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Lord McIntosh of Haringey: I am always responsive to gentle persuasion, but I am afraid that the purpose of Clause 4 is to set out the minimum standards as required by the European directive. I--and I am sure other Members of the Committee--can think of many additional qualities they would like from a postal service, but it would not be appropriate to put them on the face of the Bill.

Baroness Miller of Hendon: I was interested to hear the Minister's view that it would not be proper to gold-plate the European directive which deals with the provisions in Clause 4. I am always hearing that the Government are gold-plating almost every directive which comes across from the EU and that we must go along with it. However, this proposal is something else. Line 11 on page 69 defines "postal services" and a second-class post could easily sit in there.

The Minister made a great deal of saying that we would all like to see many other items on the face of the Bill; for instance, delivery before midday, every day and so forth. I understand why they cannot be included and his explanation that the Bill is designed to deal with the minimum service. But we are talking about something which is already a service; we already have first and second-class post. Old age pensioners in particular rely on the second-class post, but its provision is not in the Bill and the Minister cannot even take away the proposal for consideration. Such concern has been reported in the media and it has been tested.

All that makes me believe that I should test the opinion of the Committee.

Lord Harrison: Clause 4 seeks to enact the EU postal services directive, which specifically mentions the universal service obligation. Earlier today, a Member on the opposite Benches, who has since left his place, raised the spectre of the European Union introducing a "portable" stamp that is usable throughout the EU, letting yet another hare run for the Eurosceptical press to pick up.

8 Jun 2000 : Column 1270

Is it not worth making the point that it is because we have an EU postal service directive that we for the first time, through this Government, are putting into legislation the requirement for a universal service which I beg to suggest will be universally accepted and applauded by the people in this country? Is not the distinction that we are not seeking to gold-plate, because we are enacting the EU postal services directive? I believe that there would be agreement in the Committee that too much legislation, which was lean and mean and originated from Brussels, found gold-plating in this Parliament and that that practice has been unacceptable.

Lord Sharman: I have listened with great interest to what has been said on both sides of the Committee and find it astonishing that there is a focus on one service within the Post Office. It seems to me entirely proper that the Bill should set out the minimum universal postal standard. I can think, for example, of recorded delivery and registered post, both of which are important to many parts of society, but neither of which are set out on the face of the Bill. Therefore, we either go the whole hog and include a list of services which we believe to be part of the universal service, or we quite properly leave it to the postal services commission. That is what I believe we should do.

Lady Saltoun of Abernethy: As regards delivery services, I view any directive of the EU with suspicious eyes. In my experience, those services in Europe are not a patch on ours and often do not involve a delivery to a person's house; letters are left in boxes at the end of roads. I am not impressed with or happy about the idea of relying on the European Union directive.

Baroness Miller of Hendon: Before putting the amendment to the Committee, perhaps I may suggest that the noble Lord, Lord Sharman, looks at page 69, line 23, which gives a definition of registered post. I commend the amendment to the Committee.

5.17 p.m.

On Question, Whether the said amendment (No. 10) shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 134.

Division No. 1

CONTENTS
Alton of Liverpool, L.
Anelay of St. Johns, B.
Astor of Hever, L.
Attlee, E.
Blaker, L.
Blatch, B.
Bowness, L.
Brabazon of Tara, L.
Brougham and Vaux, L.
Burnham, L. [Teller]
Buscombe, B.
Byford, B.
Campbell of Alloway, L.
Carnegy of Lour, B.
Chadlington, L.
Courtown, E.
Cox, B.
Cumberlege, B.
Denham, L.
Dixon-Smith, L.
Eden of Winton, L.
Elliott of Morpeth, L.
Elton, L.
Flather, B.
Fookes, B.
Gardner of Parkes, B.
Goschen, V.
Hanham, B
Henley, L. [Teller]
Higgins, L.
Hogg, B.
Howe, E.
Jenkin of Roding, L.
Lucas, L.
Luke, L.
Lyell, L.
Mayhew of Twysden, L.
Miller of Hendon, B.
Mowbray and Stourton, L.
Moynihan, L.
Murton of Lindisfarne, L.
Naseby, L.
Northbrook, L.
Northesk, E.
Norton of Louth, L.
Onslow, E.
Oppenheim-Barnes, B.
Park of Monmouth, B.
Pearson of Rannoch, L.
Perry of Southwark, B.
Plummer of St. Marylebone, L.
Rees, L.
Renton, L.
Saltoun of Abernethy, Ly.
Seccombe, B.
Sharples, B.
Skelmersdale, L.
Strathclyde, L.
Thomas of Gwydir, L.
Vivian, L.
Wade of Chorlton, L.
Young, B.

