Previous Section Back to Table of Contents Lords Hansard Home Page

We are seeking to sell the service at a very bad time in economic terms. There is no queue out there of people saying, "Let me buy the Post Office", so I hope the Minister will think hard about what has been said, not just by me but by others, and will try to ensure that the Government come back at the final Reading with some proposals that comfort us and the British people that this is not being sold off just for fun but is something that we are trying to ensure is properly financed and properly run in Britain.

Lord Young of Norwood Green: My Lords, we welcome the amendment moved by the noble Baroness, Lady Wilcox, and believe that it is a step in the right direction. The question is whether it goes far enough in that direction. We welcome the Government's acceptance of the kind of information that ought to be made available before Royal Mail is sold. We have already stated that there are still many unanswered questions about the disposal-the timetable, the qualification of the future owner, the nature of the sale, how value for money will be secured, the danger of asset-stripping, safeguards for the universal service, and safeguards for the post office network. Yet the

4 May 2011 : Column 501

scope that is being given to the Secretary of State to make the sale is still very large indeed, with only a factual report to Parliament.

There is a significant improvement in the scale of information that is being offered, but it is certainly not the whole answer. I listened carefully but I did not quite get the assurance given on the nature of the contract between Royal Mail and the Post Office. I would welcome the Minister, in responding, clarifying the point that she made about next spring, when this contract is likely to be signed, and saying how strong the guarantee is on the 10-year period. Is it still just a hope, and are there still likely to be legal barriers to the 10-year period being a part of the contract?

I want to speak to Amendments 7 and 8. The House will be aware that we have consistently put the case for a long-term agreement between Royal Mail and the Post Office, to run from point of sale. We have proposed a 10-year duration. As my noble friend Lord Whitty said, it is certainly not an academic issue; it is a matter of commercial survival. The Government's assurances are an improvement but still fall short of the commitment that we seek. I have no doubt that we will continue to return to this issue until we get a satisfactory assurance.

My noble friend Lord Whitty's amendment provides a useful elaboration of the information that we seek, including the contract length, any contractual break period and the total value of the contract to Post Office Ltd. We urgently support his amendment and urge the House to do so.

Amendment 8 seeks further guarantees, and important ones, on the risk assessment of the proposed disposal of Royal Mail. My noble friend Lord Christopher rightly seeks confirmation that due diligence of the prospective buyer has been undertaken. These are sensible steps to take before such an important transaction, and I thought that his graphic and interesting description of the Netherlands postal system was an important contribution to this debate.

Once again, we support this amendment.

Baroness Wilcox: My Lords, I rise to respond to the noble Lords, Lord Whitty, Lord Christopher and Lord Young, on my amendment and the other two amendments. In response to the concerns expressed by the noble Lord, Lord Whitty, about the details to be provided in the Clause 2 report, I reiterate some of the sentiments I mentioned earlier. The information that we propose to include in the report includes much of the information that the noble Lord seeks in his Amendment 7. I would hope that the contract's duration would be for the 10 years that many noble Lords are seeking, but the longest legally permissible duration will depend on other factors, such as volume commitments, which must be commercially negotiated between the companies. Finally, we must not require in Clause 2 the disclosure of information that might inadvertently damage the commercial interests of either business. That would damage the commercial sustainability of the post office network, which I am sure is not the noble Lord's intention.

The noble Lord, Lord Christopher, raised a number of important points about how the postal service is provided in the Netherlands. I believe that these are

4 May 2011 : Column 502

consequences of the regulatory framework in the Netherlands, not of the ownership of its postal companies, but we will come to those matters when we debate Part 3 of the Bill, and I hope I will be able to provide him with further reassurance then.

The noble Lord, Lord Young, asked me to clarify what I said about the timing of a new contract between Royal Mail and the Post Office. As I said, negotiations are under way, and we expect a new contract to be ready to be signed by next spring. I hope that with those reassurances the noble Lord feels that he can withdraw his amendment.

Lord Whitty: My Lords, I appreciate that the noble Baroness has gone some considerable way. However, from what she just said it is clear that the information that the Government envisage in the report is on potential investors and the financial viability of both halves. There is a bigger public interest issue here. The post office network, which is so dear to many of our communities, depends on this agreement for one-third of its income. Unless this Bill spells out that part of the report to Parliament will cover something like the details that I have in my amendment, I do not think that the Government will be bound to provide a sufficient report on which Parliament can judge. Therefore, I would like to test the opinion of the House.

6.19 pm

Division on Amendment 7.

Contents 137; Not-Contents 191.

Amendment 7 (to Amendment 6) disagreed.

Division No. 4


Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Armstrong of Hill Top, B.
Barnett, L.
Bassam of Brighton, L. [Teller]
Berkeley, L.
Bhattacharyya, L.
Bilston, L.
Blackstone, B.
Blood, B.
Borrie, L.
Brooke of Alverthorpe, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Carter of Coles, L.
Christopher, L.
Clancarty, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corbett of Castle Vale, L.
Crawley, B.
Cunningham of Felling, L.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donoughue, L.
Drake, B.
D'Souza, B.
Dubs, L.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gibson of Market Rasen, B.
Gilbert, L.
Glasman, L.
Golding, B.
Gould of Potternewton, B.
Grantchester, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.

4 May 2011 : Column 503

Hughes of Stretford, B.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kennedy of Southwark, L.
Kestenbaum, L.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Knight of Weymouth, L.
Lea of Crondall, L.
Lofthouse of Pontefract, L.
Low of Dalston, L.
McAvoy, L.
McCluskey, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Martin of Springburn, L.
Massey of Darwen, B.
Meacher, B.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
O'Neill of Clackmannan, L.
Palmer, L.
Parekh, L.
Patel of Bradford, L.
Pendry, L.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prescott, L.
Prosser, B.
Puttnam, L.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Richard, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Snape, L.
Soley, L.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Thornton, B.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turner of Camden, B.
Wall of New Barnet, B.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Williams of Elvel, L.
Wills, L.
Young of Hornsey, B.
Young of Norwood Green, L.


Aberdare, L.
Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Anelay of St Johns, B. [Teller]
Armstrong of Ilminster, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Baker of Dorking, L.
Barker, B.
Benjamin, B.
Berridge, B.
Best, L.
Bilimoria, L.
Blencathra, L.
Bonham-Carter of Yarnbury, B.
Boothroyd, B.
Boswell of Aynho, L.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brinton, B.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Byford, B.
Cathcart, E.
Colwyn, L.
Cope of Berkeley, L.
Cormack, L.
Courtown, E.
Craigavon, V.
Crathorne, L.
Crickhowell, L.
De Mauley, L. [Teller]
Deech, B.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
Dundee, E.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elton, L.
Empey, L.
Falkner of Margravine, B.
Faulks, L.
Feldman, L.
Feldman of Elstree, L.
Ferrers, E.
Fink, L.
Flight, L.
Fookes, B.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freud, L.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
Glenarthur, L.
Glendonbrook, L.
Gold, L.
Goodlad, L.
Greenway, L.
Grey-Thompson, B.

4 May 2011 : Column 504

Griffiths of Fforestfach, L.
Hamwee, B.
Hanham, B.
Hannay of Chiswick, L.
Harris of Richmond, B.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Hollins, B.
Home, E.
Howe, E.
Howe of Aberavon, L.
Howell of Guildford, L.
Hunt of Wirral, L.
Hussein-Ece, B.
Inglewood, L.
James of Blackheath, L.
Jay of Ewelme, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jones of Cheltenham, L.
Jopling, L.
Kirkham, L.
Knight of Collingtree, B.
Lamont of Lerwick, L.
Lee of Trafford, L.
Lexden, L.
Lingfield, L.
Linklater of Butterstone, B.
Liverpool, E.
Loomba, L.
Lothian, M.
Lucas, L.
Luke, L.
Lyell, L.
Macdonald of River Glaven, L.
MacGregor of Pulham Market, L.
McNally, L.
Mancroft, L.
Maples, L.
Marks of Henley-on-Thames, L.
Marland, L.
Marlesford, L.
Masham of Ilton, B.
Mawhinney, L.
Mawson, L.
Mayhew of Twysden, L.
Morris of Bolton, B.
Naseby, L.
Neuberger, B.
Neville-Jones, B.
Newby, L.
Newlove, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Oppenheim-Barnes, B.
Palmer of Childs Hill, L.
Pannick, L.
Parminter, B.
Phillips of Sudbury, L.
Ramsbotham, L.
Rawlings, B.
Razzall, L.
Reay, L.
Rennard, L.
Ribeiro, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rogan, L.
St John of Bletso, L.
St John of Fawsley, L.
Saltoun of Abernethy, Ly.
Sassoon, L.
Seccombe, B.
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shrewsbury, E.
Skelmersdale, L.
Smith of Clifton, L.
Spicer, L.
Stedman-Scott, B.
Steel of Aikwood, L.
Stewartby, L.
Stowell of Beeston, B.
Strathclyde, L.
Taylor of Holbeach, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tonge, B.
Tordoff, L.
Trefgarne, L.
True, L.
Trumpington, B.
Tugendhat, L.
Tyler of Enfield, B.
Ullswater, V.
Vallance of Tummel, L.
Verma, B.
Waddington, L.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Walpole, L.
Wasserman, L.
Wei, L.
Wheatcroft, B.
Wilcox, B.
Willis of Knaresborough, L.
Wolfson of Sunningdale, L.
Younger of Leckie, V.

6.31 pm

Amendment 8 (to Amendment 6) not moved.

Amendment 6 agreed.

Amendment 9

Moved by Lord Kennedy of Southwark

9: Clause 2, page 2, line 5, at end insert ", and

( ) how the name "Royal Mail" will be protected and used by the universal postal service provider"

4 May 2011 : Column 505

Lord Kennedy of Southwark: My Lords, this is a similar amendment to one that I tabled in Committee. I was not convinced by the Minister's response then and said I would bring it back. I hope that the Minister has had time to reflect on this. As I said before, people do silly things all the time and doing nothing is, in my opinion, unwise. This amendment would only require the Secretary of State to report on how the name "Royal Mail" will be protected. If the noble Baroness is not minded to accept the amendment, can she explain how we avert another Consignia debacle? Saying that this is such a well-known and recognisable brand name that no new owner would ever consider getting rid of it just does not stack up-Consignia proved that. Future owners may decide to change the name to some other well-known name and Royal Mail as a brand would be lost. That, I contend, would be a matter of much regret. I beg to move.

Lord Jenkin of Roding: My Lords, I listened to the noble Lord with some interest, but I should have thought that, if ever a brand name would be of immense value to anyone who bought the business afterwards, it is that of Royal Mail. I hope that I am not being indiscreet but when I discussed privatising Royal Mail while I was in the Department of Industry in 1981, I was told brusquely, "It's royal-we can't touch it", so it has been delayed for my noble friends to bring to the point now which I would really have liked to have seen a long time ago.

Lord Boswell of Aynho: My Lords, perhaps I may comment first on the amendment which has just been moved by the noble Lord, Lord Kennedy of Southwark. We all have an interest in the continuation of the proud name "Royal Mail", which honours those who have worked in that service over 300 years. All of us here should respect that, not only those who are historians or antiquarians. At this point, perhaps I had better declare my interest in archives and my involvement with the all-party group, of which the House may be aware. However, if the noble Lord looks forward to the proposed new clause in government Amendment 54, which has been grouped with this amendment for convenience, we might have a more substantive discussion. I look forward to the Minister's comments on that amendment, on which I shall speak in a moment.

I make no apology for wanting to see that this is got right because it is not necessary to be a fan of TS Eliot's poetry-although I am one-to understand that the past is very much part of the present and the future and that it should not be possible, in a mechanistic way as it were, to unpick them or to take no notice of them. It is really important that the heritage and pride which have gone with that name and its tradition are celebrated and maintained, not least because it is a matter of obvious sensitivity in relation to the monarchy. We do not need to speak about that in detail but the monarch's head appears on our postage stamps and her title attaches to our postal service. We hope that will continue.

However, as I said in Committee, any of us who have been to see the Royal Mail's museum and archive, which is the subject of the government's proposed new clause tabled in Amendment 54, will know the richness

4 May 2011 : Column 506

of what is there. There is complexity and fascination in how designs were considered, modified and put into circulation and that is all part of the tradition which should go with this. It is important that we make these commercial changes-I am not resiling from that-and that we do not spend unreasonable money on resourcing the past, however important it is. I said in Committee that there were some concerns about the resources available for the existing archive.

I thoroughly welcome the proposed new clause in Amendment 54 which is really, if I may say so, a considerable tribute to the noble Lord, Lord Clarke of Hampstead, to his colleague, the noble Lord, Lord Christopher, to my noble friend Lord Brooke of Sutton Mandeville and, modestly, I hope, to the little contribution that I made on a warm early April afternoon when we first discussed this in Committee. We raised it with the Minister, who said that she would go and think about it. She has clearly done so and we should give her a good measure of credit for that.

The proposed new clause which the Minister intends to bring forward in the Government's name is promising. For a start, it is prescriptive as to duty in that the Royal Mail company will have to send a report, which she will have to consider. That report will have to come to Parliament and anyone who has been here for any length of time is aware that that provides a channel for questions, an opportunity for expressions of dissatisfaction and so forth. Yet it does not inhibit the company in the nature and form of what it does, which is the right approach. If we sat there saying, "This is what we will do with the archive and this is the precise specification of the new and successor arrangements", we might live to regret that and not be able to deliver it, so flexibility is desirable.

However, because these things tend to be forgotten-unless I am under a misconception; if so, my noble friend the Minister will no doubt disabuse me-it is also probably right to record that in creating this new duty, which goes beyond the existing obligation of Royal Mail, there will be obligations in relation to the archive and what we call the state process of the business. The opportunity to retain postal material and the obligation to report on what is being done is a new and welcome duty. However, we are substantially talking about a concern, which we should never forget when the ownership of public assets is moving from the public to the private sector either in whole or in part, to impose the right kind of traditions and conditions to ensure that the element of public service is not overlooked and that a great archive's future is adequately secured.

