HC Deb 18 April 2000 vol 348 cc925-9
Mr. Alan Johnson

I beg to move amendment No. 15, in page 39, line 10, after "its", insert "wholly owned".

Mr. Deputy Speaker

With this it will be convenient to discuss the following: Government amendments Nos. 16 to 18.

Amendment No. 78, in clause 66, page 41, line 21, at end insert— '( ) the effect of the proposed issue or disposal would be that no more than 10 per cent. of the total share capital of the Post Office company at the time of the transfer would have been disposed of.'. Government amendments Nos. 79 to 81.

Mr. Johnson

The amendments provide further evidence that the Government are sticking to our commitment to keep the new Post Office company and its relevant subsidiaries within public ownership by ensuring that we allow only a narrow portal for share sales or swaps, while allowing it greater commercial freedom.

Amendment No. 16 plugs a potential loophole in the restrictions on the disposal of shares in subsidiaries carrying out the core business by applying the restrictions on the disposal of shares to any subsidiaries owning shares in a relevant subsidiary.

Amendment No. 15 amends clause 62 and seeks to ensure that the Government do not prejudice the rights of any external shareholders in the subsidiaries of the Post Office company by restricting the Secretary of State's power to direct subsidiaries of the Post Office company to issue shares to subsidiaries which are wholly owned.

Amendment No. 17 is a minor drafting amendment to bring the wording of clause 65(3) into line with that of the new subsection (5).

Amendment No. 18 supports the Government's policy of allowing the Post Office greater commercial freedom by allowing the Post Office company and its subsidiaries flexibility to reorganise its structure as it thinks fit. It relaxes the restriction in subsection (2) of clause 65 on the disposal of shares or share rights in a relevant subsidiary by the Post Office company, any of the subsidiaries or their nominees to allow disposal among themselves. Again, there is no harm in the shares being passed round in this way, as each of the parties concerned is subject to the restrictions on disposing of shares to a third party. There is great benefit, because it allows the company flexibility in its structure.

Amendments Nos. 79, 80 and 81 are technical amendments which bring the provisions in those clauses into line with each other.

Amendment No. 79 to clause 69 adds a provision requiring the Secretary of State to consult the Post Office company before exercising his powers to extinguish any of its liabilities and to consult the Post Office company and the subsidiary in question if any of a subsidiary's liabilities are to be extinguished.

Amendment No. 80 provides power for the Secretary of State to make an order to repeal the clause when its purpose is spent. This power mirrors the provision in clause 73 which provides for the Secretary of State to make an order to repeal clause 73 when its purpose is spent.

Amendment No. 81 removes the requirement in clause 73(7) to consult the Post Office if an order is to be made to repeal the section under subsection (6).

Mr. Bowen Wells (Hertford and Stortford)

Who drafted these amendments, and why is it necessary to introduce them at this stage? Has the Bill been improperly drafted? Does it reflect Ministers' desires and objectives? Why are we being subjected to this long list of tiny amendments that should have been taken care of in the original drafting of the Bill?

Mr. Johnson

It is not a long list at all. On Second Reading, Opposition Front Benchers were suggesting that there would be over 1,000 amendments. In fact, there were 185, of which only 80 have been Government amendments. I am not as experienced in this place as the hon. Gentleman, but I understand that that number of amendments compares very well with Bills under the previous Government.

9.45 pm

I also make the point that the Post Office is the Methuselah of public sector industries, because it has been publicly owned since 1631, and there is a lot of legislation to tidy up when making changes to the Post Office. I assure the House that I would have preferred not to have had so many amendments this evening, but these are minor, technical amendments and I have ensured that Opposition Front Benchers have been kept informed about our changes.

As I was saying, there is no need to consult the Post Office in the same way if we intend to repeal the clause, as the repeal would not affect it in the same way as the creation of debt.

Mr. John McDonnell (Hayes and Harlington)

I wish to speak to amendment No. 78 and give an assurance to my hon. Friend the Minister, who is suffering from a heavy cold, that I will not press it to a Division. Amendment No. 78 would affect clause 66, which will enable a partial share sale in the Post Office company to further a joint venture or a partnership. However, no limit is set on the volume of shares that may be sold. As a result, any amount of the Post Office company could be sold off.

As my hon. Friend the Minister has said, we obviously wish to ensure that we fulfil our policy of maintaining the Post Office company within the public sector. That is why we need clarity with regard to clause 66. There are concerns that the Government have not tabled an amendment, as requested in Committee, to limit the amount of shares that could be sold. For example, amendment No. 78 suggests a 10 per cent. maximum. The Government argument has been that that would restrict commercial flexibility and the room to manoeuvre of the company in cementing joint venture deals. However, the Post Office itself, in its evidence to the Select Committee, suggested that that problem would be highly unlikely to arise.

There have been joint ventures and share swaps elsewhere, but they have been restricted to the 5 per cent. level. That has happened occasionally in the telecommunications industry, and has never involved a share swap of more than 10 per cent. France Telecom and Deutsche Telecom, for example, had a swap agreement that involved a 5 per cent. exchange of shares only.

The Government's legislative proposals arise from a Labour party conference motion that stated that there must be no uncertainty or ambiguity, now or in the future, about the commitment of a Labour Government to the continued public ownership of the Post Office. Clause 66, as drafted, is inconsistent with the spirit of that motion. It will raise doubts among the workers in the Post Office and among the electorate about our commitment to the public ownership of the Post Office in the long term. It gives the wrong signals to those in the industry and to the electorate.

I am aware that, today, further talks have gone on that may resolve the problem, and therefore I urge the Government to table a clear amendment on the issue in the other place to prevent any back-door threat to the public ownership of the Post Office.

