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Lord Skelmersdale: I wonder whether the Minister recognises the following words:

"A number of very different postal markets are now fully liberalised: Sweden, Finland, New Zealand and Argentina have all abolished their monopolies ... As a first step the Government is halving the monopoly from £1 to 50p. ... An order under section 69 of the British Telecommunications Act 1981 has been laid and with Parliamentary approval this reduction in the monopoly will take effect from 1 April 2000".

Those words appear in the department's White Paper on the Post Office.

As my noble friend Lady Miller said, the Government were forced to back off from their proposal to reduce the monopoly to 50 pence--as, indeed, we established in this Chamber when I laid a Prayer against the second order negating, as my noble friend pointed out, the first order--in order to avoid defeat at the Labour Party conference in Bournemouth. Speaking at a fringe meeting at the

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conference, the CWU's spokesman, Derek Hodgson, warned that the union also wanted a commitment in Labour's next election manifesto not to privatise the Post Office. He was quoted in the Daily Telegraph as saying:

"If they don't back off, they have got a fight on their hands and they have got a fight that they can't possibly win".

The situation has become even more confused during the past month. In a recent article in The Times Graham Corbett, the new Post Office regulator, said that he would consider the abolition of the monopoly on letters and parcels costing under £1--a plan that was immediately attacked as "backdoor privatisation". He also hinted at job cuts, saying that he expected the business to be more efficient and that the most obvious way of curbing costs would be to reduce the Post Office's 160,000-strong labour force. He continued thereafter, but the remainder of the article is not really germane to this matter. I believe that any reasonable man--certainly a visitor from the planet Mars--would ask: what on earth is going on? Is it not about time that the Government stood up and were counted?

Lord Sainsbury of Turville: As the noble Baroness made clear, she is well aware of the twelfth report of the Trade and Industry Committee published on 14th September 1999. In that report, the committee recommended that the Government consider withdrawing the Postal Privilege (Suspension) Order 1999, which would have reduced the monopoly to 50 pence in price and 150 grams in weight from 1st April this year, so that the postal services commission could consider evidence put to it of the effect of a reduction in the monopoly threshold and recommend to the Government an appropriate threshold. After very careful consideration the Government accepted that recommendation. I believe that that shows very clearly that we take both the Trade and Industry Committee and the postal services commission very seriously.

We shall be remitting the issue to the commission as soon as possible and urging it to treat this as a high priority. Having accepted the recommendation of the Trade and Industry Committee, it would clearly be wrong to accept an amendment to the Bill that would reduce the scope of the reserved area before the commission has even begun to consider evidence and consult interested parties.

The overriding duty of the commission is to ensure the provision of a universal postal service--the delivery of letters and parcels to any part of the United Kingdom at a uniform tariff. It is vitally important that all users, wherever they work or live in the UK, should be assured of these essential services. The Government place an enormous weight on the value of this obligation. We believe that greater competition must not undermine these services. We recognise that this is what users of postal services expect.

However, we do not believe that greater competition is incompatible with the provision of a universal postal service at a uniform tariff. We remain totally committed to greater competition in postal markets. Greater competition in postal markets will be a spur to

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efficiency, which should bring benefits for consumers in terms of choice, price and quality, while universal service obligations are maintained.

As far as concerns the European Commission, we expect a proposal to be issued formally within the next few days. There will then be a substantive discussion between member states and the Commission about the issue that it raises. In general terms we welcome the framework proposed by the European Commission that the first stage of liberalisation should be a reduction in the price/weight threshold and that there should then be time to adjust to that reduction and a further review of its impact before any decisions are made about the next phase. But we shall need to give careful consideration to the price/weight threshold and, in particular, to determine an appropriate level proposed for a first step. As I said, the key objective is to ensure the maintenance of a universal service and to promote the interests of consumers.

We are giving the commission a free hand to decide on what changes to the reserved area are compatible with the provision of a universal postal service; indeed, it could come forward with a recommendation for 50p or 150 grams, as proposed in the amendments. However, the commission might find in favour of a completely different figure. Under the existing Postal Services Directive, the reserved area can only be set at a level necessary to ensure the maintenance of the universal service. I am sure that the commission will do a thorough job and consult all interested parties. We should leave the commission to get on with its work and not seek to prejudge it. Therefore, I ask the noble Baroness to withdraw her amendment.

Viscount Goschen: I heard what the Minister said about remitting the issue to the commission, but perhaps he could clarify the following point. Should the commission decide, for example, to reduce the weight from 350 grams to 150 grams, can the noble Lord explain by what means that could take legal effect?

