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There are two examples at the moment, one of which is certainly ongoing and the other is, apparently, temporarily resolved. Not many people know that all the fire engines in London are owned by a company called AssetCo, which recently got into significant financial difficulties. I am told that it will be all right on the night but I have never seen anything to give me assurances about that. It certainly begs a question in my mind as to what would have happened if AssetCo had gone into administration or whatever. The other case, which is certainly continuing, concerns Southern Cross, one of the largest care home companies in Britain, with 31,000 residents in 750 homes. As I understand it, it is owned to a substantial degree by a company in the Middle East. I am not sure what would happen if the worst came to the worst in respect of these. It is therefore appropriate for the Government to place within the Bill sufficient provision to ensure not only that the service continues but that the staff are looked after and their future provided for. I can see no reason why these amendments should not be accepted.

Earl Attlee: My Lords, before I address the amendments it may be helpful to the Committee if I say a few words about the policy intention behind Part 4 of the Bill, which introduces a special administration regime. The noble Lord, Lord Christopher, suggested other areas which could, in certain circumstances, cause problems.

These special administration provisions are contingency provisions. We believe that the package of measures set out in the Bill will secure the future of Royal Mail and the universal postal service. The special administration provisions are simply the Government acting prudently and putting in place sufficient contingency plans to ensure that the universal service continues to be provided in the unlikely event that the provider is at risk of entering insolvency proceedings. The noble Lord, Lord Stevenson, referred to the possibility of this arising from an unsympathetic regulatory regime. I remind the noble Lord that the whole object of the Bill and the duty of Ofcom is to secure the universal postal service.

As set out in Clause 67, the overriding objective of a postal administration is to secure the universal postal service that so many of our communities and small businesses rely upon. In order to do this, the administrator and the Secretary of State must have the necessary tools and be able to use them swiftly and decisively to preserve the universal service. It is in this context that we must consider Amendments 25D, 25E and 26A.



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Amendments 25D and 25E seek to add additional elements to the objectives of the postal administration. Amendment 26A would restrict the Secretary of State's power to reduce the regulatory burden on the universal service provider while it was in special administration. Amendment 25D is intended to protect the interests of employees, while Amendment 25E seeks to ensure that the universal service provider is rescued as a going concern. I understand the intention behind the amendments but, as I have said, time will be of the essence in a special administration scenario. To act swiftly and decisively, we must be absolutely clear about the overriding objective, and in this case that must be the continued provision of the universal postal service. To add other objectives would reduce the administrator's ability to take the action needed to secure the universal postal service-which must be our overriding aim.

5.15 pm

Furthermore, I reassure the noble Lord, Lord Young, that there is no need for Amendment 25E. There is already a preference enshrined in the Bill for the postal administrator to seek to rescue the universal service provider as a going concern. Only in limited circumstances-for example, if a rescue is not possible-can the administrator take steps to transfer the undertaking to another company or companies. This is set out in Clause 67(5). I hope that the noble Lord finds that reassuring and ask him not to move Amendment 25E when we come to it.

On Amendment 26A, as I have said, the single most important objective of the special administration regime must be to secure the continued provision of the universal postal service. Being in a special administration scenario would mean that the universal service provider could no longer continue to fulfil their universal service obligations and the provision of the universal service-in any form-would be at real risk. In such a scenario, the Secretary of State must have the ability to take whatever action is necessary to secure the universal postal service. I remind the Committee that we think that this situation is very unlikely to arise.

Such action could include reviewing and changing the minimum requirements of the universal service. That is not a pleasant scenario to consider, nor one that we ever expect to be in. If we were, we might face the stark choice of changing the minimum requirements or losing the service altogether. That choice would not be for Government to make alone without constraint. Any proposed changes under Clause 80 would be subject to approval by affirmative resolution after being made. The minimum requirements would, of course, still have to comply with the requirements of the postal services directive. Given this explanation, I ask the noble Lord to consider withdrawing Amendment 25D and not moving Amendment 25E or Amendment 26A.

Amendment 26 relates to Clause 80(2), which allows the Secretary of State to modify Ofcom's universal postal service order in a special administration scenario. Noble Lords may recall from our discussions earlier today that this order is the more detailed specification of the products and services that the universal service provider must deliver. Amendment 26 introduces the

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negative procedure into this provision. It implements the second and final recommendation made by your Lordships' Delegated Powers and Regulatory Reform Committee and I believe it is wholly appropriate. I hope that all noble Lords will support it.

