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This amendment seeks to give Ofcom control over the setting of minimum charges for all national providers of delivery services as defined as servicing more than one country in the United Kingdom. Small businesses in northern Scotland are, in particular, discriminated against by this process. In many cases it is cheaper for them to get stock by buying up goods next time they physically cross the arbitrary line drawn by some companies, as opposed to utilising delivery services themselves. I am sure that the Minister is familiar with the detail of that problem. I beg to move.

Lord De Mauley: Although the amendment draws an important distinction between courier services and postal services, a distinction which may be worth exploring further at a later stage, in the context of the proposal to widen the scope of regulation, we have reservations. The law already requires a registered and insured service to be provided at a uniform tariff, and that is provided by the Royal Mail special delivery service. That is a political decision and forms part of the USO. In recognition of that USO, Royal Mail has certain benefits such as the unique right not to charge VAT, as confirmed by the European Court of Justice on 23 April. We consider that it would be an unacceptable interference with normal business economics to extend that to other operators.

It costs more to deliver to areas where there is a low delivery point density and mileage is not the biggest cost driver. As the costs of delivery are broadly speaking unaffected by crossing a border within the UK, there is no logic to make a distinction between such services and other services, as that might have the perverse

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effect of dissuading operators from serving parts of the UK. Parcelforce offers non-fixed prices to its current customers for, for instance, non-universal services. Royal Mail actively seeks to be paid different amounts from large customers and other operators for deliveries in rural areas to help them fund the universal service through zonal pricing. The amendment would stop that important evolution of Royal Mail’s business.

Lord Carter of Barnes: I thank the noble Lord, Lord Razzall, for raising this point. As he may not be aware, I have parents who live in, for these purposes, the wrong part of Perthshire, so the reality of this point is not lost on me. However, Clause 42 is one of a series of clauses which allows Ofcom to impose requirements on all postal operators. This new clause proposed by the noble Lord, Lord Razzall, also seeks to impose requirements on all postal providers operating across the three nations of mainland Britain. I understand that the noble Lord’s intention is to prevent private operators charging different prices for using courier or postal services in different parts of the country. I suspect that he is trying to protect against unfair pricing in particular parts of the nations.

The amendment would also specify the minimum charges. These must be fixed through either a price-per-mile pricing structure or a fixed rate. I assume that the noble Lord would like to make the pricing structure of private providers slightly more transparent, as well as preventing excessive differences between the costs of courier or more traditional postal services.

We share the noble Lord’s concern that members of the public should have access to a universal, uniformly priced postal service. As the noble Lord, Lord De Mauley, has already pointed out, that is provided through the universal postal service, which is already secured by the Bill up to a certain size and particular shape. The uniform tariff—the “one price goes anywhere” tariff—is the assurance that wherever you send an individual letter in the United Kingdom you will be charged the same price. The Bill requires Ofcom to ensure that a “one price goes anywhere” service is provided as part of a universal service in the future.

The universal postal service protects first and foremost individual members of society, but also small and medium-sized enterprises. The Bill already requires Ofcom to consider what services are needed to meet the reasonable needs of users, and Ofcom has a duty to exercise its functions generally. Such consumers are currently, and will continue to be, able to post letters and other parcels up to a certain size at a uniform price across the United Kingdom and to use the registered service.

Beyond that, I am afraid to say to the noble Lord that the provision of courier and postal services is a competitive area of the market. Businesses can use many different postal providers to send packets to each other and their customers or, indeed, alternative forms of distribution. Competition and those alternative forms of distribution, not regulation, provide customers with alternative choices for their services and, we hope, provide an incentive for lowering prices and developing innovative products meeting customers’ needs, wherever they may live within the United Kingdom. Conversely, restricting the way charges are set restricts

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courier and parcel companies’ ability to compete with each other. We believe that that may be damaging to the postal market, rather than the opposite.

Importantly, the amendment would extend the ability of Ofcom to impose price controls. It might therefore radically and, we believe, disproportionately expand the scope of regulation. That, too, is not to the benefit of the postal market. Regulation should be targeted in an objectively justifiable and proportionate manner so as to allow companies to meet the needs of their customers without unnecessary regulation. The amendment would require regulatory intervention that is in our view neither justified nor proportionate.

