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Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)Post Office Review |
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Post Office Review Our election manifesto contained two very clear commitments of direct relevance to the Post Office: First, it committed us to ensuring that "self-financing organisations within the public sector - the Post Office is a prime example - are given greater commercial freedom to make the most of new opportunities". And second, it stated that " public services and transport services in rural areas must not be allowed to deteriorate". There is a third commitment, made whilst we were in Opposition. It was contained in a letter written in April 1996 from Margaret Beckett to Alan Johnson, who is with us here today as the Member of Parliament for Hull West and Hessle, but who was then the General Secretary of the Communications Workers Union. In that letter Margaret said "It remains the Labour Party's view that this drive from the centre..." - in this she was referring to the Tory Government - "...to continue with the programme of closure and franchising of offices should cease, and that there should be an open review on the future of the nation-wide network of post offices". The review of the Post Office, which we announced on 16 May, will enable us to address all three commitments. Indeed our announcement on that day included the suspension of the Crown office conversion programme whilst we undertake the review, whose underlying theme is how best to grant the Post Office the greater commercial freedom it needs to meet the challenges and opportunities of the coming years. The Government fully recognises that the Post Office is one of the country's key national institutions held in great affection by the public. The Conservatives tried to privatise it. We opposed that in favour of a public Post Office providing a comprehensive service. Customers and workforce agreed with us. The overwhelming support for the campaign which forced the Tories to abandon their proposals showed the depth of public feeling that an organisation in public ownership and run in the public interest for more than 350 years should not be torn up by its roots and made subject to the private profit motive for reasons of political doctrine. Under a succession of Tory Ministers the Post Office remained trapped in a futile and damaging policy vacuum. Post Office managers were forced to watch from the sidelines whilst their continental neighbours were free to seize the opportunities opened up by the increasing globalisation of the marketplace. There are as a result strong pressures to end this prolonged period of limbo by taking quick decisions on the way forward. We understand and sympathise with those pressures. But what is important is that we reach the right decisions, and that we avoid the temptation to seek the quick fix. I therefore make no apology for proceeding carefully and cautiously with our work. We want to move forward on the basis of the broadest possible consensus. That is why the first stage of the review has focused on extensive consultations with the main interested parties in the postal sector. We wanted to understand as fully as possible the dynamics of the Post Office and of the wider postal sector. We wanted to hear at first hand from those most closely involved the issues that most concerned them. And as we move forward to later stages of the Review, we want to continue to involve them to help us find the right answers. The first round of consultations has already taught us some valuable lessons. Despite the differences of focus and perspective among those consulted, the exercise has clearly demonstrated that the fundamental elements of postal policy - universal service at a uniform tariff and a nation-wide network of post offices - remain keystone requirements for both business and the general public. Also there is broad acceptance that the Post Office needs greater commercial freedom both to meet the challenges and opportunities it is facing, and the changing needs and expectations of its customers. But this acceptance is frequently qualified by a demand that in return the Post Office should be subjected to a greater level of regulatory scrutiny. There is widespread agreement that existing as well as future competition between the Post Office and the private sector should so far as possible take place on a level playing field. The Government's Competition Bill, currently before Parliament, proposes significant changes to important aspects of UK competition law, and should serve to address some of the concerns expressed; but those we consulted clearly want the Review to include consideration of the case for an expert independent regulator. Another major area of concern is the worrying deterioration of the industrial relations climate, particularly in Royal Mail, over recent years. Whilst clearly this is primarily an issue for management and the unions, it is widely recognised that without improvements in this area not only is the quality and reliability of existing services jeopardised but realisation of the Post Office's wider commercial ambitions and objectives is also constrained. Some see the operation of public sector pay policy, and in particular the extent to which it has prevented staff from sharing in the success of the business, as an important contributory factor to poor industrial relations, and as a strong argument in favour of structural change to remove the Post Office from the public sector. It is widely felt that the level of the dividend - the so-called negative external financing level, or EFL - which the Post Office is required to contribute each year to the Treasury has in recent years become excessive, and well beyond a normal commercial dividend. It is argued that the effect has been to starve the Post Office of investment, especially since it is also not free to borrow on the commercial markets. It is difficult not to have some sympathy with this viewpoint, and it is certainly one area that we shall look at carefully with our Treasury colleagues in our future work on the Review. In the short term there are obvious constraints: as a Government we have pledged ourselves to honour our predecessor's spending plans, and that obviously limits our flexibility to make adjustments on the revenue side of the equation. I said earlier that we intended to proceed carefully and cautiously, and that our concern was to find the right answers rather than the quick fixes. But that does not mean that we have to proceed slowly. Nor does it mean that we cannot or will not decide anything until we are in a position to decide everything. On the contrary, we will aim to make good progress with our work, and to organise it so that its output becomes a rolling policy programme of developments, rather than a single big bang solution. There have already been some early results of this approach. Thus we have authorised the Post Office to seek a joint venture arrangement with a private sector partner for its Quadrant catering operation, having first secured assurances that the interests of existing Quadrant staff would be fully safeguarded. These safeguards extend to retention of existing terms and conditions of employment, trade union representation, Post Office pension fund membership, and wider job and career prospects within a larger organisation. We hope to be in a position to announce shortly the terms of reference, modalities and likely timescales for taking forward the next stages of our review of the Post Office. The work that I have described to you all too briefly this afternoon is perhaps best characterised as an initial scoping study based on wide consultation as precursor to more substantive work in a more formal review framework. I should like to end by returning to my starting point - the manifesto commitment to ensuring "that self-financing organisations in the public sector - the Post Office is a prime example - are given greater commercial freedom to make the most of new opportunities". There has been much press speculation in recent weeks that what the Government intends is to turn the Post Office into a plc, and to follow that closely by a 49% share flotation. I believe that such speculation is thoroughly unhelpful in a number of respects. It implies that the Government has already made up its mind, and thereby also carries the implication that any further work on the review, and any further consultation, would be a sham. I refute this absolutely and categorically. Such speculation also focuses the debate on semantics, and therefore diverts attention from the real issue, which is what structure will best enable the Post Office to meet the challenges and opportunities of the coming years. It is that real and urgent issue that we intend to address. And we intend to seek the help and co-operation of all those who have a stake in the future of this organisation, which has served our nation so excellently for more than 350 years, to find the right answers. That is what the election manifesto promised. That is what we intend to deliver. |
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Other speeches by Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)
(the following are available from the archive) |
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