Downing Street Says » Royal Mail

Put that John Grogan MP had commented that a deal would need to be done between Ministers and backbenchers, the PMS said that he would not get into a public discussion between the Prime Minister and his backbenchers. The general point was the one made by Pat McFadden on the radio this morning; we did have to address the underlying financial problems at Royal Mail and we could not get away from that.

We could not get away from the fact that Royal Mail was facing a 5.8billion pension deficit and it was facing falling demand for postal services. This was why the action we were proposing was designed to save Royal Mail and secure the universal service and Royal Mail s future.

We had put forward our proposals and we were ready to listen to any other proposals put forward. However, these would have to be realistic and they had to address the underlying problems, and so far we had not seen any alternative proposals at this point that did that. We could wish away the problems of the Royal Mail, but that didn t address the underlying problems; they were faced with a large pension deficit and falling demand for their services.

Asked how the Prime Minister would respond to reports that his Chief Whip was actively encouraging MPs to fight against any planned sell-off of Royal Mail, the PMS said that the Prime Minister had no reason to believe that was the case.

Asked whether he thought having a private sector partner was an integral part of Royal Mail s future, the PMS said that we had set out our proposal and that was the proposal on the table. The legislation was currently going through the House of Lords and was due to come back to the House of Commons in the summer. The issue was how to get new investment into the Royal Mail and how to transform and modernise Royal Mail in the face of technological change. Those were the challenges that we faced and needed to be addressed.

Asked if the Prime Minister would reject any solution that did not involve private sector partners, the PMS said that what we wanted to do was address the pension deficit and the underlying financial position, which we believed required more investment. This was why we welcomed investment from the private sector and if there were any alternative views that secured those objectives, we would like to hear them as none had been put forward yet.

Asked whether the Royal Mail needed a plan to modernise as well as a plan for the pension deficit, the PMS said it needed a plan for both. That was why this was looked at very thoroughly. It was not something we came up with independently, as it was looked at by Mr Hooper in his report. We were acting on the basis of his recommendations, which had come about through a very serious and rigorous piece of work. This was the basis on which the Government was moving forward.

Put that in the Government s view the current management was not able to deliver that kind of plan, the PMS replied that the issue was how to deal with the pension deficit and how to deliver the transformation and modernisation that Royal Mail needed in order to deal with technological change. That was why we were proposing the action we were taking on the deficit, which had to be conditional on action to modernise and reform the Royal Mail.

Asked how the Government would make sure the private sector stake wasn t an arbitrary one, the PMS said that that was a decision that Ministers would have to take. We had been very clear that there did need to be a majority public sector ownership and that was why it was written into the face of the bill. Asked if the Government was open to negotiation on the size of the private sector stake, the PMS said that these decisions would need to be taken once we had considered what was being offered by any potential private sector investor.

Put that the private sector investor would need to bring expertise as well as investment, the PMS said the rationale for private sector investment was set out in the Hooper Review and he referred people back to that.

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» Tuesday, May 5, 2009

Royal Mail

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