NOT-CONTENTS
Alli, L.
Amos, B.
Andrews. B.
Archer of Sandwell, L.
Ashley of Stoke, L.
Ashton of Upholland, B.
Bach, L.
Barker, B.
Bassam of Brighton, L.
Berkeley, L.
Billingham, B.
Blackstone, B.
Borrie, L.
Brookman, L.
Bruce of Donington, L.
Burlison, L.
Carter, L. [Teller]
Chandos, V.
Christopher, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cocks of Hartcliffe, L.
Cohen of Pimlico, B.
David, B.
Davies of Coity, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dholakia, L.
Diamond, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Elder, L.
Evans of Watford, L.
Farrington of Ribbleton, B.
Filkin, L.
Gale, B.
Geraint, L.
Gibson of Market Rasen, B.
Gladwin of Clee, L.
Goodhart, L.
Gould of Potternewton, B.
Grabiner, L.
Graham of Edmonton, L.
Greaves, L.
Grenfell, L.
Harris of Greenwich, L.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Hylton-Foster, B.
Jacobs, L.
Jay of Paddington, B. (Lord Privy Seal)
Jeger, B.
Jenkins of Putney, L.
Judd, L.
Kennedy of The Shaws, B.
Kirkhill, L.
Layard, L.
Lea of Crondall, L.
Linklater of Butterstone, B.
Lipsey, L.
Longford, E.
Lovell-Davis, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McNally, L.
Mallalieu, B.
Mar and Kellie, E.
Massey of Darwen, B.
Milner of Leeds, L.
Mishcon, L.
Mitchell, L.
Molloy, L.
Monson, L.
Morris of Castle Morris, L.
Morris of Manchester, L.
Newby, L.
Phillips of Sudbury, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Puttnam, L.
Ramsay of Cartvale, B.
Rea, L.
Redesdale, L.
Rendell of Babergh, B.
Richard, L.
Rodgers of Quarry Bank, L.
Roper, L.
Sainsbury of Turville, L.
Sharman, L.
Sharp of Guildford, B.
Shore of Stepney, L.
Simon, V.
Smith of Clifton, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Strabolgi, L.
Taverne, L.
Taylor of Blackburn, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Thornton, B.
Tomlinson, L.
Tope, L.
Tordoff, L.
Turnberg, L.
Turner of Camden, B.
Uddin, B.
Walker of Doncaster, L.
Walmsley, B.
Weatherill, L.
Wedderburn of Charlton, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.
Woolmer of Leeds, L.
Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

8 Jun 2000 : Column 1272

5.27 p.m.

Baroness Miller of Hendon moved Amendment No. 11:

Page 2, line 41, at end insert ("and prices shall be geared to costs").

The noble Baroness said: As the amendment states, it is intended to ensure that prices are geared to costs. The need for the Post Office to link costs to prices was emphasised by the Government in the July 1999 White Paper entitled, Post Office Reform: A world class service for the 21st century:

"The Post Office should not, therefore, charge different prices to different customers, or categories of customers, for the same service where the differences in prices do not reflect the quantity, quality or other characteristics of the service supplied".

