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Postal Services Bill [HL]

Volume 710: debated on Wednesday 20 May 2009

Third Reading

Amendment 1

Moved by

1: After Clause 13, insert the following new Clause—

“Report on agreement to dispose of shares in a Royal Mail company etc

(1) This section applies to any agreement that would (or could) reduce the proportion owned (directly or indirectly) by the Crown of a Royal Mail company.

(2) Where such an agreement is entered into, the Secretary of State must lay a report on the agreement before Parliament as soon as reasonably practicable after the agreement has been entered into.

(3) The report must state—

(a) the principal objectives intended to be achieved by the entering into and carrying out of an agreement to which this section applies, and(b) the extent to which the Secretary of State considers that the carrying out of the agreement mentioned in subsection (2) will achieve those objectives.(4) The report must state—

(a) the principal criteria applied in deciding whether an agreement to which this section applies should be entered into, and(b) the extent to which the Secretary of State considers that the agreement mentioned in subsection (2) meets those criteria.(5) The report must contain a summary of the terms considered by the Secretary of State to be the principal terms of the agreement.”

My Lords, I have provided a number of commitments to this House to be as transparent about the process to find a partner for Royal Mail Group as commercial confidentiality allows. Amendment 1 stems from this.

We have had a number of debates during the earlier stages of the Bill about the detail of our negotiations. Expressions of interest from potential partners have already been received and we are actively examining them. I shall provide a further update in due course on the bid process.

Our criteria, set out clearly in February, make it clear that any strategic partner must be motivated to modernise Royal Mail over the long term, and must offer value for money for the taxpayer. We will not do a deal at any price. There is some way to go and it may well take longer to reach agreement with a partner than it takes to debate and agree this Bill. Your Lordships have stressed the need to be assured that the deal that we ultimately agree meets the criteria that we have set. The noble Lord, Lord Hunt, has tabled a number of amendments in this regard. Recognising your Lordships’ legitimate interest in this area and my desire to be transparent, I agreed on Report to consider his amendments and return to the House. I am therefore moving Amendment 1.

The amendment requires the Secretary of State to lay before Parliament a report on any binding agreement that would reduce the Crown’s ownership, either directly or indirectly, of a Royal Mail company. It sets out the detail that must be covered by the report: the Government’s objectives for a transaction and whether they have been achieved; the criteria that have been applied in assessing the transaction and whether they have been met; and, finally, the principal terms of the agreement.

I trust that your Lordships will recognise this as a significant commitment on the Government’s part to ensuring the transparency of any process to reduce the proportion of shares in Royal Mail held by the Government, not just the partnership proposal that we are currently pursuing. Therefore, I beg to move.

My Lords, I thank the Secretary of State for bringing this amendment forward, as he promised to do on Report. I welcome his assurances that the criteria applied in the first report will be those that have been published and spoken about in the debates on this Bill. I thank him for that.

My Lords, as the Secretary of State will remember, we supported the proposals brought forward by the noble Lord, Lord Hunt of Wirral. Clearly it is difficult to find the right between the role of the Executive and the Government, on the one hand, and the role of parliamentary scrutiny on the other. The Secretary of State has done a good job of striking that delicate balance. We certainly support the amendment.

Amendment 1 agreed.

Clause 14 : Annual report on post office network

Amendment 2

Moved by

2: Clause 14, page 6, line 35, leave out paragraph (b) and insert—

“( ) the postal services, services provided under arrangements with a government department and other services that are provided at those post offices, and( ) the accessibility of those post offices to users of those services.”

My Lords, Amendment 2 adds to Clause 14, which requires an annual report on the post office network. The amendment adds a requirement to report on services provided at post offices; that is, postal services, services provided under arrangements with government departments, and other services provided at post offices.

This amendment accepts, and in two respects builds on, the proposal made on Report by the noble Lords, Lord Hunt and Lord De Mauley. First, it ensures that any report includes details of services provided to all the Post Office’s customers—small businesses as well as the general public. Secondly, it ensures that the Post Office reports on the services it provides on behalf of all postal operators and not just Royal Mail.

