistic. So I will be optimistic on behalf of the Secretary of State and assume that his negotiating skills, consultation abilities and balloting skills have got him to a position where he has an option that has been positively consulted upon and has secured a work force majority. At this point paragraph (f) would be engaged and the Secretary of State would have to present to Parliament a Bill that conferred on him the power to dispose of the business in relation to the bid on which he has already consulted and secured work force approval.

I suggest that the Minister should see that hurdle as little or no obstacle, because, if all the preceding points have been secured, the approval of Parliament should be a follow-on step in the process. That would allow parliamentarians to comment and vote on the proposals, which would be a just and appropriate part of the process, and would add a further level of transparency and authority to any sale, which is sadly lacking from the Bill as it stands.

The Bill states that the Secretary of State only needs to

“lay before Parliament a report on the proposed disposal.”

When the Minister gave evidence to the Committee last week, he was challenged by my hon. Friend the Member for Telford on the format of that report. If the Minister had been more forthcoming in his responses, we might not be debating the matter now. My hon. Friend and I are reasonable men, and we would have welcomed the opportunity to spend time discussing other aspects of the Bill, but the Minister’s responses were not very helpful. On the report as it stands in the Bill, he said that

“in clause 2, we are putting a requirement on ourselves to report back to Parliament. No doubt, when we debate clause 2, you will want us to do far more than that. I can just imagine the amendments that you will put forward.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 126, Q250.]

I hope my hon. Friends and I have not disappointed the Minister too much, and that we have met his expectations on the hoops that he feels we want him to jump through. [Interruption.] The Minister says from a sedentary position that we “surpass them,” which I take as some degree of compliment.

This would have been much easier if the Minister had been more conciliatory to my hon. Friend the Member for Telford. When pressed on how the report would be laid, the Minister referred my hon. Friend to clause 2. As we all know, the clause states only that a report will be laid, and not how it will be laid. My hon. Friend gave the Minister a way out when he asked—in simple but poignant words—whether the Minister intended just

“to pop it in the Vote Office?”

The Minister would still not be drawn, replying to another question from my hon. Friend that

“there will be a Command Paper”.––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 127, Q252-253.]

I looked up Command Paper on Wikipedia, that well-trusted research base:

“A command paper is a document issued by the British government and presented to Parliament. White papers, green papers, treaties, reports from Royal Commissions and various government bodies can all be released as command papers, so-called because they are presented to Parliament formally ‘By Her Majesty’s Command’.”

The Committee is, therefore, no further forward in understanding the Government’s intentions. I am sure that the Minister understands the need for my hon. Friends and me to press him on the amendment.

The amendment would require a Bill that should include

“all aspects of the proposed transfer”

to allow parliamentarians to arrive at an informed decision on the future of Royal Mail. Wikipedia tells me that Royal Mail can trace

“its history back to 1516, when Henry VIII established a ‘Master of the Posts’, a post which eventually evolved into the office of the Postmaster General.”

Interestingly, the service was first made available to the public by Charles I in 1635, and postage charges were first introduced by Charles II in 1660. That is the end of the history lesson for now, except to say:

“Between 1719 and 1763, Ralph Allen, Postmaster at Bath, signed a series of contracts with the post office to develop and expand Britain’s postal network. He organised mail coaches which were provided by both Wilson & Company of London and Williams & Company of Bath.”

That history should not be consigned to the dustbin without parliamentary agreement on the deal that takes it out of public ownership. The Bill does not allow for that, so I believe, as do my hon. Friends, that paragraph (f) of the amendment would be supported by Royal Mail’s founders if they were with us today in Committee.

Paragraph (f)(ii) would require the Secretary of State to outline how he proposes to enshrine the universal service provision in law regarding the new provider and the new Bill that would empower him to dispose of Royal Mail. The deal for such a disposal must be made after consultation, votes of all affected employees of Royal Mail, and votes in Parliament.

There has been much said, and there will be more, about the universal service provision—it is dear to my heart for a number of reasons. My constituency has many rural parts—indeed, I have lived in some of those locations, which make part of my constituency look like a metropolis. I can understand, therefore, any new provider’s business argument to reduce the universal service obligations. However, for constituents who live in rural parts—in some cases in absolute isolation, as the hon. Member for Angus mentioned in the previous sitting—the service must not be allowed to be eroded.

I am sure that some hon. Members will agree that, for many households, the postal service is a lifeline, and that universal should mean just that—universal.

Michael Weir (Scottish National Party, Angus)

I agree, but I emphasise another point that I made earlier in the week: we should not get hung up on the matter of individual mail, because the importance of the universal service relates to small and medium-sized businesses in rural areas, which cannot operate without a dedicated mail service.

Gordon Banks (Labour, Ochil and South Perthshire)

The hon. Gentleman has made a valid point and I shall come to businesses—I hope that he did not expect me to miss them out of my contribution.

Michael Weir (Scottish National Party, Angus)

Just in case.

Gordon Banks (Labour, Ochil and South Perthshire)

Why should I get a six-day service when I am in London on parliamentary business, but a lesser service when I return home to Scotland, just because it is a bit more isolated? Why should people—or businesses—who want to contact me by post have to pay a premium because I live a bit further away than somebody else? It simply is not fair, and the Government must guarantee the universal service provision. My hon. Friend and I had in mind the best interests of families up and down the UK when we tabled the amendment. At the same time, we were considering the Minister’s position and we thought that he needed a little help.

As the hon. Member for Angus has suggested, we need to consider the impact of the universal service provision on UK businesses. In evidence to Committee, I highlighted how many small businesses rely on the post for a range of services, including payments. Many also receive purchase orders, legal documents, architectural drawings, products to sell and products that they have bought, and myriad other things. Why should such businesses in my constituency, or in that of the hon. Member for Angus, get a lesser service than businesses in city centres? I do not think that they should—neither, I am sure, do the hon. Gentleman or my hon. Friends. To protect households and businesses, the universal service provision, as currently enjoyed, must be secured in a Bill that would empower the Secretary of State to sell off the best china—the amendment proposes just that.

Finally, paragraph (f)(iii) of the amendment would require the Secretary of State to include in such a Bill a report on the progress of Royal Mail’s modernisation at the time of the proposed transfer. That measure is necessary because it will be vital for parliamentarians to understand the level of progress that has been made, to ensure that they are able fully to evaluate the benefits, or otherwise, of any deal that the Secretary of State proposes.

What will be the value of the unspent budget allocated to the modernisation process at that point in time—if there is a balance, depending on when the sale proceeds and how future modernisation is funded, assuming that the business is not sold by the end of this modernisation period? We have tried to draw the Minister on that. He has not yet bitten the hook, but we will continue to try to get him to comment on that—not to have him wriggle on our line, but so that we may understand his intentions for future modernisation should Royal Mail not be sold before the end of this modernisation process. It is important to be able to evaluate that, which will empower parliamentarians with the knowledge of how much progress has been made, and at what cost. It is also important to establish the Secretary of State’s vision for the unspent modernisation budget, if there is one. Does he see it returning to the Treasury, where it would be out of Royal Mail’s control, or does he intend to donate it to the successful bidder? That is a vital question, but the Bill does not require it to be addressed. Our amendments would prompt the dispersal of such knowledge.

There are serious issues that require the Government’s attention, and by accepting the amendment the Minister could ensure that such matters receive not only Government attention, but parliamentary attention. That would provide him and the Secretary of State with a level of transparency that I am sure they are anxious to achieve in any deal.

Pulling all that together, amendment 16 is large and important. It is important because it delivers a level of security, checks and balances, and transparency that the Bill fails to provide. As it stands, clause 2 does not do what it should say on the tin. In the evidence session last week, the Minister was found wanting in his response to my hon. Friend the Member for Telford. It is with those reasons in mind that I have delayed the Committee on this matter for so long this morning. I look forward to hearing further contributions on this amendment. If the Minister feels that the conditions laid out in the amendment are too onerous, I will offer him, in the spirit of giving, three alternatives to consider.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is Christmas already.

Gordon Banks (Labour, Ochil and South Perthshire)

I move on to amendments 17, 18 and 15, which are in my name and that of my hon. Friend the Member for Llanelli. First, amendments 17 and 18 call for either a super-affirmative motion or an affirmative motion before the Bill, or the order to which it refers, becomes lawful. As there are a number of new MPs on this Committee, it might be useful if I explain how those work. Older heads, such as the Minister, can rest their ears at this point.

First, if anyone is keen to read about it in more detail, the super-affirmative resolution procedure is defined by section 18 of the Legislative and Regulatory Reform Act 2006. In a nutshell, the procedure outlines a 60-day period following the laying of an order by the Minister, during which the relevant parliamentary Committees may report on the draft order, or either House may make a resolution on it. The Minister would have to have regard to any such reports or resolutions, as well as any other representations made on the draft order. Once the 60-day period has expired, if the Minister wished to make the order with no changes, he would have to lay a statement before the House. He could then make an order in the terms of the draft, assuming that it had been approved by a resolution of each House of Parliament. Alternatively, if the Minister wished to make an order that is a revised version of the draft order he has laid, he would have to lay before Parliament a revised draft of the order and a statement that specifically sets out the proposed revision. If that is approved by the aforesaid resolution of each House of Parliament, he may then make the order. If Members would like an example of where such a super-affirmative motion could be used, they could look at sections 17 and 18 of the Digital Economy Act 2010.

Members will perhaps be relieved to know that the super-affirmative motion is the more complex of the two, and that an affirmative resolution procedure is less complicated. In this matter, the Minister may make an order in terms of the draft only if the draft order has been approved by a resolution of each House of Parliament after 40 days, not 60 days, of the order being laid before Parliament. Again, if Members wish to see an example of this procedure in action, they can look at section 47 of the Higher Education Act 2004.

Turning to amendment 15, if the Minister wished to dispense with these procedures too, as I expect he might, the option would remain for the Secretary of State to lay a Bill before Parliament, which is not to be confused with the Bill referred to in amendment 16.

The amendments are important as they would put a duty on the Government to come to Parliament and seek the Houses’ permission to sell the business based on the deal on the table. In my view, and that of the Opposition, the duty to report back to Parliament is vital. I am sure that the Minister will agree that I have been incredibly gracious and flexible in offering him three—indeed four—alternatives to the Bill as it stands, or three alternatives, should he find the sacrifices in amendment 16 too demanding. I am sure that the Minister will also agree that any decision to sell off part of such an historic and valued organisation as Royal Mail must, at a minimum, be subject to a vote by the people’s representatives on the value of the deal on the table.

I do not want to repeat what I have said earlier, but I want to stress to the Minister and the Committee the importance of bringing any proposed decision to sell to Parliament for approval. As the Bill stands, the only duty on the Secretary of State after he decides to sell is to lay a Command Paper in the Vote Office, and referred representation about what that may mean. Surely we need a little more detail from the Minister and a larger commitment from the Government to report adequately to Parliament on this vital issue.

To conclude, I am trying to help the Minister by offering four alternatives that would allow him to engage Parliament. The Minister has sat on the Back Benches long enough to appreciate that the authority of Parliament should be absolute, so it is my hope that he will consider the amendments seriously in his deliberations with officials.

In another nutshell, when the criticism rains down on the Minister’s head that not enough consultation has taken place and that the proposals have been rushed through Parliament, I hope that he will think back to today and remember that he had the opportunity—indeed, four opportunities—to ensure that Parliament has been properly consulted on the decision to sell off part of the national institution that we all know as Royal Mail.

Michael Weir (Scottish National Party, Angus)

I want to make a brief speech on the clause and on amendment 16. I listened carefully to the hon. Gentleman, and I have a great deal of sympathy for his argument even though, as I pointed out in one or two interventions, I see some difficulties with it.

The main difficulty, particularly with paragraph (a), is that we do not know the final structure of any privatised company, should that disaster come about. The Bill, as it stands, allows for 90% of Royal Mail to be sold off, with 10% of shares going to the work force. If Royal Mail is sold off by a public offering, it may have many shareholders, in which case the 10% shareholding of the employees could be significant. If Royal Mail is, however, sold off to, for example, Deutsche Post or TNT, which would then control 90% of the shares, the 10% share held by the work force would not be that significant. The final structure will depend on how many members of the board should be from the work force. While I fully appreciate the amendment and would agree that it is important that a representative of the work force is on the board, the number and how that is done will depend on the final structure of any privatised company—although we hope that it is not privatised, but that is an argument for later.

I was interested in what the hon. Member for Ochil and South Perthshire had to say about the headquarters of the company. Again, that is something that I have a great deal of sympathy for. In Scotland, we have experience of companies that have been taken over and of promises being made that the headquarters will remain in Edinburgh. What happens, however, is that there is a brass plaque on a plate somewhere in an office in Edinburgh and real control is exercised elsewhere. That has been a problem of the Scottish economy for many years. I am concerned that the same thing might happen here, especially if there is a sale to a foreign company, which might have its main business elsewhere.

The Minister intervened on the hon. Member for Ochil and South Perthshire to ask about British Energy. Now, as someone whose hands are clean and who has never voted for the privatisation of anything, I want to comment not on British Energy, but on the privatisation of energy companies, because there is an analogy there that may be of interest in the case of Royal Mail.

As we all know, the previous Government privatised the state-owned energy companies, and there was to be competition between all those companies. The number of companies has, however, progressively shrunk to the point where there are now the big six that basically control all energy within the United Kingdom. Of the big six, only two are now based in the United Kingdom—Scottish and Southern Energy and British Gas. All the others have become subsidiaries, in one way or another, of big foreign-owned multinationals, whether that is EDF, Iberdrola or whichever.

Hon. Members may remember that in hard winters in previous years—I am sure that if we have a hard winter this year, it will happen again—concerns have been raised about the way that some of those companies operate vis-à-vis the energy supplied on the continent and the energy supplied within the UK and about whether they are, in fact, giving a better deal to continental customers.

My particular concern—I remember this from my time on the Business and Enterprise Committee and Energy and Climate Change Committee—is the operation of the interconnectors, because the energy system within the UK and the continent depends on those interconnectors, through which, in theory, if the market is working properly, energy flows one way or the other depending on price. The evidence from previous hard winters in the UK, however, is that that has not happened, because even though the price is higher in the UK, the energy is still flowing the other way. That has raised concerns about whether foreign-owned companies are giving due weight to the interests of consumers in the UK. I do not want to try your patience, Mr Hood, and go on too long about energy, but the question is, if a company is foreign-owned, whether the interests of UK consumers will be adequately protected.

My view is that Royal Mail is part of our national infrastructure and cannot be looked at as just another company to be sold off on the stock exchange or otherwise. If control is not retained within the UK, the interests of UK consumers may be diminished. That is important because, as the hon. Member for Ochil and South Perthshire rightly said, the universal service obligation, which is a political obligation imposed by Parliament, is vital to businesses within particular rural areas. Later, I am sure we will talk a great deal about the universal service obligation, on which I have comments to make.

