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Postal Services Bill [HL]

I thought that the previous debate gave the Secretary of State an excellent opportunity to set out the background to the agreement which I think has been reached on all sides of the Committee about the vital importance of the universal service obligation. As we debated a little earlier, the review recommended a completely new regulatory regime, not just a new regulator. The independent review of the UK postal services sector by Richard Hooper, Dame Deirdre Hutton and Ian Smith last December has met with general approval. We certainly accept those recommendations in principle. As was debated a little earlier, we are dealing not only with a new regulator, Ofcom, but with a whole new set of tools, including much wider-reaching regulatory powers. The Bill certainly gives those powers. Indeed, the new and improved drafting of the regulator provisions places significantly fewer limits on Ofcom’s powers than the limits which the previous Postal Services Act 2000 placed on Postcomm. There are some safeguards on when certain conditions can be imposed, although I confess that they are so buried in the schedules that it has taken a little while to dig them out. Unlike in the Postal Services Act 2000, no clear exemptions from regulation are laid out in this legislation. The Government like to claim that the Bill is deregulatory. The move from a licensing regime to an authorising one might indeed be useful for achieving deregulation, and Ofcom certainly has a duty to be proportionate. However, we know from experience that regulatory creep has happened elsewhere with stronger safeguards than that. We are very glad to see that the Bill states unambiguously that Ofcom’s primary duty is to preserve the universal postal service, but the question of what is covered by that term is left entirely open beyond the minimum set out in Clause 29. Our Amendments 84A and 89E therefore seek to ensure that regulation in the UK does not gold-plate the European Union’s postal services directive. Of course, the amendments may not be perfect since services are not exactly exempted in this directive. They are protected from being reserved to the USP. But I seek to ensure that the services that were exempt under the Postal Services Act, such as document exchange, express services and so on, continue to be excluded from the UPS. I understand that Ofcom will naturally have to comply with the directive, but it will have the power to go beyond the limits indicated by the directive under Clause 29 and, especially, Clause 36. It certainly has the power and, possibly, the duty to go beyond previous regulatory limits in its market assessment. Even being included in the review will be a burden for many operators and will add significantly to market uncertainty. I am looking therefore to the Minister to confirm that not only will Ofcom not extend the UPS into previously exempted services, but also will not assess those areas within the review. I have to say that, from time to time, this Government seem to believe that every aspect of our lives should be regulated to a greater or lesser extent. But on these Benches we do not support the state’s intrusion into sectors where there is no important social benefit to regulation. Services such as document exchange and courier services were established as an unregulated alternative to the UPS and should remain that way. Our second amendment highlights the same concern, this time in Ofcom’s assessment under Clause 36 of whether a service falls within the scope of the universal postal service. We have later groups of amendments looking at the objectivity of that assessment, but for now I want to restrict my concerns to the possibility that Ofcom will have the authority to decide that an exempted service is within the scope. For precisely the same reasons as in Clause 29, exempted services should remain exempted and should be clearly seen to be so. The loss of specific exemptions in primary legislation means that the sector has lost a considerable amount of legislative certainty. Businesses operating in a fluid and competitive market need that sort of certainty. In view of the words a few moments ago from the Secretary of State about the way in which this whole market is changing, and his implication that innovation in this sector should be encouraged and will undoubtedly increase, I hope he would accept that to try to extend the regulatory burden on exempted services is not the way to do this. It might also be of assistance to the Committee if we could be brought up to date as to exactly where Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008 is at the present time because there has been some talk of further amendments to this directive. It would be helpful if the Minister could place on record exactly where we are as regards the directive. I beg to move.