Billy Hayes:SPEECH FOR BRIEFING of ROYAL MAIL MEMBERS

[NEWS]

MANCHESTER

I want to outline three things about the Government and the postal industry.

 Where we’ve been
 Where we’re going
 And what we’ve got to do now.

Where we’ve been –
In the first period of the Labour Government we had the debate about commercial freedom in Royal Mail.

When they were DTI Ministers, Patricia Hewitt and Alan Johnson, never tied of telling us that the CWU asked for – and got – commercial freedom in the form of the Postal Services Act 2000.

And they were right. The Postal Service Act contained much that we asked for:
 Royal Mail was given some ability to borrow money – relatively small amounts.
 Royal Mail was subjected to a regulator – Postcomm.
 Royal Mail could not be privatised without primary legislation – with one exception which I’ll return too.

The Postal Service Act created the basis for Royal Mail being subject to competition. It was turned into a PLC – albeit of an unusual type.

And like any PLC – it will be operating in a market.

So Postcomm’s introduction to competition to Royal Mail was a direct result of the very terms of the Act itself.

In the Act Postcomm has a primary duty to protect the universal service obligation. But it was also given a duty to introduce competition where appropriate.

I make these observations, because if we want to tackle competition we must understand that our past policy has contributed to its introduction.

The Government has promoted a competition agenda – in line with a prevailing orthodoxy in the EU, the USA and the OECD countries.

Developing a response to this international consensus, now is far more difficult that the Union’s earlier naïve support for ‘commercial freedom’.

It can be argued that the Government, or management, interpreted this in a way we didn’t intend.

Well – lets leave aside the fact that ‘commercial freedom’ inevitably implies ‘market conditions’ that is competition prevailing.

There are a number of ways Government and management interpreted the policy.

In 2001 – when I first became GS – there had already been secret i.e. commercial – negotiations about the sale of Consignia to TPG (the Dutch privatised Post Office).

This was the exception specifically within the Postal Services Act. For a joint venture, no primary legislation from Parliament was necessary.

In the current climate, it is unlikely that a review of the Postal Services Act will result in that provision being changed.

Or take the issue of share distribution.

As you can see from page 7 of the members handbook version of Delivery Quality Leighton’s original proposal was for a 51% share distribution.

20% to staff – 31% on the open market with 49% remaining with Government.

This can be dressed up as the Government some how still owning or controlling the industry.

But remember – the 20% proposal only came up after the Union had got the Government commitment at Warwick into the Manifesto and placed before the electorate.

Before that they wanted to sell the lot.

It is important to remember:

 How Government and management policy are variable
 And how far we can actually vary these policies – if our campaigning is effective.

In case you are in any doubt let me remind you of a newspaper headline in 2004 i.e. Royal Mail to be sold.

So if that is where we’ve been where are we going?

In 2007 we have a change of leadership in the Labour Party in Government.

We are also likely to have – articles in the press notwithstanding – a change in the management of Royal Mail.

For a short period there is a soft spot for the Union to press against.

I must stress this is a very short period. According to speculation in the Financial Times, and elsewhere the PM is set to resign on 25 June.

Give that what credence you like.

But once in the saddle – both the new Prime Minister, and a new chairperson in Royal Mail – will want to demonstrate their toughness. And negotiators have to consider this tactically.

But we also need to consider the cycle of this Government.

By May 2010 we have to have a General Election.

The new leader of the Party is unlikely to repeat Callaghan’s mistake of going to a full term.

So it’s most likely that we will face a General Election in 2009 with October 2009 being a better bet than May 2009.

Of course, a new Labour Leader may want to call a snap General Election – but I rather doubt this.

If it is 2009 for the next General Election, then in reality we only have two Labour Conferences to determine policy – October 2007 and October 2008.

The October 2007 Conference is going to be something of a rally for the new leader with probably very little that is controversial discussed or carried.

So let us assume that the policy cycle for the next Manifesto will begin by the end of this year in the National Policy Forum and culminate in the documents going to Party Conference in 2008.

The Election Manifesto will then we drawn from that in early 2009.

Whatever reforms we want to argue for – we will have to start getting clear ourselves later this year.