The point, however, is that Government Members talk about choice and competition when the reality is that in rural Scotland—I am sure it is the same in rural parts of England and Wales—there is no competition. Royal Mail has the only people who will deliver. My concern is not ideological, about who owns Royal Mail, but about what services will be delivered to rural areas.

Gordon Banks (Labour, Ochil and South Perthshire)

To elaborate on what I think the hon. Gentleman was saying, and I think I agree: Royal Mail is currently the only service deliverer, and there is no likelihood of anyone else coming into the market to cover parts, or all, of our constituencies, when they can cherry-pick and take the best parts of the business. That would put his constituents’ businesses at a significant disadvantage compared with others throughout the UK.

Michael Weir (Scottish National Party, Angus)

Although the hon. Gentleman is entirely correct, it is actually worse than that. To use my constituency as an analogy, the main road from Dundee to Aberdeen passes through the centre of it. I guess that what will happen is that communities on that main road will get the service, because Aberdeen and Dundee are reasonable markets. A service provider may well decide to deliver to Dundee and Aberdeen and stop off in one or two places on the way, such as Forfar, Brechin and Stonehaven—who knows? Or they may go straight past, because they want to; we do not know that. I can guarantee, however, that villages such as Tarsfide or Glen Clova will not get a service, because they will have to go an hour off the main road to get anywhere near such places, and that is just not going to happen. The reality is that there will not be choice there—as there is not now, to a great extent.

An analogy is perhaps with the parcel service, which has been fully liberalised for many years. Look at adverts in any magazine for delivery of goods by post and there is a little bit at the bottom that says, for example, “This does not apply to the highlands and islands of Scotland.” Couriers will not deliver there, or will only do so at a very high price. My fear is not so much about the personal letter market; it is about the small package market, which is the important thing for small businesses in my constituency. The universal service is so important because such businesses need to be able to receive and send small packages to keep their businesses going, and I worry that that is not going to happen.

The point about the universal service is well made, but there are also serious concerns about control of the business. I support what the hon. Gentleman has said, but I do not think his proposal is perfect, because it needs more thought. The direction of travel, however, is certainly something I would support.

Karl Turner (Labour, Kingston upon Hull East)

I rise to speak in support of amendment 16, as tabled by my hon. Friends.

I do not intend to take up too much time, not least because I am well aware that some members of the Committee are finding it difficult to concentrate—I hope, however, that hon. Members will indulge me a little. I understand that one hon. Member on this Committee finds it very dull and, rather than listening intently to the debate as I am, they are intent instead on tweeting their thoughts. We all know what the Prime Minister has said about what too many tweets might make. On a serious note, I am sure that employees, users and potential investors, whose long-term futures are very much at the heart of what Opposition Members are focused on, will share the Prime Ministers sentiments about tweeting, at least during this Committee.

I will now speak to the amendment, if only to help me achieve a better understanding of it. Paragraph (a) would allow at least one employee in the privatised Royal Mail or its successors to sit on the board of the new company. The inclusion of such a representative would allow for a close working relationship between the board and the employees. It would allow employees a point of view and provide them with an opportunity to ensure that any concerns they may have would be heard. That could only serve to strengthen the company, as my hon. Friend the Member for Ochil and South Perthshire has suggested. It also fits in well with the Government’s mantra that we are all in this together. I am obliged to my hon. Friend for reminding the Committee of Richard Hooper’s evidence, because it had slipped my mind. Mr Hooper responded to a question from the hon. Member for Bedford by suggesting that the situation in Post Danmark, which has a union representative on its board, works very well.

Paragraph (b) would require the headquarters of the new business to be located in the UK. I do not see why any member of the Committee would not want to ensure that. It would surely be a good thing for all concerned. It is a real prospect that the potential purchaser will be an overseas company, so the amendment would protect the integrity of Royal Mail. My hon. Friend was right to say that the amendment will also help to protect management jobs. That is an important point. Not agreeing to the amendment would send a message that the Government do not care whether Royal Mail resides in the UK and that they are not concerned about its identity. Indeed, it contradicts the assertion that we are all in this together.

Paragraph (c) provides a safeguard that would require the Secretary of State’s approval before future owners could relocate the headquarters outside the UK, once it is up and running. The provision would give Parliament the opportunity to question the Secretary of State on any of the company’s relocation plans, and it would offer proper accountability to the electorate. Again, that certainly relates to the proposition that we are all in this together.

It would be sensible to undertake a consultation exercise, as proposed by paragraph (d). It would allow for informed comment on the proposals and, as my hon. Friend rightly says, the Secretary of State would benefit from the consultation process. It would serve to improve things.

The restriction that paragraph (e) would place on the Secretary State would be beneficial, because it would mean that the work force were in favour of any agreement reached between them and the Secretary of State. It would help to secure and strengthen the relationship between management and staff.

Paragraph (f) would require the Secretary of State to present to Parliament

“a bill which confers on the Secretary of State the power to dispose of the business”

after he had consulted the work force and secured their approval. That would allow for further scrutiny by Parliament and, of course, goes much further than simply requiring the Secretary of State to

“lay before Parliament a report on the proposed disposal.”

Amendment 16 simply provides for greater inclusion of interested parties and allows for better accountability. I cannot see any reason why the Minister would not want that to happen; it would be of assistance. I hope that I have been able to keep the attention of Committee members in this very short speech. Also, I hope that I have helped to reiterate the concerns of the hon. Member for Angus. For the reasons given, I urge hon. Members to support amendment.

Nia Griffith (Labour, Llanelli)

I hope that Committee members will excuse me if I have to stop to cough; I will try not to. I hope that we will manage to get through this, because these are important amendments.

Amendment 16 is obviously very detailed. We have heard a lot already from my hon. Friend the Member for Ochil and South Perthshire, and I do not wish to repeat everything that he said. I would like to start with the issue of directly electing board members from those who are directly employed, as my hon. Friend has suggested. Obviously, it is a sound and practical suggestion, but it is certainly not a new idea; it is not even a revolutionary idea or just the preserve of socialism—a word that is hurled across the Chamber as if it were some form of insult, whereas socialism is about fairness, justice and treating people well.

We have known for many years about many successful examples of good collaboration between management and boards. Sometimes people have patronising ways of speaking about employees on boards, in the same way that they have patronising views about young people being on governing bodies or about primary school children taking part in interviews for members of staff. I assure Committee members that in the work I have done in schools and with youth clubs, the young people are usually very perceptive and extremely sophisticated in how they approach the work. The same is obviously true of employees; they have tremendous experience and understanding of what makes the company tick, and they can bring that huge wealth of knowledge and networking to the board.

Employees are vital to improving industrial relations, which, as we have heard, are already improving. We had glowing reports about how industrial relations have improved from Donald Brydon, the chairman, union representatives such as Dave Ward, the deputy secretary of the Communication Workers Union, and from Hooper himself. The idea of total privatisation will be a terribly difficult step for many members of the work force.

Gordon Banks (Labour, Ochil and South Perthshire)

It is worth putting on record again that when we were drafting the amendment, we bore in mind the fact that work force and management relations are fundamental going into this uncharted territory in which the work force may find themselves. Paragraph (a) strengthens the Bill; it is lacking now, and to preserve the good work force and management relationship there is no alternative other than to approve paragraph (a).

Nia Griffith (Labour, Llanelli)

I agree. My hon. Friend has taken the words out of my mouth. Having the full confidence of the work force and the work force’s involvement in every possible way are obviously important at this time of change, because—let us be honest—if we want a successful Royal Mail, the work force have to be fully engaged. They are the ones who will make it successful and who have a vested interest in it being successful.

What are the advantages of having the work force on the board? The first advantage is transparency. For far too long, people have had the idea that there is a terrible secret plot against them, that there is determination on the part of management to make everything as difficult as possible for employees, and that the board in particular has a number of secrets it does not wish to divulge. We talk a lot nowadays about the need for transparency, and having employee representation on the board gives that transparency.

Having the work force on the board is also important for communication. If there are messages to come down through the company, communication is vital. We know there are often difficult decisions to be taken, and it useful to share those discussions with employee representatives, so that they can see what the challenges are. They can see why difficult decisions have to be made and why the choices are not very nice.

Gordon Banks (Labour, Ochil and South Perthshire)

We are talking in this Committee about a communications company. Should a communications company not have the best possible chain of communications from its management to its work force?

Nia Griffith (Labour, Llanelli)

It would be ironic if it did not have that, as it is crucial. However, communication in the work force is never easy. Trust, communication and transparency are difficult to give tick-box answers to on a performance management sheet, but they are vital qualities. If one evaluates what is going on in any company, poor communication nearly always leads to poor performance and results. Whereas, good communication can build up those vital industrial relations that make a successful company. Those qualities are almost impossible to quantify, but they are crucial in the running of any successful modern business.

I shall move on to the topic in paragraph (b) of headquarters in the UK. The National Federation of SubPostmasters is adamant about that. Woe betide any politician who ignores the National Federation of SubPostmasters. It gets its feedback from a wonderful network of sub-postmasters across the country, because the post office is the hub of gossip and the place where everything that happens in the local community is known. If the Government are interested in putting more business into the post offices, instead of employing expensive consultants, they could use the vast network of sub-postmasters, which would provide a clear picture of what is happening on the street. They will put the politician back in touch with what is happening out there.

When I have been on the doorstep or in my local post office, what is the talk? We all know the usual political issues, but how many times have we heard, “This country is being sold to foreigners all the time”? People are convinced that we have sold things here, there and everywhere. It is bad enough with private companies, when we see British Steel become Corus and then Tata. We see familiar names such as Morris Motors metamorphose into such things as ThyssenKruppTallent and Calsonic Kansei, to give just a couple of examples. People feel aghast, but that is nothing compared to how they feel about the energy companies. The fact that E.ON and EDF are taking over energy companies is brought up time and again in that local post office and on the doorstep. In Wales, the fact that a French company is now running the tolls on the Severn road bridge, between England and Wales, is brought up again and again. How is it that a French company is benefiting from that?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is interesting to hear about the gossips in the post offices and how they are helping our debates. We should always listen to what our constituents are saying. Does the hon. Lady ever hear people objecting in such conversations to British companies investing abroad?

Nia Griffith (Labour, Llanelli)

The Minister is correct that people do not usually do so, but it is an emotional topic. People do not object to British companies investing abroad, but they feel strongly when they see EDF and E.ON on their electricity bills, and they see their toll bridge being run by the French. In addition, it is unbelievable for people in Carmarthenshire that in a country with lush grass, a mild climate and the most wonderful dairy herds in the world, we might even have French milk.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister’s intervention was entirely to the point, but my hon. Friend’s comments indicate that our constituents do not often see the overseas investment that UK companies are making. They see what is happening on their doorsteps, however.

Nia Griffith (Labour, Llanelli)

Returning to Royal Mail, it is one step too far. Most people do not want to see Royal Mail in foreign hands. Some good arguments have been made today to that effect, and I will make a couple more. People always have a tremendous trust in the security and the integrity of the post. They know that their postman or postwoman will not indulge in identity fraud, and they know that their details will not be sold to anybody. They are worried that if a company is not based in the UK, there may be ulterior motives, which is a particular concern with Royal Mail.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Is it possible that a foreign company that purchased Royal Mail might liquidate assets from Royal Mail in order to keep prices cheaper in another country where it also provides a service?

Nia Griffith (Labour, Llanelli)

My hon. Friend makes a good point, and that is a considerable worry. People feel that it is the British who are giving and others around the world who are gaining. They are worried about a precious national asset being used to prop up businesses elsewhere. Having spoken about paragraph (b), paragraph (c) follows logically; if Royal Mail is to have a headquarters in this country, people would like it to remain here. They do not want to see it whisked abroad five minutes after the Secretary of State has relinquished control.

Those points are important for confidence, which is vital to future success. People feel strongly that Royal Mail should remain in the UK. It would be ironic if we were to have a royal wedding with a Royal Mail that had been privatised and was being run from a foreign part. That would be the ultimate irony.

Paragraph (d) is about consultation with employees, which is important. As the hon. Member for Angus has pointed out, it is about ensuring that the employees not only of Royal Mail, which will be privatised if the Bill becomes law, but of the whole Royal Mail group have their say. It is all very well to say that they had their say in Hooper, but this is a Bill. Circumstances are different, and a little more detail has been provided—nothing like enough detail for many of us, because many questions remain unanswered—but it is nevertheless a significant step forward from Hooper. A case can be made for further consultation, and such a major step as separating Post Office Ltd and Royal Mail deserves full and thorough consultation.

I will now discuss paragraph (e), which is all about the importance of democracy. Nobody in the room could possibly deny that a 51% majority is vital to show what the work force want in a yes-no situation. The Minister may remember that the AV vote is all about showing that an MP has the confidence of their constituents, by having more than 50% of them agreeing that the MP is better than the other candidates. It will be interesting to see how the AV vote goes next year. In my constituency, we shall—as people in Scotland will —be knocking on doors and saying, “First off, I would like to introduce you to our candidate in this election and tell you a little about him. Then, I would like to tell you about the list system. Yes, that’s the one where there are four of them standing, but only one cross on the paper.” They might respond, “That’s the one where the losers get the prize, isn’t it?” I would reply, “Well, yes, actually, it is the one where the losers get the prize. You’ve got the system.”

Gordon Banks (Labour, Ochil and South Perthshire)

I take it that my hon. Friend is not advocating that we should have an AV system to determine the outcome of the ballot in paragraph (e).

Nia Griffith (Labour, Llanelli)

The difficulty next May will be that not only will we have our first-past-the-post constituency Assembly Member election—similar things will happen in Scotland—but we will also have this wonderful list system, which needs three pages of calculations for someone to understand how the one that they did not vote for got elected.

Jimmy Hood (Labour, Lanark and Hamilton East)

Order. I think that I am giving the hon. Lady too much hope. I invite her to return to the amendment.

Nia Griffith (Labour, Llanelli)

By the time one has explained the alternative vote, constituents do not want to listen to another word. I return to the fundamental issue that a 51% majority is a basic democratic principle. It will give confidence to the company that people are behind its privatisation and that it has their confidence and support in making it a successful company. That vote would be extremely useful.

Paragraph (f) addresses why we want to have detail about the universal service provision. Many hon. Members have spoken about this already, and they will return to it later. One of the difficulties of rural communities is that not only are they a long way away—if they did not have the universal service provision, or if the costs were higher, it would be difficult for them to function—but it is difficult for them to attract the inward investment of large companies that need to transport goods a long way. The argument is that the companies always want to be nearer to their markets. The advent of the internet has been a tremendous boost to those of us in the more far flung corners of the UK.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Is it not also the case that this paragraph of the amendment is important because rural communities, especially if they are not covered by a local enterprise partnership—that is some 40% of the country currently—will not have the necessary organisation to get in contact with the regional growth fund? They will therefore not be able to access funds for developing their business, for example, if they are an e-mail business that exports goods.

