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Royal Mail Act 2017


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Royal Mail Act 2017

An Act to make provision for the renationalisation of Royal Mail Group

BE IT ENACTED by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1. Postal Services Holdings is established as a public corporation wholly owned by the Secretary of State (the corporation)

2. On the passage of this Act, all securities and subsidiaries of:
(a) Royal Mail Group plc., and
(b) Post Office Group Ltd.
shall be vested in the corporation.

3. When the securities of Royal Mail Group are vested in the corporation, the owner immediately prior to the vestment shall be entitled to compensation in the form of Government bonds of equivalent market value in the month immediately preceding the introduction of this Bill (c 380p per share).

4. Section 2(a) does not apply to those shares that were granted to employees of Royal Mail Group and which are still owned either by the employee in question or a member of their family.

5. If an individual under section 4 wishes to divest his shareholding, he may only do so by applying to the Secretary of State for compensation equivalent to that paid under section 3 adjusted by the change in the nominal GDP index published by the Office for National Statistics. Upon payment of compensation, the shareholding shall be vested in the corporation.

6. The corporation may not divest its shareholding in Royal Mail Group or Post Office Group, or any subsidiary thereof.

7. The governance and roles, responsibilities, and powers of the Corporation and the Secretary of State with respect to postal services shall be as under the Postal Services Act 2000 before the passage of the Postal Services Act 2011.



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Mr Speaker

I move that this Bill be read a second time. 

The sale of Royal Mail was the latest, Mr Speaker, in a long line of firesales of the country's crown jewels. Established in the 16th century, it has had a proud and long history of serving all our nation's communities. It has connected isolated and rural communities to one another for centuries, delivered precious cargo: whether love letters, legal letters, pay slips, or Christmas cards. It has touched, and continues to touch, every facet of our lives.

The red postbox is a symbol of Britain known around the world. And it is a symbol of the connections binding our country together and the social ties that are the core of our country and our existence.

The Royal Mail - one of the first public services provided by the Crown, still proudly bearing the seal of the Crown.

And the parties opposite, spearheaded by the new leader of the Liberal Democrats, decided to sell it for a quick buck.

Not to protect the universal service for the people of this country, which is increasingly under threat from corporate costcutting.

Not to make it more commercially viable, because it already made a profit of well over £300 million a year as a public service.

Certainly not for the staff at Royal Mail, who have consistently opposed privatisation: 96% of CWU members voting against it in 2013, and consistently supporting its return to the public sector since.

Mr Speaker, it was pure ideology, greed, and disrespect for the regard we all hold this precious national asset in, that motivated this sale. 

It was also a deeply botched sale. In order to make it happen, British taxpayers were asked to take on the pension plan and its liabilities, used cynically by the Chancellor at the time to pretend he was meeting his fiscal targets while leaving future taxpayers with a significant liability and selling off the assets and name of Royal Mail itself. And numerous reports since have concluded that the conduct of the sale, and the Government's alarmist rhetoric on industrial relations, meant that they had undervalued this priceless British asset.

A bad policy, and a botched implementation.

And we will now put it right.

This Bill will reestablish Royal Mail as the public company that the majority of its workers, the majority of the country, and I hope, the majority of this parliament, believes it should be.

This will protect the universal service to all British people, ensure that the profits of Royal Mail are invested in the business or in the country as a whole, and ensure that our proud posties are working for the public and not for corporate profits.

Royal Mail shares will be traded for equivalent Government bonds, worth around 3.5bn. It is important to understand that makes the Government and the taxpayer no better or worse off. We are trading one asset for another as exactly the same value. On an ongoing basis, the distributed profit of Royal Mail would be expected to far exceed the annual interest payment on Government bonds.

As part of the privatisation, 10% of shares were reserved for Royal Mail staff. The Government will not purchase their shares immediately, but will establish a scheme to allow them to elect to return their awards at equivalent fair market value when and if they choose. Those shares will not be otherwise publicly tradeable.

Mr Speaker, this Bill does not turn back the clock. It enables a bright, positive future for Royal Mail as a customer focussed public service. This proud public service, centuries old, will once again serve the people, not private profit, and I commend it to this House.

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Mr Speaker, 

While the official Opposition considers their stance on this legislation, I would be happy to rise in support of it and the measures proposed. We in the SNP had stood against the original privatisation- particularly for the reasons put forward by the Right Honourable Member for Coventry South. The proposal to privatise the Royal Mail- not a business but rather an important public service, particularly in more remote or rural regions- was something that was done too poorly, too quickly, and too haphazardly to be allowed to continue. 

And that is what we are protecting here- the reason that this move should be celebrated- is because this will only strengthen the Universal Service Obligation and ensure continued service to the communities in Scotland that depend on, that are built around, predictable, consistent, professional mail and parcel delivery. I know that this Obligation has been enshrined in law and sold as a "safety net," but we all know that it was a matter of time before a private Royal Mail sought to weaken that obligation in the name of saving money or reducing labour costs- and eventually cutting off communities. After all we have seen the Shadow Chancellor call Royal Mail an industry better run by businessmen- but we all know the game. The game of business is to maximize profit which is done through cutting costs and increasing revenue. 

