Postal Services Bill

My Lords, I support this amendment. At this juncture, I am happy to share the same analysis, if not completely then certainly key parts of it, with my noble friends Lord Clarke and Lord Hoyle. Like the noble Lord, Lord Brooke, I confess that I was not on the side of the angels or the angels as defined by my noble friend Lord Clarke on the previous occasion, but on this occasion I share his analysis. We and fellow Peers of several party affiliations and of no party affiliation, as we have seen in this interesting debate, have submitted amendments that seek to ensure that the sale of Royal Mail meets four main objectives if it goes ahead. First, it should be done in a timely fashion, which does not present the prospect of an endless cloud of doubt hanging over the future of the company. Secondly, proper measures should be taken to ensure that value for money is gained for the taxpayer and that the company is not sold at too low a price. Thirdly, there should be greater clarity and accountability than the Bill currently provides. Certainly, a number of speakers in this debate have expressed that concern. Fourthly, a privatised Royal Mail should be put on a secure footing and not be subject to the ravages of asset stripping or disintegration, or be doomed to failure because of the circumstances which this Bill creates. The proposed 100 per cent privatisation is at the heart of our concerns about the future of the universal postal service. At Second Reading, I think that I declared my interests as a former employee of the GPO, albeit at the time when it reigned over telecom as well as postal, and a significant involvement in the union as the company changed from a nationalised company on the telecom side to a privatised company. We are concerned about the future of the universal postal service. I share the points made by the noble Lord, Lord Skelmersdale, on the future of the nation’s post office network. Private shareholders are more likely to argue that it is unsustainable and too costly, which will undermine the universality of the service. Many rural, distant or sparsely populated areas are costly to reach. I did not agree with every part of the analysis given by the noble Viscount, Lord Eccles, but he rightly reminded us that the final mile is rather a metaphorical term, given that it can be sometimes 10 miles or more. The danger with a totally privatised Royal Mail is that a private company will not necessarily want to invest in a business burdened by a costly universal service. Such a company might lobby the regulator and the Secretary of State to reduce the level of such a service. My noble friend Lord Clarke was absolutely right to remind us that one potential buyer has already commented in very blunt terms. Noble Lords might recall that the managing director of TNT, Pieter Kunz, said that the universal service obligation was, "““a kind of Jurassic Park and we should get rid of it””." We are not indulging in a sort of fantasy or paranoia when we draw to the Minister’s attention the view that some potential buyers have of a universal service obligation. The noble Lord, Lord Swinfen, drew to our intention the importance of making this Bill absolutely clear and his concern that it is not clear in its current state. I was interested in the point made by the noble Viscount, Lord Eccles, about the way in which the regulator functioned in the past in relation to competition being more important than the universal service obligation. He is right. I think that we got that wrong, although it is not fashionable to admit that. While I did not agree with the conclusion made by the noble Baroness, Lady Kramer, that it needed private capital first, I certainly could not help but acknowledge her point about regulation and the way in which it was introduced and functioned. Clause 30 sets out the terms of the universal postal service obligation, which includes the requirement to collect and deliver mail six days a week at one price anywhere in the country. The universal service obligation also has other elements, including letter packet delivery, letter and packet collection, affordable and uniform tariffs, registered items, insured items, and legislative petitions and addresses. It includes, as we agreed during the previous Bill—it is unfortunate that the noble Lord, Lord Low, is not in the Chamber—services to the blind and partially sighted. The Bill proceeds to provide for changes to the level of the USO in Clause 33 in particular. We will later in our scrutiny look at the ways in which this Bill might deliberately or inadvertently open the door to a diminution of the universal service. The Federation of Small Businesses stated that the universal service obligation, "““must be protected and services must not diminish. Any change to the scope of the USO could have a negative impact on small businesses””." Again, that was referred to at Second Reading. The point about how reliant on that universal service delivery small businesses are is fundamental. There is an environment in which more and more of them require their products to be delivered to distant parts of the country as a result of people buying