23 Dec 2008
23 December 2008
Anger as Mandelson threatens to sue HBOS merger challengers
By Tom Gordon, Scottish Political Editor
SOURCES CLOSE to Alex Salmond last night accused Lord Mandelson of trying to “stack the deck” against those challenging the merger of HBOS with Lloyds TSB after they were threatened with huge legal bills unless they dropped their case.
Lawyers acting for Mandelson, the business and enterprise secretary, told the Merger Action Group (MAG) that unless it halted its legal fight, Mandelson would “pursue costs against each of the group’s identified members”.
However if the six-member group, which challenges the merger proposals at the Competition Appeal Tribunal in London tomorrow, were to drop its case, Mandelson would “wholly exceptionally waive his claim for costs”.
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The ultimatum was delivered to MAG’s lawyers on Friday afternoon, demanding they withdraw their appeal by 5pm the same day. The group declined.
Malcolm Fraser, the spokesman for MAG, said last night: “I can confirm that our lawyers did receive a letter from Lord Mandelson’s legal team on Friday inviting us to withdraw our appeal. This invitation was declined.
“In the public interest, we are determined it should go ahead.”
The letter, from Adam Chapman of the Treasury’s Litigation and Employment Group, which represents Lord Mandelson’s Department of Business, was addressed to Ian Forrester, the Brussels-based Scottish QC representing the action group.
The six named are Dan Macdonald, of Macdonald Estates; Malcolm Fraser, the architect; Peter de Vink, the Scottish financier; David Alexander, of property firm DJ Alexander; Tim Noble, of Noble and Co; and Mark Shaw, chief executive of Hazledene Group.
A source close to the first minister said: “This indicates real concern in the UK government that there is a substantial case to answer about the behaviour of Lord Mandelson towards his responsibilities and the clear lack of the promised level playing field.
“We think the Department for Business, Enterprise and Regulatory Reform has been badly spooked by Mr Justice Barling’s wise decision to hold the case under Scottish jurisdiction despite the protestations and intense lobbying of the Treasury’s legal team. Lord Mandelson … would do well to leave the tribunal to determine the case instead of attempting to stack the deck yet again.”
MSPs opposed to the merger urged MAG to refuse to knuckle under to “undemocratic bully-boy tactics.”
Independent MSP Margo MacDonald, who fears merger would mean huge job losses in her Lothians seat, said: “I find it breathtaking that a group of responsible people whose only motive is the public interest can be subjected to such threats and intimidation by a member of the UK government.
“Why is Lord Mandelson’s legal team employing these outrageous bullying tactics? Is it, perhaps, because they think they are going to lose?”
She added: “I would be very surprised if the pursuit of the MAG members for legal costs is a matter for Peter Mandelson. I would have thought that it is for the tribunal to decide on costs.”
The SNP’s Alex Neil, who on Friday tabled a motion at Holyrood calling on Mandelson to refer the merger to the Competition Commission, said: “It seems to me that Lord Mandelson wants a pair of jackboots for Christmas so he can boot his way right through the UK legal system to get his own way.”
MacDonald, Neil, and Scottish Liberal Democrat leader Tavish Scott pledged support for the challenge when they met MAG spokesman Malcolm Fraser at Holyrood last week.
Scott later raised the matter at First Minister’s Questions, calling on the Scottish government to consider assisting with MAG’s legal costs.
He said last night: “The tribunal is meant to be a way for small business to challenge big government. It is wrong for the Labour government to be so heavy handed.
“I want to know if ministers authorised this letter. Were Lord Mandleson and Alistair Darling aware of this letter?”
The case at the Competition Appeal Tribunal will be held under Scots law, meaning any appeal would be heard at the Court of Session in Edinburgh.
20 Dec 2008
Lord Mandelson’s spokesmen are curiously silent about Jaguar boss Ratan Tata
As Lord Mandelson decides whether to give taxpayers’ money to Jaguar Land Rover, the tycoon who bought the firm with a £2 billion bridging loan will no doubt hope that their personal rapport proves decisive.
