Postal Services Bill

My Lords, I very much appreciate the thrust of the amendment. Obviously it is crucial to everybody in your Lordships’ House that whoever becomes the private partner or investor in the Royal Mail should have the resources to be able to continue the modernisation programme and make sure that it becomes a very successful company. From my guilty experiences of years as a corporate banker, I know it is extremely difficult to write a financial test that will do this. I understand that the noble Baroness, Lady Dean, has made a good thrust at it. However, the reality is that, unless there are also tests on cash flow and the income statement, and a variety of different tests looking at the balance sheet, there is not a hope of getting a grip. In the days of modern financial structuring, and with the range of options that are allowed under various accounting procedures, the chances that a financial test—even a carefully drawn one—would provide the ability for Ofcom to identify and winnow out a provider would be extremely limited. It will be a much more complex task that requires understanding the businesses and the broader scope of the work that they do. It requires ongoing monitoring; it requires a much more complex approach. One of the comforts that perhaps some of us have in this House is that Ofcom is at least doing this with the media industries, and that it has that kind of business and financial understanding which ought to allow it to recognise if the private partners in the universal service provider have the appropriate financial structure and strength to be able to provide capital in the future. It seems to me that the thrust of the amendment is a very important one. However, in practice, this is not something that can be devised in a House like this and put in the Bill. There is comfort within the broader role that Ofcom plays. Its experience and expertise means that we should have every expectation that it would exercise real prudence in financial oversight of a universal service provider.