There is little more to add about a policy that is going to be good for our communities and will provide them with the certainty that the jobs will be there and that the public services they count on will remain safe in government hands- where public services ought to be.

Devon Milne MP

MP for Aberdeen North (2015 - ) | Scottish National Party


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Mr. Speaker, 

I rise today, for the first time as Shadow Chancellor of the Exchequer, to deliver the Opposition’s response to the Government’s plan to reverse four years of progress by placing the Royal Mail back into the hands of the state. I appreciate this opportunity to lay out the Conservative Party’s case for why the innovation and growth achieved by privatization is so vital, and why the Government’s plans threaten the health of Britain’s universal postal service upon which millions rely. 

It is fitting, Mr. Speaker, that the first time I speak to the House as Shadow Chancellor is to make an intervention on a debate focusing on the Royal Mail given how important the service has been to myself and my family. The key function of Royal Mail is to ensure our country remains connected - a particularly important function when living on an island off the coast of mainland Britain, as my family does. The Isle of Wight, the community into which I was born and now have the privilege of representing in Parliament, is heavily reliant on the services provided by Royal Mail. While the internet has made welcomed changes in how individuals stay in contact with one another, you’re never going to be able to deliver a parcel via email. As such, the Royal Mail will always play an essential part in our country’s social and economic fabric. 

The Conservative Party wants to enhance Royal Mail’s ability to play that essential part in our country’s future - which is why we reject the Chancellor’s plans to undermine the service’s future and jeopardize the ability for Britons to remain connected with one another. In his speech, the Chancellor makes three key arguments: that things were going well when the Royal Mail was under state control, that the situation has worsened as a result of privatization, and finally that the quality of the Royal Mail will improve if it returns to state administration. Allow me to take this opportunity to dispel with each of those arguments and the assumptions upon which they rest. 

The Chancellor begins his speech by arguing that privatization wasn’t rooted in a desire to improve the financial outlook for Royal Mail, because the service was already financially viable. Wrong

When the Coalition Government came to power they inherited a Royal Mail that was in a state of disarray. In 2007, the Royal Mail was the least profitable mail service in Western Europe and the only one to make an operating loss. It is categorically untrue to suggest, as the Chancellor does, that Royal Mail under state control was operating as a profitable model and providing good value to the taxpayer. You don’t need to take my word for it - you can listen to Richard Hooper CBE, the man tasked by the previous Labour Government with leading an independent review into the financial viability of Royal Mail. In his own words, he concluded in both 2008 and again in 2010 that the financial situation facing Royal Mail was so dire that, “the status quo is untenable.” That’s why it was a Labour Government that, in 2009, tried to partially privatize Royal Mail to save it from the impending financial cliff. They failed because of backbench opposition - left wingers who now seem to run the modern Labour Party. 

The Chancellor then argues that the quality of service has declined since Royal Mail was sold to the private sector. Wrong

It was left-wing Guardian columnist Simon Jenkins who begrudgingly admitted that the Royal Mail was, “always a strong candidate for sale to the private sector.” And he was right - the Royal Mail has flourished under private ownership, employees are now part owners in the company and share in its success, and service has remained unchained. The 2008 independent review, led by Mr. Hooper, concluded that Royal Mail would need to attract considerable capital in order to make the investments needed to radically modernize their services. Since privatization, Royal Mail has garnered hundreds of millions of pounds in new investment, without having to rely on taxpayer financing. Since privatization, the Universal Service Obligation has never been infringed, meaning Royal Mail continues to operate 6 days a week with single price UK-wide service. Since privatization, Royal Mail is no longer operating at a loss, teetering on requiring a bailout financed by the British people. By the numbers, privatization has been an objective success for both Royal Mail’s profitability and the reliability of the services they provide to the British people. 

Finally, the Chancellor argues that the services rendered by the Royal Mail will be substantially better if returned to state control. Wrong, again. 

It’s important to remember how bad things were just a few years ago: in 2008 Royal Mail lost £500 million in profits to other forms of communication, accounted for 60% of days lost to strike action because of terrible labor management, and had a distribution network that had been virtually untouched since the 1990s. Under state management, Royal Mail was outdated, outmatched by its peers, and out of touch with the needs of the British people. Privatization changed that, because it enabled Royal Mail to attract long needed capital to invest in new practices, modern technology, and higher standards. Just like mail services around the globe that have been privatized, the Royal Mail has proven to be a case study in why mail programs run better when in the hands of companies that actually know how to run a business. With this shortsighted decision, the Labour Government risks undermining all of the progress made by the Royal Mail and forcing the British people to clean up the mess when renationalization inevitably fails. 