Mandrake hears that Ratan Tata, the chairman of the Tata Group, has met the peer several times, but mystery surrounds the extent of their acquaintance. Mandy’s spokesman confirms that he has met the suave 70-year-old bachelor to discuss “trade issues”, but says he has not accepted hospitality from him since he became Business Secretary in October. The spokesman refuses to discuss whether he was entertained by Tata while he was European trade commissioner. Peter Power, his spokesman while in Brussels, says it is a Whitehall matter.
The pair have mutual friends in the Hinduja brothers and both attended a Confederation of Indian Industry summit in Delhi in 2005. “They may have been introduced to each other, but they did not enter into a discussion about stuff,” says Tata’s spokesman, inelegantly.
The pair will have the opportunity for more talk next month when Mandelson leads a British trade delegation to Tata’s native Mumbai.
16 Dec 2008
Mandelson accepts partnership proposal for Royal Mail
Lord Mandelson told the Lords the Government “reject cutting back the universal service”.
He said that any partnership with another firm would not include the Post Office network.
Lord Mandelson said the Government accepted the conclusions of the report.
Alongside the minority partnership, he said the report recommends the Government should “take over responsibility for reducing substantially the pension deficit” and replacing the regulator Postcomm with Ofcom.
The Business Secretary said that implementing the changes would provide “benefits for everybody”.
He told peers: “It will protect the universal service for consumers. It will give Royal Mail new opportunities to modernise and develop. It offers the Royal Mail’s staff a future in a modern, efficient postal operator with more secure pension arrangements. It offers the whole country a Royal Mail we can be proud of.”
In his report, which was commissioned by the, then, Business Secretary John Hutton last December, Mr Hooper said the status quo is “untenable”, Lord Mandelson added.
The minister said that securing a minority partner “will bring the Royal Mail fresh investment, new opportunities to grow in Europe and internationally and to offer new services.
“It will provide a fresh new impetus to modernising the Royal Mail and securing the universal service.”
He added: “We and the Royal Mail have already received one expression of interest from the Dutch postal company, TNT, to build such a partnership. I very much welcome this approach from an experienced postal company, just as I will welcome other expressions of interest from credible partners should they come forward.”
Lord Mandelson described Mr Hooper’s final report, published this afternoon, as a “serious, wide-ranging study” that “makes sober reading”.
The Business Secretary said the report sets out five challenges facing Royal Mail: the revolution in communications technology, efficiency, the pension fund deficit, labour relations and regulation.
He told peers: “In this country 60 billion text messages were sent last year and we now send five million fewer letters than two years ago.”
Mr Hooper estimated the Royal Mail lost £500 million in lost profits last year because of new technologies, Lord Mandelson added.
He said: “Hooper reports that Royal Mail is less automated and less efficient than its Western European counterparts. In modern European postal companies, 85% of mail is put in walk-order by machine for delivery to the individual home or business.
“By contrast, in Britain in local delivery offices it is still done entirely by hand. The Royal Mail badly needs to catch up and modernise.”
Lord Mandelson said that the report found that on top of its regular £500 million pension contributions, Royal Mail was having to find an extra £280 million to “plug the deficit”.
Relating Mr Hooper’s finding on Labour relations, Lord Mandelson said: “Levels of trust and cooperation are low. Industrial action takes place too often. A fresh start in industrial relations is badly needed.”
Mr Hooper also found “a lack of trust” between the Royal Mail and the regulator Postcomm, Lord Mandelson said.
Lord Mandelson described Mr Hooper’s final report, published this afternoon, as a “serious, wide-ranging study” that “makes sober reading”.
The Business Secretary said the report sets out five challenges facing Royal Mail: the revolution in communications technology, efficiency, the pension fund deficit, labour relations and regulation.
He told peers: “In this country 60 billion text messages were sent last year and we now send five million fewer letters than two years ago.”
Mr Hooper estimated the Royal Mail lost £500 million in lost profits last year because of new technologies, Lord Mandelson added.
