Draft Postal Services Act 2000 (Determination of Turnover for Penalties) and (Consequential Modifications No. 1) Order 2001

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Mr. David Heath (Somerton and Frome): It is a pleasure to serve, for the first time, under your chairmanship, Mr. Wells.

I want to make a few points on both documents, dealing first with the penalties order, which raises some concerns. I did not have the privilege of serving in Committee on the Postal Services Bill, so I cannot pretend to the same expertise as the hon. Member for South-West Hertfordshire (Mr. Page) in the details of that legislation. However, my principal concern has always been to ensure the maintenance of the Post Office as a universal provider, especially for those parts of the country where it is not a profitable enterprise to provide the service at a fixed rate. All the proposals for the privatisation or part-privatisation of the Post Office or the introduction of competition by other means should ensure that, at the end of the day, the Post Office continues to deliver and collect post from every corner of the United Kingdom at a reasonable and fair cost.

I understood that article 3 of the penalties order dealt with the means of calculation of annual turnover, so my point is slightly at variance with that of the hon. Member for South-West Hertfordshire. I am worried about the arbitrary step formula that is introduced in article 2.

Will the Minister answer one nit-picking question? I am sure that he can reassure me that everything is in order, and that the legislation has been drafted in the normal way. However, article 2(2) identifies a period

    ``greater than 1 year but less than 2 years''

while paragraph (3) deals with

    ``a period greater than 2 years''.

That begs the question whether the penalty would revert to being on the annual turnover alone if an operator were smart enough to be in breach of its licence for precisely two years, as the period of precisely two years is not mentioned in either paragraph (2) or (3). Legal ruling may exist elsewhere that means that there is in fact no lacuna, but I would be grateful for clarification.

The figure of 10 per cent. seems arbitrary. I assume that the Minister will confirm that it is specified in the Postal Services Act. That being so, the penalty is already draconian, as the hon. Member for South-West Hertfordshire said. In fact, it is even more draconian than has been suggested, because if the infraction were over a period of one year and a day, the penalty could amount to 20 per cent. of annual turnover under the regulation. It may be said that the regulatory body would not do that, but it is nevertheless open to it to impose that penalty. It is a matter of concern that the longer the infraction is in place, the greater the penalty. The continuance of the infraction could be not the licence holder's fault but the result of the regulator's having failed to identify it. It is wrong that if somebody carries out a service and infringes regulation in good faith—not being aware of the infringement—that person should be penalised by the tardy action of the regulator.

My main quarrel with the consequential modifications order is not that it imposes an enormous amount of regulation but that such provision should have been in the schedules of the original Act. Repeals and amendments are not proper matters for consequential legislation. I can only assume that the original Act was introduced in such haste that the homework was not done to find out where those consequential amendments should have been. That is not the best way of performing the duties of government.

The Minister did not refer to article 2 of the order, which deals with references to second-class post. Which other enactments specifically refer to second-class post, and which might do so in the future? I understand that second-class post might need a legal definition in the context of a postal services Act. I can conceive of no other primary legislation in which the term would or should have any legal significance. I would be concerned if there were any requirement for a member of the public to use a particular class of post to comply with a particular enactment made by the House. I would be grateful for an explanation of the thinking behind the references in article 2.

On the longer schedule of consequential changes, I accept that statute must be brought into compliance with new legislation, and that terms need to be changed. However, we have a duty to consider whether those changes make sense, and whether they improve the clarity of legislation. Article 57 deals with the Representation of the People Act 1983, which is dear to the heart of all hon. Members. It includes a perfectly workable reference to

    ``the postmaster or deputy postmaster''.

Under the regulations, the Act will be amended to replace those words with

    ``the official designated by a universal postal service provider or the deputy of that official''.

That does not have the same clarity, and it certainly does not have the same brevity. We understand the duties of a postmaster in whatever organisation provides the universal service. Why is it necessary to change a term that is understood in British law—``postmaster''—and could easily be defined as

    ``the official designated by a universal postal service provider or the deputy of that official''

instead of replacing it in every piece of legislation in which it appears. Why do parliamentary draftsmen insist on that? Is it not otiose, and should we not therefore resist it?

There are concerns about the penalties order, as the hon. Member for South-West Hertfordshire said. We have no choice but to accept the consequential modifications order, because it is necessary to make other statutes work. However, that does not mean that I welcome it or the fact that it has been presented to us as secondary rather than primary legislation, or that I believe that every change that it makes is necessarily good. The Minister, however, may be able to persuade me.