So, the up-shot of Alistair Darling’s announcement on the Future of Royal Mail, in this area, is that we need a new version of Delivering Quality by later this year – to form our platform for changing the direction of Royal Mail.

I would add, as an aside, that the very good development of our campaign around ‘Serving Quality’, and the Government’s consultation on the future of the Post Office Network, is falling very nicely into this framework.

Now if that is where we are going – what then must we do now?

Most of you have already heard from Dave – your negotiators are immediately tackling the issues of pay, conditions and pensions.

We can put a certain on Government on these questions. But the pressure is entirely dependent upon the coherence of our policy in negotiations, and how far we are carrying the membership in that campaign.

That is obviously where all of you come in.

When we meet with Government – we always have to know what we want. So from the DGS(P) to Unit Rep, there has to be a common purpose on the support for our negotiating stance.

That is the real pressure that we can bring to bear when we meet with Government on matters which Government regards as being the property of management/Union relations.

But on the issue of regulation and competition there is an element which is locked into politics proper, rather than industrial relations.

What is the Union going to do about competition? There are a number of tactics which we must use.

Firstly – get the funding for Royal Mail right.

This we have been doing with our campaign for investment through the price control and additional Government investment. Successes have been registered here, we should not be underestimated.

In addition our anti-privatisation campaign has been crucial.

If you can imagine what would happen had Royal Mail been privatised this becomes clearer. Almost certainly we would be facing a division between sections of the industry which at present form a coherent whole.

So that for example we would have faced logistics becoming a separate firm. We would face the demand to separate upstream arrangements from delivery arrangements into discrete firms.

And so on.

Our second tactic is to get the Union prepared to organise the whole postal labour market rather than just in Royal Mail.

Now it is very important to fill in the gaps in our organisation in Royal Mail. We have been letting slip too many recruitment opportunities. The result as been a worry rise in non-membership. This has to be a big push by Branches.

But the key challenge is to organise the competition. This is the way to prevent the race to the bottom, and to lift all postal workers living standards.

At the moment we have begun a national campaign in Business Post. It is important that we have Branch support for this.

But, in reality, we must find additional resources to organise new groups of workers. I do not believe this will come from the Branches.

I am hoping that we can get the NEC to agree on the allocation of new additional resources for an organising drive.

We need to get our Organising Department solely focussed on organising and recruitment.

I don’t believe we will crack this problem solely on existing Branch resource.

Nationally we’ve yet to establish a new organising system to make a break through. But this is not an option – this is an absolute necessity.

And our third tactic – after infilling Royal Mail recruitment, and organising the whole labour market in the Postal Industry – our third tactic is to launch a campaign for the review of competition outlined in Labour’s election manifesto.

We will be shortly launching a new EDM which we expect all Branches to organise around.

We will work up the wording with our Constituency Supported MPs.

But our key will be support for the USO in a competitive market.

The theme is to get the competition to pay for its share of the USO.

This can be done by getting established a support fund for the USO which the competitors pay into.

When Postcomm first proposed to introduce competition they raised this fund as a reassurance, and a sop to those concerned about the USO.

We may well ask them to deliver on this.

An alternative that it to be considered, is the introduction of a supplement in the access price.

This means that competitors get charged – on every piece of mail that goes back into the Network.

At the moment, the competitors have the advantages of using the USO, without having to contribute to funding it.

Either of the methods I have outlined could address that.

Our EDM will say that the review should examine these options – rather than simply insist upon one.

But we should not accept Royal Mail’s proposal that we get the domestic customers and small businesses, to subsidise the competition by a swingeing increase in USO stamp prices.

This proposal from Royal Mail shows that they lack the will to actually challenge the competitors.

We do not. Nor do we lack the will to challenge Postcomm. Postcomm want to pretend that Royal Mail losing revenues does not jeopardise the USO.

This denial is simply Postcomm denying that it has made a mistake. We certainly intend to put this out and integrate into the new campaign.

So – in response to competition – we are going to:

 Strengthen our position in Royal Mail by filling in the gaps in recruitment.
 Launch a drive to organise other postal companies
 Launch a new campaign for a review of competition by Government which defends the USO.

You will have a big part to play in the success of these tactics.

[L Tommo]

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