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I understand fully the concern of the noble Baroness that there should not be any unintended consequences, but I believe that we have something here that is responsible, that builds on practice and can generate confidence in the way councils carry out their work. The only innovation introduced by the provisions is the ability of local people genuinely to influence the scope and process of examination. I have to say also that I do not think that the noble Baronesss concerns are shared by the bodies that one would expect to demonstrate concern if there was an issue. In Grand Committee, for example, we discussed the fact that CIPFA had concerns about Clause 16. My officials have since met representatives from CIPFA and have explained that the meetings at which officers would give evidence are meetings of the O and S committee which can be attended by members of the public. On the basis that this builds on current practice, CIPFA confirmed that it no longer believes that Clause 16 blurs the accountability of officers and elected members. We have agreed to work together with the body to produce guidance on the clause. Moreover, I do not need to remind her that the Local Government Association itself has not supported the amendment. In fact, it would like to see the provisions in Clause 16 extended to cover employees of other local public bodies.
Very briefly, I know that the noble Baroness will understand why I cannot accept her amendment. In terms of its content, I believe that we have met the consultation requirements that we make arrangements for extending these provisions to civil servants. On the first requirement, local authorities have been consulted about the provisions. This was done during the consultation process known as Communities in Control. Welsh Ministers also intend to consult on the petitions provisions before they commence them in Wales. In addition, we are committed to working closely with the local government sector and the trade unions
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I respect why the noble Baroness has brought back this issue. I hope that I have reassured her as to the intentions, the practices and the outcomes that this clause will generate. I am sure that Clause 16 in no way undermines the accountability of members for local decision making. I hope she will understand why I cannot accept her amendment.
Baroness Hamwee: My Lords, I am grateful to the two speakers; it is helpful to have their views and responses on the record. I cannot remember whether the noble Baroness, Lady Warsi, said that it would be irresponsiblebut that is what she meantto make the operation of the Bill unworkable but I am dealing with only one clause. I do, indeed, intend to make it unworkablethat is absolutely the objectivebut only the clause, not the whole Bill.
I would say to the noble Baroness that it is not tit for tat. The provisions in the amendment are to illustrate the reasons for our opposition to the clause. If there was any tit for tat around this, it came from the Local Government Association. It was quite clear when it proposed an amendmentwhich was not one that I or my colleagues wished to pursuethat if this provision were to apply to local authorities, it should apply to other authorities as well. It was a reaction to that. It was not a case of, We think it is a good thing and let us extend it. I recall its briefing supporting the proposed amendment very well.
As to the issue of a new Act of Parliament, I am not the first to propose this. The noble Viscount, Lord Astor, and the noble Lord, Lord Trefgarne, tabled an amendment proposing that the Bill being promoted by my noble friend Lord Oakeshott of Seagrove Bay on taxation of Members of this House,
It is suggested that Clause 16 is about issues and not individuals. The Minister said that there would be no right of access, I think is the term she used, for members of the public to an officer. But if it is only
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Picking up on the points in my amendment, the Minister assures us that there has been consultation on the detail but, given her comments about the guidance that has been issued and hoping that there will be consultation on the draft guidance, I assume that there has not been consultation on the detail to the extent that I anticipated.
The reference in my amendment to either House of Parliament is not intended to be a right for members of the public; it is a right for Select Committees, which is quite different. Clause 16 is not about issues; it is about calling an officer, identified by name or description, to account at a public meeting. This is a matter of principle and I wish to test the opinion of the House.
Lord Hunt of Wirral: Our amendments in this group would ensure that any USP access condition imposed under subsection (1)(a) was accompanied by an appropriate assessment of costs. As the drafting stands, an access condition could be imposed, including one with price controls, without a transparent and relevant set of accounts being drawn up specifying the different costs of the relevant matters. This form of drafting is repeated in Clause 44 for a general access condition.
Our first amendment in this group would insist that an access condition contained both the access requirement and the relevant accounting separation. Access conditions are, as the independent Hooper review made clear, a particular area of contention between the various
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In conversations about this drafting, various parties, including Ofcom, indicated that they welcomed the flexibility that the either/or gave them, because the relevant accounting separation might have already been required under Clause 35 and to repeat the requirement would be unnecessarily burdensome. As a result, I have tabled the second of my amendments to take account of that possibility. There is also the possibility that Ofcom might think that an accounting separation of access matters was needed but not a requirement to give access or to impose price controls. In this case, surely Clause 35 gives it enough power to impose the necessary accounting standards. I beg to move.
The Parliamentary Under-Secretary of State for Communications, Technology and Broadcasting (Lord Carter of Barnes): While I think that I understand the driving logic behind the amendments to create a binding connection between the requirement to impose an access condition and the requirement for a transparent level of accounting disclosure and clear financial information, the Government believe that these two amendments, in practice and in course, would provide no additional regulatory benefit but, perversely, could risk an increased regulatory burden on Royal Mail and possibly a delay in implementation.
Under Clause 34 as drafted, Ofcom may impose a USP access condition for either access to Royal Mails postal network or accounting separation relating to access, or both elements together. Amendment 87B would join these elements, thereby reducing Ofcoms flexibility under Clause 34 to impose an access condition without having also to impose a related accounting separation condition.
Amendment 88A would allow for an accounting condition under Clause 35 to be sufficient to satisfy Clause 34(1)(b). Amendment 88A presupposes that a condition under Clause 35 has been imposed and is sufficient to cover the access being required under Clause 34. Again, that has the potential to constrain Ofcom and could mean delaying the imposition of an access condition pending imposition of an accounting condition under Clause 35. It would also mean that Royal Mail had to be subject to both a USP access and a USP accounting condition rather than just a USP access condition alone.
