Consignia

HL Deb 07 May 2002 vol 634 cc1069-87

7.40 p.m.

Lord Hoyle

rose to ask Her Majesty's Government what they are doing to improve industrial relations in Consignia.

The noble Lord said: My Lords, I must declare that I am a member of Amicus. A section of Amicus is the Commercial Managers Association, which has 15,000 members in Consignia.

Although we are discussing industrial relations, we cannot escape from what I believe is a dire threat to the postal service that is not solely the pride of this country but has in many ways been the envy of the world, because it provides a universal service at a uniform price. That is being endangered by the proposals of Postcomm. The only way that the Post Office can meet the competition is if we follow the European directive, which calls for competition to be introduced, but gradually, at a pace that Consignia can withstand, so as to he beneficial. Postcomm's proposals, far from going along that line, may destroy what the Post Office is committed to do: provide a universal service at a uniform price. That is the danger.

I am not sure whether Postcomm realises that it is putting that at risk, but any competition should benefit all—not only the large user but the small user; those in both urban and rural areas. Cherry picking is taking place on a large scale. In its proposals, Postcomm has got its figures wrong. The figures have been examined by Consignia, the unions and independent authorities.

In the first phase, 2001–04, far more of the market is being opened up. For example, 50 per cent of the market by volume and 40 per cent of the market by revenue will be opened up. That contrasts with Postcomm's figures of 40 per cent by volume and 30 per cent by revenue. Cherry picking on that scale puts at risk the profitability of the Post Office and puts at risk the universal service, because to meet that figure will cause a large increase in stamp prices, as has occurred in Sweden.

The tragedy, which people appear to be unable to get through to Postcomm, is that once it does that—once the damage has been done to the postal service we cannot pick up the pieces of the jigsaw and put it back together again.

I do not intend to take 10 minutes, as my noble friends and other noble Lords have been reduced to so few minutes, but it is against that background that we must consider industrial relations. Industrial relations have been poor—largely due to bad management; I have always said that management gets the industrial relations and unions that it deserves—and there has been a good deal of unofficial action. For instance, last year, more than 60,000 employee days were lost—a 20,000 increase on the previous year. The Post Office has a poor record on harassment and bullying at work. Almost 10 per cent of employees admitted that they had suffered from harassment. That is not a good thing; it is the wrong kind of foundation on which to build.

Thanks to the efforts of my noble friend Lord Sawyer and the Sawyer report, we have avoided a crisis—we could have been on the eve of a national strike tonight but, thank goodness, common sense has prevailed. Thanks to the Sawyer report, industrial relations in the Post Office are becoming more stable, official action has almost ceased and the two sides are talking together.

The partnership concept offers the way forward. It is absolutely necessary because—I speak as a member of Amicus, which has knowledge of many industries—the centralised command and control method in the Post Office belongs many years in the past. I hope that the concept of partnership will take over. It is absolutely necessary because only in February this year, the CMA commissioned an inquiry among senior managers. I do not want to go into too much of the report's detail, but it found that most managers did not feel that the present top management was up to the task of meeting the challenges that lie ahead for the Post Office.

One would have thought that that would have set alarm bells ringing in Consignia. Although that survey of senior managers was sent to the chief executive, John Roberts, and the chairman, Allan Leighton, in February, as I speak we have not received an acknowledgement, let alone a meeting about it. Surely, that is not the way to run industrial relations. As I said, if it were not for the Sawyer report, which talks of partnership, I should be painting a fairly bleak and black picture. That is the only way forward. When there has been talk of 30,000 redundancies in the industry, we need to use all the skills, talents and expertise not only of managers but of the workforce. They must pull together in partnership if they are to meet the competition.

That is the problem facing Consignia and its employees. That is why morale has been low. But with the new concept of partnership there is now hope that it can move forward. But I must tell my noble friend—I hope that he will reply to this point—that it cannot move forward while the sword of Damocles in the form of Postcomm's proposals hangs over the industry The Government cannot hide behind what the regulator says. They must accept responsibility for the present position, face up to it and take measures to ensure that we have a viable Post Office that continues to provide a universal service at a uniform price.

7.50 p.m.

Lord Davies of Coity

My Lords, I am grateful to my noble friend Lord Hoyle for introducing this debate. I have no doubt that it was the report of my noble friend Lord Sawyer that prompted it.

Since my noble friend's report was published, a great deal has happened. On 25th March, there was a major announcement, stating that far-reaching reorganisation would take place in the postal service and that more than 12,000 jobs would go. The newspapers speculated that over 40,000 jobs would disappear and that 3,000 urban post offices would close. To some degree, all those circumstances have an impact—directly or indirectly—on industrial relations.

All proposed change in the workplace breeds feelings of insecurity and suspicions among those at the sharp end—the workforce. Without labouring the point, I must say that that was the case for the Luddites. The Luddites were condemned for retarding progress by smashing the machines. However, their motive was not stopping progress but safeguarding jobs, their livelihoods and those of their families, all of which were to be taken away by the introduction of machinery. Nobody in the management bothered to consider their plight. In the headlong drive for productivity—that word was not used then—and greater profit, the workers were forgotten. Management actions became counter-productive.

