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Lord Hunt of Kings Heath: My Lords, I am not sure that at this moment Denmark is the country to which I particularly would choose to look for good examples! But, that is a very helpful suggestion. I have not seen examples of that, but I should be very happy to look into it.

Lord Swinfen: My Lords, the noble Lord has concentrated in his answers on medicines. Will he use his best offices to ensure that food is also properly labelled? Many people with poor eyesight have allergies and need to know what food contains.

Lord Hunt of Kings Heath: Yes, my Lords, there are food labelling regulations which require food labels to be easily visible, clearly legible and indelible. But I agree that there are many examples of poor food labelling. The Food Standards Agency has produced a taskforce report suggesting how the regulations of 1996 could be made more explicit. That is subject to consultation at the moment. Again, I hope that the agency will publish further advice later in the year which will enable us to get much better labelling on food products.

Lady Saltoun of Abernethy: My Lords, as we have been talking about eyesight, would not a minimum font size be quite a good idea?

Lord Hunt of Kings Heath: My Lords, yes. Within medicines there is a minimum font size in relation to the packaging of labels, which is seven point Didot, which I can reassure noble Lords is very small indeed. That is why we are anxious to produce voluntary guidelines in this country which will encourage manufacturers to go much further and better than the legislative guidelines.

Baroness Trumpington: My Lords, are garden products included in this? A great many garden products are very dangerous. For instance, if chives which have been sprayed against slugs are eaten, they would not do your child a bit of good.

Lord Hunt of Kings Heath: My Lords, I believe that that comes under the category of consumer product safety legislation. That requires manufacturers to give clear information about safe use. My understanding is that the relevant government department publishes guidance. I shall draw the comments of the noble Baroness to the relevant department.

Lord Brookman: My Lords, my noble friend will be aware of Coeliac disease. I was not aware of it until last year. The Coeliac society, as the Minister is aware,

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does a first-class job. But is he convinced that the labelling of products by shops and supermarkets for those who suffer from this illness—people do not like to call it a disease because it is not transferable—is adequate?

Lord Hunt of Kings Heath: No, my Lords; practice is variable and the Government will continue to talk to manufacturers to ensure that as much information as possible is given.

People Trafficking

3.30 p.m.

Lord Dixon-Smith asked Her Majesty's Government:

    What action they propose to take following the evidence presented on Channel 4 on Sunday 9th June concerning people trafficking into the United Kingdom.

Lord Bassam of Brighton: My Lords, the United Kingdom Immigration Service will investigate all substantive evidence of abuse of immigration controls given in the documentary. We have a comprehensive strategy to tackle the organised immigration crime of people trafficking and smuggling. The strategy is set out in the White Paper, Secure Borders, Safe Havens, and focuses on strengthening the law; tackling criminals through intelligence and enforcement; achieving international co-operation and prevention in source and transit countries; and dealing appropriately with the victims of trafficking. Together, those strands constitute a co-ordinated response to a global problem.

Lord Dixon-Smith: My Lords, I am most grateful to the Minister for that reply. It is somewhat reassuring to hear that, despite the delicacy of relationships between those responsible for administering and enforcing the law and those involved in journalism, especially investigative journalism, they are not, shall we say, inhibited by the need to protect sources and so on. However, the programme contained strong evidence in the international field. Can the Minister assure the House that work on the international front and the international aspects of that trade will be positively pursued as rapidly as possible?

Lord Bassam of Brighton: Yes, my Lords, I can give that assurance. The United Kingdom is at the forefront of international efforts to combat organised immigration crime through a number of means: negotiations, signing protocols, joint enforcement work and the United Nations Convention on Transnational Organised Crime, which covers trafficking and smuggling. So we are on the case and working with our partners across Europe and across the world to tackle what is frankly an appalling crime.

Lord Dholakia: My Lords, how many prosecutions have been brought under Section 25 of the

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Immigration Act 1971, which provides the power to arrest people who traffic in human beings? Can the Minister confirm that countries through which some of those people pass receive financial benefit from people who perpetrate such vile crime in human trafficking?