The Bill rightly requires Ofcom to act in a proportionate manner when imposing any regulatory conditions. That applies equally to accounting conditions, whether they are imposed under the powers set out in either of the two clauses that we are discussing. We believe that this will ensure that there will be no unnecessary repetition of accounting conditions. I hope that this explanation is clear and I invite the noble Lord to consider withdrawing his amendment.
Lord Hunt of Wirral: I have listened carefully to what the Minister has said. I shall consult further in the light of the explanation that he has given. In the mean time, I beg leave to withdraw the amendment.
Amendment 88 is, from the point of view of running the Royal Mail, one of the most important things that we will be looking at, putting aside the other major parts of the Bill. It is important because of the history of the last eight to 10 years, when the Royal Mail was not allowed to act on a commercial basis, and because of the way in which the whole thing was sorted out in the early days. I was going to bore the Committee; I have put down about 10 references that I have made in the House to the whole business of pricing. However, it is getting a bit late, so I will not go through them all, but I might pick up one or two of them.
Many of the problems of today stem from the fact that our Government got it terribly wrong in allowing Postcomm to misinterpret its brief and to favour the route for competition. It is not surprising that establishing competition for Royal Mail involves setting up a comparable network to Royal Mail. The Royal Mail network currently involves daily collections from 115,000 pillar boxes, 11,500 post offices and daily delivery to 28.4 million addresses with fewer than 3,000 delivery exemptions. It has a workforce of around 167,000, 69 mail centres, 1,400 delivery offices and one national hub. It has around 31,000 vehicles, two trains and 42 flights a day.
Competitors would have to consider whether they could mirror or match that infrastructure, which gives the Post Office such a unique position. As we heard the other night, Royal Mail is really the only potential provider for the universal service. Those sorts of resources are necessary if the UPS is to be provided. Therefore, what we are looking at is the fact that competition has baulked at making such a substantial capital investment, despite all the fluffy talk about the investment that competitors could make. Instead, the competitors have concentrated on part-sorting mail and trunking it to Royal Mail offices for completion in sortation and delivery by Royal Mail.
This access work has been carried out at prices for Royal Mail that have allowed exceptional profits for competitors. In fact, there is a subsidy provided by Royal Mail. Nobody has done the work. Even Hooper could not reach a conclusion on how you do this costing to get a commercial basis. This subsidy is often talked about as 2p an item. You are talking about millions of items a day. Because of a law that the Labour Government introduced, the competitors are enjoying this subsidy from Royal Mail, which delivers at a loss while having to maintain that infrastructure. That is why I mentioned the infrastructure earlier; it is quite a costly operation.
No one can say with accuracy how much Royal Mail has lost because of this misguided Postcomm policy, but I should think around £100 million a year for the competitors has been a nice little feather bed. I have just looked up some of my comments from eight years ago; all this was accurately prophesied. As I say, Richard Hooper could not come to a conclusion in his report. He just left the matter for further examination by Ofcom.
My Amendment 88 seeks to guarantee the position for the future. If access is carried out on commercial terms, services are purchased at their value rather than through a subsidy. Royal Mail is currently unable to compete for access work, not because of inefficiency but because the regulator has established a system of pricing that is completely unfavourable to it. Richard Hoopers report recognised that the system of access pricing with Postcomms headroom regulation is unlike any other system of access offered by other European postal providers.
The access headroom regulation prevents Royal Mail from lowering the price that it can charge retail customers for its bulk end-to-end service without also lowering the access price by the same proportion. This means that any cost savings made on upstream activity cannot be passed on to retail customers without the business then losing revenue by also having to lower the access price. With the lowering of the access price to competitors, those competitors can pass the savings on to their own customers and retain contracts. The only additional efficiency being provided is that created by Royal Mail, which, in turn, gains no benefit. In regulatory terms, this would be characterised as a perverse outcome, yet Postcomm has sat on this perversion and no one has seen fit to address itnotwithstanding the fact that the House of Lords has been told on many occasions that what was going on was not only morally wrong but commercially daft when you think of Royal Mails position. If my amendment is accepted by the Government, such an outcome would have to be addressed by the regulator.
As the Bill stands, it is only the universal service providerwe have all agreed in this House that, although it has not been written in the Bill, we are talking about Royal Mailthat is obliged to publish information and audited performance details. Many noble Lords will be anxious for Royal Mail to compete on a level playing field. Indeed, I note that the Parliamentary Labour Party brief issued by the Secretary of State on 26 February in support of First Reading was entitled A Level Playing Field for the Royal Mail. The noble Lord, Lord Hunt, reminded me the other day that that term is correct terminology for these Europeans. Is it too much to hope that the Government will move beyond such pieties in order to implement the measures necessary to secure a level playing field?
Those requirements are all necessary and useful, but they are hardly sufficient. Along with that, Clause 46 indicates that Ofcom may require postal operators to provide a redress scheme, which is clearly to allow for some consumer protection in the case of failure in the service offered. In total, the conditions that Ofcom may impose are minimal. At no point does the customer or independent observer have an opportunity to compare an audited performance of these firms with that of Royal Mail. I hope that the Government will take this amendment in hand.
Much has been made of the term transparency, not least in Richard Hoopers report. We should be clear that, to date, what is being spoken about as transparency is merely the exchange of information between the regulator and Royal Mail. None of us will see this material unless we work with the regulator, Royal Mail management or limited circles of government. Such transparency is merely about reducing friction between the regulator and Royal Mail management on the provision of Royal Mail data; it is nothing larger than that. Broader transparency would allow the customer and independent observers to actively compare and contrast the performance of postal operators. I hope that there is more substance to the Governments commitment to transparency than has so far been suggested. I beg to move.
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