Select Committee on Constitution Minutes of Evidence

Examination of Witnesses (400-417)



  400. Firstly did you, and secondly could you—I understand about judicial review, and I understand the problems with that—go back to them and say, "Look, why haven't you; please tell us? We represent the consumers, the consumers are really rather important because they actually pay your salaries; and will you please tell us why you didn't? And, of course, we do have very good links with the press all over the country"? If one really wants to do something, one usually can do something, or not?
  (Mr McGregor) We had a very extensive and, I think probably it is true to say, rather fraught towards the end, exchange of correspondence with the Commission just along those lines. We became sufficiently concerned about the processes that they were following to seek the advice of leading counsel about our legal position. We were starting to get worried that our own statutory duties were starting to be compromised because of the timetable that Postcomm were pursuing. And we reported back to Postcomm that, in the view of the counsel whom we had consulted, there were serious shortcomings in the process, we argued that they should give more time to the consultation, to allow people to respond effectively; at the end of the day, they agreed to extend the consultation period by six days, which, out of, as I say, a two-year process, did not seem to us to be an adequate response. But at the end of this exchange we were left with the rather unenviable choice of do we seriously consider taking judicial review proceedings, or do we try to improve processes for the future through improvements to the Memorandum of Understanding.

  401. Mr Frewin, I think, in the introduction, the same question, you were the Parliamentary Officer; do you have specific MPs or Peers who take an interest in your affairs, and in a matter like this can you go to them? Again, who is representing the poor consumer?
  (Mr Frewin) Certainly, we can bring it to the attention of quite a few people who have shown interest in postal matters. But I think the main driver here was to get to an agreement with Postcomm for the future.

  402. Rather than make a row over this, use it as a fulcrum to get a sensible arrangement?
  (Mr Frewin) Rather than have to have a "public" row, yes.

  Lord Acton: A public row, sorry. Thank you.


  403. If I could come back, I touched upon the point about appointments, because you mentioned that members of Postcomm are appointed by the Secretary of State, and indeed in the memorandum you mentioned that one of the members, Martin Stanley, actually is seconded from the DTI. I just wonder, what role does Postwatch have in the process, what role should it have, should there be consultation with Postwatch when it comes to appointments?

  (Mr McGregor) We have no formal role, in terms of appointments that the DTI makes to Postcomm. Naturally, we have a fairly regular dialogue with DTI, and if we have any comments or suggestions to make then we have the ability to do that, but that would be just an informal giving of views.

  404. And how adequate do you think that process is; that is what has happened, are you perfectly content with that, would you like to see a greater role in that process, or not?
  (Mr McGregor) No, I think the processes, as they are operated by DTI, do not give us cause for concern.

  405. So, you are perfectly content with those who serve on Postcomm?
  (Mr McGregor) Yes.

  406. How do you fit that with your earlier comments about the practices where you have taken issue with them?
  (Mr McGregor) I think, obviously, there is a difference between, say, the individual members of a Commission, bearing in mind that there are seven of them, and the communal decisions that come out of the Commission. Now, we do not know and we are not party to the advice that the Commissioners were being given about how robust their consultation processes were. We do not actually know what has been said to them. All we have been able to go on is the actual decisions that the Commission have come up with at the end of the day. It is those decisions, rather than any individual Commissioners, that we have been critical of.

  407. Fine; so if one was addressing that as a problem the question essentially would be perhaps the openness, in terms of the decision-making, so you would have greater awareness of what led to the decision?
  (Mr McGregor) Yes.

Lord Jauncey of Tullichettle

  408. Mr McGregor, in your paragraph 15, you refer to the role of the DTI in regulation being complex, and then, at the very last sentence, you state that it is unclear how much weight they give to each interest group when reaching its decisions. Where do you draw the line between the role of the DTI in the regulatory process and the regulator himself? It is certainly not clear to me, I am afraid.

  (Mr McGregor) I think the root of the issue, with the involvement of DTI, is around their role as shareholder as well as sponsor of the regulatory regime that was put in place to oversee the commercialisation of Royal Mail. We do not see that there is any conflict of interest, if DTI has got a straightforward sponsorship role, because there are quite a number of other departments that have got that; but where they are also the shareholder, and they are the shareholder of an organisation that, unfortunately, has been losing considerable sums of money over the past 18 months, then conflict inevitably must arise. We have been discussing this with DTI, and we understand that DTI themselves are conscious of these possible conflicts and wish therefore to create a kind of shareholder executive with an independent board, so that it looks more like a public limited company kind of structure. And, although we do not know yet the full details of this, that kind of a separating out of the shareholder function from the sponsorship function would go, I think, a long way to resolving some of the current conflicts that we see inherent in the DTI's role.

