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Lord McKenzie of Luton: My Lords, I respectfully remind the House that this is a time-limited debate. We are running over and we have virtually no margin left.
12.42 pm
Lord Sawyer: My Lords, I thank my noble friend Lord Clarke of Hampstead for initiating this debate. This is a good time to have it and my noble friend's passion and wisdom on the subject is something that we should all be thankful for.
I was involved approximately five years ago in preparing a report on industrial relations in the Royal Mail and have been involved intermittently since that time. In 2000 there were real problems with unofficial strikes and disputes, which sapped public confidence and lost huge amounts of revenue. The days lost through strikes peaked at 85,000 in 2003; in 2005 it was 4,300 days. Therefore, there was a drop of 95 per cent. The question is: have industrial relations improved? Well, there are some grounds for optimism
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outside those statistics. First, the Royal Mail received favourable publicity in recent months for its 2 per cent reduction in sickness absence, which is good. That has apparently saved the company millions of pounds, which it should. The company's own regular employee surveys show that employees' assessment of their own management has improved. Furthermore, the company's safety performance seems at last to have turned a corner for the better. Although much remains to be done on these industries, they are all moving in the right direction. They are below many of the other sectors that we would be involved in, but they are going in the right direction.
I can certainly inform the House that, since we wrote our initial report in 2000, there have been times when management and unions have worked together in a more effective way. That has produced benefits. One particular example is worth mentioning. The Royal Mail was investigated by the Equal Opportunities Commission a few years ago, and the issue of bullying and harassment at work has been jointly recognised and tackled by the Royal Mail and the unions. There have been some improvements to date on reported incidents. To help eliminate this problem there has been encouragement for the establishment of local groups to tackle these and related issues by members of the workforce, the unions and the Royal Mail working together on the issues in their locality. These groups are called dignity and respect at work groups, which simply would not have been able to operate in the environment and culture that existed within the Royal Mail a few years ago.
That is not a unique example. A joint safety steering group has been established to try to form a consensus on the practical measures needed on how to make improvements in safety performance that will last. Furthermore, and perhaps most importantly, in the past few months, the national officers of the CWU (the main union) and senior members of the Royal Mail's management team have jointly reviewed the strategic plans that the business feels it must address with the arrival of the competition that has been talked about in this debate. Major changes in investment and working practices will have to be faced by all the parties. To date, this has been done in a constructive and sensitive manner that again would not have been possible a few years ago. As the Government are the sole shareholder in the Royal Mail, I believe that it is proper to ask the Government how they might help to ensure that the Royal Mail and the unions can fulfil their obligations to the rest of us by helping to promote good industrial relations.
I mentioned a moment ago that discussions between the Royal Mail and the CWU were taking place around the strategic plans. There would be obvious and great public benefit if these discussions bore real fruit and changed the culture of industrial relations at the Royal Mail. But, obviously, there are many difficult operational and employment changes to be contemplated and implemented on which it will be difficult enough to come to a common conclusion. In particular, the major union, the CWU, will need to adapt to change and refocus what its role should be so
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that it can effectively influence—and not just challenge—the Royal Mail's thinking on these sorts of issues.
Furthermore, both the trade union and management leadership are learning, but need to continue learning, about new behaviours to take employees with them in this to benefit all who want the Royal Mail to be successful in the new competitive environment that we are now in. This amounts to big change from the past for both parties. Both need help and encouragement. The union needs help and encouragement and the people who lead the union need to be supported. The Government need to understand how difficult it is for unions sometimes to make change in these kinds of environments. There is always a fear—I think you hear it around the table—that both sides will "revert to type" and to behaviours of the past. We have to avoid that. The Government should place their emphasis not so much on the kind of headlines and debates we read about, but how they might genuinely understand what is going on in the Royal Mail and help and support the changes that are taking place. That would be helpful.
Indeed, the Government could help both sides by avoiding what I would call "unresolved distractions". Obviously, there are issues of pensions deficits and capital investment that need to be resolved, but there are other issues; for example, that of employee ownership. While it remains unresolved apparently—we do not know what, if anything, is really being suggested—the ability to reach any kind of consensus on this issue detracts from the positive things that we try to do in the industrial relations field. It certainly takes the attention of the union leaders away from the issues that the union ought to be concentrating on.
I have only a brief word to say on ownership. It is informed by the review carried out by Job Ownership Limited, the only independent, and, thus in my mind, objective review of this issue—Royal Mail employee ownership—that has been undertaken. The report from Job Ownership Limited was published last year and is interesting and informative. I shall quote only one paragraph:
"An employee stakeholding—whether in the form of individual or collective ownership—won't be enough on its own to create the harmonious, productive industrial relations and employee engagement that the main stakeholders all want to achieve. Research evidence shows that this impact is only achieved when a meaningful equity share is coupled"—
"with far-reaching employee involvement and participation. Successful implementation of ownership restructuring will require an intensive, long-term communication, awareness and education programme among staff and management".
