Postal Services Bill

My Lords, the primary purpose of the Bill is to protect the universal service. The Bill requires Ofcom to secure the provision of the universal service and to ensure that it is meeting the reasonable needs of users. Indeed, that latter point is a requirement not just of this Bill but of the European postal services directive. The noble Lord, Lord Stevenson, suggested that Ofcom’s duty to secure the future of the universal service was in some way on a par with its duty to have regard to the financial sustainability and efficiency of the universal service. I am happy to reassure noble Lords that this is not the case. Ofcom’s overriding duty in relation to postal services is to secure the provision of a universal service. In doing so, Ofcom must have regard to the need for financial sustainability and efficiency, but these considerations cannot outweigh the need to secure a universal service. Clause 29 requires Ofcom to assess the needs of users and to set the universal postal service order at a level that meets those needs. The provision is a necessary tool to ensure that the postal market remains flexible and responsive to user needs. I know that there has been some confusion and concern about the relationship between the universal postal service order, and the minimum requirements in Clause 30. The order will set out the particular products and services that Royal Mail must provide, over and above the minimum requirements and the standards that the company must meet. These products are currently set out in Royal Mail’s licence. As we are abolishing the licensing regime, they will need to be set by order in the future. Amendment 24HZA, tabled by my noble friend Lord Eccles, seeks to constrain the scope of the universal postal service order. Clause 29(2) provides that the universal postal service order must include ““as a minimum”” each of the services set out in Clause 30. The subsection allows Ofcom to include more services or higher requirements—for example, it can specify the percentage of first-class letters that must be delivered the next day. Given that the universal service must evolve in line with user needs, this is appropriate. I understand where my noble friend is coming from and it is important that we hear the arguments he has made so well. However, I should say to him that to be compliant with the directive, we must allow Ofcom the flexibility to ensure that user needs are met. It is right that Ofcom, as the expert regulator with all the market information, is the body that makes the judgment. Given that explanation, I hope that my noble friend will withdraw his amendment. I turn to Amendment 24J in the names of the noble Lords, Lord Low and Lord Laming, and the noble Viscount, Lord Tenby. I recognise that the noble Viscount is speaking for the noble Lord, Lord Low, and I thank him for introducing the amendments. I assure the House that the market assessment that Ofcom is obliged to carry out as a result of Clause 29(4) is not a review of the minimum requirements. It cannot change those requirements. As I said earlier, the European directive requires that the universal service should respond to user needs. Therefore, Clause 29 requires that Ofcom must carry out a market assessment before it makes a universal postal service order. This is eminently sensible, given the rapidly changing market. The first universal postal service order will not be subject to such a market assessment for the simple reason that Ofcom will not have time to conduct one. We therefore expect that the first universal postal service order will require Royal Mail to provide essentially the same services that it is required to provide now. However, the Bill ensures that the market assessment will be conducted within 18 months so that we will be sure that the universal service is meeting user needs. I stress again that the market assessment under Clause 29 has nothing to do with the minimum requirements in Clause 30 and cannot recommend changes to those requirements. In light of that reassurance, I hope that noble Lords will not press the amendment. I turn to Amendment 24K in the names of the noble Lords, Lord Low and Lord Laming, and the noble Viscount, Lord Tenby, and to Amendment 24L in the name of the noble Lords, Lord Laird and Lord Rogan. The power in Clause 33 enhances the safeguards against changes to the universal service minimum requirements. As we have discussed, Clause 30 enshrines the current minimum requirements for the universal service, with the important addition of free services for the blind or partially sighted. The requirements gold-plate our European obligations, but this is gold-plating that we are rightly proud of. As my colleague, the Minister for postal affairs, said in the other place—I am happy to repeat it here—the Government have no intention of reducing the minimum requirements of the universal service. As things stand, and as they would have stood under the 2009 Bill, a future Government could reduce those minimum requirements to the level required by the European directive through a negative resolution procedure using powers under the European Communities Act 1972. This means that Saturday deliveries could have been dropped, and different prices could have been charged for sending letters to Cornwall and Clapham. We do not believe that that is acceptable, which is why we have introduced Clause 33. Before I go into the detail of the clause, I ask noble Lords to note that the power to review the minimum requirements is just that—a power. It is not a duty or an obligation. Clause 33 puts in place a clear procedure to be followed before the minimum requirements can be altered. Through this procedure, it offers vital new protections for us all. The protections