That was a long time ago. By the 21st century, we ought to have learnt more about industrial relations in the Post Office than my noble friend's report suggests. I have spent the greater part of my working life in industrial relations in the private sector, mostly representing low-paid workers in food manufacturing, retail distribution, wholesale grocery and catering, to name but a few. In most cases, I represented women workers and part-time workers. From all that, I learnt that partnership was more beneficial to those whom I represented than conflict. My union, USDAW, was one of the first to initiate that approach.

When I was general secretary of USDAW, I signed a partnership agreement with the noble Lord, Lord MacLaurin of Knebworth, who was chairman of Tesco. Today, Tesco is one of the most advanced retailers in Britain. Nearly 100,000 of its staff are members of USDAW, and the workforce is among the best paid and provided for in the retail sector. That is, undoubtedly, an example of good industrial relations.

It is important that management must believe in good industrial relations and must work to achieve them. Managers must respect those who work for them and convince them that they do. They must be totally interested in the well-being of those whom they employ and ensure that they are confident of that. Regrettably, that picture is not reflected in the report produced by my noble friend Lord Sawyer. The picture is more that of a them-and-us situation, rather than a partnership working for the good of all.

Of course, the fault is not all on the side of management. Often, justifiable criticism can be directed at workers and their representatives. However, I know from decades of experience that, if a them-and-us culture of conflict is to be removed, it is management who must do the most work. Attitudes must change; there must be patience and tolerance. Understanding and respect must be the name of the game. Only in that way can mistrust and lack of confidence among the workers be removed, making a clear way forward for the benefit of a culture of partnership for the benefit of all. There will be progress and increased economic solvency for the postal service, security of employment and improved conditions for staff and an improved service for the consumer. That is not just a theoretical forecast; that is exactly what happened with Tesco.

When I first became involved with Tesco, it was a pileit-high and sell-it-cheap company that hired and fired at will and had no industrial relations. We should compare that situation to where they are today.

I thought that I might run out of time in this debate. It looks like I must stick to four minutes, so I shall come to the end of my speech.

In a previous debate, my noble friend Lord Clarke of Hampstead said: I said that one penny on postage would produce £180 million. If it had been two pennies—still the cheapest postal service in Europe—we would have wiped out the deficit that the Post Office faces today".—[Official Report, 25/3/99; col. 38.] Although I have the greatest respect for my noble friend, I am not persuaded that that would have been helpful. I also suspect that such an approach may have been used in the past to solve immediate problems, while leaving core difficulties undealt with. We must ensure that Consignia—not the Government—uses the services of ACAS in order to develop a culture of partnership and remove the existing conflict.

7.56 p.m.

Baroness Gibson of Market Rasen

My Lords, I thank my noble friend Lord Hoyle for allowing us to have this important and timely debate.

I spoke about Consignia and its industrial relations in a previous debate during which worries similar to those being voiced today were expressed. Between then and now, I have had the opportunity to meet those who run Consignia, and I feel somewhat more assured than I did then. They appear to recognise what is needed to ensure the continuation of high quality postal services. That recognition is, at least, a starting point.

I shall concentrate on the position of workers who are employed as managers in Consignia and who face decided difficulties in that organisation. I declare an interest as a former national official of Amicus, the union that organises the managers in their CMA section. I have also talked to those managers and know how eager they are that Consignia should succeed. Those managers are keen to work within Consignia to ensure its success. They are in a unique position, squeezed between powerful forces. They take the pressure from above—from those who run Consignia and who are eager to reform it and its working practices—and from workers at the sharp end who encounter daily difficulties that sap their morale and increase their fears.

It is obvious that managers are pivotal to Consignia's success and that they must be allowed to exercise discretion and judgment in many different circumstances. Unfortunately, the managers do not believe that they are being allowed those freedoms. They believe that their voice is rarely listened to and that their views are ignored. Those men and women want to play a considered and respected part in Consignia. If their knowledge of how the postal system works is ignored, it will be Consignia and the public who will lose out. No one will gain.

Industrial relations are not a concept that applies only to employers and workers in urban areas. Employers and workers in rural areas are affected too. I still worry about services in rural areas. Rural postal workers are not just postal employees; they are part of the life of their area. Postmen and postwomen play a large part in their community. They know the local populace; their knowledge is second to none. They take messages from neighbour to neighbour, especially if houses are spread widely around a village or hamlet. They can keep an eye on the elderly, the lonely and the young family who may need help. In cases of illness, they know whom to contact when the doctor needs calling or a son, daughter, mother or sister needs to be told. They are a fundamental part of the rural scene. If the rural postal worker goes, a part of the social network goes too.

In a recent interview, Allan Leighton, the chair of Consignia admitted that, the management needed to hold their hands up because they had made mistakes in the past". On industrial relations, he said: There has been too much in-fighting in Consignia, when it should have been looking after its people and its customers". He recognised that an improvement in industrial relations must be the foundation for turning round the Post Office and that the better industrial relations achieved in the six months since the publication of the report by my noble friend Lord Sawyer represented a platform that could be built upon. The CMA likewise is on record as welcoming the partnership initiative and sees it as the best way forward.