Finally, the Government have been wise in not being too precise on the nature of this by providing, in effect, an ongoing and if necessary contingent liability on successor organisations. I do not particularly mind who owns the archive, provided that it is available publicly as a jewel in the crown and an asset that is on display, that it is adequately resourced and that we may long continue to celebrate it despite the ownership changes which are taking place under the Bill.

Lord Clarke of Hampstead: My Lords, first, I thank sincerely the Minister and her team for producing Amendment 54. I am touched by how this has been

4 May 2011 : Column 507

done, which satisfies to a great extent concerns that have been in my mind ever since privatisation was first mentioned-I think that was in 1970-something. Amendment 55 may appear to be going over the top a bit but any report dealing with sold-off public assets should have some reference in the accounting procedure to the donations received in cash or in kind by the museum, so that people can keep track of what has come in and what is going out.

Before I sit down, I should say that I have slipped up, as I should have mentioned in an earlier discussion the wonderful GPO film unit, which is another one that seems to have slipped off the edge. Anybody who wants to see how the GPO prepared for the Second World War-for maintaining its services during that period-should go to the archives, where the DVDs are on sale. They really are worth watching. Again, I thank the Minister for her courtesy.

Lord Young of Norwood Green: My Lords, I also support Amendment 9 in the name of my noble friend Lord Kennedy. It asks that the report should include information about how the name of Royal Mail is to be protected and used by the universal postal service provider. I listened with interest to the noble Lord, Lord Jenkin, when he mentioned the value of the brand. We should remind ourselves that it was not that many years ago that the dreaded Consignia reared its head. Nobody understood why such an appalling name was chosen. It received no public understanding or acclaim, but no doubt the consultancy did quite well out of it. There is a bit of previous in this respect, which is why my noble friend Lord Kennedy was absolutely right to draw this aspect to our attention.

I will deal also with Amendment 54. As others have said, the House will agree that we owe a debt to my noble friends Lord Clarke and Lord Christopher, who deserve enormous credit for persuading the Government to bring forward this amendment, which will require the Post Office to tell us in an annual report how these collections are being looked after. I also pay tribute to the enthusiasm of the noble Lord, Lord Boswell, in his support for this. He made the point about ensuring that the collection is on public display and adequately resourced. While we welcome the amendment, producing a report is not the same as making sure that the heritage is taken care of. However, it will certainly concentrate minds and provide a degree of transparency that was not in the original Bill. Again, I congratulate my noble friends Lord Christopher and Lord Clarke, and the Government for listening to their case, which we welcome.

We also support Amendment 55, which would improve the government amendment by requiring that the report include details of donations, both in money and in kind, from Royal Mail to the British postal museum and the Royal Mail archive. I hope that the Government feel able to take another positive step in this direction by supporting the amendment.

Baroness Wilcox: My Lords, I will respond to the amendment of the noble Lord, Lord Kennedy, and then move on to Amendment 54 and also respond to Amendment 55 at the same time.

4 May 2011 : Column 508

I said in Committee that I fully appreciate the sentiment behind the amendment of the noble Lord, Lord Kennedy, and understand why he seeks reassurance that the Royal Mail name will be preserved. However, the name of the company that delivers the universal postal service should be a commercial decision for that company and its shareholders. As the noble Lord, Lord Kennedy, said in Committee, Royal Mail is a great brand name. My noble friends Lord Jenkin of Roding and Lord Boswell have agreed. The commercial reality is that any owner will see this name as an asset. It is instantly recognisable in the United Kingdom in relation to the provision of the universal postal service. As a brand it is up there with Coca-Cola and McDonald's-brands and goods that your Lordships might not necessarily purchase but will no doubt recognise.

I have heard what has been said about companies doing daft things. I agree that this can happen, but it is very rare for any company completely to abandon its leading brand. For example, there has been much discussion of the decision by the Post Office corporation in 2001 to change its name to Consignia once its operations were transferred to a public limited company. With hindsight, all involved-Parliament and the general public-saw this as a poor decision. However, even in this situation the brand name Royal Mail was not abandoned, nor was Parcelforce or the Post Office. These brand names continued to be used in all customer-facing operations, regardless of the name of the top company. A similar example is Centrica's continued use of the brand name British Gas. To all intents and purposes, the public-facing side of the business in the United Kingdom is British Gas. This can be seen in its advertisements in newspapers and on television. I have listened carefully to the points raised in the debate today but I am not persuaded that it is necessary to include in primary legislation a requirement for a company to be called a particular name after a privatisation. This would not be good use of the legislative process.

6.45 pm

I turn now to Amendments 54 and 55. The noble Lords, Lord Clarke and Lord Christopher, tabled amendments in Committee about the preservation of the Royal Mail archive and museum collection once there has been a disposal of shares in the company. My noble friends Lords Brooke and Lord Boswell also spoke eloquently in support of these important issues. In response to those amendments, I explained that it was not appropriate for the Bill to place duties on a Royal Mail company that would be in excess of duties placed on publicly owned companies, and that I fully expected Royal Mail-regardless of its future ownership structure-to continue to recognise the importance of its heritage as part of its commercial brand. I also said that a privatised Royal Mail should be proud of its history and use it to its advantage in an open and transparent way.

The intention behind Amendment 54 is to ensure that Royal Mail must be open and transparent about its activities with regard to the archive and the museum. It will not be able to shuffle them off into a dark corner. It requires Royal Mail to report to the Secretary of State annually on its activities. The Secretary of

4 May 2011 : Column 509

State will be required to lay this report before Parliament. We recognise that Post Office Ltd, while separate from Royal Mail, will have something to contribute to the report. This is why the amendment also requires Royal Mail to consult Post Office Ltd when preparing the report.

Lord Brooke of Sutton Mandeville: The following line is not totally transparent:

"Before preparing the report, the company must consult any Post Office company".

Consultation can take a wide variety of forms. Could the Minister give your Lordships' House some idea of what kind of consultation she envisages?

Baroness Wilcox: I will get a note and come back to that. I will continue with my point for the moment. Amendment 55, tabled by the noble Lords, Lord Clarke and Lord Christopher, would amend Amendment 54 to require the Royal Mail company's report to include details of financial support, both in cash and in kind, for the museum collection and its archive. In tabling Amendment 54 we have not been prescriptive about what should or should not be included in the report. As I have said, we fully expect a Royal Mail company to continue to recognise the importance of its heritage. How it chooses to support the museum and archive will be a matter for the company. However, any support that it gives to the museum and archive will be an intrinsic part of its activities, and it follows that the report will include these details. It is not, therefore, necessary specifically to include this requirement in the new clause.

The Government want to see the heritage of Royal Mail preserved. Amendment 54 provides the right balance and places a sufficient spotlight on Royal Mail's activities to ensure that the Government and Parliament have the opportunity to scrutinise those activities, and for Royal Mail to demonstrate its ongoing commitment to its heritage. I hope that your Lordships will be able to support Amendment 54. I ask the noble Lords, in view of the reassurances that I have given, kindly to withdraw Amendment 9 and not to move Amendment 55.

Lord Kennedy of Southwark: My Lords, I thank all noble Lords who have spoken in the debate. I also thank the Minister for her response, although it was disappointing. My amendment does not seek to affect the disposal of Royal Mail; it seeks merely to protect the name. I will not press the amendment to a vote, but the Government have taken an unnecessary and risky decision. I hope that they are right, but if they are proved to be wrong a tragedy will result which could so easily have been avoided. I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendments 10 to 14 not moved.

Amendment 15

Moved by Lord Rogan

15: Clause 2, page 2, line 19, at end insert-

"( ) The Secretary of State shall submit a report to the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly setting out the impact of the proposals in

4 May 2011 : Column 510

Scotland, Wales and Northern Ireland respectively, including the effect on post offices, small and medium-sized businesses, rural communities, pensioners and people with disabilities."

Lord Rogan: My Lords, I wish to move Amendment 15 standing in my name and that of the noble Lord, Lord Laird. This amendment seeks to ensure that there is adequate consultation with the devolved Governments, small and medium-sized businesses, rural communities, pensioners and people with disabilities prior to the disposal of shares in Royal Mail. In light of the news I read this morning that 9,000 post offices could close under the current proposals, this amendment seems all the more important and pertinent.

As the Bill has progressed through the House, noble Lords from Scotland, Wales and Northern Ireland have been keen to ensure that it protects the current level of postal services in those nations. We have sought, and received assurances from the Minister, that consultation will take place with service-user groups prior to any changes being made to the universal service obligation. This is most welcome. I now ask the Minister to ensure that that same sensible process is undertaken for largely the same reasons prior to the disposal of shares in Royal Mail.

In Committee, the Minister referred to Sections 3 and 7 of the Communications Act, which gives Ofcom a duty to have regard to a specified range of groups when carrying out any of its functions. In particular, Ofcom must have regard to the needs of four user groups: persons with disabilities; the elderly; those on low incomes; and the devolved Administrations. This amendment refers to matters that I believe fall outside Sections 3 and 7. It relates to the need for consultation to take place with the devolved Administrations as soon as is practical after the Minister has taken the decision to dispose of shares in Royal Mail.

I am somewhat bemused that Clause 2 does not already contain this provision. Noble Lords on all sides of the House have been keen to ensure that this privatisation does not result in services being cut back in remote rural areas. I believe that noble Lords are equally keen to ensure that what we broadly call "vulnerable service users" do not see their postal services denuded. Let us be clear: this legislation is not without controversy. I believe that it will benefit from a far greater sense of legitimacy if Ministers are able to report on their intentions to the devolved Administrations and key service user groups as the Government undertake a share disposal in Royal Mail.

The postal services are not devolved matters for logical reasons, as my noble friend Lord Empey so eloquently put it in a previous debate. Royal Mail is a part of our national infrastructure which is highly valued by the British public. I would not want to see the type and quality of postal services that we receive differ from one area of the United Kingdom to the next. It is precisely because this is not a devolved matter that I believe the Government must go that extra mile and ensure that their intentions in respect of privatisation are communicated to the devolved Administrations.

As many noble Lords have explained in Committee, small businesses in Scotland, Wales and Northern Ireland are particularly reliant on Royal Mail services

4 May 2011 : Column 511

and it would seem sensible that this user group is consulted prior to disposal, particularly in the current economic climate. Other key service user groups, such as people living in rural communities, pensioners and disabled people in the devolved Administrations could be affected by the sale of Royal Mail, and as a result deserve to be consulted prior to Royal Mail moving from the public to the private sector.

This amendment, and others similar to it, that were moved during Committee reflect deeper concerns about the impact that privatisation of Royal Mail will have on services in our communities, particularly in rural areas of Scotland, Wales and Northern Ireland. Noble Lords set out in Committee a number of worries they have about the lack of a commitment from the Government to use this Bill to ensure that postal services are continued at a level users currently enjoy, and that no one user group is impacted on negatively.

We are equally concerned that plans to privatise Royal Mail will be forced on the devolved areas without a meaningful consultation with the devolved Administrations. There is real concern about the consequences of Royal Mail privatisation on service users in Scotland, Wales and Northern Ireland. Failure to consult specifically in these areas will lessen the credibility and legitimacy of the privatisation-a potential problem that is easily rectified by Ministers agreeing to the terms of this amendment.

I trust that your Lordships will be able to support this well intentioned amendment, which aims to increase the legitimacy of this legislation and ensure that the Government's plan to privatise is fully communicated through the proper channels to those who most rely on Royal Mail services.

Lord Low of Dalston: My Lords, I apologise to the House for missing my cue at the beginning of this group but I should like to speak briefly to my Amendment 14, which is in this group. It seeks to ensure that service-user groups are consulted before Royal Mail is sold off and would require the Secretary of State to bring a report to Parliament setting out how the universal service provider will maintain the minimum requirements contained in the universal postal service obligation. Before I do that, I want to say a word about the debate we had on this issue on the second day in Committee on 14 March. In that debate, the noble Lord, Lord Razzall-I am not sure whether he is in his place today-whom the Minister described as having all the subtlety of an air raid, said:

"If we are to preserve the reputation of this House for knowing the facts and having expertise, we really must not say things that are not true ... I said earlier, it is more expensive for the Royal Mail to deliver to Norwood Green or Hampstead than to maintain the service to the Orkneys and Shetland ... if we are to be the serious House that knows the facts, we should take that on board".-[Official Report, 14/3/11; cols. 113-14.]

Having a concern for the truth which is at least as great as that of the noble Lord, Lord Razzall, I undertook to follow up the matter and come back to it on Report, if it was necessary to set the record straight. The Minister helpfully sent us a note on the subject and I have also taken the matter up with the Royal Mail. From this it appears that the cost of delivering the universal service in urban areas other than London

4 May 2011 : Column 512

is approximately 11 per cent lower per postal item than the average cost across the country as a whole. The cost of delivering the universal service in rural areas is approximately 11 per cent higher per postal item than the average cost across the country as a whole. However, the cost of delivering the universal service in London is an anomaly at approximately 10 per cent higher per postal item than the average cost across the country as a whole, largely due to higher wage rates in London.

From this it is apparent that the cost of delivering to London and rural areas is roughly the same and far higher than the cost of delivering to other urban and suburban areas. Royal Mail comments that, other than in London, delivery of an item to an urban area is on average 22 per cent less costly than delivery to a rural area. I repeat that the claim of the noble Lord, Lord Razzall, that it is more expensive to deliver to Hampstead and Norwood Green than to Shetland and the Orkneys is not quite correct. I have actually toned down what Royal Mail said. As Shetland and the Orkneys are more remote than the average rural area, delivery costs substantially more per item than it does in London-more than double. It is not clear where the noble Lord was getting his figures from. He was probably comparing wage rates that are higher in London; and he was probably not comparing like with like. Myriad other costs are involved in delivering to places such as Shetland and the Orkneys. I hope that that is now clear and that we can put that matter behind us.

