Briefing by the Prime Minister’s spokesman on: Royal Mail, standards legislation, crossrail/public spending and misc
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.
Standards Legislation
Asked if the Prime Minister was still confident that the standards legislation could do the job it was intended to do, the PMS said yes; the issue on which the Government lost the vote yesterday was not central to the core of the bill, which was about allowances and expenses and the move from self to independent regulation. The bill remained on course.
Put that the bill had been put through too quickly without enough thought for legal ramifications, the PMS said that the Prime Minister felt it was important that we moved from self-regulation to independent regulation and that, given the degree of public concern and the lack of confidence in the political system, it was important that we did this as quickly as possible.
Crossrail/Public Spending
Asked if the Guardian was right to say that there was a question mark over crossrail going ahead, the PMS said that the Government remained committed to crossrail and the position had not changed.
Asked if that meant that there was no basis to the story, the PMS said that we had not yet announced the transport budget beyond 2011 because we had not yet conducted the spending review for that period yet.
Put that Transport was one of the departments that would be giving money to the Department for Business, the PMS said that there was a transfer of money from Transport to Communities and Local Government for social housing, but that was for this spending review period (2009/10 and 2010/11). The story in the Guardian was about what would happen beyond 2011. In any case that particular transfer of money from Transport reflected underspends in the department, which was money that had been freed up because the PFI market was unfrozen and therefore the Government needed to set aside less money to support PFI projects.
Asked when crossrail would start, the PMS said that crossrail remained on course and our position had not changed; the previously announced timetable remained.
Put that projects like crossrail would get sidelined because money was being taken out of certain departments, the PMS said that we were also planning to engage on an ambitious programme of asset sales, which aimed to raise £16 billion that would be additional money available for gross public investment.
Asked if that would be enough money to make up the gap, the PMS said that we had not yet set the spending envelope for the next spending review period.
Put that capital expenditure was currently at 3% of GDP and would go down to 1.25% of GDP, the PMS said the Treasury had set assumptions for the period beyond 2011, which formed the basis for their projections for the period beyond 2011. The Treasury had not yet set the spending envelope for capital expenditure for the period beyond 2011.
Asked how you could make 1.25% of GDP from 3% of GDP by selling £16 billion worth of assets, the PMS said it depended on the timescale over which we sold the assets. We were not setting the spending envelope now. The journalist was trying to present this as a fixed Government spending envelope beyond 2011, but what was clear in the Budget was that these were assumptions that underpinned projections.
Put that other transport plans like electrification and high-speed rail were dead in the water, the PMS said that the remark was not justified because we had not yet set our spending plans beyond 2011. When we did set our spending plans for beyond 2011 it would be on a fully costed basis. You would be able to reach conclusions about which projects would be going ahead at that point.
Asked if there was going to be a cut in the Ministry of Defence’s budget, the PMS said that we set out our spending totals for the Ministry of Defence as we had done for all departments, up until 2011. We had not yet set out the spending total for the period beyond 2011.
Asked how the £16 billion of asset sales would cover the gap in the Whitehall budget if local councils kept their money, the PMS said that we had not set spending totals for the period beyond 2011, but simply wished to point out that we had £16 billion of asset sales that was based on a thorough piece of analysis by independent reviewers on the run-up to the Budget. The £16 billion was additional money that was available for public sector gross investment. Local authorities invested capital resources, as did central government, so this potentially made more money available to local authorities and central government. We were not making decisions now about the allocation of resources or the total of resources available beyond 2011.
Misc
Asked if the Prime Minister was embarrassed by the fact that two of the big decision that had been announced yesterday on Royal Mail and on nationalisation were made by unelected Cabinet Ministers who could only be scrutinised properly in the Lords, the PMS said that the Prime Minister was not embarrassed; there was a statement in the House of Commons by Transport Minister Sadiq Khan, who also attended Cabinet when transport was on the agenda, so there had been a chance for the House of Commons to scrutinise the National Express announcement. We had a Government of all the talents, which enabled us to bring in people with expertise and experience into the Cabinet; that strengthened the Cabinet.
Asked if MPs would be given the chance to question a Business Minister in the House of Commons, the PMS said that there would be plenty of opportunities for MPs to cross-examine the Business Minister Pat McFadden, who also attended Cabinet.
Asked about the situation in Iran, the PMS said that the Foreign Office had put out a statement last night, which confirmed that of the four Embassy staff who had previously been in detention, two had been released over the last two days. We were also seeking confirmation following Iranian reports that a further member of staff was released yesterday. It remained our top priority to get all British Embassy staff released as soon as possible.
Put that the German Finance Minister had said that there was reluctance from Britain to regulate the banking industry, the PMS said that we were determined, as were all members of the G20 including Germany, to implement the G20 conclusions and that was what we were doing in relation to financial services. We would be publishing our proposals to reform regulation of the financial services soon. Germany had done this with its announcement of a third fiscal stimulus in recent days and we were sure that all other countries would also push ahead with implementation of the G20 conclusions.
Asked if we were on the same page as Germany, the PMS said that there had been very constructive discussions at the European Council on these matters recently.
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