In any event, Ofcom will have a power to investigate anti-competitive behaviour in specific circumstances—for instance, if it is suspected that postal providers abuse a position of dominance wherever that market dominance may appear, or enter into anti-competitive agreements to maintain artificial pricing levels.

In practice, the amendment also does not seem to have the effect intended. The noble Lord’s laudable intention is to protect customers in particular areas. Importantly, requiring Ofcom to set minimum charges does not prevent postal providers setting prices above those minimum charges.

On balance, I invite the noble Lord, Lord Razzall, to withdraw his amendment, safe in the recognition that there are those close to my home who recognise the points that he makes.

Lord Razzall: I am sorry that a small amendment designed to protect the interests of the Minister's parents has required such a lengthy and dispiriting answer, but I will read what he said in Hansard and in the mean time beg leave to withdraw the amendment.

Amendment 95A withdrawn.

Clause 42 agreed.

Clause 43 : Essential conditions

Amendments 95B to 95D

Moved by Lord Carter of Barnes

95B: Clause 43, page 25, line 23, leave out “the purpose of” and insert “any one or more of the following purposes”

95C: Clause 43, page 25, line 26, leave out “or”

95D: Clause 43, page 25, line 27, at end insert—

“(d) guarding against the theft or loss of or damage to postal packets,

(e) securing the delivery of postal packets to the intended addressees.”

Amendments 95B to 95D agreed.

Clause 43, as amended, agreed.

Clause 44 : General access conditions

Amendment 95E

Moved by Lord Hunt of Wirral

95E: Clause 44, page 25, line 34, leave out “the operator’s postal infrastructure or”

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Lord Hunt of Wirral: Our amendment in this group again looks at the scope of Ofcom's powers. Clause 44 gives the regulator the power to impose a condition requiring the postal operator to give access to another operator not just to services within the scope, which is understandable, but also to an operator's infrastructure. As I read it, the clause as drafted would allow Ofcom to insist that an operator who provides absolutely no services within the scope must open up its infrastructure to another operator. Surely that cannot be the intention. Does not the Minister agree that any access condition should be imposed only on services within the scope? If it is necessary to enforce access to the infrastructure, it should similarly be only on infrastructure relevant to services within the scope. I beg to move.

Lord Carter of Barnes: As the noble Lord says, the amendment would reduce or limit Ofcom’s ability to impose access conditions on certain types of postal operators by removing the reference to postal operators’ infrastructure from the general access conditions. In the Government's view, the amendment is not necessary and could be contrary to our obligations under Article 11a of the postal services directive, which deals with access conditions to the infrastructure of the universal service provider.

Clause 44 sets out general access conditions that apply equally to all postal operators, including the Royal Mail. The amendment would allow Ofcom to impose access conditions on postal operators only for services that they are providing within the scope of the universal postal service. As the market develops, it is important that Ofcom, as the industry regulator, can intervene when it considers it appropriate, allowing access between other postal operators as well as Royal Mail. Confining the clause to services within the scope of the universal postal service risks limiting appropriate and sensible regulation and setting it in one particular moment.

Article 11a of the postal services directive requires that, whenever necessary to protect the interest of users and/or to promote effective competition, member states are required to ensure that access conditions are available to elements of postal infrastructure. Clause 44 gives effect to our obligations under that part of the article. Noble Lords may be reassured by the fact that the clause provides the power to Ofcom for appropriate general access regulation in future. Although the condition of necessity is a stringent test—far more stringent than it often appears on reading—it is one that I hope will provide comfort that the appropriate checks and balances are in place, however remote the possibility of it being used.

In the light of that clarification, I hope that the noble Lord will consider withdrawing his amendment.

Lord Hunt of Wirral: I am very grateful to the Minister for his clarification, which I will carefully consider. In the mean time, I beg leave to withdraw the amendment.

Amendment 95E withdrawn.

House resumed. Committee to begin again not before 8.28 pm.

