Postal Services Bill

The Committee consisted of the following Members:

Chairs: † Mr David Amess  , Miss Anne Begg  , Mr Jim Hood 

† Banks, Gordon (Ochil and South Perthshire) (Lab) 

† Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab) 

Collins, Damian (Folkestone and Hythe) (Con) 

† Davey, Mr Edward (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

† Fuller, Richard (Bedford) (Con) 

† Griffith, Nia (Llanelli) (Lab) 

† Harris, Rebecca (Castle Point) (Con) 

† McClymont, Gregg (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab) 

† Morrice, Graeme (Livingston) (Lab) 

† Newmark, Mr Brooks (Lord Commissioner of Her Majesty's Treasury)  

† Patel, Priti (Witham) (Con) 

† Stephenson, Andrew (Pendle) (Con) 

† Swinson, Jo (East Dunbartonshire) (LD) 

† Turner, Karl (Kingston upon Hull East) (Lab) 

† Vaizey, Mr Edward (Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport)  

† Walker, Mr Robin (Worcester) (Con) 

Weir, Mr Mike (Angus) (SNP) 

† Wright, David (Telford) (Lab) 

Chris Stanton, Annette Toft, Committee Clerks

† attended the Committee

Public Bill Committee 

Thursday 2 December 2010  

(Afternoon)  

[Mr David Amess in the Chair] 

Postal Services Bill

Clause 28 

Duty to secure provision of universal postal service 

Amendment proposed (this day): 74, in clause 28, page 15, line 14, at end insert 

‘, and OFCOM shall include Post Office branches as access points.’.—(Nia Griffith.)

1 pm 

Question again proposed, That the amendment be made. 

The Chair:  I remind the Committee that with this we are discussing the following: 

Amendment 75, in clause 28, page 15, line 15, after ‘receptacle’, insert ‘, Post Office Branch’. 

Amendment 78, in clause 30, page 16, line 33, at end insert— 

‘Requirement 3A: Access to postal services via the Post Office BranchesUtilising a Post Office Company, a number of Post Office Branches consistent with regulations to be laid before Parliament by the Secretary of State.’.

Amendment 89, in clause 35, page 19, line 44, at end insert 

‘including those provided by a Post Office Company,’.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab):  After this morning’s sitting, I went away, as the Minister suggested, and had a close read of the Bill. 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey):  And you now agree with us, Gregg. 

Gregg McClymont:  The Minister will be surprised to learn that I do not necessarily agree with him. He made a suggestion to me in relation to the provision that was being referred to, clause 28(3), which relates to clause 29. Clause 28(3) states: 

“In performing their duty under subsection (1) OFCOM must have regard to— 

(a) the need for the provision of a universal postal service to be financially sustainable”. 

Having looked again at the clause, I believe that it prioritises the financial needs of the universal service provider over all other stakeholders whose needs should be considered by the regulator. My understanding is that that prioritisation is not normal in respect of universal service obligations. With regard to Ofcom—I see that the Minister who straddles both camps, the

Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey), is not in his place—there is no such prioritisation in the communications industry, for example. Instead, statute makes consumer interests the priority interest. According to my understanding of these provisions, the regulator is required to adapt the level of public services required, depending on the profitability of the service. 

This Minister suggested that our earlier disagreement was about what is meant by “financially sustainable”. 

Mr Davey:  I want to ensure that the hon. Gentleman has read the provision properly, because it talks about the need for the provision of a universal postal service, not of a provider. It is the service to the consumers. I am afraid that the hon. Gentleman is wrong again. 

Gregg McClymont:  The Minister will not be surprised to learn that I do not agree with that interpretation, but I want to pick up his earlier contention about what is meant by “financially sustainable.” My understanding is that it means profitable. I say that because a non-profitable universal service is not, in economic terms, sustainable. What does “financially sustainable” mean, if it does not mean profitable? 

Mr Davey:  I want to state for the record that we seek for Royal Mail to be a profitable company. Part of the problem and the threat to the universal postal service is that under the way in which the previous Government operated the policy, it has not been making profits and has been a drain on the taxpayer. 

Gregg McClymont:  You see the tactic, which I understand, of diversion, Mr Amess. This morning, the Minister suggested that “financially sustainable” does not mean profitable. As I have said, a non-profitable universal service is not, in economic terms, sustainable, so what does “financially sustainable” mean, if it does not mean profitable? Does the Minister want to tell me that? Does he have an answer? I suspect not. 

Mr Davey:  For the record, I gave the answer previously. The hon. Gentleman just chose not to listen. 

Gregg McClymont:  The Minister referred back, as is his wont, to the 2009 Bill. I say again that “financially sustainable” must mean profitable, because it is not possible to have a non-profitable universal service— 

Mr Davey:  I was not referring back to the 2009 Bill, because the 2009 Bill did not have this provision in it. That was one of its mistakes, and that is why this Bill is a much better Bill. 

Gregg McClymont:  The Minister is doing his best to move off the key point, which is that “financially sustainable” must mean profitable, because a non-profitable universal service is not, in economic terms, sustainable. It is not possible to see what else the phrasing could mean, if it were litigated. It seems to me illogical to have a universal service obligation tied to a requirement of profitability. The whole point of the universal service obligation, in all the utility sectors, is to require the bidder to carry on providing services that would not be

provided by the market because they are not profitable. The universal service obligation as a concept was first invented— 

Mr Davey:  What I do not quite understand in the hon. Gentleman’s argument—as much as it is understandable at all—is that he seems to suggest that if Royal Mail operates in a profitable and financially sustainable way, it is somehow bad news for Post Office Ltd. I put it to him that the reverse is the case. 

Gregg McClymont:  I am surprised at the Minister for saying that. There is no suggestion of that. If I am right, his contention this morning was that my reference to profitability in clause 28(3) was untrue, because the words used were “financially sustainable”. I think that that is what he said. My response is that financially sustainable must mean profitable, because a non-profitable universal service is not, in economic terms, sustainable. He shrugs his shoulders. [Interruption.] I am not sure whether he is confused—I certainly would not want to say that anyway. He might want to come back to me when he reflects on the matter, as I have, and I take the further point that he makes. 

The provision, as it is written, potentially empties the universal service obligation of any sensible meaning. It means that the regulator is legally required to provide only services that are profitable, because “financially sustainable” cannot mean anything but profitable in economic terms. How can we have a non-financially sustainable universal service in economic terms? I see that my hon. Friends the Members for Middlesbrough South and East Cleveland and for Kingston upon Hull East are nodding in assent. Running 12,000 post offices is not profitable. The effect of prioritising the financial sustainability of the universal service provider will be to increase the price that a purchaser will pay for Royal Mail. 

I will explain why that is the case. Let us reflect for a moment on the bidding process: No. 1, a number of buyers want to buy Royal Mail; No. 2, the statute does not require Royal Mail to maintain post office numbers or use post office services; No. 3, not maintaining unprofitable post offices lowers Royal Mail’s operating costs; No. 4, lowering Royal Mail’s operating costs increases Royal Mail’s profitability; No. 5, given that those four points hold, buyers must thereby increase their offers vis-à-vis their rivals, and I will explain why; No. 6, if a bidder bids too low and its potential profit is too high, it will effectively allow a rival to buy Royal Mail. If a bidder bids too high, the cost of the debt taken out to finance the acquisition will eat into profits, and there is no reason to buy Royal Mail over any other potential investment. 

Mr Davey:  Yet another flaw in the hon. Gentleman’s argument is that he seems to suggest, from his economic analysis of Royal Mail’s fortunes, that Royal Mail’s profit and loss is fundamentally dependent on its relationship with Post Office Ltd. If he looks at the revenue flows of a postal administration such as Royal Mail, he will see that they are—surprisingly enough—from delivering letters and parcels, and its relationship with the post office with a retail counters network is not as significant to its financial fortunes or profitability as the hon. Gentleman makes out. 

Gregg McClymont:  I thank the Minister for that intervention. Let me complete my interpretation of the bid process, leave it on the record and allow the Minister and others to reflect on it or otherwise. As I was saying, if a buyer bids too low and its potential profit is too high, it will effectively allow a rival to buy Royal Mail, but if it bids too high, the cost of the debt taken out to finance the acquisition will eat into profits and there is no reason to buy Royal Mail over any other potential investment. No. 7 is that the bid price will therefore rise until operating costs, plus the costs of servicing debt, produce a “normal” level of profit for a potential buyer. If operating costs are lower, debt costs can be higher, and competition between bidders will raise the price of Royal Mail. 

Finally, the Government can thereby raise the sale price of Royal Mail by refusing to adopt statutory protection for post offices. That is my interpretation of a bidding process; there may well be others, but I want to put that on the record for others to reflect on. On that point, I will sit down. 

Graeme Morrice (Livingston) (Lab):  I rise in support of the amendments tabled by my hon. Friends. I do not wish to take up too much of the Committee’s time, as I appreciate that we have a lot to cover over the next few hours and that we need to get home. The situation is difficult with the adverse weather conditions, particularly in the north and Scotland. 

My hon. Friend the Member for Llanelli talked eloquently about this group being the Christmas cake amendments—a very topical theme. The only thing that she did not mention was the fairy on top of the Christmas tree. As far as the Minister is concerned—no relation—it appears that he wishes to have his cake and eat it, because, as my hon. Friends have said, there is no point in warm words and honourable intentions if they are not backed up by clear and specific clauses in legislation. 

I suggest a descriptive analogy for the current clauses in the Bill, the “Fifteen Ways To Lose Your Mail Services” clauses, because the Bill contains no less than 15 provisions that will allow Ofcom to either alter or water down the universal service obligation. The Government claim that the one-price-goes-anywhere, six-days-a-week universal service obligation is protected by the Bill in its current form under a privatised Royal Mail. Indeed, the Secretary of State said as much in the House on 27 October. If that is the case, why does the Bill require Ofcom to review the universal service obligation within 18 months? And, as I have mentioned, why does it contain those 15 provisions? Why do the Government continue to refuse to correct the apparent loopholes in the Bill, which our amendments seek to do? 