Finally, in the repeated Statement of 25th March, which has been mentioned by my noble friend Lord Davies of Coity, the Secretary of State for Trade and Industry stated: I have made it clear to the new chairman that there needs to be an effective partnership relationship between the management and the workforce if we are to deliver [the competitive postal markets of the 21st century]". He also said: And we will do everything we can through the Employment Service, and other agencies, to provide support, assistance and new opportunities to those losing their jobs".—[Official Report, 25/3/02; col. 33.] The Consignia management has stated that it will resist compulsory redundancies. I want to place on record tonight that we are watching to ensure that both the government and the Consignia pledges are adhered to.

8.1 p.m.

Lord Brookman

My Lords, my noble friend Lord Hoyle, in his customary fashion, set out his views on how best industrial relations in Consignia could be improved. Those of us who are interested in industrial relations and the postal service should be grateful to him.

The debate, following the loss of the quite amazing and much loved Baroness Castle of Blackburn, somehow brings into perspective how in many respects relationships between government, employers and employees have moved on. Being actively involved as a trade unionist throughout the Conservative years of government, and to be here now in the House of Lords witnessing positive legislation such as the minimum wage, trade union recognition and the working time directive to name but a few, is heart-warming. Most noble Lords here today have made a considerable contribution to industrial relations and the industrial relations world. Indeed, one noble Lord was overheard to say, "I see the mini TUC is on duty tonight!".

Much has been said about the independent review initially sought by the CWU some two years ago. That review, which I have read, looked at industrial relations in Royal Mail. My noble friend Lord Sawyer, who I see in his place, chaired that independent review and he, together with the two other members, Ian Borkett and Nicholas Underhill QC, should be congratulated. It is an honest, common-sense analysis, outlining a series of recommendations which I am advised are slowly but surely being implemented. That is good news to us all.

Reading the independent review, I felt a little uncomfortable. For example, knowing many fine people in the CWU and reading that there was a, lack of accountability to the national union", by a very small number of branch officials made me wince. Industrial relations have suffered and will continue to do so while certain management employ macho management ways and bark out orders in a military style. Front-line managers seeing their role as authoritarian and purely directive is counterproductive. Against those views expressed in the review, it was extremely pleasing to read of the breakthrough last week on pay and other matters. The review's key message of common sense has prevailed.

However, this debate refers to the Government and their position. Thirty thousand job losses have been declared and we have seen headlines such as that from Consignia's chairman, Allan Leighton, saying, "Why am I sacking 30,000 pasties? Because we're in the mire—big time". His position is clear: the sacrifice of some to save the many.

That approach concerns me. All my working life I was involved in one way or another in the steel industry. It was once publicly owned and British Steel corporation employed some 250,000 people when it was formed in 1967. Now renamed Corus—that is significant, is it not?—the company employs about 40,000 people world-wide. Throughout the years it has been relentless in its approach—"cut to survive". So my point is that clearly what is missing in this country of ours is relevant participation, consultation, workers involved in matters such as rationalisation and, yes, closures where they occur, so that possible alternatives can be found or at least considered.

The situation should not be as Mr Leighton described: It was a sad day, last Monday [25th March] arriving at 6.15 a.m. at the East London depot of Parcelforce to tell employees it was to close after 27 years". That is not proper consultation, partnership, stakeholdership or any other form of satisfactory industrial relations. What we need—and what Consignia needs—is the ability for those who bear the brunt of change to have a voice prior to the changes being announced. That would bring about better industrial relations, trust and commitment. I await with interest to hear my noble friend's response to my final remarks.

8.5 p.m.

Lord Sawyer

My Lords, I am grateful to my noble friend Lord Hoyle for initiating the debate and to my noble friends on this side of the House for giving their time, knowledge and experience to this difficult issue. I want briefly to do two things. First, I want to comment on the progress that has been made since the publication of our report. Secondly, I want to comment on what needs to be done in the future.

First, as regards progress, the avoidance of the pay dispute and the use of mediation—the agreement to a two-year pay deal—is, in my opinion, sensible and a great victory for the use of mediation and arbitration and for the use of ACAS. That is the way in which the business should conduct its industrial relations in the future.

Secondly, the general moratorium on unofficial strikes still holds. It has been in place since August and the effect on quality of service has been marked. If the management and unions can continue the moratorium, that will hold them in good stead in the future.

Thirdly, the doubling of the number of managers attending training courses and the emphasis on the courses being moved from the application of agreements to behaviours to dealing with issues such as harassment, bullying, diversity and how to get people to work in co-operation rather than adversity is much to be welcomed.

Fourthly, the establishment of the 17 trial partnership boards is still waiting to take place. It is ready but is being held in abeyance because of the pay dispute. With the new two-year deal, people should be able to divert their energies to making the partnership boards work. They will bring great benefit to the business. We have seen the appointment of Mr Rupert Midalon and Ms Francis O'Grady who I am sure some of my noble friends will know from her work at the TUC. They will be two new independent members of the national partnership board and I welcome those appointments.

