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Schedule 8: Information provisions

Part 1 Requirements to provide information to OFCOM

274.     Paragraph 1 enables OFCOM to require information necessary to carry out their functions from current or former postal operators, those providing facilities or access points or who have provided them, or any other persons who appear to OFCOM to have information required by OFCOM to pursue their functions in relation to postal services. It gives examples of the purposes for which the information would be required.

275.     Paragraph 2 limits the circumstances where OFCOM may require information for the purpose of ascertaining whether there is, or has been, a contravention of a condition of general application, which are defined as a regulatory condition other than a designated USP condition, a USP condition or a USP accounting condition. OFCOM must have had a complaint, have decided to carry out an investigation, have reason to suspect a contravention, or be considering universal service burden sharing directions.

276.     Paragraph 3 enables OFCOM to require information to carry out comparative overviews of the quality and prices of postal services, and for statistical purposes.

277.     Information required by OFCOM to carry out their functions or related purposes must be provided in the manner and within a reasonable period specified by OFCOM, and OFCOM must describe what the information is and why it is required. Such demand for information must be contained in a notice, except where information is required by OFCOM to ascertain who is liable to administrative charges payable as a result of Schedule 4.

Part 2 Enforcement

278.     Under paragraphs 5 and 6, if OFCOM have reasonable grounds for believing that a person is contravening an information demand, they may give that person a notification. The notification must set out the determination and the requirement and contravention in question, and specify the period for making representations and for complying. This period must be at least one month, unless OFCOM and the person notified agree a shorter period, or OFCOM believes there is a repeated contravention and OFCOM considers a shorter period is appropriate. OFCOM may also extend this period. A notification may deal with more than one contravention. OFCOM may give a further notification in respect of the same contravention only in certain circumstances.

279.     Paragraph 7 enables OFCOM to impose a penalty when a notification of contravention of information requirements has been given and not complied with. The penalty can be up to £50,000. The Secretary of State may substitute a different maximum amount by order. This order is subject to affirmative resolution procedure.

280.     Paragraphs 8 to 11 enable OFCOM to give a direction to suspend or restrict the entitlement of a contravening person to provide postal services. OFCOM may give a direction only if: (a) the contravening person has been or is in serious or repeated breach (b) a previous attempt to secure compliance has failed and (c) it is appropriate and proportionate. A direction may impose conditions, including payments for compensation. Before giving a direction OFCOM must notify the contravening person, give an opportunity to make representations and propose remedying the situation, and consider every representation and give one month’s minimum notice, except in urgent cases (which are provided for in paragraph 11).

281.     Under paragraph 12, it is an offence for a person to provide a service when entitlement to do so is suspended or restricted, punishable by a fine.

282.     Paragraph 13 provides that it is an offence to fail to provide information in accordance with a requirement, punishable by a fine. An offence is not committed if it was not reasonably practicable to comply or reasonable steps have been taken. It is an offence to provide false information knowingly or recklessly, punishable by a fine and to imprisonment for no more than two years.

Part 3 Supplementary provisions

283.     Paragraph 14 requires OFCOM to publish a statement of their general policy on the exercise of their information powers and the uses to which they propose to put information obtained by them.

284.     Under paragraph 15, OFCOM must comply within one week with requests by persons as to whether they need to notify OFCOM before they carry on postal services, whether the person’s notification satisfies the relevant requirements, and information about the person’s rights in relation to access negotiation.

Schedule 9: Transitional provisions for Part 3

285.     Schedule 9 enables OFCOM to carry out certain functions during the transitional period. The transitional period is the period between the day the Act is passed and the date when OFCOM take on responsibility for postal regulation, when the majority of provisions of Part 3 of the Act generally come into force.

286.     Until the first universal postal service order is made by OFCOM, the universal service is defined by reference to section 4 of the Postal Services Act 2000 (defining the universal service), and services within the scope of the universal service are decided by reference to section 7A of the Postal Services Act, which describes the services not outside the scope of the universal postal service prior to the day the Act is passed.

287.     Under paragraph 3 OFCOM may designate provisionally the universal service provider, but this designation ceases to have effect when the first designation is made under clause 34.

