Postal Services Bill

My Lords, I shall speak to Amendments 24J and 24K. I hope that I will not be accused of being self-indulgent if I suggest that it may be for the convenience of the Committee if I tack on Amendment 24N, to which I can attempt to move seamlessly after my remarks on Amendment 24K. All these amendments are in the name of my noble friend Lord Low, who very much regrets that he is unable to be here owing to urgent business commitments abroad. Amendment 24J is a straightforward amendment that is designed to place in the Bill the assurances that the Minister was kind enough to give at Second Reading. At that stage she made it clear that there is no scope for the postal services regulator, Ofcom, to downgrade the minimum requirements that make up the universal postal service. At Second Reading the noble Lord, Lord Tunnicliffe, and my noble friend Lord Low expressed concern that the Ofcom market review, which has to take place within 18 months of the Bill receiving Royal Assent, might be the vehicle for downgrading the universal service obligation. In response the Minister said: "““I am happy to reassure them that this is completely untrue. There is no small print allowing this … Ofcom must have conducted a market review to ensure that the services offered as part of the universal service reflect user needs. These are set out in statute and the review cannot recommend a downgrade of the minimum requirements after 18 months””.—[Official Report, 16/2/11; col. 777.]" That is a welcome reassurance. It is both clear and unambiguous. I therefore hope that the Minister will have no objection to including in the Bill in an equally clear and unambiguous fashion the restriction that it reinforces. By placing in the Bill that restriction on changes to the universal postal service—a restriction that has support on all sides of the House—we make it clear to Ofcom and, more importantly, to any future Government who may have other ideas, that although Royal Mail is being privatised, the service that the public rightly expect to receive will be maintained. I very much hope that on that basis the Minister will welcome the amendment. Amendment 24K seeks to strengthen the Bill by giving greater protection to the universal service by ensuring that the current minimum requirements are maintained for a period of five years. I welcome the establishment of Ofcom as the new regulator for postal services. I need not repeat the argument for that. Suffice it to say that it makes sense with the continued development of electronic communications and their integration with traditional postal services. Ofcom will have a key role in determining whether a privatised Royal Mail succeeds or fails. It will not just regulate competition; it will regulate service levels. Underpinning that is the universal postal service, which is made up of a number of minimum requirements. The obligation itself is non-negotiable: if you have a licence to deliver letters and packets within the regulated area, you must meet the obligations placed on you by these requirements. The value of the universal postal service to the public would surely be diminished if the minimum requirements that underpin it were eroded. Recent research conducted by Consumer Focus and Postcomm highlighted the fact that safeguarding the universal service remains key for customers. I do not doubt the Minister’s intentions on this, but we should be clear: once the Bill receives Royal Assent, she then hands over responsibility for the protection of the universal postal service to Ofcom, along with an obligation to review the current minimum requirements to see whether they are meeting what are called the ““reasonable needs”” of consumers. This, along with some 14 other provisions in the Bill, allows the regulator or the Minister to vary the terms of the universal service obligation in a variety of circumstances. That is worrying. The ““reasonable needs”” of one person may not be the same as those of another. One person may feel that their reasonable need is to have a delivery every day, while another may be happy to make do with two or three a week. Some people may feel that it is a reasonable need to be able to pay less to post a letter to the next town than to a town 300 miles away. Is that right or wrong? I suggest that it is a matter of opinion. That is why I believe this amendment will strengthen the Bill. It provides a period of certainty and stability for the public and for any prospective purchaser of Royal Mail. Rather than leave Ofcom with the vague remit to review the universal service ““from time to time”” it ensures that for a period of five years the current minimum requirements making up the universal service obligation are safe. It protects uniform pricing as well as daily letter and packet collection and delivery to all homes. It protects freepost services for blind people that would otherwise be disproportionately expensive because of the additional weight of braille materials. The universal service is essential to small businesses. The Federation of Small Businesses notes that small businesses are really struggling in the current economic climate and is concerned that changes to Royal Mail and the Post Office will leave them without access to an accessible and affordable