Nia Griffith (Labour, Llanelli)

My hon. Friend is absolutely right that there are considerable problems.

Sir David Amess (Conservative, Southend West)

I remind the Committee that with this we are discussing the following:

Amendment 17, in clause 2, page 1, line 16, leave out from ‘after’ to end of clause and add

Amendment 18, in clause 2, page 1, line 16, leave out from ‘after’ to end of clause and insert

Amendment 15, in clause 2, page 1, line 17, leave out ‘a report’ and insert

Nia Griffith (Labour, Llanelli)

I expect that you will be pleased to hear, Mr Amess, that I will not start from the beginning on amendment 16. In fact, this morning I had nearly come to the end of my deliberations on it. We had reached the part of proposed new subsection (2)(a)(f) that deals with a universal postal service. We were talking about the absolute importance of rural areas being able to develop e-mail businesses and small businesses growing up using postal services, because it is sometimes so difficult to get investment by big companies, with large numbers of jobs, into areas that are very far from the markets. Therefore provision that is universal, in terms of both a uniform price and deliveries six days a week, is critical. That is why we believe that it needs to be specified, through the amendment, that we expect the Secretary of State to make clear exactly

“how he proposes to enshrine the universal service provision as laid out in section 28 of this Act in law in respect of the new legislation”.

Such provision is extremely important for the small business community in rural areas.

I want to stress again why we believe that further consideration of these matters is necessary and why we tabled amendments 17, 18 and 15. The current Postal Services Bill has a number of similarities to the 2009 Postal Services Bill, but this Bill will privatise Royal Mail in its entirety, which makes it distinct from the 2009 Bill. One of our difficulties is in trying to grasp the detail and to discover exactly what information is in the Bill about whether there will be an initial public offering, whether it will happen all at once or in tranches, whether it will lead to a sale to a proven communications business or a private equity group or whether it will mean the break-up of the company into different geographical and functional units, with parts of the business being hived off and so on. Because we need more detail and information, we were anxious to table amendments 17, 18 and 15, which would all, in varying degrees, bring accountability back to Parliament by ensuring that we had more information about what exactly is proposed.

As we have said many times already, there are few examples of 100% privatisation having taken place. Even countries such as the USA and Canada, where Moya Greene came from, have postal services that are publicly owned. I will spare hon. Members a reference to a certain postal service that I am sure my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East will mention.

Damian Collins (Conservative, Folkestone and Hythe)

May I pre-empt the interest in Deutsche Post? Does the hon. Lady not share my interest in the fact that that privately run company is looking to expand its network of mailboxes and sorting centres in Germany, as opposed to Royal Mail, which has been forced to retract them over so many years?

Nia Griffith (Labour, Llanelli)

I would rather not intervene in the dialogue about a postal service of which I have very little knowledge, so I shall leave that point for the hon. Members with a specific interest in that company.

There have not been many instances of 100% privatisation. That brings me back to the specific issue. We are looking at further measures whereby there would be an opportunity to bring back to Parliament the proposals outlined in the Bill, about which we want much more detail. We could move to the alternative resolution or, indeed, a super-affirmative resolution procedure that would require the Bill to be put before Parliament. There is more detail that we want to know about, which is why our preference is for the strongest of the four amendments that we have tabled. It would ensure the maximum possible involvement of Parliament in the full scrutiny of the Bill.

People might think that we are exaggerating, that we cannot see the wood for the trees or that we have not understood the detail of the clause, but previous privatisation legislation has provided more detail. Matters have been spelt out more clearly. For example, the Railways Act 1993 imposed a series of general duties on the Secretary of State and the franchising director in respect of the award of franchises. There were detailed prescriptions concerning to what type of entities assets could be transferred. Under the Railways Act, the franchise director of the British Railways Board was restricted to transfer assets to franchised companies or companies that the board wholly owned under sections 85 and 86 of the Act. The Secretary of State was also subject to several franchising and licensing general duties to protect the interests of users of railways services in respect of price and quality, in particular.

We are all concerned about the users of the Royal Mail service and the users of the post office network as they, by implication, will be affected by what happens. Under the Railways Act, specific measures have mentioned such concerns in more detail than are set out in the Bill. The Secretary of State was also subject to a number of general duties such as promoting the use of the railway network, promoting efficiency, promoting competition, minimising restrictions on operators and ensuring safety. He was further obliged to promote the award of franchise agreements to companies in which employees had a substantial interest. We are worried that there is not the same degree of detail under the Bill as drafted, which is why ideally we would like a new Bill introduced. Failing that, we would go for a super-affirmative resolution or an affirmative resolution procedure because such matters need considerable consideration and it would be a mistake to move forward too quickly. Parliament needs to have the opportunity for further scrutiny of exactly what the Government are proposing. It is for that reason that I support the amendment, about which my hon. Friend the Member for Ochil and South Perthshire has spoken so eloquently.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I support amendment 16 tabled by my hon. Friends the Members for Ochil and South Perthshire and for Llanelli. Paragraph (a) of the amendment shows that there would be great benefit if an employee representative served on the board. Having someone with a trade union background would allow a direct communicative relationship between the board and the work force, thus avoiding, as we have sometimes seen in industry, the unnecessary complications of HR interference.

In the first evidence session, Dave Ward of the Communication Workers Union said that the representative sitting on the board did not have to be a trade union rep. There is great scope there and the CWU has again shown flexibility. The amendment would allow a continuation of the bridge-building that has happened over the past two years through the modernisation programme. Also, such representation on the board would be of direct benefit to all employees, whether they are union members or not. The board would work with the trade union, which is recognised on site, but which also represents employees who make the democratic decision not to be a member of the union.

As I said, such a position would also help build on the trust and relations established over the past two years, after the previous difficult years. Fundamental to a position on the board for an employee representative would be the communication between the shop floor, the board and the other directors on that board. The great prospect—better than just an employee representative—is the element of customer representation. We are talking about a relationship on the board between the producers—the work force—and the actual customers. I do not think that is very common but it would be a great industrial practice to take forward. In fact, ideas for mutual relationships have been proposed in the co-operative movement. Unfortunately, between the 1930s and 1950s, the Conservative party blocked such relationships between producers and a consumers.

Customer representatives on the board would also have a great effect in building up trust between the work force and customers. We avoid the middleman, which, the majority of the time, tends to be different tiers of management. We could have the shop floor talking directly to the customer.

Richard Fuller (Conservative, Bedford)

The hon. Gentleman talks about customers. Some customers are also competitors, so does he envisage a competitor having the right to sit on the board?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I do not know, to be honest, but that is a consideration. Obviously, there are different ways of being a customer. There is the individual member of the public but also business. As the hon. Gentleman rightly said, some businesses are in direct competition with Royal Mail. That is something for us to consider and discuss.

Richard Fuller (Conservative, Bedford)

I appreciate that it is quite confusing in that instance. It might be something of merit for the Minister to consider. In the instance of employees, there is a suggestion—in fact, there is a part of the Bill—that would provide employees with 10% or more of the stakes in the business. Should the employee representative represent the interests of employees as shareholders, employees as a whole, or the union members of the work force?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I think that it should be employees as a whole. We have not talked specifically about a trade union representative as opposed to an employee representative. Obviously, the union wants to have some input and discussion about whom the representative would be. As Dave Ward said, the representative need not be a trade union representative. But communication between the shop floor and the consumer is important.

Richard Fuller (Conservative, Bedford)

I appreciate the hon. Gentleman’s being so generous and giving way. If the representative on the board is not a member of the trade union, is there the potential for conflict between the two? How would that be resolved in messages to the work force—a large proportion of which is unionised—if there is a dissonance between what the representative of the board says and what the trade unionist says?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

That industry relationship exists anyway. If the hon. Gentleman is advocating collective representation across all industrial sites, I am absolutely willing to support him 100%. There is real scope across parties to look at that type of relationship in industry. We could have a direct conversation between shop floor employees and consumers, and miss the middleman in between. That would be a really radical step for genuine industrial relations. It would allow the shop floor to understand commercial viability and also get their voice across to the consumer.

If a board had an employee representative and a customer representative, it would speed up the time taken to make decisions. A middleman proposes consumer need—why x, y and z need to be done—to management, which is then relayed to the shop floor. That process would be quicker if an employee representative could talk directly to a consumer representative. There is huge scope for a change of focus.

As I have said, such a change would build on the good industrial relations that have been established over the past two years under the modernisation programme. It would also show employees that they have a visible democratic stake in the company and are represented by someone who can reflect their views, as varied as those may be, between unionised and non-unionised workers on the board. Employees would have a direct relationship with a board representative.

There will be a question about what system should be in place, and who should be consulted to appoint such a person. The amendment proposes that there would not be a restriction to only one representative, and after consultation with the unions and other employees at different tiers within Royal Mail it might be found that two are needed, so that should be considered.

Gordon Banks (Labour, Ochil and South Perthshire)

Does my hon. Friend agree with the point that I tried to make earlier—that however many employee or customer representatives there may be on the board, it is important that they have the full roles and responsibilities of other members, so that it is not a two-tier board?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Yes, it is fundamental that each individual on the board has one vote, which would clearly demonstrate that each member had an equivalent mandate.

Paragraph (b) of the amendment concerns the location of the headquarters of the new business. The measure would demonstrate clearly to the employees, the customer, and the country as a whole that we, as a Parliament, want whoever will own Royal Mail to be based in the UK. The danger is that the potential buyers—Deutsche Post or TNT—already have European headquarters. That does not necessarily mean that if they owned Royal Mail they would keep their headquarters in Europe, or that Royal Mail would not be in the UK. The amendment, however, makes it clear that any potential buyer must have a base here.

Michael Weir (Scottish National Party, Angus)

Is not the crux of the matter the structure of the company after it is privatised? If it will be an independent entity, it can have a separate operation, board and head office in the UK; if, however, it is fully owned by, say, Deutsche Post, it may be run merely as a subsidiary of that company, with any entity in the UK having very little power over the ultimate direction.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I raised the point earlier with my hon. Friend the Member for Ochil and South Perthshire that there is nothing to stop a potential buyer from liquidating certain assets to re-source its services in another country. Similarly, it may want to liquidate many assets and sell the service on to make a short-term profit, which would be the case if it were an equity firm or some such asset-stripping organisation. That is what leaves industry per se vulnerable to privatisations, unless regulation stipulates that any future business must have a headquarters the UK. Of course, that in and of itself does not stop a business from having an HQ in Britain and asset-stripping the whole industry.

Damian Collins (Conservative, Folkestone and Hythe)

Is the hon. Gentleman suggesting that if the best offer made for Royal Mail shares was made by a company that happened to be headquartered overseas but nevertheless demonstrated an outstanding track record in the delivery of postal services, the resources to invest and the desire to do so, that offer should be turned down simply because the company was headquartered in a different country? Is his concern so great that we should accept an inferior offer for Royal Mail simply on that basis?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Not necessarily. After the privatisation of British Steel, when it joined Hoogovens to form Corus, whose base is now in London—in Millbank, actually—the historical link, or the culture within the industry, was very Dutch-dominated. There are complications there. Having just the HQ in Britain is not in and of itself a demonstration that Royal Mail would be kept in Britain, but it would certainly be better than not putting that stipulation in.

Nia Griffith (Labour, Llanelli)

Does my hon. Friend recognise the comments made by employees in my Corus plant, that all the work seemed to be going to Holland and that they did not feel that they were getting the same opportunities to bid for the same types of work?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Indeed, and I am sure their brothers and sisters in Teesside would concur with such an opinion.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I would be very concerned if the letters for the constituents of the hon. Member for Llanelli ended up in Holland. That would be very bad performance, and I do not think the regulatory system would allow that.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

As I was saying, in relation to the steel industry, we had a site—a beam mill—that was part of the Scunthorpe site. Teesside was producing slab steel. For the 12 months prior to the mothballing in February, steel was being imported from the ?muiden site in Holland, even though the Teesside site was perfectly viable, as we now know. I have been arguing, alongside my brothers in the community, for the past two years, that things had been perfectly viable.

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

Does my hon. Friend agree that his practical experience on the ground in Teesside is supported by a raft of academic research that suggests that when the crunch comes, foreign-owned businesses, understandably, tend to make savings where they can overseas rather than in their home country? The Cadbury takeover, in particular, brought out a lot of that evidence into the public domain.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Indeed. I concur with my hon. Friend.

Richard Fuller (Conservative, Bedford)

I am concerned that the analogy may not be appropriate. Is the hon. Gentleman, in the comparison with the steel industry, honestly suggesting that savings might mean that a foreign owner would take British letters overseas, sort them, bring them back and then deliver them? Or is there some other way in which it could export Royal Mail services overseas?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I was not saying that, of course. I was talking about the actual capital in the business and the residual value of the existing capital, which would be quite easy to sell very quickly to recoup a lot of the equity initially spent in a sale. Likewise, in the steel industry, a perfectly viable site such as Teesside, which unfortunately underwent the overlook of the Prime Minister’s fiscal friend Kirby Adams, would have to deal with that situation unless we stipulated quite clearly that there should be a UK base.

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

There is a potential irony here. We could have a situation where a German or Dutch postal operator used profits from a British operation to support their operation in their home market, in which post office numbers are protected by statute. We could see a shrinking of the number of postal access points in Britain to support the businesses of a Dutch or German owner in their own country, where they are protected by statute.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

My hon. Friend makes an absolutely brilliant point.

Damian Collins (Conservative, Folkestone and Hythe)

I am aware that a Member may not intervene on an intervention, but seeing that the hon. Gentleman has accepted his colleague’s premise, I would like to ask—I have completely lost the train of my thought now. [ Laughter. ]

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

Was it a British train?

Damian Collins (Conservative, Folkestone and Hythe)

What did the hon. Gentleman say?

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

Was it a British train?

Damian Collins (Conservative, Folkestone and Hythe)

My mind has gone completely blank. It will come back to me.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

As my hon. Friend was saying, the largest minority shareholder in Deutsche Post—the German Government—would potentially be able to subsidise their share and their financial interest via Royal Mail.

Damian Collins (Conservative, Folkestone and Hythe)

The hon. Members for Cumbernauld, Kilsyth and Kirkintilloch East and for Middlesbrough South and East Cleveland were discussing whether Royal Mail’s profits might be used to subsidise other postal services in another jurisdiction, but does the hon. Gentleman agree that it would be a wonderful position for Royal Mail to be in to be profitable and have such cash at its disposal?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I believe that Royal Mail, after two years of modernisation, is perfectly profitable. The issue at stake is whether the state and the public have an interest in that profitability going forward. Obviously, we are discussing that now.