We have also seen the establishment of an independent support team, headed by Sue Marsh. That will be independent from both the unions and management and it will have employees and union representatives seconded to it. It will work entirely on the development and implementation of partnership communications, behaviours, the application of agreements, management development and union participation in the business. All those joint project teams will work behind the scenes doing good and useful work. That is to be commended but we rarely read about it in the newspapers because none of the constructive industrial relations work attracts the kind of headlines produced by strikes.

As regards the future, the real issue is commitment. We need more than words. That is no criticism—to some extent I have only been able to produce words—but we need action in the field, among people working together daily on partnership projects. We need commitments from the Government to partnership and Ministers speaking on platforms and at the Dispatch Box about the benefits of partnership.

The chairman and chief executive recognise that the commercial success of the business can be achieved through partnership. It cannot be achieved through the normal business channels which might apply to other commercial companies. In this business, commercial success can come only from the commitment of the workforce. That message needs to come loudly and clearly from the top. Managers must be listened to. I agree with my noble friend Lord Hoyle that it is important that managers who are keen and willing to play a role in partnership are listened to and are given an opportunity to be heard.

I want to put on record my thanks to Mr Peter Skyte, an official of the CWU who over the past few months has played a constructive role in difficult circumstances. Finally, I say to my friends in the CWU that now the pay dispute is out of the way I want to see the resources and energy of that great union devoted to building a completely different and new model of industrial relations based on partnership. I hope that in moving forward they will have the good sense to listen to the wise words of my noble friend Lord Clarke of Hampstead, who still has many wise words of counsel to offer in this business.

8.10 p.m.

Baroness Turner of Camden

My Lords, I welcome the opportunity to participate in this debate and I thank my noble friend Lord Hoyle for making it possible. I am sure that I am not the only Member of your Lordships' House to have become rather worried by the large advertisement which appeared in the April edition of the Parliamentary Monitor. It was from the Communication Workers Union, warning against the possible loss of the universal postal service as a result of the proposals of the Post Office regulator, Postcomm—bent, as it said, on increasing competition. The union stressed that some 30,000 jobs could be lost.

Of course I was concerned about possible job losses but, as a member of the public and as a consumer of post office services, I was also concerned about the possibility that the universal postal service could be damaged or disrupted. I have a great respect for the men and women who run our postal services. There may be occasional blips, but in general it is a first class service.

My specific interest is that my union, Amicus, has within its membership managers who work in the postal service, already referred to by my noble friend Lady Gibson of Market Rasen. The Communication Managers' Association is an autonomous section of my union. The association has provided me with a copy of its response to the Postcomm proposals. It is not against competition; it recognises that EU directives impose an obligation to introduce some competition, but it is critical of the way in which Postcomm has sought to implement those directives. The association points out, quite correctly, that Postcomm has a statutory duty to ensure the continuation of a universal service at a uniform price. According to the National Audit Office, however, Consignia might find it hard to finance the provision of a universal service at current prices and at current levels.

That the present exercise in restructuring will mean job losses is also confirmed by the incumbent chairman of Consignia. Much of what he has said also confounds those who claim that the present difficulties within the Post Office arise from its failure fully to embrace competition. Until recently this was an institution which declared large profits every year—before there was any competition. Why has there been a change? The chairman asserts two reasons; first, that postal prices have remained low compared with the rest of Europe and, secondly—perhaps more important—the fact that most of the large profits made in previous years went to the Treasury. "We needed that money to invest in our business and in our people", he said.

Under Postcomm proposals, Consignia faces having one-third of its market opened up to cherry-picking competition. The market could be opened up entirely to competition within the next two or three years. It seems unlikely, with the profitable sectors hived off and privatised, that Consignia would be in a position to sustain a universal postal service at a uniform rate and at a reasonable cost. Inevitably, there would be redundancies—not as many, it is hoped, as forecast by the CWU, but far too many to be sustained from a social viewpoint.

What happens to the remaining rural post offices? That point was raised by my noble friend Lady Gibson. Again, it is the poorest and most vulnerable in our society who will feel the pressure the most. They depend on post office services in a way that the better off do not. Generally speaking, older, poorer citizens do not have access to e-mail. The services provided by rural post offices are necessary to them.

Those communication managers who are members of my union point out that much of the research on which Postcomm based its proposals is not all that accurate. The impression has been given that total liberalisation is general throughout Europe, but apparently that is not the case. In fact, the competitive market outside the UK consists of Sweden, Finland, New Zealand and Argentina. The market has been relaxed, although only to a limited extent, in the Netherlands, Germany, Spain and the US. None has suffered the maximalist approach about to descend on Consignia.

It is to be hoped that further progress down this route will be halted so that further consideration can be given to the very well-informed objections from the trade unions concerned.

8.14 p.m.

Lord Haskel

My Lords, my noble and very good friend Lord Hoyle asks what the Government are doing to improve industrial relations at the Post Office. I hope that my noble friend will forgive me for responding to a Question with a question: what are industrial relations at the Post Office to do with the Government? Surely industrial relations are a matter for the management and the unions, working together in partnership. Industrial relations form part of the style, the vision and the ethos that management and the unions have for the work of running the Post Office. It is not a matter for the Government, neither in their capacity as shareholders nor in their government capacity.