He said: “Hooper reports that Royal Mail is less automated and less efficient than its Western European counterparts. In modern European postal companies, 85% of mail is put in walk-order by machine for delivery to the individual home or business.
“By contrast, in Britain in local delivery offices it is still done entirely by hand. The Royal Mail badly needs to catch up and modernise.”
Lord Mandelson said that the report found that on top of its regular £500 million pension contributions, Royal Mail was having to find an extra £280 million to “plug the deficit”.
Relating Mr Hooper’s finding on Labour relations, Lord Mandelson said: “Levels of trust and cooperation are low. Industrial action takes place too often. A fresh start in industrial relations is badly needed.”
Mr Hooper also found “a lack of trust” between the Royal Mail and the regulator Postcomm, Lord Mandelson said.
He added: “Hooper proposes Ofcom should take over responsibility from Postcomm for regulating the postal market. Its primary responsibility would be to maintain the universal service in the wider context of the other changes taking place in communication markets.”
Lord Mandelson said he will respond with a full statement of policy in the early part of next year but the Government “agrees with Hooper’s analysis and the recommendations” and “we intend to take forward the recommendations as a coherent package of measures”.
He said the Post Office would not be included in the minority partnership because the network of branches “combines a unique set of commercial, public and social roles”.
But he added: “A healthier Royal Mail letters business will be good for the Post Office.”
LORD MANDELSON – HOUSE OF LORDS STATEMENT THE FUTURE OF ROYAL MAIL
DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release
(2008/312) issued by COI News Distribution Service 16 December 2008
Introduction
My Lords, I wish to make a statement about the Royal Mail.
This Government is firmly committed to a universal postal service: that is, the ability of the 28 million homes and businesses across the country to receive mail six days a week, with the promise that one price goes anywhere.
The universal service helps to bind us together as a country. And, as well as its social importance, it is the means by which many companies build and operate their businesses, but it doesn’t come free.
Last December, John Hutton invited Richard Hooper to lead a full, independent review of the postal services market. Its purpose was to look ahead to the future and to recommend the steps needed to sustain the universal service, in a world where technology, consumer behaviour and the communications market are all rapidly changing. The review did not cover the Post Office network.
I have now received Richard Hooper’s final report. It is a serious, wide-ranging study, and makes sober reading. We are publishing it this afternoon. I am very grateful to Richard Hooper, and to Dame Deirdre Hutton and Ian Smith, for their work on it.
Hooper’s conclusions
Let me set out Hooper’s analysis of the challenges facing the Royal Mail.
First, there has been a revolution in communications technology over the past decade as consumers turn to emails, the internet and text messages. In this country 60 billion text messages were sent last year. And we now send five million fewer letters than two years ago.
Hooper is absolutely clear that the main challenge to the Royal Mail is from the impact of changes in technology and consumer choices. His estimate is that, last year, the shift of mail to these new technologies cost the company £500 million in lost profits. That is five times the impact of business lost to other postal companies in our liberalised market. The message is therefore clear. Making these other companies go away is not the answer to the Royal Mail succeeding.
Royal Mail’s success matters because it is the only company capable of delivering mail to every address in the UK, six days a week. And as Hooper makes clear that will be the case for the foreseeable future.
So a healthy Royal Mail is vital to sustaining the universal service.
The second challenge is efficiency. Hooper reports that Royal Mail is less automated and less efficient than its Western European counterparts. In modern European postal companies, 85% of mail is put in walk-order by machine for delivery to the individual home or business. By contrast, in Britain, in local delivery offices it is still done entirely by hand. The Royal Mail urgently needs to catch up and modernise.
The third challenge is the Pension Fund. Hooper warns that Royal Mail has a large, growing and volatile pension fund deficit. This is near impossible for the business to manage and is a huge demand on its revenues. Each year on top of its regular £500 million contribution to the pension fund, the company is having to find an extra “top up” of £280 million to plug the deficit. These payments look set to rise substantially when the fund is re-valued next year.
Fourth, Hooper says labour relations in the company need to improve. Levels of trust and co-operation are low. Industrial action takes place too often. A fresh start in industrial relations is badly needed.