To return to the amendment, capital flows are now truly international, but the amendment would protect the UK integrity of Royal Mail and would bind any successful bidder to a recognition of the importance of having a headquarters located in the UK and making it an integral part of Royal Mail going forward. As my hon. Friend the Member for Ochil and South Perthshire alluded to, there is the history of Royal Mail—people’s familiarity with something that they grew up with and that is part of their community, and of their personality and relationships. It is important, and it is a bigger issue than just having a UK base. It is a small part of a broader point about ensuring that the Government have a say in that service going forward. It is also about preserving the UK identity in Royal Mail at its very least.

Paragraph (c) of the amendment would stop any potential buyer or future owner moving the headquarters of Royal Mail in the future, so that they could not decide to have a base in the UK as stipulated by the Government and pay that lip service, then after a year or two move the headquarters elsewhere. If Royal Mail is sold on to another owner, the amendment would ensure that the headquarters remained in the UK with that new owner.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Is the hon. Gentleman worried about the UK HQ being the global HQ for that company, or just the UK branch of a global company? What is he particularly concerned about?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

We can only discuss Royal Mail in the parameters of the present. The Royal Mail is providing a postal service for the UK. I do not know whether the Minister envisages Royal Mail becoming a multinational business, be it publically or privately owned. All I know is that I am discussing the postal service for Britain, and making sure that British postal service has its HQ in the UK. Perhaps the Minister will let us know his future plans for Royal Mail.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am interested to know whether the hon. Gentleman is worried about a UK headquarters that is part of a global company whose global headquarters may be located elsewhere, or whether he is concerned that the company that runs Royal Mail must have its global headquarters located in London. Which is it?

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The universal service obligation assumes a service for UK nationals living in the UK, and the amendment would ensure that the service that they use has an HQ for them. I do not know what the Minister’s plans are for a global Royal Mail. I am not sure whether the Bill alludes to a potential buyer that he already has in mind.

Gordon Banks (Labour, Ochil and South Perthshire)

Does my hon. Friend agree that we are talking about Royal Mail as it serves the UK? The amendment therefore talks about Royal Mail as it serves the UK going forward. If the Minister can negotiate, through his good skills, both a UK headquarters and a global headquarters for whatever company buys Royal Mail, would my hon. Friend accept that?

Graeme Morrice (Labour, Livingston)

Will my hon. Friend join me in reassuring the Minister on his apparent dilemma about where the head office would be—whether in the UK or globally? If we do not go down the road of privatisation lock, stock and barrel, everything will remain in the United Kingdom.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

My hon. Friend makes a good point. We have to ensure that Royal Mail has its headquarters in the UK, which will reassure people across the country that the Royal Mail service is for the UK.

Paragraph (e) of the amendment would require a ballot of employees to ensure—on the basis of 51% or a simple majority—that they knew what was going to happen and agreed with it, which is crucial for industrial relations in the industry. It would be interesting to know whether not only direct employees of Royal Mail, but contractors and subcontractors, might be balloted—what would their relationship be to such a ballot, and would they be allowed to vote? We also need to look at that to ensure that everyone who works for Royal Mail, directly or indirectly, has a say in its future, because that has an implication for those contractors and subcontractors.

On paragraph (f) of the amendment, it is clear that the taxpayer needs to have information about any potential buyer of Royal Mail—times, dates, financial offers, details, headquarters and the national origin of the companies—as part of a broad consultation process. The taxpayer also needs to know how much money has been spent under the modernisation programme of the past two years, and how much will be spent to complete that programme. Is that part of the value of the company at the point of sale to a new owner, or are the modernisation funds on top of the company’s value?

Damian Collins (Conservative, Folkestone and Hythe)

Does the hon. Gentleman agree that one of the good things about the Bill is that it gives slightly more scrutiny to Parliament than previous privatisations? Although the Bill gives the Secretary of State the power to privatise Royal Mail, he has to give a report to Parliament before completing that, whereas for the British Telecom privatisation the Secretary of State had no such obligation.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I do not see any fundamental change. The amendments would allow for more parliamentary scrutiny, after other layers of society have scrutinised any potential deal. Previous privatisations were de facto, as the hon. Gentleman said. Essentially, the Bill as it stands still makes this a de facto privatisation. The report is more about telling Parliament that the sale is complete after that has happened, rather than giving Parliament a chance to see and adequately scrutinise a potential deal before an agreement is made.

David Wright (Labour, Telford)

Does my hon. Friend think it is ironic that the amendment, as I know from my years in the House spent sitting in Committee, is exactly the type that Liberal Democrat Members have tabled over the years—for bringing information to Parliament, inserting sunset clauses, requiring reports back to Parliament and ensuring that hon. Members are informed? On reflection, they may well have been right at times. Their amendments have often been rejected, but perhaps they should accept such amendments now that they are part of the coalition Government.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

I agree. I do not think that there should be a cap on any consultation. Paragraph (d) of the amendment relates to that. How many communities are aware of the elements of the Bill that we are discussing? Apart from the headlines, have the public been genuinely consulted as service users? I recently spoke with residents in Guisborough in my constituency, following the Remembrance day ceremony, and found that local people there had no idea of what was being proposed, who the potential buyers might be, what the shares would be or anything else on the matter until I brought it up.

Gordon Banks (Labour, Ochil and South Perthshire)

Does my hon. Friend agree that while there might not be a great deal of public knowledge about the proposals, the one thing that the public are clear about in that regard is that they want to see Royal Mail retained? I mentioned in an earlier sitting that 60% of the population would not agree with the Bill selling off Royal Mail, and 63% of Liberal Democrat voters feel exactly the same way.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Of course I agree with my hon. Friend; the facts from that poll speak for themselves. I do not think that people are naive enough to believe that public ownership will not necessarily mean that we would need to access private capital to provide the service they expect, but they certainly do not want to go down the old road of hard-line privatisations that we witnessed in the 1980s. Some people in Guisborough did not understand where that policy of access to private capital came from, and they certainly are not aware of the detail on how it would be implemented, Therefore, paragraph (d) of the amendment would allow adequate consultation on the Bill across different tiers of society, and within the House, so that we can hold it in proper check.

Sir David Amess (Conservative, Southend West)

I have listened carefully to the debate and decided that, because it developed very widely, there will be no clause stand part debate. Before the Minister responds, I ask hon. Members to bear that in mind. If they wish to get anything off their chests, they should speak again to the amendments or to the next set of amendments.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

We have had a two-hour debate on the amendments, which has given me time to think of an appropriate soubriquet. I christened the group of proposed amendments to clause 1 the Red Bull amendments because the Opposition wanted to speed through the privatisation of Royal Mail—in undue haste in more than one respect. I call the current group the Gordian knot amendments, particularly in respect of the hon. Member for Ochil and South Perthshire, because they seek to tie the Government in knots, in an attempt to delay and put barriers in the way of what is in the Bill. The question is whether the Committee should give the Government flexibility as they go about trying to get private capital into Royal Mail. We are never quite sure of Opposition Members’ intention, because in the proposed amendments to clause 1 they wanted to speed up privatisation, but in the clause 2 amendments they seem to want to put barriers in the way. That is their right as the Opposition, but the Government believe that it is absolutely vital to retail flexibility on how shares or share rights are issued or transferred in future. Only if we have that flexibility can we ensure the best commercial outcome for Royal Mail and the taxpayer.

We saw the Opposition’s efforts with the Postal Services Bill 2009, when they put artificial barriers on the timing and form of the sale, which was totally counter-productive. That sale did not go ahead. Indeed, the House did not have the pleasure of debating that Bill. The current Bill will not do that, and we are clear that we want flexibility. We have made it clear that, unlike the previous Government, we do not intend to launch a sale process until after the Bill receives Royal Assent. We have also made it clear that a sale could be through either an auction for potential purchasers, or a flotation. Our aim will be to ensure that the sale process secures what is best for Royal Mail and the best value for the taxpayer.

The Government have fully recognised the role of Parliament in this issue. That is why we have the Bill, and it is why clause 2 requires the Secretary of State to lay a report before Parliament when he has decided to undertake a “relevant disposal”, to use the phraseology of the Bill, or has decided that another person—for example, Royal Mail Holdings plc or Royal Mail Group Ltd—should undertake such a disposal. That is why we will resist the amendments.

We have had a wide-ranging debate over the last two hours. I do not wish to go down every alley down which Opposition Members have taken us—no doubt you would call me to order, Mr Amess—but I would refer to the little history lesson that the hon. Member for Ochil and South Perthshire gave the Committee. He said that it was Charles I who first allowed the public access to the Royal Mail system. I was disappointed that the hon. Gentleman did not mention Rowland Hill, who, as everyone will know, was the founder of the uniform penny post in 1840. In many ways, that got rid of the corruption and abuse that had been in the postal system prior to that, and it was one of the great things that took postal services forward not just in this country but worldwide. Rowland Hill should be mentioned in any debate that we have about postal history, not least because the Government, with this Bill, are determined to ensure that we protect the universal service and, in particular, the uniform pricing that he pioneered.

My hon. Friend the Member for Bath (Mr Foster) is particularly knowledgeable about Ralph Allen, who was mentioned by the hon. Member for Ochil and South Perthshire as one of the founders of the postal system. He increased the number of stagecoaches that served the country in the 18th century. The hon. Gentleman will know that there is an exceedingly good school in Bath named after Ralph Allen; it is a very fine, co-ed comprehensive school.

To return to the amendments, Mr Amess—

Sir David Amess (Conservative, Southend West)

Please.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I could go on, but I think I should return to the amendments.

This group of amendments seeks to insert requirements in the Bill that are not necessary to achieve the Government’s objectives. The amendments would, first, reduce the Government’s flexibility to achieve value for money for the taxpayer from a disposal; secondly, further delay action being taken to address the challenges faced by Royal Mail and the postal market; and thirdly, put in place additional barriers to a sale of shares. For all those reasons, we cannot accept them.

Graeme Morrice (Labour, Livingston)

Why is the Minister afraid of consultation?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I will deal with that later. I thought I had explained to the hon. Gentleman in our debate on the earlier group of amendments why not only are we not afraid of consultation but consultation has occurred. I shall repeat those arguments in due course.

I wanted particularly to focus on amendment 16, which seeks to include a plethora of criteria and conditions that would need to be met before any disposal could take place. It surprised me that hon. Members believe that such conditions should include a new Bill, in addition to this one, before there can be a disposal. I thought that we were debating the issue of Royal Mail and private capital, and that we did not want to delay such consideration even further. I can see absolutely no reason for a Government to introduce two successive pieces of legislation to sell a company. That would be a complete waste of parliamentary time and would delay the injection of private capital and disciplines that we have all heard Royal Mail so desperately needs.

Opposition Members were in the Committee when Richard Hooper made it absolutely clear that urgent action was needed on the full package that his report proposes; otherwise, Royal Mail would not survive. That is the thrust of what he said in the update of his report and to this Committee. If we do not take action, it will not be a question of how Royal Mail is supported. Frankly, there will not be a Royal Mail if we listen to the Opposition, who seem to want to delay action.

I do not believe that there is any need for another Bill. The record of how past Governments have privatised utilities shows that they have not used a two-Bill model. It would be inadvisable to do so. It would prevent negotiations on a transaction because any commercial partner that is interested in investing would say to the Minister or departmental official, “It is very interesting, but you have another parliamentary hurdle to leap. How can we invest in the negotiations and prepare for the transaction, given that Parliament can veto it?” This proposal is particularly ill thought-through.

Paragraphs (a) and (b) of amendment 16 are predicated on Royal Mail being sold to a foreign company. My right hon. Friend the Secretary of State made it clear on Second Reading that the Government have no difficulty with foreign ownership if it is in the best interests of the company and the taxpayer. It is surprising that the Opposition are worried about that. Royal Mail has the proud heritage of providing the universal service across the UK, but it would be inappropriate for Government to enshrine in statute the location of the offices of a private sector company. What is important is the service that Royal Mail provides to its customers. The regulatory regime established by part 3 of the Bill will ensure that a high quality universal postal service is provided, regardless of who owns the company and where its headquarters are located. Unless we tackle the problems facing Royal Mail and the sector, we will not have a Royal Mail or a universal postal service left. It is urgent that we take action.

When I challenged Opposition Members in the long debate that we had about precedents, they did not want to engage. I intervened to ask why the Labour Government sold off British Energy in 2009 to a French company, EDF, that has its headquarters in Paris. We might have discussed BAA plc, the owners of which are headquartered in Madrid. We might have discussed the privatisation of the electricity industry: one distributor, London Electricity, was acquired by EDF in 2009 under the previous Government and another, East Midlands Electricity, is owned by E.ON, the headquarters of which is in Düsseldorf. If Opposition Members want to pursue this point, they must explain to the Committee how the people who have their electricity supplied by East Midlands Electricity and London Electricity, the passengers who use British airports owned by BAA and the customers of British Energy are being so dramatically poorly served as a result of the headquarters of the companies that own and run those businesses being located in other European cities. I do not think that they can make that case, and that is why they did not bother to respond to me earlier.

David Wright (Labour, Telford)

The Minister’s remarks downplay the historic and cultural significance of Royal Mail. It has been around for centuries in this country, people have a great affinity with it and it is a national institution. His remarks about the privatisation of segments of other service industries fail to acknowledge the significance of this institution to the British people.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I assure the hon. Gentleman that I recognise the significance of this institution to the British people. He will recall that I began my remarks with a history lesson, so I do have a feel for the institution’s history. However, many institutions of great history and heritage are owned by companies and shareholders in other countries. I am glad that he intervened because I am happy to dwell on this point, rather than make the progress that I had planned to make.

There are many other companies and organisations owned by British shareholders, British pension funds and British investors in other countries whose headquarters are located in London and elsewhere in this country. That is a very good thing. It is called the 21st century. Although Royal Mail may have history, it is important that we live in the 21st century and that our companies and Government policy are linked to the 21st century, not the 16th century. I am sure that the hon. Gentleman wants to take us back to the halcyon days of the 16th and 17th centuries, but our constituents would like to live in the 21st century where Royal Mail is faced by the challenge of the internet and the e-mail, and why the Bill has been drafted.

Graeme Morrice (Labour, Livingston)

I concur with the comments made by my hon. Friend the Member for Telford. I have listened carefully to the Minister, but is he saying that if the most money comes from, say, a Belgian private company, his Conservative and Liberal Democrat coalition Government would be happy to see a plaque on a building in Brussels saying, “Headquarters of the British Royal Mail”?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman, like some of his hon. Friends, has been regaling us with different fantasies about what might happen here or what might happen there. But he and his colleagues have to focus on why they want to saddle any future owner and operator with that requirement. It has not happened under previous legislation. When the Labour party was in government, it did not pay heed to such matters. Perhaps the Opposition have such high-tax plans for British business that were they to come back to power, they would have to require by law companies to stay in this country because otherwise those companies would flee. Perhaps that is what is behind their approach.