We all accept that the USO is costly to provide, and we have already heard from my hon. Friend the Member for Kingston upon Hull East that at least one private mail company has said that it is not economically viable and needs to change. Therefore, the commercial imperative for a privatised Royal Mail company would be to seek to reduce the scope of the universal service obligation or at least— 

Mr Davey:  I think it would be wrong if the statement that delivering the universal service is necessarily loss-making stayed on the record. We heard in evidence from Tim Brown,

the chief executive of Postcomm, that had Royal Mail made 1.5% annual efficiency gains since 2005—1.5% per annum annual efficiency gains—it would now be making a profit of £600 million. The hon. Gentleman’s argument is based on something that is simply not the case. 

Graeme Morrice:  I note what the Minister has said, and, of course, he disagrees with our position on this, as we disagree with his position. 

A privatised Royal Mail company may well look at commercial alternatives, if this were to be blocked, rightly, by the Government in terms of the USO being too expensive. After all, a privatised Royal Mail company’s prime obligation will be to safeguard the profits of its business and the dividends of its shareholders. What if a privatised Royal Mail company were ever offered a cheaper alternative to the post office network? That is not an impossibility. What if a national retail chain decided to provide such services? We have heard about many examples of shops, and indeed pubs, providing post office services, so why not provide services to Royal Mail, too? 

There is absolutely no guarantee whatsoever that a privatised Royal Mail will continue to use the post office network. Likely? Perhaps. Definitely? No. In a way, it is like TUPE—fine at the time, but no guarantee that employment terms and conditions would be protected once employees had transferred. It is, therefore, vital that the Government enshrine in legislation, as we have often heard in the cases in other countries, the statutory requirement for a privatised Royal Mail company to use the post office network. 

1.15 pm 

Mr Davey:  The debate has been enjoyable so far. In terms of naming groups of amendments, I hope that I can add to the merriment. The hon. Member for Llanelli wished to christen the group the Christmas cake amendments. Given that it is her first attempt at christening a group of amendments—I do not want to discourage her—perhaps I should stop there, but at times, listening to the debate, I thought that the Santa Claus amendments would have been a better name. Now we have progressed through childhood, we all know that Santa Claus is a figment of our imagination. Many of the arguments seem like that— 

Gordon Banks (Ochil and South Perthshire) (Lab):  What? 

Mr Davey:  I fear I have entered a controversial area and shattered the understanding of the hon. Gentleman. 

I reflected whether the group should be called the letterbox amendments, because the definition of an access point also includes letterboxes, and yet we have not heard a single mention of them during the debate. There are 115,000 letterboxes around the country, part of our great tradition, and we have not heard a single defence of Royal Mail’s letterboxes with Her Majesty’s insignia upon them. I am shocked, frankly, that Her Majesty’s Opposition have failed to mention the case for letterboxes. 

Nia Griffith (Llanelli) (Lab):  My understanding is that we need to defend things that are under attack. How is the Minister attacking postboxes? 

Mr Davey:  I assure the hon. Lady that I am not, but I thought that she would seek to defend letterboxes—but defence came there none. Perhaps that is because she knows that they are not under threat from the Government. 

I have actually decided to christen the group the Francois Greeff amendments, which I will explain later. I want to keep the Committee in anticipation of my explanation. 

The problem with the amendments is that many of them are unnecessary. They would include post office branches in the definition of access points and place a statutory commitment on Ofcom to include post office branches as access points. The definition of an access point used in the Bill should be familiar to hon. Members, because it is drawn from the definition used in the Postal Services Act 2000 and is identical to the definition used in the 2009 Postal Services Bill. 

Let me be clear: as drafted, the definition already includes post office branches. Currently, post office branches are access points through which Royal Mail satisfies its universal service obligation. That is because they are a 

“facility provided for the purpose of receiving postal packets…for onwards transmission by post.” 

The same situation will continue, so amendment 75 about which we have heard so much is absolutely unnecessary, and I ask hon. Members not to press it. 

Amendments 74 and 89 seek to oblige Ofcom to include post office branches as access points. Amendment 78 seeks to include, as a minimum requirement of the universal service, a number of access points that must be provided by post office branches. 

The basis of the amendments seems to be Opposition concern about the long-term sustainability of the post office network. That is in spite of the Government’s recent announcement on the future of the post office network and the clear pledge that there will be no further programme of post office closures, as seen under the previous Government. That is in spite of the commitment that the network of at least 11,500 outlets will be maintained throughout this Parliament. That is in spite of the innovations that will see the network of outlets open for longer, a reduction in queues and offering access to new services. That is in spite of the £1.34 billion funding package, which will enable the Post Office to deliver all things. That is in spite of the fact that the Government have acted swiftly to end the cycle of decline that, for years, previous Governments did so little to arrest. If Opposition Members had done a rather better job of defending post offices, we might have taken the amendments seriously. We have a clear policy to deliver and support the post office network; they do not. 

Karl Turner (Kingston upon Hull East) (Lab):  I wonder whether the Minister will reflect on the comments of Mr Kunz, the managing director of Dutch mail operations, who said: 

“In the Netherlands, we will make 11,000 people redundant in the next couple of years. They will be replaced with part-timers and franchisees…Mail collection and delivery will be outsourced, and TNT will become ‘managers of mail’”, 

and what is particularly important is that 

“Operations will be reorganised into deliveries on three days a week in the next two or three years.” 

According to Mr Kunz, 

“If politicians want six days a week, they will have to finance it. As a company, we will not finance it” 

and that the universal service obligation is 

“a kind of Jurassic Park and we should get rid of it.” 

Mr Davey:  I would like to comment in detail, but what the hon. Gentleman has said is completely irrelevant to the amendments. He is talking about the universal service in respect of the mail service, which is more relevant to clause 30. 

The Francois Greeff amendments are all about post offices and the fear, which the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East described in his speech, that somehow the clause is hostile to the future of the post office network. It would have been better if he had explained why five post offices closed in his constituency under the network change and urban reinvention programme and apologised for the previous Government’s appalling policy. 

Gregg McClymont:  The hon. Gentleman should have figures to hand, as I have suggested. The post office where my father collects his war pension was closed, so I am well aware of post office closures. The Minister’s answer to the amendments seems to be that this Government will do a much better job at making the Post Office efficient and, more importantly, economically viable. If we accept that for a moment, what is the danger of writing into statute provision for access points to give reassurance to all parties? 

Mr Davey:  I will come to the details of the rest of the amendments, but I have dealt with amendment 75 and made it clear that it is completely unnecessary. 

It is through our measures to protect the post office network, not through additional layers of regulation, that we will create conditions to ensure local people continue to see post offices as a natural, convenient place to access Royal Mail services. Royal Mail will continue to see the Post Office as its retail partner of choice as long as that is what its customers want. That was made absolutely clear to the Committee by the Royal Mail chairman and chief executive. It is by attracting customers for all types of services that the Post Office will ensure its future success, and the Government’s support and funding will help the Post Office to achieve that. 

The amendments go much further and would impose requirements on Ofcom to tie the Post Office and Royal Mail together through regulation. When we debated the inter-business agreement, we had a long discussion about such matters and I lost the drift of the arguments then, and I am losing it today. As Conservative Members know, we discussed in relation to new clauses 3 and 4 why legislation is not the right vehicle for establishing the terms of trade between two independent businesses—or any businesses, in fact. We do not need to go through those arguments again, as I have made them clear. 

One argument that was completely unacknowledged by Opposition Members is that the Bill will strengthen the current position of access points. We are enshrining in law that the reasonable needs of users have to be taken into account when ensuring there are sufficient

access points. At the moment, that is just in Royal Mail’s licence, but we will have in the statute that the regulator must take account of those needs, and I want to say a little more about that later. Moreover, when making its decisions on that, Ofcom has a wide range of general duties to which it must have regard—far more than Postcomm has—so that is an improvement. 

Sometimes, it feels as though Opposition Members have not read the Communications Act 2003. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wantage, who is not in the room at the moment, is a fantastic Minister and has responsibility for Ofcom, and I am sure that he has read some of the 2003 Act. He will be able to refer Opposition Members to the relevant duties that will apply to Ofcom as it regulates the postal industry. I refer Opposition Members to section 3(4), which states: 

“OFCOM must also have regard, in performing those duties, to such of the following as appear to them to be relevant in the circumstances… 

(l) the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas”. 

I could read out many of the other paragraphs in that subsection, but the point is that when Ofcom is judging whether there are sufficient access points, under the Bill there are much more specific and detailed duties involved in its reassuring itself that it has taken account of consumer needs, and that is a real strengthening of the current regulatory framework, which was put in place by the previous Government. The hon. Gentleman and the hon. Lady have utterly failed to take account of that. 

Gregg McClymont:  I, too, have been reading the 2003 Act. Section 3(1) states: 

“It shall be the principal duty of OFCOM, in carrying out their functions— 

(a) to further the interests of citizens in relation to communications matters; and 

(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition.” 

My point about how Ofcom operates is that commercial interests are not prioritised in the 2003 Act in the same way as in clause 28(3) of the Bill. 

Mr Davey:  I am afraid that the hon. Gentleman has misread how the Bill works with the 2003 Act. The Bill could not be clearer about Ofcom’s primary duty when dealing with postal markets. Clause 28(1) states: 

“OFCOM must carry out their functions in relation to postal services in a way that they consider will secure the provision of a universal postal service.” 

Gregg McClymont:  Will the Minister give way? 

Mr Davey:  That could not be clearer, but I am happy to give way again. 

Gregg McClymont:  We have, of course, to look at every subsection of a clause. Clause 28(3) states: 

“OFCOM must have regard to— 

(a) the need for the provision of a universal postal service to be financially sustainable”. 

I am sorry to reiterate the point, Mr Amess, but what could “financially sustainable” mean in that context, other than profitable? 