7 pm

Amendment 14 would oblige the Secretary of State to consult service-user groups before Royal Mail was sold off, and would require him to lay a report before Parliament setting out how the universal service provider will maintain the minimum requirements in the universal postal service obligation. Among user groups that it would be appropriate to consult, the amendment instances small businesses, pensioners, people with disabilities and people in rural and remote areas. However, as was said in the debate on Amendment 24N in Committee, I am sure that the list is not exhaustive.

Amendment 14 is a re-run of Amendment 16, debated in Committee on 14 March. On that occasion, I described in detail why it was important to consult all those groups and I do not propose to do that again. However, when withdrawing my amendment in Committee, I said:

"The Delegated Powers and Regulatory Reform Committee has pointed out that the Secretary of State has a power"-

under Clause 33(5)-

I said that I would read the record carefully and I have noted the words of the noble Baroness in her response to a similar amendment, then Amendment 24N, requiring Ofcom to consult an identical range of user interests when conducting a review of the minimum

4 May 2011 : Column 513

requirements contained in the universal postal service obligation. The noble Viscount, Lord Tenby, kindly moved that amendment for me in Committee on 6 April, when I was out of the country. At col. 1785, the noble Baroness said that the Bill should be read alongside Section 3 of the Communications Act 2003, which already requires Ofcom to have regard to a similar range of groups when carrying out any of its functions.

Looking again at the remarks of the noble Baroness in response to concerns voiced in Committee by the noble Baroness, Lady Kramer, on 14 March at cols. 119-120, I detected an assurance that when performing its duties under the Bill, Ofcom's general duties in the Communications Act 2003 would apply. If she can confirm this, and that Ofcom will have to report annually to the Secretary of State on its activities, including those in relation to provision of the universal service, and that the Secretary of State is required to lay that report before each House of Parliament, it may be possible not to move my amendment.

Lord Empey: My Lords, I should like to speak briefly. I am sure that the Minister in her response will argue that the amendment is not required because the main purpose of the Bill is to ensure the survival of the universal service obligation. However, the amendment indicates the level of concern in rural and remote areas that somehow, once the service is passed into the hands of the private sector, other things may happen. I hope that the Minister will again attempt to allay those concerns, which I know are real.

I said in my previous remarks in this House that many people regard the Royal Mail as a piece of national infrastructure. It is in that context that people, particularly those in remote areas who are already disadvantaged, fear-perhaps irrationally, but I nevertheless assure the noble Baroness that their fears are genuine-that somehow, despite the intentions of the Bill, things will ultimately change. I hope that that is not the case, but perhaps I may assure her that these concerns are genuine, and I hope that in her response she can give comfort to those of us who have these anxieties.

Lord Whitty: My Lords, I support the amendment in the names of the noble Lords, Lord Rogan and Lord Laird. The Minister will be well aware of my past engagement with Consumer Focus, the statutory body for postal services, which operates as separate entities in Scotland, Northern Ireland and Wales. It has become apparent, when assessing the needs of domestic consumers of postal services and post offices, and also those of small businesses in using those services, that there are somewhat different considerations relating to the firm commitment to the network and the universal service, particularly in rural areas and in those countries.

In Northern Ireland, there are particular issues relating to the north and the south, to An Post, and to getting mail across the sea. While preserving the universal service, the body of the post office and the body of Royal Mail as parts of our United Kingdom national infrastructure, it is important that we recognise that any dilution of the service or differential treatment of the parts of the United Kingdom would be particularly

4 May 2011 : Column 514

detrimental to those countries. It is therefore important that the devolved Administrations are fully involved in any changes.

Perhaps I may gently say to the noble Baroness that it has been obvious that her department in Whitehall has not always been the best when consulting devolved Administrations on a whole range of issues, including this one. The department is getting better, but acceptance of at least the principle of the amendment would be appreciated and would help the Government's approach. It would meet the fears of many businesses and individuals in those countries, particularly in rural areas and small towns.

Lord Razzall: My Lords, I was not going to intervene, but because the noble Lord, Lord Low of Dalston, raised the point I made in Committee, we should put on the record that after the noble Baroness looked into this point she wrote to both of us and said that we were actually both right. As the noble Lord indicated, the cost of delivering items of mail in London is more or less the same as the cost in rural areas, and is significantly greater than the cost in other United Kingdom cities. The point that I was trying to make, obviously inelegantly, was that if I was really worried about what would happen I would worry about London. It is not only that the cost of delivery in London is greater, but London is such a huge element in the costs of Royal Mail, which has huge overheads, any third party looking at the overall cost of the Royal Mail-rather than looking at the Orkneys and Shetland-will have to look at the costs in London. It is Hackney that ought to worry, rather than the Orkneys and Shetland. That was the point I was trying to make.

Lord Low of Dalston: If it is truth that we are concerned with, as a serious House concerned about its reputation, it is not correct to say that it is more expensive to deliver to Norwood Green and Hampstead than to the Orkneys and Shetland.

Lord Stevenson of Balmacara: I hesitate to interfere in what is obviously an important battle of words; perhaps the Minister will take on the mantle of responding to ensure that we have equity at the end of this debate.

I shall speak to the substance of the amendments in the names of the noble Lords, Lord Low and Lord Rogan. The sale of Royal Mail and the separation of the post office network is a momentous event and is bound to cause concern and have genuine repercussions on the universal service and on the post office network, as we have heard and will continue to hear during debates on Report. We are very pleased by the stress that the Government are placing on retaining the universal service. There has not been a sitting in which we have discussed the Bill without that provision being at the heart of the remarks that have been made; we welcome that.

I pay tribute to the noble Lord, Lord Low, whose representations led the then Government to incorporate a service to blind and partially sighted customers into the universal service minimum requirement and to put it in the 2009 Bill. Nine million items a year are sent free of charge through the Articles for the Blind

4 May 2011 : Column 515

service, and the Bill carries through that decision, a move which will be welcomed on all sides of the House.

That experience illustrates the value of proper consultation to improve results and help people to feel part of the decision rather than the victims of one. It can be argued that there is a general duty on Ofcom to take into account the interests of vulnerable groups, but the amendments would require-just at the time it is needed-proper consultation with user groups, including small business, pensioners, people with disabilities and people in rural areas. People with a disability are more likely to use mail services as a means of communication. Disabled people visit the post office to post mail more than the average. Equally, other groups who I mentioned in that list need to be consulted, and the amendments would ensure that.

The other amendment deals with concerns in those parts of the UK which would be most vulnerable to any reduction in the USO or the post office network. Scotland, Wales and Northern Ireland certainly feel more at risk than other parts of the UK.

I am not sure whether Ministers have had the chance to read the current edition of the London Review of Books and, in particular, the article by James Meek entitled "In the Sorting Office". It is an extremely good tour d'horizon of some of the problems facing modern post services. He spends some time describing his experiences visiting the Netherlands and the operations being carried on there, some of which were mentioned by my noble friend Lord Christopher.

In particular, I draw attention to the points Mr Meek made in the article about when he visited rural parts of the United Kingdom. Muck is a Scottish island two and a half miles south of Skye. The article states:

"There are 12 households on Muck, and they get mail when and if the ferry arrives from Mallaig ... Bad weather can cut the ferries down to one a week in winter. There have also been times-it happened the other day"-

when one puts a first-class letter on the early ferry and it reaches London the next morning. So they get a very variable service. The problem is that Muck now has a satellite dish for broadband internet. You can even, if you are lucky, catch a mobile signal in some parts of the island, if the wind is in the right direction-I added that last bit, but it is true.

"Nowadays email's so important for communication that the post is getting less and less important",

says one islander:

"I'm afraid the Royal Mail's in a losing battle".

The article goes on to draw something to the wider public's attention which I had not known, which is that Jersey,

I think that Jersey is still a part of the United Kingdom, although it is obviously a separate entity, so we are in danger of some dilution of the USO.

We will return to the question of the USO and how we will protect it. We know that the Government are on our side, but I think that there are measures that might strengthen that protection. The amendments

4 May 2011 : Column 516

are about consultation to make sure that user groups, including small businesses, pensioners, people with disabilities and people in remote and rural areas, are consulted, and I urge the Government to accept them.

7.15 pm

Baroness Wilcox: I turn first to Amendment 14. As I said earlier, Ofcom will be required to report annually to the Secretary of State on its activities, including the provision of the universal service, and the Secretary of State is required to lay this report before each House of Parliament.

In performing all its duties-those in this Bill and those in the Communications Act 2003-Ofcom must have regard to various areas and groups as set out in Section 3(4) of the 2003 Act. These include: the needs of persons with disabilities, of the elderly and of those on low incomes; the opinions of consumers in relevant markets and of members of the public generally; and the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas.

That list covers all the groups set out in the amendment tabled by the noble Lord, Lord Low, and I hope that he will be reassured by that. As I said in Committee, those requirements on the performance of Ofcom's duties will apply to all future regulation of the postal sector. That is far more enduring than a snapshot assessment at the time of a sale.

The noble Lord, Lord Low, mentioned the power in Clause 33 to amend the minimum requirements of the universal service. We will come to that power when we discuss amendments to Part 3, but I know now that the power in Clause 33 is subject to the affirmative procedure.

On Amendment 15 in the name of the noble Lords, Lord Rogan and Lord Laird, to which the noble Lord, Lord Rogan, spoke this evening, I reiterate what I said in response to a similar amendment laid by the noble Lord, Lord Touhig, in Committee. The overarching objective of the Bill is to secure the universal postal service in the United Kingdom. It is about securing a postal service that is available to all in the United Kingdom and delivers to all addresses in the United Kingdom.

As I said in Committee, the Government have already produced an impact assessment on the Bill's proposals. The assessment considered the impact of the proposals on all parts of the United Kingdom, together with the impact on small firms, rural communities and disadvantaged groups.

As I said earlier, Ofcom will report annually on its activities, including ensuring the provision of the universal service throughout the United Kingdom. In addition, we expect Royal Mail to continue to report on its quality of service performance, broken down by postcode area, so that there continues to be transparency about the provision of the universal postal service to all parts of the United Kingdom.

With regard to post offices, the Government recognise the need for accessibility by specific groups. The report by a Post Office company required by Clause 11 must include information about that. Clause 11 also requires

4 May 2011 : Column 517

that the Secretary of State give a copy of the report to Ministers in the devolved Administrations, as well as, of course, laying the report before this Parliament.

The information that is already in the public domain and that which will be provided as a result of the Bill will provide long-term transparency on the protection of the universal postal service and the accessibility of post offices throughout the UK. Those reports and the activities of the regulator will, as I have explained, take into account the needs of disadvantaged groups and those in rural areas.

I hope that, with these reassurances, the noble Lord will withdraw his amendment.

Lord Rogan: My Lords, I thank those Members who have spoken to my amendment. I have listened to the Minister and thank her for her remarks. I beg leave to withdraw the amendment.

Amendment 15 withdrawn.

Clause 3: Employee share scheme

Amendment 16

Moved by Lord Stevenson of Balmacara

16: Clause 3, page 2, line 25, leave out from "reduced" to end of line 35 and insert "from 100%, the proportion of the company owned by or on behalf of the employee share scheme shall be at least 15% of the proportion of the company that is now owned by the Crown"

Lord Stevenson of Balmacara: My Lords, the amendments make the case for employee shares being held as a trust and for employees to have a voice on the board in the light of the employee share scheme being established. We agree that that should be in the Bill because we have heard a lot of Ministers' warm words for employees, but we need more assurances.

The benefits of employee share schemes, which were rehearsed to some extent in Committee, are widely recognised. They can include motivating employees to become more productive, helping to align employees' interests with those of shareholders, remunerating employees in a tax-efficient way, increasing loyalty and reducing staff turnover. Of course, employee share schemes cannot do that on their own. They have to be part of a wider approach to good industrial relations. Employee shares will not be welcomed if they are felt to be a sop, to be at the expense of pay or a substitute for the usual channels of interaction between management, unions and staff.

However, given the more generalised benefits of such schemes and the very significant efforts made by current employees to implement the modernisation programme within Royal Mail, it seems appropriate to reward that effort by making available an increased proportion of the company for an employee share scheme. Carole Leslie of the Employee Ownership Association spoke of the benefits of such a scheme in evidence to the Public Bill Committee in another place. She said:

"The benefits for the Royal Mail in considering employee ownership would be giving employees who work in that organisation a real stake in the company, a real interest in delivering an excellent service to the customers and service users, finding ... the

4 May 2011 : Column 518

right way to solve problems. They look at it not as something that is done to them, but as something they own and have a bit of control and influence over. They also have the information to use that influence wisely. A huge benefit is what I see".-[Official Report, Commons, Postal Services Bill Committee, 9/11/10; col. 76.]

If we accept the principle of employee shares, we are still short of detail. The Government have said that there will be a scheme but they have not said exactly what it will be. Having said that, we welcome two important concessions that the Government have made. First, we have pressed for greater detail about the scheme and are therefore pleased that the Government have brought forward an amendment so that, before the disposal of Royal Mail takes place, there will be a report to Parliament setting out the detail of the proposals for an employee share scheme.

Secondly, in Committee we pointed out that the Bill as it stands requires employee shares to be offered only when the last Crown share in Royal Mail has been sold. We argued the case for a trigger that kicks in when the first shares are sold. I think I heard the Minister suggest that that might indeed be acceptable to the Government, in which case we welcome that as well. However, whenever it is, we think that the Government should make some employee shares available when the first disposal is made.

The amendment proposes that shares should be held in trust for the benefit of employees, as we think that that is the right way to settle this matter. We now understand that this would be difficult for some employees to accept, as they would expect to be able to cash in the shares if they were taking them up, but we do not think that that is the right way forward to build in long-term value in the company. We believe that, for example, on leaving employment, shares held by employees should be disposed of only by way of transfer for consideration through the trust. It is obviously fair that employees who leave employment and leave a scheme should be able to capitalise on their shareholding, particularly if there has been capital growth. That is a scheme incentive. However, to maintain the integrity of the scheme as a whole, the disposals should go back into the scheme.

