Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 300 - 319)

MONDAY 25 MARCH 2002

MR JOHN ROBERTS CBE, MARISA CASSONI AND MR STUART SWEETMAN

  300. So that is 15,000 on top?
  (Mr Roberts) Yes.

  301. Of which 10,000 came from the EU Directive and a further 5,000 job losses would come from—
  (Mr Roberts) I think he was just splitting £500 million and £250 million.

  302. On the same calculating method, you would accept that?
  (Mr Roberts) Of course. Can I emphasise to the Committee again—

  303. That is 40,000 jobs. With the EU Directive, which is almost certainly going to come in, that is 40,000 job losses, is it not?
  (Mr Roberts) It is exactly that but that is not what we have been saying.

  304. I will say it again now.
  (Mr Roberts) I think you are playing with numbers and words, if I may say so. We have done a calculation, as it were, around this table. I would not want to be pinned to that calculation at this stage because, as we have said, we are not yet clear exactly how the impact will fall on us when these changes to liberalisation come in. That is based on our assumptions. It is not necessarily true that it would have to be taken all out of costs but the assumptions that I have been asked to work to were assume it is taken out of cost, it will have an impact on staff. If it did just what you have described, yes, it would add up to 40,000 but that is not what we are saying today. We are adding apples and pears together to come up with a result.

  305. As you might expect postal workers tend to follow what Consignia says.
  (Mr Roberts) I know, that is why I am rather concerned that we are doing a calculation around the table.

  306. I bet you are. When Postcomm appeared before us Mr Stanley, who is the Chief Executive of Postcomm, said to us that ".  .  .the management and workforce will only change if they face a real danger that they will lose business to competitors. It is too easy if a company has a monopoly and it is owned by the taxpayer and has recourse to the taxpayer to stay as it is". Do you agree with that?
  (Mr Roberts) I think there is an element of truth in that. I do not think I would agree that you would never change. I think we have been trying over a number of years to make changes and I think some of them have been very successful. I think there is no doubt that when you have competition, as I was saying earlier, that does provide an added spur. If you have always been in a monopoly, the prospect of competition is something which, as we have seen in the last 12 months, really gets the whole of the industry focusing, not so much internally, which monopolies do, but focusing much more externally on what is going to happen in the market, what is going to happen to your customers, what is going to happen to your revenue.

  307. You would agree with him also when he said whenever you speak to senior managers, middle managers or the workforce of Consignia they say this company will never change until we see competitors walking down the same streets delivering mail against us. It is a fairly constant theme for them.
  (Mr Roberts) I think there is no doubt that if you apply that to the letters business, because of course we have exactly that situation in parcels already, that would administer probably the biggest shock to the organisation that it has ever had. I do not think I accept though that is the only way in which you get change.

  308. Maybe I am coming at this from a different angle from some Members of the Committee. My fear is that you are not going to be exposed to enough competition, that is my concern. You are raising all sorts of fears about what might happen if you are exposed to competition. All the evidence from various European countries that have gone for greater liberalisation is that the original provider retains an absolutely dominant market position. Do you accept that is the case?
  (Mr Roberts) I think there are few examples. I think the most quoted examples are Sweden, New Zealand and Finland, very small countries in the main in postal terms, where liberalisation has been introduced in different ways. For example, in New Zealand there is no regulator and as a result the industry has been able to see off competition, I think, quite easily. In Sweden, we know that the Swedish postal administration got itself into trouble for predatory pricing early on. In Finland, because there is no access pricing, because of the high tax compensation payment for any competitor, I think there are no competitors. I think that some of the examples that are quoted from abroad are not necessarily good examples for countries like ourselves, Holland and Germany. There is no doubt that at the end of it, your statement is absolutely correct, in those situations the incumbent has tended to hold on to an enormous part of the market.

  309. That is because you have the infrastructure, you have got the brand name.
  (Mr Roberts) Sure.

  310. By the way, what was the cost of changing the name to Consignia?
  (Mr Roberts) It was half a million pounds for getting the name and it was £1.5 million for making the various physical changes to become a `Plc' which was a price we would have had to have paid anyway given that we were changing from being a state industry to being a `Plc'. The basic stuff like the name plates and everything else outside buildings, notepaper, getting a company number and name off.

  311. How much is it going to cost to change back?
  (Mr Roberts) It will doubtless cost another half a million pounds if it were to be changed back.

  312. A complete waste of money.
  (Mr Roberts) Indeed, if you change it back.

  313. You are going to change it back, are you?
  (Mr Roberts) I do not think any formal decision has yet been taken on that.

  314. There is an awful lot of current press speculation that you are going to change your name back. You are saying you are not going to?
  (Mr Roberts) We have not taken any decision on that at all at the moment.

  315. You have not taken the decision?
  (Mr Roberts) No.

  316. So you do not know where the speculation is coming from?
  (Mr Roberts) I have seen all the speculation in the press and I think our Chairman has been very clear in saying that he is not very keen on the name, but he has also made it clear that that is not the issue of the day, not on a day when you are talking about 13,000 redundancies.

  317. Are you keen on the name?
  (Mr Roberts) I rather like the name, yes. I actually believe that it was introduced for the right reason, which was to try to give a bit more space to the three key brands of Royal Mail, Parcelforce Worldwide and the Post Office, meaning the high street branches.

  318. So the Chief Executive and the Chairman of this company cannot even agree on the name.
  (Mr Roberts) I do not think I actually said that. That is not the issue for today and I think you trivialise it if you talk about that on a day when we have had to do some rather more fundamental changes than the name.

  319. Actually, with respect, quite often, and I am thinking of British Airways here, it is a symbol of companies getting themselves into a mess when they start messing around with the name without addressing the more fundamental problems of the business.
  (Mr Roberts) I think we were doing both. I think we were addressing both the fundamental problems and we were changing the name. One of the fundamental problems was the confusion between the Post Office, meaning the group, and the Post Office, meaning the shop on the high street.


 
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