Michael Weir (Scottish National Party, Angus)

It is interesting that the Minister is making the point about living in the 21st century. I am all in favour of that, but he and his colleague, the hon. Member for Bedford, were making a great joke about the suggestion that mail would go elsewhere to be sorted and come back to the United Kingdom. One of the problems of globalisation is that mail is a commodity just like anything else. I offer the hon. Gentleman the example of a seafood company that was taking langoustines from Scotland, sending them to Thailand to have them dressed and bringing them back for sale in the UK all within 24 hours. Why would mail be that different?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am glad that the hon. Gentleman introduced Thailand into the debate because I had the pleasure of visiting the Thai Post Office three times. Its headquarters is located on the outskirts of Bangkok, near the airport. Although I went there three times, I spent less than 24 hours in Thailand. That is what a busy boy I was as a management consultant. Given the time and the cost of going from Britain to Thailand to talk to the Thai Post Office, it is highly unlikely that a future owner of Royal Mail will be taking his constituents’ letters to Bangkok and back to the UK. That might be unprofitable.

Michael Weir (Scottish National Party, Angus)

It is interesting, but langoustines are perishable goods and such journeys can be carried out. It does not have to be Thailand; it could be Belgium, which is closer. There are already examples of bulk mailers posting mail in other European countries because it is cheaper to get it into the UK that way.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

We could be in danger of needing a discussion on international postal rates and how different countries in the past have arbitraged on different rates of postage and how the Universal Postal Union in its quinquennial conferences has had to tackle the problems of arbitrage on postal rates. However, we should not detain the Committee on such a debate because it is the only circumstance in which the hon. Gentleman’s nightmare scenario could arise. Given that 70 million letters are posted every day in the United Kingdom, the idea that they will all be offshore in the way suggested by the hon. Gentleman is frankly nonsense.

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

Will the Minister give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

No, I would like to move on. Paragraph (d) of amendment 16 concerns an issue that has worried one or two Labour Members. It would require some sort of new consultation exercise to take place. I do not believe that there is the need to conduct a new consultation exercise along the lines suggested in the amendment. Our policy is soundly based; it is the result of a major, independent review by Richard Hooper commissioned by the previous Government. He and his fellow panel members met all the major stakeholders in the industry, held more than 200 meetings and accepted further written contributions. Over the summer, my right hon. Friend the Secretary of State invited Richard Hooper to look back at his 2008 report and update it. During that update, Richard Hooper met all the leading stakeholders in the industry again. Since I came into the Government, I have met some of the key players in the sector and discussed Government proposals with them.

All that consultation going back over a period of years was taken into account when we published our policy document on 13 October and fed that into the Bill. I do not believe that there is a need for further consultation; that would lead only to further delay, and Royal Mail needs action now. Perhaps Mr Consultation would like to intervene.

Graeme Morrice (Labour, Livingston)

I am most grateful to Mr Privatise Royal Mail. The Minister does not want to embark on consultation, and he has explained why. There may have been consultation under the previous Labour Government, but it was a different Bill to that proposed now, which is wholesale privatisation.

I will repeat a question that I asked in an earlier intervention. Why is the Minister scared to consult on the current Bill? During the general election, there was no mention in the Conservative party manifesto of the full privatisation of Royal Mail, and the Liberal Democrat manifesto did not contain any proposal for the majority privatisation of Royal Mail. As we know, staff do not want such a move, the unions do not want it and, more importantly, the public do not want it. Why not test the proposals to see whether they are based on the sound premise described earlier?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am in danger of repeating myself, just as the hon. Gentleman has done. I do not wish to go around every single block a third or fourth time. I simply say that I believe the proposals to be well founded and that they build on a lot of work and consultation carried out by the previous Government. Richard Hooper told the Committee that unless we press ahead quickly he was extremely worried for the future of Royal Mail and the universal postal service. Given that, further delay and inaction would be deeply damaging.

Paragraph (a) of amendment 16 is about having an employee representative on the board. I listened intently to those Labour Members who sought to explain the measure in detail, although I have to say that we got fairly little detail. I was quite upset at that as I am a strong believer in industrial democracy. I am sure that Labour Members will have read the Bullock royal commission on industrial democracy from 1977. They might have thought that that was an idea that they would have pursued when in government. I checked the previous Labour Government’s record on industrial democracy and having workers on the board over the past 13 years, but I could not find any action by the previous Government to put workers on the board. In fact, in the debate on the 2009 Postal Services Bill, two Labour peers, Lord Morgan and Lord Lea, proposed, in what would have been new clause 3A, that the Royal Mail board should comprise Crown representation, workers’ representation and corporate partners’ representation. That new clause was resisted by the previous Government, who did not want workers on the board.

Ed Vaizey (Conservative, Wantage)

Shocking.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am deeply shocked, given the arguments that Labour Members have advanced.

The present Government, with a Liberal Democrat Minister, have put in the Bill, as we shall debate under clause 3, a larger percentage of shares for employees than there has been in any privatisation legislation in this country before. If there is one way to ensure that employees can have a voice in a company in the future, it is to give them a share of that company in the future—something that Labour Members refused to do when they were in government, even last year, when they had the previous Postal Services Bill and the opportunity to do so. Therefore I have to say, in response to their warm words about having workers as board members and how fantastic an idea that would be, that they never did that when they were in government, that they opposed it when Labour Members put it forward, and that we have a proposal to deliver on the force of that idea far more effectively. They did not do that in government. I wonder whether they will oppose employee shares for workers.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

Is the Minister aware that there is a share plan already in existence for Royal Mail?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think that the hon. Gentleman is talking about what is sometimes referred to as the phantom colleague share plan. I am sure that that will be discussed in detail. He knows that there are no shares for employees in that plan and therefore it is rather different from what we propose.

Royal Mail may decide in the future that there are advantages to an employee representative being on the board.

Tom Blenkinsop rose—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

In a second. Royal Mail may decide that, but I certainly do not consider it appropriate to impose it through legislation. Board composition should be a matter for the company and its shareholders, including the employee shareholders, who under our proposals will be able to decide on it themselves. They will not be dictated to by the Government, and it will not be set permanently in statute. The need is for flexibility.

In this debate, Labour Members have referred to what Richard Hooper told the Committee when he gave evidence on 11 November. It was interesting that they did not read out the full answer that he gave on that question to my hon. Friend the Member for Bedford, because at the end of his answer, Richard Hooper said:

“I suspect that the answer to your question is that when you are preparing Royal Mail for privatisation, you need quite a lot of flexibility. I think that if there are too many rules around it, those people who are finding buyers will have more difficulty.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 116, Q231.]

Having considered the proposal about having workers on the board, as my hon. Friend invited him to, Richard Hooper basically said, “Don’t put it in the legislation. Leave it up to the company. Leave it up to the shareholders.” That is exactly what we intend to do.

Finally, I come to the part of amendment 16 that would require a majority vote by employees before a relevant disposal could be made. Again, that would be highly unusual. It looks like another attempt by the Opposition to put a barrier in the way of addressing Royal Mail’s concerns. It should be for the shareholders of any company to decide on a change of ownership. They own the company, and they should decide on that. In this case, the Government are the sole shareholder of Royal Mail, and we believe that it is in the interests of the company and the taxpayer to facilitate an issue or disposal of shares that will allow an injection of private sector capital and disciplines into the company in the way that we propose. The idea that the matter should be put to an employee vote does not make sense at all.

Amendments 17 and 18 would add a requirement for additional parliamentary approval, either through a super-affirmative procedure or an affirmative procedure, before shares could be disposed of or issued. Such a requirement is not necessary. We are now in the process of scrutinising the Bill, which contains a package of measures that we should be debating. Those measures secure the future of the Royal Mail, and they are what the Committee and the House need to decide.

It is right that the power to enable the Secretary of State to dispose of shares in the Royal Mail company should be considered alongside the other two parts of the package in the Bill—tackling the pension deficit and reforming the regulatory regime. The Opposition would have us separate those two issues, although Richard Hooper emphasised in his evidence last week that none of the measures he proposed in his report—whether the one for the previous Government or the update for this Government—should be taken in isolation. They are part of a package. Interestingly, if we look at the Postal Services Bill of 2009—I make no apology for coming back to that, because it was only last year and it was a Labour Bill—Labour included no such mechanism. There was no such time-consuming mechanism in that Bill.

Additional parliamentary processes would create enormous uncertainty for potential investors, as I discussed a few moments ago. Any uncertainty would reduce the value of the business and, ultimately, undermine the prospects for selling the company. We cannot support that position. I am therefore surprised that Labour Members wish to delay the time at which the Secretary of State should report to Parliament on the proposed sale of Royal Mail. The clause requires the Secretary of State to report to Parliament as “soon as” he has decided that the sale process should be launched. The amendments would leave the Secretary of State waiting until new investors had been identified.

Amendment 15 would require—as would proposed new subsection (2)(f) of amendment 16—the Secretary of State to introduce a further Bill empowering him to dispose of the Royal Mail. As I said earlier, that is not appropriate.

There was some discussion about whether the process of the Secretary of State reporting to the House should be set down—whether he should make an oral statement or how he should report. I refer hon. Members to the Bill, which, if read carefully, can be seen to be giving Parliament a particularly good role. We are not saying that the Secretary of State should report only once. If there are different tranches of sales—if a minority stake is sold, then further shares in future—on each occasion, we are suggesting, the Secretary of State should lay a report before the House. That is a super-accountability, compared with what we have seen in the past, and therefore meets all the concerns of the Opposition.

The absurdity of the idea that we should stipulate in legislation that the report should be made by an oral statement is shown by envisaging a situation in which the Secretary of State decides at a particular point in the whole process that he wants to put 100 shares or 1,000 shares into an employee share trust, as part of a number of different parts of the transaction. If we stipulated an oral statement, the Secretary of State would have to come to the House and make an oral statement about a relatively minor part of a process. That would be completely inappropriate and waste parliamentary time—were it to happen, the Opposition would no doubt be complaining. We therefore do not intend to do that.

In conclusion, we need to proceed quickly with the process. The proposed amendments would achieve the opposite. They are not in the interests of the taxpayer or of Royal Mail, and I urge the hon. Member for Ochil and South Perthshire to withdraw the amendment.

Gordon Banks (Labour, Ochil and South Perthshire)

I thank the Minister for his remarks. I will begin by touching on some of the things that possibly need addressing.

I was glad to hear that the hon. Member for Angus has sympathy for our argument. As I tried to say earlier, although amendment 16 may not be perfect, we have given the Minister an opportunity to take it, or parts of it, away and return with Government amendments on Report to increase the transparency. We heard from him a few moments ago that he has no intention of doing so, and why does that not surprise me?

On the issue of the headquarters, the fears of the hon. Member for Angus are important. Yes, we want to see the headquarters of Royal Mail, a UK organisation and company, in the UK, but we also want to see the management functions of Royal Mail below the headquarters be retained within the United Kingdom. I alluded to that when I tried to draw the steps of employee progress through Royal Mail—how employees could work up the ladder, as many have done. That would be much more achievable if not only the HQ, but the operational divisions of management structures, were held within the United Kingdom.

My hon. Friend the Member for Kingston upon Hull East, who is not in his seat at the moment, again supported the amendment. I am glad that he felt that it would strengthen the Bill in many ways. My hon. Friends, to a man and a woman, feel that. We do not agree with the Minister on the level of transparency in the Bill. As the Bill stands, we do not think that it is particularly burdensome on the Minister.

My hon. Friend the Member for Llanelli spoke well about our intentions regarding the Bill and the advantages of work force representation on the board. That would give a level of transparency in employee-management relationships, which is again lacking in the Bill as it stands. I made a point in an intervention. We are talking about a communications company here, and we think that there should be an extremely good set of communications within it, from the top management right down to the shop floor. Having one or two representatives of the work force on the board would achieve that.

My hon. Friend also mentioned the issue of the HQ in the UK, and how the National Federation of SubPostmasters has been lobbying for it. It is important to know—I intervened on my hon. Friend the Member for Middlesbrough South and East Cleveland on this point—that people want to retain not only the HQ of Royal Mail in the United Kingdom, as it is now, but Royal Mail in public ownership, which is contrary to what the Minister stood for in the election a few short months ago.

On democracy and the need for a ballot, the Minister sees the amendment as a major set of hurdles. In some ways, he has himself to blame, because in the evidence session, he threw a challenge down above the hoops that we expected him to jump through. He said earlier—from a sedentary position, I think—that we have excelled his expectations. The purpose of the amendments is not to put him through the wringer, but to improve the quality of the Bill, and we feel that each amendment—16, 17, 18 and 15—would do that; we are talking about 16 at the moment.

Amendment 16 would give a degree of accountability and transparency. The Minister persistently refers to the 2009 Bill, but it did not propose selling off 100% of Royal Mail or putting Royal Mail out of state or public control. This Bill, however, as we have heard, will put Royal Mail 100% into private hands. That is why there needs to be a level of scrutiny in preparation for that happening. Let us not confuse ourselves about what we are discussing. We are discussing the level of scrutiny on the deal that is on the table, which will sell Royal Mail. We are not discussing the level of scrutiny that has got us to this stage of the Bill. No one can doubt that there has been a degree of consultation, with Hooper’s reports in 2008 and 2010. We are discussing what happens when there is an offer on the table that the Secretary of State wants to accept and sell Royal Mail to whoever it is.

I am grateful for the support of my hon. Friend the Member for Middlesbrough South and East Cleveland. He spoke well about employee representation, and I bow to his superior knowledge of such matters, which is drawn from his previous life as a union representative. We all agree that employee representation would be a significant benefit to the work force. During my earlier remarks, Mr Amess, when Mr Hood was in the Chair, I floated the possibility of not only, as the amendment states, having employee representation, but having consumer representation on the board. My hon. Friend picked that up and ran with it. That level of interaction would be significantly beneficial to the company. It would show that this is a communications company that is intent on communicating.

In his remarks, the Minister took us back to yesterday and the Red Bull speeding-through amendments. There is nothing that the Minister should have been frightened about in yesterday’s amendments, because all he had to do was come back and revise the sunset clause. We were not saying, “You must go away and do that.” If the Minister had wanted to go away at that point in time, we would have rejoiced with him. At that time, the control to accept the sunset clause and still sell Royal Mail was firmly in the Minister’s hands. The Minister will not be surprised that I am disappointed with his remarks.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The Gordian knot.