Mr Davey:  The hon. Gentleman has failed to read the beginning of clause 28(3), which states: 

“In performing their duty under subsection (1)” 

—the duty of securing the provision of a universal service— 

“OFCOM must have regard to”. 

The issues that he keeps referring to, about “financially sustainable” and about the need for the provision of a universal postal service to be efficient, are things to which Ofcom must have regard in meeting its primary duty. So, I am afraid that the hon. Gentleman has again misunderstood. 

Gregg McClymont:  The Minister keeps telling me that I have misunderstood the issues. I do not comment on that; it is for other people to judge. He skilfully went on to clause 28(3)(b), but what does “financially sustainable” mean? If it is, as he has said, all about protecting the universal services as stated in clause 28(1), why then have clause 28(3)(a), and what does “financially sustainable” in that paragraph mean in this context, if it does not mean profitable? 

1.30 pm 

Mr Davey:  I am keen to engage the hon. Gentleman in the debate, but it is shame that he did not rise to his feet and make his points when we were discussing the amendment tabled by the hon. Member for Llanelli that would have removed clause 28(3). His points are not related to the Francois Greeff amendments, but I am happy to deal with them. 

The hon. Gentleman is showing his true colours. As a historian of guild socialism, it is quite clear that he does not believe that organisations should be financially sustainable or profitable. That is exactly why his party has landed Royal Mail and other organisations in such a complete and utter mess. 

Gregg McClymont  rose—  

Mr Davey:  The hon. Gentleman wants to have another go. One has to hand it to him; he is brave. 

Gregg McClymont:  Again I will let the Committee judge who is showing more courage. I am sure it is the Minister because he does not have a stable peg to hang his jacket on. 

I never suggested that I was a historian of guild socialism; I just perked up when the Minister mentioned it. I know that that is the way his arguments go, but he is trying to move away from the point that I am trying to get him to address. What is the point of having subsection (3)(a) mention “financially sustainable” unless it means that the provider must be in profit? I just do not get it. 

The past is another country. I was not in Parliament during the time of the previous Government, or responsible for their successes or otherwise, and I am sure that the Minister has good points to make about his feelings.

However, I ask him to address what “financially sustainable” means in this context for a provider, if it does not mean profitable. 

Mr Davey:  It means financially sustainable. If we wanted to use the word “profitable”, we would have used it. One of the reasons why legislation in this area tends not to use the word “profitable” is because defining that word can be quite difficult, as accountants are aware. “Financially sustainable” is a much better understood phrase. 

Gregg McClymont:  Will the Minister give way? 

Mr Davey:  Before I let the hon. Gentleman in yet again, I should say that it is bizarre—quite remarkable—that he does not believe that Ofcom should ensure that the universal postal service is financially sustainable. It will be no good to our constituents, to businesses, to our economy and certainly to the long-term viability of the universal postal service if it is not financially sustainable. Why is he so worried about the phrase? 

Gregg McClymont:  The Minister just said that the Bill does not say “profitable” because the word is difficult to define, which is why the Government put in “financially sustainable” instead. Does that not make my case for me? 

Mr Davey  rose—  

Richard Fuller (Bedford) (Con):  Does the Minister agree that there are a number of companies that are unprofitable but financially sustainable? Does he also agree that from one year to the next, a company may or may not be unprofitable, but it is always financially sustainable? Therefore, does he agree that “financially sustainable” is a much better term than “profitable”? 

Mr Davey:  My hon. Friend anticipated the exact argument that I was going to use against the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, who may want to come in again to deny the strength of my hon. Friend’s argument. 

Gregg McClymont:  The Minister said a moment ago that the Government used the term “financially sustainable” because “profitable” is difficult to define. The hon. Member for Bedford made a fair point. Words are always capacious, and getting to the heart of what is meant in a definition is difficult. That is what I am trying to tease out. What does “financially sustainable” mean? Even if the hon. Gentleman is right, which I am sure he is, that from one year to the next a company may be sustainable but not profitable, is it not in the logic of a privatised Royal Mail entity to be profitable at some point in the short to medium term? 

Mr Davey:  It is not a duty of Ofcom to worry about the profitability of the universal service provider on a year-to-year basis. The Bill makes it clear that to perform its duty under subsection (1), which is to secure the provision of the universal postal service—I keep coming back to the words of the Bill because I think they are what the Committee is supposed to be looking at—Ofcom must 

“have regard to…the need for the provision of a universal postal service to be financially sustainable”. 

That is the key point. We had an interesting debate earlier when Opposition Members tried to suggest that we had written “universal postal provider”, and I had to keep reminding them to look at the words in the Bill. There is a specific reason why we did not put those words in the Bill. We put “universal postal service” because that is the service that we are concerned about. That is what our constituents use and what small and medium-sized enterprises depend on, and it is Ofcom’s duty to defend it. That is why we won the argument last time and why—I think—we are winning the argument this time. 

Gordon Banks:  The Minister and I had an exchange over the universal service provider and universal service provision. That exchange came about because the Minister used the words “universal service provider” in his remarks to the Committee, not because Opposition Members have promoted it. Hansard will show that. 

Mr Davey:  I am sure we will all be poring over Hansard to check who was right or wrong in that particular exchange. 

In setting the appropriate density of access points—not only post offices but letterboxes, which Opposition Members forgot to mention—Ofcom will be subject to its general duties under section 3 of the Communications Act 2003. That is the point that the Opposition seem obstinately not to take on board. The 2003 Act includes duties to have regard to: 

“the opinions of consumers in relevant markets and of members of the public generally…the needs of persons with disabilities, of the elderly and of those on low incomes…the different interests of persons”— 

including businesses— 

“in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons”— 

and businesses— 

“living in rural and in urban areas”. 

If that is not strengthening the requirement, I do not know what it is. I am therefore extremely confident that, in meeting its duties, Ofcom will ensure that the needs of all users of postal services throughout the country are properly reflected. I am equally confident that the right measures are in place to ensure a vibrant, ongoing, long-term relationship between Royal Mail and the Post Office, based on mutual commercial benefit rather than regulatory obligation. 

Nia Griffith:  Will the Minister explain what he thinks the relationship is? I am still confused by the belief that it will happen. 

Mr Davey:  We are going back to the arguments about the IBA, when I made it very clear that Royal Mail would not absent itself from the largest and, arguably, the most popular retail network across the country, because it would not want to vacate that to its competitors. 

Gregg McClymont:  The Minister is not as delighted as usual to give way. The Minister wants to draw our argument in a caricature, which is either/or—there either is an IBA or there is not. If we accept, as we do, that the agreement will be a commercial negotiation between two organisations with different bargaining positions,

will it be as good an agreement as the Post Office currently gets from the IBA? Our view is that, when everything is taken into account, and given the relative size of the two organisations, there is at least a question mark about what the agreement will be. 

Mr Davey:  The hon. Gentleman clearly wants to go back to our previous debate, when we made it absolutely clear that, currently, the IBA is negotiated not by the Government but between Post Office Ltd and Royal Mail. It is not an open and public agreement; it is commercial and it goes into huge detail. I am told it is more than 100 pages. That is why we resisted the legally dubious proposal from the Opposition when we debated whether it could be enshrined in statute. It is why, very interestingly, the chairman of Royal Mail, Donald Brydon, made it clear in his evidence to the Committee that before privatisation he would secure the longest possible IBA that was legally permissible. One would have thought that that would have reassured the hon. Gentleman. The hon. Lady almost accepted and then rowed back. It is impossible to put such an agreement into statute. 

Gregg McClymont:  Throughout our discussions, the Minister has suggested that we are antipathetic towards the market, but I am only applying what should be obvious market logic. We will have negotiations between two organisations, which should consider their relative strengths. It seems to me that Royal Mail is in a stronger position. 

More fundamentally, Donald Brydon can say that there will be an IBA, and we can agree with him. As the Minister has pointed out, however, that agreement goes to thousands of pages. What is in it—the stipulations, when it is renegotiable, the terms of the deal? We have no idea; neither does the Minister. That is the slow-burning fuse that is at the heart of the debate. 

Mr Davey:  The differences between us are ultimately about philosophy. The hon. Gentleman and the Labour party seem to believe that it is the job of Government and Parliament to put complicated business agreements into legislation. That was not the Labour party’s view when it was in government—not only in this area, but in others—and it is certainly not our view. I want to discuss matters in the Bill—not just the words of Donald Brydon—that relate to the process that we have put in place, which should give Opposition Members much comfort. 

The hon. Gentleman has discussed the statutory protections in Germany, Holland and elsewhere, which he lauded as superior to this country’s protections. However, unlike Germany or any other country that I looked at when I asked for some analysis, we have a double protection: we have the access points, which are regulated by Ofcom on to the universal service provider; and in addition we have the access criteria, which relate to Government funding of Post Office Ltd. The combination of those two protections is extremely powerful. We have the power of the regulator, and the power of the Government through a legal contract that relates to the funding that they have provided, which, in the case of this Government, has been very generous. 

Nia Griffith:  First, I understand that the access criteria apply to the post office network, but if Royal Mail is not obliged to use that network, I am not sure how the criteria are relevant. 

Secondly, if Royal Mail were to use the Post Office—obviously, in an IBA—it could ask for a certain number of outlets; it would not have to use the whole network. Will the Minister explain how the access criteria that are relevant to post offices can be put together with the access points in the Bill, which could be any outlets and any number of them? The two do not seem to match up. 

Mr Davey:  I was trying to respond to the thrust of the hon. Lady’s remarks, and to those of other Opposition Members. It seems that they tabled the amendments to protect the post office network and I have been making a set of arguments to suggest that those are unnecessary. I have discussed the funding, the services and stability, and I am now discussing the access criteria that Post Office Ltd is legally obliged to meet. In a previous debate I explained how Post Office Ltd’s access criteria are monitored on a monthly basis. The criteria are therefore extremely significant and have been completely downplayed by Opposition Members during this debate. 

