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Postal Services Bill [HL]

My Lords, my response to the noble Lord will probably test my powers of persuasion. It is quite a challenge, but I am up for it. The amendments seek to limit Ofcom’s powers to regulate in respect of services which do not currently require a licence. The amendments are not necessary and may in future even be damaging to securing the provision of the universal postal service. On that basis, I shall seek to persuade the noble Lord to think again. Protecting the universal service is what this Bill is all about. We need to give Ofcom the best tools available to help it to do that now and in the future. It is vital that we do not tie Ofcom’s hands. I appreciate that there is a concern that some postal operators might be regulated in future where previously they were not. I reassure noble Lords straightaway and in the strongest terms that Ofcom will not regulate everything within the potential scope of regulation—there is a clear distinction there. I make it absolutely clear that Ofcom will regulate only where it is proportionate and justified. In practice, from what is already known about the courier and parcels market in particular, it is highly unlikely that Ofcom will materially increase the burden of regulation. We do not expect Ofcom to regulate services not currently required to have a licence for the foreseeable future, except to the extent required by the directive. The directive requires us to ensure that operators have complaints systems and other consumer protection measures. However, operators tell us that they have these systems in place in any event because the market requires it. It is likely therefore that they will already be complying with any consumer protection measures and, as such, there will be no added burden for them. The amendments are unnecessary also because exceptions to the regulatory regime are redundant under a system of general authorisations. Moving, as we are proposing, from a system of licensing to one of general authorisations means that it is no longer an offence to convey a letter without a licence. As such, it is not necessary to list services which are exceptions to the regime. On the specific questions of excluding from the scope of the universal service, ""the conveyance of an overseas letter out of the United Kingdom"," of a letter in consideration of £1 or more, or of a letter weighing 350 grammes and over, the postal services directive requires that the universal postal service covers both national and cross-border services, and that the universal service extends to postal packages of up to at least 10 kilograms, which will almost certainly be priced above £1. To prescribe that the conveyance of such letters is within the scope of the universal service when undertaken by the designated universal service provider but outside the scope when provided by any other operator simply lacks logic, and introduces an undesirable element of regulatory confusion. The proposed restriction on Ofcom’s powers may damage the proportionate regulation of the postal market by hindering the collection of robust evidence about the market on which to build the new regulatory regime. The postal services market is going through a period of significant change, and we cannot predict with any certainty how it will be structured in the future. Ofcom’s strategic market reviews will perform a vital function in ensuring that regulation is appropriate, timely and evidence-based. It is essential that the new regime be evidence-based. As Hooper pointed out, no review of the sectors within the postal market has ever been carried out in the way now proposed. With the changes facing the industry today, it is paramount that there is the best possible evidence on which decisions on the regulatory regime should be based. For certain sectors of the postal market to be outside the remit of that review makes no sense. Ofcom and all those with an interest in the market need the strategic review to be as comprehensive as it can be. Excluding certain services, as proposed by the amendment— namely, those within a document exchange, letters weighing 350 grammes or more or costing £1 or more—could significantly restrict the ability of Ofcom fully to understand the postal market and to regulate accordingly. It is true that this means that some postal operators currently outside the scope of regulation could conceivably be regulated under the new regime. We understand that for some companies this means that they have less certainty about regulation. We recognise those concerns but consider this as a transitional issue which will be resolved as soon as Ofcom has completed its market review and can consult on its proposals. It is important that the valid concerns of postal operators are balanced against the importance of Ofcom being able to keep the whole market under review. It would not make sense, therefore, to prejudice or anticipate the reviews that are going to be undertaken by excluding certain things from their purview at this stage. Given the changes that the market is experiencing, this is particularly important. We cannot foresee exactly how the markets will change and evolve. It would not make sense to attempt to try to do so for the purposes of this legislation. It would be quite wrong to take a decision that would prejudice Ofcom’s ability to take necessary but targeted steps to secure the universal service. We just do not have that kind of scientific certainty about the market and how it is changing. I repeat my earlier assurance that we do not expect Ofcom to extend the scope of regulation to include the services referred to in the noble Lord’s amendment in the foreseeable future, except so far as required by the directive. Ofcom will regulate only where necessary for specific purposes, the most important of which is to secure the provision of the universal postal service. Ofcom already has a legal duty to reduce unnecessary burdens on the areas that it regulates and a duty to promote self-regulation. We expect and anticipate that Ofcom will fulfil that remit. Reducing unnecessary burdens and promoting self-regulation are as important a part of Ofcom’s remit as any other. To be clear, we are not expecting the active scope of regulation to increase. We expect the new regime instead to be much better targeted. On the back of this assurance and explanation, I invite the noble Lord, Lord Hunt, to withdraw his amendment. I hope that in the light of what I have said he will be prepared to do so.