The final amendment in this group, Amendment 25F, seeks to introduce the negative procedure into Schedule 11(9). The Delegated Powers and Regulatory Reform Committee did not recommend this change but invited the House to consider whether it would be appropriate. I thank the noble Lord, Lord Young, for tabling his amendment and allowing us the opportunity to do just that. It may be helpful to set out the intention behind Schedule 11(9); it permits the transfer of statutory functions to a new company that is taking on all or part of the provision of the universal postal service in a special administration scenario. However, we expect that all significant statutory powers will automatically accrue to the new company when it becomes the universal service provider in accordance with Schedule 11(8). Schedule 11(9) is simply a mop-up provision to ensure that any obscure powers-for example, in local or private legislation-can be captured and transferred to the new company. This is, once again, simply prudent government at work. We do not expect to have to use the provision and, in the event that we did, it is highly unlikely that the powers in question would be significant. We do not feel that it is necessary or appropriate to have a separate parliamentary procedure attached to the provision. I hope that the noble Lord finds this explanation helpful and will consider withdrawing Amendment 25F.

Lord Stevenson of Balmacara: I thank the Minister very much for his comments. He came up to us at the end of day three of the Committee stage, with a more mournful expression than he sometimes has on his face, saying that we had cheated him of his moment of glory because we had withdrawn our amendment at quite short notice. It was the only amendment that he was down to speak to that day, and we took it away from him. Now here he is, irresistibly back in the Box, popping up all the time. So it does come back; it goes in rounds.

Quite a lot of what we have talked about today are what could be described as mop-up provisions and backstops-things that are very unlikely to occur. The Minister argued that, as a result, we did not really need to put them in the Bill, because they were so unlikely that it would be a waste of our time to spend our precious moments on them. In The Hitchhiker's Guide to the Galaxy, a book that I am sure all noble Lords have read, or listened to the programmes, there is a vehicle driven by a thing called the improbability drive, which has the result of making the space travellers turn up in the least likely situation that can be imagined at the time of their arriving. In a situation where they are being threatened by giants and attacked from all sides, they think of something completely unlikely and are immediately transported there. I simply say this because sometimes the impossible and the improbable does happen; we should not be deluded into thinking that it is so remote that we should not have provisions for it. That was what inspired us to put forward these proposals, some of which the Minister looked at sympathetically and some of which he did not.



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It is important to have contingency provisions, and we are not arguing against that, but if we are going to do that we should be consistent. I hope that on reflection the Minister might accept that there were one or two points in what we said that might be worthy of a little bit more consideration. The principle on which we have been working is that if the aim is continuity, the going-concern process would be the least disruptive. That is why our amendments are framed as they are. I do not think that anything the Minister said is against what we are trying to achieve. My sense is that the whole process of going into administration would be such a major issue that making sure that there was greater concern than currently expressed in the statute for going concern would be helpful. But we would not push that at this stage.

As we reach the end of our discussions here, I wanted to say that, particularly today but as mentioned on a number of occasions in Committee, we have been a little unkind about Postcomm. We had a quotation from the noble Viscount that expressed in its own terms what it felt about itself. Even so, I am sure that the people at Postcomm have done what they could with possibly difficult ammunition to achieve what Parliament wanted them to do, and no personal criticism should be implied by what we or anybody else has said. On the other hand, the Minister kindly pointed out what the framework was for the new regulatory structure and expressed various options and hopes for that, but he did not say that Ofcom would not be an unsympathetic regulator in the same way as Postcomm was. We should bear that in mind. Having said that, we register our support for government Amendment 26.

Viscount Eccles: I intended no criticism of the individuals in Postcomm. We need to remember that regulators have only a limited amount of independence. We are inclined to talk as though they had a rather larger amount of independence than they actually have. When I look at the 2000 Act and think about the policy intentions behind it and the interpretation of them, I am not entirely surprised that Postcomm got itself into what it admits is a very difficult position. In any evaluation of how the present situation comes about, we have to remember-and that is exactly why I intervened on Schedule 9-that the Government of the day are in the final analysis the accountable body and Parliament with it, and the regulator is trying to carry out their wishes as it interprets them, with a certain amount of independence, but only a certain amount.

Earl Attlee: My Lords, I must confess to never having read The Hitchhiker's Guide to the Galaxy, but I do have my own personal copy of the law of unintended consequences, which was passed many aeons go. I am happy to have further discussions with the noble Lord offline and we take on board his comments about Postcomm.

Lord Stevenson of Balmacara: I beg leave to withdraw the amendment.

Amendment 25D withdrawn.

Amendment 25E not moved.



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Clauses 67 to 71 agreed.

Schedule 10 agreed.

Schedule 11 : Postal transfer schemes

Amendment 25F not moved.

Schedule 11 agreed.

Clauses 72 to 79 agreed.