If we could learn from the suggestion made by my noble friend Lord Brooke of Alverthorpe, that is the sort of thing that we should be emphasising. It is about employee involvement, participation, communication and awareness. It is not about political rhetoric or newspaper headlines; it is about something much deeper and more fundamental than that. I hope that the Government will help the parties to concentrate on that, because that is what is needed.
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Many issues are of public interest—the post office network, the universal service obligation, value for money pricing—but my main interest in participating in this debate is not to discuss any of those things but to help the House to understand that as we enter the world of postal liberalisation, some progress has been made on industrial relations at the Royal Mail that needs to be sustained and nurtured in the interests of all members of the public and business customers. If the Government can support the real, concrete developments that are occurring there on the industrial relations agenda, they will be doing us all a service.
12.51 pm
Lord Hoyle: My Lords, I must first declare an interest. I am a member of Amicus, which represents the Royal Mail managers. I must tell my noble friend Lord Clarke of Hampstead how indebted we are to him for initiating this debate. It involves an awful lot of expertise. I follow my noble friend Lord Sawyer, who has been involved in industrial relations and played a vital role in developing them. Those who speak after me have knowledge of the Post Office—no one can have more knowledge than the noble Lord, Lord Dearing. We met many times when I was on the Select Committee in the other place. I only wish that some of the things that were said then had been implemented and that the Government had not been quite so greedy in taking back many of the Post Office's profits, instead of using them for investment. The Royal Mail would then be in a better position to compete in the liberalisation that is coming today. But we are not at that stage.
I was also interested to hear from my noble friend Lord Brooke about NATS, because the two of us, along with others in the House, played a major role in setting up a non-profit operating company. I am pleased that it is working so well and that it is now gaining the confidence of the employees. I am sure that my noble friend has had a large part to play in that.
That does not get us away from the problems that Royal Mail faces. It is right that today we have been concentrating on the fact that while competitors are coming into the market, the universal service obligation rests with the Royal Mail. We must ensure that the universal service is protected and continues. It is right to refer to places where liberalisation and privatisation have taken place. Sweden is one, but a very expensive service operates there. Another is New Zealand, which is a far more recent example, but which no one could say has been a complete success by any means.
As was said by the Select Committee in its report in December, to ask the Royal Mail to prepare for competition at a time of great uncertainty does not seem common sense, to say the least. What are we talking about? We are going for liberalisation when there has been underinvestment and the Royal Mail faces uncertainty about stamp increases and the position of the pension fund, as has been referred to, which of course bothers all employees. They are bothered by the huge hole: not only how it has come
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about but what will be done to remedy it in future. The Government ought to make a commitment to get the pension fund back on a more equitable footing.
Why have we done this when, as has been said, other countries have until 2009 to do it? What are we doing to try to get liberalisation in other countries brought forward? That would create a more equal footing for the Royal Mail to compete on. That is essential. We know that it is coming—as has been said, we cannot resist it—but we know that 2009 is a long way away for other countries. We are suffering the consequences now. Companies such as La Poste or Deutsche Post can now compete in this country, with the terrible effect that that may have on our universal service. It is wrong that we allow that to happen now, while they can shelter behind their frontiers with closed walls to our going into their markets. To have a level playing field, we should press for an earlier liberalisation of the whole of Europe so that we can have fair competition.
One concern in the Post Office in the past has been that when there have been rises in the price of stamps, they have often been far too late and the benefits have not been taken. I know that discussion has been taking place with Postcomm about whether there should be easier ways or an agreed formula for rises, rather than their being too little too late so that we start from behind.
Are the Government still contemplating—I hope not—putting VAT on postal services? That would be extremely unfair to the ordinary user, especially people on low incomes who need low stamp charges so that they can afford to send post. Are we going down that route—it does help those who are registered for VAT, but it does not help the ordinary customer? I hope that we will not follow that line.
On share options, especially as the Government have said that they will not privatise, I think that it would be far better to consider profit sharing. However, if we are going down the route of share options, what discussions has the Minister had with the Royal Mail and what is the Government's thinking? It has not been clear how that would come about, where they would be transferred from or how they would be traded. Would they be on the open market, which could lead to a form of privatisation; or would they remain within the company, so that the employee would get the benefit if he retired or left the company? I understand from my noble friend Lord Brooke that that happens in the case of NATS. We need more information on that and I hope that the Minister will be able to help us.
What is happening with Postcomm? It is being asked stringently to monitor and set standards for private operators. What is being done about that? Is that going ahead?
Finally, if we do not follow that policy, we will have creeping privatisation, destroy a service that is respected by most people and destroy a loyal employee base.
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12.59 pm
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