Lord Bassam of Brighton: My Lords, the section to which the noble Lord refers provides for prosecution of anyone,


    "knowingly concerned in or making or carrying out arrangements for securing or facilitating"

illegal entry. I cannot specifically identify whether that provision has been used in the circumstances that the noble Lord described, but the power is there and available for use.

Our enforcement efforts during the past few years are bearing fruit. The Government set up the multi-agency Reflex organisation through the National Crime Squad working with the Immigration Service and certain other key local police forces—the Met and Kent police in particular. It has had great success. Since May 2000, I understand, there have been about 82 investigations into organised immigration crime, about 400 arrests, and 139 convictions, representing a 90 per cent success rate in the courts. So we are acting vigorously; Reflex is working well; we are working internationally; and the powers are there to deal with the matter.

Lord Alton of Liverpool: My Lords, does the Minister agree that one of the most disturbing aspects of trafficking is the trafficking of children, unaccompanied minors? Does he recall that in a debate in your Lordships' House in March the Government stated that 66 children had disappeared from the care of West Sussex social services alone? How many more children have disappeared since March from West Sussex social services? What does he know about the plight and ultimate fate of those children?

Lord Bassam of Brighton: My Lords, I share the noble Lord's concern about the smuggling of children, as, I am sure, does every Member of your Lordships' House. It is a grave issue and we must at all times act vigorously on it. The noble Lord asks some specific questions to which I am afraid that I cannot provide the detailed answers from the Dispatch Box. I shall ensure that the information that the noble Lord seeks is provided to him and shared with the whole House.

Baroness Gibson of Market Rasen: My Lords, my noble friend mentioned the work of Reflex. Yesterday, together with other noble Lords, I visited the Reflex organisation as part of our sub-committee work. It is doing a tremendous amount of work, but, as it pointed out to us, the more it does, the more there is for it to do and it needs—that awful word—resources. Can my noble friend assure us that the Government will keep their eye on the resources for that unit, which is doing so much good work?

Lord Bassam of Brighton: My Lords, Reflex received 22.6 million from SR 2000 from the organised crime

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reserve, which runs until 2004. Yes, we recognise the importance of providing resources equal to the task. That is constantly under review. Obviously, there is a current spending round in train and no doubt that is one of the priority areas on which the relevant Ministers will be focusing. I can give that guarantee.

Lord Williams of Mostyn: My Lords—

Lord Waddington: My Lords, with the greatest respect, I would ask the noble and learned Lord to be charitable as the earlier question ran on until 24 minutes into the sitting.

Lord Williams of Mostyn: My Lords, I sympathise with the noble Lord, Lord Waddington, but we have a 30-minute limit. I think that we must stick to it.

Consignia

3.36 p.m.

Lord McIntosh of Haringey: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:

    "This morning, Allan Leighton, the chairman of Consignia, announced the second phase of the company's restructuring plans. He announced that the Royal Mail would save 350 million a year by moving to a single delivery at a consistent time, six days a week, and that those plans will result in a further 17,000 redundancies over the next three years. He said:


    'The underlying loss from operations graphically shows why we need to restructure the company and embark on a three-year renewal programme to restore profitability'.

    "Thousands of postmen and women now face an anxious and difficult time. Those decisions are very painful for the workforce, who have shown their commitment to serving the public and who have often been frustrated and angered by poor management and failure to invest in better ways of working. Allan Leighton has made it clear that the company aims to achieve the reduction in jobs on the basis of voluntary redundancy and by offering alternative jobs within the company. Early indications from the Parcelforce restructuring, which I reported to the House on 25th March, suggest that that can be achieved. We will of course do everything that we can through Jobcentre Plus and other agencies to help people who leave the Royal Mail to get new jobs as quickly as possible.

    "The need for radical action is underlined by the company's financial results for the last financial year, published today, in which it announced a 1.1 billion pre-tax loss. Much of the loss comprises exceptional costs from restructuring but the company made an underlying loss of 318 million on its day-to-day operations.

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    "Central to the programme to restore the mails business to profit and to improving service and efficiency is the re-organisation of mail deliveries that Allan Leighton announced today. The Communication Workers Union has said that it also supports the ending of the second delivery.