288.     Under paragraph 4 OFCOM must determine before the end of the transitional period the regulatory conditions applying to postal operators when Part 3 of the Act generally comes into force. These initial conditions must be similar to the current licence conditions for either the designated universal service provider or other operators, save where they appear to OFCOM unnecessary to maintain the current conditions. The general test for imposing regulatory conditions (paragraph 1 of Schedule 6) applies subject to this requirement that initial conditions must be similar to those in place before the Act comes into force generally, save where they appear unnecessary. Any modifications to those initial conditions must not result in conditions that could not have been imposed under Part 2 of the Postal Services Act 2000. The procedures under Schedule 6 (relating to the imposition, modification or revocation of conditions), and under clause 51 (appeals against price control decisions) apply to the imposition of initial conditions.

289.     During the transitional period, the provisions in relation to the universal postal service order, the designation of the universal service provider, and the imposition of conditions apply to the extent necessary for OFCOM to be able to work on the universal postal service order, designation and imposition of conditions. This work includes market assessment and consultation. The provisions in relation to information provision (clause 54 and Schedule 8) also apply to the extent necessary for OFCOM to carry out their functions during or after the transitional period. The provisions of clause 55 (general restriction on disclosure of information) have effect accordingly.

290.     During the transitional period, Postcomm must consult OFCOM before doing anything with a view to modifying or revoking a licence.

291.     This schedule also gives the Secretary of State power to make an order amending a provision in the universal service provider’s licence to extend a volume adjuster mechanism to allow a volume forecast index to continue to an index year ending 31 March 2011 to cover the period when initial conditions are in place.

292.     The order made by the Secretary of State may adopt a forecast figure which has been produced by Postcomm using the same methods as used by it to determine the forecast figures for the index years currently set out in the licence condition.

293.     Before making the Order, the Secretary of State must consult the universal service provider and such other persons as he considers appropriate for a period of 21 days, and consider representations that might be received.

Schedule 10: Minor and consequential amendments and repeals

294.     Part 1 of this Schedule covers minor and consequential amendments to the Postal Services Act 2000.

295.     Part 2 of the Schedule covers minor and consequential amendments to the Communications Act 2003.

296.     Part 3 of the Schedule covers minor and consequential amendments to other enactments.

297.     Part 4 of the Schedule covers general modifications and applies to enactments other than those amended elsewhere by the Schedule.

298.     Part 5 of the Schedule contains other repeals.


299.     Tackling the Royal Mail’s pension deficit will involve establishing a new public sector pay-as-you-go scheme being established, and all liabilities in the Royal Mail Pension Plan (RMPP) accrued before December 2008 being transferred into this new scheme.

300.     This will leave the ongoing RMPP with approximately £3bn of liabilities and £3bn of matching assets. The new government scheme will hold the balance of liabilities (approx £29.5bn). This scheme will then make payments to scheme members as payments fall due.

301.     The assets transferred to the government will be sold over time and the proceeds transferred to the Consolidated Fund. There are, in addition, costs associated with the initial set-up of the new government scheme and the ongoing administration costs of this new scheme.

302.     Implementation costs comprise:

  • Initial implementation costs largely consisting of professional advice and services (estimated to be in the range of £10 - 15m).

  • In addition there will be costs associated with the disposal of the assets of the RMPP. This cost is estimated to be in the range of £190 - 210m in total. This will be offset by an annual saving on scheme investment costs of approximately £20m per annum

303.     Ongoing administration costs for the new government scheme are estimated to be in the region of £7 - 10m per annum. Currently, this administration function is performed by an in-house team of approximately 100 employees at Royal Mail. The Government intends to do further work to determine the best way to administer the new scheme. One option may be for Royal Mail to continue to perform this function. If the administration function is outsourced, it is expected that the additional public sector manpower requirement would be minimal.

304.     In addition there will be costs during the transitional period of the merger of Postcomm with OFCOM. However, in the longer term there are likely to be associated cost savings, particularly the annual funding for Postcomm (of which Royal Mail is a large contributor), which for 2007-08 was just over £10m.


305.     The Better Regulation Executive guidance requires the government to publish an impact assessment when it introduces legislation that will:

  • Impose or reduce costs on business or the third sector

  • Impose or reduce costs on the public sector above a threshold of £5m

  • Attract high levels of political or media interest

306.     An impact assessment covering all parts of the Bill has been published alongside the Bill and sets out the costs and benefits to the postal services sector, the private and public sectors and the government. Copies have been placed in the Vote Office. In addition, the full impact assessment is available on the BERR website at

307.     The impact assessment estimates that the total cost of implementing the Hooper package of measures will be £6.2bn and the total benefit will be between £8.8 and 9.2bn (present values estimated over a 10 year period). The best estimate of net benefit is £2.8bn.