Fifth, regulation. Hooper also reports a lack of trust in the relationship between the company and the regulator. There are disagreements about basic information and these tensions divert energy from the chief challenge of modernising the business.
So overall, Hooper’s conclusions are crystal clear. The status quo is untenable. The universal service is under threat. The choice we face is either downgrading the universal service as we manage decline or acting now to turn things round and secure the Royal Mail’s future.
Hooper’s Recommendations
At the heart of the Hooper report are three linked recommendations.
Pension deficit
First, the pension fund deficit. Hooper recognises that this represents a significant challenge for the company.
The Report recommends that as part of a package of changes, the government should take over responsibility for reducing substantially the pension deficit. I would stress that Hooper says this would only be justified as part of a coherent package to secure the Royal Mail’s long term viability.
Partnership
Secondly and closely related, to improve the Royal Mail’s performance it should forge a strategic minority partnership with a postal operator with a proven record in transforming its business, working closely with the workforce. This, Hooper believes, would give Royal Mail the confidence, the experience and the capital to make the changes needed to improve performance and face the future. In other words, save the Royal Mail by investing in its future.
Regulation
Finally, regulation. Hooper proposes Ofcom should take over responsibility from Postcomm for regulating the postal market. Its primary responsibility would be to maintain the universal service in the wider context of the other changes taking place in communication markets.
Government response
My Department will want to study the report in detail. I intend to respond with a full statement of our policy in the early part of next year.
With backing from the Government, the Royal Mail has been improving performance in recent years. But progress has been too slow and Hooper is clear that, in the face of the challenges confronting the company, transformation must be faster and more far reaching.
I can say now that the Government agrees with Hooper’s analysis and the recommendations. As he does, we reject cutting back the universal service. Indeed, we share his ambition for a strong universal service and strong Royal Mail. And we intend to take forward the recommendations as a coherent package of measures.
We will fulfil our manifesto commitment to “a publicly owned Royal Mail fully restored to good health, providing customers with an excellent service and its employees with rewarding employment”. Bringing in a partner through a minority stake in the Royal Mail’s postal business will help us deliver that goal. It will bring the Royal Mail fresh investment, new opportunities to grow in Europe and internationally, and to offer new services. It will provide a fresh new impetus to modernising the Royal Mail and securing the universal service.
We and the Royal Mail have already received one expression of interest from the Dutch postal company, TNT, to build such a partnership. I very much welcome this approach from an experienced postal company, just as I will welcome other expressions of interest from credible partners should they come forward. My Department will pursue this in the coming weeks.
Post Office
Finally, I should comment on the Post Office, which was not part of the review’s terms of reference.
The network of local Post Offices combines a unique set of commercial, public and social roles. In recognition of this a partnership would not include the Post Office network.
But a healthier Royal Mail letters business will be good for the Post Office. Today’s announcement will help underpin our existing commitment to the Post Office network. We are providing £1.7 billion to 2011 to support a network of around 11,500 branches. We will continue to support the non-commercial network beyond that time. Noble Lords will recall the recent announcement that the Post Office Card Account will stay with the Post Office. We will now build on that decision to ensure a stable and sustainable network for the future.
We are determined to have a Post Office network offering a broad range of services throughout the country, supporting both social and financial inclusion. I am delighted that the House of Commons Business and Enterprise Select Committee has agreed to undertake an inquiry into what further services the Post Office could offer.
Conclusion
My Lords, I believe that Royal Mail and the postal market can thrive in the future – provided that decisive action is taken now. Without far-reaching change, the opportunities brought by technology will become overwhelming threats. This need not be the case. I believe that there are benefits for everybody in the package of measures that we intend to take forward.
It will protect the universal service for consumers.
It will give Royal Mail new opportunities to modernise and develop.
It offers the Royal Mail’s staff a future in a modern, efficient postal operator with more secure pension arrangements.
It offers the whole country a Royal Mail we can be proud of.