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Social Security (Flexible New Deal) Regulations 2009

12th Report Merits Committee

Motion to Take Note

7.29 pm

Moved by Lord Kirkwood of Kirkhope

Lord Kirkwood of Kirkhope: My Lords, it is my pleasure to move the Motion on the Order Paper, namely to move that this House takes note of the Social Security (Flexible New Deal) Regulations 2009. In so doing, I draw attention to my entry in the Register of Members’ Interests. I am a non-remunerated, non-executive director of the Wise Group in Glasgow. It might be worth reminding myself that this is a Motion to take note, not a Prayer. That is deliberate, because the House should be able to comment and seek further and better particulars from Ministers on statutory instruments that are important, without taking the full-blown normal method of objecting to them that has served the House from time immemorial of moving a Prayer to reject them. That would be the wrong thing to do. But having regard to the valuable work of the Social Security Advisory Committee and the Merits Committee in raising a number of legitimate points gives the House the opportunity, through a Motion of this kind, to ask for clarification, which is the purpose of this Motion in my name. I hope that the House will be able to take advantage of it and to get the Government’s policy intention clearer.

In particular, two issues which run through the report from the Merits Committee and the Social Security Advisory Committee’s work exercise me. The stated policy intention was generated before the economic circumstances took quite a steep downturn. The provenance of this policy was in late 2006 and early 2007. The commissioning strategy was published in February 2008. These were times when the economic auguries were in a much better position and we were more confident that the state could provide policy and public expenditure in a way that perhaps is now more suspect. The policy in the budget in particular underpinning this policy deserves scrutiny, just so that we can reassure ourselves that we understand what the Government are trying to do and are confident that the money is available now to do it.

As noble Lords will know, contracts for phase 1 of the Flexible New Deal have been delayed. The announcement has been delayed for the very good reason that the department has realised that the targets set out in phase 1 policies were unachievable in the circumstances, as opposed to when they were originally put in place. I hope that the Minister will say that we will get the results of the successful bidders shortly, which is what I expect. If we do not get the results of the providers who will provide an essential service starting in October 2009, there will be a question mark about whether the providers acting in good faith can deliver the policy in the time available to them. In

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addition, not only would phase 1 be delayed, causing providers some difficulties, but the operation of and submission of the bids for phase 2 would fall hard on the heels of the announcements of the successful contractors for phase 1. A lot of activity is going on against a background of economic change for the worse. That all puts pressure on everyone, in spite of the fact that everyone recognises that, ultimately, we are all trying to do the same thing and help more people into work.

Undoubtedly, it is true that the caseload for the next three to five years is set to expand. It is bound to expand because of the increased worklessness that is already in the system. It is inevitable and impossible to predict, but everyone can be confident that unemployment levels, however they are measured, will go up over the next 12 months, which was unexpected when the policy was put to bed originally. In addition, noble Lords will also know that the on-flow of lone parents to the JSA will increase. Later this week, we will discuss that at Second Reading of the Welfare Reform Bill.

Perhaps I may remind colleagues of what they probably know intellectually: in 2010, employment and support allowance claimants will be encouraged—if that is the right word, as some of them will not be given much choice—to apply and may find themselves on jobseeker’s allowance as well. There is a whole anticipated increase in the on-flow to jobseeker’s allowance. All that puts pressure on Jobcentre Plus, which, under the Flexible New Deal, has to administer the first 12-month period in three phases for the clients referred to them.

In the few moments available to me this evening, I should like to say that I concur with the sentiments of the Social Security Advisory Committee, as no doubt do other noble Lords, on some of the salient points made in its valuable report. However, based on my experience with the Wise Group in Glasgow, I should like to make some suggestions which are significant but in parallel to the recommendations of the SSAC. My strong advice to the Government is that if there is a capacity problem and more people are coming on to JSA, it would be sensible to start with working with the willing. Of course, we have to provide services for all customers, but if there are challenging capacity pinch-points, my experience indicates that you get further faster if people volunteer to come down and engage with the department in trying to find work for themselves. They are already motivated and have that activation factor which is essential to make progress.

With a big increase in the caseload, it makes a lot of sense to concentrate on working with the willing. There is an opportunity cost to working with the recalcitrant part of the customer client group and great opportunity costs in working with people who are reluctant to engage with the department or with providers. Therefore, it is best to start by thinking about helping those who try to help themselves first. Once those customers have been dealt with, it would be sensible to move on and to deal as a priority with the other sections of the customer base.