The amendment also calls for representation on the board for the employee share scheme once it is established. I have already made the arguments in favour of generalised employee representation but I think that they acquire additional merit when it is seen that some 15 per cent, we hope-but certainly 10 per cent under the Government's proposals-of the shares will be available to be held by the employees of Royal Mail. This means that they should as of right have a chance to have a collective voice at the highest level, and we think that that should be stated in the Bill. I beg to move.

Lord Razzall: My Lords, having sat through what I would describe as "Lord Mandelson's Bill" under the previous Government, I am absolutely delighted at the Labour Party's conversion on the road to Damascus regarding their commitment to employee participation here. The noble Baroness would not be surprised if I indicated that, were the Government minded to go from 10 to 15 per cent, I could not be more delighted. However, whether she can persuade the Treasury of that, I have my doubts.

4 May 2011 : Column 519

Lord Brooke of Alverthorpe: My Lords, I support my noble friend Lord Stevenson. I do not think that there has been any conversion on the part of the Labour Party. I was an employee when NATS was a PPP. I was an employee share representative acting on behalf of the employees and I was a partnership director. It is true that the employees had 5 per cent of the shares, which is less than what is on offer at the moment, but the Labour Government's policy was to try to develop more employee involvement than there had been in the past. I suspect that, had they stayed the course with the previous Bill, we might have seen the emergence of something like that. There were certainly plenty of private discussions about the possibilities. Indeed, prior to the Bill being presented, some of us had conversations with Royal Mail about the prospects of creating a trust for employee shares, and we tried to be quite innovative in our approach. Some of us identified that one of the major issues facing postal employees was problems over home ownership. If we created employee shares within the company, while those shares would not be on the open market but would be kept within the trust, why could an arrangement not be created whereby the share ownership was offset against support from building societies to assist employees in purchasing or part-purchasing their homes? Royal Mail looked into that at one stage. Therefore, I welcome what the Government are trying to do. Perhaps the Minister, with all her powers of persuasion, can get round the Treasury and convince it that it should move from 10 to 15 per cent.

It has been pointed out to me that this offer is the biggest ever to be made during the course of a privatisation. I believe that if we check the records to see what happened with the bus industry, where deregulation and privatisation took place on a great scale around the country, we will find that many employees and managers had the opportunity to purchase shares in many of the bus companies in the country. Indeed, in some instances, they took them over 100 per cent, some of them also being put into trusts and some into ESOPs. Therefore, I believe that there is a precedent for offering a level of ownership higher than 10 per cent. I suggest that the Minister has a look at the bus industry if she needs some supporting evidence for her arguments in persuading the Treasury to go beyond the 10 per cent offer.

Secondly, I believe that there should be a trust, although I shall not repeat all the arguments that have been made before. There is a natural temptation for some people to get their hands on the shares and perhaps to dispose of them fairly quickly, as we have seen happen in several privatisations, but I believe that a trust provides a means for an employee to be more permanently committed to the company and to the welfare and profitability of the company in the long term. I hope that the Government will come forward with proposals on a trust.

Thirdly, that leads me to the final point made by my noble friend Lord Stevenson concerning representation on the board. I hope that shares will be issued on the basis of equality, regardless of people's grades within the company, so that the managing director will get no more shares than a postal worker. Equally, I hope that, if there are instances in which votes have to take

4 May 2011 : Column 520

place within the trust, each vote will carry the same weight and value. In particular, an opportunity should be created-probably for the first time; certainly my Government did not do it-for there to be an employee director on the company that would be created under the privatisation proposals to represent the interests of the employees' shares.

This is a chance for the Government to be progressive and to effect some changes in a new way. I see that on 7 June Mr Francis Maude is to speak to a gathering on employee ownership in the Strangers' Dining Room in the other place. Perhaps he will float what the Government have in mind regarding further changes in the nature of ownership within the public service, with a greater push for employees to have a greater stake in the ventures in which they are involved. This could be linked up with what is happening in Royal Mail.

The Deputy Speaker (Lord Brougham and Vaux): My Lords, I should have announced that, if this amendment is agreed to, I cannot call Amendment 17 due to pre-emption.

7.30 pm

Lord De Mauley: My Lords, I again say that I am grateful to noble Lords on the opposition Front Bench who agree with us on the establishment of an employee share scheme. I think that we all agree that this is a key feature of the Bill and will help improve employee engagement and the culture of the company.

However, we should not lose sight of the fact that the overriding purpose of the Bill is to safeguard the universal service and secure the future of Royal Mail. A key means of doing that is enabling the introduction of private capital. In a previous debate, the noble Lord, Lord Tunnicliffe, stated that the Government should strike the right balance between employee shares and attracting private capital. He also said that we should learn lessons from previous privatisations. Yet, through their Amendments 16 and 17, noble Lords seem to suggest that we have not gone far enough.

So let me put in context the commitment we are already making through Clause 3. The minimum 10 per cent share requirement in this Bill is the largest statutory employee share scheme of any major privatisation. There is no doubt that it is a meaningful share, but one which, in our judgment, will not harm our ability to attract private capital. As I have said previously, most major privatisations did not even refer to employee shares in their respective Bills. Furthermore, the eventual share schemes in those past privatisations offered generally smaller stakes-5 per cent in the case of BT and British Gas and less than that for the other utilities of electricity and water. Only Rolls-Royce and BA came close, at 10 per cent and 9.5 per cent respectively, but I reiterate that we are committed to at least 10 per cent. The noble Lord, Lord Brooke, referred to the bus companies. We of course looked at them, but they were generally very much smaller companies. We consider that a stake of at least 10 per cent already strikes the right balance between a meaningful stake and attracting private capital.

Amendment 16 would also require that the shares be allocated to employees on a pro-rated basis in line with the reduction of the Government's shareholding.

4 May 2011 : Column 521

The Bill already allows for that and, as the noble Lord, Lord Stevenson, mentioned, the Government have committed to place shares into the scheme simultaneously with the first sale of its shares.

In Amendment 18, noble Lords have sought to specify the design of the scheme such that it is structured as a share trust. As I said during our debate in Committee on a similar amendment in the name of the noble Baroness, Lady Dean-ably spoken to by the noble Lord, Lord Brooke of Alverthorpe, in her absence-an employee share trust certainly has its attractions, particularly its ability to deliver the Government's objective to ensure a long-standing employee stake in Royal Mail. The Minister for Postal Services, too, has been clear that he sees many attractions to establishing such a trust. However, it is important to keep options open on the design of the scheme at this stage. Individual share ownership also has its merits, giving employees a very real sense of ownership through their share certificates.

The design of the scheme will in part depend on the type of sale we undertake. For example, individual share ownership could be appropriate if Royal Mail were floated on a stock market. There are circumstances where it could also make sense to have some combination of a trust and individually held shares. The noble Lord, Lord Tunnicliffe, suggested in our debates in Committee that perhaps some shares could be used for training or bursaries. Again, there could be merits in such ideas. However, until we have reached a firm decision on the form of a transaction, it would be unwise to set in stone the form of the employee share scheme. However, I remind your Lordships that government Amendment 6, which we debated a little while ago and your Lordships accepted, requiring us to give details of the scheme when we put shares into it for the first time, will provide the House with further assurance about its proposed design at the appropriate time.

Finally, Amendment 18 returns to the issue of having an employee representative on the board. As my noble friend said when responding to Amendment 10, while the idea may well have some merits, it is for Royal Mail and its shareholders to determine whether the board should include an employee representative. Thanks to this Bill, Royal Mail's shareholders will of course include its employees in the future.

The future ownership of Royal Mail, by both private investors and its employees, inextricably links them. Within the important boundaries set by Clause 3, the exact size and form of the scheme should therefore be informed by the type of transaction and the circumstances at the time of sale. I ask noble Lords to accept that it is imperative that we keep our options open. I therefore ask them not to press their respective amendments.

Lord Stevenson of Balmacara: My Lords, I thank the noble Lord, Lord Razzall, for his support for the amendment, and my noble friend Lord Brooke for sharing again his experience of working in this operation. We can laugh about it even if we cannot always agree on the absolute detail of what the figures mean. My noble friend Lord Brooke said that this was an opportunity for the Government to show themselves to be progressive

4 May 2011 : Column 522

in these matters, a theme which has run through most of our debate today. I am grateful to have had confirmation that the Government feel that the employee share scheme should be pushed forward and supported. We are pleased to have had confirmation that shares will be available from the first tranche.

The Minister said that the Government were minded to go for a trust but were not quite sure. There will be a point where they have to come down on one side of the fence or the other. We can see the argument for keeping options open-we are not so daft as not to-but what the purchaser is going to get needs to be clear. I would have thought that any purchaser who wanted to put a very large stake into Royal Mail would want to know that it is a well run and productive corporation and will do the job in which they are investing. That must require them to have good employee relationships, and we have argued-I think that the Minister agrees-that there is a case for ensuring that the employees' involvement is proper, appropriate and at the level which will mean that we will get a well run and productive firm.

We have argued for greater than 10 per cent-I got a sense of some support from the noble Lord, Lord Razzall, on that. I do not think that the Minister is minded to go that way and he produced a long list of previous privatisations. But it is the future. Why not boldly go where others have not gone and take it up to 15 per cent, and then reflect on that? However, I shall withdraw the amendment.

Amendment 16 withdrawn.

Amendments 17 and 18 not moved.

Consideration on Report adjourned until not before 8.37 pm.

Middle East Peace Process

Question for Short Debate

7.37 pm

Asked By Baroness Tonge

Baroness Tonge: My Lords, I was going to apologise this evening for drawing your Lordships' minds away from the tumultuous events in the Middle East, the dubious NATO campaign in Libya and the capture and assassination of Osama bin Laden, but I shall not in view of other developments over these past few days. This debate is very timely.

I want to make an appeal that we all remember the Palestinians and the injustice that has been meted out to them since 1948. It is an injustice which lies at the very heart of Arab Muslim angst against the West and which has allowed one country, Israel, supported by the USA and the European Union, consistently to break international law since 1948, when it was decided that the Palestinians would pay the price of the Holocaust even if they had had nothing to do with it.

4 May 2011 : Column 523

Let us remind ourselves quickly of the facts on the ground. The wall or security barrier has been built between Israel and the West Bank. Fair enough, I would say. I witnessed during the second intifada the sheer terror of Israeli citizens as they experienced the suicide bombers-the al-Aqsa martyrs as they were then-encouraged and supported by Fatah. Let us remember that Fatah is now Israel's chosen partner for negotiations. The barrier was quite understandable, but what was outrageous was that the course of that barrier grabbed a huge amount of land and water in the West Bank from Palestinian farmers and families.

Palestinians have difficulty accessing healthcare and education, and humiliation continues daily at the check-points. The settlements go on expanding despite exhortations from the international community and repeated criticism from this Government. Farmers are attacked, crops are ruined and children are brutalised and imprisoned. Nowhere is this better demonstrated than at al-Walaja near Bethlehem. The town and its people are being strangled. I have no time to give noble Lords the details, but I hope that the Minister will comment on what is happening.

In Gaza, little has changed. Food is scarce if you are poor, as most Gazans are. Together with the terror of constant overflying and sonic bombing, and the poor education that the children are getting, the international community, by its inaction, is allowing a whole generation of children to grow up malnourished, undereducated and deeply traumatised by the actions of their neighbour, Israel. A more recent development is the targeting of children by snipers as they attempt to collect gravel for building purposes, because building materials are not allowed in. Gaza is an academy for the terrorists of the future: I cannot repeat this often enough.

We must not forget, in this overview of the situation, the plight of Israeli Arabs and Palestinians living in Israel, who are subjected to an apartheid-like regime of control and lack of freedom, let alone the 7,000 to 8,000 prisoners languishing in Israeli jails. Will the Minister update us on the humanitarian situation in Gaza and the West Bank, and on what the Government intend to do about it?

There have been great changes recently in the situation. In March, after a meeting with Mahmoud Abbas, the Foreign Secretary said:

"The Peace Process must not be allowed to become a casualty of uncertainty in the region. It is too important to be allowed ... to falter".

He said that a big hindrance to any negotiations taking place was the divisions between Fatah and Hamas. He also cited the problems of the settlements, East Jerusalem and Gaza. William Hague looked forward to the upgrading to mission status of the Palestinian delegation to the UK, but did not comment on the fact that, a month earlier, the USA had vetoed a UN Security Council resolution condemning the settlements, even though it used the same words that Hillary Clinton used a year before when the USA called for an end to settlement expansion. Is this yet more evidence of the power of the Israel lobby in the United States?

The Palestinians have made progress and, thanks to the good offices of the new Egyptian Government, and Mr Al-Arabi in particular, a reconciliation has

4 May 2011 : Column 524

been brokered between Hamas and Fatah, and promises have been made by Egypt to open up the Egypt-Gaza border crossing at Rafah. Mr Al-Arabi is a very distinguished man and a former judge at the International Court of Justice. He is to be applauded for his efforts and I hope that we will encourage him in every way possible.

The Israeli Government, predictably, has said that Fatah must chose between Israel and Hamas. They always produce another hurdle when one is removed, and never miss an opportunity to miss an opportunity. They have also decided to withhold taxes worth $56 million that they have collected on behalf of the Palestinian Authority on the grounds that the money may be used by Hamas to buy arms. Mr Al-Arabi has made it clear, as have the negotiators in Cairo, that a unity Government composed of independents and technocrats from the West Bank and Gaza will run the Palestinian Authority until elections have taken place. It will not be run by Fatah or Hamas. Israel must be told that this could be its last chance to get a two-state solution. A huge opportunity was missed after the Palestinian elections in 2006, when we refused to give the Palestinian people the Government they wanted after a monitored, free and fair democratic process.