Gregg McClymont:  I do not want to misquote the Minister, but he suggested that our amendments are unnecessary. I understand that he is confident in what he is doing, and as we know from his tour around Mexico, Argentina and elsewhere, he clearly has knowledge of mail services. However, can he understand why we are somewhat dubious about his confidence in the measures that he is taking to improve the post office network’s viability? It is not that we do not think he is doing a good job, or that we think he does not have some good ideas; but when two thirds of the network is economically unviable, as Paula Vennells said, there needs to be a remarkable turnaround, and we merely looking for some statutory protection. If the Minister gets it right, what is the harm? He has protected the network and the statutory protection is in place if it goes wrong. That is not an unreasonable position. 

1.45 pm 

Mr Davey:  I am afraid the hon. Gentleman is wrong for a whole set of reasons. I started my remarks—astonishingly, the Opposition have failed even to comment on this point—by saying that the legislation tightens up the requirements on Ofcom to meet consumer needs. That is a greater requirement than on Postcomm. The truth is that consumer needs change over time, so it may well be that how such things are defined and implemented will have to change. Tim Brown, the chief executive of Postcomm, made that point in his evidence to the Committee. I want to come back to comparisons with other postal networks, but at this point I should move on. 

Consumer needs might change in the future, and therefore how the service is defined and how it is regulated by Ofcom might need to change. For example, because there has been such an increase in parcels, particularly due to online retail, one would expect that Royal Mail will need to invest in changing its production processes to meet that increasing consumer demand. Equally, one would expect that Ofcom, to meet its requirement to respond to consumer needs, might have to change how it considers access points and other obligations set out in the Bill. One can easily imagine that it might want to think about that in a much broader way than the Opposition have talked about. 

One of the frustrations for consumers using the postal service is not so much the question of where they can take a parcel—I have never had a complaint about that, although I do live in a suburban constituency—as the fact that people cannot be at home all the time to receive a delivery. Traditionally, as defined in the European directive and as reflected in how Opposition Members want to amend the Bill, the provision of access points takes no account of the point that consumers want to be sure that they can pick up their parcel if they were not at home when a delivery was attempted. 

There has been an awful lot of innovation, which we will come on to when we debate a group of amendments about parcels, but some examples are germane to the point about Ofcom needing flexibility over how it meets its obligations to reflect consumer needs on access points and such matters. In the future, we will see more innovation on how people can receive a parcel: there will be secure lockers outside homes, including—I should not advertise—two well-known devices, the Hippo box and the ParcelPod, that are being used; there is the Safeplace scheme, which has been introduced by Royal Mail; and several parcel operators offer a service under which they will text a consumer about when they expect a parcel to be delivered and the consumer can phone back to say, “I won’t be in, so can you deliver at another time?” 

What we are most aware of is the need for Royal Mail to think in a more customer-friendly way about how late its depots open, so that people can collect a parcel that could not be delivered. I am keen on the notion of using post offices as depots in the future. They can actually be already, but this is a potential growth market. At the moment, people can pay £1.50 to pick up a parcel from a local post office. In considering access points and the way those markets will deliver, we will have to think differently—in ways that the Opposition have not thought of, but in ways that Ofcom will be empowered to think by the Bill. We are trying to future-proof the Bill and not to set in rigid statute, or by regulation, ideas that in five, 10 or 15 years might be completely the wrong way of protecting the consumer interest. 

I want to go back briefly to that point, because I want to put to rest the issue of legislating. The access points that Ofcom regulates and the access criteria that the Government funding agreement will uphold provide a double protection. If we analyse whether the impact of our access criteria and access points is more effective in ensuring a viable post office network than in Germany or other countries such as France—I am using Postcomm material—the evidence suggests that we have stronger, not weaker, protections. 

Let us look at individual countries, which I have had research on. If we look at the statutory protections in Germany, which the hon. Gentleman is so keen on, I am not sure whether he is aware that the protection in rural areas is for a post office every 80 square kilometres—I am sorry, but we are not keen on that protection, because it would undermine the needs of consumers. Our protection, which comes from the access points and access criteria, is stronger for rural users. Once again, I am afraid, the hon. Gentleman has shot himself in the foot by citing Deutsche Post. 

Gregg McClymont:  The number of times that I have shot myself, it is a surprise I am still standing. 

The Minister makes an interesting point and his colleague, the hon. Member for Worcester, made a reasonable point about the German position. However, the Germans have statutory protection, which we do not. The Minister referred to a double lock, as he may or may not call it, but if we look at subsection (3)— 

“In performing their duty under subsection (1) OFCOM must have regard to…the need for the provision of a universal postal service to be financially sustainable”— 

as we stand, 12,000 post offices are not financially sustainable and only 4,000 are. 

The Minister then referred, rightly, to the fact that the Government contract is with Post Office Ltd. Unless his optimistic plan—I am sure “gamble” is the right word—for the future of the post office network comes off, we will be left with Ofcom bearing down on post office numbers, on the “financially sustainable” criterion, because at some level “financially sustainable” must mean profitable, and certainly it does not mean unprofitable. More importantly, we will be left with the taxpayer picking up the tab to maintain the post office network. All we would like to see is, in those circumstances or otherwise, some statutory protection. Is that too much to ask? 

What is the downside? I do not understand the downside to having statutory protection for all the likely things that the Minister says will happen. He will reply, “You’re socialists, you want to over-regulate,” but why is enshrining six days a week in statute not over-regulation, whereas having access points is? 

Mr Davey:  The hon. Gentleman is beginning to irritate his own Whip, so I caution him against going on. 

Once again, the hon. Gentleman has completely misread the Bill. The provision refers to how Ofcom regulates the universal service provider—mail, collection, sorting and delivery services—not to how Ofcom regulates the post office network. If he reads Hansard, he will see that that is exactly what he said. He was implying that in this way Ofcom is regulating the post office network to make it financially sustainable, but that is not what the clause says. 

One of the great things about being a constituency MP is having regular surgeries. I do not know how many surgeries my colleagues have, but I have two a week, one at 8 am every Monday morning at 21 Berrylands road, Surbiton, and the second one on Thursday or Friday night, or Saturday morning, depending on the week, at different locations. One makes oneself accessible, with many access points and open access criteria for one’s constituents. When one does that, one gets lots of good ideas from constituents, and that is why I have christened the group the Francois Greeff amendments. 

Only a week last Monday, Francois Greeff came to see me. He had a letter with him which I am passing on to the chief executive of Royal Mail, Moya Greene, because it contained four interesting ideas about how we could cut costs at Royal Mail—he said at the Post Office, but he meant Royal Mail. That is already worrying the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. Three of the ideas might be tricky to implement in the UK. Paragraph 3 of the letter states: 

“In America, each house has a post box at the gate, on the perimeter of the property. The postman never leaves the pavement, except for recorded deliveries. He covers a far shorter route.” 

The suggestion is that every property in the UK have a postbox at the end of the drive. We are not going to take up that idea, but I am happy to pass it on to the chief executive. 

There are two other ideas that I am not sure will catch on. One is: 

“selling and installing standard post boxes offers a merchandising opportunity that will raise revenue, and from which a profit can be made.” 

We know that the hon. Gentleman would obviously not want profits to be made. The third proposal is: 

“wheels are more efficient than walking. Offer all postmen an optional pair of free rollerblades or a scooter.” 

I think that there would be some serious health and safety issues with that innovation, so I could not agree to it. 

The idea that has direct relevance to our debate today about access points is that 

“the national standard post box” 

in America 

“has two tiers so that the postman also collects outgoing mail. Each post box has a flag to signify whether it contains outgoing mail. Moving into this system means that the entire cost of maintaining the pillar box system and vans that collect mail is removed from the Post Office.” 

That is an ingenious idea, and I have discussed it with officials. It would mean 28 million access points for the collection of mail, which would be a radical shift. I am afraid, however, that there are a few practical difficulties, and I therefore do not think that we will introduce the idea by way of a Government amendment. I suggest, however, that Francois Greeff shows an ingenuity in thinking about access points that is sadly lacking in the Labour party. 

There is something in my constituent’s suggestion, in the sense that in rural areas it might well be appropriate for the Royal Mail employee who delivers letters also to collect parcels. I am not saying that that is Government policy; Royal Mail operates at arm’s length, of course, and in due course will be privatised. It shows, however, that the crux of the debate is that consumer needs change and that we need our universal service provider, supported by the regulator, to be responsive to those needs and not be tied up in knots by statutory and regulatory provisions. The approach that we have put forward is in the interests of the users of both the post office network and Royal Mail and I therefore invite hon. Members not to press the amendments. 

Nia Griffith:  Members will be pleased to hear that I shall be very brief. Many things have been said today, but I am not sure that we are any the wiser. The matter is of immense importance to us, and we shall certainly wish to return to it at a later stage of the Bill. 

I shall try to understand the Minister’s comments. On the one hand, he is extremely keen to see the maximum number of access points, even talking about 28 million boxes. I am really surprised that among all the exciting ideas that he cited he did not mention his friend the former MP for Montgomeryshire, Lembit Öpik, and the idea of every postman and woman having a Segway, to roll along the pavement with and from which to hop off and deliver letters. If anyone does not know what a Segway is, I am sure that they can google the former MP for Montgomeryshire, if he can be found behind the Cheeky Girls somewhere. 

2 pm 

There is a gap between wanting to ensure that the consumer has all the access points—something we seem to agree on—and not having in the Bill any firmer statement than “reasonable needs of users.” We are told that the great strengthening of the Bill is the fact that Ofcom has to take note of the reasonable needs of users. To me, that does not give much of an indication of the number of necessary access points. It is very dubious indeed whether any provision would make sure that the access points are well distributed throughout the country and within a certain distance of peoples’ homes. That is not covered by the Bill. It seems to have nothing to do with the post offices and the good work that everyone wants put their way. 