That is doubly true now that the Government have appointed a new chairman, Mr Allan Leighton. The other reason why the Government should not get involved in industrial relations at the Post Office is that industrial relations are an important element of the restructuring of the Post office. Restructuring is obviously essential. All the signs have been there for some time: a high turnover of staff; losses in spite of income holding up; costs obviously out of control; and many post offices not only unprofitable but also in the wrong place. In a purely commercial world, such a company would lose out to competitors and go out of business, but there are social and political considerations which mean that the Post Office must continue in business, providing a universal postal service. That makes industrial relations even more complex and difficult.

So as well as reasonable terms for those who go, there has to be encouragement for experienced employees to stay in order to maintain the service. That is a tricky bit of industrial relations, again best left to management and the unions. We have seen that setting rates of pay is also best left to them and to arbitration. In the Post Office, which has to be restructured in order to continue, it may be more efficient to pay above the going rate, because that reduces staff turnover and encourages the good people to stay.

My noble friend Lady Gibson spoke of managers. Presumably, post offices too will be rationalised, and so will their managers. Not only should there be an inducement for sub-post masters to retire early; there will also have to be inducements for some sub-post masters to move from the old areas that do not need as many post offices to new areas that require more.

So I do hope that, when my noble friend on the Front Bench comes to reply to the debate, he will say that he has no intention of becoming involved in industrial relations at the Post Office. It is a most unsuitable case for government meddling and interference. Industrial relations form part of the work of management and the unions in restructuring the Post Office. The Government must give them the time to develop, once again, that wonderful affiliation to the Post Office that staff have had over the years. It is the kind of affiliation referred to on many occasions by my noble friend Lord Clarke. It is a valuable affiliation that will motivate and enable every employee to deliver the good results that we all want to see in the Post Office of the future.

8.18 p.m.

Lord Clarke of Hampstead

My Lords, like other speakers, I am grateful to my noble friend Lord Hoyle for giving us a chance once again to talk about the Post Office. I declare my usual interests. I joined the Post Office in 1946 as a telegraph boy. I then became a postman and, later on, I became a trade union representative in the industry.

I shall have to rush because there is so much to say. Four minutes is nowhere near long enough; I shall need four minutes just to respond to the final comments of my noble friend Lord Haskel. I agree 100 per cent with my noble friend that there is no room for government in industrial relations.

If only that were true. Over the years, I have seen Post Office management representatives run to the telephone to find out whether they could come to an agreement with the union. I have seen government interference when people have asked for tariffs to be looked at; I have heard the telephone calls and seen the letters going backwards and forwards. My noble friend Lord Haskel should not tell this House that there is no place for government interference. I agree with my noble friend, but until the time comes when governments stay out of industrial relations, we shall have problems. However, they are of course a lot better since the report produced by my noble friend Lord Sawyer.

Last week we learned that the head of Consignia is to be replaced by someone as yet unknown to those outside the circle where such decisions are made. Of course it will not be the Post Office which makes the decision, it will be the Government. We all know that. I do not expect my noble friend on the Front Bench to comment in any detail about what I believe to be an act of scapegoatism.

I should like to place on the record of this House that I believe beyond any doubt whatever that Mr John Roberts has given unstinting and loyal service to the Post Office in all the positions he has held during a career that started in 1967. At all times an honourable man, he deserved better. I wish him well for the future. I wonder whether it has anything to do with the fact that John Roberts was able to stand up to Postcomm and its interference in the running of the Post Office. Is it a coincidence—or is it just bad luck for John Roberts?

Industrial relations in the Post Office have been bedevilled by political interference for so long. Last week—unusually for me—I read a paper. I read that a Cabinet Minister is frustrated by John Roberts. I expect John Roberts and his friends in senior management have been frustrated by the interference that they have had to put up with from the Government, not only this one but the previous one and others before that. It has always been difficult.

Now that my noble friend Lord Haskel has had time to calm down from his outburst, I can say, "Yes, get the Government out of it"—but let the Post Office run in a way that enables it to do the things that Tesco does. My noble friend Lord Davies of Coity referred to Tesco, but I wonder whether Tesco has been able to keep its costs 13 per cent below the 1988 level of the retail prices index. The Post Office has had to do that at the direction of government.

For many years, Post Office workers have seen change after change after change introduced but few have been of any visible benefit to the people who do the job. Those people produced a £3.8 billion profit over the past 20 years, but as my noble friend Lady Turner said, 70 per cent of that £3.8 billion went straight into the Treasury's coffers.

Both management and the union deserve praise for reaching agreement on the pay deal. I agree that there is still work to be done, but I should like to give a piece of advice to my noble friend the Minister in regard to the pressure and the bullying about which we have heard: call the dogs off—otherwise, with the best will in the world, it will happen again despite working together and the harmony that has been created. At the moment people in Romec, the profitable arm of the Post Office which is responsible for cleaning, maintenance and engineering, are facing outsourcing and the loss of their jobs. I ask my noble friend the Minister to take note of that.