on the internet. Ministers have helpfully—I think it was helpfully—pointed out that Ofcom would be obliged under Clause 29 to conduct within 18 months a market review rather than a review of the universal service itself. I am sure that the House would appreciate an elaboration of what limits would apply to that market review. However, it is very clear that, under Clause 33, Ofcom may initiate or be required by the Secretary of State to conduct a review of the universal service obligation that could begin at any time—18 months, 12 months or even six months—after the Bill becomes law. After that the Secretary of State could, by order subject to affirmative procedure, instigate a reduction in the universal service. It is not just us who are expressing our concern here on the opposition Front Bench. After all, the Delegated Powers and Regulatory Reform Committee recently pointed out its concern in a very helpful and succinct comment on this Bill entitled: ““Clause 33(5)—alteration of minimum requirements for universal postal service””. It states: "““Clause 29(1) requires OFCOM by order (subject to no Parliamentary procedure) to set out the services which a universal postal service should provide. Clause 29(2) requires the service to ""include, as a minimum, the services set out in clause 30 (minimum requirements such as daily delivery of letters Monday-Saturday, a uniform public tariff, etc). The order by OFCOM cannot alter the minimum requirements. However, clause 33 provides a power for OFCOM to review the extent to which the minimum requirements reflect the needs of users of postal services. If OFCOM carry out a review (and they may be directed by the Secretary of State to do so) the Secretary of State may then, by order subject to affirmative procedure, amend clause 30. The Secretary of State is not constrained necessarily to follow any conclusions of the review. The Committee makes no recommendation on clause 33(5), but draws it to the attention of the House as a significant power which would allow the Secretary of State to alter the minimum requirements for a universal postal service set out in clause 30””." I trust that the Minister will respond to the committee’s genuine concern about the nature of this legislation and the fact that it is not good enough in its protection of the universal service. Ministers might protest that they have no intention of reducing the universal service. I have no reason to doubt their good intentions, but if the Bill permits such a diminution, a future Minster might decide to use it to that effect. Indeed, we will propose amendments to give effect to the Minister’s wish to maintain a universal service at its current level, but my point here is that the move to 100 per cent privatisation magnifies these concerns for the future. On page 81 of his December 2008 report, Modernise or Decline, Richard Hooper rejected the notion of 100 per cent privatisation, saying that, "““This option would only be appropriate and feasible if modernisation had been completed””." Unfortunately, as we know, while good progress is being made on that front, we still have some way to go. It is only fair and right that we should have an assessment of how the Secretary of State will ensure that the provisions of the universal postal service will be maintained following disposals. This will also be a critical question for anyone thinking of buying into the business. It is fair and right that we should know what progress has been made with the modernisation programme, and how much of the budget has been spent. My noble friend Lord Clarke drew the modernisation programme to our attention. The noble Lord, Lord Skelmersdale, also expressed concern about what would happen to that money. Will the owner of the privatised Royal Mail be able to squirrel away the modernisation money for its own use? I trust that the Minister will deal with that in her reply. The new owner will benefit from the fact that the Government are taking on the burden of the pension deficit. How will that be accounted for? I can well remember that when British Rail was privatised and Railtrack was formed as a private company to look after the infrastructure of the railways, track, signalling and so on, it had an enormous provision buried deep in its books, which was a payment from government for the so-called Thameslink 2000 project. The central point of it was a major realignment of the Underground tunnels and passenger access under Kings Cross station in London. The year 2000 came and went and the project had not been carried out. For all that time, the millions and millions of pounds provided for the project sat in the coffers of Railtrack. How can we be sure that nothing like that will happen in the case of Royal Mail? On one level, it could be said that this is quite a modest amendment. Given the nature of the debate and the concerns that have been expressed across the Committee, I hope that the Minister will deal with these issues in her reply. We have asked for information and we need reassurances, if the Government intend to go ahead, to ensure that the sale is conducted in a proper and reasonable manner, if and when it takes place.