UK-wide postal service. The concerns raised by the federation are stark. It states: "““Given that more than 99 per cent of all businesses in the UK employ less than 50 people, and are dependent on Royal Mail and the Post Office, the importance of the universal service obligation is paramount to their survival and future growth””." Ensuring that the current minimum requirements are maintained for five years would give pause to those who might want to use the sale of Royal Mail as the opportunity to reduce the level of service to which we are accustomed. To take just one all important example, it would protect the principle of a uniform price for a stamp wherever you happen to live. The public want to see their current service maintained. The Bill as drafted leaves too many loopholes for those who might want to erode the current minimum requirements that make up the universal postal service. I urge your Lordships to support this amendment to protect our cherished universal postal service in order to ensure that small businesses, pensioners, people with disabilities and everyone else in our society who has come to rely on the universal service are protected. If the Committee can stand it, I will discuss Amendment 24N, which I daringly suggested might be tacked on to the other two. This amendment seeks to ensure that no significant changes are made to the postal service without adequate consultation with those who rely upon it. Those who are most dependent on Royal Mail are most at risk as a result of changes to the service it provides. It is surely right that those who are most vulnerable to change should be able to exert some influence over the change that takes place. Whether in public or private hands, the postal service should be responsive and accountable to those it serves. The lack of protection for service users makes it essential that the Bill does not pass into law without giving users a stronger voice in what happens. On the one hand the Bill legislates to protect the current universal service but on the other it mandates the proposed postal services regulator, Ofcom, to review that service within 18 months of the Bill receiving Royal Assent. It would be completely unreasonable for Ofcom to railroad through changes to the universal postal service without full and proper consultation. This amendment seeks to ensure that this cannot happen. There was some debate on the first day of Committee about the relative cost of providing postal services in rural and urban areas. According to Royal Mail, delivery costs vary widely depending on the nature of the address. They are relatively low in high-density areas such as town centres where there are large volumes of mail going to a large number of addresses in a relatively small area. Conversely, they are much higher in areas where there are few addresses and small amounts of mail to deliver. The single tariff benefits those who live in rural areas and it is those customers whose service would be most at risk if a wholly commercialised pricing structure was applied to postal services. I am sure that noble Lords from Northern Ireland, Scotland and Wales will share my concern that any review of the universal service obligation by Ofcom will look very closely at how expensive it is to provide services in rural areas. That is what regulators do. It is what Ofcom has done so successfully in the telecommunications sector. However, the mail is not that kind of market. There is no suggestion, even if the Bill allows it, that there will be more than one licensed postal services provider with the universal postal service obligation. Yet the economists at Ofcom will undoubtedly ask why it is that users in urban areas subsidise an often loss-making postal service in rural areas. Why not reduce the cost of a stamp in the cities and make those in the countryside pay a price that better reflects the cost of the service? Small businesses, particularly those in rural areas, rely on the postal service for their livelihood. Again, in a truly competitive world these businesses would be charged a price for the service they receive based at least in part on their location. I know that the Federation of Small Businesses is worried about this legislation precisely for that reason. Small businesses in rural areas are perhaps among the most vulnerable to the aggressive commercialism that we associate with privatisation. Older people are reliant on the postal service as a means of communication. It is hard to believe, I know, but many do not use e-mail and the internet. It is important that a privatised Royal Mail and the new regulator do not disadvantage older users by adopting pricing policies which restrict their access to postal services. I believe that this amendment would strengthen the Bill by ensuring that Ofcom consults fully with key user groups. Organisations representing pensioners, small businesses, disabled people's organisations and rural areas should be an integral part of the review process so that their views inform the decisions Ofcom takes. I hope that the Government will support the obligation to consult contained in this amendment. It would give added legitimacy to the decisions of the regulator, which in the last analysis should be accountable to the public it serves.