Postal Services Bill
Debate between Baroness Kramer and Lord Hoyle
Lord Hoyle
I was not going to rise, but I am going to rise and there may be other occasions when I rise when we hear the eloquence of the noble Lord opposite. I notice that he did not reply to the argument being put forward here about the uncertainty that would rest with Royal Mail unless there is a conclusion date. The question that was being asked was, “Are they going to give it away?”. I know that the Minister is a more reasonable person, and I expect that she will deal with the arguments rather than going round the periphery and talking about what might or might not have been. The pair of us had a little discussion. We did not always agree, although on other subjects in the past we have agreed, so we have something in common, but not on this. I hope the noble Lord will not rise again unless he is going to deal with the arguments in a constructive way and say why we should not have it. The reason is that we cannot allow uncertainty to continue. That will happen. How can management plan ahead if it has to keep asking itself: When will we be selling it off? How will we sell it off? Where are we going to go? No planning can take place in such circumstances. It not only affects the Royal Mail; it affects the Post Office network as well. We need to know what the Government are thinking. They have said, and I completely agree with them, that it will not be a giveaway. They are trying to get the right price with the right company that will serve the interest. I, of course, am totally against that, as is known. The point is that we are where we are in discussing this Bill, and it is reasonable to put a limit on this. After all, we are only at the beginning of 2011 and we are talking about the end of 2012. What is wrong with that? I do hope that we get a more constructive reply from the Minister.
Baroness Kramer
My Lords, I should, I suppose, confess to something of a wicked past. Back when I was a banker in the United States, part of my work was advising companies that were making purchases and selling off subsidiaries. If I was advising a potential buyer of Royal Mail, I would be hoping very much that this amendment would pass, because, frankly, nothing would give more leverage to a potential purchaser than what in effect is being described here as a drop-dead date.
We have seen government in the past sell assets at far below their appropriate value. I was very involved from the other side when I was on the board of Transport for London and the Government insisted on the Tube public/private partnership. TfL set itself internal deadlines. I do not believe that they were externally set, although I would have to check that. The ability to negotiate in effect collapsed in the final days as those deadlines approached and were very much exploited by the private partners and the banks on the other side, so I beg this House not to fall back into that trap.
The noble Lord discussed uncertainty, but what greater uncertainty could there be than the knowledge that the Government might find themselves coming back to this House at the time of a sunset clause for leave to continue with a sales programme. That maximises uncertainty for Royal Mail and for the other parts of the group that will, we hope, go on to their new future.
Baroness Kramer
Internally, due diligence is critical. The specifications and the instructions to the investment bankers, accountants and others engaged in the valuation have to be tough and in the monitoring and examination rigour should be applied to the response that they come back with. However, it still has to be in an internal setting, not a public setting. People will have many opinions across this House, but this will be a highly complex process with a great deal of detail. While this House has the ability to understand all that, there may be a subset of people who might be interested in being part of the consultation process by taking a look at that on behalf of the House. However, to me, it certainly would not be possible to do it in a public setting without giving the buyer the most impossible leverage.
Lord Hoyle
The noble Baroness said that if we value it, we will not get a penny more. In past privatisations, it was not that we got the value for the business, but that we sold it at a loss, at a low price. That is what we are asking her to deal with.
Baroness Kramer
I fully understand what the noble Lord is saying. In the past, privatisations have been naive. We have to use pressure to make sure that the Government do not go through that naive process once again. I suggest that the remedy being proposed here—that the value is discussed in detail out in the public arena—does not achieve the purpose. It simply has the effect of making sure that in the end there is a cap on the sale price and creates another set of problems without necessarily disposing of the first set. We need to be pressing to make sure that the internal work is up to standard, but to my mind—and that is one person’s opinion—bringing it into the public arena does not achieve that.