Session 2010-11
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Postal Services Bill

Postal Services Bill


The Committee consisted of the following Members:

Chairs: Mr David Amess  , Miss Anne Begg  , † Mr Jim Hood 

Banks, Gordon (Ochil and South Perthshire) (Lab) 

Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab) 

Collins, Damian (Folkestone and Hythe) (Con) 

Davey, Mr Edward (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

Fuller, Richard (Bedford) (Con) 

Griffith, Nia (Llanelli) (Lab) 

Harris, Rebecca (Castle Point) (Con) 

McClymont, Gregg (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab) 

Morrice, Graeme (Livingston) (Lab) 

Newmark, Mr Brooks (Lord Commissioner of Her Majesty's Treasury)  

Patel, Priti (Witham) (Con) 

Stephenson, Andrew (Pendle) (Con) 

Swinson, Jo (East Dunbartonshire) (LD) 

Turner, Karl (Kingston upon Hull East) (Lab) 

Vaizey, Mr Edward (Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport)  

Walker, Mr Robin (Worcester) (Con) 

Weir, Mr Mike (Angus) (SNP) 

Wright, David (Telford) (Lab) 

Chris Stanton, Annette Toft, Committee Clerks

† attended the Committee

Column number: 683 

Public Bill Committee 

Thursday 9 December 2010  

(Afternoon)  

[Mr Jim Hood in the Chair] 

Postal Services Bill

Written evidence to be reported to the House 

PS 22 COSLA 

Clause 49 

Consumer protection conditions 

Amendment proposed (this day): 122, in clause 49, page 30, leave out lines 34 and 35 and insert 

‘every operator appropriate to the postal service each provides’.—(Nia Griffith.)

1 pm 

Question again proposed, That the amendment be made. 

Nia Griffith (Llanelli) (Lab):  Having heard what the Minister has to say, I want to press the amendment to a vote. 

Question put , That the amendment be made. 

The Committee divided : Ayes 8, Noes 8. 

Division No. 37 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Vaizey, Mr Edward   

Walker, Mr Robin   

The Chair:  The Chair casts his vote with the Noes to keep the Bill in its present form. 

Question accordingly negatived.  

Clause 49 ordered to stand part of the Bill.  

Clause 50 

Provision that may be made by consumer protection conditions 

Amendment proposed: 65, in clause 50, page 31, line 35, leave out ‘may’ and insert ‘must’.—(Nia Griffith.)  

Question put, That the amendment be made. 

The Committee divided : Ayes 8, Noes 9. 

Column number: 684 

Division No. 38 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Amendment proposed: 66, in clause 50, page 31, line 45, leave out ‘may’ and insert ‘must’.—(Nia Griffith.)  

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 39 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Clause 50 ordered to stand part of the Bill.  

Schedule 5 agreed to.  

Clause 51 ordered to stand part of the Bill.  

Schedule 6 

Imposition, modification or revocation of regulatory conditions 

Question proposed, That the schedule be the Sixth schedule to the Bill. 

Gordon Banks (Ochil and South Perthshire) (Lab):  I will not detain the Committee long. Schedule 6(3) relates to the conditions that Ofcom must comply with before imposing, modifying or revoking a regulatory condition. Paragraph (3)(3)(d) mentions 

“the period within which representations may be made to OFCOM about their proposal.” 

Therefore, I am interested to know whether the Minister has any idea how long an acceptable period would be; bearing in mind that the Bill states that the minimum period must be at least a month. Does he see that period as being the norm, not just the minimum? 

On another issue, do the representations received by Ofcom to revoke a regulatory condition have to be subject to any other consideration over and above those

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given when imposing a regulatory condition? Under paragraph 5, Ofcom must provide to the Secretary of State 

“a copy of every notification published under paragraph 3 or 4”. 

What duties lie with the Secretary of State in respect of those notifications once he has received them from Ofcom? [ Interruption. ]  

The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey):  I am waiting for the applause to die down. 

The Chair:  Order. The noise has now died down. 

Mr Vaizey:  Schedule 6, about which the hon. Member for Ochil and South Perthshire has asked me a number of questions, is a great opportunity for me to make my official debut in the Committee. I have waited for 17 or 18—or is it 19?—sessions to get on my feet and speak about this important Bill. The applause and cheers that greeted my rising were suitable, given the weight of the Bill. I am particularly pleased that thousands of people have turned out in the streets this afternoon to mark the occasion, although my colleagues and friends in the police force do not necessarily need to keep my supporters under such scrutiny. 

Before addressing the hon. Gentleman’s specific questions, may I use this opportunity to talk about the important point behind schedule 6? Its objective is to ensure that there is a clear framework under which Ofcom must operate when imposing regulatory conditions on the sector. Taking one step back, now that we have moved into a new and perhaps more entertaining phase of the Bill, it is important to talk about part 3 in general. It is worth pausing to reflect on what we have covered so far and what we are moving on to. We have spent some interesting hours debating Ofcom’s duties and powers and what it would be able to do under the Bill. The next clauses and schedules that we will be debating are about how Ofcom goes about implementing its duties and powers; how it must go about its work; how regulated parties can appeal against Ofcom’s decisions; and how we will move from the current regime to the new one, which is known as the transition period. 

There are also some important provisions relating to postage stamps bearing the image of Her Majesty. When we reach clause 60 I will speak to those, although no amendment has been tabled. [ Interruption. ] I am grateful for the indication from the hon. Member for Llanelli that she will speak to that clause, because it is important. It would be wrong to allow that clause about Her Majesty to pass without comment. 

David Wright (Telford) (Lab):  May I tell the Minister on that note that flattery will get him nowhere? 

Mr Vaizey:  There is a certain end-of-term feel to this afternoon’s proceedings. 

Clauses 51 to 53 introduce schedule 6, about which I am about to speak, and schedules 7 and 8. Those set out the nuts and bolts of the regime: how Ofcom will impose regulation; how it will enforce its decisions; and how it will obtain the evidence on which the regime will be based. As we have discussed, the regime will be

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evidence-based. We have also provided an effective route of appeal for those who need to challenge Ofcom’s decision and we have ensured that the Secretary of State can provide guidance to Ofcom, if needed, on social and environmental matters. I know that the Opposition have tabled amendments on that provision. 

Clauses 62 and 64 pave the way for the transfer of regulation to Ofcom through the abolition of Postcomm and the detail of the transitional provisions in schedule 9. We want a smooth and rapid transition to the new regime so that the market receives much-needed certainty as quickly as possible. 

I hope that you will indulge me, Mr Hood, if I use the questions that I have been asked about schedule 6 as an opportunity to speak generally about part 3 of the Bill. Clause 65 requires the Secretary of State to review the regulatory provisions that we are discussing after they have been in place for five years. I know that an amendment has been tabled on that issue. The review is a key feature of the Government’s drive to reduce regulation. What is essential today to protect the universal postal service may not be essential in five years’ time. We do not believe that regulation should be made for the sake of it, nor do we believe that it should be set in stone. That theme has run through our debates. 

I now turn to the questions that the hon. Member for Ochil and South Perthshire has asked about schedule 6. The objective of the schedule is to ensure that there is a clear framework under which Ofcom must operate when imposing regulatory conditions on the postal sector, so that everyone affected by the regulatory regime knows the rules and how they will be applied. The schedule is modelled on similar provisions in the telecoms sector, which is the sector in which Ofcom currently works. The schedule fulfils the requirements of the EU postal directive, which sets limits on regulation. The schedule sets defined limits on the regulatory action that is available to Ofcom. Ofcom may only impose or modify a regulatory condition if it is satisfied that the condition or modification is objectively justifiable, does not discriminate unduly against particular persons, and is proportionate and transparent. Those tests must be met before Ofcom can act. 

1.15 pm 

Paragraph 2 sets out Ofcom’s powers that may be contained in regulatory conditions. This is the nuts and bolts of how Ofcom will do its job. It includes 

“the power to impose a requirement to comply with directions”. 

For example, Ofcom may direct an operator to amend its prices to ensure compliance with the condition on affordability. It gives the power to impose an obligation with respect to a consent, an approval or a recommendation. It also gives the power to confer a discretion, as well as to impose different conditions for different cases and to revoke or modify the condition. However, Ofcom may not use those powers to stop or restrict a person’s entitlement to provide postal services. It can only do that if there has been serious and repeated contravention of regulatory requirements, so that power is dealt with separately in schedule 7. 

Transparency is important in the new regime, especially because regulation is done without licences. Paragraph 3 therefore sets out the notification procedure for imposing, modifying or revoking a regulatory condition. Ofcom

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must publish a notification setting out its intention, the effect of the change and its reasons for making the proposal. It must then give at least a month for anyone to make representations. The hon. Member for Ochil and South Perthshire asked how long would be an acceptable period to make representations. It would usually be between one and three months, but he can come back to me if he does not find that answer satisfactory. Ofcom has to say what it plans to do and why, and let those affected have their say. Ofcom must then consider every representation on the proposal and have regard to every international obligation notified to it by the Secretary of State before it can take action. 

Paragraph 4 provides that directions, approvals or consents given by Ofcom or other persons for the purposes of regulatory conditions are subject to similar provisions, which mirror similar provisions in the telecoms regime. 

Ofcom is a creature of statute. It is accountable to the Secretary of State and to Parliament, so paragraph 5 ensures that the Secretary of State and the European Commission will be provided with copies of the appropriate notifications, directions, approvals, consents, modifications and withdrawals. That will enable the Secretary of State to have oversight of Ofcom’s decisions, and for the European Commission to be satisfied that the directive’s objectives are met. The hon. Gentleman asked whether there would be any exceptional circumstances. Urgent action might be needed on occasion to protect the universal service obligation, or possibly for reasons of national security. 

Gordon Banks:  I do not remember using the words “exceptional circumstances,” but I did ask what duties will lie with the Secretary of State once he receives notifications from Ofcom. What will he do with them? Will they just gather dust in a bookcase or will he do something with them? They do not come back to Parliament. 

Mr Vaizey:  I am grateful for that detailed questioning from the hon. Member from Ochil and South— 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey):  Perthshire. 

Mr Vaizey:  It is interesting whose hand is being held in Committee. I have been going round describing myself as the political commissar appointed to the Bill to keep an eye on my Liberal Democrat colleague to make sure that he keeps the faith but, clearly, the monitored Minister is keeping an eye on me. I had anticipated that occasionally he might whisper in my ear to help me with some of the more technical aspects, given the formidable team that I face but although I have only been in the House for a mere five years, even I know the constituency that the hon. Member for Ochil and South Perthshire represents so ably. 

Given the notification to the Secretary of State, which is part of the argument about Ofcom being a creature of statute and thus accountable to Parliament and to the Secretary of State, there are no specific duties in relation to that notification. However, if the Secretary of State is notified, he will take an interest in what Ofcom is doing just as Members will take an interest and, being experienced, they can raise issues of concern in respect of any action undertaken by Ofcom. The key principle is that Ofcom notifies the Secretary of State. 

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Gordon Banks:  As the Minister has mentioned, the notifications must go the Secretary of State and the EU. They do not go to Parliament, so how can we raise issues if the Secretary of State does not make them available to Parliament? 

Mr Vaizey:  The fact that the notifications are made available to the Secretary of State and the European Commission keeps to the principle that Ofcom is accountable. Ofcom already makes notifications about how it regulates the telecoms sector. They are obviously public, and it is open to hon. Members to raise such issues in Parliament just as they raise other matters. 