Gordon Banks (Labour, Ochil and South Perthshire)

Opposition Members do not think that the burden on the Secretary of State does not provide an appropriate level of scrutiny. While the Gordian knot amendment may stick in our minds, we do not think that amendment 16 is as burdensome as the Minister has tried to make out.

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

I just wondered, in reference to the Gordian knot, whether my hon. Friend thinks that the Minister was setting himself up as Henry V. In Shakespeare’s play, he famously said:

“Turn him to any cause of policy, The Gordian Knot of it he will unloose, Familiar as his garter”.

I cannot see the Minister’s garter, but I do wonder about the analogy.

Gordon Banks (Labour, Ochil and South Perthshire)

We have had a bit of history from me and the Minister, and it has now been topped off with the cherry on the cake. The Minister has said that the amendment would need to introduce a new Bill. We feel that the amendment is needed to scrutinise the deal that is on the table at that point of time. That would put the desire to sell on a solid footing. We are sorry to see the Minister disagreeing with the headquarters aspect of the amendment, which is fundamental to retaining the UK identity of Royal Mail.

The Minister took us back to previous privatisations, but my hon. Friend the Member for Telford intervened and made the point that the Minister does not grasp the cultural significance of Royal Mail to people in the UK. The tax scam that the Minister suggested was at the base of our amendments was a jovial aside. The introduction by the hon. Member for Angus on the issue of langoustines—I bet nobody imagined that we would have got langoustines into this debate—showed how a perishable good can be taken to the other side of the world and back in 24 hours. If that can be done with langoustines, it can be done with letters. Who knows what the future will bring, but we will remember the Minister’s words today if and when our letters start to be sorted somewhere else.

The need for consultation concerns consultation on the deal, as I have said, and not consultation on the process to get sales. We feel that the employees’ representative on the board is important, because of the way in which the Royal Mail will be held—I have made the point about 100% of Royal Mail being sold into private hands under the Bill.

I will be quick in winding up, because I know that we want to make progress. I was interested to hear the Minister say that the Royal Mail might think that that is a good idea. If so, why not do it now and save Royal Mail the bother, time and effort, as I am sure that it has other things to worry about? The Minister discussed flexibility, but I have offered him significant flexibility in the drafting of the amendment and in my contribution.

The Minister did not even take up my kind offer of amendments 17 and 18, which would be far less onerous than amendment 16, but which still provide for scrutiny of the sale. That disappoints me, because it is clear that he does not want any scrutiny of the deal that is put on the table to buy Royal Mail. He tried to convince us that the need to lay a report—or reports if there is a staged sell-off—is transparency enough. I remind him of his response to my hon. Friend the Member for Telford in the evidence session, which showed that the Bill is not strong enough on that point.

I am perfectly happy not to press amendments 17, 18 and 15, but I will press amendment 16 to a Division.

Nia Griffith (Labour, Llanelli)

I beg to move amendment 19, in clause 2, page 2, line 12, leave out ‘a’ and insert ‘the’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following:

Amendment 20, in clause 2, page 2, line 13, leave out ‘a’ and insert ‘the’.

Amendment 21, in clause 2, page 2, line 13, leave out from ‘service’ to end of Clause.

Nia Griffith (Labour, Llanelli)

The words with which the amendment is concerned are brief: “a” and “the”. They may seem absolutely trivial, but behind those small words is an enormous difference. It is the difference between selling off the whole package and cherry-picking.

The question is why anyone would want to cherry-pick and have bits of the Royal Mail and not other bits. One might ask why that matters if the whole thing is going to be privatised anyway. The reason is that some bits are more attractive and offer better returns. We might find that the bit that is the most difficult to dispose of is that which is most closely linked to the universal service obligation. Clearly, the more of an obligation one has and the more conditions one has to fulfil, the more difficult it is to race away and make large profits. The real danger is that, if we split up Royal Mail and allow cherry-picking, we might end up with the Royal Mail letter service as we know it—the service that is most familiar to us—being under the most pressure. This morning, we talked at length about the very important role of the universal service obligation to the provision of a personal service right across the country at a uniform, affordable price. We should, therefore, resist any idea of cherry-picking.

It may be of interest to hon. Members to know a bit about the components of Royal Mail. Many people in this country may not have heard of General Logistics Systems, the arm of Royal Mail operating in continental Europe. That business has a very attractive look, partly because it works in markets that do not come under the same types of regulation—there are fewer obligations to have to fulfil. It is an attractive prospect. It handles more than 1 million parcels a day, and it has a network of 667 depots and 29 central transhipment points, with 16,000 delivery vehicles and 1,700 long-distance trucks. Its core operation is business-to-business parcel deliveries, and it has 220,000 customers in 34 states across Europe. In the financial year 2009-10, it delivered 345 million parcels, and had revenues of €1.7 billion. It is an important organisation, and it forms a large part of the success of Royal Mail Group. It would also be ripe for cherry-picking, which would be allowed under the clause as it stands.

GLS is extremely proud of its quality and its service. Its philosophy is one of having a united European-wide team spirit, with decentralised decision making in line with local market demands. In other words, it operates flexibly across 34 countries, trying to meet business customers’ requirements in the best possible way. It is very proud of its security record, and of how its carriers take all sorts of precious and valuable items across the length and breadth of Europe. It is also proud of its reliability, and of its ensuring that every package should arrive on time. It tries to focus on each customer’s individualised needs, and it wants to do exactly what the customer wants. In dealing with large business customers, large volumes are often involved, which helps it to make appropriate and profitable deals. It states that it is transparent in what it does. The way it expresses that is strange—it refers to people’s parcels being “transparent” —but that means that people can track where the parcel is and what is being done, which keeps them informed. It is flexible, being able to respond to all sorts of demands right across Europe, and it provides the customised packages that people have come to expect.

In many respects, GLS is a bargain. As I have said, many people in the country may not even be aware that it is part of Royal Mail, that splendid institution which we are seeking to protect. If Royal Mail has to be hived off as a privatised organisation, we do not want to see it split up into tiny fractions. As I have mentioned, GLS, for those who have not remembered, stands for General Logistics Systems—it likes to tell us that it stands for “European Leader in Quality”, but I have not fixed those initials to the letters GLS. It is an attractive offer, which could be part of a cherry-picking operation.

I shall move on to Parcelforce, another component part of Royal Mail. Again, it has a different market from Royal Mail’s, which we tend to understand as the letter service in our country. It links into Europe and does not have the degree of regulation under the universal service obligation that our letter service has.

Parcelforce has had some good press recently: only a fortnight ago, it posted a 14% rise in its operating profit to £8 million for the six months ending on 26 September. Its turnover increased by 3%, from £191 million to £197 million for the first half of 2009.

The chairman of Royal Mail Group said:

“Despite difficult trading conditions in its highly competitive and unregulated market, Parcelforce achieved growth.”

That is not just a blip, because in the year up to May, it also revealed that its turnover had remained static at £399 million, but that its operating profit had risen 41% to £17 million, from £12 million during the 12 months to 31 March. That is a pleasing report and will make Parcelforce very attractive to buyers. That interest is not only theoretical, however, because we have heard some of the competitor companies lining up to say that they would be very interested indeed in considering the purchase of Parcelforce. There are a number of rivals to Royal Mail Group who are very likely to snap up Parcelforce. It is profitable and has a wide customer base, which will be extremely attractive to many parcel carriers. That is not a fantasy of Opposition Members; customers might line up to buy certain parts of Royal Mail but not be interested in other parts. As ever, if such cherry-picking takes place it could be more difficult to get a sensible purchase, by which I mean an appropriate purchase to get the best possible deal for the taxpayer. We might be left with a difficult situation in which the goodies have been taken and there is nothing much left.

Parcelforce has not always had it easy, of course. In 2002 it had difficulties, but it was prepared to make some significant changes. In that year it was making a loss and it realised that it needed to hone its service a little more finely and make the necessary changes, so that it could turn a loss-making business into a profitable one. That is exactly what it did.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Lady is quite right to say how well Parcelforce is doing. Is that why, in the 2009 Bill, Parcelforce could have been sold and was not necessarily to be kept in majority Government ownership?

Nia Griffith (Labour, Llanelli)

As we have said before, we are looking at what is in front of us and we are talking about very different situations. We are talking about part Government ownership and complete privatisation. If I go back to my original point, we are talking about the effect on the universal service obligation of what might be left, and that is the problem. It is not about a viable operation that could be sold off. The problem is that, whereas before there might have been a stronger Government guarantee about the universal service obligation, we know that a privatised market would put huge pressure on the regulator to push back the boundaries a little bit, and that is why the situation is different.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

To be absolutely clear, in the 2009 Bill it was not the case that Parcelforce could be part-privatised. The 2009 Bill would have allowed the whole of Parcelforce to be sold off.

Nia Griffith (Labour, Llanelli)

But that is exactly the point. When I talk about the 50%, I am talking about the effect of the universal service obligation on the part of the service that we all know about—having our letters delivered at home. If we get rid of a very successful part of that operation, it is what is left that matters. Under the previous Bill, there would have been considerably more Government influence on what was left, because of majority Government ownership. If we get rid of Government ownership and fully privatise, there is even less opportunity to influence. We have a regulator, but when regulators deal with a privatised monopoly, they are constantly under pressure: “Do you want higher prices or do you want to get rid of Saturday delivery?” We can hear those questions being asked almost as soon as privatisation takes place.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am afraid that the previous Government proposed that under the restrictions on ownership of both Parcelforce and GLS—there are no restrictions on GLS, as I am sure the hon. Lady knows—the successful parts of Royal Mail Group could have been sold off. The state would have been left to deal with the more problematic part of losses being made and volumes going down, and would have got rid of the profit-making parts where volumes were going up. Will the hon. Lady admit that that was rather an odd position for the previous Government to take?

Nia Griffith (Labour, Llanelli)

Actually, quite the opposite. It is the falling mail volumes that make it difficult to make a letter service viable and profitable, even though a lot of changes have taken place in Royal Mail, which is carrying out the modernisation programme. But we were trying to protect the customer and what the customer gets in terms of the universal service provision. It is not unreasonable to want to keep that part, which is so crucial to the lifeblood of the length and breadth of our country, particularly rural communities. It is reasonable to guarantee a universal service obligation. Keeping the problematic bit in majority Government ownership would mean that we would have a much better opportunity to ensure that it would not be allowed to fail.

Difficulty arises if the business is privatised. It would be a tremendous shame to split it up when, quite clearly, pressure would be on the letter service to try to increase profits even more. Again, pressure would be on the regulator when asked about moving back the boundaries, or to give in a little here and there. We have already seen permission given for a first class stamp to go up to 46p, so we can see the direction of travel. If Royal Mail is to be sold off, it would be helpful to the letters part of the service if there were a little help and support from the other parts of the package so that it moves forward completely and there is less pressure on the regulator to send prices sky-high and get rid of services.

Parcelforce Worldwide is part of the Royal Mail Group. It is a leading provider of a full range of services, including a guaranteed delivery at certain times on certain days. It uses a network of international partners to extend its reach way beyond the UK to 99.6% of the world population, which is pretty good. Its European delivery partners include General Logistics Systems and the E Parcel Group. It delivers 210,000 parcels a day and operates in three distinct markets. It works with business-to-business services such as the transportation of parcels and supplies from one company or commercial venture to another. For example, a manufacturer could be sending to a wholesaler or a wholesaler could be sending to a retailer, services that are likely to be repeat orders to restock a supply chain. It is a different type of service from the birthday card or the Christmas card market, which varies significantly. By that, I mean clearly defined, high-volume and high-value contracts that are likely to last a considerable time.

Parcelforce Worldwide has business-to-consumer services that involve parcels going from business to homes, driven by retailers and e-tailers. Have members of the Committee heard of the dreadful word “e-tailers”? It means that we are all buying more things not from the famous catalogue that used to be delivered to the doorstep by the lady down the road, but from the pictures on the internet. I am sure that hon. Members will be interested to know that the items used to be things like DVDs and books, but now they are clothes. There is a growing market for people just to click on to the internet, as a result of which the parcels that come to the doorstep might be bigger and heavier than they were. Apparently, that is a growing market and those who know about such things tell us that it will continue to grow.

The consumer-to-consumer arm of the Parcelforce Worldwide service is the postage of presents. We perhaps associate the idea of having something exciting to unwrap at Christmas with our childhood or nieces and nephews. The company thought that it should do something because it was not doing as well as it should have been. A couple of years ago, it realised that it needed to improve its international services and change its marketing to respond to increasing competition and changes in the external environment. It decided that it needed to refine and reposition the product called “international datapost,” a service that covered the urgent, very fast delivery and the deferred, medium-speed categories of its delivery range.

Parcelforce Worldwide decided that it would differentiate between different types of users, those who want something instantly the next day and must have it by a certain time as quickly as possible and those who want reliability but do not necessarily need the item by the next day. Of course, people have different ideas about price. Some will pay a premium if they want to ensure that their particular item arrives on time, while others will prefer to pay the lower price as long as the item arrives safety and will organise themselves appropriately. Clearly, the company was looking at ways in which to improve the service so that it takes a juicier share of the profits.

Parcelforce Worldwide decided to create a new set of international services with those various factors as attributes differentiated by price and speed, in line with the customers’ needs. It also created new names. Businesses always love new names for their services, do they not? It reminds me of Italy, where there is a train called an espresso. However, that is not as quick as a rapido, which in turn is not as speedy as a rapidissimo—it goes on. Every time a new layer of speed is invented, there has to be another “-issimo” on the end.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

What do they call a slow train?

Nia Griffith (Labour, Llanelli)

If the Minister really wants to know, a slow train is an espresso; that is the slowest. It is a bit like “New-something” being one of the older buildings in a town, and one often finds a “New” street in an older part of the town.

Damian Collins (Conservative, Folkestone and Hythe)

Or new Labour!

Nia Griffith (Labour, Llanelli)

I am glad that the hon. Gentleman has found his voice.

Parcelforce Worldwide is doing quite well, and has 53 depots across the UK, where all those types of customers—business-to-business, business-to-consumer and consumer-to-consumer—can send their parcels both within the UK and to international destinations.

Of course, customers can send their parcels from post offices. However, is this going to be a “will be able to” if the Bill goes through, or will it be a “might”, if they are lucky? Or are people going to have to say, “Well, unfortunately, Llanelli is only a small town, so we have decided that we will have only one centre for parcels, down in Swansea”? These are the scenarios that people could be faced with when we see the privatisation go through a Bill like that, which does not seem to provide a secure enough regulatory framework.

Be that as it may, the point that we are talking about at the moment is whether the business should be allowed to be hived off even though it is successful. I will tell you a little bit more about the fact that it is extremely successful. It will tell you about its tracker systems, its partnerships and the way it can reach right round the world to 99.6% of the world’s population. Having said all that, it is by responding to external changes that it has improved its market condition, and it is able to meet potential competition.