308.     The monetised costs include: staff time spent on modernisation (£8-11m); new pension provisions implementation costs (£205m); and a transfer of historic pension liabilities from Royal Mail to the government (£6bn). The monetised benefits include: efficiency savings (£2.6-£3.0bn); pension administration benefits (£190m); and a transfer of historic pension liabilities/assets from Royal Mail to the government (£6bn).

309.     Key non-monetised costs include: financial costs associated with modernisation (£1.5bn - which is already accounted for in the ‘do nothing’ option and therefore does not represent an additional cost); costs of merging OFCOM and Postcomm; costs associated with diversification and expansion. Key non-monetised benefits include: social and economic benefits of sustaining the universal postal service; less management time spent on relationship with the Regulator; more effective regulation of the sector; proceeeds from sale of minority shareholding; further benefits of diversification and expansion.

310.     Specific impact tests, including equalities impacts, are contained in an annex to the Impact Assessment.


311.      The Bill will not have a significant impact on the environment or carbon emissions.


312.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act).

313.     Mr Gareth Thomas, the Minister in charge of the Bill in the absence of Mr Pat McFadden, has made the following statement:

“In my view the provisions of the Postal Services Bill [HL] are compatible with the Convention rights.”


314.     This Bill includes provision giving effect to Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008, which amends Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal services. Directive 97/67/EC was previously amended by Directive 2002/39/EC. References are to the consolidated version of the Directive. A Transposition Note setting out how the Government will transpose into UK law the main elements of the Directive is annexed to these Explanatory Notes.

315.     The Directive provides that member States must ensure the provision of the universal service is guaranteed and must include certain minimum requirements (see Articles 3 and 4 of the Directive). Clause 31 provides that OFCOM’s primary duty is to carry out their functions in a way that will secure the provision of a universal postal service. Clause 32 provides that OFCOM must by order set out a description of services that should be provided in the United Kingdom as a universal postal service. Clause 32 also provides that the universal postal service must include the minimum requirements of the universal postal service, as set out in Article 3 of the Directive. The Bill enables OFCOM to impose conditions on providers of postal services and it is through these conditions that the relevant obligations of the Directive will be secured. In particular, clause 34 provides for the designation of a universal service provider and clauses 30, 35-38 provide for the imposition of conditions on the universal service provider to ensure that Article 6 and parts of Article 11a and Article 14 are implemented.






The Bill implements provisions of Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008 amending Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal services.

This Directive amends Directive 97/67/EC which was previously amended by Directive 2002/39/EC. References are to the consolidated version of the Directive.

Articles 3, 4(1) and 5: Provision of the universal postal service


Article 3 places an obligation on member States to ensure that users enjoy the right to a universal service of a specified quality at all points in their territory at affordable prices. This includes the requirement to ensure that the density of access points takes account of the needs of users. It also sets out the minimum requirements of a universal service.

Article 4.1 provides that each member State shall ensure that the provision of the universal service is guaranteed.

Article 5 provides that each member State must ensure that the universal service provision is such that the “essential requirements” are guaranteed; that there is no discrimination and that it shall not be interrupted except in the case of force majeure.


These Articles are implemented by clauses 31, 32, 35, 40 and 46 of, and Schedule 6 to, the Bill.

Clause 31 provides that OFCOM must carry out their functions in relation to postal services in a way that they consider will secure the provision of a universal service and the provision of sufficient access points to meet the reasonable needs of users.

Clause 32 provides that OFCOM must set out in an order a description of the services they consider should be provided in the UK as a universal service. This must include at least the minimum requirements as set out in Article 3.

Clauses 35 and 40 allow OFCOM to impose conditions on postal operators for the purpose of securing the universal service is provided to the required standards.

Clause 46 allows OFCOM to impose conditions which include those necessary to secure essential requirements.

Schedule 6 provides the test that must be met before imposing or modifying regulatory conditions and includes that there must be no undue discrimination.



Article 4.2: Designation of universal service providers


Article 4.2 allows member States to designate universal service providers in order that the whole of the national territory can be covered. When they do so, member States must publish the obligations and rights of universal service providers. They must notify the Commission of the identity of universal service providers. The designation of a universal service provider must be subject to periodic review.