I hope that noble Lords agree that this provision, together with Clause 14 which it amends, will improve the transparency of the post office network and provide important and robust information to Parliament. Therefore, I beg to move.

My Lords, my noble friend Lord De Mauley and I thank the Secretary of State for accepting the principle of the amendment that we introduced on Report and welcome what the Secretary of State has just said. Keeping the services that post offices can offer under review will be critical to their ongoing support.

Amendment 2 agreed.

Clause 36 : USP access conditions

Amendment 3

Moved by

3: Clause 36, page 20, line 19, at end insert—

“( ) In imposing a USP access condition that imposes price controls in connection with the giving of access to the universal service provider’s postal network or to part of that network, OFCOM must have regard to such of the costs incurred in the provision of that network, or part of that network, as OFCOM consider appropriate.”

My Lords, in moving Amendment 3, I will also speak to the other amendments in this group standing in my name. Under Clause 36, Ofcom would have the power, provided that certain conditions were satisfied, to set the price that other companies must pay to access the network maintained by the universal service provider. In doing so, Amendment 3 will ensure that Ofcom has regard to the costs of providing that network as appropriate. This amendment follows suggestions made in Committee by the noble Lords, Lord Hunt and Lord De Mauley, and by my noble friend Lord Clarke.

Competition can improve the efficiency of the postal sector and stimulate innovation. Both are essential if we are to sustain the universal service and to ensure that it meets the changing needs of consumers. Competition must, however, be appropriate and fair. The new access regime set out in this Bill is designed to be transparent and cost-based and to ensure there are no unfair cross-subsidies between postal companies. The fact that Royal Mail needs to modernise is accepted by all the relevant parties. Inefficiencies will take time to drive out, but they must not be locked in for the long term. We believe that this amendment will enable Ofcom to strike the right balance in taking appropriate account of costs.

Amendments 4, 5 and 6, too, respond to amendments tabled during Committee by my noble friend Lord Clarke and the noble Lords, Lord Hunt and Lord De Mauley. Clauses 41, 42 and 43 enable Ofcom to establish a scheme to share the cost of providing the universal service. Amendment 4 has the effect of giving Ofcom a duty, rather than a power, to review whether the obligation to provide the universal service imposes a financial burden on the universal service provider. Amendment 6 requires that the first of these reviews must be undertaken no later than five years after Clause 41 comes into force and every five years thereafter. Amendment 5 will ensure that Ofcom must consider whether the universal service provider is meeting its statutory obligations in a cost-efficient manner, in deciding whether any financial burden is unfair and, therefore, that a new scheme is needed.

Amendment 7 responds to suggestions made by the noble Lords, Lord Hunt and Lord De Mauley. It will apply the affirmative resolution procedure to any future regulations dealing with the creation of a scheme to share the cost of providing the universal service. It also provides that the Secretary of State must give his consent before any regulations are laid. This reflects the reality that government support would also almost certainly be necessary for any regulations to gain the approval of Parliament.

Finally, I would like to say a few words on the subject of appeals. The adequacy of this Bill’s appeals provisions has been the subject of some debate. In particular, some have argued that judicial review by the High Court should not be the means of appeal for some decisions taken by Ofcom. While I do not have a specific proposal to make today, the Government have heard what has been said and will continue to give this issue careful consideration as the Bill moves to the other place. I beg to move.

My Lords, at this very late stage in the Bill I rise to say how much I welcome the amendment dealing with Ofcom and the new regulation regime that is proposed. I welcome it because I believe that it will be a great boost for Royal Mail if it gets a fair regulator that allows it to do its job properly.

I cannot let the opportunity pass without saying how sad I am to be at the requiem of a fully publicly owned organisation and to see happen the privatisation that is proposed in the Bill. However, it would be wrong to expand on that on this amendment; I just wanted it said.