  409. So really they are unusual, if not unique, in the utility regulator world, are they not, in being shareholders of the principal supplier of services?
  (Mr McGregor) Yes, I think they are unique. I think, through circumstances which they themselves did not want, the Department for Transport found themselves as owners of Railtrack for a period, and also the sponsorship for the industry, but that was a matter of accident rather than intention. We are not aware of any other Government department which has the shareholder role and the sponsorship role under one roof.

Lord Elton

  410. Most of my question has been answered, but I would like to know, as a result of the obscurity and mixed interests of the DTI, did that inhibit you from taking advantage of the fact that they see themselves as using its good offices to broker agreements between disagreeing groups? Were they a party to your private row, or not?

  (Mr McGregor) I am not sure a party would be the right way to describe it. We did keep DTI informed as to the issues that we had with Postcomm, but we were doing so because they are the guardians of the legislative regime, and so they do have the sponsorship role for ourselves, and also they have the role of appointing the members of Postcomm. And therefore it is very much in DTI's interests, and quite legitimate interests, to see that the statutory framework that they created under the 2000 Postal Services Act is working and working as intended.

  411. Would you think that the statutory framework could with advantage be changed?
  (Mr McGregor) Yes, we do, and, as I say, we think the primary change of advantage would be to give us the right to appeal to the Competition Commission, because I think that would introduce a whole series of disciplines into the processes, which do not exist at the moment. And, yes, in the light of experience, over the past two years, there are two or three other, smaller changes that we think could usefully be made to the Act.

  412. Do you have them at your fingertips?
  (Mr McGregor) One area is our ability to gain information. We have information-gathering powers, which are very similar to those that Postcomm have, and we can require any licensed operator to provide us with information. However, there is an ability that is written in for Postcomm to veto any information requests that we might make, but, oddly enough, we do not have the ability to veto any information requests that Postcomm might make. And it seems to us a very sensible change just to say that if, as an independent consumer body, we feel we need to know certain information that we should have the unfettered ability to ask for that.


  413. A general question, relevant to our inquiry. Postcomm is now a collective body; in a number of sectors, of course, they have moved from the individual regulator to a collective body. I wondered if you had any views on that; would you regard it as desirable having a collective body rather than a single regulator?

  (Mr McGregor) In a sense, we are not able to compare and contrast, because it was set up as a new collegiate body. Our experience, I think it is probably fair to say that the jury is out on this one. What we have found is that, clearly, you have the Chairman and the Chief Executive, the Chairman is there for three days a week and the Chief Executive is full-time; the other Commission members, essentially, I think, devote a couple of days a month, or of that order. So probably there is a bit of disparity, inevitably, in the understanding of issues that you get between the Chairman and the Chief Executive and the other members; but, because we do not know, and we do not see minutes because they do not publish minutes, or anything like that, as to how the Commission operates internally, it is really rather difficult for us to comment. For example, we do not know if, on a particular issue, there are any dissenting voices within the Commission, the Monetary Policy Committee was cited as an example earlier, but dissenting views are not recorded by the Commission nor the reasons behind them. So the extent of how much debate goes on between the Commissioners is very difficult indeed to judge.

Lord Elton

  414. Do we deduce from that that you would strongly favour the publication of the minutes of their meetings?

  (Mr McGregor) Yes, we would strongly favour that; it seems important, from an accountability point of view, that they should do so. To pick up on the earlier conversation, we ourselves publish our minutes, and, yes, we do make sure that commercially-sensitive or staffing matters, and things like that, are taken out of the minutes; but we publish them, and it seems to us important that Postcomm should do the same as well.


  415. Now we know a number of regulators have contact with one another, sharing information, just to keep in touch; do you have much contact with other consumer bodies in other sectors?

  (Mr McGregor) Yes, we do. Up to date, it has tended to be rather ad hoc, in a sense we are the kind of new boy, new kid on the block; but, yes, obviously we have met with and have a dialogue with the other bodies. And, in fact, as we were waiting outside with WaterVoice to come in, we were discussing the possibility of setting up a more regular and structured series of meetings with the utility Consumer Councils.

  Lord Acton: I hope you will give due credit to us, as facilitators.


  416. I was going to say, we have already served a purpose, facilitating this kind of dialogue. I was going to say to our previous witnesses, in terms of their memorandum, it was clear they were speaking partly to us but also speaking partly to the regulator, so actually I think we are fulfilling a process by allowing some dialogue to take place.

  (Mr McGregor) If I could just add to that; also the National Consumer Council runs a regular forum to which all of the consumer bodies go.

  417. Yes. Fine; thank you very much indeed, that has been extremely helpful. Again, may I thank you for the memorandum that you put in, that was very clear and has been very valuable to us, and we are most grateful to you for giving up the time to be with us this afternoon, which has been extremely valuable for our purposes. Thank you both very much indeed.
  (Mr McGregor) And, again, thank you for the invitation.

  Chairman: Thank you.

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