I commend this statement to the House
- Last Updated: 16 December 2008 5:26 PM
- Source: The Scotsman
- Location: Edinburgh
Royal Mail privatisation a threat to services
15 Dec 2008
2008-12-15 Mike Weir MP, SNP Westminster Business and Enterprise spokesperson has expressed concern over reports that the Business Secretary, Lord Mandleson, is considering privatisation of Royal Mail.
Commenting, Mr Weir said:
“The idea that Royal Mail could face privatisation is a step too far even for Lord Mandleson.
“Many of the problems currently faced by Royal Mail have arisen through previous attempts at liberalisation and privatisation.
“We have just witnessed a massive bail out of banks. New finance for business has all but dried up yet the Business Secretary appears to be considering the privatisation of Royal Mail. This is complete madness.
“While strong action is undoubtedly needed, privatisation is not the answer. We need a long term strategy which will protect postal services and allow them to flourish.
“Royal Mail is not just another business but has a huge social role, including the universal service obligation which is so important to many areas of Scotland.
“Further damage to Scotland’s postal services cannot be permitted.”
Related news articles
- UK Government resignations over Royal Mail (2008-12-17 13:06)
- MP condemns part-privatisation of Royal Mail (2008-12-16 16:41)
- Review an opportunity for vibrant PO network (2008-12-11 14:00)
- Victory for people power over PO Card Account (2008-11-13 16:08)
- Elderly lose out if Post Office loses card account (2008-11-11 16:02)
Mandelson criticised over letter
6 Dec 2008
Page last updated at 17:48 GMT, Saturday, 6 December 2008
http://news.bbc.co.uk/1/hi/scotland/7769285.stm
Lord Mandelson has been accused of bully-boy tactics after it was claimed his lawyers sent a threatening letter to those against the HBOS merger.
Lawyers for the business secretary invited the Scotland-based Merger Action Group to end its protest.
MSPs Alex Neil and Margo MacDonald said the move was “extraordinary”.
But the Department for Business, Enterprise and Regulatory Reform (Berr) said the offer had been aimed at saving the group legal costs.
The Merger Action Group (MAG) was formed to mount a last-ditch legal challenge to the deal involving Lloyds TSB and HBOS.
It is due to have its case heard on Monday at the Competition Appeal Tribunal (CAT) – a specialist legal body whose function is to decide appeals on competition issues.
Public interest
MAG claims that Lord Mandelson’s decision to allow the merger to go ahead without referring it to the Competition Commission was unlawful.
In a statement on Saturday, SNP MSP Mr Neil and Independent MSP Ms MacDonald said the letter had threatened MAG’s six key members for legal costs unless they halted their court action.
Ms MacDonald added: “I find it breath-taking that a group of responsible people whose only motive in taking this legal action is what best serves the public interest can be subjected to such threats and intimidation by a member of the UK Government.”
A spokeswoman for the Department of Business confirmed that lawyers had written to MAG offering them the opportunity to withdraw their case “in light of the strength of evidence against it”.
She added: “The letter was intended to give the appellants a chance to save costs before pursuing their legal challenge further.
“It was neither an ultimatum nor a threat to individual members.”
MAG’s legal bid was fast-tracked last week, with the tribunal deciding the challenge would begin on Monday. It is hoped the appeal hearing could be completed by the following day.
Although the case is being heard in London, it will be conducted under Scots Law.
The UK Government overruled competition concerns raised by the Office of Fair Trading when it gave the merger between HBOS and Lloyds TSB the green light.
Legal challenge
MAG spokesman, Malcolm Fraser, who is an Edinburgh architect, said the group had declined the offer of Mr Mandelson’s lawyers after it was received on Friday.
He added: “We are committed to our cause in the public interest. We are determined it should go through.”
Scottish Liberal Democrat leader Tavish Scott, another backer of the legal challenge, said he was interested to find out if Lord Mandelson and Chancellor Alistair Darling were personally aware that the letter had been sent.
An aide to Scotland’s First Minister. Alex Salmond, said Lord Mandelson “would do well to leave the tribunal to determine the case”.
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