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Baroness Miller of Hendon: My Lords, perhaps I may say that we are talking about the Horizon project, to which I assume the Minister refers. On several occasions, until the last minute, government Ministers said that it would be delivered and that it was a very good service. In the end, they found that they could not deliver it. That is all. When the Minister says "misconceived", I say that it was equally misconceived by Ministers on the other side. However, I do not accept that it was misconceived.

Lord Sainsbury of Turville: My Lords, I believe that it is now generally considered to have been misconceived. The Select Committee in another place was very clear about that. Perhaps we should have spotted earlier that it was in trouble. However, it is now generally considered that it was undeliverable and would not have worked.

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In that connection, I wish to make the point that we have a simple choice with regard to the Post Office systems of updating them to ones which are based in the end of the 20th century and using those systems to replace ones which were appropriate to the first half of the 20th century. The idea that we should allow the Post Office to go forward in the future with the paper-based systems which currently exist seems to me to place the Post Office in a totally defensive and unacceptable position, particularly with regard to gaining new business.

Of course, one can always effectively subsidise a business by keeping and continuing to fund totally antiquated and labour-intensive systems. However, with all due respect to many noble Lords who have spoken on that issue, I hardly believe that that is a way to provide Post Office Counters with the means to deal with the future. We must give it modern systems which enable it to obtain new business and play a new role in the rural communities. As the noble Baroness, Lady Miller, said, it is not a question of taking away the profitable business and giving it to the banks; it is a question of bringing it up to date with the kind of systems that we should have in the 21st century.

I turn to a matter which, again, I believe has dominated this debate; that is, Clause 102. I believe that it had been made very clear that this is an enabling clause which will enable us, if necessary, at a suitable time in the future to produce a scheme to subsidise the post office network. It is not proposed to use it at present and we have not tried to put in place a system of subsidy which would not be appropriate at this stage.

Finally, the noble Baroness, Lady Miller, raised the question of the Post Office's structure. We have put forward a structure which is necessary to enable the Post Office to compete in this new world of international competition, rather than searching for ideological purity which means that we must have at least 51 per cent in the private sector.

The question of transparency of accounts is covered by the European Postal Service Directive. That will cover the question of cross-subsidy. There will, therefore, be total transparency on that issue. A final point needs to be made in this context. It has been pointed out that Treasury consent is necessary for the borrowings. This is a simple and uncomplicated provision. Most financial provisions have it in one form or another.

I turn to the comments of the noble Lord, Lord Razzall, who described very well all the issues that need to be covered in considering the kind of structure that is appropriate for the Post Office in the future. The noble Lord suggested that the way to resolve all these issues is effectively to keep it within the public sector and with a public sector structure. I find it difficult to see how that would resolve the problem of how to keep a public sector influence in a body which also has a commercial one. Therefore, while his description of the issues was extremely good, I am by no means convinced by his argument. He certainly did not put forward any reasons to suggest that this would

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resolve any of the tensions which inevitably exist in such an organisation and which are reflected in structure between the public sector aspects and the purely commercial ones.

The noble Lord, Lord Razzall, raised two fundamental issues with which I shall deal. The first concerned the question of the national network. We are determined to maintain a national network. This Government have, for the first time, publicly laid down the criteria for access which will enable that statement to be properly judged. It is a major step forward. It is, of course, very easy to say, "We support a national network", without knowing what it means. For the first time, we are laying down criteria as to what it means.

Another theme that has run through this debate is the status of the Post Office and the question of privatisation. I again make it quite clear that the Government have no plans to privatise the Post Office. It will remain publicly owned. When publishing the White Paper, the Secretary of State promised that the Government would not seek to dispose of Post Office shares without further primary legislation, except where limited sale or exchange of equity would be in the interest of the Post Office to cement a joint venture or strategic alliance with another company, in which event the approval of the Houses of Parliament would be required. That is a very clear and unequivocal statement about where we stand on that particular issue.

I turn to some of the points made by the noble Lord, Lord Dearing. The noble Lord, Lord Dearing, knows more than anyone in this House about the Post Office and, moreover, played an enormous part in reinvigorating the organisation when he took over as the chairman. I can assure him that we will make certain that the balance sheet of the Post Office is commercially sound. Indeed, there is no point in having a plc unless we give it that strong balance sheet as a basis for going forward. As was announced in the Statement to the House in 1998 and restated in the White Paper in July 1999, the Post Office's balance sheet will be restructured by 1st April 2002, in order to place the Post Office company on a more commercial footing so that it can be better benchmarked against its competitors. We are employing advisers to help us make that transition. However, I certainly take the noble Lord's point, of which the DTI is very conscious, that we have to make certain that commercial decisions are taken speedily and that the whole basis for the relationship will depend on a hands-off stance being taken by Ministers.

In relation to the question of cost of ATC, there is no question of cost being transferred to those who receive the benefit. People will, in exactly the same way, be able to get payments at their post offices in cash, without deductions from them. That obviously

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will depend on them not using any of the other banking services. They can continue to get benefits from the Post Office in cash in the normal way.

