Postal Services Bill

My Lords, before I address the amendments it may be helpful to the Committee if I say a few words about the policy intention behind Part 4 of the Bill, which introduces a special administration regime. The noble Lord, Lord Christopher, suggested other areas which could, in certain circumstances, cause problems. These special administration provisions are contingency provisions. We believe that the package of measures set out in the Bill will secure the future of Royal Mail and the universal postal service. The special administration provisions are simply the Government acting prudently and putting in place sufficient contingency plans to ensure that the universal service continues to be provided in the unlikely event that the provider is at risk of entering insolvency proceedings. The noble Lord, Lord Stevenson, referred to the possibility of this arising from an unsympathetic regulatory regime. I remind the noble Lord that the whole object of the Bill and the duty of Ofcom is to secure the universal postal service. As set out in Clause 67, the overriding objective of a postal administration is to secure the universal postal service that so many of our communities and small businesses rely upon. In order to do this, the administrator and the Secretary of State must have the necessary tools and be able to use them swiftly and decisively to preserve the universal service. It is in this context that we must consider Amendments 25D, 25E and 26A. Amendments 25D and 25E seek to add additional elements to the objectives of the postal administration. Amendment 26A would restrict the Secretary of State’s power to reduce the regulatory burden on the universal service provider while it was in special administration. Amendment 25D is intended to protect the interests of employees, while Amendment 25E seeks to ensure that the universal service provider is rescued as a going concern. I understand the intention behind the amendments but, as I have said, time will be of the essence in a special administration scenario. To act swiftly and decisively, we must be absolutely clear about the overriding objective, and in this case that must be the continued provision of the universal postal service. To add other objectives would reduce the administrator’s ability to take the action needed to secure the universal postal service—which must be our overriding aim. Furthermore, I reassure the noble Lord, Lord Young, that there is no need for Amendment 25E. There is already a preference enshrined in the Bill for the postal administrator to seek to rescue the universal service provider as a going concern. Only in limited circumstances—for example, if a rescue is not possible—can the administrator take steps to transfer the undertaking to another company or companies. This is set out in Clause 67(5). I hope that the noble Lord finds that reassuring and ask him not to move Amendment 25E when we come to it. On Amendment 26A, as I have said, the single most important objective of the special administration regime must be to secure the continued provision of the universal postal service. Being in a special administration scenario would mean that the universal service provider could no longer continue to fulfil their universal service obligations and the provision of the universal service—in any form—would be at real risk. In such a scenario, the Secretary of State must have the ability to take whatever action is necessary to secure the universal postal service. I remind the Committee that we think that this situation is very unlikely to arise. Such action could include reviewing and changing the minimum requirements of the universal service. That is not a pleasant scenario to consider, nor one that we ever expect to be in. If we were, we might face the stark choice of changing the minimum requirements or losing the service altogether. That choice would not be for Government to make alone without constraint. Any proposed changes under Clause 80 would be subject to approval by affirmative resolution after being made. The minimum requirements would, of course, still have to comply with the requirements of the postal services directive. Given this explanation, I ask the noble Lord to consider withdrawing Amendment 25D and not moving Amendment 25E or Amendment 26A. Amendment 26 relates to Clause 80(2), which allows the Secretary of State to modify Ofcom’s universal postal service order in a special administration scenario. Noble Lords may recall from our discussions earlier today that this order is the more detailed specification of the products and services that the universal service provider must deliver. Amendment 26 introduces the negative procedure into this provision. It implements the second and final recommendation made by your Lordships’ Delegated Powers and Regulatory Reform Committee and I believe it is wholly appropriate. I hope that all noble Lords will support it. The final amendment in this group, Amendment 25F, seeks to introduce the negative procedure into Schedule 11(9). The Delegated Powers and Regulatory Reform Committee did not recommend this change but invited the House to consider whether it would be appropriate. I thank the noble Lord, Lord Young, for tabling his amendment and allowing us the opportunity to do just that. It may be helpful to set out the intention behind Schedule 11(9); it permits the transfer of statutory functions to a new company that is taking on all or part of the provision of the universal postal service in a special administration scenario. However, we expect that all significant statutory powers will automatically accrue to the new company when it becomes the universal service provider in accordance with Schedule 11(8). Schedule 11(9) is simply a mop-up provision to ensure that any obscure powers—for example, in local or private legislation—can be captured and transferred to the new company. This is, once again, simply prudent government at work. We do not expect to have to use the provision and, in the event that we did, it is highly unlikely that the powers in question would be significant. We do not feel that it is necessary or appropriate to have a separate parliamentary procedure attached to the provision. I hope that the noble Lord finds this explanation helpful and will consider withdrawing Amendment 25F.