Examination of Witnesses (400-417)|
WEDNESDAY 30 APRIL 2003
400. Firstly did you, and secondly could youI
understand about judicial review, and I understand the problems
with thatgo 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,
(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"
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
(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.
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
(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
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
(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.