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Baroness Miller of Hendon: Perhaps I may begin by apologising to the Minister. My Deputy Chief Whip was whispering something in my ear when the Minister came to a critical part of his reply. He repeated that part of his reply, and I am glad that he did.

I have listened very carefully to what the noble Lord said. There is no way that I would wish to put in jeopardy the universal service provision. I shall take the matter away and consider it carefully. I think that at this stage I probably accept what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 92 not moved.]

Baroness Miller of Hendon moved Amendment No. 93:

("(f) require a universal service provider to keep separate accounts of each of the postal services which may not be provided unless he is a licence holder under Part II and any other postal services, and that the accounts for any other postal services clearly distinguish between services which are part of a universal postal service and which are not,
(g) prohibit cross-subsidies by a universal service provider between the postal services which may not be provided unless he is a licence holder under Part II and any other postal services which are not part of a universal postal service").

The noble Baroness said: I consider Amendment No. 93 to be very important. The purpose of the amendment is to give the opportunity for the Secretary of State to impose an obligation for all licensees who require a universal service provider to provide transparent accounts and to prohibit cross-subsidies. I beg the Committee's pardon. It is for the Post Office; not for the licensees. I read my notes wrongly.

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The White Paper emphasised the importance of transparent accounting and limiting cross-subsidies to a level necessary for the preservation of essential services. It states:

    "the Regulator will need to ensure that the necessary accounting transparency is in place to give credible assurance that there is no cross-subsidy from the business units operating in the monopoly area to those competing in other market sectors".

The point was expanded later—I abbreviate slightly—where it states:

    "The Regulator will ensure that . . . any . . . body licensed . . . to operate a full public postal service . . . does not act in any way anti-competitively".

    "In particular the regulator will ensure that any cross-subsidy from the monopoly area to competitive activities is the minimum ensure the continued provision of services required by the universal service obligation [USO] and the uniform public tariff".

The White Paper made clear that until the regulator was established the responsibility for ensuring transparent accounting and monitoring cross-subsidies rested with the Government. The 12th report of the Select Committee on Trade and Industry reached a similar conclusion. It states:

    "There has for some years been understandable resentment among the Post Office's commercial competitors in the parcels business at the way in which Parcelforce has been kept afloat by loans from the Post Office".

A no less important matter for consideration is the fact that transparency and limitation of cross-subsidies is also a central theme of the European postal services directive. Recital 28 states:

    "separate accounts for the different reserved and non-reserved services are ensure that not adversely affect the competitive conditions in [the non-reserved area]".

Article 14 of the directive contains an express requirement to keep separate accounts and to allocate costs to each of the reserved and non-reserved services.

The amendment will ensure that the Bill gives appropriate weight to the directive, to the select committee report, and, in particular, to the Government's stated policy as set out in the White Paper—all of which require that competition should be fair and that cross-subsidies should only be permitted where they are necessary to maintain the universal postal service obligation.

The Minister for Competitiveness told the committee in the other place that the Government had "considerable sympathy" with the aims of a similar amendment tabled by my honourable friends. He said that he believed that the Bill already made provision to achieve these aims and suggested that the Companies Act 1989 and various pieces of legislation prohibiting anti-competitive practices achieved the desired effect.

The short answer is that the amendment seeks to enhance the provisions in the Bill and in the other legislation. One could describe it as "belt and braces". The amendment makes clear in a single place—without anyone having to hunt through the statute book—what is required to comply with this important topic.

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To anticipate another possible objection, I hope that the Minister will not suggest that the objective of the amendment will be met by conditions in the licence. Subject to what already appears in the Bill, and what may later be included by amendments that we intend to bring forward, the regulator has a discretion as to the contents of the licence. Indeed, there is no requirement that every licence should be identical.

It is true that under Clause 101(2) the Secretary of State can intervene if he is dissatisfied with the arrangements, but the Government are seeking only permissive powers. It cannot be right that the Government's obligations to comply with the directive—and, indeed, with their own stated policy in the White Paper—as well as with the will of Parliament, as expressed in the select committee report, should be put into effect at the discretion of the regulator. It should be in the Bill. It has been said several times that they want transparency and no cross-subsidy, and that should be in the Bill. It is fundamental. Creating competition for the Post Office, but ensuring that that competition is fair and complies with our Community obligations, is fundamental. That is why I began by saying that this is a very important amendment.

The amendment ensures transparency; I hope that the Minister will be able to meet me on it. I beg to move.

Viscount Goschen: I support my noble friend's amendments. These amendments cut to the heart of the Bill. Throughout the discussions at Second Reading and during two days in Committee, a great deal has centred on the ability to generate fair competition for the Post Office, for the universal service provider, but to ensure that no competitive edge is gained by the provision of the universal service than would otherwise be the case.

In order to give the regulatory authorities the information they require to ensure that this happens, my noble friend has hit upon extraordinarily powerful arguments for insisting that these basic provisions should be put on the face of the Bill. They would be in line with our European obligations. It is extraordinarily important to include such a provision on the face of the Bill in order to achieve the comfort required by bodies that might be competitors of the universal service provider in the non-reserved areas. I support the position adopted by my noble friend.

5.30 p.m.

Lord Sainsbury of Turville: I must say again that there is no substantial difference between the noble Baroness and myself on this matter. We too believe that there should be transparency and that any movement in the accounts should be clear to anyone involved. The amendment seeks to ensure two things: first, that the universal service provider keeps transparent regulatory accounts; secondly, that anti-competitive cross-subsidies from the reserve to the non-reserved areas are prohibited. They are exactly the aims with which the Government have sympathy. The regulatory framework established by provisions within the Bill already provides for both.

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The amendment would have no practical effect unless and until the order-making powers in Clause 101 were used. Given that these powers are intended to be used only in very limited circumstances—in effect they are emergency powers and not ones on which the provision of universal postal services are intended to rely—it is unlikely that they will be triggered in the near future, if ever. Unless the noble Baroness wishes only to ensure regulatory accounts and prevent undue cross-subsidy at some as yet unknown point in future, this amendment will achieve nothing. (I seek to avoid using words which are regarded as provocative.)

This amendment is not appropriate in respect of the order-making power itself. The two issues highlighted in the amendment are already subsumed within the general powers of Clause 86(2). That clause provides that the Secretary of State may by order make such provision as he considers appropriate to ensure that the obligation is complied with. We have already made provision for the concerns that lie behind the amendment. To ensure that there is a level playing field and the Post Office company does not abuse its dominant position, or otherwise act in an anti-competitive manner, including illegal cross-subsidy from reserved to competitive services, under the Bill we are establishing—

Baroness Miller of Hendon: I apologise for interrupting the Minister. I believe that the noble Lord said that under Clause 86(2) the Secretary of State could make absolutely certain that there was transparency. I do not find that provision in the clause. It may be that the noble Lord has referred to the wrong provision.

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