Question put and agreed to.  

Schedule 6 accordingly agreed to.  

Clause 52 ordered to stand part of the Bill.  

Schedule 7 agreed to.  

Clause 53 ordered to stand part of the Bill.  

Schedule 8 agreed to.  

Clauses 54 to 56 ordered to stand part of the Bill.  

Clause 57 

Price control decisions 

Question proposed, That the clause stand part of the Bill. 

Gordon Banks:  I will keep the Committee for an even shorter time than I did earlier. I draw attention to subsection (3) and the phrase 

“as soon as reasonably practicable”. 

As there is similar usage of words throughout the Bill, will the Minister expand on his expectations of what he considers reasonably practicable, and say how someone would determine whether the period that Ofcom used to refer an appeal was indeed practicable? Who makes the decision to hold Ofcom to account? 

Mr Vaizey:  I am grateful for the chance to comment on clause 57. When speaking to the previous clause, I drew attention to the relationship between myself and the Minister with responsibility for postal services. It is worth making the point now that I have been talking on clauses for about 18 minutes, and already the Committee has accepted seven clauses and four schedules. It is interesting to note that in 100 hours of debate, my colleague, the Minister with responsibility for postal services, only managed to pass 49 clauses, an average of two hours a clause. I am currently running at an average of two minutes a clause. 

Mr Davey:  Is my hon. Friend launching a bid for Report stage? [ Laughter. ]  

Mr Vaizey:  The clause and the supplementary provisions in clause 58 are the final plank of the appeals mechanism created by the Bill, which ensures that those affected by Ofcom’s decisions have a proper route of appeal. The clause enables those affected by a price control decision to appeal against it to the Competition Commission, if they consider that Ofcom has made an error, or errors, in coming to the decision. It allows the Competition Commission to investigate any matter, or do anything

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else, to help it come to a decision on whether to dismiss an appeal. If it decides that Ofcom has made a material error in the decision, the Competition Commission can make its own decision on the subject matter, or refer the matter back to Ofcom for it to reconsider and make a new decision in accordance with its ruling. 

Importantly, the clause sets out the time frame in which price control appeals must be lodged and heard. Notice of appeal must be sent to Ofcom within two months of publication of the price control decision it relates to. Ofcom must refer it to the Competition Commission 

“as soon as reasonably practicable”. 

The hon. Member for Ochil and South Perthshire asked whether I could elaborate on that definition. It is in Ofcom’s interest to refer any appeal under the clause as quickly as possible. Ofcom is subject to the supervision of the courts, so any action that it took—if it was seen by the relevant parties as somehow dithering unduly—would be subject to judicial review. That definition means that it can be supervised in that way, but I would hesitate to go too far off piste. I venture that 

“as soon as reasonably practicable” 

means exactly what it says on the tin. 

The Competition Commission must also determine the appeal within four months of receiving it, or within six months in exceptional circumstances. That ensures that appeals are resolved as swiftly as is reasonably practicable. We have made special provision for Ofcom’s initial price control decision, to ensure that that decision in particular is protected from any prolonged appeal. We have done that because it is vital that the transition to the new regulatory regime is as speedy and smooth as possible. In the case that an appeal is lodged against the first price control decision, it is right that the standard four months allowed under the Bill should apply, rather than the six months allowed under exceptional circumstances. As with decisions that are appealed to the Competition Appeal Tribunal, the decision stands pending the outcome of the appeal. Once the decision has been made, Ofcom must give effect to it as soon as is reasonably practicable—I have already covered the definition of that. 

Should anyone want to challenge the Competition Commission’s decision, they can, with permission, make an appeal to the CAT, under the provision set out in clause 55, which we passed without discussion. Price control decisions are defined in clause 57 as 

“a decision of OFCOM as to the tariffs”, 

that may be contained in a designated universal service provider condition, which could, for example, set the maximum price for stamps. A price control decision is also 

“a decision of OFCOM…as to prices that may be charged for the giving of access under an access condition”. 

The definition does not include decisions on access prices that have been reached as a result of the dispute resolution procedures set out in paragraph 2 of schedule 3. This clause is virtually identical to the one proposed in the previous Government’s 2009 Bill. It provides an effective route of appeal to the Competition Commission against Ofcom price control decisions. 

Question put and agreed to.  

Clause 57 accordingly ordered to stand part of the Bill.  

Clause 58 ordered to stand part of the Bill.  

Column number: 690 

Clause 59 

Duties in relation to social and environmental matters 

1.30 pm 

Gordon Banks:  I beg to move amendment 123, in clause 59, page 36, line 26, leave out ‘may’ and insert ‘must’. 

At this point I might slow down the Minister’s batting average a bit, after the past half hour, and give back some credibility to his partner in crime—not a lot, but some. 

We keep returning to the topic of “may” and “must”. The amendment is simple; it would strengthen the opportunities to use the regulation of the industry for the provision of related social and environmental goals. Changing “may” to “must” would guarantee that the Government and the negotiator address the opportunities that exist for the postal industry to support such generally accepted aims as promoting community cohesion and reduction of the industry’s carbon footprint. 

To date, the Committee has been generally reluctant—in votes, if not in debate—to provide either the Secretary of State or Ofcom with extra powers in the Bill, so I realise that my specific amendment might be contradicting our general stance. However, the amendment leaves intact the obligation under subsection (3), whereby the Secretary of State has to undertake a consultative process before any guidance is given. We are satisfied that that removes the chances of the Secretary of State’s guidance being in any manner arbitrary, but we cannot accept, in 2010, with everything we know, that the contribution of the postal industry to broader social and environmental matters can be in any sense optional. Opportunities must be utilised and the amendment gives effect to that imperative. 

With that, I close my remarks, and I will listen to the Minister’s response, before we decide where to go. 

Mr Vaizey:  I am most grateful to the hon. Gentleman. He will have noticed that the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton, has now left the room. Clearly, my remarks at the beginning of the debate on the last clause hit home. 

Graeme Morrice (Livingston) (Lab):  Is the Minister suggesting that two Lib Dem MPs equal one Conservative? 

Mr Vaizey:  Not at all, but I know that some hon. Members are more sensitive than others, and perhaps I should have been more careful about the feelings of the Under-Secretary of State for Business, Innovation and Skills. My point about how slowly he has taken the Bill through Committee was meant in jest and not in any way meant to question his abilities. The whole Committee has been impressed, if not overwhelmed, by his grasp of the Bill. It is almost a Bill that he was born to take through Committee: he spent his early life as a management consultant working in postal services, and his knowledge of postal service regimes from Argentina to Russia and beyond surpasses even that of his own officials. Why he should decide to leave the room on the basis of my badinage about the pace of the Committee is beyond me. Anyway, we must not dwell on the issue, but instead

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turn to the clause. [ Interruption. ] I hope that the Whip, my hon. Friend the Member for Braintree has not left the room to sneak to the Under-Secretary of State for Business, Innovation and Skills. 

The clause enables the Secretary of State to secure that Ofcom carries out its functions in relation to postal services in a way that is consistent—the Under-Secretary of State for Business, Innovation and Skills has returned—with wider social and environmental policy. Amendment 123 seeks to substitute “may” with “must”, thus forcing the Secretary of State to issue such guidance from time to time. 

The amendment is one in a long list of such amendments that aim to strengthen—from the point of view of the hon. Member for Ochil and South Perthshire and his Opposition colleagues—consumer protection and the regulatory regime. From the Government’s perspective, the amendment merely serves to force an action without due consideration for whether that action has to be taken. The Government, and indeed the previous Government when they introduced the 2009 Bill, recognise the need for the provision of this power—the need for guidance on social and environmental policy—but then and now the view remains that it should be used only if there is a clear need for that power to be used, and that is why we would like to maintain the use of the word “may” rather than “must” in the provision. It is obviously the case—members of the Committee may want to draw attention to this point—that there is a similar provision in section 43 of the Postal Services Act 2000. It is no longer a duty but it is a discretionary power under the Bill. 

By way of background, the previous Government issued guidance to Postcomm under such a provision—section 43—back in March 2001, but no further guidance was thereafter issued. The guidance was issued to Postcomm because it was a new regulator that had just been set up under the Postal Services Act 2000. Having been established under that Act, Postcomm was in its early days and was exercising its functions at the start of a new licensing regime. In such circumstances, it was probably only right that the Government issued guidance on wider policy. 

It should be noted that Ofcom is a well-established regulator. It was established by the previous Government and is now regarded around the world as one of the finest regulators in its field. I know from my own experience of working with Ofcom as the Minister with responsibility for communications that its understanding of wider social and environmental issues is well established. I would go even further and say that it is hard-wired into its operations. In my submission to the hon. Member for Ochil and South Perthshire, circumstances now are quite different. 

We need to recognise that many of the policy issues that may be covered in such guidance are now a more fully normal part of policy making than they were at the time of the Postal Services Act 2000. Indeed, that may be another tribute to some of the work of the previous Government. The power to make guidance in more exceptional circumstances is still necessary, but a duty to do so is no longer considered necessary or appropriate in an environment where we all want to reduce the burden of regulation. 

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Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab):  I am fascinated by what the Minister is saying. Will he comment on remarks that his boss made about Ofcom to the Guardian on 14 June? The Secretary of State for Culture, Olympics, Media and Sport said: 

“A big area I want to repatriate to government is policy making…If people are working hard to deliver the government’s agenda, as Ed [Richards]” 

of Ofcom 

“is, then I'm happy to work with them. Does that mean there aren’t things at Ofcom that need to be changed? Of course not and I’ll communicate that to Ed.” 

Does that not suggest that the notion that Ofcom is an institution that the Government are entirely happy with is at odds with that statement? 

The Chair:  Order. That intervention is too long. 

Mr Vaizey:  I am grateful to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East for his intervention. I am grateful for a number of reasons. First, I have sat and admired the speeches and interventions of the hon. Gentleman. I understand he is a former Oxford don. I think he taught at Worcester college, Oxford. 

Gregg McClymont:  It was not Worcester college. 

Mr Vaizey:  I gather it was St Hugh’s college. 

Gregg McClymont  indicated assent.  

Mr Vaizey:  During the hon. Gentleman’s interventions and speeches, I kept thinking that our gain in Parliament was clearly a substantial loss to Oxford university, where I believe he taught politics. [ Interruption. ] History. 

Gregg McClymont:  I hope the Minister has a better grasp of detail. 

Mr Vaizey:  I am afraid not. I was an Oxford historian, so that is part of the problem. The hon. Gentleman has been silent for the past few sittings, having hit the ground running in the first few sittings. I am glad that he is now back up and running, because we value his contributions, including his passionate defence of post office services on Second Reading and in other debates on the Bill. I heard him refer sotto voce to my right hon. Friend the Secretary of State for Culture, Olympics, Media and Sport— 

The Chair:  Order. Will the Minister get back to the amendment? 

Mr Vaizey:  Yes. To deal briefly with the intervention about the powers of Ofcom, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East should be in no doubt that the Government are a great admirer of Ofcom. Perhaps, outside the Committee, we can discuss the difference between its policy-making and regulatory roles. 