I hope that our friends of all parties down at the other end will find the courage to put Part 1 into a shape that will allow Royal Mail to remain fully publicly owned. I welcome other parts of the Bill and the tremendous progress that we have made on the public pensions and, as I just said, on the regulator.

I take this opportunity to thank the noble Lords, Lord Tunnicliffe and Lord McKenzie of Luton, for their unfailing courtesy during the Bill’s long passage through Committee and Report. I should also thank members of the Bill team, who have been equally helpful when I have put questions to them.

I welcome this group of amendments because of the proposed regulation, which I wish well. I place on the record my gratitude to all those who have shown their patience with me over the past few weeks.

Amendment 3 agreed.

Clause 41 : Review of costs of universal service obligations

Amendments 4 to 6

Moved by

4: Clause 41, page 23, line 8, leave out “may” and insert “must”

5: Clause 41, page 23, line 12, at end insert—

“( ) In carrying out a review under this section OFCOM must consider the extent to which, in their opinion, the provider is complying with those obligations in a cost-efficient manner.”

6: Clause 41, page 23, line 12, at end insert—

“( ) The first review under this section must be carried out no later than 5 years after this section comes into force; and every subsequent review must be carried out no later than 5 years after the previous one.”

Amendments 4 to 6 agreed.

Clause 42 : Sharing of burden of universal service obligations

Amendment 7

Moved by

7: Clause 42, page 24, line 40, at end insert—

“( ) Regulations under subsection (5) may not be made unless—

(a) the Secretary of State has consented to the making of the regulations, and(b) a draft of the statutory instrument containing the regulations has been laid before Parliament and approved by a resolution of each House of Parliament.”

Amendment 7 agreed.

A privilege amendment was made.

Motion

Moved by

My Lords, I want to acknowledge the fact that the content and tenor of our debates, which have lasted in the region of 35 hours over the past two months, have upheld the tradition of this House in subjecting legislation to robust and detailed scrutiny and holding the Government to account. I pay tribute in particular to the noble Lords, Lord Hunt, Lord Razzall and Lord Clarke. We do not agree on everything in the Bill, but each has raised important issues across the scope of the Bill: on the Royal Mail’s organisation, on pensions and, as discussed just now, on regulation. As a result, the other place will receive a Bill that has been much improved. This could not have been possible had it not been for the contributions made during the Bill’s passage through this House and the excellent and commendable work undertaken by the Bill team. I record my thanks for its work, not just for the Government but, I notice, for the opposition parties as well, in the best spirit and tradition of the Civil Service.

My Lords, I respond warmly to the comments of the Secretary of State. It has been a pleasure working with my noble friend Lord De Mauley and noble Lords on all sides of the House in seeking to improve the Bill; I am grateful to the Minister for what he has said about that.

I join the Secretary of State in thanking the Bill team, not because it veered towards accepting the case put forward by other noble Lords, but because it was listening—as, indeed, was the Secretary of State. I hope that he will accept, in the terms in which he has just spoken, that we have striven to ensure that the Bill leaves this House in a better state.

The Secretary of State will be aware that there are continuing concerns, some of which he addressed in his earlier remarks. We hope that his colleagues in the other place will listen as attentively as he has to these continuing concerns and accept not only the improvements which have been made in this House but the case for the further improvements that are still necessary.

My Lords, I join the noble Lord, Lord Hunt of Wirral, in thanking the Secretary of State for the courtesy he has shown to us throughout the Bill’s passage. I endorse everything that he and the noble Lord, Lord Hunt, have said about the way in which the debate has been conducted. However, I would add one little coda to that. It will have been apparent to everybody who sat through your Lordships’ debates that the noble Lord, Lord Clarke of Hampstead, did not necessarily agree with the Bill. The fact that he conducted his rearguard action with such skill does him great credit, even if he has not carried the majority of his own party or either of the opposition parties on many of the points that he raised. The real creator of the Bill, Mr Richard Hooper, is sitting in the Public Gallery, and we are very glad to see him here.

Bill passed and sent to the Commons.

House adjourned at 5.56 pm.