We seem to have one mention of the access points, but we have nothing in the Bill that will make those access points happen. Furthermore, we do not have anything that will tie the post office in with the Bill. It is a tremendous lost opportunity because that would be a way forward, and at one fell stroke would link in the post office network. If it was for the Royal Mail to use the post office network and access points with a specified number of outlets, obviously that would give a tremendous boost to the Post Office. However, the Minister clearly does not wish to give the Post Office that reassurance. 

There does not seem to be the will to make the fine words translate into a proper guarantee for the Post Office. That is a tremendous disappointment to the National Federation of SubPostmasters, which said that it would have liked a 10-year IBA, but cannot see it coming. Our proposal is a way that it could have had such security for the post offices in the future. It is a great disappointment for many customers that, without such a guarantee, a third of post office business could disappear. It could be difficult for some local post offices to be kept open and some people could miss out. 

I am worried that we have not received a better proposal than that Ofcom be required to take note of the “reasonable needs of users”. That is not helpful. It is not good enough. I wish to return to the topic later in our proceedings, so I shall not press the amendment or amendments 75, 78 and 89 to a Division. I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Clause 28 ordered to stand part of the Bill.  

Clause 29 

The universal postal service 

Gordon Banks:  I beg to move amendment 76, in clause 29, page 15, line 28, at end insert 

‘ and OFCOM will ensure that any such order or modification does not immediately disadvantage—(a) individuals living in rural areas,(b) individuals living in urban areas,(c) small and medium enterprises,(d) disadvantaged individuals,(e) individuals with low income,(f) individuals with disabilities, and(g) elderly individuals.’.

The Chair:  With this it will be convenient to discuss the following: Amendment 41, page 15, line 29, leave out subsection (4) and insert— 

‘(4) The Secretary of State must specify the terms of a universal service order prior to OFCOM assuming powers to regulate postal services, which must be laid before Parliament at least one month prior to the day on which the provisions of this Part come generally into force; and thereafter OFCOM must carry out an assessment of the matters detailed in subsection (3) before the end of the period of 18 months beginning with the day on which the provisions of this Part come generally into force.’.

Amendment 77, page 15, line 31, leave out ‘before the end of the period of 18 months beginning with’ and insert ‘not before 5 years after’. 

Clause stand part. 

New clause 7—Universal service obligation —  

‘(1) The universal service provider must send to the Secretary of State each year a report on its fulfilment of the universal service obligation.(2) The report must give details of—(a) the range and extent of the service, including access points,(b) the utilisation of the service by its customers,(c) any surveys, or studies, of the use of the service, and(d) any exceptions in the service.(3) The report must give details of how it is adapting service provision to ensure it is accessible to—(a) individuals living in rural areas,(b) individuals living in urban areas,(c) small and medium-sized enterprises,(d) disadvantaged individuals,(e) individuals with low incomes,(f) individuals with disabilities, and(g) elderly individuals.(4) The report must contain such relevant information as the Secretary of State may from time to time require.(5) The Secretary of State must lay a copy of the report before Parliament.’.

Gordon Banks:  When talking to the previous clause, the hon. Gentleman destroyed my belief in Santa Claus. I hope that he will not be so brutal with me this time. Tread gently, Minister. 

Amendment 76 is designed to ensure that any universal postal service order is made or modified by Ofcom not only by the assessment stipulated under subsection (3), but that that the conditions laid down under proposed paragraphs (a) to (g) of the amendment are also acknowledged and that nothing in the order or modification immediately disadvantages those affiliated with the conditions. 

I argue that it is possible for the review in clause 29(3) to be carried out with results that satisfy the Bill’s criteria, but fail to take into account one or more of the groups that are stipulated in the amendment. I shall highlight the importance of such groups. 

First, paragraph (a) refers to individuals who are living in rural areas. I represent many such constituents, as do many of my hon. Friends, including my hon. Friend the Member for Llanelli. We know the importance of taking them into account in ways that ensure that they are not disadvantaged by any changes that Ofcom might make. Why is that important? I can speak for myself only, but I do not believe that I, or my constituents in rural areas, should be subject to an inferior level of service, or to a more expensive one than people who live in other areas. Without providing for such individuals, we run the risk of having a universal service that is not

universal in content or context and, as a result, is multi-layered and disadvantages great swathes of the United Kingdom. 

Just as individuals in rural areas should be protected by paragraph (a), those in urban areas should be protected by paragraph (b). I can probably hear a few cogs turning as the Minister thinks, “First rural areas—now urban areas.” The proposal aims to ensure the protection of the service, and its availability to individuals throughout the UK. A future review might be focused on, for instance, business mail, and if that were the case, it would be unacceptable. The proposals in paragraphs (a) and (b) would also be of great service to businesses because although business-to-business communication is important, so is business-to-individual communication. 

At present, businesses do not necessarily make a judgment about whether to deal with someone in a particular area based on the quality of the available communication networks, but they might do so in future. We might see individuals who are currently disadvantaged because they have poor access to, say, digital communications networks, becoming even more disadvantaged by a reduced or more expensive access to the mail network. That will not happen if the Minister accepts the amendment. 

Paragraph (c) is a safeguard in reverse to paragraphs (a) and (b)—I hope that hon. Members are still with me. I am not saying that one section—public or business—is more important in relation to any universal postal service order or modification, but the amendment is all about that—it is about spelling out what is important in such a consideration. 

In discussion on an earlier amendment, which concerned the inclusion of medium-sized businesses in clause 11(3), I accepted the Minister’s assurances that “small” would include up to 250 employees. I shall do the same in relation to this amendment, however the Minister may have some work to do, because this subsection does not mention businesses at all. As ever, I want to help the Minister, but for me to do so, he must accept that the important interests of small and medium-sized businesses have not been considered in this part of the Bill. We have heard how, in future, small and medium-sized businesses may make up the core of Royal Mail’s business, therefore we must ensure that their interests are not overlooked in any order or modification. 

Paragraph (d) calls for any order or modification to consider disadvantaged individuals. The proposal would not make any judgment of whether such people were disadvantaged and living in a rural area or in an urban area; it goes one step further to protect all individuals living in all areas. We want those who are disadvantaged— wherever they live—to have a status in any order or modification in relation to clause 29(3). They do not have such a status in the Bill as it is written. It is important for those disadvantaged individuals to have additional rights in this situation, and any modification or order that resulted in their being further disadvantaged would be unacceptable. 

We have heard evidence that people who may be more disadvantaged than others rely on mail services and post office services. I understand that the relevance in this case is to postal service orders, but we know that there is a dependence and a reliance on post offices and Royal Mail. We must also recognise that those potentially disadvantaged individuals may be disadvantaged in a

temporary way, so Ofcom would therefore have to ensure that the work it did in preparation for any order or modification was complex. Surely that is nothing less than the Minister would expect. 

It is very important that disadvantaged individuals, as in paragraph (d), are not confused with low-income individuals. On occasion, they may be the same, but often they are not. The amendment would ensure that there was no confusion and that both sections of the population would have proper recognition. Low-income individuals would be recognised as having a dependence on a mail service that does not disadvantage them because they are low-income earners. 

On paragraph (f), I hope that the Government would always take those with disabilities into their considerations in a positive way. As written, the Bill does not do that, but our amendment does. The rights of an individual with disabilities should be protected in the clause, as should the rights of those in paragraphs (a) to (g), who I have already referenced. Disabled individuals have every right to have as full and as competitive a service as others, but the Bill does not recognise that. 

The clause, as amended, would allow individuals and support groups to play a role in the construction or amendment of any order, to ensure that they were not disadvantaged by the outcome. The challenges of life with a disability are severe enough, and it is little to ask of the Minister to recognise that and take action here and now to ensure that the impact on disadvantaged individuals of any future action by Ofcom is fully evaluated, so that individuals are protected in the immediate future. Of course, if the Minister wants to go further and extend our amendment from “immediately disadvantage” to “permanently disadvantage”, my hon. Friends and I would not object. The amendment, with the inclusion of paragraph (g), would protect the service experienced by elderly individuals. Some might argue that I am being selfish here. I know that I am getting on and that I am not as young as I used to be, but we all have elderly family members and the argument for them is the same as it is for the others who are mentioned in the amendment. It is only by considering all the sectors of the community that are referred to in the amendment that the Government’s objectives in subsection (3) can be met. 

I admit, once again, that we are pushing the Government a lot further than they would like to be pushed, but that is because my hon. Friends and I feel that the clause as it stands is deficient. All sectors of UK life deserve to be referred to in the clause. They deserve to have their needs and requirements evaluated and not disadvantaged by any such order or modification. The amendment does that and the Bill, as is stands, does not. The amendment is designed to ensure that those living in rural and urban areas, small and medium-sized businesses, disadvantaged, disabled and elderly individuals, as well as those on low incomes, are not disadvantaged by any actions that Ofcom may take in modifying or making a universal postal order. As I have said, those groups do not have their specific needs recognised in the Bill. My hon. Friends and I believe that the Bill should recognise those groups, which is why we tabled the amendment. I am interested in the Minister’s response to amendment 76. 

New clause 7 is designed to strengthen the universal service obligation through the publication of a report from the service provider to the Secretary of State on

the fulfilment of the obligation. The implications of the new clause are, arguably, not too dissimilar to the requirement in clause 11, where a post office company must send the Secretary of State a report each year on its network of post offices. My hon. Friends and I tried to strengthen that at that point in our deliberations, but the Minister would have none of it. When we look at this part of the Bill, there appears to be nothing that mirrors this requirement on Royal Mail as a service provider. My hon. Friends and I believe that this is unwise, because under clause 34 it states: 

“OFCOM may designate one or more postal operators as universal service providers.” 

As such, a report—or reports—becomes even more necessary. That should not be confused with any role that Ofcom has to play in the matter. It is something that we should hear straight from the horse’s mouth or, indeed, the horses’ mouths. 

2.15 pm 

Many of the requirements in new clause 7 are similar to those in amendment 76, to which I have just spoken. Amendment 76 refers to Ofcom making or modifying a universal postal service order. When it is approved by the Committee, new clause 7 will form a relationship between universal service providers and the Secretary of State, and a relationship between all universal service providers and, indeed, Parliament. 