The debate on the amendment relates to Ofcom’s role as a regulator, which is what it is. At the same time, we want Ofcom to be lightly regulated, in the sense of not

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imposing too many inflexible duties on it, but instead giving it an element of flexibility, which is certainly our direction of travel on Ofcom’s powers as a telecoms regulator. It is right and proper that we have kept faith with that direction of travel in the Bill and have allowed Ofcom a degree of flexibility about when and where it should appropriately exercise the powers it will be given by the Bill. It is given such powers because it is a creature of statute, being accountable to the Secretary of State and to Parliament. 

We fully recognise that there may be circumstances in which the Secretary of State considers there is a need to issue guidance, and that is why the Bill allows that, but the amendment adds no substance or value to the Bill. Those are harsh words, and I am tempted to say that they are not mine. The use of any power by Government should be based on a practical need to satisfy a real purpose; it should not have to be used just for the sake of issuing paperwork. On that basis, I hope that the hon. Member for Ochil and South Perthshire will accept that the clause as it stands is fit for purpose and that he will withdraw his amendment. 

Karl Turner (Kingston upon Hull East) (Lab):  I am grateful to the Minister for those words, but although they were very entertaining, I am not convinced. Amendment 123 would make only a slight adjustment to clause 59, but it would significantly strengthen opportunities to use the regulation of the industry for the provision of related social and environmental goals. Replacing “may” with “must” would oblige Ofcom to regulate in a manner that will contribute towards attaining the social or environmental policies laid out in the guidance from the Secretary of State. 

The amendment would guarantee that the Government and companies with an interest in buying Royal Mail address opportunities for the postal industry to advance such generally accepted aims as promoting community cohesion or reducing the industry’s carbon footprint. It would not remove the obligation laid out in subsection (3) directing the Secretary of State to undertake a consultative process before any guidance is given. That would helpfully prevent the guidance from being arbitrary in any way, as my hon. Friend the Member for Ochil and South Perthshire has accurately pointed out. The amendment is not unreasonable. The passage of the Bill must not result in the contribution that the postal industry makes to broader social and environmental matters becoming optional. 

I understand that Royal Mail is currently having great success in pursuing social and environmental goals, which must be welcomed. The most recent Royal Mail corporate social responsibility report outlined some of those successes and I want to put them on record: it achieved the target for 50% of electricity to come from renewable sources; it raised £1.8 million in charitable donations in the past year; and 43,000 of its employees regularly donate to good causes through the payroll system. Royal Mail currently works in partnership with organisations that can make a difference at local level. In recent years strategic partnerships have been built with Barnardo’s and Children in Need, and it is engaged with businesses in the community. Its report states: 

“We want to redefine volunteering to mean more than just ‘done in a day’ projects”. 

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Given that volunteering is such a central plank of coalition policy, I see no reason why Government Members should not support the obligation detailed in the amendment. In my view, it goes to show that the big society has always existed. 

1.45 pm 

Royal Mail has also made significant progress towards its environmental goals, and its achievements are laudable. Absolute greenhouse gas emissions have been reduced by 12% since 2004-05, transport-related gases have fallen by 9.8% and building-related greenhouse gases have fallen by 16.3%. 

Many companies operating in the private sector have corporate social responsibility standards and aims. That is not just a choice for large corporations such as BT, but an integral part of business strategy. As the concept is already an accepted principle in the market, I see no objection to including an obligation in the Bill for the Secretary of State, in conjunction with Ofcom, to ensure that a privatised Royal Mail continues to contribute to achieving social and environmental goals. 

The amendment is about how we view the relationship between corporate companies and social and environmental concerns. Should they be obliged to act as a responsible corporate citizen, or if they see fit, should they feel free to choose not to do so? The contrast is stark, and I know where I stand on the matter. 

In an age in which policy is geared towards supporting a big society, such an amendment should receive support from all Government Members. Striving for social responsibility within a free market should be a priority, not a secondary option. For those reasons, I respectfully urge the Minister and Government Members to embrace the amendment. 

Gordon Banks:  This is what we have missed over the past four weeks. I may not be impressed with the Minister’s powers of research, but I am impressed with two words used by my hon. Friend the Member for Kingston upon Hull East, “slight” and “significant”—slight burden and significant opportunity. On those words I would like to press the amendment to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 8. 

Division No. 40 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

The Chair:  In accordance with the practice of the House, I cast my vote with the Noes in order to preserve the Bill in its existing form. 

Question accordingly negatived.  

Clause 59 ordered to stand part of the Bill.  

Column number: 695 

Clause 60 

UK postage stamps bearing image of Her Majesty 

Question proposed, That the clause stand part of the Bill. 

Nia Griffith:  I shall be as brief as possible. I am sure that the Minister will enjoy responding. He may not remember that back in 2005 we featured in the same radio programme, when we were being trailed for a day on what it was like to be new MP. I asked who else was being trailed, and was of course told. That was our last encounter. 

The clause spells out for any prospective purchaser of Royal Mail the appropriate protocol for using the Queen’s head on postage stamps. It may be obvious to us, but some private sector operators who are interested in purchasing Royal Mail, particularly if their headquarters are abroad, may not be aware of the courtesy. The clause spells out in no uncertain terms in subsections (2) and (3) that any direction issued by the Secretary of State must make it absolutely clear that permission must be sought from Her Majesty the Queen to use her image on stamps. That requirement will ensure that there is no unintended disrespect on the part of special edition stamp designers that might otherwise result in inappropriate size or position of the image. 

Under subsection (1) the Secretary of State may give that direction. Will the Minister clarify whether “may” is used because the Secretary of State has discretion about whether to use the power to give a direction? Will such a direction be necessary only if a privatised Royal Mail intended to use Her Majesty’s image on its stamps, and how will such an organisation know if that were so? Are we to understand that a privatised Royal Mail would not necessarily put Her Majesty’s image on its stamps? Is that conceivable? 

Some commentators have noted that Royal Mail is a prestigious and trusted household brand name. After the short-lived and hastily abandoned Consignia episode, prospective purchasers would do well to consider using the name “Royal Mail” and the image of Her Majesty. Constitutionally, it would not be appropriate to consult Her Majesty on that possibility, but I wonder how she would feel if after so many years and in the run-up to her diamond jubilee, her image disappeared from our stamps. That would break a long and historic link. 

Many hon. Members collected stamps when they were younger, and will have experienced the excitement of older relatives proudly showing them old stamps with the head of previous monarchs, perhaps going back to the famous penny black bearing the head of Queen Victoria, whose reign saw so many initiatives to establish public services, and legislation to improve the lives of all, particularly those living in the rapidly expanding industrial towns. I dare say that Prince William may have thoughts about the matter. The date of the forthcoming royal wedding—it has obviously been designed to give the Liberal Democrats an extra bank holiday to campaign for the AV referendum—will predate any sell-off of Royal Mail which, as the hon. Member for Witham suggested, will no doubt feature the happy couple on a special commemorative stamp with the image of Her Majesty, Prince William’s grandmother, at the top. 

Column number: 696 

What would the public think about losing Her Majesty’s image on our stamps. The value of stamps tucked away in purses and wallets might increase overnight, but I suspect that many people do not want to see the end of that historic tradition. Will the Minister enlighten us on the circumstances in which the Secretary of State would give a direction to a universal provider, and is it envisaged that a privatised provider of a universal service might choose not to use the monarch’s image on stamps in future? 

Mr Mike Weir (Angus) (SNP):  I want to make a few quick points that are slightly different from those made by the hon. Lady. Clause 60 states: 

“The Secretary of State may give a direction to a universal service provider in relation to United Kingdom postage stamps bearing the image of Her Majesty that the provider proposes to issue.” 

Is it conceivable that we could have a situation in which some stamps bear the image of Her Majesty and some do not? In an earlier debate, I mentioned FastPost in New Zealand, which is an alternative post office system that issues its own stamps. In the parlance of the Bill, it would not be a universal service provider, but it could be delivering a service throughout the United Kingdom. We may have parallel systems in which some stamps bear the image of Her Majesty and some do not. 

At the moment, each nation of the United Kingdom has its own definitive stamp and an ordinary postage stamp that bears the symbols of the nation as well as the image of Her Majesty. Will the Minister assure us that that will continue and that we will not have one-size-fits-all stamps throughout the United Kingdom, thus ending a great tradition of which many stamp collectors are fond? 

Finally, the United Kingdom is famous throughout the stamp collecting world for being the only country that does not have its name on the stamp; it has only the image of the Queen. If that were to disappear, or if we were to have two or more different sets of stamps—one with the image of the monarch and one without, and one with the name of the country and one without—it would undermine our great postage stamp tradition. Such matters may be minor in the great scheme of things in the privatisation of the Royal Mail, but I would none the less be interested to hear what the Minister has to say about them. 

Mr Vaizey:  I am grateful to have the chance to respond to the comments made by the hon. Members for Llanelli and for Angus. I begin by welcoming the hon. Member for Llanelli; it is a great opportunity to be reunited with her after five years. Of course, I am fond of Llanelli because it is the birthplace of Michael Howard, my former boss and one of the great leaders of the Conservative party, now safely ensconced in the other place. If Llanelli can produce two such political Titans as Michael Howard and the hon. Lady it must be a very special place, and I hope that one day I might be part of a party that goes to Llanelli to unveil statues, both to Mr Howard and to the hon. Lady. [Interruption.] I note the indications of assent from the Opposition Benches. 

I welcome the comments of the hon. Member for Angus. If I may be so bold, I was surprised by the tone of both interventions, although I am probably—almost

Column number: 697 
certainly—being unfair. The hon. Member for Llanelli gave an almost poetic homage to the monarchy and Her Majesty the Queen, with which I completely agreed. The other day, I read that our current Prime Minister had camped out for the royal wedding when he was a teenager. Frankly, after the hon. Lady’s intervention, I would not be surprised to see her camping out for the wedding, or indeed sitting in the front row in Westminster abbey, courtesy of a personal invitation from Her Majesty. It really was a superbly royalist speech with which I completely concurred. 

Then we had the support of the hon. Member for Angus for the United Kingdom; a kingdom united by one postal service and one stamp. At the same time, he recognised the different traditions and parts of the United Kingdom. 

Mr Weir:  The hon. Gentleman said that he was a historian. Given his comments, I am surprised. He should know that the Union of the Crowns applied in 1603 and the Union of the Parliaments in 1707. It is the Union of the Parliaments that we seek to dispense with. At the end of the day, the Crown is a matter for the people, as it always has been in Scottish history. 

Mr Vaizey:  I am grateful for that clarification; it is somewhat reassuring for me. 

The hon. Member for Llanelli referred to the penny black, and the hon. Member for Angus referred to this country’s unique status in having the sovereign’s head on a stamp, which gives me an opportunity to refresh hon. Members, as the hon. Gentleman has already kicked off the history lesson, on how our unique postal stamp system came about. 

2 pm 

The hon. Gentleman is quite right—it is a good pub quiz question—that this is the only nation on earth where the sovereign’s head appears on stamps. All other nations have to put up with the rather prosaic design of their country’s initials on their stamps. I concur with the mood of the interventions from both hon. Members that were we to have a system where our stamps had the initials UK on them, we would be all the poorer for it. 

Nia Griffith:  If we had the initials UK, what does the Minister consider would be the situation in Wales, where there is another official language? 

Mr Vaizey:  Perhaps the hon. Lady can help me on what the initials would be. Would they be CWM? Given that Welsh Assembly is now in the ascendancy, perhaps the initials would be WAC. 

Nia Griffith:  If I can correct the Minister, the initials would actually be DU, which is the Welsh equivalent of UK. 