That brings us to the more familiar point, which is our Royal Mail Group. We all know about the letters and packages business, which covers the whole UK with a one-price-goes-anywhere universal service. That is something that Royal Mail is proud of, and something that we, as customers, consumers and their representatives, want. We are proud of the fact that there are 115,000 post-boxes around the country. I wonder whether they are going to remain red if Royal Mail is privatised, or whether they will become blue and yellow, with a large blue stripe and a thin yellow stripe. The Minister has to have some credit, has he not? Having post boxes painted after him has to be a legacy worth going for.

We know all about the technological, “Beam me up, Scotty” stuff, but these parcel deliverers can still keep in the market, because people cannot magick parcels from A to B. There are plenty of ways to get messages through, such as simply speaking on the telephone, sending a text message or e-mailing, and we know the difficulties that that has thrown up for the service.

Essentially, Royal Mail is the most vulnerable service, because it has to provide the greatest chunk of its resources for the universal service provision to ensure that 28 million homes have a postal service that turns up regularly, six days a week, and offers a uniform, affordable price for items to be sent right across the UK. That is why my hon. Friend the Member for Ochil and South Perthshire and I tabled the amendment, in which the tiny words “a” and “the” assume such significance.

Amendments 20 and 21 also concern the fact that we cannot have a situation where everything is shattered into smithereens, people pick up the bits that they want, and the bit that needs most help and support—the bit that is most threatened—is left. That bit is then hived off to the private sector, which might desperately think that it needs to do some extra profit-making to meet its universal service obligations, which would put more strain on the regulator. The consequence of such a situation may be that we lose our services. That is why we have taken such care to propose a change from “a” to “the”.

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

I support amendments 19 to 21 in the name of my hon. Friends, because the first line of clause 2(5) and clause 2(5)(a) provide that the Secretary of State for Business, Innovation and Skills can dispose of shares in “a Royal Mail company”, not “the Royal Mail company”. I shall focus on the use of the indefinite article in the clause.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Before the hon. Gentleman proceeds, will he acknowledge that clause 2 concerns a report on any decision, as opposed to how the Secretary of State can make any transfers or disposals?

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

I am happy to accept that statement. As I continue, the Minister will see that my remarks are still pertinent to the amendments.

I should like to focus on the use of the indefinite article in clause 2. There may be an entirely logical explanation for referring to “a Royal Mail company” rather than “the Royal Mail company”. It may be that the clause is written in that way to ensure that if the Royal Mail changes its name—I am sure we all remember its short-lived branding as Consignia—it would still be subject to the provisions and definitions in the clause. As I say, there may be a perfectly rational explanation for the use of the indefinite rather than the definite article. It may be entirely innocent, but the unintended consequences of the designation “a Royal Mail company” in the clause might be profound. Reference to the issuing of shares in “a Royal Mail company”—or Royal Mail Group, I should say—allows this or a future Government, in the form of the Secretary of State, to engage in the potential asset-stripping of Royal Mail, which is a danger.

Ministers have insisted that making shares available in Royal Mail is for the purpose of attracting capital to Royal Mail as a whole. The Secretary of State for Business, Innovation and Skills said in the debate on the Bill on 27 October:

“The problems that Royal Mail faces can be addressed through the Bill. After all, it is the only company with the ability to visit all 28 million addresses on a daily basis. It has an unrivalled customer base, and it can build on its position as the leading provider of letters and parcels by providing a new range of digital products for its customers. The Bill is the only way that we can make that positive future a reality.”—[Official Report, 27 October 2010; Vol. 517, c. 349.]

However, the usage in clause 2(5) of the indefinite article—as in “a Royal Mail company”—makes it possible for him to split up Royal Mail. Such a split would destroy Royal Mail’s ability to build on what he called its position as the leading provider of letters and parcels.

The most profitable bits of Royal Mail’s business, such as its European parcels business, to which my hon. Friend the Member for Llanelli referred, might be sold off separately. That would certainly please the Treasury, I suspect. It is possible that the use of the indefinite article in clause 2 is the policy of the Treasury. We all know that it is a formidable institution. By its own lights, it promotes prudence, caution and economy, but by definition its focus is short-term. Its interest in the Bill will be in maximising its short-term sales receipts. I do not complain about that, as it is what the Treasury does, but the Committee must take that potential Treasury interest into account in assessing the clause. Assuredly, the Treasury’s interest is not to ensure that Royal Mail remains a public utility of strategic importance. At least, that is not likely to be its primary interest, which is usually to maximise receipts. As that is its overriding concern, one can envisage a scenario in which profitable parts of Royal Mail, such as Parcelforce UK and GLS, the European parcels wing, are sold off separately, with the proceeds going—guess where?—to the Exchequer.

Just so that the Committee is clear about the precise danger that I am alerting it to, it is worth recapping the structure of Royal Mail Group. We know that it was split into several businesses—Royal Mail, Post Office Ltd, managing post office retail outlets, Parcelforce Worldwide and GLS. In the round, Royal Mail Group has some very profitable arms. From that, and the evidence of the CEO and chairman of Royal Mail, we know that the industrial weakness of Royal Mail Group has been or seems to have been exaggerated. That was my interpretation of the evidence given by the expert witnesses last week.

As we remember, the CEO, Moya Greene, said:

“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.]

From that evidence, this is not an unprofitable business—certainly not parts of it.

We also know what Richard Hooper told us. He has been mentioned a number of times today. He said:

“The important point I want to make is that private sector capital is needed in this business—it is needed urgently, it was needed two years ago and it is needed now. Whether it is a minority or majority shareholding, I would prefer to leave that to the political process.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 108, Q214.]

To me, there is a fundamental point there. From the evidence that we have heard, full privatisation is not a technical requirement. It is a political decision. That emerged from the evidence of both Moya Greene and Richard Hooper. No one disputes Royal Mail’s need for additional capital. No evidence that the Committee has heard, however, has explained why that can only be achieved by full privatisation. No evidence that the Committee has heard explains why this capital could not be raised by either the sale of equity in Royal Mail, given the profitable arms to which we have referred, or the issuing of bonds. More pertinently, the first line of clause 2(5) and clause 2(5)(a), as they are written, could be used—I am sure this is not the Minister’s intention, but unintended consequences are what I am discussing—to break up Royal Mail.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I have to bring the hon. Gentleman back to the point I made earlier in an intervention on his speech—the clause is about a report. It is not about what powers the Secretary of State has to break up Royal Mail in the way that he is discussing. The clause, and any amendments to it, must surely be about the report.

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

I take the Minister’s point. It seems to me that the report is of some importance, since I suspect that the report will play a role in how the Minister and the Government proceed.

I am worried that a staggered break-up of Royal Mail is a possibility. More importantly, such a staggered break-up would make it more difficult to finance the universal service. Why do I say that? I say that simply because, the more that Royal Mail is broken down, the more financially significant the universal service becomes as a burden on the remaining assets. That is why the Bill also contains clauses that allow a potentially shrunken Royal Mail to apply for a reduction in the universal service. If we look at clause 28(3), clause 33, clause 42 and clause 43, you can see the provision for a potentially shrunken Royal Mail applying for a reduction in universal service.

In such a scenario, the Bill is likely to produce a situation where the Dutch integrated mail and post office business, TNT, or the integrated German business, Deutsche Post, will take all or part of Royal Mail’s business. The post office network could be shrunk in order to make those Royal Mail businesses more profitable in the short term. That gives rise to a horrible irony. Profits from UK business will be used to cross-subsidise the protected post office network in Germany and the Netherlands. The Governments in those countries decided to encourage those businesses to operate on a global basis—absolutely—but they did not think that it should be at the expense of Dutch and German citizens. They passed laws to make sure that their universal service, including the post office network, had legislative protection.

The Minister previously said to me—I have had a few discussions about this—that such protection for the post office network would be socialist over-regulation. I believe that his view amounts to a Thatcherite overreaction. For those reasons, we must amend “a” Royal Mail company to “the” Royal Mail company.

Ministers say that the changes are necessary to preserve the whole Royal Mail business. If that is true, the indefinite article is superfluous, whether in a report or otherwise. If Ministers are being careless about unintended consequences, we should oblige them to alter their position. Breaking up Royal Mail will diminish its ability to become the competitor that the Bill is ostensibly designed to create. Breaking up Royal Mail also reduces the ability of the company to finance the universal service. We must make sure that such an outcome is impossible. That is why I support amendments 19, 20 and 21, tabled in the name of my hon. Friend the Member for Llanelli.

Gordon Banks (Labour, Ochil and South Perthshire)

I am grateful to have the opportunity to support amendments 19, 20 and 21 and my hon. Friend the Member for Llanelli. I congratulate my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East on his very enlightening contribution. On amendments 19 and 20, my hon. Friend the Member for Llanelli has laid out the Opposition’s position. I must confess, this will be the longest speech I have ever delivered, or ever will deliver, on a single word. The Minister can rest easy, because I know he was worried.

William Blake once said:

“To see a World in a Grain of Sand”.

Perhaps if he were sitting on the Government Benches in Committee today, and if he had finished his constituency casework, he would perhaps be writing, “To see a Bill in a single word.” We would know what he meant because we are talking about the word, or indeed the letter, “a”. The impact of the use of the word “a” in relation to the clause under consideration is substantial, as we have already heard in contributions from Labour members of the Committee. The Bill allows the Secretary of State—perhaps I should say “a” Secretary of State—to dispose of shares in “a” Royal Mail company. Whereas the Bill clearly makes reference to the selling off of shares in “a” Royal Mail company, the Conservative manifesto made no such representation on sell-off. The Lib Dem manifesto did. It said that the Lib Dems would sell off 49% of shares in Royal Mail, and that the other 51% would be divided between an employee trust and the Government.

We have heard much about the sell-off. Indeed, the Minister has been desperately trying to defend why he is now selling off all of Royal Mail. We are now clear, from the contributions that have been made on the issue, that if the Bill is passed, 0% of shares—a big, fat nothing—will be owned by the Government. That is a number usually attributed on a Saturday afternoon to the football results of Alloa Athletic in Scotland. I hasten to say not now, as Mr Mulraney has given the club a new direction; I suppose the plastic pitch helps a little bit, too. Royal Mail will be owned outwith the Government, who will own nothing. That could be as much as 50.99% less than the Minister promised in his manifesto.

On the issue of selling some shares, the Minister has at least been consistent, unlike his Conservative colleagues. As I have already said, the coalition document has 18 words in it, but nothing related to the sale of Royal Mail. I guess the Minister has flip-flopped again. He stood in May on a manifesto to sell off some of Royal Mail, supports a coalition document that does not mention selling off Royal Mail, and then delivers a Bill that sells off all of Royal Mail.

The Bill, as it stands, will allow the Secretary of State, or dare I say, a Secretary of State, to engage in a random sell-off of Royal Mail, in a way that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East has referred to as asset-stripping. I am sure that this, to use another set of words from my hon. Friend, is an unintended consequence of the Bill, and that the Minister will quickly understand our constructive approach on the matter and accept the amendments. However, if not, perhaps he will be able to tell the Committee what input the Treasury has had in the wording of the Bill, as my hon. Friend has alluded to. It appears to us that the way the Bill is worded may encourage asset-stripping. We fear that the Treasury may be behind that objective, and that perhaps the Minister is not even in control of his own Bill. The Treasury’s best interest may not always be the country’s best interest, which I think was also a point made by my hon. Friend. Many people will recognise that short-term gain is not always the best outcome.

Again, under the Bill as it is currently drafted, the Secretary of State or—I do not mean to try your patience, Mr Amess—a Secretary of State will be able to sell off or asset-strip the best and most profitable parts of Royal Mail. I believe that we possibly heard something in preparation for that very issue when the Minister referred to it in Committee. I quote his reply to my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East. He said:

“We may initially, in the first phase, have a minority sale to enable us to obtain capital to go further. I think that is exactly the right approach”.

Let us analyse his words, because they could mean a lot in practice. It could mean the part privatisation of a section, or all of, the Royal Mail Group, but it could also mean the complete selling off of one of the companies within the group. Members will know, as we have heard, that Royal Mail Holdings plc is split into four businesses—Royal Mail, Post Office Ltd, Parcelforce and GLS. All are of varying sizes and have varying assets, revenue and profits, making some very interesting in the eyes of private UK and private foreign investors, but others less so.

Royal Mail has revenue of £6.5 billion and a profit of £121 million. It employs more than 155,000 staff. The GLS business has revenue of almost £1.5 billion, with a profit of £112 million, and it employs 12,000 staff. The Parcelforce business has revenue of £399 million with a profit of £17 million and employs more than 4,000 people. Last but not least, the Post Office business has revenue of £838 million, with a profit of £72 million, and employs more than 8,000 staff.

Indeed the competition is already sniffing around, with its comments of interest in Parcelforce not difficult to locate. As my hon. Friend the Member for Llanelli said, it is worth remembering why Parcelforce is of such interest to its competitors. Yes, it is profitable, but that was not always the case. In 2002, Parcelforce was making a loss, and I want to take the Committee through some of the important steps that it made. In response to that loss, those managing the business decided to change the type of service it offered. Instead of unguaranteed parcel deliveries, typically taking between two and four days, which all of us can remember, Parcelforce decided to focus on time and day guaranteed, express delivery. That resulted in an increased value of each delivery and an increase in operational efficiency. Parcelforce adopted a customer-oriented approach designed to attract and retain key customers. That can be seen when, during the exam season, Parcelforce regularly delivers millions of exam papers, scripts and coursework.

Interestingly, Parcelforce was also the first express carrier in the UK to give its customers the option of sending their parcels carbon-free. In June 2006, Parcelforce introduced an automated customer information line that allowed customers to track parcels and change delivery arrangements by phone on a 24-hour, no-queue basis. Automated information was one of the first such services in the UK’s logistics express industry to provide personalised information, using advanced speech recognition and caller identification technologies to recognise repeat callers, anticipate their information requests and offer personalised information about their particular parcels. Why was that so significant? It was a massive change to the business plan, and a change that was made to a company in public sector ownership. If we ever need an example of how a public sector company can change, we just have to look to Parcelforce. I am sure, as my hon. Friend the Member for Llanelli said, that many companies would be keen to get their hands on Parcelforce’s network of two hubs, 47 depots and 1,800 red vehicles.

However, the Bill and the Minister’s words could also mean the selling off of GLS, which as I said earlier, employs more than 12,000 people throughout 36 European states, with revenues of nearly £1.5 billion and profits of £112 million.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Just for the record, GLS could be sold today. It is not covered by the restrictions under the Postal Services Act 2000.