Well-being, as defined by Carol Black in the valuable work she has done and continues to do with mental health and intermittent illness, is a very important

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part of this programme. It would be really sad if it was to get lost in the crush of the incoming on-flow of new customers. If I had control over the Government’s programme, for people who genuinely suffer medical conditions with an intermittent dimension, I would guarantee that, for a period of time, six months or a year, they would not be prejudiced in their benefit claim if they fell out of work. It is the one thing that gets them out of the door and motivates them to take the big step of moving into the first stage employment opportunity that I hope they will be offered. But at the moment a lot of them are very reluctant and will continue to be reluctant to go into work because of the lack of a guarantee that their benefit position would not be prejudiced by taking the chance.

Local discretion is very important in providing the skills, the healthcare and the childcare to give people the active support that they need if this programme is to work. We need to remind ourselves that this is a centrally driven programme in terms of its policy. Its implementation will be successful only if it is delivered skilfully and sensitively at the local level. Open access to personal advisers at stage 3 should be added. I know that there are constraints on resources and that there is a three-hour access to stage 3 for customers. I do not think that that is enough. If more open access to personal advisers could be made available at stage 3, my experience from working in Glasgow suggests that that could pay dividends if it was possible.

Continuing support for early-stage employment is essential. I guess that that is more appropriate for stage 4 than for stage 3. The new providers offering these skilled services—the not-for-profit, social enterprise and private sector providers—must be required to make sure that they do not abandon people once they cross the threshold of work for the first time. A lot of first-time workforce job entry customers find it very difficult to survive the first six weeks to the 13-week stage of their employment.

I turn to my wish list. We keep forgetting about the employers. I understand that the Government have done some valuable work with the Access to Work scheme, and I welcome the fact that the spend has been doubled, but it does not begin to take us to the point where jobseekers can be confident that they can go to an employer with a package that includes the valuable assistance which the Access to Work scheme can provide. In its absence, job opportunities cannot be secured.

I want to make a couple of brief points before I conclude. Although it is not a departmental responsibility, I am concerned about the findings set out in a report produced last year by the CBI entitled Towards a NEET solution. It looks at young people in the 15 to 19 year-old age group who are not in employment, education or training and considers ways of tackling the problem. However, in giving the United Kingdom a very poor rating, at number 23 out of 28 OECD countries, it has some really important things to say. I shall quote one sentence:

“Even if the Government’s target of reducing the percentage of young people not in employment, education or training from 10 per cent to 8 per cent by 2010 is met, the UK will still lag behind major OECD competitors, and that means significant costs for taxpayers”.

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This is true, and I urge the Minister and his department to think carefully about how to work with colleagues in education, skills and other parts of the Whitehall hierarchy to address the issue. These young people could be unemployed for a lot longer than some of the others in the customer base and therefore will cost more to put right in the long run.

We must evaluate or set up a continuous assessment of how the Flexible New Deal is going. The target of a proper evaluation in 2012-13 is all very well and important for a proper longitudinal study, but that will be far too late to look at what is happening as the programme evolves. At the beginning it is impossible to judge what the circumstances will be, so evaluation is important. Also, we all have to think about stage 5. I am frightened about Workfare. I understand that the proposal is still open to consultation and no doubt we shall talk about it with the department later in the year. I look forward to engaging in the debate because, as I say, I am worried about some of these proposals.

I conclude simply by saying that, for ease of reference, paragraph 5.9.1 on page 51 of the Flexible New Deal White Paper sets out estimates that I think were generated in different times. The savings are estimated at around £400 million in JSA payments over the next 10 years. It also mentions savings on departmental expenditure of approximately £32 million per annum, and the money to be used to assist the hardest-to-help customers on to stage 3. I wonder if that estimate is anything like appropriate now. I turn to the implementation costs which are listed at £30 million to around October 2010. Again, is that figure still apposite and appropriate? The paragraph finally goes on to talk about having access to European Social Fund money during the programme period of 2007-13.

My point is simply this: all these estimates were good at the time, and I am sure that they were properly researched, but I do not believe that they are valid any more. I hope to be put right about this during the course of the debate but, if not, I want to make a final plea to the Minister. Will he ask for some updated figures and arithmetic, particularly after the phase 1 contracts under the Flexible New Deal are known? Perhaps he would write to colleagues who take part in the debate—here I should say that I am grateful to note that the Conservative Front Bench is to take part—to see whether a sensible update could be made on some of the figures that lie behind the provenance of this policy. It is too important to get wrong. On that basis, I commend the Motion to the House.

7.45 pm

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