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Postal Services Bill [HL]

I am grateful for the opportunity to respond to the interesting comments that have been made in contributions to this debate and the opportunity to discuss Clause 29 in more detail. Clause 29 is the keystone of this Bill. It reflects the Government’s first, top priority: to secure the provision of a strong universal postal service. It is to sustain this service that we are proposing action to turn round the Royal Mail’s finances and business. With consumers having ever greater access to e-mails, text messages and other electronic media, the letters business is in structural decline. That decline seems to be accelerating. In the UK, volumes fell by 2.3 per cent in 2006-07, by 3.2 per cent in 2007-08 and, according to Royal Mail’s results, by 4 per cent for the first half of 2008-09. Yet mail remains part of our social and economic fabric and way of life in this country. People value the ability to receive and send a letter at the same affordable price everywhere in the UK, six days a week. We have heard little about customers in debates about the Bill so far, yet it is precisely customers we want to protect by securing the universal postal service. There will always be a need to post mail and packets. That is why, in the face of falling letter volumes, the Government are taking decisive action. Clause 29 enshrines in legislation the minimum requirements of a universal postal service, at the current standards that we enjoy in the UK now. We agree with the Hooper report that the option of degrading the universal service as a response to the worsening finances and trading conditions of the Royal Mail should be rejected. That is not the path along which we want to go. Amendments 82 and 83 would add Saturday collection and delivery of non-letter postal packets such as parcels to the minimum level of the universal service. In our view, the amendments are not necessary or appropriate. That requirement is not currently part of the universal service. None the less, Royal Mail already collects and delivers parcels or postal packets six days a week, despite not being bound to do so by the universal service obligation. It does so now, and it does so because it is convenient for customers. Furthermore, the parcels business is a competitive and vibrant market. As Adam Crozier told the BERR Select Committee in another place, Royal Mail expects 75 per cent of its profits to come from parcels in five years’ time. Customer demand and an effective market should therefore ensure that consumers retain the ability to send and receive parcels on a Saturday through either Royal Mail or another postal operator. In those circumstances, we believe that adding an additional regulatory burden to the Royal Mail at this stage is neither helpful nor necessary. Finally, the Bill allows for flexibility in the regulatory structure. Should Ofcom in future decide that the market is not meeting the reasonable needs of customers, it may add services to the universal service under Clause 29. That could indeed include Saturday collection and delivery of parcels if necessary. The Bill gives Ofcom the power it needs to protect users while allowing for less regulation and more flexibility for both Royal Mail and other operators where the market works well. I hope that, in view of that reassurance, the fact that Ofcom has within its power under the Bill to introduce such a regulatory requirement should it prove necessary in future and that the service is already currently provided, the noble Lord, Lord Cotter, will be content to withdraw his amendment. The amendment in the name of the noble Lord, Lord Hunt, proposes to remove expressly bulk mail services from services that need to be provided at a uniform tariff. The requirement for a uniform tariff is provided by Clause 29(3)(e). I believe that the intention behind the amendment is to make clear that there does not have to be a "one price goes anywhere" service for bulk mail. I understand the background to that proposal. The Hooper report indeed suggests that there is a strong case for Ofcom to consider whether competition is sufficiently well developed to remove some bulk mail products from the universal service specification. I assure the noble Lord that we do not intend to restrict the choice of consumers. On the contrary: we seek the opposite. The amendment he proposes is unnecessary. Clause 29(3)(e) does not require Ofcom to secure that bulk mail is provided at a uniform tariff in the whole of the UK. However, there is the option. In principle, we want to leave that question open for Ofcom to judge and decide because it will be best placed to reflect the changes in the postal market. We do not believe that it is appropriate to fix the details of the individual specific products to be provided to the specification of the universal postal service in the Bill. Frankly, it is for the market, for customers and for the regulator, responding to customer demand, to form such a judgment if necessary, in due course. I therefore invite the noble Lord, Lord Hunt, in the light of what I have said, not to press his amendment.