    "Twenty years ago, 15 per cent of all mail arrived by the second delivery. Today that is just 4 per cent, but that 4 per cent of mail accounts for 20 per cent of delivery costs and 30 per cent of delivery time. Most other European countries, with far higher postal prices, make only a single delivery each day and none of them has a target of delivering before 9.30 a.m.

    "In future, customers who regularly receive 20 or more items of mail a day will receive their delivery between 7 a.m. and 9 a.m. That will include people working from home as well as businesses. All other customers will receive their mail by lunchtime. Those changes will mean that 1 million more first class letters every week should arrive on time. The changes will also mean that postmen and women can work a five day week, instead of the current six.

    "Let me put Consignia's announcement into context. Allan Leighton said this morning:


    'These losses did not happen overnight. Unresolved issues and problems stretching back for up to a decade are reflected in these results'.

    "When this Government came into office in 1997, we immediately took steps to fulfil our manifesto commitment to give the Post Office what management and unions had long been arguing for—greater commercial freedom. The Postal Services Act 2000 completed that process, creating a plc and giving the company the freedom to borrow for growth investment. We cut back its 'dividend' to normal commercial levels and we announced the appointment of a new finance director in October 2000. In April 2001, Lord Sawyer was appointed to look at deep-rooted industrial relations problems in Royal Mail. This year, we strengthened management further by appointing a new chairman and securing a new chief executive for the Post Office network.

    "Greater commercial freedom is the right policy. But in exercising these new freedoms, decisions were made that, with the benefit of hindsight, we can now see were wrong. In his announcement, Allan Leighton said that,


    "management mistakes have been made over a number of years".

    "The company decided, for instance, to expand internationally—a strategy supported by many distinguished observers, including the Trade and Industry Select Committee. But other European postal operators were already ahead of the game—and in the meantime Consignia lost control of its costs at home. Costs went on rising at a time revenue growth was slowing. In 2001 the growth of mail volume, at 3 per cent, was half that of 1999. The financial results published today show that overall turnover grew by 3.6 per cent, but that this was

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    outstripped by a 4.8 per cent rise in costs. The result is that the company is now running at an underlying loss of 1.2 million a day. These losses cannot continue, and over the next three years, under the renewal plan, the losses will be eliminated and the company returned to profit.

    "I can also inform the House that the group chief executive, John Roberts, will be retiring later this year once his successor has been appointed. The search for his successor will begin immediately.

    "Let me stress to the House that today's announcement, like the Parcelforce restructuring, is not the result of any decision by the regulator. Both announcements are about stemming the losses and creating an efficient company. Today's announcement would have been made whatever the decision made by Postcomm.

    "But I would like to put on record the fact that I welcome the announcement by Postcomm about the adjustments to the timing of its proposals, the change in the definition of bulk mail and the decision to monitor the market closely to ensure that the universal service is not put at risk. In reaching its decision, Postcomm has clearly listened to the many representations made by honourable Members as well as from other stakeholders, including the Communications Workers Union.

    "The challenge now is for Consignia to improve the quality and reliability of its services so that it can keep its customers rather than lose market share.

    "Let me deal next with the financial issues associated with today's announcement. I have agreed a package of measures to put the company on the right financial footing to enable it to deliver this renewal programme. Consignia plc has reserves on its balance sheet of 1.8 billion, which represents accumulated past dividends and cash generated by the business. These are more commonly referred to as the 'gilts'. The Government now propose that the 1.8 billion of gilts will be held by the group holding company as reserves while the business is being turned around. These reserves will be available to back the investment required in the mails business to implement the renewal programme and to support the nation-wide network of post offices, subject, where necessary, to the relevant state aid clearances.

    "As I explained to the House on 25th March, the Government have agreed to forgo the projected dividend for 2001-02, releasing an additional 64 million for the company. I told the House then that,


    'a decision on dividends for other years will be taken in the context of the strategic plan'.

    I can tell the House today that the company will be allowed to retain the notional dividends for the previous year as well as part of the overall 1.8 billion of reserves. In addition, I can confirm that the Government do not expect to take cash out of the business by way of future dividends during the three years of the renewal plan.