Mr Vaizey:  I was simply genuflecting to Wales in thinking that the initials would spell out the Welsh name for Wales. We are, however, going off at a tangent, Mr Hood, and I want to bring the debate right back to clause 60. 

Column number: 698 

We were discussing how Britain got into this unique position. The hon. Lady failed to mention that the idea of a uniform penny postage was first promoted by Rowland Hill in 1837. I forgot, however, to pick up on the fact that she paid tribute to the success of a series of Conservative and Liberal Governments during the 19th century in terms of their work for this country. The penny postage was introduced by the Postage Act 1839, and in January 1840, a communications revolution took place when letters were carried to destinations throughout England, Scotland, Wales and Ireland for just one penny. 

As an aside, my former Conservative party chairman gave me an envelope signed by a previous Member of Parliament for Wantage, and it may interest hon. Members to learn that it used to be practice for MPs not to pay for their postage. They simply had to sign their names, but that practice was withdrawn in the 19th century, because hon. Members abused the perk—nothing ever changes. 

The Chair:  Order. I invite the Minister to return to the 21st century and to the clause stand part debate. 

Mr Vaizey:  I will not, therefore, detain hon. Members with the history of the prepaid adhesive label. 

There is a well-established process for ensuring that the sovereign approves of postage stamps bearing her image, and I am apparently allowed to reveal—I find it surprising that I am—that Royal Mail is already in discussions with the palace on stamps for the jubilee and to celebrate the coming royal wedding. That special relationship between Royal Mail and the royal family has been in place for more than 40 years and will undoubtedly endure. In fact, it is a voluntary arrangement. There is nothing in statute that requires the sovereign’s head to be on a stamp, and there is nothing in statute that requires Royal Mail to consult the royal family. The arrangement is entirely voluntary. 

The clause actually supports the sentiments of monarchists in the Opposition and those who support the royal family. We want safeguards in place in the unlikely event that the voluntary arrangement breaks down, which is why clause 60 appears in the Bill. It gives a power of direction to the Secretary of State to require a universal service provider not to issue postage stamps that bear Her Majesty’s image without prior royal approval of the design. The direction may also contain provision in relation to the subject matter of stamp designs and the approval process. The clause states: 

“A person to whom a direction has been given has a duty to comply with it…That duty is enforceable in civil proceedings by the Secretary of State”. 

[ Interruption. ] That could be the Palace on the phone. The clause continues: 

“A direction can be varied or revoked by a subsequent direction.” 

It is an important reserve power to keep in the toolbox, in case current arrangements fail. It is the first time that a Bill has formally included powers to preserve such a unique arrangement. 

The hon. Lady once again painted a picture of a happy family sitting around the wireless listening to our proceedings, wondering how the Bill will affect their daily lives, and whether it will affect their enjoyment of

Column number: 699 
postage stamps or birthday cards. She should therefore welcome and embrace this clause, as should the hon. Member for Angus. 

Question put and agreed to.  

Clause 60 accordingly ordered to stand part of the Bill.  

Clauses 61 to 64 ordered to stand part of the Bill. 

Schedule 9 

Transitional provisions for Part 3 

Nia Griffith (Llanelli) (Lab):  I beg to move amendment 67, page 99, line 18 [Schedule 9], leave out ‘Except as mentioned below,’. 

The Chair:  With this it will be convenient to discuss amendment 68, page 99 [Schedule 9], leave out lines 24 to 29. 

Nia Griffith:  Schedule 9, which is introduced by clause 64, contains transitional provisions in relation to the coming into force of part 3 of the Bill. Amendment 67 would delete from paragraph 4(2) of the schedule the words “Except as mentioned below”. Amendment 68 would delete the exception mentioned in paragraph 4(3), which states: 

“Sub-paragraph (2) does not apply to consumer protection conditions (and, accordingly, references elsewhere in this Schedule to initial conditions do not include consumer protection conditions).” 

Sub-paragraph (2) specifies that the initial regulatory conditions that apply to postal operators must be substantially similar to the licence conditions that applied before the Bill’s provisions came into force, except for a specific exemption in relation to consumer protection conditions and a caveat allowing Ofcom to exclude any licence conditions that it determines are not necessary. 

The Bill should be amended to remove this exemption, as it heightens concerns that consumers’ interests will not be given sufficient consideration by postal operators. Indeed, I find it extraordinary that an exemption is being made in respect of consumer protection conditions. I am sure that the Minister will be familiar with European legislation on the matter. Under article 19 of EU Directive 2008/6/EC, member states should ensure that transparent, simple and inexpensive procedures are made available by all postal service providers for dealing with postal service user complaints. In the UK, that is covered by the Postal Services (Consumer Complaints Handling Standards) Regulations 2008 and the Postal Services Regulated Providers (Redress Scheme) Order 2008. 

We would have expected the Government to ensure similar protection for the consumer to that which is currently available and that, at the very least, they would need to comply with the EU directive. We are therefore surprised to find that although everything else is supposed to reflect current practice, consumer protection conditions have been singled out not to enjoy any of that protection. I should be grateful if the Minister would tell us the reason for this specific exemption. The Under-Secretary of State for Business, Innovation and Skills seemed to acknowledge earlier the importance of consumer protection conditions, so it is particularly odd that those conditions are not going to be quasi-copied or reflected in the new framework. 

Column number: 700 

Mr Vaizey:  I am grateful to the hon. Lady for her remarks. They give me an opportunity to set her mind at rest and to make it absolutely clear that we take the issue of consumer protection extremely seriously. The Bill will actually extend consumer protection into areas where hitherto it may not have been. 

Schedule 9, as the hon. Lady indicated, makes transitional provisions in relation to the regulatory part of the Bill. The objective of the schedule is to ensure a smooth transition between the current and the new regime to provide as much certainty to the market as possible and to enable Ofcom to carry out certain functions during the transitional period between Royal Assent and when Ofcom takes full responsibility for postal regulation on the appointed day. We expect the transitional period to last approximately three months. As such, schedule 9 enables Ofcom to start work on developing a new regulatory regime as soon as possible following Royal Assent. 

During the transitional period, Postcomm will continue to be responsible for regulating the sector. However, from Royal Assent, Ofcom will be able to exercise some of its powers under the new regime in advance of the substantive provisions in part 3 coming into force. Those powers will allow Ofcom to work during the transitional period on the forthcoming regulatory regime, with a view to making an order of designation, or imposing conditions as soon as is practical after the rest of part 3 comes into force. So far, none of that is really controversial. It is plain common sense to allow Ofcom to get on with preparing for its new role. 

During the transitional period, Ofcom must determine the regulatory initial conditions that will come into force on the appointed day. They will apply until they are modified, if at all, to all postal operators once part 3 comes fully into force and we move from a licensing regime to a general authorisation regime. Those initial conditions will apply to postal operators who have, or would need to have, a licence under the current regime and would include, for example, price control and access provisions. Importantly, as is clear from the Bill, initial conditions must have substantially the same effect as current licence conditions, except when it appears unnecessary for Ofcom to maintain those conditions. As such, initial conditions can apply only to those who had licences under the old regime, or who would have required them. 

That brings me to the amendments that the hon. Lady has tabled because, quite laudably, she wants to ensure that consumers are adequately protected during the transitional regime. However, perversely, I would argue that the amendments could have, to a certain extent, the opposite effect. They would ensure that consumer protection conditions are included as initial conditions. However, the fact that under the Bill they are not included under initial conditions does not mean that consumers are unprotected. In terms of consumer protection, the current licence regime requires that licence operators have a complaint handling system in place and that they are members of an approved redress scheme. That protection stems from the Consumers, Estate Agents and Redress Act 2007, which was passed by the previous Government. 

The first thing to note is that the initial conditions ensure that the current licence conditions are captured and maintained beyond the transition, so at present,

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operators, such as couriers, who do not currently need to hold a licence, are actually excluded from having consumer protection provisions in place. During the transitional period between Royal Assent and the appointed day when Ofcom assumes regulatory responsibility, the regulatory regime, including consumer protection, will remain the same. As I have already said, during the transitional period Ofcom will determine the initial conditions that will come into force on the appointed day. 

2.15 pm 

There is good reason why consumer protection conditions are excluded from the initial conditions. Initial conditions are used to replicate existing licence conditions. They cannot be used to introduce new regulations. I will try to set out briefly why this matters for consumer protection conditions. The European postal services directive requires all postal operators, not just those who would have been captured under the old licence regime, to have a simple complaints handling system. Because initial conditions have to be substantially the same as existing licence conditions, it would not be possible to extend this requirement to all postal operators using initial conditions. So, instead of using initial conditions, Ofcom will use its powers in part 3 to impose the consumer protection conditions in clauses 49 and 50, which were debated this morning, to implement this requirement. These conditions will be applied from the day Ofcom takes over regulatory responsibility. 

I hope that reassures the hon. Lady and other hon. Members that there will not be a gap in consumer protection. Furthermore, the Bill will ensure broader consumer protections than the amendment would have provided. I am sure that the Committee would welcome that outcome. The amendments would have another potential impact: Ofcom would have to replicate every single existing licence condition as an initial condition, whether it thought that necessary or not. The Committee has already spent a great deal of time debating “may”, “must” and “will” and I do not intend to spend any more time on that issue. In this case, it is clearly totally inappropriate to force Ofcom to impose initial conditions on operators that it considers to be unnecessary. 

Let me give an example. Royal Mail’s current licence has a condition that relates to competition investigations. This will not be necessary in future because Ofcom has concurrent competition powers. It would be regulation for regulation’s sake and would serve no purpose other than to maintain unnecessary regulation. Given what I have said about the consumer protection conditions in the Consumers, Estate Agents and Redress Act 2007, in clauses 49 and 50 and in the EU postal services directive, to which the hon. Lady referred, I hope she will be reassured that there is a strong consumer protection regime in the Bill and that consumer protection will now extend to all operators that provide postal or postal-like services. That is surely something that all hon. Members can welcome. 

Nia Griffith:  I do feel that my amendments would strengthen the situation. They do not contradict what the Minister said and would enhance the clause and would be in line with it. If good regulation is working now there is no reason why it should not be mentioned in more than one place or be covered in more than one

Column number: 702 
piece of legislation. Obviously, there is some overlap between the European directive and the other pieces of legislation we have mentioned. I feel very strongly that it is strange to make an exception here when the sentiment is to give consumers as much protection as possible. I therefore want to press the amendment to a vote. 

Question put, that the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 41 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Schedule 9 agreed to.  

Clause 65 

Review of Part 3 

Nia Griffith:  I beg to move amendment 124, in clause 65, page 40, line 7, leave out ‘5’ and insert ‘3’. 

The amendment seeks to change the review period, which begins on the day that the provisions in this part come into force, from five years to three years. Hon. Members will be very anxious to know how the regulator is progressing in its dealings with the privatised Royal Mail, because the situation will be very different. There will have been a handover from Postcomm to Ofcom. The service will be provided by a privatised Royal Mail, which may give rise to a different dynamic because the privatised Royal Mail may be more inclined to maximise profit, meaning that there could be additional pressure on the regulator. There will be a new regulatory regime, as set out in part 3 of the Bill. There are also likely to be continuing changes in the marketplace, changes in the overall use of mail services by consumers, and changes in respect of the aspirations of competitors in the market. 

