Examination of Witnesses (Questions 460
MONDAY 25 MARCH 2002
ROBERTS CBE, MARISA
460. That is disgusting, is it not?
(Mr Roberts) Yes, it is, and during the years when
we were making all of those profits we were caught by public sector
pay policy when, in fact, we would have had the money to put postmen's
pay up but we were not allowed to. Now we are in a situation where,
of course, the money is not there but we are still trying to get
postmen's pay higher and we have agreed with the union
461. But has the Chairman not suggested a freeze?
(Mr Roberts) No.
462. My understanding is that the Chairman has
suggested there should be a freeze on wages.
(Mr Roberts) He said that if he was in a private sector
business with the results that we have talked about then there
would be a pay freeze, but he has not suggested we have a pay
freeze and, in fact, pay negotiations are coming to a head just
as we speak.
463. My final question is do you accept that
if you have a disgruntled workforce you are going to have problems?
(Mr Roberts) If you have a disgruntled workforce you
are going to have problems, I do accept that. We do have a disgruntled
workforce in places and we are working very hard with the union,
particularly in the light of Lord Sawyer's report, to actually
turn that around.
Mr Rendel: Can I say first of all, Mr Roberts,
as the only Liberal Democrat Member of this Committee that I have
every sympathy with you in trying to change the name of an organisation,
it is not an easy thing to do.
Mr Davidson: You want to be called Consignia!
464. Let me move on from that and ask, when
competition is introduced will prices go up?
(Mr Roberts) If you are saying competition equals
raising prices, I do not think so because it may well be that
when we see what the competition is we will have to hold prices
down. Please do not let me mislead you. At the moment in thinking
about our response to Postcomm's proposals we are also thinking
about what we should do about the price. As a complete follow-on
from competition does not necessarily equal a price rise, it may
actually have to be the reverse once we see what competition is
465. So your argument with Postcomm that they
should not introduce competition so quickly because that would
force you to raise prices is not correct? I thought that was one
of the reasons you had given against Postcomm's wish to introduce
(Mr Sweetman) It is the pace at which competition
466. So if they introduce competition quickly
you will have to raise prices but if they introduce competition
only in the timescale that you propose then you will not have
to raise prices?
(Mr Sweetman) If the competition impact is quicker
than we as an organisation can adapt to re-base our costs, to
change the nature of our fixed and variable costs, if that is
quicker than we can respond to then that will put our ability
to finance the USO at risk. The only policy lever then available
to Postcomm to ensure that we can continue to finance the USO
is the price mechanism and that is within their report. If that
is the only policy lever left and the impact of competition is
faster than we can change then prices would have to go up for
us to maintain our financing of the USO.
467. You seem to be saying different things
at different times to some extent. You said to Mr Jenkins earlier
that you agreed having the Universal Service Obligation meant
that you would always be competing in effect with one hand tied
behind your back, and yet you also seem to think that it is a
good thing that competition should be introduced and you said
just now that if competition is introduced it may well be that
prices go down, which from the point of view of the users of services
I am sure will be welcomed.
(Mr Roberts) May have to go down, yes.
468. So you want competition or do you not want
(Mr Roberts) It is to do with the way in which competition
is introduced. At the moment we are finding
469. But however it is introduced you will always
be working with one arm tied behind your back.
(Mr Roberts) I think we will.
470. Is that a good thing?
(Mr Roberts) No, it is not a good thing, but I think
the issue is if you introduce competition into this kind of industry
where you have got a uniform price, which is the discussion I
was having with Mr Jenkins, if you cannot re-base your prices
if your competitors are coming in at a lower price than you then
you have got one armed tied behind your back.
471. So are you saying that it is a good thing
because in practice what this will mean in the long term, because
it will mean you always have one arm tied behind your back, is
we no longer have a uniform tariff?
(Mr Roberts) It might well do. The point I am making
is if you introduce competition in a different way, if you introduce
it in a staged way in the way in which the European debate has
gone on then at least you get the chance to see what impact that
is having and you may not get into that position as quickly as
we might do with the Postcomm proposals and, therefore, you can
actually introduce competition, you can maintain a uniform price
or, over time, you can decide that competition has grown to such
an extent that the customer has then got real choice and the uniform
price may not then be as important as it seems to be now.
472. Would it not always be important for those
who are living in outlying areas because are they not the ones
who suffer from not having a uniform tariff?
(Mr Roberts) Yes, I agree with that.
473. What you are saying, it seems to me, is
that the introduction of competition is going to endanger those
who live in rural areas?
(Mr Roberts) It could well do if you look at the one
example that everybody quotes, which is Sweden, because prices
have gone up so much. The point I am trying to make is that none
of us know what will happen in the market when we do introduce
competition whatever method we use to put it in and that is the
real issue, that none of us know what will happen.
474. I sympathise with your lack of complete
knowledge about what will happen and, if I may say so, I think
it is extremely significant that you now seem to be coming to
a point where you are saying that the introduction of competition
will mean that you will always have one hand tied behind your
back and although that may mean lower prices to some people it
is likely to endanger those who live in outlying areas who now
benefit from a uniform tariff but may not in future.
(Mr Roberts) That is right. If the uniform tariff
goes then that is quite right.
475. May I go back now to the sudden collapse
in profits which a number of Members have asked you about. You
were asked about what the special costs were and you said there
was some international agreement which you had made.
(Mr Roberts) Yes.
476. Which increased your costs.
(Mr Roberts) Yes.
477. Who made that agreement?
(Mr Roberts) That was an agreement which all the postal
services in Europe were asked to try and negotiate by the European
Commission because they were concerned about the way in which
prices were charged for mail which crossed boundaries. In other
words, if we send mail to Germany we have to pay the Germans for
delivering the mail in Germany. The European Commission had looked
at all of this and they had decided that the basis on which it
was previously done was not the correct basis. The basis was then
changed in a very long and complicated negotiation but the net
effect of that on us was that it increased cost and it increased
cost by about £137 million in the year that we were talking
478. Presumably there were other countries where
costs went down as a result?
(Mr Roberts) Yes, because we are a net exporter of
mail. This country after the States actually exports more mail
than it brings in.
479. Did we have to agree with this? Did we
have a no veto on it? Did we have a veto?
(Mr Roberts) No, we did not have a veto on it. We
could have pulled out of the whole agreement which would have
meant that in the end we would have had to do a bilateral negotiation
with every other country that we have mail arrangements with.
Our view was if we did that it would be probably more expensive
than going through this agreement which was expensive enough.