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    "As part of our decision on the gilts, we have agreed to fund the Post Office network's historic losses. David Mills, the new chief executive officer of the Post Office, is working up a strategic plan for the network which will look at new ways of increasing revenues from commercial activities. As we informed the House on 26th April we have committed up to 210 million for compensation for sub-postmasters in the urban networks who are planning to leave the business and for investment in urban offices. The House will have a further opportunity to debate this when state aid clearance is granted.

    "I welcome today's announcement by the company that it intends to change its corporate name to Royal Mail Group plc by the end of this year. Her Majesty the Queen has agreed in principle to this name change. Few will mourn the passing of the name Consignia, and I will not be one of them.

    "Allan Leighton and his colleagues have shown that they are willing to make the very tough decisions needed to turn the company round. But the company is now set on a course for renewal and recovery. It will not be easy, but, as today's announcement shows, it is essential if we are to have a Royal Mail that the workforce can be proud of and that delivers the service that customers deserve".

My Lords, that concludes the Statement.

3.46 p.m.

Baroness Miller of Hendon: My Lords, I thank the Minister for repeating the Statement made by his right honourable friend the Secretary of State for Trade and Industry in the other place earlier today.

I expect the Minister is probably as sad as we all are to hear of the problems in Consignia and of the company's dreadful results last year, although, following earlier statements, they were expected and did not come as any great surprise.

Less than 10 years ago the Post Office was perceived as the best of its kind in the world. Unlike its European competitors it was profitable, its delivery performance was top of the international league table and its then chief executive boasted of the workforce as his 200,000 in-house consultants and ambassadors to the public. The "postie" was trusted and respected. Then we get today's Statement.

The figures are, by anyone's standards, quite shocking. Only three years ago, when the Post Office was making profits of around half-a-billion pounds annually, the then Secretary of State was pleased to announce that the Postal Services Bill, which was to become the Postal Services Act of 2002, would ensure that the company had a golden future and was set to become a global force. Instead, its performance has deteriorated; morale and performance in the workforce is low; and we learn that last year there was a pre-tax loss of 1.1 billion, equivalent to 1.2 million every trading day, with all of its businesses losing money.

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The Statement repeats what Allan Leighton had said. There had been management mistakes over a number of years. I am sure that that is right. But no mention is made of the disastrous industrial relations of the company during that time. I know that the Government have to be aware of it because they set up the inquiry under the noble Lord, Lord Sawyer, to look into the business. Does the Minister agree that that factor has also contributed to the situation? Indeed, does he agree that the Government have also played a large part in the debacle?

There will be no surprise at the terrible loss of 30,000 jobs. That has been trailed for quite some time. We are pleased and welcome the fact that it is intended to achieve those job losses by voluntary means. However, can the Minister give the House more information on the financial details which will allow the Post Office to use the money that has been invested in gilts over many years? Will this also require clearance from the European Commission under the provisions of state aid? This redundancy money has to come from somewhere, somehow, apart from the costs involved in the restructuring of the company.

It is said in the Statement that the announcement, like the restructuring, was not the result of any decision by the regulator. However, can the Minister state the Government's attitude to the application by the Post Office to increase the price of first and second-class posts? I would be interested to know what the Government think. Is the Minister confident that the Post Office is not simply trying to increase its prices in an area where it does have a monopoly in order to subsidise its heavy loss-making operation in areas where it is subject to competition? It is important, if the company is to get itself right, that we have all this information on the table and know from where we are starting.

We appreciate that the second-class delivery accounts for only 4 per cent of the mail but for 20 per cent of the costs. Are the Government confident that the fears of many people running small firms and working from home about the difficulties entailed if they receive their mail much later than others are unfounded? Will this not also mean a bigger burden for the Post Office if it is delivering first-class post between 7 and 9 a.m. but other businesses or homes in a similar area do not receive their mail until lunchtime?

The Minister has not said too much about the regulator's proposal to open up the market to competition, but we assume that that is still the plan. We welcome that. We believe that not only would competition assist the consumer but that it would assist the Post Office itself if it has to decide to work within certain parameters. Does the Minister agree that, in this area, there are still great opportunities for the Post Office, including potential sources of revenue from allowing other operators access to its delivery network? So far, the Post Office has been unwilling to negotiate realistic terms and prices on access charges. Does the Minister share our disappointment at that

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attitude? Does he agree that, if there is to be true competition, the issue of VAT will have to be addressed sooner or later?