Israel's fear of Hamas is based on the old Hamas charter, which is a relic, and on the fact that neither Israel's leaders nor ours have ever bothered to talk to Hamas leaders. On numerous occasions I and other parliamentarians have been assured by Hamas leaders, in particular Khaled Meshaal, that they will accept a two-state solution based on the 1967 borders, and will maintain a truce. However, things are getting more difficult. The rockets fired recently were from dissident groups in Gaza, which get more numerous and better supported as Hamas is seen not to be able to make progress in its negotiations with Israel.

Finally, Israel has been indulged for too long in the interests of American foreign policy as well as its own. The rights of Palestinians under international law have been ignored, and much suffering and injustice have been endured. International law was not mentioned in the 2003 road map, which was meant to provide a framework for negotiations. The International Court of Justice ruling on the separation barrier was ignored, and President Obama, after he took office, ignored completely international law in his speech in Cairo on Israel and Palestine. Why?

International law is for everyone. It is for Israel, Palestine, Bahrain, Syria, the European Union-and even the United States of America. If we continue to apply it selectively, there will be no future for Israel, and the world order will ultimately collapse. I implore the Minister to tell the House that we will bring pressure to bear on Israel to co-operate with Egypt and the Palestinian negotiators in Cairo. We must not miss the great opportunity of the Arab spring-however difficult it is, and however many road blocks are put in the way-to bring justice also, at last, to the Palestinians.

Baroness Northover: My Lords, I gently remind noble Lords, before we move into the main part of the debate, that it is time limited and that when noble Lords see two minutes on the clock, their time is up.

4 May 2011 : Column 525

7.46 pm

Lord Dobbs: My Lords, I thank the noble Baroness for introducing this very important debate. I remind the House that peace is a puzzle of many parts, and in the Middle East one of the important parts is Pakistan. It is a country in great crisis. It also has an arsenal of nuclear weapons. The price we would pay for the failure of Pakistan would be devastating. It would destroy the prospects for peace in Afghanistan and infect the entire Middle East. That failure would almost certainly be lived out also on the streets of this country. It could put in the hands of extremists like bin Laden the most terrible weapons of destruction.

It is very easy to lay blame. Did Pakistanis know that bin Laden was hiding there? Of course some of them did, but it would be folly to kick over the entire barrel simply because some of the apples are rotten. Perhaps it is scarcely surprising to see the media sneering, but I was desperately disappointed to hear the CIA director, Leon Panetta, publicly proclaiming that Pakistan could not be trusted over bin Laden. In one broad, sweeping, trite statement, he humiliated them all. It is precisely that sort of insensitivity that could push Pakistan into the abyss.

The country needs help, not humiliation. A stable Pakistan is a precondition for a wider peace. We in Britain have a unique role to play. Our ties are abundant. We have educated their politicians, trained their officers-and one day we might even beat them at cricket. Britain needs to be the sort of good and patient friend to Pakistan that only we can be. Restoring stability will not be easy. It will not be completed in one year, or probably even in 10; but the prize is worth every effort, because if we fail, the alternative is not just a subcontinent but an entire Middle East in nuclear chaos.

7.49 pm

Lord Anderson of Swansea: My Lords, I will make four points. First, the prospect six months ago of achieving peace in the Middle East through the peace process appeared very bleak. Progress made by Prime Minister Olmert and President Abbas in 2008 was reversed by the new right-wing coalition led by Prime Minister Netanyahu, who could plausibly point to the fact that there was no negotiating partner on the other side who could deliver, and to the increasingly sophisticated rocketry passed by Iran to Hezbollah and Hamas. Again the hopes raised by President Obama's Cairo speech were dashed, and most commentators at the time were confidently predicting the renewal of armed conflict.

Secondly, much remains unchanged, but there are now flickers of a positive movement both in the Palestinian economy and in their security services. The Arab spring has weakened the rejectionist Syria, and the new Egyptian initiative today unites the Palestinian factions. It would be helpful to have the Government's analysis of the significance of this. However, the way in which Hamas is mourning the death of bin Laden is surely not helpful.

New factors put Israel on the defensive; Egypt will shortly open its borders with Gaza, and a Government responsive to their people in Egypt might in fact repudiate the 1979 treaty with Israel. Again, the Palestinian

4 May 2011 : Column 526

Authority will press the United Nations General Assembly in September for recognition. There will be much international support, and this Government will have to have a clear position by that time.

Finally, the status quo is no longer tenable. Friends of Israel should urge Prime Minister Netanyahu to respond positively to the new challenges. Time is not on their side. One hopes that the challenge today of President Abbas-choose settlements or peace-will be answered positively.

7.51 pm

Lord Alderdice: My Lords, the strategy that has been adopted for some time-isolating Hamas in Gaza-seems no longer tenable. As many of us have advised, it was not a long-term option. In the case of Egypt itself, the Arab spring has meant that instead of standing in the way of an accommodation between Fatah and Hamas, Egypt has within weeks facilitated it. It has also, as the noble Lord, Lord Anderson, indicated, pledged to open the borders. This in practice makes the siege of Gaza impossible to sustain. However, while we might focus on others in the few minutes available to us for this debate, I should like to put to the Minister the question of how Her Majesty's Government will respond to two developments.

The first development is the move towards a Palestinian Government who are more inclusive and supported by Fatah and Hamas. Will Her Majesty's Government engage with that new Palestinian Government, or will they do what they have done in the past, and what they did after the Mecca agreement, and avoid engagement because of the support or participation of Hamas?

Secondly, in the event-as seems extremely likely, as the noble Lord, Lord Anderson, said-that the United Nations General Assembly approves a Palestinian state on the 1967 borders, albeit a relatively virtual one, what will be the approach of the United Kingdom Government? Will we support such an application? If it is approved by the General Assembly regardless of whether we support it, what will be the attitude? This is not, of course, a question only for us or the United States. If Hamas is part of a UN-approved Palestine, what will be its reaction to a UN-approved Israel? Everyone is put under pressure to recognise each other. However, I would appreciate the Minister's response on those two questions.

7.53 pm

Lord Weidenfeld: My Lords, I am afraid that the two-minute speaking limit prevents me arguing certain basic facts with the noble Baroness, having myself been involved for over 60 years with Israel. There are many facts concerning even its creation which I should very much like an opportunity to discuss here at greater length.

I think that the Arab spring is a mixed blessing. On the one hand it has given fresh hopes; on the other, the symbolism of Tahrir Square has also meant assault and savagery against a hopeless American woman. I think that the important thing now is the attitude of the reunited two forces, Hamas and Fatah. If Prime Minister Abbas, whose Administration has a great

4 May 2011 : Column 527

record of economic improvement and recovery, were willing to prove to the whole world that Hamas is unmistakably and irrevocably prepared to accept the existence of the state of Israel and of two adjacent states, an Arab state of Palestine and a Jewish state of Israel-and, indeed, if Hamas itself would endorse that-then I think that the road is open for negotiations.

I had the opportunity in recent weeks to be in Israel and to speak to leaders of the Government, the opposition and other people of importance and influence in the country, and I can tell your Lordships that there is considerable desire for true peace along the lines of two countries, Arab Palestine and Jewish Israel. However, Hamas has to submit to the supreme test-that it is unmistakeably and irrevocably agreeable to the existence of Israel. Nothing else would suffice or enable a negotiation to start.

I also believe that in the shadow of the death of the greatest terrorist of all time, we will all have to be watchful. The fanatical followers of bin Laden will try to wreak revenge. We therefore need to have an iron will, patience and understanding, and still not falter in our desire to have peace.

Finally, I believe that the unilateral recognition of a state of Palestine is a disastrous move that would aggravate the issue unless it were immediately preceded by efforts to get the parties to the table. I know that responsible European leaders are using their influence in every way to prevent this proposal coming before the United Nations, and certainly not before the Security Council.

I believe that we should all now be working together under the leadership of the United States, reinvigorated as it now is by the success against bin Laden; try to see the position fairly; and bring the parties together on the basis of total and unconditional mutual recognition.

7.57 pm

Lord Dubs: My Lords, I recently visited the West Bank; it was my first time there. Of course any solution must acquire security for Israel, but also dignity, self-respect and justice for the Palestinians.

As part of the visit I went to see the Israeli military courts in Ofer. I believe that the way in which these courts operate is an obstacle to achieving a just peace in the region. We went to see how children are treated by this system of military justice. Approximately 700 Palestinian children are prosecuted every year in these courts, and at the end of January this year some 222 were in jail. In the court we visited we saw a 14 year-old and a 15-year-old, one of them in tears, both looking absolutely bewildered. What shocked me as much as anything was to see that these young persons-children-had chains or shackles around their ankles while sitting in court. They were also handcuffed as they went into court. Although the handcuffs were taken off while they were in court, they were put on again as they left the court.

When being interogated these young people do not have the security of video recordings, lawyers or parents present. In fact, if parents want to visit, their permission might take 60 days to come through, by which time the young person might have served his or her sentence.

4 May 2011 : Column 528

The court proceedings are in Hebrew, with translations of a doubtful quality. The verdicts are mostly based on uncorroborated confession evidence. The evidence against one young person that we saw was of throwing stones at an Israeli armoured vehicle, for which he is likely to get 60 days in custody.

I do not believe that this process of humiliation represents justice. I believe that the way in which these young people are treated is in itself an obstacle to the achievement by Israel of a peaceful relationship with the Palestinian people. I think that the Israelis should apply proper standards of human rights to the way in which they treat them.

7.59 pm

Lord Hannay of Chiswick: My Lords, I raise three questions, and I hope that the Minister can respond to them.

The first is whether this is the moment at which we should be trying to revive the peace process, or should we be-as the Israeli Government would wish us to-sitting back, waiting for the dust to settle, doing nothing hasty, and making no innovations? I am sad to have to say that I think that the second choice is disastrous. I hope we will explain to our Israeli friends that we think it is disastrous because the new regimes that are emerging in Arab countries will be more sensitive to public opinion and will be open to radicalisation, and if there is no process to engage with we can be quite sure what will happen. We will drift towards confrontation and perhaps even hostilities. I believe in everything that the Minister and her colleagues have said in recent weeks, and I hope that they share this view and will be active in trying to revive the process.

Secondly, how is the vacuum in the peace process best filled? I do not think we can hope that Israel or the Palestinians will fill it spontaneously. In those circumstances, I feel that it is important to argue with the United States that it, together with the quartet, should put some kind of outline down on the table and test the views of the parties to that outline. It need not be anything particularly ambitious. It could be within the parameters of the Clinton negotiations at the White House and the subsequent Taba negotiations, but we need some substance on the table, otherwise the thing will just go round in circles.

Thirdly, who should we, Britain, and our European allies be talking to? I believe we should be talking to everyone, and that includes Hamas. We must surely now make a distinction between talking to everyone and negotiating. That is the essence of diplomacy. We should not negotiate with anyone, including Hamas, who does not desist from violence and does not accept the Arab peace initiative, but we should talk to everyone because we will have something to say if an outline is put on the table, and preserving the old system of boycotting Hamas completely will be counterproductive.

I hope that we can hear a response from the Government on those three points. We are at an important moment, and I hope that we will turn it into an opportunity, not another entry in the long catalogue of missed opportunities.

4 May 2011 : Column 529

8.02 pm

Lord Palmer of Childs Hill: My Lords, I think it is worth restating that, quite rightly, the coalition Government's, and I hope most people's, policy is for a two-state solution. To carry this forward, all sides have to put the past behind them, however unpleasant-and much of it is unpleasant-and concentrate: first, on understanding that Israel's natural priority is its own security; secondly, on ensuring that Israel understands that settlements, other than the large towns grouped near the 1967 border, will eventually need to go, just as Israel moved all its settlements out of Gaza; and, thirdly-these all go together-understanding that Hamas needs to accept, albeit reluctantly, the state of Israel permanently and that no longer will rockets pour down on Israeli towns such as Ashkelon and Sderot.

Progress has been made between Israel and the Palestinian Authority. However, the Fatah-Hamas agreement does raise real difficulties and challenges. The noble Lord, Lord Anderson, referred to this, and I shall give greater detail. Ismail Haniya, the leader of Hamas in Gaza, said about Osama bin Laden:

"We condemn the assassination and the killing of an Arab holy warrior".

The Times, which is not noted as a pro-Israel newspaper, carried an interesting editorial on 29 April. It stated:

"Hamas ... promotes its own concept of peace, founded on the Islamic concept of hudna, or an extended ceasefire. Yet it seeks an Islamic state from the Jordan to the Mediterranean, promulgates The Protocols of the Learned Elders of Zion, launches rocket attacks against Israeli civilians, and has received money and arms from Iran".

So my question to the Minister is: how does this affect the securing of an eventual settlement that, as the Times put it,

I firmly believe that this is the way to create a stable Palestine alongside a secure state of Israel. Both sides have to sit down at the negotiation table, put the past behind them and look towards the future. This Question is about the "assessment ... of progress". That is the future.

8.04 pm

The Earl of Sandwich: My Lords, today's meeting in Cairo provides some hope of reviving the peace process, but we cannot count on it while Mr Netanyahu is in charge of Israel. Our Prime Minister has described Gaza as a prison camp. Conditions there have deteriorated. Far from withdrawing, Israel has in fact tightened its grip, and IDF restrictions have made life for Palestinians almost intolerable. There are innumerable stories of people unable to get even proper medical help.

One aspect of present policies is the trauma and psychological damage done to young children in the West Bank and Gaza. The poorest Palestinian children include those who have suffered from conflict, street violence and the worst kinds of abuse. One admirable service in Jerusalem is the Spafford Children's Center, which provides counselling and speech therapy to children who would otherwise drop out of the school system. Arts therapy and cultural alternatives to violence have been highly effective in relieving post-traumatic

4 May 2011 : Column 530

stress disorders. The centre's work now also extends beyond the city and the separation wall through outreach clinics, but it now takes hours for Palestinian health workers and students even to get from Bethlehem to Jerusalem, let alone to obtain visas to train abroad. What are Her Majesty's Government doing to convince Israel that freedom of movement is essential for this kind of work? Are they urging Israel to ease the blockade? Finally, will the EU have to pick up the pieces if Israel suspends payments to the Palestinian Authority?