Clause 80 : Regulatory powers exercisable during postal administration

Amendment 26

Moved by Baroness Wilcox

26: Clause 80, page 49, line 20, at end insert-

"An order under this subsection is subject to negative resolution procedure."

Amendment 26 agreed.

Amendment 26A not moved.

Clause 80, as amended, agreed.

Schedule 12 : Minor and consequential amendments

Amendment 27

Moved by Lord Kennedy of Southwark

27: Schedule 12, page 129, line 6, at end insert-

"( ) A postal operator wishing to exercise the power to impose surcharges on or detain items where the postage is unpaid or underpaid shall take steps to identify items priced and posted over the counter at a post office or such other designated access point provider."

Lord Kennedy of Southwark: My Lords, my noble friend Lord Whitty is unable to be in your Lordships' House today and I have agreed to move this amendment on his behalf. The provisions in the Bill allow Royal Mail to detain postal packets and to impose a surcharge in respect of non-payment or underpayment. When the correct amount is not paid or no payment is made that is absolutely right-I have no problem with that whatever-but the Bill is too one-sided. This series of amendments seeks to redress the balance so that the consumer who, through no fault of their own, finds themselves in dispute with the Royal Mail about whether the correct price or any price has been paid has the basis of making a case to be considered.

Presently, the burden of proof rests entirely with the consumer. I am sure that all of us in this Committee would accept that mistakes happen. This amendment seeks to take account of that fact and that, on occasions, people have gone into Post Offices and paid the correct fee to send their packet through the system but the appropriate stamps have in error not been affixed. The packet goes on its merry way and the intended recipient

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at the other end has it delayed and can only get their hands on it on payment of a surcharge, even though the packet's delivery has been paid for. This is not fair and not right.

Noble Lords may ask, "Where is your evidence?". Well, I have it and I will happily give it to the Minister later. The evidence is a special delivery, signed-for packet to Consumer Focus from Royal Mail itself. Royal Mail forgot to put a stamp on the packet, then surcharged Consumer Focus for the pleasure of receiving papers from Royal Mail. The Government need to look carefully at this area. Maybe such a detailed provision does not need to be included in the Bill at all. If it is retained, there needs to be some protection for consumers from unjustifiably imposed surcharges. I beg to move.

Earl Attlee: My Lords, as we have discussed, for the universal service to be sustainable the provider must be able to cover its costs. The nature of our postal network means that it is possible for users, inadvertently or otherwise, to put items into the system without the correct postage. In such situations, to prevent the system from unravelling, it is vital that postal operators can recover the postage that should have been paid. Paragraph 35 of Schedule 12 to the Bill gives postal operators the right to detain items with insufficient postage until the correct amount has been paid and allows them to impose a surcharge. Importantly, Ofcom may limit the amount of the surcharge and the length of the detention period. Once the correct postage and any surcharge have been paid, the operator may no longer detain the item.

Amendments 28 and 29 in the name of the noble Lord, Lord Whitty, and ably-and, I have to say, wickedly-moved by the noble Lord, Lord Kennedy, with his knock-out argument, seek to prevent detention or surcharging if the item was priced and posted at a post office or other such designated access point provider. Amendment 27 would require postal operators wishing to detain or apply surcharges to underpaid items to take steps to identify items priced and posted at a post office or other such designated access point provider.

While I fully understand where the noble Lords are coming from, I do not think that legislation is the solution to this problem. I understand from Royal

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Mail that if a customer complains that they were surcharged for an item that was posted at a post office, the surcharge is automatically refunded.

In addition, I understand that this is a relatively small problem. Between October and December 2010, Post Office Ltd had around 300 complaints about surcharging of underpaid mail posted at a branch. In a typical quarter, however, the Post Office will conduct over 100 million label or stamp transactions. Complaints about surcharging to Royal Mail amount to 1 per cent of the total complaints received.

Given that there are effective systems in place to deal with these matters, I fear that imposing the regulatory burdens proposed by these amendments would be disproportionate to the scale of problem. I hope that the noble Lord will reflect and feel able to withdraw the amendment.

Lord Kennedy of Southwark: My Lords, I thank the Minister for his response. These issues need looking at. I am happy at this stage to withdraw the amendment but my noble friend Lord Whitty may bring this back on Report. I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

Amendments 28 to 30 not moved.

Amendment 31

Moved by Baroness Wilcox

31: Schedule 12, page 149, line 30, leave out paragraph 174

Amendment 31 agreed.

Schedule 12, as amended, agreed.

Clauses 90 and 91 agreed.

House resumed.

Bill reported with amendments.

House adjourned at 5.33 pm.


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