The Hooper report clearly described, in some detail, the complexities of regulation. There have been difficulties in the past and his thorough analysis weighed up two sides of the question; on one hand, sufficient regulation must be ensured, and on the other, one must not over-regulate. Without going through all of that analysis, I simply emphasise the importance that he laid on the regulatory regime, as well as the further comment in his 2010 report about the progress made to date: 

“Postcomm has worked hard to develop a new forward work programme and has recently completed consulting on a new regulatory framework. During this time a better and more constructive relationship between Postcomm and Royal Mail has emerged—although there still remain fundamental disagreements between them about the right regulatory future.” 

Column number: 703 

So clearly, although work has started there is a lot to do, and Ofcom will be undertaking that work in the run-up to a possible sell-off and privatisation of Royal Mail. 

Five years seems a long time not to have any idea of how that regulatory framework is working out in practice, which is why we would like the report to come back for scrutiny after three years. That would give us a much better idea of exactly what has happened, which would be helpful to all concerned, whether it is for those who are planning future business, the regulator, or elected Members who want to know how the whole system is working. 

Mr Vaizey:  I am pleased to see the Under-Secretary of State for Business, Innovation and Skills maintaining his helping hand. The reason it took me a while to rise—approximately two or three seconds—was that I wanted to check whether any hon. Members looked as though they wanted to contribute to the debate. It would surprise me, given the forceful nature of the contribution by the hon. Member for Llanelli, if other people did not rise to their feet in support of her arguments. She rightly reviewed the significant changes that may happen as we move towards the new regime, and she put forward a forceful case suggesting that the review should take place sooner rather than later, or, to sum up the contrast between her position and that of the Government, within three years as opposed to five. 

Let me first make some positive points about clause 65, which I hope the hon. Lady will welcome. The clause is in line with our commitment to better regulation. It aims to strengthen the monitoring and scrutiny of regulations that place a burden on business, and bear down on regulatory costs. It requires the Secretary of State to conduct a review as soon as reasonably practicable once five years have expired since part 3 came into force—I will come on to the distinction between five years and three years in a moment. In layman’s language, that will be when the Bill is enacted, some point in the middle of next year. 

The Secretary of State must set out the conclusions of the review in a report laid before Parliament. That report should set out the objectives of the regulatory system, and assess the extent to which those objectives have been achieved. It should also assess whether those objectives remain appropriate, and whether they could be achieved with a less burdensome regulatory system. 

The hon. Lady’s amendment seeks to reduce the timetable for the review from five years to three. I do not agree with her arguments because in order to review whether the regulatory system established by part 3 has successfully delivered its objectives, a sensible period of time must have elapsed before such an assessment is made. Three years is too short a time frame to allow an assessment of any real value. 

When the hon. Lady outlined some of the issues to be tackled during that period, she almost strengthened the Government’s argument. Ofcom would need to gather evidence and consult in advance of making any regulatory decisions. Such decisions will not normally come into force immediately, so as to give the regulatory parties time to adjust. Furthermore, it could take years before the impact of the regulatory decisions is demonstrated in the markets, and a period of three years would not

Column number: 704 
allow the regime time to be used fully. Extending the time frame to five years will ensure that a sufficient period has passed in order to evaluate properly the effectiveness of part 3. I therefore hope that hon. Members will resist the amendment. 

Nia Griffith:  I am not convinced by the Minister. I think that hon. Members will want to know what is happening and to see a report; they will want some indication from Ofcom, and it would be helpful if we could see how the situation is bedding down after three years. From what Hooper has said, we already know that things have changed between 2008 and 2010. The market is developing quickly, which I am sure the Minister knows from his other responsibilities. The pressures will be changing and this regulatory regime will have a baptism of fire. There will be a lot of pressure and many different interests that might challenge some of the tenets of the legislation. I feel strongly that there should be a report after three years and that we need an indication of how things are progressing. A clear picture should be put in front of us. I will therefore press the amendment to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 42 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Clause 65 ordered to stand part of the Bill.  

Clause 66 

Postal administration orders 

Question proposed, That the clause stand part of the Bill. 

2.30 pm 

Gordon Banks:  I will detain the Committee only a moment on this, before we move on to clause 67 and a raft of amendments. If there is a requirement for the court to make a copy of the postal administration order—something that would normally go to the administrator of the administration—available to the Secretary of State, will the court distribute it more widely, to a public body for instance? 

Mr Vaizey:  I am grateful for the chance to speak to clause 66, which opens part 4 of the Bill. If the hon. Gentleman will allow me, I shall just set the context of the clause and the ones that follow. 

Column number: 705 

Part 4 puts in place a special administration regime—a “postal administration”—that is designed to ensure the maintenance of the universal postal service. It is obviously prudent to ensure that appropriate provisions are in place to deal with the unlikely—in our view—eventuality of a universal service provider getting into financial difficulty and being at risk of entering into insolvency proceedings. The provisions in part 4 are, therefore, very much reserve provisions. We need them because it is sensible that the Government plan for any scenario, no matter how remote. There are precedents for such regimes in other sectors, most notably in the water and energy sectors. Each regime has a specific objective that the administrator has to achieve. As set out in clause 67, on which we will have an extensive debate, the broad objective of a postal administration is to secure the provision of the universal postal service to the standard set out in the universal postal service order made under clause 29. 

The clauses in this part cover four distinct areas. Clauses 66 to 71 set out the fundamentals of the postal administration regime, and deal with postal administration orders, postal administrators, the powers of the court and, importantly, setting the objective of a postal administration, which is to secure the provision of the universal postal service and to ensure that there is no longer a need for a postal administration. Clauses 72 to 76 are designed to prevent postal administration being frustrated by action taken to wind up the company, voluntary wind-up, ordinary administration or the enforcement of security. 

Clauses 77 to 79 allow the Secretary of State to give financial support to companies in a postal administration in the form of grants, loans or guarantees and, where appropriate, to indemnify the postal administrator. Clauses 80 and 81 give the Secretary of State powers to make modifications to the regulatory regime while a postal administration order is in force, including modifications to deal with funding the costs of a postal administration. Clauses 82 to 86 contain a number of supplementary provisions, one of which enables part 4 to be applied to partnerships, and another that deals with its application to Northern Ireland. 

Clause 66 is the opening clause of part 4. It defines the postal administration order as an order, made by the court in relation to a universal service provider, that directs that a postal administrator be appointed to manage the universal service provider’s affairs, business and property. Subsection (3) makes it clear that the postal administrator must manage the company, exercise their powers and perform their duties to achieve the objectives of the postal administration as set out in clause 67. 

The purpose of the postal administration is to ensure the provision of the universal postal service in the UK. Clause 66(4) makes it clear that if the universal service provider were to be a foreign company, the postal administration would only apply to the company’s affairs, businesses and property in the UK. 

Once an order is made, the administrator is under a duty to publish his appointment and send a notice to creditors. Those matters are dealt with in the detailed rules under section 411 of the Insolvency Act 1986. Obviously, I have a detailed knowledge of section, but I am not sure that I want to detain the Committee with the ins and outs of that. Perhaps the hon. Gentleman

Column number: 706 
will indulge me and allow me to write to him with a copy of section 411 setting out how those provisions work. 

Gordon Banks:  I thank the Minister for that. If I understand his comments correctly, the administration order that is given by the court will go to all creditors. 

Mr Vaizey:  That is correct. 

Question put and agreed to.  

Clause 66 accordingly ordered to stand part of the Bill.  

Clause 67 

Objective of a postal administration 

Gordon Banks:  I beg to move amendment 125, in clause 67, page 40, line 33, at end insert— 

‘(aa) the rescue as a going concern of the company subject to the order, and’.

The Chair:  With this it will be convenient to discuss the following: amendment 126, in clause 67, page 40, line 34, leave out 

‘one or both of the following means’ 

and insert ‘means of relevant transfers’. 

Amendment 128, in clause 67, page 40, line 36, leave out subsection (2). 

Gordon Banks:  The amendments are tabled in my name and that of my hon. Friend the Member for Llanelli. Clause 67 defines the objective of a postal administration, and amendment 125 would mean that the rescue of the company as a going concern was a free-standing objective of the postal administration, rather than a means of securing the other objectives—that is, the provision of the universal postal service. It would mean that it would no longer be necessary for the postal administration order to remain in force. 

We are beginning to look at some of the blackest sides of matters in these and future amendments. I hope that the Minister agrees, however, that it is our duty to look at the worst-case scenario and to make sure that the Bill prepares the country for anything that might happen one of these dark days. None of us wanted the clause to have any operative impact, but I think that my hon. Friends and I would say the same about much of the Bill. The amendment makes the rescue of the company as a going concern an objective of the Bill from the postal services point of view. That would provide an extra safeguard on those in an administrative position, and it could also strengthen a universal service provision in such a situation. 

Amendment 126 relates to clause 67(1)(b) and is a consequential amendment that provides that, where the company cannot be rescued as a going concern, the objective of the postal administration contained in paragraph (b) would be achieved by making the relevant transfers. 

Amendment 128 calls for the removal of subsection (2) and is, therefore, a consequential amendment to amendments 125 and 126. If the rescue of the company as a going concern becomes an objective of the

Column number: 707 
administration under clause 67(1), and the only means of securing the continuation of the postal administration is by making the relevant transfers under clause 67(1)(b), subsection (2) becomes superfluous. I hope you followed all that, Mr Hood. I hope the Minister followed it. 

Mr Vaizey:  Can the hon. Gentleman repeat it? 

Gordon Banks:  I do not know where we might go with this. These amendments seek to strengthen the rescue of a company as a going concern as an objective of any postal administration order, and take us to a position where the postal administration order itself is no longer necessary. I look forward immensely to the Minister’s response. 

Mr Vaizey:  I am grateful for the opportunity to speak to the amendments. In 90 minutes the Committee has got through 16 clauses and five schedules. At that pace we could have considered the entire Bill in three sittings, although I make no comment on the relative speed. I gather that things are getting interesting outside the Committee Room; we have had visitors in the Public Gallery of the Chamber, although somehow no one has found their way to this scintillating Committee to register their interest in what we are debating. 

I welcome the hon. Gentleman’s comments on the importance of these provisions. I think he put it very well; members on both sides of the Committee clearly share the view that we would not want to see any of these provisions used in the future, but that it is prudent and right to have them. Further, as he also said, if it is prudent and right to put in place provisions to deal with such eventualities, it is also prudent and right to scrutinise those provisions to ensure that they are as effective as possible. In that sense, but only in that sense, I welcome the amendments. 

Part 4 puts in place a special administration regime—a postal administration—that is designed to ensure the maintenance of the universal postal service where there is a risk of a universal service provider entering into insolvency proceedings. We are confident that the provisions in parts 1, 2 and 3 will secure the future of Royal Mail and will ensure the maintenance of the universal postal service, and that there should be no need for a postal administration. However, as I have remarked, we believe it is prudent to ensure that appropriate provisions are in place. 

Precedents exist for such regimes, most notably in the water and energy sectors. If Royal Mail was in danger of entering insolvency proceedings in the future and a postal administration was necessary, what matters and is really important to all users of the mail service in the UK economy is securing the universal postal service. This is where I part company with the hon. Member for Ochil and South Perthshire. It is not necessarily about preserving Royal Mail as a corporate entity. 