8.06 pm

Lord Sheikh: My Lords, I care about humanitarian issues, and I have been involved in facilitating two convoys of humanitarian aid being sent to Gaza through the Rafah crossing. I have also visited Gaza with the consent of those on my Front Bench and the Conservative Party. I, along with three other British parliamentarians, visited Israel and the West Bank last month. While in Ramallah, we had a meeting with Prime Minister Salam Fayyad of the West Bank. During our meeting, the Prime Minister said that if and when the Palestinians get full independence, the half a million Israelis would be welcome to stay in the West Bank. We also spent the best part of a day with an Israeli army officer and high officials in the Israeli Foreign Office to hear the Israelis' point of view. I have therefore visited Gaza, Israel and the West Bank and have first-hand knowledge of the various issues.

In regard to Fatah and Hamas, the leaders of both groups have today signed a reconciliation pact in Cairo aimed at ending their four-year rift. The agreement paves the way for a joint interim Government and fixes a date for general elections next year. The Palestinians are aiming for a declaration of statehood in September, and I very much hope that all parties involved in the dispute will have something positive to say before the declaration. I think that the peace plan submitted last month, whose signatories included two former leaders of the Israeli intelligence agency, Shin Bet, a former chief of Mossad and a former chief of the Israeli defence forces, needs to be considered. Israel is a mighty military power, but it must be magnanimous and arrive at a two-state solution whereby it has a guarantee of security and nationhood, but in return it must ensure that Arabs are fairly treated and have full independence. To achieve this, we need active participation and help not only from the two countries involved but from the United States, the European Union and, of course, other members of the quartet.

8.08 pm

Lord Judd: My Lords, I am particularly glad that the noble Baroness, Lady Tonge, the noble Earl, Lord Sandwich, and my noble friend Lord Dubs mentioned children in this debate. The plight of children is deeply disturbing. The condition in which children in particular are being held in prison in both parts of Palestine is an affront to any decent humanitarian standards, but it is also totally inexplicable in terms of peacebuilding because of the bitterness it must engender in the young.

4 May 2011 : Column 531

The coming together of Hamas and Fatah certainly provides a great opportunity, but I would like reassurance from the Minister that the Government are totally convinced that if a success is to be made of this opportunity, the process, as well as the solution, in making peace must be owned by the parties themselves. It has to be inclusive and preconditions have to be kept to a minimum. The point about peacebuilding is that you build commitment in the context of the process. Insisting on too many preconditions before the process begins prevents the process getting under way. That is the whole challenge of a peace process.

Finally, I believe that the outside world, including the United States-I would like an assurance from the Minister that this is the Government's position-must realise that it cannot impose or manage a solution here. As I have said, that solution has to be built by the parties. There is a difference between facilitating, which we should all seek to do, and trying to impose or manage, which we must try not to do, because the solution will be the solution of the people themselves.

8.10 pm

Lord Pannick: My Lords, the noble Baroness, Lady Tonge, says that we must not miss this opportunity to advance the peace process. But progress depends on repudiating the noble Baroness's thesis that Israel and what she describes as the Israel lobby are solely responsible for barriers to peace. Progress essentially depends on a recognition of the interests, the concerns and the mistakes of both sides.

Baroness Tonge: My Lords-

Lord Pannick: I will not give way. I have only two minutes.

The unfortunate Palestinian people continue to be denied freedom of expression and an independent judiciary. It is therefore very difficult for leaders to emerge who are able to say clearly to their own people what needs to be said. What needs to be said is, "It is in your interests to abandon the futile attempt to destroy the state of Israel. Let us concentrate on education, prosperity and the development of a civil society of our own". That, more than anything, would give confidence to the leaders and the people of the state of Israel that a peace settlement can be achieved which is a lasting solution to an extremely difficult problem so that security walls, blockades and military courts are no longer needed.

8.12 pm

Lord Sacks: My Lords, I welcome this debate because it allows us to focus on both words of the phrase "peace process". We who pray for peace understand by that word a state in which I recognise your right to exist and you recognise mine. That is what peace minimally means. How can we be speaking about peace when Hamas remains committed as a matter of principle to the elimination of the state of Israel; when it engages in missile attacks against innocent civilians and uses its own innocent civilians as human shields; when it propagates some of the most vicious anti-Semitic

4 May 2011 : Column 532

myths ever to have inflamed the hatred and to have anaesthetised the conscience of human beings, and two days ago praised Osama bin Laden as a holy warrior; and when it refuses to agree to the fundamental principles laid down by the quartet, not least of which is the recognition of Israel's right to exist? Until Hamas undergoes fundamental change, there may be a process but there will not be peace. Peace is more than a resting place on the road to war. I cannot make peace with one who denies my right to exist.

No one familiar with the history of the Jewish people through its 4,000 years of history can fail to appreciate how deeply Jews within Israel and outside long for peace, pray for peace and long for the ability to live as other people live-without fear, without hate, without being treated as a pariah, without being blamed for the troubles of the world and without being denied the right to exist. That is why I urge the Government to be resolute in their insistence that the path to peace in the Middle East must begin with the unequivocal recognition of the state of Israel's right to be.

8.15 pm

Lord Triesman: My Lords, given the time that I have, I am going to have to restate a position. The conditions for peace require a major development in good faith on all sides. Good faith in the pursuit of peace imposes a clear duty. Any progress cannot be destroyed by either party by taking steps or striking positions which they know in advance are abhorrent to the other.

The quartet, which we support, has set out what must be pursued actively, in good faith and in a climate of restraint. Israel should desist from expansion, from building illegally on Palestinian land and from making it ever less possible to create a viable Palestinian state. The question inevitably will arise about the sincerity of a desire for a two-state solution when that two-state solution becomes more difficult by the day in the financial, economic and other arrangements.

An equally plain and equally great impediment is the routine and continuous firing of sophisticated rockets and other munitions into Israel, which undermines confidence among ordinary people that a peaceful solution is possible. The refusal to recognise the right to exist of the Israeli state, not least by Hamas-whatever the noble Baroness may have said at the beginning-speaks to a long-term resistance to peace and that cannot be ignored. In terms of recognition, we also welcome the extension of the diplomatic status of Palestinian entities.

Two viable states, respect for life, respect for law including international law, and recognition of legitimate states and their right to exist are the foundations of what will strike an honourable peace.

8.17 pm

Baroness Verma: My Lords, first, I thank my noble friend Lady Tonge for allowing us to have this debate which is so crucial at this time. I should also like to thank all noble Lords for the measured way in which this debate has been approached, considering the circumstances in which we find ourselves.

4 May 2011 : Column 533

We are seeing unprecedented change across the Middle East combining immense potential for greater democracy with the risk of instability and violence. Both the Prime Minister and the Foreign Secretary have made it clear that the peace process cannot become a casualty of regional uncertainty. This Government are working with international partners-the US and the E3-to get the Israelis and Palestinians to return to direct negotiations as soon as possible.

The negotiations should be based on a two-state solution on the basis of clear parameters. As noble Lords know, these parameters are: an agreement on the borders of the two states, based on the 1967 lines with equivalent land swaps agreed between the parties; security arrangements that, for Palestinians, respect their sovereignty and show that the occupation is over and, for Israelis, protect their security, prevent the resurgence of terrorism and deal effectively with new and emerging threats; a just, fair and agreed solution to the refugee question; and fulfilment of the aspirations of both parties for Jerusalem. A way must be found through negotiations to resolve the status of Jerusalem as the future capital of both states.

Both the Israelis and the Palestinians must be determined to enter into meaningful negotiations. We look to both parties to return to negotiations as soon as possible on the basis of the clear parameters I have outlined. Our goal remains an agreement on all final status issues. We will contribute to achieving this goal in any and every way that we can. Noble Lords have raised important questions and crucial points, many of which I am sure will be raised this evening when the Prime Minister meets with the Prime Minister of Israel.

I will now respond to some of those points and questions, but I hope I will be forgiven if I cannot answer all of them. I undertake to write to noble Lords and have copies placed in the Library.

The noble Baroness, Lady Tonge, asked about the expansion of settlements, especially at al-Walaja. We are aware of this and the Parliamentary Under-Secretary of State for Foreign Affairs visited the settlement in January during his visit to Israel and the Occupied Territories. Our view is that all settlement activity in the occupied Palestinian territories is illegal and an obstacle to peace, and therefore we will raise this issue with the Prime Minister of Israel again.

We remain concerned about the prevailing situation in Gaza, although some welcome progress has been made on the humanitarian aid side, the move from a white to a black list, and the increased volume of imports. But a fundamental change is needed to achieve pre-2007 levels of exports as soon as possible, along with improved co-operation with the United Nations and the NGOs. The recent Israeli measures to facilitate exports out of Gaza are welcome, but they need to be made swiftly and implemented quickly. This means action on the ground. It is also vital that Israel should allow Gaza to import the raw materials necessary for manufacturing exports. We are discussing with Israel, the EU and the UN how we and others in the international community can help to move the issue forward. We continue to encourage the Government of Israel to enable Gaza exports this year to attain the levels of

4 May 2011 : Column 534

2007. The British Government believe that a strong economy in the Occupied Territories is key to promoting peace, stability and prosperity.

The noble Baroness also spoke of Hamas, as did a number of other noble Lords. Our policy on Hamas is clear. The quartet has set out clearly that Hamas must renounce violence, recognise Israel and accept previously signed agreements. Hamas must make credible movements towards these conditions, which remain the benchmark against which its intentions should be judged. The clear focus for now must be on a return to direct negotiations between Israel and Palestine as soon as possible.

The noble Lord, Lord Anderson of Swansea, asked about the United Nations General Assembly in September. Our focus remains on getting the parties back to the negotiations as the best way to achieve a two-state solution, but as we approach September, we are all clearly going to be faced with some very difficult choices which we are currently considering.

The noble Lords, Lord Anderson, Lord Weidenfeld and Lord Hannay, and my noble friend Lord Alderdice all talked about the Fatah-Hamas reconciliation. We renew our calls to both sides to commit to peace talks leading to a Palestinian state that exists in peace and security alongside Israel. Britain hopes that the announcement of reconciliation between Fatah and Hamas will lead to the formation of a Government who reject violence and pursue a negotiated peace, and we will judge a future Palestinian Government by their actions and readiness to work for peace. Intra-Palestinian reconciliation remains a critical component of the peace process. We are of course examining the detail of the recent announcement and we are in discussions with our partners.

On Palestine's recognition and on state building, we see negotiations towards a two-state solution as the only way to meet the national aspirations of Israelis and Palestinians, leading to a sovereign, viable and contiguous Palestinian state living in peace alongside a safe and secure Israel and its other neighbours in the region. The UK is fully committed to supporting the Fayyad plan and helping to build the institutions of a future Palestinian state, but a negotiated solution remains the only result that will actually bring peace and justice to the Palestinian people. We therefore call on the parties urgently to return to negotiations. The noble Lord, Lord Weidenfeld, can be reassured that our focus is on bringing the parties back to negotiations, that it must be that both parties feel safe and secure, and that it is a settlement which is agreed by all and recognised by all.

My noble friend Lord Dubs was absolutely right about a stable Pakistan. It is crucial that we have a stable region, and that is why our aid programme has been increased. By working with Pakistan, we will be able to tackle terrorism.

A number of noble Lords spoke about the importance of the Palestinian Authority, and that is why we have upgraded the Palestinian general delegation. It was agreed by the Foreign Secretary on 8 March that, in view of the signs of improvements made by the Palestinian Authority in its state-building agenda and the progress being made on its road-map commitments, the upgrade

4 May 2011 : Column 535

of the delegation office means that it will now be renamed as the Palestinian mission. There will be simplified visa arrangements, but it is important to make it clear that this is not the first step towards recognising the Palestinian state, which I repeat must be achieved through negotiations. Diplomatic status will only be conferred on diplomats from states that we recognise.

There are many points that I have not addressed, on which I undertake to write to noble Lords, but in my closing paragraphs I will address some further questions. The most important lesson we have learnt from the Arab spring is that legitimate aspirations cannot be ignored and must be addressed. If we cannot create a path for those legitimate aspirations to be secured through negotiation, there is a risk of violence and a generation of people who see little hope for the future. This should not be allowed to happen. We understand Israel's deep and justified security concerns, and we will work with Israel to preserve her security and the stability of the region around her. We hope that the signing today of the reconciliation agreement between Fatah and Hamas in Cairo will lead to the formation of a Government who reject violence and pursue a negotiated peace. As I have said, we will judge a future Palestinian Government by their actions and readiness to work for peace.

We are extremely concerned about the escalating violence and the deaths of civilians in Israel and the occupied Palestinian territories, including the bomb attack at a bus station in Jerusalem and the surge in rockets and mortars from Gaza. We have condemned the extremists for instigating this violence and deliberately attempting to wreck the chances for peace. They should not think that while the attention of the world is elsewhere, we will turn a blind eye to their actions. Israel has the right to defend herself, but we will call on her to be proportionate in her retaliation, and we call on both sides to do all they can to prevent the further loss of innocent life.

We recognise the significant progress made by the Palestinian Authority in building the foundations of a viable Palestinian state in line with its road-map commitments. The UK continues to support the creation of a sovereign and viable Palestinian state alongside a secure Israel, but also continues to believe that the best way to achieve a lasting solution that delivers a sovereign, independent and contiguous Palestinian state alongside a safe and secure Israel at peace with her neighbours is through a negotiated solution. We will be working with the international community to do everything we can to achieve this, and we look to both parties to come to negotiations based on the clear parameters as soon as possible.