In the beginning of the Chancellor’s speech, Mr. Speaker, he argued that the decision to privatize Royal Mail was, “pure ideology.” In fact, the opposite is true. The Coalition Government acted upon the recommendations of an independent review, first commissioned by the Labour Party, that made it clear that there were two choices facing the Royal Mail: change or die. Ideology played no part in it; instead, the Conservative Party followed the facts and came to the conclusion that only with private investment would Royal Mail have the resources it needed to catch up with the times and save its service model. In doing so, we protected the universal service obligation and ensured that families across the United Kingdom had a Royal Mail that they could rely on to remain connected with their loved ones, receive critical information, and participate in the British economy.

Today, however, it is indeed ideology that is at the root of this Government’s decision. A hard-left ideology, typically pursued by the fringes of the Labour Party, and motivated by a desire to see the power of the state expanded indefinitely. This decision has nothing to do with improving the services offered by Royal Mail or protecting the financial solvency of the organization. If it were, the Government wouldn't be making a decision that flies in the face of every independent review commissioned on this topic over the past decade. It is a shame that the British people are stuck with a Labour Government that cares more about political ideology than they do about practical results, and it is a shame that in their pursuit of this ideological aim that the British people will be made to suffer with a less reliable, less well-funded, less innovative Royal Mail. 

Member of Parliament for Rushcliffe (1979-) 

Member of the Conservative and Unionist Party 

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Mr Speaker,

I thank the new Shadow Chancellor for joining the debate. I confess that looking at the order paper it is increasingly hard to keep track of his namesakes in the Opposition and what they believe on Brexit or on Royal Mail and whether I should be welcoming their contribution or rebutting it. Margaret Thatcher once told the House that every Prime Minister needs a Willie, but I wonder whether the Leader of the Opposition might feel these days that he has a few too many with far too many different views.

I also want to take the opportunity to congratulate him for his appointment to the role, and for in his first speech and statements showing to us just how far off the mark he plans to be. Before joining us in the House for this debate the Shadow Chancellor said - and I quote - that by taking Royal Mail into public ownership I was “cosplaying as a Communist”. I’m not actually sure I know what cosplaying is, Mr Speaker, but I am reasonably certain that the five centuries during which the Royal Mail and its predecessors were owned by the people of this country were not spent under a communist regime.

His statement to this House, Mr Speaker, while lacking some of that hyperbolic flare is a stunning example of omitting some of the most important facts.

For example, Mr Speaker, the Shadow Chancellor claims that I am wrong to assert that Royal Mail was financially viable when it was privatised. He rests a lot on the status of the Royal Mail in 2008 in his assertions there. Now I’m not an expert, Mr Speaker, but I feel like there may have been a few corporations and a few sectors that faced financial difficulties in that particular year. But if you take a longer view, Royal Mail has made significant profits over time. Thanks to the actions of the last Labour Government working with Royal Mail and workers, Royal Mail was on an increasingly financially sustainable path. 

By the time Royal Mail was privatised, it was making an operating profit of £608 million - but their latest accounts show a profit of just £490 million - even if you exclude transformation costs, profits were higher in 2013 than they were last year. 

That trajectory of improvement hasn’t been sustained since privatisation.

So if selling Royal Mail was so vital for its financial sustainability, why on earth did all of the improvement in its financial sustainability happen while Royal Mail was owned by the people? Why did the Government have to hive off the pension plan, leaving it with future taxpayers, just to get that sale across the line?

By ignoring the trends before 2008, and after 2008, the Shadow Chancellor rests on a nearly ten year old report. We have more information now.

He then, Mr Speaker, claims that I am wrong to claim nationalisation will protect service levels from further decline. Before again simply referencing reports and statistics from 2008 - more than five full years before privatisations happened!

There’s a good reason, Mr Speaker, that he isn’t looking at anything more up to date. For example, last year Royal Mail missed its targets on the universal service obligations. Meanwhile, the dividends paid out to shareholders in the face of that and minimal change in financial performance have risen every year - by 15% in just three years.

The signs are there if he cares to see them Mr Speaker that privatisation has Royal Mail not operating as the public service that it is to the people of this country. And to whom is it then accountable when things go wrong right now? Private shareholders, whose priority is return on their investment not the public service. 

That is why the priority over the last few years has been increasing dividend payments, not service.

His final claim, Mr Speaker, is that privatisation has delivered more investment in Royal Mail. And yet even that is not true. Last year, Royal Mail made investments worth £450 million. In the year it was privatised, Royal Mail made investments of £617 million.

So while the Shadow Chancellor swerved from his extreme spin in the House of Commons, Mr Speaker, he is simply wrong on all three points he has raised.

Wrong that it was necessary to privatise Royal Mail for its own financial good: with profits lower today than they were the year it was privatised.

Wrong that it was necessary to privatise Royal Mail to enhance services: with Royal Mail in 2016-17 missing its universal service targets.

Wrong that privatisation was necessary to allow more investment in Royal Mail: with nearly 50% more invested in the year it was privatised than it was last year; while dividends have soared.

Wrong - much like the rotten policy of privatisation itself.

I suggest, Mr Speaker, that the Shadow Chancellor take a leaf out of his namesake on the backbenches and support us in bringing this vital public service back into the ownership of the Crown and the people.

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