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Postal Services Bill [HL]

As has already been discussed today, the Government’s first priority is to secure the provision of a strong universal postal service. Clause 29 defines the minimum requirements of the UPS, valued by individuals and businesses alike. The amendments proposed by the noble Lord, Lord Hunt, are, if he will forgive me, potentially open to interpretation. These amendments may seek to exempt services listed in certain recitals of the original, unamended postal services directive from being regulated. The recitals mention certain services and say that these services are different from or do not form part of the universal service. These are, as he has alluded to, express services, document exchange, new services and self-provision. The recitals do not say that the services are "exempted" from the whole of the application of the directive. Whether these recitals mean that these services are "exempted" from the provisions of the directive concerning the universal service could no doubt give rise to long legal debate. We believe that they do not mean that. Recitals, as he will know, are guides to interpretation and not operative laws in themselves. The postal directive has evolved over time, and the recitals of 1997 are less targeted to the present times. The first postal services directive, the 1997 directive, was principally concerned with which services member states were allowed to reserve as an absolute monopoly to their main postal service provider—in the United Kingdom, the Royal Mail. That does not equate to saying that the UK could not require Royal Mail to provide an express service if, in the light of changing national circumstances, it were appropriate to do so. Indeed, the directive as it is now, 12 years later, requires member states to allow the universal service to evolve with society. It does not list or otherwise set out any "exemptions" except in Article 3 for packets that are very heavy or of unusual dimensions. The services listed in the recitals can be unclear; new services, for instance, are difficult to define. We would suggest, therefore, that the proposed amendments would not provide clarity but potential uncertainty, and this could cause confusion if they were taken to apply to the minimum requirements of the universal service as defined in Article 3 of the postal services directive. The central reason for this is that these are the key areas where the United Kingdom has explicitly gone beyond the minimum requirements of the postal services directive for the universal service here in the United Kingdom. These amendments could have the unfortunate consequence of the universal service being degraded. That could potentially reduce the requirement of a service of letter delivery six days a week in the United Kingdom to five days, and remove the requirement to have a service at an affordable price that is uniform throughout the United Kingdom. The noble Lord may be seeking to replicate some of the exemptions under Section 7 of the Postal Services Act, which result in some services not being regulated at present. Moreover, as he rightly suggests, the fact that these exemptions are not mirrored in the Bill simply reflects the change in the regulatory regime from licensing to authorisation. It will no longer be an offence to convey a letter without a licence or exemption because where everyone can provide a service and licences are not required, there is by definition no need for exemptions. A particular consequence of the change is to remove the exceptions applicable to some operators such as couriers and other parcels businesses. We believe it is important that Ofcom, with the necessary controls that the noble Lord has alluded to, has the discretion to develop the future regulatory regime, albeit subject to appropriate levels of public consultation. I hope he will be reassured that Ofcom will not want to regulate everything which could fall within its potential scope. As required by the terms of its founding statute, it will regulate only where it is necessary, proportionately and in the interests of consumers and competition, and specifically in this area, to secure the provision of the universal service. Ofcom is an experienced regulator subject to the principles of ensuring proportionate, transparent and targeted regulation in all its decision-making. It is required to exercise those responsibilities with appropriate levels of consultation. The Bill is explicit in requiring Ofcom to consult on the original specification of the universal service, both in its detail and in products and services. I move on to the point made by the noble Lord about potential gold-plating, which is one we would recognise. The amendments may seek to reduce the requirements of the UK universal service to those of the postal directives, which could also have the effect of diminishing the universal postal service we enjoy today. The postal services directive defines in article 3 the minimum requirements of the universal service. The Postal Services Act 2000 and now the Bill mostly reflect those requirements. There are three areas where the United Kingdom, again, has explicitly gone beyond the minimum requirements of the postal services directive for the provision of a universal service: first, the six-day-a-week delivery of letters; secondly, the one price goes anywhere service or a uniform price across the United Kingdom; and, thirdly, the imposition of a 20 kilogram weight limit on domestic package, which can be part of such a service. I shall now address the main consequence of this. The Bill aims to protect customers by securing the universal postal services we currently have. I am sure this aim is shared by the noble Lord, Lord Hunt. We believe that it is right that the United Kingdom continues to have a service of letter delivery six days a week and at a price that is uniform throughout the United Kingdom. Reducing letter delivery to five days a week, as is the minimum required by the postal services directive, and potentially removing the one price goes anywhere requirement, would rightly be seen as a reduction of the protection afforded to customers. Individuals and business customers would not, therefore, receive their letters on Saturdays and may have to pay different postal prices depending upon where they live or do business. Royal Mail could lose business to other communications channels as a result of the additional complexity and inconvenience to its customers. The wider postal market would also suffer a decrease in mail volumes as a result of that lack of clearly specified convenience. Another consequence of the amendment would be to restrict the postal items and packets which could be included in the universal postal service to postal items up to two kilograms and postal packets up to 20 kilograms for all UK mail. These are the minimum requirements, again, of the postal services directive. The directive allows member states to increase the weight limit of the universal service for postal parcels delivered in their territory, again up to 20 kilograms. The United Kingdom has decided to take advantage of this flexibility, both in the original Postal Services Act and in this Bill. This means that the Bill sets the limits of letters and packages which can be considered as part of the universal service at 20 kilograms. The Bill will enable Ofcom, however, to carry out a thorough market assessment, a robust and public consultation, and to decide which specific products should be provided as a universal service, anticipating future changes in the market but within that specified framework. If Ofcom changes the services it considers should be provided in the United Kingdom as a universal service from the ones currently provided, this will be on the basis of an evidence-based review. We expect that the future regime will lead to better, more targeted and transparent regulation, not to more. We appreciate that the noble Lord, Lord Hunt, wishes to avoid the gold-plating of European legislation. Indeed, the Government are committed to reducing red tape and making sure that regulation is appropriately targeted. But, at the same time, it is crucial in this debate to retain the six-day-a-week letter delivery as an essential feature of the current universal service and a protection for customers. On the noble Lord’s last question, the Bill will implement the 2008 postal services directive which amends the original directive. The directive needs to be implemented by 2010 and there are no further amendments beyond implementation at the current time.