To continue my remarks on new clause 7, such a report would be useful if there were a single provider, but invaluable if there were multiple providers. The providers should be able to put in an official report of their own creation their view on the fulfilment of the universal service obligation and provide this to the Secretary of State, who must lay it before Parliament 

Clause 36 calls upon the universal service provider to publish information about the extent to which it is providing specified postal services in accordance with specified standards, and also to publish an independently audited performance report. We believe that new clause 7 goes further in some respects, but we would not be averse to keeping anything in the Bill that was felt to be superior. 

In the Bill as drafted, the report that a universal service provider has to produce does not appear to have to be passed to any specific person. As a result, it could be argued that there is an opportunity missed here for the Secretary of State and Parliament to be legally entitled through powers in the Bill to scrutinise the report. Furthermore, the report does not seem to be held to any timetable. It does not appear to be expected annually, as per clause 36. Perhaps the Minister will explain why. 

New clause 7(2) stipulates the details that must be covered by the report, and I will go through each of these in a little more detail. Paragraph (a) states that the report must contain details of 

“the range and extent of the service, including access points” 

about which there was a significant discussion earlier. The range and extent of the service are important as they empower the reader of the report, and therefore the Secretary of State and Parliament, with details of the service being provided, and how the provider views

their own efforts to meet with the content of the Bill in relation to the minimum requirements set out in clause 30. This section would also require details on the access points. My hon. Friends would be delighted to see that as it will allow the inter-determination between the universal service provider and the access points to be clear. It would allow further scrutiny, and comparisons between such interdependency and multiple universal service providers, if there were to be more than one, as the Bill provides for. 

We have heard throughout our sittings about the importance of access points— dare I say post offices?—in relation to Royal Mail. I do not wish to be criticised by the Minister at this moment in time, but I will come to something else later. With a third of Post Office Ltd footfall and revenue coming from mail services, there is an importance both ways, and it would be useful to monitor it provider by provider. It could be argued that, whereas post offices are currently the access points we refer to, there is no guarantee, as we have heard this morning and early this afternoon, that that would be the case in future. No doubt the Minister is thinking “here we go again”, but it is true. 

With the possibility of varying providers comes the possibility of varying access points. This part of new clause 7 would allow a comparison to be made not only between providers but also between the added value that access points deliver to the varying universal service providers and their universal service provision. Not wanting to be subjected to the wrath of the Minister, for forgetting about postboxes, we should put on the record that we also consider postboxes as access points and we intend them to be so treated in this part of the Bill. 

New clause 7(2)(b) would allow for the report to give details of 

“the utilisation of the service by its customers.” 

It may be argued that that is already covered in clause 30, but as that clause has no reporting requirements, it is important and necessary to include customer service utilisation here. The service provider will or should have that information, and I would argue that it needs to have such information. The information should also be available for consideration by the Secretary of State and Parliament. 

Subsection (2)(c) would ensure that the report contained details of “any surveys, or studies,” on the use of the universal service. That would be important for gauging how, how often and to what level providers are engaging with their customers and markets. Some of the studies might be published in their own right at different times throughout the year, but such reports would have to contain an analysis of each of the pieces of work, by referring to the availability of those various surveys and studies. At a time of multi-layered universal service providers, that would be excellent information for making a comparison on the level of engagement that each business was embarked on, and for allowing different solutions to the same problems to be made clearer and to be better evaluated. 

Paragraph (d) is self-explanatory. It would require any exceptions to the universal service provision to be detailed, which would in turn not only allow there to be public provision of such a fact, but provide closer scrutiny and allow comparisons to be made between universal service providers with similar exceptions. 

In new clause 7(3) there is a similarity of detail to the words in amendment 76, which I have already discussed. I was going to say that I do not want to go into them all again; I do want to, but that would probably try everyone’s patience, so I will make only one or two references. New clause 7 would place a responsibility on the universal service provider, whereas amendment 76 would place a responsibility on Ofcom. It could be argued that both are required for consistency, and that in each case they are required to ensure that the areas covered in paragraphs (a) to (g) remain at the core of what Ofcom is regulating and of the service that is being provided by potentially more than one universal service provider. As I said earlier, paragraphs (a) to (g) would possibly be of added importance if there were numerous providers of the service. 

I will comment on one or two of those areas in relation to new clause 7. The report would call on the service providers to give details of how they were adapting their service continually to ensure that the universal service provision is accessible to the aforementioned groups. That is a very different proposition from Ofcom having a responsibility under amendment 76, as it would allow each of us and each of the provider’s customers to see clearly the steps that it was taking to comply. A particular service provider may have little or no responsibility for those living in a rural area if it is predominantly concerned with covering an urban area, but another provider may have a huge responsibility in an area of rural coverage and provision. 

Reports from universal service providers would allow scrutiny of performance of that responsibility to take place on a provider-by-provider basis in the Department and in Parliament. Subsection (4) would allow the Secretary of State to expand on our very reasonable list as he felt was appropriate. My hon. Friends and I are very happy to have that power bestowed on the Secretary of State by new clause 7, and we are reasonably sure that he would use it appropriately and fairly. 

With the new clause would come a responsibility for the Secretary of State to lay a copy of the report before Parliament. Again, I can imagine that cogs are going around about there being more responsibility for the Secretary of State, and about his doing something that would enable Parliament to have some scrutiny. 

We have tried to be consistent throughout the Committee stage, and have argued well for increased parliamentary scrutiny of the many actions that result from the Bill. We have asked that Parliament be consulted on the final offer accepted by the Secretary of State for the purchase of Royal Mail, but the Minister has refused. We have argued for Parliament to be consulted on the employee share scheme, but again he has refused. We have argued for Parliament to be consulted on Post Office ownership but, guess what, the Minister has refused. He has built up a bit of a reputation, not only for wrecking my Christmas by saying that there is no Santa Claus, but also as someone who appears not to want to extend parliamentary scrutiny to the proposals in the Bill. This is an opportunity for him to redeem himself. I do not suppose that he can reinvent Santa Claus, but he can accept the new clause and the amendment. He can wipe the slate clean and embrace our requests for greater parliamentary scrutiny. 

The Minister knows that we have asked him only to lay a copy of the report before Parliament. We are not asking for a vote, or even a debate on the matter,

although it would be acceptable to Members on the Opposition side of the Committee should the Minister want to take that extra step. We have asked him to ensure that the Secretary of State behaves in the same manner in relation to new clause 7 as he expects him to behave in relation to clause 2. In the words of my hon. Friend the Member for Telford, the Secretary of State could just 

“pop it in the Vote Office”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 127, Q252.] 

if he so wished. Whatever the Secretary of State does—whether he decides, as his way of informing Parliament, to pop the report in the Vote Office, or to do something a little more extensive—that is a better level of scrutiny than is currently in the Bill. We will settle for him popping it in the Vote Office, because that will allow for scrutiny that does not currently exist. 

I have rushed through this, but I am trying to catch up on time. Amendment 76 and new clause 7 are important because they strengthen the Bill, and they strengthen the ability of the sections of the community to which they refer to have a greater say—any say, in fact—in the regulatory process and in the business plans of individual service providers. 

I wish that the amendment and the new clause were not necessary, but as the Minister is hellbent on flogging Royal Mail, they are. [ Interruption. ] To counteract that comment from a sedentary position, he is hellbent on flogging all of Royal Mail. The amendment and the new clause follow the spirit of openness and empowerment in which we have approached the Bill. I am sure that the Minister wants to be open and to empower our communities, and indeed Parliament, and he can do that by agreeing to the amendment and the new clause. 

Nia Griffith:  I rise to speak to the new clause and to all the amendments in the group, but as we are short of time I shall ensure that I do not repeat what my hon. Friend has said. 

Amendment 77 is on the possible assessment by Ofcom of the universal postal service. The timetable in clause 29(4), for an assessment to take place within 18 months of new arrangements being put in place, is misguided. The cynic might say, “Oh, we can see what’s going to happen here. The Ministers would like to get the privatisation out of the way and, as soon as that’s done, the regulator can come in and decide to change things, probably in some sort of negotiation with a privatised monopoly that might of course influence how things go.” Lo and behold, things might be changed—respecting the norms of the EU directive, obviously—and made detrimental to the service, giving a less good service. That could happen very quickly. A five-year period, however, would give us the opportunity for a sense of stability and for the newly privatised company to be required to meet certain standards for a long enough period to embody those standards and make them more likely to be upheld in the future. 

2.30 pm 

Moreover, we need to look at how the timing will work out in practice. If we look more closely, we will see that if the review or assessment is conducted within 18 months of the privatisation of Royal Mail, that review or assessment might well—depending on the

pace at which privatisation takes place—occur around the time when the current inter-business agreement between Royal Mail and the Post Office is up for renewal. Depending on the exact timetable, by the time the privatisation of Royal Mail goes through, only about 18 months might be left of the current IBA—what a coincidence! We could, therefore, see a privatised Royal Mail driving a hard bargain with whichever provider it chooses to make its contractual arrangements with when the current IBA comes to an end. At around the same time, Ofcom could be conducting some sort of consultation as part of the assessment, so it would not be at all surprising to find a privatised Royal Mail not only driving a hard bargain with potential providers of counter services, but also exerting pressure on Ofcom to relax the requirements that it imposes on Royal Mail as the universal service provider. 

What would we be left with? Fewer access points, fewer deliveries, higher prices, and different prices in different parts of the country and for mail going to different parts of the country. The temptation to maximise profit and reward shareholders will always exist, because that is how private companies work. The pressure will increase against the background of ever-falling mail volumes and Royal Mail’s desire to continue investing in new high-tech equipment, not to mention an economy that will be making a slow recovery—slower than from the recessions of the 1980s and 1990s, and that is official, from the Office for Budget Responsibility this week. 

Mr Davey:  Did the hon. Lady notice the figures yesterday, on output increasing faster than it has in 16 years and as fast as France and Germany? 