Clause 34 provides that OFCOM may designate a single postal operator as the universal service provider and must publish the designation. It provides that the designation may be subject to review in accordance with regulations made by OFCOM. The procedure for designating and reviewing designations must be efficient, objective, proportionate, transparent and not give rise to any unfair discrimination. OFCOM must notify the Commission of designations and of cases where designations ceased to have effect.



Article 6: Provision of information by universal service providers


Article 6 provides that member States must take steps to ensure that users and postal service providers are given sufficiently up to date information regarding the particular features of the universal service offered, including information as to conditions of access to these services and prices and quality standards. This information must be published and member States must notify the Commission of how this information is to be made available.


Clause 35 allows OFCOM to impose a designated USP condition on the designated universal service provider. This may include provisions requiring the universal service provider to provide any information specified in the condition about any service it is required to provide as part of the universal service. Schedule 6 provides that the way in which a regulatory condition is to be imposed or modified is by publication of a notification setting out the condition (or modification). Paragraph 5(2) of Schedule 6 provides that the European Commission must be sent a copy of every notification in respect of a designated USP condition or a general universal service condition.



Article 7 and Parts B and C of Annex I: Financing of universal service


These provide for a range of alternatives available to member States in cases where there is a need for external financing of the universal services. The financing alternatives include public compensation through direct state subsidies or cost sharing mechanisms (Articles 7(3) to (5)), or indirectly, financing through the use of European public procurement procedures (Articles 7(2)).


Article 7(3)(b) to (5) are implemented through clauses 40(2) and 42 to 44 of the Bill. These provisions confer powers on OFCOM to set up (by regulations) a cost-sharing mechanism to finance the postal universal services by means of contributions from service providers and/or user’s fees. Before a cost-sharing mechanism is set, OFCOM is required to carry out a review of costs of the universal service provider and conclude that the (i) service provider is subject to an unfair financial burden when complying with universal service conditions; and (ii) it would be unfair for that provider to bear the whole or part of that burden.

Article 7(2) and (3) (a) do not require implementation.

The net cost calculation mechanisms in Part B and the recovery of costs provisions in Part C of Annex I to the Directive only become relevant when OFCOM reviews the financial burden of the universal service and decides whether to set-up a cost sharing mechanism, through regulations made pursuant to these new enabling powers. Accordingly, these provisions only need to be given effect in the regulations made by OFCOM under the new powers.


Secretary of State and OFCOM.

Article 9: Conditions governing the provision of postal services: granting of Authorisations


Article 9 allows member States to introduce authorisation procedures. For services which fall outside the scope of the universal service, these may be introduced to the extent necessary to guarantee essential requirements; and for services which fall within the scope of the universal service, to the extent necessary to guarantee the essential requirements and to ensure the provision of the universal postal service. Article 9.2 sets out restrictions on what authorisations may and may not do. Article 9.3 provides that the procedures, obligations and requirements referred to in the preceding paragraphs must be transparent, accessible, non-discriminatory, proportionate, precise and unambiguous, be made public in advance and based on objective criteria. There must also be an appeal procedure.


Clause 30 provides a general authorisation for persons to provide postal services without the need for any licence or authorisation but the provision of those services may be subject to regulatory conditions imposed by OFCOM. The types of conditions are listed in Clause 30(2).

Clause 46 provides that “essential conditions” can be imposed on any postal operator if OFCOM consider it necessary for the purposes of safeguarding certain matters, which include some of the essential requirements which might not be secured by other means. Under clause 40 general universal service conditions may be imposed on operators providing services within the scope of the universal service (as defined in clause 39) to the extent necessary to secure the universal service. Clause 35 provides that a designated USP condition may be imposed on the designated universal service provider to secure the provision of the universal service.

Schedule 6 provides for the procedure in relation to imposing and modifying conditions and provides amongst other things that any condition must be objectively justifiable, non-discriminatory, proportionate and transparent. Notifications of conditions must be published.

With the exception of decisions as to price controls, which may be appealed to the Competition Commission under clauses 51 and 52, there is no specific provision for appeals: decisions of OFCOM can be appealed by way of judicial review.



Article 11a: Access


This Article provides for member States to ensure, where necessary to protect the interests of users and/or to promote effective competition, transparent, non-discriminatory access conditions are available to postal infrastructure or services provided within the scope of the universal service, without prejudice to member States’ right to adopt measures to ensure access to the postal network under transparent, proportional and non-discriminatory conditions.

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Prepared: 22 May 2009