That is clearly reflected in the objective of a postal administration as set out in clause 67. The objective is to ensure that the universal postal service is secure, and that there is no longer a need for postal administration. The means by which that can be achieved are set out in subsection (2). Those means are either the rescue of the company as a going concern or relevant transfers. 

Column number: 708 

2.45 pm 

The effect of amendments 125, 126 and 128 is to move the rescue of the universal service provider as a going concern from a means to achieve the objective of postal administration to an objective simply in its own right. I fully accept that the postal administrator should be permitted to achieve the objective of the postal administration by seeking to rescue the company as a going concern. The rescue of the existing company may well be best designed to ensure seamless continuation of its business. I do not believe, however, that a going concern rescue should be an objective in itself. Suppose that we reach a situation—I remind the hon. Gentleman that we agree that it is almost impossible to imagine ourselves in such a situation, but we are in the era of prudence—when Royal Mail as the universal service provider is in administration, I repeat that our policies are designed to avoid precisely such a situation. 

Despite all that, the Government certainly believe that the overriding objective of the administration has to be the securing of the universal postal service that our constituents rely on, not simply the rescue of the company. We believe, however, that there should be a preference for the objective of the postal administration to be achieved through the rescue of the company as a going concern, rather than through relevant transfers. I hope the hon. Gentleman is reassured by that. That is why we have written into subsection (5) that transfers can only be used if the rescue of the company is not “practicable” or would not achieve the objective, or if the transfers can achieve a better result for creditors and members—shareholders—than could be achieved otherwise. 

That is the right order of preference. The postal administrator’s hand should not be tied by making the rescue of the company an objective. A rescue might not be practicable—it might not be in the best interest of the users of the universal postal service—and the administrator should have other means available. I therefore ask the hon. Gentleman to withdraw his amendments and for the clause to stand part of the Bill. 

Gordon Banks:  I listened carefully to the Minister, but I am not convinced that our amendment 125 would create a particular problem for the postal administration operation. Our amendment would strengthen and preserve the universal service provision, so I shall press amendment 125 to a vote—amendments 126 and 128 are consequential. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 43 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Column number: 709 

Gordon Banks:  I beg to move amendment 127, in clause 67, page 40, line 35, at end insert— 

‘(c) the protection of the interests and entitlements of the employees of the company subject to the order.’.

The Chair:  With this it will be convenient to discuss the following: 

Amendment 129, in clause 67, page 41, line 26, at end insert— 

‘(e) the protection of employees of the company is secured such that they will suffer no material detriment arising out of the relevant transfer.’.

Amendment 130, in clause 68, page 41, line 40, at end insert— 

‘(ca) representatives of the employees of the company, and’.

Amendment 131, in clause 69, page 42, line 13, at end insert— 

‘(ea) before making the order call for such evidence as it think appropriate that the interests and entitlements of employees of the company are to be safeguarded, and’.

Amendment 133, in clause 69, page 42, line 38, at end insert ‘and 

(c) make provisions for the safeguarding of the interest and entitlements of employees of the company.’.

Amendment 134, in clause 70, page 43, line 19, at end insert ‘and 

(c) the interests and entitlements of the company’s employees.’.

Amendment 138, page 104, line 8 [Schedule 10], at end insert— 

‘(aa) explain how the objective of protecting the interests and entitlements of employees of the company subject to the order is to be achieved, and’.

Amendment 139, page 114, line 10 [Schedule 11], at end insert— 

‘(aa) representatives of the employees of the old company have consented to the making of the scheme, and’.

Amendment 140, page 114, line 21 [Schedule 11], after ‘company’, insert 

‘, the representatives of the employees of that company’. 

Amendment 141, page 114, line 27 [Schedule 11], after first ‘company’, insert 

‘, the representatives of the employees of that company’. 

Amendment 142, page 114, line 30 [Schedule 11], after ‘company’, insert 

‘, and the representatives of the employees of that company’. 

Amendment 143, page 114, line 39 [Schedule 11], at end insert 

‘, including the employees of the old company’. 

Amendment 144, page 114, line 41 [Schedule 11], at end insert 

‘and the representatives of the employees of the old company.’. 

Amendment 146, page 117, line 27 [Schedule 11], at beginning insert 

‘Subject to paragraphs 19 and 20,’. 

Amendment 147, page 119, line 30 [Schedule 11], after ‘under’, insert ‘or in connection with’. 

Amendment 148, page 119, line 37 [Schedule 11], at end insert— 

‘(2) The new company shall procure that employees of the old company who become employees of the new company as a result of a postal transfer scheme are entitled to the same pension
Column number: 710 
benefits in respect of their employment with the new company as was the case in their employment with the old company and that such employees will suffer no material detriment in relation to pension provision.’.

Gordon Banks:  This is the last big batch of amendments that we will be considering in Committee, although a number of smaller—none the less important—amendments are to come. I will go through them in the order on the selection list. 

Amendment 127 has relevance to amendments 125 and 128, which we have just discussed; its purpose is to make the protection of the interests and entitlements of employees of the company subject to the postal administration order an objective of the postal administration. It is self-explanatory. We want the rights of employees recognised in that way. Ordinarily, in administration, employees would rank as preferred creditors in respect of many employment-related debts and then only to the extent of £800 save in respect of accrued holiday entitlement. Protection of the employees’ interests should be an objective of the administration. 

Amendment 129 refers to subsection (5) and calls for the introduction of new subsection (e), under which 

“the protection of employees of the company is secured such that they will suffer no material detriment arising out of the relevant transfer”. 

It would protect employees’ interests in the event of a postal administration order being made, and relevant transfers of parts of the company’s business could be made only if the protection of employees’ interests were secured. We would be supportive of the Minister in his support of our amendment. 

Amendment 130 would add 

“representatives of the employees of the company” 

to subsection (2)(c). It would impose a requirement that the representatives of the employees of the company are given notice of any application for a postal administration order. On its own, the amendment would not create additional rights beyond being given notice at the same time as other potential categories of creditors. In any administration, the employees’ interests and entitlements are at risk. There is no logical reason why their representatives should not be given notice of the application for a postal administration order, and I am sure that the Minister will see things that way, too. 

Amendment 131 relates to clause 69, and the powers of the court when hearing an application for a postal administration order, and would insert 

“before making the order call for such evidence as it thinks appropriate that the interests and entitlements of employees of the company are to be safeguarded.” 

Its purpose is to give the court hearing an application for an administration order the power to call for evidence to show that, consistent with amendment 127 to clause 67, the interests and entitlements of employees are safeguarded. If the objectives of the administration are to include the protection of employees’ interests, the court hearing the application for an order should have power before making the order to call for evidence on how the employees’ rights are to be safeguarded. That is particularly so because the protections afforded by TUPE are relaxed in the event of insolvency and/or administration. 

Amendment 133 also relates to clause 69, and calls for the insertion of 

“make provisions for the safeguarding of the interest and entitlement of employees of the company”, 

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under new paragraph (c) to subsection (6). The Committee will know by now that the general thrust of our arguments is to empower and safeguard the rights and entitlements of employees of the company. The amendment is consistent with the amendments proposed to clauses 67 and 69, when an interim order should make provision for the safeguarding of the interests and entitlements of employees of the company for the same reasons as under a full order empowered by the courts under subsection (1)(a). 

Amendment 134 calls for the creation of a new paragraph (c) and would cover 

“the interests and entitlements of the company’s employees”. 

Consistent with amendment 127, which would make the protection of the interests and entitlements of employees an objective of the administration, it would require the postal administrator to exercise his powers and duties in a way that best protected those interests and entitlements on the same basis as those detailed in paragraph (a). 

Paragraph 49 of schedule B1 to the Insolvency Act 1986 requires an administrator to make a statement 

“setting out proposals for achieving the purpose of administration.” 

Amendment 138 to schedule 10 would require the administrator also to include in his statement an explanation of how 

“the objective of protecting the interests and entitlements of employees…is to be achieved.” 

Amendment 139 would require that representatives of the employees of the old company have consented to the making of a postal transfer scheme, in addition to the consents of the receiving company and the Secretary of State. The Opposition are keen to see that provision added to the schedule. We believe it is just recognition of the employees in the old company, and allows them to speak on any transfer to a new company. 

On many occasions during the Committee’s consideration of the Bill, we have attempted to empower the work force in many different ways. Amendment 139 would empower the work force by ensuring that they support the transfer at the end of what would be, as we discussed in our previous exchange, a very difficult period for the employees, for the business and, possibly, for users throughout the Untied Kingdom. 

Amendment 140 is self-explanatory. It would ensure that when the court has made a postal administration order and the Secretary of State wishes to modify a postal transfer scheme, representatives of the employees are consulted. The employees’ interests and entitlements are likely to be affected by any modification to a transfer scheme, so their representatives should be informed. 

Paragraph 4(3)(a) of schedule 11 requires the consent of the old company and the new company to modifications to any transfer scheme. Amendment 141 would add an additional requirement for the consent of the employees’ representatives, as the employees’ interests will also be affected. 

Amendment 142 continues in that mould. Paragraph 4(3)(b) of schedule 11 requires the consent of the old company to a transfer covered by TUPE. The amendment would add an additional requirement for the consent of representatives of the employees of the old company, whose interests will be affected. 

Column number: 712 

Amendment 143 would call for the Secretary of State to ensure that he has regard to the employees of the old company in the approval or modification of a postal transfer scheme. That is consistent with the current drafting, which provides for the Secretary of State to have regard to the interests of persons affected. 

Amendment 144 would reaffirm the need for the Secretary of State, before approving or modifying a postal transfer scheme, to consult not only with Ofcom, but with employees’ representatives, as their interests, too, will be affected. The amendment, therefore, continues in the mould of the previous amendments in the group. 

Amendment 146 makes it clear that paragraph 11 of schedule 11, which modifies rights on termination of entitlements under a transfer scheme, does not apply to the transfer of rights and liabilities in relation to employees. Those rights and liabilities are covered by TUPE, as detailed in paragraphs 19 and 20. 

Amendment 147 asks for TUPE rights to apply to a transfer not only under, but in connection with, employees’ contract of employment. The effect of the amendment is to make paragraph 19 consistent with TUPE. 

Finally, amendment 148 calls for employees of the new company, who were employees of the old company at the time of a postal transfer scheme, to be entitled to the same pension benefits in respect of their employment with the new company as they were as employees of the old company. That would mean that no material detriment of pension provision developed. 

3 pm 

Paragraphs 19 and 20 of schedule 11 to the Bill make provision for TUPE to apply to protect employees in the event of the making of a postal transfer scheme. However, TUPE is notorious for not making adequate protection for future service pension provision. This amendment seeks to remedy that defect by requiring a new employer to provide the same pension benefits as applied before the transfer and to ensure that a transferred employee suffers no material detriment in pension provision, as I have said. This is a fair and just amendment and I hope it receives the Minister’s approval. 

These amendments are complex and I have tried to whizz through them so that we can get to the end of the Bill by 5 o’clock. There are still some important issues for us to discuss. These amendments are complex and technical in most cases, but that does not diminish their importance. I hope that the Minister will be able to address the concerns that have led to the tabling of these amendments. Where he cannot do so, I look forward to his supporting us in a vote, when we come to that. 

Mr Vaizey:  I rose precipitately there simply to begin by congratulating the hon. Gentleman on what was a formidable display of his technical abilities in trying to amend this clause. I took furious notes during his submission, so I will try to respond in as much detail as I can, because he gave the Committee a detailed exposition on the various amendments that he has tabled. They have, however, an encompassing theme, to which I will return in a moment. 