are threefold. First, there can be no changes to the minimum requirements unless Ofcom has conducted a review of the needs of users. Secondly, the clause guarantees that no change can result in a different minimum level of service for different parts of the country. We could never have a five-day-a-week letter delivery requirement in Cornwall and a six-day-a-week requirement in Birmingham. Services must always be priced uniformly. Thirdly, any proposal for change would be subject to the affirmative procedure in both Houses. The noble Lord, Lord Stevenson, stated that Clause 33(6) does not reference the uniform tariff. I reassure him that this is contained in the meaning of Clause 33(6) and is absolutely the Government's policy. Clause 30(3) makes this clear. I turn now to the amendments. Their effect would be that for at least five to six years, Ofcom would not be able to initiate a review of the minimum requirements. Given the enhanced protections that we have established under Clause 33, it would not be helpful to tie the hands of the regulator in this way. Ofcom will be responsible for regulating the postal services market and should be able to review the market and user needs where it feels this is appropriate. We should not forget that Ofcom’s primary duty will be to secure the universal service. It will need to be able to gather vital information on customer and market needs if it is to fulfil this obligation. Given the reassurances I have made on the protections for the minimum requirements, I hope that noble Lords who spoke will not press their amendments. I turn to Amendment 24LZA. As I explained earlier, Clause 33 puts in place new protections against changes to the minimum requirements—changes that could be made now using European Communities Act powers. What noble Lords seek to do with this amendment is to prevent any changes to the minimum requirements by disapplying the European Communities Act powers. While I sympathise with the intention behind this, it is simply not practical. The European Communities Act exists because it is sometimes necessary to make changes to primary legislation in order to implement European obligations. We cannot rule out the possibility that at some point in future there may be a new European Union postal services directive setting new minimum requirements—possibly higher ones, possibly lower ones and possibly just different ones—and we will be legally obliged to make those changes. It would not be acceptable in those circumstances not to have a means of doing so other than by new primary legislation, which might well not be possible in the time required. The provisions in the Bill tread the right balance between ensuring that a future Government cannot use the European Communities Act to make changes simply because they want to reduce the minimum requirements, while leaving Parliament the power to make necessary changes—for example, if required to do so by European law. I also politely remind noble Lords opposite that their 2009 Bill did not include any provision such as the one proposed by this amendment. I make it clear that we have no intention of changing the minimum requirements. The Bill enshrines the same minimum requirements that we currently enjoy and enhances the protections against any changes to them. For those reasons, I hope that noble Lords will not press this amendment. I turn to Amendments 24M and 24N, which seek to ensure that the review of user needs established under Clause 33 is comprehensive. Amendment 24M would require there to be an assessment of the impact of any changes on postal services as a result of a review of the minimum requirements in Northern Ireland, Scotland and Wales. I reassure the noble Lords, Lord Laird and Lord Rogan, that Section 7 of the Communications Act gives Ofcom a duty to carry out impact assessments. In light of that, were Ofcom to conduct a review of the minimum requirements, it would have to consider the impact of any proposals it made on users in the three devolved territories, as well as on a range of other categories of person. Amendment 24N in the names of the noble Lords, Lord Low and Lord Laming, and the noble Viscount, Lord Tenby, would require Ofcom, when conducting a review of the minimum requirements, to consult user groups representing people in rural areas, small businesses, pensioners and people with disabilities. These intentions are entirely appropriate. However, I remind noble Lords that the Bill must be read alongside the Communications Act 2003. Section 3 of that Act already requires Ofcom to have regard to a specified range of groups when carrying out any of its functions. In particular, Ofcom must have regard to, "““the needs of persons with disabilities, of the elderly and those on low incomes””." It also has to have regard to, "““the opinions of consumers in relevant markets and of members of the public generally … the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas””." It is also important to note that in the Communications Act ““persons”” refers to corporate bodies as well as individuals. Therefore, Ofcom must equally have regard to the needs and interests of businesses in different parts of the United Kingdom, including small businesses. I turn to Amendment 24PC. I can tell the noble Lord, Lord Young, and his team that I agree wholeheartedly with the intention behind this amendment. However, happily, it is not needed. Requirement 3 in Clause 30 requires uniform and affordable pricing. I also remind the noble Lord that in Clause 33 we are putting in place new safeguards that explicitly prevent any changes to the minimum requirements that would result in non-uniform pricing. With those reassurances, I hope that the noble Viscount will feel able to withdraw the amendment.