I have a note on children being held in custody. I would just like to reassure the noble Lord, Lord Judd, and others who raised the issue that we are taking it very seriously and are raising it with the Israeli Government at every juncture. We continue to monitor the situation, but in the interests of trying to get the two parties back into negotiations, it is really crucial that, while we treat Israel as a close and candid friend, we are also able to be frank about those things that we disapprove of.

4 May 2011 : Column 536

I have reached my 12 minutes but I reiterate that I will write to those noble Lords whose questions I have not managed to answer. This has been an important debate and it is one that I suspect we will keep returning to.

8.29 pm

Sitting suspended.

Postal Services Bill

Report (1st Day) (Continued)

8.37 pm

Clause 4 : Restrictions on issue and transfer of shares and share rights in a Post Office company etc

Amendment 19

Moved by Baroness Wilcox

19: Clause 4, page 2, line 43, after "may" insert "by order"

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, I shall speak also to Amendments 22, 24, 28, 29, 31 and 32 in order to reflect their purpose in its entirety. I shall also address Amendments 21, 23, 25, 26, 33, 34 and 35 in the names of the noble Lords, Lord Young, Lord Tunnicliffe and Lord Stevenson, as well as Amendments 20, 27 and 30 in the name of the noble Lord, Lord Kennedy. This is a large group of amendments but it covers ground with which we will all be familiar from earlier stages. I shall try, therefore, to be as brief as I can while still, I hope, addressing the concerns of noble Lords. I hope that the government amendments will help to ease the noble Lords' concerns as well as the concerns raised in Committee by the noble Lord, Lord Whitty.

All sought to increase the parliamentary scrutiny around the transfer of Post Office Ltd to a mutual ownership structure. The Government believe strongly that a mutual structure should not be imposed on Post Office Ltd from the top down, and this has not changed. We are still of the opinion that Parliament should not dictate the structure of a mutual Post Office Ltd or the make-up of its board. When the company is mutualised these details must be agreed by all of the interested parties and the interests of stakeholders such as sub-postmasters and employees must come first.

As I have said before, the Government have asked Co-operatives UK to report on recommendations for a move to a mutual model. This report will be presented to Ministers shortly and we will of course make it public. Should your Lordships wish, I shall also ensure that a copy of it is placed in the House Library. I hope the report will provide more detail of what a mutual Post Office Ltd might look like in practice. The Government plan to launch a public consultation later in the year, which will develop further details of how a mutual Post Office Ltd might work.

Your Lordships will understand that the suitable model for a mutual Post Office has yet to be designed and that we cannot know its governance structure. As I said in Committee, it is by no means clear at this early stage that the selection of both sub-postmaster and employee representatives to the board would

4 May 2011 : Column 537

necessarily be the best option. Enshrining governance arrangements in legislation goes completely against our commitment to ensuring that the mutual is developed by the people who know it best. The Government do not, therefore, agree with Amendments 34 and 35 in the names of the noble Lords, Lord Young, Lord Stevenson and Lord Tunnicliffe.

I understand the desire of both Houses to be able to exercise further scrutiny over a move to a mutual. Until we have fully consulted, we will be unable to define specifically what the Post Office mutual will look like and we recognise that, in order for Post Office Ltd to transfer to mutual ownership, it must have become commercially self-sustaining. Indeed, the noble Lords, Lord Young, Lord Tunnicliffe and Lord Stevenson, recognise this too in their Amendments 21, 23 and 33. We are confident that the strategy mapped out by Post Office Ltd, backed by the Government's £1.34 billion funding package, will deliver a commercially self-sustaining business.

There are a number of elements to this, as set out in detail in the Government's policy statement published last November, particularly the aspiration that the Post Office should become a front office for both central and local government. There are great opportunities for the Post Office to develop this ambition and a number of pilots for new services have already been agreed. For example, the Department for Work and Pensions has recently announced plans for three pilots, including document verification for pensioners and support for jobseekers in more rural areas. The DWP has also confirmed that it will work with the Post Office to explore its role in supporting new ways of delivering welfare, including universal credit. Post Offices are also of course a trusted and natural place for people to access face-to-face government services such as identity verification services. Currently, the ambition to be a front office for government builds on existing capabilities and strengths.

As Paula Vennells, the Post Office's managing director, explained to a number of us at the briefing meeting last week, the Post Office is working closely with the Cabinet Office to explore the services it could offer the Government to help them to make the savings that this demanding fiscal environment requires. Paula has also been working with Martha Lane Fox to ensure that the Post Office can have a sustainable role as services are increasingly delivered digitally-a trend which is set to continue. This could include supporting those who are unable or unwilling to access services in this way.

As Paula Vennells also emphasised last week, the front office for government strategy must not be considered in isolation. The Post Office must continually improve, with quicker transactions, shorter queues and longer opening hours. The better the Post Office's customer-service offering, the more attractive it will be as a channel for government departments. That is why the Post Office's network strategy-the introduction of 4,000 main post offices and 2,000 Post Office Locals across a network that remains above a total of 11,500 outlets-is so important. That is why the Government's investment of £1.34 billion and their commitment that there will be no programme of Post Office closures are

4 May 2011 : Column 538

also so important. We will no doubt discuss that network strategy in more detail when we come to Clause 11.

On the question of a post bank, I reiterate what I said in Committee. The Government have already looked carefully at the options and arguments for establishing a standalone post bank. Regrettably, our conclusion is that it is just not a viable option, particularly in the current fiscal environment. Setting up and capitalising a post bank would be prohibitively expensive as well as creating a much more volatile and risky balance sheet for the company. Yet it is important to remind noble Lords quite how extensive the Post Office's existing financial services business already is. For example, the Post Office offers savings accounts, ISAs, mortgages and credit cards and, following the recent agreement with RBS, it will provide access for more than 80 per cent of all UK current account holders. That is in addition to the wide range of basic bank accounts available to those who do not use conventional current accounts. As I said in Committee, from this strong base financial services have significant potential for growth.

These are some of the key strands of the strategy which we are confident will put the Post Office on a commercially sustainable footing. We have been clear that this is not an overnight solution. It will take a few years, and possibly more than the two years allowed under the amendments of the noble Lord, Lord Kennedy, for Post Office Ltd to become self-sustaining-that is, Amendments 20 and 30. The process of moving to a mutual model should not be rushed through and the Government have no intention of setting deadlines which Post Office Ltd and its stakeholders must meet in order to speed up this process. We recognise that some time will pass between the debates we are having now and any subsequent move to a mutual model. As such, Parliament should be given the opportunity, nearer the time of a proposed mutualisation, to scrutinise those proposals in more detail.

The amendments in my name in this group ensure that both Houses will need to approve a move to a mutual through the affirmative resolution procedure before it can proceed. They also ensure that a report giving details of the proposed move to a mutual will be laid before Parliament before any order is made. We hope that this addresses the concerns raised by the noble Lord, Lord Kennedy, and other noble Lords, since the government amendment seeks to ensure that the report will now be laid before Parliament before it votes on whether the company should be mutualised.

I reiterate that the proposals eventually brought before Parliament must be developed with the full involvement of all interested parties. The Post Office's commercial position must have improved as we expect. Provided that these things happen, I am confident that proposals for a mutual Post Office will, after careful scrutiny, be implemented. The reports in Amendments 21, 23 and 33 will not be required because the improvements to the Post Office's commercial position on which they seek comfort will necessarily already have occurred. Parliament will in any event have the safeguard of a vote on a move to mutual ownership.

4 May 2011 : Column 539

Amendments 25, 26 and 27 are technical amendments that I hope I can clarify as unnecessary. As I stated at Committee, Clause 4(4) makes quite clear the only people who can own an interest in the Post Office. The clarification envisaged by Amendment 25 is not required to achieve this. Amendment 26 seeks to ensure that any disposal made by a relevant mutual would be a disposal of its entire interest. Again, as I said in Committee, we believe this amendment to be unnecessarily restrictive. Clause 7 provides sufficient safeguards to ensure that it is perfectly possible for different stakeholders to form separate corporate bodies to take their interest in the Post Office. Provided the safeguards in Clause 7 were met, why would we want to prevent this prior to completion of the process of designing what a mutual might look like?

Finally, Amendment 27 in the name of the noble Lord, Lord Kennedy, is technically unnecessary as Clause 4(1) ensures that a disposal of shares can be made only pursuant to a direction under subsection (2) or an approval under subsection (3). In addition, the government amendments brought forward today will ensure that any direction made by the Secretary of State under subsections (2) or (3)(b) must be subject to approval by Parliament through an affirmative resolution procedure.

I therefore hope that these government amendments will provide noble Lords with further reassurance regarding the move to a mutual model. I hope, too, that the noble Lords, Lord Young, Lord Stevenson and Lord Tunnicliffe, will feel they need not move their amendments. I beg to move the amendment in my name.

Lord Stevenson of Balmacara: My Lords, we welcome government Amendments 19, 22, 24, 28, 29, 31 and 32. They are a very positive response to the representations made inside this House and beyond for greater accountability before Post Office Ltd is made a mutual. They also deal with the case of that mutual disposing of Post Office Ltd subsequently in whole or in part to another mutual or set of mutuals, and we are very pleased to see them. We are particularly pleased that provision has been made for the Secretary of State to come back to Parliament to provide details and seek approval of an order under the affirmative procedure before it is too late to influence events. We welcome these amendments and support them.

I shall speak to a number of the amendments in this group that we have tabled, but I have taken comfort from what the Minister has said in her response and will give her some assurance that we will not press the amendments to a vote. However, one or two points need to be made for the record.

Amendments 25 and 26 seek the safeguard of maintaining Post Office Ltd as a single entity before and after the creation of a mutual. From what the Minister has said, that is probably not necessary. Amendments 21 and 23 seek to ensure the Government give proper consideration to the case for a post bank. We have heard from the Minister that she has looked hard at that proposal. Given that that is the case, would it be possible for the Minister to share some results of the investigation with us? That would put our concerns beyond all doubt. Perhaps she could write to me with as much detail as she feels she can.

4 May 2011 : Column 540

What I am left with is to reiterate the comments that we made earlier but to add more flesh to the suggestion about the volume of government business being transacted at post offices before the disposal takes place. We should be given more information about that, and a report should be provided to both Houses.

On the amendment in the name of my noble friend Lord Kennedy, who is not in his place at the moment, I understand the wish to avoid unnecessary sloth over creating the mutual, but I agree with the Minister that the overriding consideration must be to have Post Office Ltd in good shape before mutualisation. That is why we put in Amendment 33 a call for a sustainable development plan for Post Office Ltd before any change of ownership is mooted.

It would be nice to see the Co-operatives UK report when it comes. It was promised in April but has still not been delivered. When it does come, we would like to have a look at it as well. The Minister said that she would publish it, and we are grateful for that. That will get us only to the stage where we understand better what the options are. We will need to know what the Government intend to do; as we have discussed, the Government intend to provide a full report on that before any proposals come through. I hope that in preparing a report for both Houses of Parliament, the questions that we have about what obligations a privatised Royal Mail will be under to utilise the Post Office network will be answered and, in the case of Post Office Ltd, what type or range of mutual bodies may end up owning our post office network. What will the rules be and what will be the extent of its powers? Who will be eligible to be a member? How will a board be constituted and could the mutual-owned post office have ownership and nationality tests that would be appropriate for a company-owned Post Office Ltd? Those are all questions that we will want to come back to at that time.

I turn to Amendment 23 and government business. The amendment puts in context some of the difficulties facing those who run the network of post offices throughout the United Kingdom. The Post Office is a trusted and traditional outlet for government services on the high street, and the future of the service lies in the redevelopment of that role. The post office network needs new sources of revenue to survive without subsidy; the Government need a reliable means of communicating with and serving the public directly in their local communities and, in this time of economic downturn, access to government services is more crucial than ever.

The Government should consider making the Post Office a first-choice provider of local and national government services on the high street. A systematic policy of using the Post Office as a shop front for government services could help the Government reach vulnerable and marginalised members of society in rural and urban deprived areas. Moreover, it could further the Government's regeneration agenda, tackle the financial exclusion that is rife in communities across the UK and, in so doing, ensure a future for the post office network. Despite some of the removal of government services over recent years, post offices remain a massively popular and a reliable source for information and assistance to the public.

4 May 2011 : Column 541

If the Post Office is to survive as a mutual, it cannot continue along its current trajectory. This can happen only if it keeps the work that it gets from two major clients-Royal Mail and the Government. Already there is concern about the Post Office's business relationship with Royal Mail. A survey by the Communication Workers Union this week, widely published in the papers today, found that nine out of 10 sub-postmasters said that they could not survive without Royal Mail business. Assurances from the Minister about that relationship do not hide the fact that the Bill contains no real protection for Post Office Ltd in that regard. Equally, there are reservations about the so-called locals model of franchised post offices, which by their nature make it difficult for customers to interact with staff on anything other than the most superficial transactions. A recent report by Consumer Focus highlighted some of the problems in this regard.

The Post Office is dependent on Royal Mail's business for its survival. Over one-third of its revenue, £343 million, and one-third of its sub-postmasters' pay, £240 million, is generated by selling Royal Mail products and services. If the two businesses are forced to separate, a privatised Royal Mail will be likely to look elsewhere for retail outlets to sell its products. There is no guarantee that it will use post offices to the same extent. The loss of accounts such as TV licensing and the "green giro" was a bitter blow, particularly for those post offices operating at very tight margins. Taking those contracts away was a classic case of the Government's left hand not knowing what the right hand was doing.

Having said all that, we think that the move to mutualisation is highly welcome, but employees and managers within Post Office Ltd will be concerned that the business they inherit has a real future. They will want to know that future revenue streams from the Government are secure and that business planning can proceed accordingly. Our amendment provides that assurance by setting out which government business will be transacted through post offices. Such a report will also enable the Government to consider what other types of their business the Post Office might be able to develop. We have a range of thoughts about that which echo many of the points that the Minister made, and we will be happy to exchange views on that, perhaps outside this discussion today.

