Downing Street Says » Royal Mail

Asked what the Prime Minister thought needed to be done about Royal Mail s pension black hole, the Prime Minister s Spokesman (PMS) said that, as Lord Mandelson said yesterday, the pension remained a matter for the company and the pension trustees. The Government had been clear about the basis on which we would be prepared to take on the pensions deficit and it was not our intention to cherry pick the implementation of the bill.

Asked what that meant in practical terms, the PMS said that it meant we were not going to cherry pick the bill and that we had to take into account the interests of taxpayers. As Lord Mandelson had been saying, the Government could not be expected to take responsibility for the pension deficit if the other challenges that faced Royal Mail were not also addressed. It was important to look at these problems as a whole, as Hooper recommended, which included issues such as investment, restructuring and modernisation. It was the Government s view that we needed to look at the Hooper package as a whole when market conditions improved, which would allow scope for finding private investment.

Put that the taxpayer was ultimately liable for the deficit, the PMS said that the pension remained a matter for the company and the pension trustees. We had been clear about the basis on which we would be prepared to take on the pensions deficit.

Asked what the situation was concerning the bill, the PMS said that we were not intending to take forward legislation until we were in a position to implement that legislation and we would not be in a position to implement that legislation until market conditions improved.

Put that the whole thing had been shelved, the PMS said that that was not a phrase we would use; it remained our intention to implement the Hooper recommendations and the legislation that we had taken through the Lords when we were able to implement it.

Asked what the difference was between market conditions now and when Lord Mandelson outlined his original plans in December 2008, the PMS said that we had seen a deterioration in the economic circumstances in the first half of this year, not only in this country but in the rest of Europe.

Put that when the original plans were outlined we had not expected the deterioration to be so sharp, the PMS said that we had been able to test the market since we introduced the legislation and it was clear that economic conditions had deteriorated in the last six months.

Put that Cabinet Ministers had been indicating that the economy would be getting better by the beginning of next year and asked if we could expect the bill to be back on track by then, the PMS said that people could expect it to be back on track when market conditions improved and we were in a position to be able to find a private investor. We would not give a forecast on the market for private investment in postal services.

Asked if the decision to delay the bill had had anything to do with internal opposition from Labour MPs, the PMS said that Lord Mandelson had set out the basis for the Government s decision in the House of Lords yesterday.

Put that people had been told that it was only the first quarter of this year that would be bad and that things would pick up in the second quarter, the PMS said that no one would argue that the sum total of what had happened over the first six months of this year represented a deterioration in economic conditions when compared to the end of last year.

Asked if there was a plan to do something similar with Royal Mail to what had been done with the banks this year, the PMS said that in terms of nationalised banks, as with the Post Office, we wanted to ensure that we got best value for money for the taxpayer.

Asked what the Prime Minister thought of the proposed strikes in London, the PMS said that the Prime Minister felt that the Royal Mail needed to change and modernise in order to turn itself around. Therefore, in his view, he did not think that planned strike action was necessary and that the unions and companies should work together in order to change and modernise Royal Mail.

Put that the Royal Mail was part of the Government s responsibility and Ministers could get involved in the sell-off if they wanted to, the PMS said that we had set out the conditions on which we would be prepared to take on the pension deficit but it was not a blank cheque. Strike action and modernisation was the responsibility of the management of Royal Mail and we would hope and expect the unions to work with the management in order to help modernise Royal Mail and turn its fortunes around.

Asked if there were any alternatives to a part-sale, the PMS said that the Government s view was that the best approach was as set out by Hooper and that was the approach we would continue to pursue.

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» Thursday, July 2, 2009

Royal Mail

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