Baroness Byford: My Lords, perhaps I may press the noble Lord on that issue. I appreciate his response to the many questions that we have raised. The question that has been raised relates to how people will get their money. If there is to be no book or giro, how can they get hold of the cash? That is the unanswered question. If I have interrupted too early, I beg the Minister's pardon.

Lord Sainsbury of Turville: My Lords, there may be a question of how the identification is established. However, as I understand the system, the money will simply be transferred into an account at the relevant post office. In that sense, they will simply have to go and draw it from that account. It is a system by which the payment is sent out to them and they can claim it at the Post Office. In case I am in any way wrong about this, I will check that point and write to the noble Baroness. It is a point which appears to cause a lot of concern. As I understand the system, it will be possible to withdraw the cash from the Post Office, in the same way as is possible at present by using a book. However, I will check that point and confirm it by letter. It is clearly a point of considerable interest and concern to people and it would be helpful if that point were established.

The savings which will accrue from this system, as was mentioned, will be very substantial. Indeed, the ability to control fraud, which is calculated to cost £140 million per year, will also result in a substantial saving from this system. I cannot see any way in which those very substantial savings could be lost in other aspects of the system. The question that has been raised is whether the pressure on the finances of the post offices that we seek to close might have a social cost which has to be taken account of in relation to this system. I still feel that it is inappropriate, in those circumstances, to say that we shall maintain what is seen to be an inefficient system involving a lot of work in post offices and that supports their finances. That is simply another way of effectively giving them a subsidy. It is inefficient and not very cost effective.

I turn to the comments made by my noble friend Lord Clarke. We have made it clear that pensioners and people in receipt of benefits will get them in cash. As far as I can establish, the figures that he presented are essentially correct. However, I do not want to comment on the question of the pension holiday for the post office, because that clearly would depend on actuarial valuations. Many of the questions that he raised will have to be taken account of in the final structuring of the balance sheet. It is, of course, difficult to make comparisons without looking at the final balance sheet, which obviously is unlikely to include the strange arrangement of a lot of government gilts which are earning interest for the Post Office. That will have to be accounted for in the restructuring of the balance sheet.

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I believe that there are huge advantages to having the Post Office as a plc, if it is to maximise opportunities abroad. In many cases, it will be dealing with foreign companies and with bankers who are used to the concept of a plc and are not necessarily aware of all the ramifications of what a state-owned enterprise will be. Therefore, the fact that it is a plc will make much easier any investment and banking arrangements. It makes a great deal of difference in clarifying the relationship between government and the plc, if it is a plc, because that has very clear responsibilities which are understood by everyone on the board.

As regards the cap, we need to maintain the maximum flexibility to enable the Post Office to develop its business in the most commercial manner appropriate. It is quite likely that if there were to be joint ventures, they would take the form which my noble friend Lord Clarke mentioned; namely, putting together assets which would not necessarily involve the holding company's shares being sold.

My noble friend is correct in wondering whether 10 per cent or 11 per cent is the better figure. I do not believe that we should get into that kind of auctioning of figures. This proposal is very carefully constrained. The Post Office must come forward with a proposal and that must be agreed by both Houses of Parliament. That provides a tight control over the situation.

The noble and learned Lord, Lord Brightman, made some complimentary remarks about the work of parliamentary counsel which I shall happily pass on. It is not a channel of communication which is overflowing with compliments and I am sure that they will be delighted that their excellent work has been noted by such a distinguished lawyer.

The noble Baroness, Lady Sharp, referred to reaching agreement for borrowings. In most commercial situations, if companies are borrowing large sums of money, they have to go to talk to people--rating agencies, bankers and others. Even in the world of commerce, some discussions must take place before large sums of money are raised. The Government have given an extremely clear assurance in the White Paper that there will be a fast-track 28-day approach to approval of large investments of over £75 million. That was employed for the approval of the purchase of the German parcel operation. So it is quite clear that that can be done if the will is there to do it.

I turn to the points raised by the noble Lord, Lord Northbrook, about the structure. I see no reason why there is anything magic about 51 per cent of the shares being sold. If it can be done on the basis of 100 per cent ownership by the Government, I am not sure why 51 per cent in the private sector enables it to compete better; for example, against the Dutch post office.

As regards the reduction of the Post Office monopoly, the Select Committee in another place suggested, after the Government made their announcement, that that should be the first job of the regulator. We listened and agreed to that.

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Finally, the interest rates will be commercial rates, but they will take account of the fact that there is government backing for the Post Office.

The Government believe that they have chosen the best way forward for the Post Office and its customers and, indeed, for the country. They are seeking to implement the reforms as quickly as they can. The greatest disservice and damage we could do to the Post Office is to cause further delay.

By implementing the reforms set out in the Bill, the Government are confident that they will put in place the means to deliver a Post Office which meets the needs of its UK customers, both business and private consumers, effectively and efficiently; a Post Office that can compete in international markets as a major overseas postal service provider; a Post Office that can develop its business and invest for the future; and most important, a Post Office which protects its social obligations and the principles of universality, accessibility and affordability, providing a world-class service throughout the United Kingdom.

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