Nia Griffith:  The worry is that we might not see a speedy recovery, but a sluggish one. 

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab):  The leader in today’s Financial Times has documented that manufacturing output in America is outgrowing most of the figures for Britain. I have also just seen that the boost in retail sales in America is outstripping Britain’s economy, mainly due to our barmy state interventionist policies. 

Nia Griffith:  I return to the matter in hand. Such things as falling mail volumes, the desire to invest in new high-tech, responsibility to shareholders, maximising profit and so on will no doubt put a lot of pressure on the privatised Royal Mail, and in turn on the regulator, to make the conditions less stringent. That will happen at the same time, potentially, as the negotiation of a new contractual agreement with someone to provide the access points. That is why it would be much better to have stability, which could be offered by keeping the present requirements for a full five years. That would enable the current requirements to become the established norm for a privatised Royal Mail. For those reasons, as explained, we would like to see the Bill amended. 

Mr Davey:  Before I address the points made by the Committee on the group of amendments, I will say a little on what the clause does. We have discussed how clause 28 gives Ofcom the primary duty to secure provision

of the universal service, and we will soon discuss the minimum service requirements of the universal service under the hard-wiring of clause 30. 

Clause 29 recognises that the postal market might change over time. It must continue to meet customers’ needs as it develops, and we must therefore make sure that Ofcom is able to reflect those changes. That is why subsection (1) gives Ofcom flexibility within the bounds of the minimum requirements of the universal postal service to describe the specific services to be provided as a universal postal service and the standards those services must reach. That is not a new responsibility. Currently, Postcomm determines the specific products that Royal Mail as the only universal service provider in the United Kingdom must provide as a universal service. Under old legislation, Royal Mail did that when the licence was granted by Postcomm. Now such provision will be under the universal service order. 

The aim of amendment 76 is laudable. The hon. Member for Ochil and South Perthshire wants to ensure that the result of the making or amending of a universal postal service order is that none of the main categories of persons would be put in any worse position than they were before. Indeed, it is such a laudable amendment that we have already provided for it. Under section 3(4)(i) of the Communications Act 2003, Ofcom is already required to take into account the needs of 

“persons with disabilities, of the elderly and of those on low incomes”, 

while section 3(4)(l) of the Act deals with 

“the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas”, 

and 

“the vulnerability of children and of others whose circumstances appear to OFCOM to put them in need of special protection” 

is covered under section 3(4)(h). We are extending such duties to Ofcom’s functions in respect of post, so amendment 76 would offer no new protections and I urge Opposition Members to withdraw it. 

Amendment 41 would put responsibility on the first universal service order in the hands of the Secretary of State rather than the regulator. Before I come to the detail, it might be helpful if I explain what the universal postal service order will do. To put it in context, clause 30 sets out the minimum requirements for a universal service. They replicate those requirements currently in place. The order will play a similar role to that currently played by Royal Mail’s licence, as I said a few moments ago. It is the level of detail below the minimum requirements that will specify more precisely the types of products and services that Ofcom, having assessed the market, considers should be provided as a universal service. It is important that that is based on a detailed understanding of the market and of user needs. For that reason, it is appropriate for it to continue to be specified by the regulator. 

As the independent regulator, Ofcom will have a detailed understanding of the market, the powers and ability to assess the needs of users. The Secretary of State does not and will not. That is just as true for the first universal service order to which the amendment refers as it is for any other. If the concern of the hon. Member for Ochil and South Perthshire is that, for

some reason, Ofcom decides to make sweeping changes to that currently required when it makes the first order, I shall reassure him about that. Ofcom will have little incentive to do that and will face a big risk. It would need a compelling set of evidence, and will have had no time to gather it. It is its intention to make an order at the end of 2011, to come into force in spring 2012. Our expectation, following discussions with Ofcom, is that it would simply roll over into the order whatever the Royal Mail licence at the time requires to be provided as a universal service. 

Ofcom has the power to remove a licence provision that it considers no longer necessary, which is to say that it has the power to deregulate where appropriate. I hope that I have reassured members of the Committee that it is wholly appropriate that the first universal service order should be set by the acknowledged independent experts, Ofcom, and I ask the hon. Member for Ochil and South Perthshire to withdraw the amendment. 

Amendment 77 deals with a fundamental feature of a universal service, which is that it must be able to respond to user needs. Indeed, that requirement stems from a European directive. The effect of amendment 77, however, would be to prevent Ofcom from assessing user needs for five years. It would be unable to reflect in the universal postal service order any change in user needs for that length of time. That is an incredibly bad idea in such a fast-changing market. It is partly the rapid pace of change in the communications market that has led to the need for the Bill in the first place. Users must be able to have confidence that what is in their universal service reflects their needs. To ensure that, Ofcom needs to be able to research those needs and have the flexibility to make regulatory decisions based on sound evidence. Given that, I hope hon. Members will withdraw the amendment. 

New clause 7 would require the universal service provider to send an annual report to the Secretary of State on the provision of universal services. I accept the importance of ensuring that there is transparency about the provision of the universal service; in many of our debates I have willingly accepted that, but I cannot see how the amendment would contribute anything new to that aim. Clause 36, which we will come to, already provides that if Ofcom is to impose any condition on the universal service provider, that condition must include a requirement 

“to publish information about the extent to which it is providing specified postal services in accordance with specified standards, and…to publish annually an independently audited performance report.” 

The report must contain 

“information about the provider’s performance in complying with specified requirements under the designated USP condition”. 

I can see that the proposed new clause is more specific in seeking to be precise about the issues that the USP should cover in its report. However, it is for the regulator to set out the universal service requirements on the universal service provider in accordance with the provisions in the Bill. It would be a significant additional burden if the universal service provider was required to produce a report covering similar but not identical grounds as a separate requirement. 

The points covered in proposed new subsections (2) and (3) seem to be things that must have been considered by Ofcom in setting the universal service standards, and

are therefore likely to be covered in the report on performance against those standards. No such requirement was included in the 2009 Bill, because it simply was not necessary. It is an additional burden when there are already reporting provisions in the Bill. That remains the case, and that being so, I ask the hon. Members to withdraw their amendments. 

Before I conclude, Mr Amess, you will have noticed, in your usual perceptive way, that I have not yet given a name to the amendments. I was intrigued by the notion that the hon. Member for Ochil and South Perthshire needed his faith in Santa Claus to be renewed. I am not quite sure where that is going to lead me, but I should say in a Christmas spirit that I am appearing in a pantomime this Saturday. 

Gordon Banks:  Oh no you’re not. 

Mr Davey:  Oh yes I am. I have a walk-on part with the St Paul’s Players of Chessington in Hook parish hall. I think it is at 2 o’clock. I believe there are still a few tickets left. I play another little dwarf, so perhaps we should call the amendments the little dwarf amendments. 

I will conclude by restating that the Government’s first priority is to secure the provision of a strong universal postal service. People value the ability to receive and send a letter at the same affordable price everywhere in the UK six days a week. That is why the Bill enshrines in legislation—in clause 30—the minimum requirements of a universal postal service. We also recognise that the postal market will change over time. It must continue to meet customers’ needs as it develops. We must ensure that Ofcom is able to reflect those changes. Clause 29 provides the necessary powers and flexibility to enable Ofcom to determine which services should be included in the universal service, based on the sound evidence of customer need and the changing market. That is why we do not need the little dwarf amendments. 

2.45 pm 

Gordon Banks:  I am tempted to say, “Now we know why the Minister is grumpy.” We have got a number of things into these debates that we could never have imagined at the beginning. I have listened to the Minister’s remarks, and I will make some comments—if it is appropriate—on amendment 77, which my hon. Friend the Member for Llanelli spoke to. None of us spoke to amendment 41; it was tabled by the hon. Member for Angus and he is not here to speak to it. We think that amendment 77 is better, so my hon. Friend the Member for Llanelli spoke to that. 

Amendment 76 gives significant advantages to the individuals and organisations referred to in paragraphs (a) to (g). I have listened to what the Minister has said, but I have not been tremendously moved by his contribution. Amendment 77 strengthens the USP as we know it, and it is something that we feel strongly about in relationship to the Bill as a whole. I believe, Mr Amess, that we will consider new clause 7 further at another point. We want to press amendment 76 and amendment 77 to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 7, Noes 9. 

Division No. 17 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Wright, David   

NOES

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Clause 29 ordered to stand part of the Bill.  

Clause 30 

Minimum requirements 

Nia Griffith:  I beg to move amendment 56, in clause 30, page 16, line 3, after ‘letters’, insert ‘and other postal packets’. 

The Chair:  With this it will be convenient to discuss the following: Amendment 57, in clause 30, page 16, leave out lines 8 and 9. 

Amendment 7, in clause 30, page 16, line 8, leave out ‘Friday’ and insert ‘Saturday’. 

Amendment 58, in clause 30, page 16, line 14, after ‘letters’, insert ‘and other postal packets’. 

Amendment 59, in clause 30, page 16, leave out lines 19 to 21. 

Amendment 8, in clause 30, page 16, line 20, leave out ‘Friday’ and insert ‘Saturday’. 

Gordon Banks:  On a point of order, Mr Amess. I said that we wanted to press amendments 76 and 77 to a vote, but we had a Division only on amendment 76. I seek your advice. 

The Chair:  The advice is that we cannot take the vote on that amendment now, which is what I was trying to indicate to the hon. Gentleman. 

Nia Griffith:  I rise to speak to amendments 56 and 57, which relate to clause 30. Clause 30 details the minimum requirements that should be required in the universal postal service. Requirement 1 of the clause states that there has to be: 

“At least one delivery of letters every Monday to Saturday”— 

to every home in the UK and— 

“to such identifiable points for the delivery of postal packets as OFCOM may approve.” 

Although there have to be six-days-a-week deliveries of letters, requirement 1(2) provides that there has to be at least one delivery of “other postal packets” on only five days a week, namely from Monday to Friday, where the term “other postal packets” means any parcel, packet or other article transmissible by post other than a letter. As it stands, the clause implies that there does not have to be a delivery of such items on a Saturday. 