Gordon Banks (Labour, Ochil and South Perthshire)

I take the Minister’s point, but we are arguing that there is a need to retain Royal Mail in its entirety. As and when it is sold, we want to preserve other parts of the Royal Mail business as there is a dramatic need to make sure that its very profitable parts are retained within the group. Perhaps the hon. Gentleman will tell us which part it will be—GLS or Parcelforce? If he raises significant capital selling off those parts of Royal Mail, is it his intention to sell “the” Royal Mail? Does he see the break-up of Royal Mail as I have described as a problem or a solution to securing universal service?

To preserve “the” Royal Mail, amendments 19 and 20 must be accepted; otherwise we are trying to protect “a” Royal Mail, which we know nothing about. Breaking up Royal Mail Holdings plc places the ability of “the” Royal Mail to provide and finance a universal service under significant threat.

Some members of the Committee might be puzzled by our deliberations on the amendments, but we are trying to highlight the fact that “a” and “the” are extremely important words and the amendments would prevent the profitable parts of Royal Mail Holdings from being stripped away while the less profitable parts are left to wither on the vine. The real question must be, why do the Government want to relinquish a controlling share in a profitable company? Let us be clear that all parts of Royal Mail are profitable.

With regard to clause 2, why would the Government want to create a situation in which their actions allow cherry-picking, which would damage what is left of the business? Royal Mail’s strength in preserving the aspirations of its customers is dependent on the strength of the operation as a whole. That is why we are pressing the Minister, why we pressed him on Tuesday and why we will do so again, to deliver a 10 or 15-year inter-business agreement between the Post Office and Royal Mail. The Government fail to recognise that that interdependency means a lot. As has been said before in the Committee, it means that even with declining letter volumes there are opportunities for other Royal Mail holding companies to grow their business. The erosion of letter volumes in itself, ironically, delivers greater opportunity for parcel delivery, as people utilise e-commerce, which can deliver even greater security to our post offices, as we heard from my hon. Friend the Member for Llanelli.

As Richard Hooper said during our oral evidence sessions, with his “Beam me up, Scotty” reference—I fear that it will be repeated numerous times during our proceedings—until we invent a means of teleportation, there will always be “great opportunities for Royal Mail”. He said that there would be great opportunities for Royal Mail, not Parcel Force. I wonder whether that was a coded message to the Minister to be careful and ensure that he does not take action that would damage the optimism that he expressed by allowing cherry-picking. That is what my hon. Friends and I are attempting to achieve with the amendments. I leave it to them and to Government Members to determine whether our proposals have Mr Hooper’s support.

In essence, if the most profitable parts of any business are taken away, the less profitable parts will drag the remainder under. In Royal Mail’s case, the company needs its parcel arm and its General Logistics Service arm to support its universal provision. That is what we must retain, as my hon. Friends and I have argued.

Finally, I believe that our amendments would increase the likelihood of the UK retaining a single business that provides a universal postal service. In doing so, we are more likely to preserve the relationship between users and service delivery in a way that would allow the brand to continue to represent the whole UK, rather than just a bit here and a bit there. We believe that that is very important as things stand today.

In closing, I will return to where I started, with William Blake. He is now seen as a romantic, but he was considered to be mad by many of his contemporaries. Perhaps some will see a likeness between him and me, but I would prefer that they did not publicise whether that comparison was drawn because of the romantic element or the mad one. During his lifetime, the British postal network grew and developed, and I trust that he would not want to see that damaged by a Bill that was defined by a single letter, a tool of his craft. I urge the Minister to listen to the case and make the right decision. We will then all know that he is not mad either, but really a romantic who wants to preserve Royal Mail for the people of the United Kingdom.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I have decided that this group of amendments should be called the indefinite amendments, not simply because the hon. Member for Llanelli is a former language teacher and could no doubt take us through all the different parts of speech in great detail and give examples in Spanish, French, Italian and Welsh, but because they are concerned with whether we should replace the definite article with the indefinite article.

I will address my remarks first to the actual effect that the amendments would have, and therefore why we cannot accept them. I will then respond to the debate, although I think that most of it did not focus on the amendments. In the spirit of scrutiny, discussion and debate I am happy to deal with the speeches of the Opposition even though they were not necessarily related to the amendments. I say that just as an observation, not to carp.

As I have said before, the Government want to maintain flexibility for the structure of any future disposal so that they can secure the right investment for Royal Mail and the best value for money for the taxpayer. We also want to ensure appropriate transparency for Parliament, making sure that we can report on how we go about the sale, and whether that includes any restructuring. Decisions on that have not yet been taken.

Clause 2(5) is constructed to ensure that the report is provided to Parliament in all potential commercial scenarios for selling shares in the Royal Mail letters business. We want to make sure that however Royal Mail is sold, and whatever the structure—in whatever way the transaction is made—the Secretary of State should have to report to Parliament on the transaction. The problem with the amendments is that they would reduce the requirement for the Secretary of State to report to Parliament on future disposals, and it would be very much against our policy to accept them. It would reduce our transparency to Parliament.

Amendment 19 would significantly reduce the scope of the reporting requirement on the Government. The clause would not be limited to one specific company, and that is intentional. Amendment 19, however, would capture only Royal Mail Group Ltd, which is not desirable. We want to ensure that any of the companies could be captured.

Under part 1 of the Bill the Government could decide to sell shares at the level of the holding company, Royal Mail Holdings plc, rather than that of the universal service provider, Royal Mail Group Ltd. That could, for example, be done to enable the creation of tax-efficient employee share schemes, as we heard about from ifs ProShare in our evidence sittings last week. If the amendment were passed, the requirement for the Secretary of State to report on a decision to undertake a relevant disposal would not bite on all the potential transaction structures, and would therefore reduce transparency to Parliament. I am not convinced that that was what was intended, but it would be the effect of the provisions, and it is why the Government cannot accept them.

As to amendment 20, the reference in the clause to “a universal postal service” is simply to ensure that the definition of a Royal Mail company, and therefore the requirement for the Secretary of State to report to Parliament, captures a company providing a universal postal service. The amendment is not necessary to achieve that.

Turning to amendment 21, subsection (5)(b) would ensure that a Royal Mail company providing a universal service would be captured by the clause 5 reporting requirement, no matter what the structure of the Royal Mail group of companies might be before disposal. If we accepted any of the amendments the Secretary of State might not be required to report to Parliament when the transaction was made, because of the structure of the transaction.

It might be—and certainly the force of some of the speeches indicates—that the Opposition want to prevent flexibility in the way the Government approach the transaction and want a particular structure for Royal Mail Holdings or Royal Mail Group Ltd to be the one that is sold. That would be a huge mistake and would be unnecessarily restrictive during negotiations with a potential investor or investors, and would therefore be against the interests of Royal Mail and the taxpayer.

We are very much aware of all the subsidiaries of Royal Mail Holdings plc and of Royal Mail Group Ltd, and some of them have been mentioned today. The hon. Member for Llanelli rightly explained what a profitable and successful business GLS is. We have heard about Parcelforce and how it has improved, although that is not unequivocally a story of profits, unfortunately. Its last annual report shows that, in the year to 28 March 2010, Parcelforce Worldwide made the small loss of £6 million before tax. It is not, therefore, as successful as hon. Members were trying to paint, but I accept that it is moving in the right direction.

The whole point, as I said in my interventions on Labour Members, is that they want to restrict how we structure any company that we decide to sell, but in both the current legislation, the Postal Services Act 2000, and in the 2009 Postal Services Bill, the Labour Government allowed itself the freedom to sell off different parts of the Royal Mail. That would have been the case if they had their way. We do not want to put any restrictions on how we do this, just as they did not want to do so. We could—I am not saying that we will—sell GLS today. We are the shareholder, and there are no restrictions on our selling GLS, which is not mentioned in the 2000 Act. The 2009 Bill would have put no restrictions on the sale of Parcelforce by the previous Government.

We will have an unhelpful debate if we focus on what the law is, what it might have been and what it is proposed to be on such restrictions. The critical factor is to provide flexibility, so that the Government have several options open to them and can make commercial decisions in the interest of the taxpayer and of Royal Mail. If restrictions are placed on the law relating to how we go about that, it would prevent our meeting our core objectives.

Nia Griffith (Labour, Llanelli)

Will the Minister outline any informal expressions of interest for any parts of Royal Mail that the Government have received? I would particularly like to know what interest there has been for a Royal Mail letters service without the other parts of the business.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

We are going about this process in a different way from the previous Government. We are introducing the legislation first—sorting out the parliamentary requirements to enable us to make the regulatory changes—and then we will worry about who may or may not want to buy the business. If we do it that way, we are much more likely to get significant private capital into the business to give Royal Mail a good future and also to get good value for the taxpayer. If we do what the previous Government did and try to sell and to legislate at the same time, we will make the same mistakes as they did. We would not be able to sell Royal Mail, and we would still have the problems that are well known to the Committee—falling volumes, which would not be tackled by increasing investment, and poor financial performance. We will not do that; we will pass the legislation first, and worry about the transaction afterwards. I do not, therefore, have anything to report to the hon. Lady.

The only subject missing from this debate is a full description of the many subsidiaries of Royal Mail Group Ltd: there is Royal Mail Estates Ltd; there is iRed Redefining Document Management Ltd; there is Royal Mail Enterprise Ltd; there is Royal Mail Investments Ltd, which owns GLS; there is Romec Ltd, which is a 51% joint-venture services maintenance company; there is Quadrant Catering, which is another 51% joint-venture catering company; and there is Post Office Ltd. Those are examples of its subsidiaries, and I would not want any of them to be forgotten in our discussions.

Some hon. Members were arguing that they were worried that the Bill would somehow allow a future purchaser of Royal Mail to asset-strip and that that would cause huge problems. Let me try to deal with that and be as helpful as I possibly can. First, we simply would not sell to a bidder, if we believed that they were not interested and could not assist in securing the future of the universal postal service. In the Bill and in how we approach the transaction to meet our primary objective, we are driven by securing the universal postal service. I repeat that that is our primary objective. I hope that reassures Opposition Members.

Michael Weir (Scottish National Party, Angus)

I appreciate what the Minister is saying, but does anything in the Bill prevent anyone who buys Royal Mail Group subsequently selling off pieces of it in a way that might impact on the universal service?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman has anticipated where I was going, because a number of protections in the Bill will give reassurance to hon. Members who are worried about that. For example, under clause 35, Ofcom has the power to impose designated USP conditions akin to condition 16 of Royal Mail’s existing licence. Condition 16 does not allow Royal Mail to pursue things, such as an asset disposal or dividend payment, if doing so would create

“any significant risk that the necessary resources will not be available”

to enable it to continue its business. We have a regulatory condition that can be imposed by Ofcom and that is akin to an existing condition. Furthermore, if Royal Mail is found to be in breach of its regulatory obligations, Ofcom can fine it up to 10% of its annual turnover of its postal business. If a privatised Royal Mail could not, through asset sales, deliver on its regulatory obligation, it would face a very large fine. Based on current turnover, a 10% fine on annual turnover would amount to a fine of £650 million, which is a big disincentive.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister has referred to clause 35, which we will obviously discuss in greater depth at some point in the future, but I would just like to pick him up on the power that Ofcom will have. The Bill states that Ofcom “may” not Ofcom “will”.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Let me deal with that straight away. Ofcom has a fundamental duty to secure the universal service and the financial sustainability of it. Ofcom has a number of powers that it may use in order to meet that overriding legal duty. I hope that I have reassured the hon. Gentleman on that immediately.

Michael Weir (Scottish National Party, Angus)

What concerns me slightly is whether these conditions will be imposed from day one, because they seem to be things that Ofcom can react to. However, if the deed has already been done, so to speak, and the sale made, we could still be left with a problem.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am halfway through a list of protections that in itself is not fully comprehensive. I have a list of protections here in order to try to reassure hon. Members that these slight nightmares or fantasies will just not be possible. I have talked about the protections under clause 35 in relation to Ofcom and about the fines that can be imposed if Royal Mail is in breach of its regulatory obligations. Of course, there are also general company law provisions. For example, directors of any company—Royal Mail or otherwise—must act in a way that they consider most likely to lead to the success of the company for the benefit of its members as a whole. If an asset disposal dividend payment did not meet that test, that obligation would have been breached. So there are some corporate law issues.

There are also some fundamental economic issues. I hope these points will begin to satisfy the hon. Member for Angus, who does not look terribly satisfied at the moment. Royal Mail’s debt, which we have discussed on a number of occasions, is secured on its assets. So it is simply not possible to transfer the assets away from the business and its debts, which are secured on those assets. Some Opposition Members proposed that Royal Mail could raise the capital it needs from further debt financing. One of the problems with that is that Royal Mail has very few assets left that are not already secured on past borrowing. Again, that suggests that it is maxed out on security for its debt and would therefore not be able to transfer assets in the way that has been suggested.

There are other protections. I shall give Opposition Members one more example, if they are still not satisfied—the pensions regulator may not allow such behaviour, because it would weaken Royal Mail’s covenant to its pensioners. There are multiple protections—some derive from the Bill; some derive from general company law; some derive from pension law; and some derive from the way in which the assets are currently secured for past borrowing. I hope that that long list provides reassurance. Clause 2 is not quite the bogey-man clause that has been suggested in some of the speeches. It concerns reporting and how such a report should be made. If one puts that aside and considers what Opposition Members have said, their fears are unfounded.

The Government want to privatise Royal Mail to get sorely needed private capital and to ensure that it is a success for this country. Our prime objective is to secure the universal service provision, and we will not do anything to put that at risk. I hope, therefore, that Opposition Members have been persuaded by those arguments and will not press the amendments.

Nia Griffith (Labour, Llanelli)

I thank the Minister for his clear explanation and for setting out one or two points on the record. We welcome the report to Parliament, because any information for parliamentarians is extremely important and we always wish to receive it.

We still have significant concerns about the weakness of the regulatory framework, which we will return to in subsequent sittings. Our fear is not one that is solely expressed by Members of Parliament; it was expressed clearly in the evidence sessions last week by Consumer Focus. The provision leaves the door open, once Ofcom has taken over, for significant opportunities for wriggle room in the EU directive of a five-day delivery at an affordable price, whatever that might mean—not a uniform price. Those would be the overall safeguards that would remain.

We have discussed many times the access points and the absence in the regulatory framework of a definition of an “access point”. The regulatory framework is something to which we shall want to return.

The amendments have provided us with a good opportunity to discuss the different options and parts of Royal Mail, and what might happen if it were broken up. I hope that the Minister will take on board our significant fears about the unpurchasability—a nice word for our Hansard reporters—of part of Royal Mail that may have to bear the burden of the universal service provision more or less on its own. We will want an update as often as possible from the Minister on how things are progressing in such matters, because we fear the pressures that could be put on the regulator as a result. Bearing in mind that we have expressed our concerns about the matter, I beg to ask leave to withdraw the amendment.