I remind hon. Members, as I did in the previous group of amendments, that the reason for including the special administration regime in the Bill is to ensure

Column number: 713 
that the universal postal service can be secured and that the service can continue to benefit all users and the UK economy. Were we ever to reach such a position that a postal administration is needed—I yet again reiterate that the provisions in other parts of the Bill will prevent that—the primary objective of the administrator has to be to secure the universal postal service. I am not saying that merely for effect; I am reminding members of the Committee that the framework of the special administration regime is—it was so impressive that the hon. Gentleman spoke to each amendment and that each amendment had its own specific purpose—to put the protection of employees’ interests on a par with the administrator’s primary objective to secure the universal postal service. 

There is a read-across from the previous group of amendments, where the hon. Gentleman sought to put the securing of the company on a par with securing the universal postal service. From his perspective, he makes perfectly valid arguments that the security of employees’ interests should be on a par with the universal postal service. Given that I have made those remarks, it should come as no surprise to hon. Members that I will resist the amendments, because it is my intention to secure the framework of this part of the Bill, which states that the special postal administration regime is there to secure the universal postal service. 

When the hon. Gentleman spoke to each of his amendments I considered each one and wanted to respond point by point. Amendment 127 seeks to make the fact that the protection of employees’ interests should be on a par with the postal administrator’s primary objective to secure the universal postal service explicit in the objective of the special postal administration. Amendment 129 seeks to prevent any relevant transfers unless employees are protected. Obviously, one recognises that employees of a universal service provider that is in postal administration will be going through a period of uncertainty and difficulty. That was acknowledged when the hon. Gentleman introduced the amendments. I certainly would not dissent from that. However, I challenge the hon. Gentleman to show that employees in such a situation should receive unique protection over and above employees in another administration. We have a special administration regime to protect the universal postal service. The hon. Gentleman needs to show why employees of a universal service provider should be given particularly unique treatment when going through the special administration process as opposed to a normal administration. I do not mean that to sound negative. 

I remind the Committee that the Bill is very good for employees. It is worth my finally paying tribute to the Under-Secretary of State for Business, Innovation and Skills because many measures in the Bill that are good for employees are down to his own endeavours. Not only will the Bill enable Royal Mail to secure its future through an injection of private capital, which will help sustain jobs, but it will give employees a real stake in the business through an employee share scheme with at least 10% of the shares. Also, it will secure the £8 billion pension deficit and therefore secure the pensions of current Royal Mail employees. There are protections for employees if there are relevant transfers under a postal administration. The protections are set out in paragraphs 19 and 20 of schedule 11. They ensure that TUPE will apply to transfers of staff and that their period of

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employment with the old company will be treated as if it were with the new company, and therefore there would be no break in service. 

Amendment 130 sought to add the unions to the list of persons who should be formally notified when an application has been made for a postal administration order. The intention of subsection (2) of clause 68 is to ensure that the key persons who may wish to make representations to court are given formal notice of the application. It is not the intention of that subsection to list all the people who may have an interest in an application for a postal administration order. The list of persons included in the clause are those who have already appointed an administrative receiver or who are entitled to appoint an administrative receiver who, as floating charge holders, are entitled to appoint an administrator. It is not intended to be an exhaustive list of interested stakeholders. That approach is consistent with normal administration. I do not see any compelling reason to move away from normal practice to include a specific clause to ensure that the unions are notified. 

Gordon Banks:  The Minister is saying that it is not meant to be an exhaustive list, and I take his contribution in the way that it is given. Can he tell the Committee that it is his intention that representatives of employees would be included in the list if that dark day happens, even though they are not listed in the Bill? 

Mr Vaizey:  I am grateful for the intervention. I am afraid I cannot say that that would be my intention, as I think I made clear. Technically, persons who have to be notified have a specific interest in the administration—they are creditors or have a floating charge and so on. It is not for me to tell a company what might be good or not good practice. One would expect a well run company such as Royal Mail to have good relations with its unions and for the unions to be made well aware of what is going on, subject to any necessity for an emergency application. 

Amendments 131 and 133 also go beyond the requirements of a normal administration order and other special administration regimes, such as the one brought in by the previous Government for the Energy Act 2004. Although I have made it clear that we want to ensure that Royal Mail’s employees can share in the company’s future success, and we are implementing a package of measures to enable that success, we do not see any reason why a special case should be made in primary legislation for the court to hear the unions’ evidence when there is no obligation on the court to hear evidence from others, and there is no similar obligation in other special administration regimes. 

With regard to amendment 131, let me point out that not including a call for evidence relating to employees’ interests and entitlements in the Bill would not exclude employees’ representatives or others from giving evidence to the court, because it is within the court’s remit to ask them to give evidence or for them to apply to the court to give evidence and seek the court’s permission to do so. They would obviously need to justify to the court why they needed to give evidence, and this opportunity is allowed under normal administration rules, and was included in the energy administration rules made under section 411 of the Insolvency Act 1986. However, I pledge not to detain the Committee with the finer

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points. When we draft the rules for a postal administration, we intend to follow current best practice and include such provision. 

I now turn to amendment 134 to clause 70. Subsection (3) provides protection for creditors, and subject to the interests of the creditors, the members—the shareholders—of the company in postal administration. The postal administrator is required to perform his or her duties in a way that best protects the interests of those two groups so far as it is consistent with securing the universal postal service. That creates the proper balance between protecting the interests of the creditors and shareholders and ensuring that the objective of the postal administration is achieved. 

Amendment 134 would add an additional requirement on the administrator to protect employees’ interests and entitlements. Effectively, it would put employees on the same level as creditors and shareholders. Under our proposals, Royal Mail’s employees will be shareholders in the company and clause 70(3) already provides them with protection in respect of their shareholding. However, to impose an additional duty to protect the interests of employees above and beyond their interests as shareholders would be inconsistent with normal administration practice, and no such provisions have been included in any other special administration regime. 

We do not see any compelling reason why a specific additional protection should be given to employees in this way. As I have already said, I fully recognise the concerns that would arise if the company was put in special administration, but I am not convinced that there is a case to make an exception to existing administration practice for employees of a universal postal service provider. 

Amendment 138 would require the postal administrator’s statement on how he or she intends to achieve the objective of post administration. The amendment would require that statement to include how the postal administrator intended to protect employees. As I have already explained, it is not appropriate for the protection of employees’ interests to be included in the objective of the postal administration, so it follows that I do not consider that this amendment should be made. 

I will take amendments 139 to 144 together, although the hon. Gentleman took each one separately. They seek to give employees a pivotal role in deciding whether relevant transfers can go forward or be modified. As I have already explained, part 4 is based on the presumption that Royal Mail should be rescued as a going concern before a transfer is considered. It is not right that relevant transfers can be potentially blocked by employees if the administrator considers that relevant transfers are the best way in which to secure the universal postal service. That runs counter to the purpose of a special administration regime. Such a role for employees is not included in any other special administration regime. 

Gordon Banks:  Would the hon. Gentleman accept that amendment 144 is not particularly onerous because it only asks the Secretary of State to consult? He already has to consult with Ofcom, so the extension of a consultation with the employees is not particularly onerous or demanding, and is that not something that he thinks would be good practice? 

Column number: 716 

3.15 pm 

Mr Vaizey:  The Secretary of State has to consult with Ofcom because Ofcom is the regulator of the Royal Mail. Therefore, Ofcom would naturally have a say, given its overall regulation of postal services in terms of where the special administration sat in that. It is more of a consultation of a technical nature. As I said earlier, no such provision for consultation with employees exists in any other special administration regime. We remain unconvinced that an exception should be made for the special administration regime for the universal postal service. 

Amendments 146, 147 and 148, while seeking to protect employees’ interests like other amendments in this group, have a specific focus on the transfer of pension benefits. We have made it crystal clear in paragraphs 19 and 20 of schedule 11 that TUPE will apply to any relevant transfers. As we discussed under clause 9, the transfer of pensions from one employer to another is not part of the TUPE process. We can see no case for including pension benefits in this process when it is not normal practice to do so. The pensions of those transferring should be dealt with in the normal way. This may be through the Pension Protection Fund or other means. 

I fully recognise that postal workers are hard-working and dedicated people. Indeed, I am looking forward to visiting each of the sorting offices in my constituency tomorrow morning, starting at 6.30 in the morning. Given the vote tonight I had better not say which sorting office I am starting at, but I can identify them as Wallingford, Didcot, Wantage and Faringdon. They will all be getting some Quality Street. However I do not believe that we should give postal workers preferential treatment outside the normal procedures in such circumstances. This is particularly the case when we are asking the taxpayer to take responsibility for Royal Mail’s existing £8 billion pension deficit to put Royal Mail on a sustainable footing. 

To sum up, I believe that the objective of the postal administration should be the continued provision of the universal postal service. I do not believe that adding the additional objectives or protections proposed by the amendments, while I fully understand the good intentions behind them, will help the postal administrator achieve that objective and therefore protect everybody’s interests in the continued operation of the universal postal service. I therefore ask the hon. Gentleman to withdraw his amendment. 

Gordon Banks:  I have listened carefully to what the Minister said. I should like to refer to one or two—five or six—of the amendments. My hon. Friends and I think that the amendments can also strengthen the universal service provision through the extra involvement of the work force or the work force representatives at different places in this process. We think that potentially works with amendment 129 and I will want to press that to a vote. Amendment 130 simply asks that the employees of the company be given notice of any application for a postal administration order. The Minister said that he did not think there was a case for it. We think that there is and we would like to press that to a vote too. 

Amendment 131 asks for the court to have the power to call for evidence as it thinks appropriate to ensure that the interests and entitlements of employees of the company have been safeguarded. Again, we should like

Column number: 717 
to press that amendment to a vote. Amendment 134 also relates to the interests and entitlements of the employees. It is consistent with other amendments that we have tabled and we should like to press that to a vote too. Amendment 144 goes back to the point that I made when I intervened on the Minister and relates to the need to consult with the employees’ representatives. I fully understand the concept of consultation with Ofcom, and my hon. Friends and I support the the inclusion of the employees’ representatives in that ongoing consultation process. In his response, the Minister said that the consultation with Ofcom would be “of a technical nature.” I am sure that the employees’ representatives can cope with such a technical consultation process. I will press amendment 144 to a Division. 

Finally, amendment 148 calls for there to be no detriment in pension provisions on the transfer from the old to the new company. I will press it to a Division as well. I am happy to withdraw the remaining amendments, on the basis that we can vote on the six that I have mentioned. 

The Chair:  Let me list the amendments that I understand the hon. Gentleman will press to a Division: 127, 129— 

Gordon Banks:  No. Amendment 129 only. 

The Chair:  Okay. Amendments 129, 130, 131, 134, 144 and 148. 

Gordon Banks:  Correct. 

The Chair:  I invite the hon. Gentleman to withdraw amendment 127. 

Gordon Banks:  I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Amendment proposed: 129, in clause 67, page 41, line 26, at end insert— 

‘(e) the protection of employees of the company is secured such that they will suffer no material detriment arising out of the relevant transfer.’.—(Gordon Banks.)

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 44 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Clause 67 ordered to stand part of the Bill.  

Column number: 718 

Clause 68 

Applications for postal administration orders 

Amendment proposed: 130, in clause 68, page 41, line 40, at end insert— 

‘(ca) representatives of the employees of the company, and’.—(Gordon Banks.)