Mr. Johnson

It must be borne in mind that, at the time of the Labour party conference last year, the issue of share sales to cement an alliance or a joint venture had not arisen. We have ensured that, if any future Government wish to sell shares in the Post Office, that would require primary legislation. However, we recognise that the communications industry is heading towards further globalisation.

I can put it no better than the Communication Workers Union, which is very perceptive on such issues. It has said: Mail services have been seen as predominantly domestic markets met by national operators. However, the growth of international mail, the opportunities for e-mail and developments in the parcels market are all leading to a more international marketplace that is likely to be dominated by a small number of global players or alliances. The British Post Office cannot afford to stand apart from such powerful trends. The CWU understands that full well. The point about saying that any future share sales would require primary legislation, except in the case of share swaps to cement a joint venture or an alliance, is to ensure that the Post Office has greater commercial freedom in the public sector.

Our battle in the early 1990s was not to maintain the status quo but to give the Post Office genuine commercial freedom in the public sector. That freedom will allow the British Post Office to move with the major international players. Our competitors have had the same freedom for many years.

Mr. McDonnell

The CWU has stated today: In our view, the current open-ended nature of Clause 66 is inconsistent with the spirit of the Labour party motion at the conference and, if the Government persists in the current wording, it is bound to raise doubts in the minds of Labour Party members and Labour voters as to the commitment of the Labour Government to the public ownership of the Post Office.

Mr. Johnson

The issue at last year's conference was the monopoly limit and not joint ventures and acquisitions.

I know exactly what the CWU position is, but it is stated on the face of the Bill that Governments cannot bring proposals forward to divest shares. Only the Post Office can do that.

The Post Office begins the process when it makes a proposal to the Secretary of State. If the Secretary of State is convinced that that is in the best commercial interests of the Post Office, he or she will put it forward for affirmative vote in both Houses of Parliament.

Post Office Acts come along only every 15 or 20 years. For example, such Acts were passed in 1953, 1969 and 1981. We cannot be tied to an arbitrary share limit—whether it be 5 or 10 per cent.—that will prevent the Post Office from securing a joint venture or alliance that is wanted by its work force, the Government and by the business itself. If we were so tied, we would have to ask the major market player with which we might be negotiating a deal to hang on for a couple of years until a slot appeared in the Queen's Speech for the necessary primary legislation. That would cause the deal to be lost, which would not be in the best interests of the work force or of the business.

Mr. McDonnell

I believe that we should listen to the work force. The CWU statement today was in support of the 10 per cent. limit.

Mr. Johnson

The triple lock that we have on the mechanism means that it would be senseless to impose an arbitrary figure, but in fact the situation is worse than that.

Hon. Members from all parties—including the hon. Member for Macclesfield (Mr. Winterton), whom I see in his place—opposed the privatisation of the Post Office. We said that there was a way a forward that would allow genuine commercial freedom in the public sector. If the Government diluted or inhibited that commercial freedom by placing caps on joint ventures or acquisitions, that would leave us open to the argument that the only way to deliver commercial freedom was by privatisation. In other words, that would destroy the argument that Labour Members have supported for the past eight or nine years.

The Government have looked at ways to resolve the concerns expressed by CWU members, and we have studied the provision of a special share. However, mergers will take place at the level not of the Post Office holding company, but of the subsidiaries. That is why amendment No. 78 would not have had the effect that its supporters wanted.

Mr. Deputy Speaker

Order. I have given the Minister considerable latitude, as I understand that he is addressing an argument to hon. Members on the Benches behind him, but equally he should be addressing me at the same time.

Mr. Johnson

I apologise, Mr. Deputy Speaker.

Mr. Nicholas Winterton (Macclesfield)

I have been listening to the Minister's argument, and to the answer that he has given to the hon. Member for Hayes and Harlington (Mr. McDonnell) who, as I am sure the House understands, is clearly seeking to represent the best interests of the Post Office work force. Will the Minister say that the changes that these Government amendments bring about not only safeguard the position of the employees, the interests of the Post Office and the interests of Government but, more than that, represent the interests of the consumer who is served by the Post Office? If the Minister could give us that assurance, we would be much happier with his brief explanation.

Mr. Johnson

Yes, I can give that assurance. This series of amendments establishes the definition of relevant subsidiaries. Following a report from the Select Committee on Trade and Industry, we went to the extent of ensuring that future Governments could not get around the block on selling shares in the Post Office by putting them into one of its subsidiaries, such as German Parcel, one of the organisations that it purchased recently, by defining what is a relevant subsidiary. So there is no way around this.

Mr. McDonnell

Will the Minister give way? Mr. Johnson: No, I am not giving way again.

My final point is that, if anyone seriously wanted to privatise the Post Office, they would not go down the tortuous route of exchanging swaps and joint ventures. There is no money for the Exchequer in floating shares on the stock exchange. All those shares will, in a sense, be undervalued because they are used to secure an alliance or joint venture. They will not be worth their full weight.

All the arguments suggest, as they did last July, that our proposals in the White Paper and the Bill represent the way forward in terms of genuine commercial freedom in the public sector.

Amendment agreed to.

Amendment made: No. 16, in page 39, line 46, leave out "in this subsection" and insert— 'any other subsidiary of the Post Office company which holds shares or share rights in, or is connected to, any such subsidiary. ( ) For the purposes of subsection (8), a subsidiary of the Post Office company is connected to another such subsidiary which falls within any of paragraphs (a) to (d) of that subsection ("the operating subsidiary") if it forms part of a chain of subsidiaries of the Post Office company which leads to the operating subsidiary and which is identified by the fact that each member of the chain holds shares or share rights in the next subsidiary in the chain. ( ) In subsection (8)'.—[Mr. Alan Johnson.]

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