Postal Services Bill

My Lords, I share the concerns of the noble Baroness, Lady Dean of Thornton-le-Fylde. Overgearing is as bad for companies as it is for Governments, and it is something we need to be aware of as we move towards selling Royal Mail. I would favour an initial public offering, but that in itself is no protection against what might come afterwards, so this is something we should look at. But first we have to have something that is saleable, which in its current form Royal Mail most certainly is not. Protecting the interests of the users of the postal services must mean protecting the universal service; that is paramount. Clause 28 gives Ofcom an overriding duty to do just that, to secure the universal service, and that is why my noble friend Lord Jenkin and I have tabled Amendment 24Q because, in our view, if there is an overriding duty then the triple lock imposed by Clause 37(4) is unnecessary if we are to stimulate the competition that eventually we would like to see. Competition, as we have heard, depends first on having a level playing field, as otherwise fair competition is completely out of the question. Competition is in the interests of consumers and it is what in the long term our amendment would help to achieve. But, at the moment, the universal service is in jeopardy because Royal Mail’s financial position is indeed precarious. To some extent the company has brought this fate upon itself. Successive managements have failed to achieve the efficiencies that they knew should have been brought about, and that in the face of a market becoming ever more dangerous. However, the current management is well aware of what needs to be done and, I believe, is fully capable of doing it as long as it is given the tools. It has the will, but it does not have the right regulatory regime. I agree with the noble Lord, Lord Young of Norwood Green, about the problems with the current access arrangements. Royal Mail needs much more freedom to decide on its products and its prices. Competition has to be on that level playing field. There are now many private postal operators who are free to tailor their products and their prices to what the market wants. They can cherry pick, but Royal Mail is prohibited from giving itself that freedom. Ofcom, when it takes over the regulation of Royal Mail from Postcomm, needs to impose a different and very much lighter regulatory regime. As we have heard, Postcomm has not been the most successful of regulators, but it has put forward among the options going ahead that of removing its ability to set prices and leaving Royal Mail free to set its own prices, with a right of appeal being in place for those who feel that it is not playing fair. The competition would have the ultimate answer. If Royal Mail is to have a viable future and appeal to investors, it needs to be able to compete. It should not be as expensive for the company as the current regulatory regime, which is expensive in two ways: it forbids Royal Mail to compete with the many private operators, and it gives Royal Mail a huge bill—£53 million in the current year, as we have heard. In the interests of fair competition, we really should consider what my noble friend Lord Jenkin mentioned, and share the cost of regulation. In any case, under the new regime the bill should be much lighter, but I see no reason why those who are benefiting from it should not make a contribution.