It is worth remembering that days lost through strikes during 1999–2000 were recorded as the lowest since records began in 1891. That year, days lost in the postal service were 0.2 per cent of all days lost. The sorrowful story of industrial relations in the 1990s is one of government interference—interference that has led to the holding down of postal prices to the lowest in Europe. That has contributed to the change of financial fortune in the Post Office and I reject entirely the idea that if you keep your prices low somehow or other manna will fall from heaven and pay your people the wages they deserve. I hope that government dogma do not lead us back to industrial unrest in our once great postal service.

8.22 p.m.

Baroness Byford

My Lords, I apologise for speaking in the gap. The error is mine. I had always intended to take part in the debate today. I shall make two quick points.

I should like to add my voice to those who have condemned the attempt to open up our postal services to European competition by 2006. Why do we have this obsession with beating other European countries to the implementation of directive after directive? How does Consignia view this decision? Does the Minister accept that this will bring greater pressure on Consignia management and staff?

I declare an interest as a patron of ViRSA, an organisation which has done a lot of work with post offices, particularly rural post offices.

I cannot allow a debate on the Post Office to pass without mentioning that last year saw the closure of 547 sub-post offices and that another 3,000 may close with the rationalisation of the urban system. Payment of pensions and child benefits and encashment of giros forms a large part of the work of rural and urban post offices. The Government are in the process of moving this work to the banks. Will the Minister explain why, when the Post Office has its own national savings ordinary account, it could not use this account and keep the work within the Post Office system? The system works only as long as the holder has money on deposit at the post office. It does not offer overdrafts and is ideal for people who have little or no money apart from benefits. Has this system been considered? Can it not be used for the automated credit transfer of pensions, child benefits and emergency payments?

This weekend on "Any Questions", Janet Daley pointed out that the welfare state exists to pay benefits according to the objective criteria. She criticised the Prime Minister for using them to coerce people into a certain behaviour pattern. It is even more reprehensible for the Government to use them to force people into a certain commercial pattern.

We are grateful to the noble Lord, Lord Hoyle, for the opportunity in this debate to express our hopes for the future of Consignia. We all want a continuation of a universal service and confidence in the future of Consignia for those involved in it.

8.25 p.m.

Lord Newby

My Lords, I, too, thank the noble Lord, Lord Hoyle, for initiating the debate. It is eloquent testimony to the state of industrial relations in Consignia that the debate is necessary at all. It is inconceivable that we would have a similar debate on other sectors of the economy where industrial action was once rife—for example, the motor industry—because over the past 20 years industrial relations have been transformed. Why has this not happened in the Royal Mail?

Some of the reasons are set out in the latest report from the group of the noble Lord, Lord Sawyer. He referred to an inability of front-line managers and union representatives to work together; he referred to the problems of leadership and communication; and he referred to the fact that problems were caused by a reluctance to accept that change was necessary at all.

He reached two conclusions: first, that there must be an end to industrial action; and, secondly, that there must be a change in the culture to develop a partnership method of working. In terms of industrial action, clearly the responsibility rests with both the CWU and the individual groups of workers whose unofficial action has bedevilled the Post Office for many years. Everyone must have been relieved when the latest threat of strike action was withdrawn, and equally relieved and encouraged by the dramatic falls in official action which have taken place over recent months.

But leadership in terms of a partnership system of management to introduce more efficient working methods must come from management itself, as set out by the noble Lord, Lord Davies of Coity. The report of the noble Lord, Lord Sawyer, argues that management at the top has accepted this principle. If so, some of the comments over recent months by both the chief executive and chairman of Consignia about redundancies—made in advance of any form of consultation— appear, unfortunately, to be based on the command and control approach which has served the Post Office so badly in the past.

On the positive side, some of the proposals in the latest package for change, which are now the subject of further negotiation, clearly are long overdue and should be widely welcomed—the five-day week is one such. Other proposals, such as longer delivery rounds associated with the ending of the second post, are more contentious, but they, too, are surely necessary to make the efficiency gains which Consignia now desperately needs.

A partnership between management and workforce is clearly essential and progress is being made, but success also depends on the attitude of Postcomm and the Government. For Postcomm, there must be a clear recognition that the postal service can be successful and efficient only if it can respond to change within an adequate timescale and with adequate resources. The initial proposals for liberalisation were simply too fast. Liberalisation must take place over a longer period. Equally, there is now virtually universal acceptance of the need for the cost of stamps to rise in order to improve the revenue situation. There is clearly popular support for such a move.

As the noble Lord, Lord Clarke of Hampstead, made clear, the role of government over a number of decades has been far from benign. The constant policy of draining funds from the Post Office made it impossible for it to respond to the changing environment in which it was operating. This was extremely frustrating both to management and to unions and helped to foster poor morale and poor industrial relations.

I agree with the noble Lord, Lord Haskel, that industrial relations within Consignia should not be a matter for government, but clearly government still play a major role in the direction of Consignia. I would particularly welcome any comments which the Minister feels able to make on the role which the Government are playing in terms of the further development of the Postcomm proposals.