The reason was set out clearly earlier in the White Paper at paragraph 26:

"[The regulator] will also need to ensure that there is no abuse of a dominant position, for example by the Post Office using predatory pricing to deter or drive out competition".

The amendment is in line with the requirements of Article 12 of the European Union postal services directive. I have no idea which of the two noble Lords opposite will answer. I suggest that it will probably be the noble Lord, Lord McIntosh, as he seems to be dealing with the whole of Clause 4. Therefore, I believe that he will be pleased that at this stage I am trying to bring the amendment into line with the directive. As he seems to be keen that everything should be thus--no more, no less--I hope that eventually he will agree with me.

I am sorry to trouble Members of the Committee with another full quotation but it is necessary to illustrate how wide the Bill is from our legally binding EC obligations. Article 12 of the directive provides,

"Member states shall take steps to ensure that the tariffs for each of the services forming part of the provision of the uniform service comply with the following principles:

"prices must be geared to costs; member states may decide that a uniform tariff should be applied throughout their national territory,

"the provision of a uniform tariff does not exclude the right of the universal service provider(s) to conclude individual agreements on prices with customers".

Article 12 of the directive could very well be described as defining the essential ingredient of a universal postal service. The directive emphatically rules that prices of each of the services forming the universal service must be geared to costs. The

8 Jun 2000 : Column 1273

amendment incorporates that requirement into the Bill. I am prepared to concede that the phrase "geared to costs" is somewhat ambiguous and that some improved definition is called for even though the words used follow those of the directive.

If the Minister will accept the principle of the amendment, which merely puts into effect, no more, no less, our obligations under EU law and, even more importantly, the Government's own policy as set out in the Government's White Paper, I shall gladly discuss with him some possible improvement in the wording. I beg to move.

5.30 p.m.

Lord McIntosh of Haringey: I am grateful to the noble Baroness, Lady Miller, for her explanation of the amendment. She is right in saying that the provision in Clause 4(2) is in line with the definition of the universal postal service in Article 3 of the EU postal services directive, and the further provisions in the directive at Article 12 regarding tariff principles and transparency of accounts.

We have not included a specific reference in the legislation to prices being geared to costs. That is not because we do not think that such a link should exist--it should--but that it is a matter best enforced by the postal services commission through the licence, as I mentioned earlier in response to amendments to Clause 4.

We intend that the Post Office plc will be granted a licence that will take effect from the first day of the new licensing regime. The licence will be agreed between the Post Office plc and the commission. It will include provisions which satisfy the detailed requirements under the EU postal services directive. A draft outline licence was placed in the House Library on 11th February 2000.

The document illustrates the kind of terms and conditions that the Government expect to see in the Post Office plc's licence. The outline of the proposed licence states at paragraph 5 that the commission is expected to prepare proposals for a price control structure and that the Post Office plc will be obliged to obtain the commission's permission before setting any new prices in relation to the universal postal services.

The commission will take into account the relationship between costs and prices as it is required to do by the directive, which has direct effect on the national regulatory authority. The amendment would not make matters any clearer; it is already clear. Indeed, it could have the unfortunate effect of restricting competition in certain circumstances. While the directive requires that universal postal services are geared to costs, there is no requirement that the ability to negotiate individual prices should be restricted in that way.

The effect of the amendment would be to limit competition. Constraining the universal service provider in the way envisaged by the amendment might prevent volume users of postal services from

8 Jun 2000 : Column 1274

negotiating commercial discounts. That would put the universal postal operator at a competitive disadvantage.

The restriction imposed by the amendment would apply to all the services within the universal service, irrespective of whether such services are within the area to be reserved for licensed postal operators. It would be particularly undesirable for those parts of the universal service, such as parcels and registered post, which are outside the licensed area and subject to full competition.

I am afraid I cannot agree that the amendment would be in the interest of users of postal services. On the basis on which I started out, that is, that the postal services commission will be regulating the prices of universal services in line with the requirements of the directive, I hope that the noble Baroness will withdraw the amendment.

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