When the Postal Services Act was introduced, we were told that the Post Office would remain a fully state-owned corporation. The Minister will recall the numerous questions that I asked his colleague, the noble Lord, Lord Sainsbury, as to whether or not the Post Office had been in negotiation with TPG, a Dutch company, to sell off the English Post Office. The noble Lord, Lord Sainsbury—and we certainly accept what he said—said that he was unaware of any of that. However, we later found out that that would most certainly have happened had the negotiations not broken down at the very last stage. So will the Minister now tell the House whether Her Majesty's Government would be willing to see the Post Office sold off to a foreign operator, or is the Post Office to remain—as defined at the time of the Postal Services Act—a fully state-owned corporation? It is important that a reply is placed on the record, considering all the previous confusion.

How will the Post Office network now be sustained, particularly in rural areas? There are only nine months to go before payment of benefits across the counter—which accounts for 40 per cent of the revenue—ceases.

Finally, we welcome—as I believe the whole House does—the dropping of the name "Consignia" and the return to the use of "Royal Mail". It was an absolute mockery of all good marketing techniques to drop a well-trusted, well-respected name, and to waste money in doing so, in return for a name that was never accepted from the word go. However, I should like the Minister to explain—although I have a certain sympathy with him; it would have been easier had the noble Lord, Lord Sainsbury, still been the responsible Minister—to explain this point to me. When I asked whether the name "Consignia" would be dropped and whether there would be a return to the original name, I was given a terse, curt, short answer. The answer was simply "No", and that was that. If it were not unparliamentary, I should say that it was a rude answer.

3.55 p.m.

Lord Razzall: My Lords, I join in the thanks to the Minister for repeating the Statement, However, I know from the remarks of the noble Baroness and from seeing the faces around this Chamber that we all regard this as an extremely sad day for the Post Office.

The opportunity should not be missed for both of the other political parties to accept their share of responsibility for what has happened. Up until 1997 the Conservative Party had every opportunity to give the Post Office the commercial freedom for which it was asking and it did nothing about it. It was during that period that the steps that the Post Office should have been taking in all kinds of areas were not taken because of the inactivity of the Conservative government. The situation today is the result of that inactivity.

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Some criticism should also be accepted by Her Majesty's Government, first, for the delay that occurred in giving the Post Office what the Government say that it wanted. I noted very carefully the words of the Statement:


    "When this Government came to office in 1997, we immediately took steps to fulfil our manifesto commitment to give the Post Office what management and unions had long been arguing for—greater commercial freedom".

A word has crept in; namely, "greater". That was not what the management and unions were asking for; we debated this issue in the House. What the Post Office was actually asking for was "commercial freedom" full-stop. What we now have is the worst of all worlds. The Post Office has not had what it wants, and the Government have been sucked inexorably back into being the lender of last resort to the Post Office and into having to take the actions with taxpayers' money that the Minister has announced today. The House should recognise that both political parties during their period of office, for whatever well-meaning reasons, have been at fault.

I follow the noble Baroness in asking one or two key questions. She touched on the plight of urban post offices. When the Government brought forward their proposals for rural post offices, a number of us in this House made the point that the elderly and the frail have just as great a problem if they are living in an urban area if their post office is closed as they do in a rural area. The Statement says that the Government are bringing forward plans to compensate sub-postmasters in urban areas who will be retiring. Have the Government any plans to assist the elderly and the frail in urban areas who will be deprived of a very necessary service in their community in the same way that plans are being brought forward in regard to rural areas?

Secondly, before the name "Consignia" is consigned to history, will the Minister give some indication as to what the cost of the "Consignia" operation has been? What has it cost the Post Office to conceive, develop, reprint, and rebrand itself as "Consignia", and then to abandon it?

Thirdly, is this an opportunity for the issue of the opening up of competition for the Post Office to be reconsidered? Does the Post Office need a longer breathing space to get its act together and to get into a position to be able adequately to compete with the competition before it is introduced?