Lord Monson: While the Minister is considering his response to that question, can he tell the Committee, first, the earliest and the latest date, respectively, when the commission might be expected to report? Secondly, can he say whether the abolition of the Post Office monopoly in certain thinly populated Scandinavian countries mentioned by Conservative noble Lords has led to any deterioration in services for people living in outlying areas?

Lord Sainsbury of Turville: As regards the universal service obligation, the situation remains the same. Therefore, there has not been any deterioration in that sense. As I understand it, it is for the commission to determine its own views. That will then become the standard which the people involved in the licences will have to accept. It would be put into effect by way of the affirmative order procedure under Clause 8.

Baroness Miller of Hendon: With regret, I have to tell the Minister that I find his answer unsatisfactory,

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particularly because he referred to the report of the Trade and Industry Committee published on 14th September. That was the critical point I was making. The report was published on 14th September. It is important that the noble Lord has a note of that date, because that is what I am talking about.

In my opinion the Secretary of State probably had that report earlier as, invariably, reports are given to Secretaries of State before they are published. However, if that is not the case and he received it only on 14th September, the Government cannot use that as an excuse for not modifying the monopoly when the advertisement to engage a regulator, which appeared on 16th September, refers to the "halving of the monopoly". Therefore that information was in the hands of the Secretary of State on 14th September. The statutory instrument was not laid until October. If the Government wished to change their mind, they must give a better reason than the information contained in the Select Committee report. That has nothing to do with it. The Government had that in their possession certainly six to eight weeks before the statutory instrument was laid.

The real reason for the Government's change of mind was as my noble friend indicated; namely, that at the trade union meeting it was made absolutely clear that all hell would be let loose--that is not a phrase that is suitable for the House of Lords; I shall rephrase it--or that there would be trouble if the measure was not revoked. That is the important point. The very least I expect the Government to do is to admit that they gave in to the trade unions, because that is exactly what they did. There are no two ways about it. It has nothing to do with the report. If it concerned the report, the Government would not have submitted the advertisement that I have mentioned. I regret that I have to inform the Minister that his reply is unsatisfactory. He should know that we on this side of the Committee are aware of the relevant dates and that I shall challenge him, albeit charmingly. I challenge him because these are important matters. It is necessary to be honest with each other across the Dispatch Box and to say what the position is.

The noble Lord has talked about protecting the universal service obligation. We also want to protect it. However, we make the point that eventually the monopoly will be modified. The Chief Executive of the Post Office, Mr John Roberts, said that the Post Office would be able to cope with the change if it was introduced gradually and it was given time to absorb it. However, it will not be able to cope if a European directive suddenly imposes it.

I understand that the Minister said that the regulator can include the measure in the licence, if he so wishes, and that the Government will leave the matter to him to decide. However, that may cause difficulties. I remember that no sooner had Mr Graham Corbett been appointed than he said that he would get rid of the monopoly altogether. That has never been denied by the Government. People in the Chamber and elsewhere are entitled to know whether the monopoly will be protected. If it is decided to get

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rid of the monopoly altogether, what will the Government say to the Post Office when they did not help to prepare it for the change by accepting our amendment?

The Minister has made quite clear that he does not intend to accept our amendment today. I think that he is wrong in that. Had we not lost the previous Division so heavily I would have pressed this amendment to a Division. However, I do not wish to lose this amendment as it is an important measure that seeks to protect the Post Office. I hope that the Minister will get his dates and his information right and give the correct reason for the Government's withdrawing the statutory instrument. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

6 p.m.

Lord Skelmersdale moved Amendment No. 15:

Page 5, line 1, leave out paragraph (d).

The noble Lord said: We now move to the part of Clause 7 which covers derogations from the Post Office monopoly. Some of them are straightforward. The first two are unlikely to involve any money changing hands. However, I am concerned about Clause 7(2)(d) which states that the monopoly is not broken by,

"the conveyance of an overseas letter out of the United Kingdom"

by anyone other than the Post Office, as I read it. One rather wonders why that is the case. At the moment it is perfectly normal for Post Office Counters to issue, for example, air mail cards and air letters. As I understand it, they are totally within the province of the Post Office. They are delivered by the Post Office and sent to Heathrow, Gatwick or wherever and are transmitted out of the country. That is done by the Post Office. With the exception of emergency circumstances--we shall discuss those later in the Bill--I cannot see why the conveyance of an overseas letter out of the United Kingdom is not the prerogative of the British Post Office. I beg to move.

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