11 February 2009 - Steve Lawson - © Hellmail Postal News

During a House Of Commons debate yesterday on the future of Royal Mail, Pat Mcfadden, Minister for Employment Relations and Postal Affairs, was grilled by several MPs, on the meaning of a 'strategic partnership' for Royal Mail.

John Gummer, Conservative MP asked:

"If a private company owns part of the royal mail, isn't it therefore the case that Royal Mail becomes partly owned, It can't be fully owned if another company owns part of it."

McFadden said that in business terms such a difference in minority and majority shares was clear and that he was committed to public ownership.

Ken Clarke, Shadow Business Secretary, opened proceedings during the debate by saying that Jim McGovern who recently resigned his post as parliamentary secretary over what he felt was the semi-privatisation of Royal Mail should be in no doubt

"That is exactly what the proposal was" he said.

He drew attention to the fact that whilst the government said it backed the move to introduce a strategic partnership, two months later, the house was being asked to debate a plan that so far lacked any detail.

He said that whilst he agreed with Lord Mandelson's announcement on the 16th december that the government supported the three main recommendations of the Hooper report, government policy was becoming a mystery, saying that there was an obscurity of the government's position.

He pointed to bad industrial relations that had the effect of weakening the business further by customers feeling they were not being able to trust the royal mail and accepted the findings of the report that the status quo not tenable. During his own time as postal minister he said he had tried unsuccesfully to convince Margaret Thatcher to bring in private investment and that ten to twelve years of inaction had made matters far worse. On regulation he said it made sense to transfer responsibility from Postcomm to Ofcom.

On pensions, he said the government had allowed the deficit to become extremely severe and despite saying it had a responsibilty to the pension deficit, no firm plans had so far been put forward. He was also concerned that the treasury would seize the pension fund's £22bn of assets as a short term measure. He concluded by asking what the government's policy was if it was inviting the opposition to agree.

Pat Mcfadden, Minister for Employment Relations and Postal Affairs said technology was at the heart of Royal Mail's problems. Mail volume decline coupled with greater choices for citizens on how they communicate, was having a marked effect on Royal Mail's finances. He said although parcels had increased, volume had still declined over all, falling by around five million items per day. The increase through internet shopping had actually been included in the drop in volume.

He was asked several times about the meaning of a 'strategic partnership' but said the government was committed to ensuring that Royal Mail remained wholly publicly owned.

"A partnership would benefit Royal Mail by giving it access to capital and the commercial experience needed to drive through change. Aa joint venture would give the Royal Mail a leading role in europe." he said, pointing out that much of Europe was already seeing consolidation of operators.

He agreed that Royal Mail had improved its performance in recent months but that walk-sequencing where mail is prepared prior to delivery, was still mostly done by hand whereas some competitors were already doing 85% of this work by machine.

On the 1.2bn modernisation loan, he underlined the fact that it still had to be repaid, and even two years on, the EU was still deliberating on whether the loan was actually permissable under EU rules.

On industrial relations he said:

"Royal Mail urgently needs a fresh start but has been hampered by lack of trust between management and workforce. In 2007, 627,000 employee days were lost as a result of industrial action, accounting for 60% of total days lost to strikes over the whole UK economy in that year.

"Its not just that major strike, but the threat of other strikes too. There are frequent threats of disputes, over pension changes or mail centre changes which we have seen in recent months. This is hurting the company, it is slowing the pace of necessary change, it is hurting the customer, and it is hurting the mail market as people are then tempted to switch to other digital communications to meet their needs.

"Everyone is agreeing they are up for change in general, but opposing it in the particular is no way forward. We need a longer term plan, with proper buy-in from the workforce and an acceptance, right through the company, of what needs to happen." he said.

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