---

Postal Services Bill [HL]

In the dying moments at Stamford Bridge, I, too, will try to be brief. However, I shall try to address the amendments and the points that have been made in the debate because, to my mind, they are central to a fundamental ambition of the Bill. I have come to be aware of and appreciate the interest and expertise of my noble friend Lord Clarke in this area. I hope that by the end of the debate he may be persuadable that it is possible to create a regime that is both fair and transparent, underpins the universal service and allows for productive competition. It is not the view of the Government that those things are in conflict. I begin with Amendment 88. I am grateful to my noble friend Lord Clarke for allowing me the opportunity to provide further clarity on USP access conditions and the Government’s position and to explain why the proposed new regulatory regime is adequate to the task at hand. The amendment seeks to introduce an additional threshold of "on commercial terms" on any USP access condition. The amendment risks creating additional regulatory burdens and may constrain the nominated company’s management—in this case Royal Mail—in its ability to run the business. While I fully appreciate and understand his concerns around cross-subsidisation, particularly unfair cross-subsidisation, it is difficult to see what meaning "commercial terms" could have in relation to Clause 34(1)(b), which deals with accounting separation relating to access. Furthermore, the amendment would create uncertainty, as "commercial terms", which is not defined, could be interpreted widely and increase the possibility of either legal challenge or judicial review. Clause 34 improves on current postal regulation by clearly setting out, and for the first time bringing on to a statutory basis, the grounds that Ofcom must have regard to when imposing a USP access condition. Clause 34 and concurrent competition law powers provide the tools through which Ofcom can ensure that access prices are not set too high or indeed too low. I am conscious that it is late, but I will digress to make a specific point. This exemplifies one of the central findings of the Hooper review, which was not that there is not a case for a transparent, accurately costed wholesale pricing regime, but that it did not currently exist, and it needs to exist on terms that are fair and transparent. The noble Lord is right to point out that Hooper did not do that transparent cost analysis. However, he was not asked to do it and nor was the review team equipped to conduct it. Its commissioning by Ofcom was central to his report. Although I welcome my noble friend’s sentiments, the amendment risks creating uncertainty without adding materially to the safeguards provided by the Bill. He can rest assured that the Bill gives Ofcom the necessary powers to establish the cost of access at Royal Mail on fair terms and to ensure that access prices are set appropriately and are subject to Ofcom’s explicit primary statutory duty to secure the provision of the universal postal service. The noble Lord, Lord Hoyle, raised by way of example the question of the precise and accurate nature of the costs, the losses and the subsidisation. One of the ambitions of this new regime must be a fair, accurate and transparent wholesale access regime that preserves and funds the universal service and stimulates not parasitic but purposeful competition. My noble friend also tabled Amendment 96, which he is proposing should be inserted after Clause 44. The amendment would give Ofcom the discretionary power to require any postal operator to publish information about its performance. In doing so, it mirrors Clause 33, which requires the nominated universal service provider, if Ofcom imposes any designated USP condition, to publish details of performance. As the noble Lord opposite observed, the amendment has the potential to significantly increase the regulatory burden on what may be very small businesses, while achieving little more than is already allowed for in the regulatory powers of Ofcom in Schedule 8 to the Bill. One has to bear in mind that these operators are already in active competition with one another and, indeed, with the Royal Mail. If customers of these alternative operators are dissatisfied with the level of service, they are able to change providers with relative ease. I should direct my noble friend Lord Clarke’s attention to Schedule 8, paragraph 3. There we have set out the powers for Ofcom to require postal operators to provide all the information that Ofcom considers necessary to carry out comparative overviews of the quality and prices of postal services. That overview must be carried out with a view to publication and in the interest of users of postal services, whom he referred to. We are satisfied that this Bill as it stands provides the necessary powers for Ofcom either to ask for any information they might require on performance conditions, or to require other operators to publish such information if it can show that to do so is objectively justifiable and proportionate. Given these explanations, I hope that my noble friend Lord Clarke will not only see fit to withdraw his amendments but think again about the balance between preservation of the universal service and fairly priced access to wholesale competition.