We think that the Post Office banking remains a prize that could help sustain the future of the network. I heard what the Minister said about it not stacking up, but it is surprising that many of Post Office Ltd's overseas equivalents have developed comprehensive banking services to offset losses of other traditional services which have made substantial contributions to the viability of those national post office networks. Even if they are not like-for-like comparisons, they are useful examples of where the future might lie.

The post office network, mutualised or not, can prosper as a standalone business with the Government and Royal Mail as key customers. Our amendments do not seek to force that choice upon the Government but ask them to consider what business they intend to transact via Post Office Ltd over the next few years so that the people who run our post offices, whom the Government want to take ownership of the business, can do so with certainty and security.

4 May 2011 : Column 542

Lord Cotter: My Lords, I thank the Minister for putting forward the government amendments, which both clarify and assist us in being sure that various points have been taken on board that have been raised in previous debates. She mentioned Post Office Locals, which are an excellent idea. For example, in my village of Congresbury in Somerset, where I live, the local post office is doing an extremely good job. I welcome what has just been said by the previous speaker-that wherever possible we should do all that we can to expand the sort of services that they can provide. Many suggestions have been made and I am sure that we all look forward to adding to them when we can get some ideas accordingly. I ask the Minister to do the same.

It is tremendously encouraging that the Government are committed to ensuring not only that we maintain services through the local post office network, but that where necessary there will be financial support so that we can carry on having representation of a post office service in all parts of the country.

I referred a moment ago to my local post office. As I said, it provides a wide range of services. I am sure that the Minister will answer me by saying that there is no problem in this direction, and that no post offices that give a good service will be reduced in scope to become just Post Office Locals. The post office that I am talking about gives the full range of services, so I will be urging the Government to maintain that full range where at all possible.

Post Office Locals are a welcome idea as the concept ensures that at least a basic provision will be there. Over time, it will be useful to clarify ideas on exactly how Post Office Locals will operate and what encouragement they will be given to do so. With my congratulations to the Minister on the amendments being put forward tonight, and on the Bill as a whole, I look forward to hearing her response to the various matters that have been raised.

9 pm

Baroness Wilcox: My Lords, thank you very much indeed for those contributions. The noble Lord, Lord Stevenson, was most reassuring for me. He asked if I could expand in due course on the assessment of the case for the post bank and I will certainly write to him on the matter. I agree that it would be lovely if we could have a Post Office bank. At the moment the numbers do not add up, but that is not to say that it could not be the case in the future so I am with him on that. When the report comes out, he will of course see it. There will be a copy put in the Library and we will make sure that he has a copy too.

My noble friend Lord Cotter gave a vote of confidence in the Post Office Local idea, which I was delighted to hear. In the ones that we have already started, we are ironing out the problems which you always have with a new idea but they seem to be becoming successful. People like them and, because the opening hours are extended, it means that the footfall and the other business transacted within the shop seem to be improving by leaps and bounds. The noble Lord, Lord Kennedy, was not here to be able to speak to his amendments but the noble Lord, Lord Stevenson, did. Unless there is anything further, I hope that covers any of the points that other noble Lords wished to make.

4 May 2011 : Column 543

Amendment 19 agreed.

Amendments 20 and 21 not moved.

Amendment 22

Moved by Baroness Wilcox

22: Clause 4, page 3, line 9, after "has" insert "by order"

Amendment 22 agreed.

Amendment 23 not moved.

Amendment 24

Moved by Baroness Wilcox

24: Clause 4, page 3, line 9, at end insert-

"(3A) An order under subsection (2) or (3)(b) is subject to affirmative resolution procedure."

Amendment 24 agreed.

Amendments 25 to 27 not moved.

Clause 5 : Report on transfer of interest in a Post Office company to a relevant mutual

Amendment 28

Moved by Baroness Wilcox

28: Clause 5, page 3, line 30, leave out paragraphs (a) and (b) and insert "proposes to make an order under section 4(2) or (3)(b) (order directing or approving issue or transfer of shares or share rights in a Post Office company to a relevant mutual)."

Amendment 28 agreed.

The Deputy Speaker (Lord Haskel): If Amendment 29 is agreed, I cannot call Amendment 30 because of pre-emption.

Amendment 29

Moved by Baroness Wilcox

29: Clause 5, page 3, line 34, leave out subsection (2) and insert-

"(2) The Secretary of State must lay before Parliament a report on the proposed issue or transfer before making the order."

Amendment 29 agreed.

Amendment 30 not moved.

Amendments 31 and 32

Moved by Baroness Wilcox

31: Clause 5, page 3, line 38, leave out paragraph (a) and insert-

"(a) give details of the proposed issue or transfer (including the expected time-scale for the issue or transfer),"

32: Clause 5, page 3, line 40, after "are" insert "proposed"

Amendments 31 and 32 agreed.

Amendment 33 not moved.

4 May 2011 : Column 544

Clause 7 : Meaning of "relevant mutual"

Amendments 34 to 36 not moved.

Amendment 37

Moved by Lord Young of Norwood Green

37: After Clause 10, insert the following new Clause-

"Closure of post offices

(1) Where any company or any other person proposes to close a post office, it shall at the earliest opportunity begin consulting representatives of the employees affected and community and other groups with an interest in the proposed closure, including consulting on that company or person's plans for alternative provision of services provided by the post office.

(2) No decision to close may be made within the period of six weeks from the start of the consultation required by subsection (1).

(3) No decision to close a post office in a Crown post office shall be taken within 12 weeks of the start of the consultation required by subsection (1).

(4) No decision to close a post office in a rural or a deprived urban area or an outreach service shall be taken within 16 weeks of the start of the consultation required by subsection (1)."

Lord Young of Norwood Green: My Lords, as you are all very aware, post offices continue to provide a lifeline to residents in rural and urban deprived areas, not only through access to postal services but as a shop front for government services, a means of benefit collection and, often, as the only source of cash withdrawal in an area. This amendment aims to ensure that proper consultation procedures are followed when a post office closure is considered. It is not intended to prevent all post office closures; it simply aims to strengthen stakeholders' opportunity for input into the consultation process. It also provides for a longer consultation process on potential closures in rural and urban deprived areas.

Rural and urban deprived areas clearly suffer disproportionately when a post office closes. Post offices have closed in vast numbers in recent years, both through formal closure programmes and through natural wastage when sub-postmasters close their businesses and post offices are not replaced. At Second Reading, the noble Lord, Lord Dobbs, proposed a 16-week consultation period for rural post offices due to close to give time to find an alternative. Over the past 10 years, the post office network has declined from 17,845 in 2000-01 to 11,905 in 2009-10. This is in large part due to two major closure programmes: the urban reinvention programme from 2003 to 2005 and the network change programme from 2007 to 2009. Approximately 11 per cent of the post office network is in urban deprived areas. Consumer Focus clearly states:

"Urban offices play an even more important role in urban deprived areas, particularly as they provide free access to cash, plus pensions and benefit payments".

The 2003-04 urban reinvention programme was an attempt by Post Office Ltd to reduce the size of the network with a view to developing a more commercially viable network. It further hoped to manage the so-far unplanned decline in network size that arose from sub-postmasters' decisions to close their businesses. At the time of the programme there were serious concerns over the fate of post offices in urban deprived

4 May 2011 : Column 545

areas. The Government stated that they would not close post offices in urban deprived areas unless there was another branch within half a mile, or unless there were exceptional circumstances to justify the closure.

The Post Office's code of practice for network change programme closure consultations included a six-week consultation process. Many stakeholders felt that the consultation processes were inadequate. This was in large part because of the criteria for closures and the decision to close 2,500 post offices had already been made prior to the consultation process. This meant that opportunities for preventing individual closures were very limited.

Post offices are still closing every week. More than 150 closed on a long-term temporary basis in 2010 alone. There is no guarantee that these will reopen; many are likely to stay closed indefinitely, as Consumer Focus has said. Since the last programme of post office closures finished we have continued to see a dwindling in the overall number of branches. According to the National Federation of Sub-Postmasters, 900 post offices-an unusually high number-are currently up for sale. Many sub-postmasters are retiring or leaving the business because of the low levels of revenue generated by some offices. The Post Office is struggling to find alternative premises and service providers. It is vital that adequate measures are in place to protect rural and urban deprived communities from these closures. I urge support for Amendment 37, which puts current practice into law, allows extra time for rural post office closures and ensures consultation ahead of any closure, planned or unplanned. It also provides additional protection for rural and urban deprived post offices. I beg to move.

The Deputy Speaker: I have to inform your Lordships that there is a misprint in proposed new subsection (3) in the Marshalled List. It should read:

"No decision to close a Crown post office shall be taken within 12 weeks of the start of the consultation required by subsection (1)".

Lord Jenkin of Roding: My Lords, one of the best things that the Government have said in the context of the Bill is that there will be no more mass closures of post offices. I am very conscious of the damage done by closures in recent years in an area that is not necessarily "urban deprived" but where quite a lot of poor people live. It is the area surrounding Vauxhall, which in the past few years has lost three post offices. The result is that the nearest post office is right across Vauxhall Bridge, half way to Victoria station. Whenever one goes past or tries to use that post office, there are queues that reach out into the street. It has been a disastrous programme for that part of London. Therefore, I very much welcome what the Government have said about closures. Of course, one cannot have an absolute ban on closures because inevitably sub-postmasters die or fall ill and businesses are sold. Although great efforts are made to try to keep the post office going, it cannot always be guaranteed. However, that is totally different from the sort of mass closure programme that we had over the past decade.

Like the noble Lord, Lord Cotter, I have been very impressed by the potential offered by Post Office Local. Up to 2,000 Post Office Locals may be coming

4 May 2011 : Column 546

forward in the next few years, offering the great majority of services that are available in a Crown post office. They will be able to offer the customer a much better deal because they will be open during shop hours. One knows that many of the shopkeepers, who are often from minority communities, work very long hours and their shops remain open long hours-and so, of course, will the post office services offered by Post Office Local. This is perhaps one of the brightest and most optimistic scenes on the horizon. It will make post offices a good deal more viable than they have been. However, post offices also need new business. I have been impressed by what I have heard about the plans-in some cases these are already being trialled-to let these post offices offer identity services, as it were. They can check identity through biometric photographs and this service is already being used by the UK Border Agency. There must be government departments which could make good use of such services. I hope that my noble friend on the Front Bench can expand on that.

I too have talked with the chief executive and was impressed by what she had to say about the range of services which need to be available in post offices. This will require investment and nobody is going to pretend that Post Office Ltd will become a fully self-sustaining business; it cannot. It will continue to require support, and everybody has recognised that. However, it seems to me that if it is given the freedom to expand into new areas and the Government support it through government departments using its services, thus enabling it to be, as it were, the front office for government, there is every chance that the post office network will survive and prosper in a way that it has not done in recent decades. Therefore, I very much support what is being planned.

I accept the argument that my noble friend put forward when we were discussing a previous amendment -that some of the proposals we are putting forward may not be necessary, but no doubt we will hear about that. In the mean time, I very much congratulate the Government on the efforts that have been made to make Post Office Ltd a more viable business than it has been in the past.

9.15 pm

Baroness Wilcox: My Lords, Amendment 37 seeks to impose consultation requirements on companies or people that propose to close a post office. As we well know, 97 per cent of post offices are privately owned and operated businesses. As I said in Committee, neither Government nor Post Office Ltd can ensure that there is always time to carry out a consultation before an office closes. A sub-postmaster may retire or move away or the premises may be damaged by fire or flooding. It cannot be appropriate to impose a consultation requirement on a retiring sub-postmaster before he can shut his store, as this amendment would do.

My noble friend Lord Jenkin of Roding spoke warmly of the Government's commitment to ensure that there will be no further programme of post office closures and that the network of at least 11,500 post offices will be maintained. I confirm that commitment. Therefore, if a post office is to close, there is a strong

4 May 2011 : Column 547

likelihood that this will have been driven by a choice of the sub-postmaster rather than by Post Office Ltd. In the unfortunate event of a post office closure, other than in very exceptional circumstances, Post Office Ltd will seek to maintain services. If a permanent closure without any replacement is proposed, the Post Office must undertake a local public consultation for a six-week period, in line with its code of practice. In addition, Post Office Ltd will contact local councillors and parish councillors about service changes.

It is worth stressing that the code of practice has been agreed with Consumer Focus. I mentioned in Committee that the code of practice has recently been amended to introduce a telephone helpline providing information on temporary breaks in service and on new notification requirements.

The noble Lord, Lord Young, mentioned that at Second Reading and the noble Lord, Lord Dobbs, in his maiden speech, called for a 16-week consultation. He spoke eloquently about the problems faced by rural communities as a result of the previous Government's closure programmes. However, this Government have committed that there will be no programme of post office closures and a network of at least 11,500 post offices will be maintained. As I said, if a post office is to close, there is a strong likelihood that this will be driven by the choice of a sub-postmaster rather than by Post Office Ltd.

In considering the appropriate duration of local consultations, it is important to strike a balance between giving communities sufficient opportunity to express their views and allowing the Post Office to get on with providing the services on which those communities so rely. A 16-week period-that is four months-as Amendment 37 envisages in some cases, seems to be disproportionately long. That is especially so when we recall that we are talking predominantly about individual small businesses operated by sub-postmasters. Furthermore, the six-week period currently required by the code of practice was introduced, following a national consultation, as part of the previous Government's closure programme.

I therefore hope that the noble Lord will be reassured by the arrangements already in place and will consent to withdraw the amendment.

Lord Young of Norwood Green:I thank the Minister for her contribution. It goes some way towards providing reassurances and we will reflect on what she said, after carefully reading it in Hansard. In those circumstances, I beg leave to withdraw the amendment.

Amendment 37 withdrawn.

Amendments 38 and 39 not moved.

Clause 11 : Annual report on post office network

Amendment 40

Moved by Lord Whitty

Next Section Back to Table of Contents Lords Hansard Home Page