Everyone who cares about the postal service is willing the Sawyer process to succeed. The sign of real success will be when the House no longer debates Post Office industrial relations because the problems of today have become the problems of the past.

8.30 p.m.

Lord Rotherwick

My Lords, one must come to the conclusion that the blame for the dire state of industrial relations in the Post Office lies fairly and squarely on management and unions alike. This is an organisation which only a few years ago was regarded as a model for other post offices around the world for the unequalled reliability of its delivery service, but which now manages to lose a million items a week; an organisation that was producing an annual profit of £600 million a year, compared with its current loss, which is running at almost £550 million a year.

Although the blame for poor industrial relations lies with the two sides I have mentioned, another party has contributed massively to the lack of motivation and poor morale of both management and staff. That is, of course, the Government.

In a recent Statement, the Secretary of State blamed the previous Conservative government. She said that, successive Conservative Governments … allowed the Post Office to stagnate and starved it of investment".—[Official Report, Commons, 25/3/02; col. 565.] Perhaps she overlooked the fact that the present Government have been in power for five years and, since 1998, have taken £2 billion in dividends.

I turn to the report of the Sawyer committee review of industrial relations in the Royal Mail. I have time merely to point to key issues in this well-balanced report. In the year to March 2001, the Post Office lost 66,000 days in industrial action. Staggeringly, this equates to half the number of days lost to industry and commerce in Britain in 2000–01.

I can do no better than quote the report: There is a clear divide between management and staff which is exacerbated by the lack of trust and respect for each other". The report adds that, there is a constant threat of industrial action, official and unofficial—and when it occurs it can be highly intimidating", including instances of both threatened and actual physical assaults on managers. One must seriously question whether, with this head-in-the-sand attitude, there is any hope for improvement in industrial relations in the Post Office.

In conclusion, I can do no better than quote once again the report: The primary responsibility for stopping strikes inevitably lies with the union … but too often strikes are a response to high handed or insensitive management behaviour". It calls for a, fundamental change in the industrial relations culture", in Consignia, and states: We expect both Royal Mail and the CWU at the highest level to take all steps in their power to prevent further industrial action—official and unofficial". Therefore, it is most encouraging to hear the noble Lord, Lord Sawyer, say that the moratorium on strikes is holding at present. One hopes that it will continue. That should be the message, bereft of party politics, from all sides of this House.

8.33 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, I begin by congratulating my noble friend Lord Hoyle on securing the debate. My noble friend and other noble Lords have raised a number of issues on the important subject of industrial relations within Consignia. I am grateful for the many constructive comments that have been contributed.

First, I must say that although there are without doubt problems in the company, there should be no implied criticism of individual postmen and women, who provide magnificent service to the general public in all weathers. They have been immensely loyal and hard working, and that must continue to be recognised.

The problems within Consignia are, of course, not a recent development. There is a history of industrial relations problems. Since the late 1980s, the Post Office has experienced great difficulty in agreeing or fully implementing new working practices that were intended to bring benefits to the business and its employees and to improve services. For example, in 1996, over 800,000 days were lost during a national dispute. That cannot be the right way to continue. Therefore, let us have no nonsense about the previous government's record on this or not intervening in industrial relations matters.

The Government, of course, share the concerns about the poor industrial relations climate that exists within Consignia. But I agree with my noble friend Lord Haskel that industrial relations are a matter for the company and the unions. Government intervention would go against the thrust of our reforms of the postal services market and would seriously undermine what we have achieved in giving the company the freedom to act commercially at arm's length from government.

I strongly agree with the noble Lord, Lord Clarke. In the past, government have intervened too much in the Post Office and that has not been at all helpful. I do not think, however, that there should be any desire to continue this. It has to end, and we have to make industrial relations clearly matters for the company and the unions. We have made the government position on this clear to both of them.

The Government have, on the other hand, consistently encouraged the management and the unions to work together to resolve disputes at local, regional and national level. They are best placed to achieve this. The Government will also help where appropriate—for example, by helping to facilitate change through the Partnership at Work Fund and to resolve disputes through ACAS services. In answer to the point raised by the noble Lord, Lord Sawyer, the Government will speak out and will make clear that they stand firmly behind the partnership approach.

The review by the noble Lord, Lord Sawyer, has been mentioned several times. It is an excellent review. It makes a clear and independent assessment of the existing problems in Consignia and of the best practice that exists. It was also encouraging that the Royal Mail and the unions jointly asked for the review to be undertaken. I agree with my noble friend Lady Gibson that this provides a platform on which to build.

The review made two main recommendations. The first was that industrial action should come to an end. The second was that the existing culture should be changed throughout the business through developing partnership ways of working. Working together in partnership is the only way to improve the industrial relations climate within the business, which is crucial if Consignia is to improve morale, turn its position around and regain the confidence of its customers.

It is also encouraging that the management and unions have responded positively to the recommendations of the noble Lord, Lord Sawyer. The moratorium jointly agreed last September, under which the Royal Mail agreed not to implement changes in working practices at local level without involving the national parties and the CWU suspended any threats of industrial action, is still in place. Although some unofficial action has occurred, it has been reduced significantly: 2,656 days were lost between August and February, compared to 48.704 between April and July.