Amendments 56 and 57 would remove the distinction between letters and postal packets by including “other postal packets” in requirement 1(1) and deleting requirement 1(2). That would make the requirement stronger and would much better reflect the needs of real life. Letters can be pushed through letterboxes without anyone being at home, but, by definition, “other postal packets” might easily include items that are too big to push through the letterbox and require someone to open the door to receive them. When are people more likely to be able to be at home to receive such parcels? It is on Saturdays, of course. Plenty of people have to work on Saturdays, but children do not go to school and many offices are closed, so people are far more likely to be at home. 

In addition, with internet shopping and activities such as eBay, there has been an increase in the number of packets sent through the post, at the same time that the volume of letters is declining. Therefore, it seems sensible to move forward by providing the sort of service that people want, which is to have all shapes and sizes of parcels and packets included in the obligation to provide a delivery six days a week, from Monday to Saturday. That would be a definite improvement on the universal postal service as required under the clause. Certainly, it would please the public, as it can be difficult and time-consuming for people to get to their nearest depot to collect packages if they are out when the postman calls. If there were a requirement to deliver such items on Saturday, people who were not at home to receive a package during the week would have the option of asking for a Saturday delivery. 

In its oral evidence, Consumer Focus said that the public valued the Saturday delivery, and it is precisely for items that will not go through the letterbox that that is so important. I am speaking about all those people who do not have a Hippo box outside their house, although perhaps the Minister might at some point decide to provide all the 28 million homes in the UK with a Hippo box. 

Mr Davey:  I do not think that I will be providing Hippo boxes for 28 million addresses, but I should tell the hon. Lady that, interested as I have been in this subject for many years, I will not ask whether the previous Government were going to change planning policy to make it a permitted development right to install Hippo box-style containers. 

Nia Griffith:  That is absolutely fascinating. [ Interruption. ] We shall find out the answer later, I suspect. 

Our amendment would ensure that it is a requirement to provide a better service for the public, which I am sure would be very welcome. I hope that the Minister will consider including in the Bill the requirement for a higher level of service, as that better reflects what people want. It does not seem too much to ask of him, as it would strengthen the universal service provision and is something that people want. 

Amendment 7, in the name of the hon. Member for Angus, seeks to achieve a similar purpose by a slightly different means, in suggesting that we keep requirement 1(1) and (2) as in the current text of the Bill, but that we strengthen requirement 1(2) by replacing “Friday” with “Saturday.” As this is in keeping with what we are

asking for, we would support such an amendment to some degree, but we feel that our amendments are much stronger, because they make it absolutely clear that all such postal items would be in one category, with no case for separating them out or for making any kind of differentiation. We feel that our amendments are better, but we understand the spirit in which the hon. Gentleman tabled his. The needs of small businesses are important, as well as those of the home consumer, because small businesses also value that Saturday service. People can do a lot of work from home if they have that facility and can use services on a Saturday, as well as from Monday to Friday. 

I shall discuss amendments 58 and 59, which are in my name and that of the hon. Member for Ochil and South Perthshire, and I shall refer to amendment 8, which is in the name of the hon. Member for Angus. Amendments 58 and 59 would make a similar change to requirement 2 of clause 30, which concerns the collection of postal packets. In the Bill, the requirement is that on a Saturday there must be a collection of only letters from every access point in the UK that is 

“used for the purpose of receiving postal packets, or any class of them”. 

Our amendment would strengthen such a requirement to reflect the needs of the public. 

Many people find that Saturday is the best day to be at home to receive a package—equally, Saturday is the only day on which they can easily get to an access point. At present, “access point” means a post office, and our amendments relating to other aspects of the Bill seek to ensure that that remains so. Amendments 58 and 59 reflect lifestyles—we aim to improve matters for consumers and ensure that they get an improved level of service. The only way to do that is to include stronger requirements in the Bill. 

Again, we understand that the hon. Member for Angus wants to achieve something similar—by slightly different means—by keeping requirements 1(2) and 2(2), but altering the word “Friday” to “Saturday”. That would be in keeping with what we seek, but it is not quite the same, therefore we support, first and foremost, our amendments. If they were not successful, however, we might consider supporting amendment 8. For the sake of guaranteeing a better service for the public, I hope that the Minister considers our proposals and accepts our amendments accordingly. 

Mr Davey:  The whole point of the Bill is securing the future of the universal postal service. The Committee is aware that the market is undergoing big structural changes. Postal volumes have declined by 15% in the past five years; Richard Hooper predicted declines of up to 40% in the next few. The evidence that was presented to the Committee was unanimous in acknowledging that action must be taken to save the universal postal service. 

Clause 30 sets out the minimum requirements of the universal service, which are identical to those in the Postal Services Act 2000, and to those that were proposed by the previous Government in their 2009 Bill. Although one might say that our approach to ownership is different, I cannot see how ownership could affect minimum requirements. It is interesting that the hon. Lady seeks to change minimum requirements that are identical to those that were in the 2009 Bill. 

I have mentioned more than once that the minimum requirements in clause 30 gold-plate the minimum requirements of the European postal service directive. I assure hon. Members that we share the view that it is possible to regulate too much, and Whitehall often gold-plates directives that come from Europe. I make no apology, however, for gold-plating the European postal directive. It is important to set that out to the members of the Committee, who I am sure have read the directive, which goes back to December 1997. 

The directive sets out in detail what is required, but we gold-plate that. We have a six-day instead of a five-day collection service, and we have a six-day instead of a five-day delivery service. We have uniform and affordable pricing instead of just affordable pricing. We have a free service for the blind and partially sighted, which is an option but not a requirement for member states. Also, we have, under requirement 7, on “legislative petitions and addresses”, a free service to convey a qualifying list of petitions and addresses, which is not required in the postal directive from Europe. We have gold-plated the European requirements, and the effect of the amendments before us would be to impose even more gold-plating and additional regulation on Royal Mail’s operations, which would risk undermining the provision of the very universal service that we are trying to save. 

In evidence to the Committee, Royal Mail spoke of the need for deregulation in competitive parts of the market if it is to survive. The most competitive part of the market is in packets and parcels. The amendment, therefore, would do precisely the reverse of what Royal Mail says that it needs. It would thus risk undermining the universal service, rather than enhancing it, so we cannot accept it. 

The parcels and packets part of the postal market is a growth area, and it is highly competitive. As things stand, there is no requirement on Royal Mail to provide a six-days-a-week parcels service in the Postal Services Act 2000, passed by the previous Government, or in the licence issued by Postcomm. Yet Royal Mail provides a six-days-a-week parcel service. Why, if it is not required under legislation, would Royal Mail provide a six-day service? 

The answer is simple and goes to the heart of many of our debates in Committee. Opposition Members want to do everything by regulation, but Government Members have said that commercial, common-sense competitive pressures will make Royal Mail provide for the needs of consumers, if that is what consumers want. Royal Mail provides a six-days-a-week parcel service, over and above what is required, because it makes commercial sense to do so. That is the best incentive for any business. 

The Government are committed to reducing regulatory burdens. We do not wish to impose regulation when not necessary. It is vital that businesses are able to operate free of the spectre of excessive bureaucracy that serves no purpose. If, as predicted, that part of the market continues to grow and become ever more competitive, a six-days-a-week parcel service from Royal Mail is likely to become even more attractive to customers. A combination of customer demand and an effective market should ensure that consumers still have a six-days-a-week service for packets and parcels. There is, therefore, no need to require Royal Mail to provide six days a week something that it would do anyway. 

In short, the amendments are unnecessary, as the outcome they seek already happens for commercial reasons. Interestingly, we had a press release last week from Royal Mail, in which it unveils the fact that not only will it keep to its normal six-days-a-week delivery of parcels and packets, but in order to assist in the run-up to Christmas, it will extend that. That is an example of Royal Mail gradually beginning to listen to consumers and consumer pressures—I give it credit for that—which means that it will have extra delivery rounds and will extend the opening hours of delivery offices for the two weeks beginning 13 December, increasing convenience for customers who need to pick up packets and parcels. Royal Mail is improving its service in response to the needs of consumers. 

To be helpful, I remind the Committee that the last recommended posting dates before Christmas are Saturday 18 December for second class items, Tuesday 21 December for first class mail and packets and Thursday 23 December for special delivery. I always like to be of service. 

I would like to continue the debate, especially in respect of packets and parcels in Scotland, but in the absence of the hon. Member for Angus I cannot address the points that I think he would have made. He might wish to return on Report, and we could have the debate then. I do not wish to detain the Committee when we have not heard his arguments, and I urge hon. Members not to press the amendments that we have discussed. 

Nia Griffith:  I appreciate what the Minister has said, and I appreciate that Royal Mail can decide to do good. However, it could also decide to do otherwise, which is why there is a regulator with the strongest possible framework. I therefore wish to press— 

Mr Davey:  Before the hon. Lady presses the amendment to a vote, I wish to apologise for not naming the group of amendments. Given her references, I ought to name them the hippo amendments. 

Nia Griffith:  My hon. Friend the Member for Telford, whose constituency is flat compared with Wales, talks from a sedentary position about pushing a hippo. 

I wish to press amendment 56 to a vote, because it strengthens the regulatory framework and is therefore highly desirable. 

Question put, That the amendment be made. 

The Committee divided: Ayes 7, Noes 9. 

Division No. 18 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Wright, David   

NOES

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Amendment proposed: 58, in clause 30, page 16, line 14, after ‘letters’, insert ‘and other postal packets’.— (Nia Griffith.)  

Question put, That the amendment be made. 

The Committee divided: Ayes 7, Noes 9. 

Division No. 19 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Wright, David   

NOES

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Ordered, That further consideration be now adjourned.— (Mr Newmark.)  

3.9 pm 

Adjourned till Tuesday 7 December at half-past Ten o’clock.