Examination of Witnesses (Questions 100
WEDNESDAY 13 FEBRUARY 2002
100. How many jobs were lost?
(Mr Stanley) I cannot remember the number
but it was about a quarter of the workforce.
101. All along you say, "Have no fear because
these large volume producers are going to have to deliver to remote
farm houses in rural areas." How do you meet the point that
ten per cent of this market is business to business, so those
arguments do not apply to that because there are not many businesses
in remote farm houses? How do you reply to the point that quite
a lot of these businessesyou mentioned one, Lambeth Council,
for instanceand these new entrants will want to insist
on striking up a deal to Consignia to ensure that Consignia is
given the arduous task of delivering the last mile up a long drive?
Presumably, you would say it is up to Consignia but it is not
because there will be a dispute between Consignia and the competitor.
You will be the arbitrator of that dispute so that it is a double
whammy against Consignia, both in that initial commercial pressure
and again in you regulating the final mile.
(Mr Corbett) It is only a double whammy
if you assume that we will exercise our judgment on the access
price in a way which is unfair to Consignia. I would emphasise
again that what we are looking for is the creation of a virile
postal industry. We see no way in which we can have a virile postal
industry without a virile Consignia at the centre of it. For us
to exercise our judgment on access pricing in a way which cripples
Consignia would be absolute madness and we will not do it.
102. We may come back to that at the end of the
meeting but you still have not answered the point about business
(Mr Stanley) Consignia will lose some
business as a result of competition. How much depends on how inefficient
they are, how slow they are to react and so on, undoubtedly, just
like a supermarket loses business to small shops nearby that offer
specialist or better service. It cannot be stressed too strongly
that the bulk of business is huge volumes going everywhere. Even
Lambeth Council. I would not want to deliver throughout Lambeth.
It is not an easy, cheap place to deliver. The cherries are not
that many that the picking of them can seriously damage Consignia.
103. Looking at some of the answers to some of
the previous questions, I notice you spent two years and no doubt
many millions of pounds on consultancy fees and the outcome is
not one which has filled me with confidence with regard to some
of the answers you have given. In the report it says that not
many of your staff have direct experience of the postal business.
Do you yourself, apart from going out with the odd postman, have
any experience of the postal business?
(Mr Stanley) Before this job, I had not
worked in the postal service.
104. You are not fully aware of what type of
business you are dealing with?
(Mr Stanley) I have spent a huge proportion
of the last two years getting to know Consignia myself. I have
done a lot of visits, met a lot of union members, managers and
so on. Given the handicap of not having worked in the business
before, I have a pretty good knowledge of the business and so
have most of my staff.
105. You will have a pretty good knowledge of
the problems the business faces then?
(Mr Stanley) I would say so.
106. Do you not feel that the money spent on
consultants would have been better spent on the postal service,
on its managers and its workforce, directing them to a new method
(Mr Stanley) No, because its problems
are fundamental cultural: lack of investment and so on. In the
view of Parliament it said, "Let there be competition"
and in our view too they need competition to sort them out. If
two years ago we could have come into this room and said, "We
think we ought to introduce competition. It seems pretty obvious
to us", and you had all said, "Fine, okay", we
would not have needed to spend a lot of time and employ consultants
to check every aspect of this issue. We would not have got away
with it. That is why we had to do this work in such detail and
look at it through so many different eyes to make sure that we
got the right answer.
107. You said that management will only change
if it faces competition. That is a lovely statement. It presumes
that management can change. It has the knowledge, the experience
and the base for change. What evidence do you have that this management
(Mr Stanley) There are some fantastic
managers in the Royal Mail at all levels. There are some who will
not be able to change, I admit, but most that I have come across
know what the problems are. There is something about the organisation
that finds it difficult to change.
108. If I can quote, "In recent years it
has lost its way". These are the fantastic managers?
(Mr Stanley) They spend a lot of time
talking and arguing amongst themselves about the best way to do
it instead of getting on and doing it.
109. That fills us with confidence. Your remedy
for this is to place them under competition and then they will
sort themselves out.
(Mr Stanley) I think they will, yes.
110. They will change the culture?
(Mr Stanley) Yes.
(Mr Corbett) I think it is reasonable to look at some
of the international comparisons and some comparisons with other
industries that have been liberalised. In case after case after
case, you see examples of significant improvements in efficiency
and significant benefits in terms of lower prices and better services
flowing back to the users.
111. You can see that discipline is brought upon
the workforce by competition?
(Mr Corbett) And on management.
112. A management that does not see e-mails as
(Mr Stanley) And on the shareholder too
because the company ought to be investing more.
113. Another answer you gave was that, although
the expenditure rose by 12 per cent, it is hard to get to the
bottom of that. I should have thought it was your job to get to
the bottom of that. How can you come before the Committee and
say, "Although the expenditure rose by over 12 per cent,
it is hard to get to the bottom of that"?
(Mr Stanley) Because a large part of
the problem arises outside the mail's business. The information
systems in the company are not geared to give the management the
information they need. The finance director and others will say
that, but they are getting much better.
114. That is a good and obvious answer. You are
not in a position to regulate this business because you cannot
and they cannot quantify the costs or the expenditure or where
they are losing money or where they are doing well. How are you
going to regulate it then?
(Mr Stanley) The systems are getting
better all the time. We have a company called WS Atkins working
with Consignia to extract the information. We are getting there
but it is hard work.
115. It is obviously hard work. It must be like
trying to nail a jelly to the wall. You do not know where the
costs are; you do not know where the costs arose; you do not know
where the management efficiency is but, you say, "We will
create a fantastic company in a few years." Can you tell
me what you consider to be fantastic?
(Mr Stanley) I would love to see the
Royal Mail go back to where it was eight or ten years ago. It
was then a really well run organisation, well managed, with a
dedicated workforce and it provided one of the best postal services
within Europe, if not in the world.
116. What went wrong?
(Mr Stanley) It is hard to put a finger
on it but I think the customers are now more demanding. Industrial
relations have clearly got worse. The company has been distracted
by political changes which you will be familiar with, and there
has been a lack of investment. All sorts of things have gone wrong.
117. It has lost its way?
(Mr Stanley) It has lost its way.
118. Did the management have a clear objective,
strategy, purpose, mission? It did not engender in the workforce
that spirit de corps where you knew you had a first class service
and pride in the job. It lost workforces because it did not pay
the right rates. We could all write the book and we did not need
two years and many millions of pounds on consultants.
(Mr Stanley) If you had agreed with us
two years ago, we would not have needed to.
119. How many years is it going to take to get
(Mr Stanley) It is hard to say but two
to three years will see a company which is significantly better
than it is now.
(Mr Corbett) Do we not need to hold on to a fundamental
distinction between the role of the regulator and the role of
the management of the company? I do not believe that any of you
would wish to see a regulatory body getting involved in the management
of the company. You ought not to, I would suggest. For good reasons
or bad reasons, we were set up to do the regulator's job. It is
not our job to manage Consignia.