The joint steering group of the noble Lord, Lord Sawyer, consisting of senior members of Royal Mail, the CWU and the Communication Managers Association, is through a series of meetings continuing to progress recommendations in his report.

A National Partnership Board, chaired by the noble Lord, has been established and is due to meet on 23rd May. The approach to partnership working has been shaped by the partnership vision developed by the joint steering group and the TUC partnership principles. A six-month pilot of regional and area partnerships boards in London, Scotland and the East Midlands will begin in June. A partnership support team has also been set up to support the National Partnership Board in delivering the partnership vision and the Sawyer recommendations.

It is also encouraging that Jonathan Evans, formerly UK human resources director of Orange, has recently joined Consignia and is part of the team with specific responsibilities for implementing the recommendations of the noble Lord, Lord Sawyer.

I agree with my noble friend Lady Gibson that middle managers and junior managers are critical to this process. I welcome the fact that a leadership development programme is now in place for all managers to be rolled out over the next two years and joint approaches are being developed to training and development and improving behaviour.

Communication is also crucially important at a time of change within the company. The unions and the workforce need to be consulted and kept informed of developments on a regular basis. There should be no surprises in what is being done to secure the future of the business.

The noble Lord, Lord Hoyle, raised the question of the Postcomm proposals. Postcomm is carefully considering the responses to its consultation document and will determine in the light of the evidence how best to introduce competition for the benefit of consumers consistent with its statutory duties, including its primary duty to ensure the provision of the universal service. The Government have followed that process closely and are in dialogue with the various players, but it is not for the Government to take on the role of a company or the regulator. They must each act in accordance with their own responsibilities and duties.

In answer to the noble Baroness, Lady Byford, the new chairman of Consignia has made it clear that he wishes to establish a new relationship between the company and the regulator—a constructive rather than a negative approach that recognises the opportunities and challenges of operating in a more competitive environment. That is very encouraging. As with industrial relations within Consignia, the way forward between the company and the regulator has to be through effective dialogue, not confrontation.

However, I must point out to my noble friend Lord Hoyle that blaming one side or the other is not the way forward. All sides need to realise that they must get their industrial relations right or they will not be able to deal with the competition that they have to face.

In answer to the noble Lord, Lord Newby, it is not for the Government to intervene with the work of Postcomm. Postcomm is an independent regulator, established under primary legislation that has been passed by Parliament. Post Office management and the unions supported the creation of an independent regulator.

The noble Lord, Lord Davies of Coity, made it clear that a partnership approach can flourish in a competitive climate. I support that point. There is no climate in which it is more essential to have a partnership approach, because one cannot afford to have the lapses of service that occur when there are industrial relations failures.

The noble Lord, Lord Brookman, raised the question of redundancies. We very much want there to be consultation, but the problems of the business have to be tackled. It is only because similar problems in the steel industry were tackled that we still have a steel industry in this country.

The noble Baroness, Lady Turner, asked why the company had turned a profit into losses. We need look no further than the accounts of the Post Office. In the past two years, turnover has gone up by 7 per cent and 8.3 per cent. At the same time, group operating costs have gone up by 7.8 per cent and 13.7 per cent. Those are not issues that are forced on the business; they are within the hands of the business. It is up to the management and the people who work in the company to get them right.

The noble Baroness, Lady Byford, asked about the introduction of ACT. I do not believe that that is forcing people to do anything. It is a simple introduction of new and modern methods into the Post Office. I also do not think that it has much relevance to the industrial relations of the Post Office.

Baroness Byford

My Lords, I think that—

Lord McIntosh of Haringey

Oh!

Baroness Byford

My Lords, am I not allowed to ask?

Lord McIntosh of Haringey

My Lords, we are over the hour already.

Baroness Byford

My Lords, the noble Lord, Lord Sainsbury, implied that ACT had no implications for the Post Office, its workings, strikes and everything else, but I think that it does.

Lord Sainsbury of Turville

My Lords, I do not think that ACT has an impact on industrial relations. It is a highly desirable introduction of modern methods. We are only doing efficiently what the previous government attempted to do and we shall continue to do it.

Over the years, industrial relations in the Post Office have been nothing short of disastrous. As I said earlier, more than 800,000 days were lost to strike action in 1996–97 alone. The review by the noble Lord, Lord Sawyer, has given us a clear statement of the way forward. He believes that there is a genuine commitment to change on all sides in the Royal Mail. That commitment must be acted upon. The culture of change needs to be implemented quickly or the impetus will be lost. In Allan Leighton, the Government believe that they have appointed the right man for the job. He is a good communicator and genuinely wants to make Consignia a great place to work. That is what the Government—and the House, I am sure—wish to see. It will not be easy, particularly at this difficult time, when the company needs to cut its costs through restructuring and, regrettably, reducing jobs. Everyone in the company needs to be clear that unless it sorts out its industrial relations it will not be able to compete effectively in a marketplace that will inevitably, over time, become increasingly liberalised, with all that that means for profitability and jobs.