Finally—this is a fundamental point and was touched on by the noble Baroness—there seems to be some inconsistency in the Government's position as set out in the Statement. There is a bland comment about the noble Lord, Lord Sawyer, being asked to undertake a review of industrial relations in the Post Office. When the noble Lord's report was produced, and when it was debated in this House, a general feeling of optimism emerged that the worst was over and that all would be well if the recommendations were implemented. The Statement is rather silent on that aspect. I suspect that that is so because the remarks being made by Allan Leighton are not consistent with the optimism that was expressed by the noble Lord in

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his report. The House should be told whether the Government agree with the general optimism about employee relations expressed by the noble Lord, Lord Sawyer, or with the more critical attacks on the Post Office workforce made by Allan Leighton.

4 p.m.

Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their response to this Statement. I agree with them immediately that this is a very sad day. It is a sad day for the Post Office and a sad day for all of us as Post Office users. However, like the noble Lord, Lord Razzall, I have to say that the picture painted by the noble Baroness, Lady Miller, of a golden age of the Post Office in the good old days under a Conservative government is a little bit far from the truth.

I think that we should be humble enough to remember how, in the good old days, we used to criticise the Post Office. We used to criticise British Rail—did we not?—for multiple shortcomings. We have to recognise, I think, that Allan Leighton was right to say, as he has done today, that the problems of Consignia/Royal Mail Holdings are deep-seated and that the current performance is the result of failure to address these issues over a number of years. That failure refers not only to the Post Office management but to government. We should remember, and the Conservative Party should remember, that it was under a Conservative government that the external financing limit was set and that very considerable sums were drawn off from the Post Office which it was not able to use for investment. For example, automated sorting equipment which should have been in place many years ago was frustrated by the fact that the government were not allowing the Post Office to use its dividends or the cash it generated.

I think that everyone is right to pay tribute to the workforce. Again, however, the criticism that at the moment we have particularly low morale in the workforce does not square very well with the fact that, five years ago, industrial action in the Post Office accounted for almost 1 million days lost per year. It was the greatest single element of days lost through industrial action. Those figures are very much lower—enormously lower—than they were then. That must be some indication of the changes taking place.

I do not know that I am qualified to comment on the difference between what the noble Lord, Lord Sawyer, thinks and what Mr Leighton thinks, and I do not think that a third view from the Government is particularly called for. Clearly, however, the workforce who have indeed been threatened by these very significant losses have been behaving with a good deal of responsibility, and they have been supportive of some of the changes that are taking place. In particular, the union is supportive of the suppression of the second delivery.

The noble Baroness, Lady Miller, asked about the use of the 1.8 billion gilts and whether state aid clearance was available in particular for redundancy money. State aid clearance is required for some of the

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purposes for which the 1.8 billion will be available. That does not include restructuring costs, which are themselves an investment in a more efficient workforce. Clearly, however, there are state aid elements, particularly in support of the network.

What view do we take on the application for increased prices? We take the view that price rises should not be used to camouflage inefficiency. That is what happened in the past, and it is certainly what happened under Conservative governments. I do not believe that that is the case now, and the Government are convinced that an application for a price rise in the context of the renewal plan is an appropriate one for Postcomm to consider.

I think that there is some confusion about second class mail and second delivery. There is no change in second class mail. What is proposed is the suppression of the second delivery, which could be both second class and first class mail. It is a legitimate point to say that the target of delivery between 7 a.m. and 9 a.m. for small businesses and those with more than 20 items is a significant challenge for the Post Office. That is why pilots are under way as to how it can be achieved. If it can be achieved, that will be a significant improvement for many small businesses.

I agree with the welcome that the noble Baroness, Lady Miller, extended to the openness to competition. I also agree with her that the opportunities arising from competition are for both Post Office customers and the Post Office itself. As for the issue of charges for access to the network, if there is no agreement about it Postcomm is in place to monitor and take decisions in its regulatory role.

The noble Baroness, Lady Miller, asked about TPG and the negotiations between the parties. I know that she and the noble Baroness, Lady Blatch, are in correspondence with my noble friend Lord Sainsbury, and I do not wish to make of that a four-cornered conversation.


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