Postal Services Bill

I think that the answer to that question is yes. In fact I am sure that the answer is yes. The universal postal service is protected by Parliament throughout this regulatory framework, not by the Government’s ownership of Royal Mail. I hope that that gives some comfort to my noble friend Lord Skelmersdale and, if he has the stamina to stay with this Bill through all its stages, I hope that by the end he will feel that he has a lot more comfort than obviously is the case now. As part of its duties, Ofcom will ensure that the minimum requirements of the universal service as set out in the Bill are upheld. As we know, the minimum requirements are above those set out in the European postal services directive in terms of the requirement to deliver letters six days a week and for a uniform tariff and service to apply. Ofcom is required to report annually to the Secretary of State on its activities, which in future will include how it has performed against its primary duty to ensure the provision of the universal service. The Secretary of State is required to lay that report before each House of Parliament. Therefore, I do not believe that Parliament would be served by an additional report on the future of the universal service at the time of sale. The noble Lord, Lord Brooke of Alverthorpe, asked what will happen if a privatised Royal Mail no longer wants to provide a universal service. Royal Mail is rightly proud of providing a universal postal service and there is no reason to expect that to change, but in the unlikely event that Royal Mail no longer wishes to provide it, the regulator, Ofcom, will have a primary statutory duty to secure the provision of the universal service and has been provided with the regulatory tools to ensure that the service is maintained. In the first instance, Ofcom would do this by imposing regulatory conditions on Royal Mail that would oblige it to deliver a universal service. Ofcom will also have the power to impose penalties on companies found in breach of the regulatory conditions. The noble Lord was also concerned that foreign owners could run down Royal Mail. Whoever owns the Royal Mail, as the universal service provider, will still be required to provide that universal postal service. The regulatory regime set out in Part 3 will ensure that. Ofcom, the proposed new regulator, has confirmed that it is satisfied that the powers in Part 3 are sufficient to protect the universal service. We will not let nationalist criteria stand in the way of the right deal for Royal Mail and the taxpayer. Investment is a global business nowadays. For example, around a third of the listed shares in Deutsche Post are owned by UK investors. The noble Lord, Lord Young, was concerned that a future owner of Royal Mail might lobby Ofcom to reduce the minimum requirements of the universal service. As he will be aware from Clause 33, there can be no such change without an affirmative resolution both in this House and in the other place. This Government have been clear that they have no intention of supporting any such resolution. As we will discuss in later sessions, Clause 33 is a vital new safeguard for Parliament. Modernisation of Royal Mail is also not directly related to ownership. The company has to modernise whether it is in the public sector or in private ownership. Modernisation does not end with the current transformation plan. If Royal Mail is to succeed and provide our universal service, ongoing modernisation will need to be an integral part of its DNA, so while the current modernisation plan is fully funded, it is clear that Royal Mail will need to go further and faster. Royal Mail therefore requires ongoing capital investment over a long period. Despite the good progress that is being made on the current transformation plans—and here I praise the management and the CWU on that progress—Royal Mail needs upfront cash, which it simply cannot generate for itself at the moment. It needs access to flexible capital, which, given the EU state aid requirements, the Government cannot provide. I quote from the evidence given to the Bill Committee in the other place by the chairman of Royal Mail, Donald Brydon. He said: "““The company cannot invest in innovative new services, it cannot modernise its fleet and it cannot modernise its equipment without capital and, as we all know, the Government do not have a lot of it””.—[Official Report, Commons, Postal Services Bill Committee, 9/11/10; col. 13.]" I fully appreciate that the noble Lord wants to be kept informed of progress on the modernisation of Royal Mail. I do not, however, believe that it should be a requirement in the report that the Secretary of State is required to make in relation to the disposal of shares. That is more appropriate to the annual report of Royal Mail itself. The latest annual and half-year reports have included information on progress, including the costs. For example, the 2010 annual report stated that Royal Mail has continued to modernise its operations with a further £500 million invested in the past 12 months, largely in new technology and equipment for our postmen and postwomen, bringing the total to more than three-quarters of a £2 billion investment programme since 2006. The noble Lord, Lord Clarke, asked whether Parliament should have approval rights over transactions to sell the Royal Mail. As I said last week, we do not believe it appropriate or in the best interests of Royal Mail to conduct commercial negotiations on the Floor of either this House or the other place. The noble Lord also made a number of general comments on the regulatory framework and how it has operated over the past 10 years. As he said, we will come to those more general points when we discuss Part 3 of the Bill. My noble friend Lord Skelmersdale asked about the funding of the modernisation plan. Royal Mail’s current modernisation plan is funded by commercial loan facilities with the National Loans Fund and the Department for Business, Innovation and Skills. The noble Baroness, Lady Kramer, is becoming a star in these discussions. She manages to put succinctly some of the things that I take a very long time to say, but that is because I mainly have to stick to my script. She has the ability to say things in a way that is clear and brings us to the nub of the issue. We have no time to waste. This is the moment for us to advance as fast as we can to protect the service that we need so badly and to make sure that Royal Mail’s employees have a real part to play in the future of the company. We hope to protect the jobs and the work that Royal Mail does in the future and to improve on it. I hope that some of these answers have been helpful to the noble Lord, Lord Clarke. I expect that he will want to reflect on them and I therefore ask him to withdraw his amendment.