4.54 pm

Mr. Johnson: I hope that I shall be able to persuade the hon. Gentleman. I agree with the hon. Member for South-West Hertfordshire that, by and large, the official Opposition and the Liberal Democrats were extremely constructive in Committee. We had a difficult and long Bill to consider, and we engendered in Committee a genuine spirit of listening to one another. Conservative Members tabled several amendments that we introduced at the appropriate stage, in recognition of the powerful arguments that they advanced.

However, I remind the hon. Member for South-West Hertfordshire that he did not make a good start on the Bill. I welcome his comments on the Bill, but at an early stage of its consideration, he said:

    ``this is a sad and miserable little Bill. It is badly drafted, as has already been admitted, and will be subject to thousands of amendments.''

An interruption followed—hearty laughter from the Government Benches—after which he continued:

    ``Hon. Members may think I am joking, but I am prepared to bet that we get into four figures before the Committee stage is out.''—[Official Report, 15 February 2000; Vol. 344, c. 845.]

He will accept graciously, as always, that the number of amendments that we tabled was 331. We did not get anywhere near four figures, and I just wish that I had bet him, as I was invited to do at the time.

Mr. Page rose—

Mr. Johnson: Before I give way, perhaps I can predict what is coming. Even if we included all the amendments before us today, under the two orders, we would be nowhere near 1,000—the four figures that the hon. Gentleman predicted.

I have intimate knowledge of article 27, which deals with drainage, to which the hon. Gentleman referred. His point is covered in article 27(3), which makes it clear that paragraph (4), at the appropriate place, states:

    ```universal service provider' has the same meaning as in the Postal Services Act 2000; and references to the provision of a universal postal service shall be construed in accordance with that Act''.

The article to which he refers mentions the term ``universal service provider'', which has exactly the same meaning as in the Postal Services Act 2000.

The hon. Gentleman asked whether the provisions on consequential amendments will affect the licence. They will not. On the penalties order, Postcomm already requires anyone who operates in the licensed area to provide regulatory accounts for that part of his business. We are trying to ensure that no new work is created for companies operating in the licensed area, or for Postcomm. The order relates to information that Postcomm already has the right to access.

The hon. Gentleman asked a valid question about the turnover to which the order refers. In his example, we would consider the first year's turnover, even if a second year had started. As a result of the consultation—we published the consultation document on 19 December—the suggestion was made that it would be confusing if part of the year were considered. We have therefore done away with parts of years. If a second year is involved, the penalty relates to two years. The maximum penalty is three years, which relates to a point made by the hon. Member for Somerton and Frome (Mr. Heath), to which I shall respond in a moment. In such circumstances, the first year's turnover would be considered. If a penalty has to be administered before a complete financial year has passed, we would take the period thus far that the licensed operator has been in operation and annualise that. That is a fair and sensible method of arranging such matters.

The hon. Member for South-West Hertfordshire described the 10 per cent. penalty as draconian. That figure is in the Act. We are not changing that legislation, but defining the period of turnover that would be used for such purposes. In fact, it was argued in another place that if we did not introduce a cap for this Act and the Utilities Act 2000, the regulator could be draconian and invent a figure. The relevant amendment was accepted on the basis that the maximum penalty would be 10 per cent. I stress that it is a maximum, and Postcomm will be entitled to set the penalty within those boundaries. Unless I have missed something, I think that I have covered the main points made by the hon. Gentleman.

The hon. Member for Somerton and Frome referred to universal service and uniform tariff. That is a crucial part of the Act. It is described as the Rowland Hill principle and has existed since 1840. Other countries have copied it, but it was not a statutory requirement on the Post Office or any other organisation until we placed such a provision in the Act. Unlike other regulators, it is the regulator's primary objective under the Act to protect the universal service at the uniform tariff.

The hon. Gentleman asked what would happen if it were no fault of the licensed operator that an offence had not been picked up until year two or three. That is a valid point for licensed operators to make when appealing to Postcomm about why they should not be subjected to the maximum fine or any fine at all. Section 36 of the Act provides that a licensee may appeal to the High Court, or in Scotland to the Court of Session, but a balance must be struck between the proper operational ability of those in the licensed area and the need for there to be genuine teeth to Postcomm's regulatory powers.

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