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 45 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Question proposed, That the clause stand part of the Bill. 

Gordon Banks:  Obviously, I am disappointed that amendment 130 did not meet with the Government’s approval, but can I take the Minister back to the discussion that we had earlier on this afternoon, where the words “reasonably practicable” appeared in another part of the Bill? Could the Minister give some outline, in this area, on what he considers to be “reasonably practicable”—whether it is days or weeks? 

Mr Vaizey:  Clause 68 sets out the process for the Secretary of State or Ofcom to apply to a court for a postal administration order. If a universal service provider is in financial difficulty then there may be other interested parties, such as creditors who hold floating charges over the company’s assets, who may have appointed or been entitled to appoint an administrative receiver, or may be entitled to appoint an administrator. Clause 68(2) requires the Secretary of State or Ofcom to give notice as soon as reasonably practicable to those persons if an application has been made for a postal administration order. As a result, those persons will have time to prepare, if they wish to do so, representations to the court when it considers the Secretary of State’s or Ofcom’s application. 

Other categories of persons to be notified may be specified in the postal administration rules. Those rules will be consulted on and made by secondary order under the power in clause 71(3). 

I do not really dissent from the remarks I made earlier about the definition of 

“as soon as reasonably practicable”. 

Those are proceedings that none of us would wish to see and there could be a variety of circumstances in which those proceedings could take place. Therefore, it would be possibly quite impractical to set a specific time period for those notifications to take place. As I said

Column number: 719 
earlier—I hesitated to say it, but I will say it more emphatically this time—the phrase 

“as soon as reasonably practicable” 

really, in my view, says what it does on the tin. If people take the view that the notifications are being unduly delayed, they can apply to the court for an order for notifications to be made. It would then be up to the court to define what 

“as soon as reasonably practicable” 

meant in those specific circumstances. 

Question put and agreed to.  

Clause 68 accordingly ordered to stand part of the Bill.  

Clause 69 

Powers of court 

Amendment proposed: 131, in clause 69, page 42, line 13, at end insert— 

‘(ea) before making the order call for such evidence as it think appropriate that the interests and entitlements of employees of the company are to be safeguarded, and’.—(Gordon Banks.)

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 46 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

3.30 pm 

Gordon Banks:  I beg to move amendment 132, in clause 69, page 42, line 19, leave out from ‘Act’ to end of line 21 and insert ‘an administration order would be likely to achieve the purpose of the administration.’. 

As it stands, the court may only make an administration order where the company is unable to pay its debts and where 

“on a petition by the Secretary of State under section 124A of the” 

Insolvency Act 1986 

“it would be just and equitable (disregarding the objective of the postal administration) to wind up the company”. 

Whether it would be just and equitable to make an order for the winding-up of the company may be the wrong test, although I guess that the Minister will disagree. Does the Minister agree that the test should be whether an administration order would be likely to achieve the objective of the administration? 

Column number: 720 

Mr Vaizey:  I once again apologise for being premature, Mr Hood, but we are all anxious to ensure that we examine the clauses in good time before the conclusion of these epic proceedings. 

Clause 69 sets up the powers of the court on receiving an application from either the Secretary of State or Ofcom for a postal administration order. The clause, as drafted, mirrors the position in a special administration under the Energy Act 2004, which was passed by the previous Government. 

I am grateful to the hon. Gentleman for setting out the purposes of his amendment. It seems inappropriate for the amendment to require the Secretary of State to satisfy the court that a postal administration order would be likely to be successful before it can issue one. It would be for the court to decide, in the broadest sense, whether there was a case for postal administration. In particular, the court would have to assess whether the company was insolvent or whether it would otherwise have been just and equitable to have wound it up. However, in circumstances where the continued existence of an important national service was at stake and where important decisions might have to be taken as to what, if any, regulatory measures are necessary in order to preserve that service, it would not be appropriate—it might even be impossible—for the court to assess whether the objective of the postal administration was likely to be achieved. 

In deciding whether to seek a postal administration, the Secretary of State would have considered factors such as the likely impact of the insolvency of the universal service provider on users of the service and on the economic interests of the country. That is not the same as in an ordinary administration, where the court may need to be satisfied that administration is likely to succeed in order to prevent a company going into administration where that would not, in fact, be in the interests of the creditors. 

Finally, it is worth bearing in mind that, given the obligations imposed by the postal services directive, in reality there could be no question of the objective of the postal administration failing to be met. The Secretary of State and the postal administrator, each using their respective powers, would need to ensure that a universal service continued to be provided, whether by a rescue or, failing that, by a transfer scheme. For those reasons, I am resisting the amendment. 

Gordon Banks:  I have listened to what the Minister has said, and I accept that administrations have many complexities. I take on board what he said about the difficulty of the court being able to determine whether the objectives of the amendment actually would be achievable. I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Clause 69 ordered to stand part of the Bill.  

Clause 70 

Postal administrators 

Amendment proposed: 134, in clause 70, page 43, line 19, at end insert ‘and 

(c) the interests and entitlements of the company’s employees.’.—(Gordon Banks.)

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Column number: 721 

Division No. 47 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Clause 70 ordered to stand part of the Bill. 

Clause 7 1 ordered to stand part of the Bill. 

Schedule 10 

Conduct of postal administration 

Gordon Banks:  I beg to move amendment 137, in schedule 10, page 103, line 6, leave out ‘50,’. 

Again, I will not detain the Committee for long. The purpose of the amendment is to make paragraphs 51 to 53 of schedule B1 to the Insolvency Act 1986 to apply to a postal administration. That schedule sets out detailed rules that apply in administrations. 

Paragraphs 51 to 53 of schedule B1 made provision for initial creditors’ meetings and associated procedural requirements. Creditors’ meetings are an important mechanism to enable creditors and employees to obtain information as to the likely payments that they will receive. Will the Minister tell the Committee why those provisions should not apply to postal administrations? My hon. Friends and I are at a loss on the matter. 

The Chair:  Order. There is a smell of smoke in the room. I do not know if it is coming from outside. Will someone check it? 

Gordon Banks:  I have actually completed my remarks, but my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East commented, from a sedentary position, on smoke and mirrors. 

Mr Vaizey:  As a committed smoker, I fess up that it is not me. I have been tempted to check, as we are talking about court proceedings, whether this being a royal palace trumps the smoking legislation passed by the previous Government, but I have not done that yet. 

I also want to make it clear that, if the worst is happening, I intend to stay in the Committee Room until we have concluded our proceedings and the Bill is through Committee and ready for Report, Third Reading and the other place. I know that the Committee is with me en masse. We have been through too much—19 sittings—we have got to know each other and we are not leaving now. 

Schedule 10 makes provision for the detailed application of insolvency law to a postal administration. It applies certain provisions of schedule B1 of the Insolvency Act 1986, introduced by the Enterprise Act 2002, to a postal administration, amended to allow for the circumstances

Column number: 722 
of a postal administration. The principle adopted has been to amend only the provisions necessary in the context of a postal administration. 

Amendment 137 seeks to reinstate the requirement in paragraphs 51 to 53 of schedule B1 to the 1986 Act for an administrator to hold a meeting of creditors of the company, at which the creditors vote whether to accept the administrator’s proposals for achieving the objective of the administration. 

As with other special administration regimes, we do not believe that the requirement to call a creditors’ meeting is appropriate. I remind hon. Members that the focus of the special administration is the achievement of the statutory objective which, in the case of a postal administration, is securing the universal postal service. 

Gordon Banks:  Does the Minister agree that at such a creditors’ meeting, it would be important for that point to be made to creditors? Many creditors would not be aware of that overarching ambition of the legislation in their dealings with whatever company it may be. At that stage in the administrative process—a creditors’ meeting—it would be appropriate for that point to be made. 

Mr Vaizey:  I hear what the hon. Gentleman is saying, but if that is the amendment’s purpose, it is not quite the same thing. If he wants the postal administrator to inform creditors about the purpose of the postal administration, it could be done by sending them a letter. In a normal administration, the administrator of a company must perform his functions in the interests of the company’s creditors as a whole, which is why there is a creditors’ meeting. In this, a special administration, the purpose is to secure the universal postal service. So, while the postal administrator in this regime has to exercise powers and perform duties in a way that protects creditors and shareholders of a company, they only do so as far as that is consistent with the statutory objective. In any case, the adjudicator has to send a statement of his proposals to the creditors, and obviously, that would reiterate the point that the administration’s objective is to secure the universal postal service. 

If Royal Mail, as the universal service provider, entered special administration, the imperative would rightly be on securing the universal postal service—I do not know how many times I will say that here. The postal administrator would work with Ofcom and the Secretary of State, who would have powers to modify the regulatory regime—which is why, with reference to the previous debate, there should be a consultation with Ofcom—as well as having powers to approve relevant transfers, where appropriate, and to support the universal service provider financially to agree how best to secure the universal postal service. Creditors would be protected as far as possible, but they would not be the primary focus of a postal administrator. There would, therefore, be no need for a requirement to hold a creditors’ meeting, nor would it be appropriate for the creditors to vote on the administrator’s proposals. As that policy is consistent with those in other special administrations, including the one in the previous Government’s Energy Act 2004, I hope that the hon. Gentleman will withdraw the amendment. 

The Chair:  Order. I have had a report back, and there are fires around the building. Fortunately, there are no fires in the building, but it is the smoke from fires in the streets that is now wafting around Parliament. 

Column number: 723 

Gordon Banks:  We can see the effect that the Minister has on the City of London. 

Mr Davey:  They are his supporters. 

Gordon Banks:  I wonder whether they are trying to smoke him out. 

I have listened to the Minister’s response, but there is much to be gained from a creditors’ meeting. I have a range of views on insolvency, which I will not bother the Committee with now, but a dearth of information is provided to creditors, and there is a lot that the administrator could do with creditors by calling such a meeting to outline their aims and objectives and to state how they must comply with the legislation. I want to press the amendment to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 48 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Schedule 10 agreed to.  

Schedule 11 

Postal Transfer schemes 

3.45 pm 

Amendment proposed: 144, in schedule 11, page 114, line 41, at end insert: 

‘and the representatives of the employees of the old company.’.—(Gordon Banks.)  

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 49 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Column number: 724 

Amendment proposed: 148, in schedule 11, page 119, line 37, at end insert: 

‘(2) The new company shall procure that employees of the old company who become employees of the new company as a result of a postal transfer scheme are entitled to the same pension benefits in respect of their employment with the new company as was the case in their employment with the old company and that such employees will suffer no material detriment in relation to pension provision.’.—(Gordon Banks.)

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 50 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Newmark, Mr Brooks   

Patel, Priti   

Stephenson, Andrew   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Gordon Banks:  I beg to move amendment 145, in schedule 11, page 116, line 43, at end insert: 

‘provided that any such modifications are in the interest of fair competition and do not place the old company at a competitive disadvantage.’. 

The Chair:  With this it will be convenient to discuss amendment 136, in clause 80, page 49, line 13, at end insert ‘provided that— 

(a) the Secretary of State has first considered whether it is in the interest of fair competition to modify or revoke any regulatory conditions applicable to other postal operators; and(b) the Secretary of State has issued a statement that he considers that the modification or revocation of regulatory conditions proposed is in the interest of fair competition.’.

Gordon Banks:  Amendment 145 attempts to add fairness to the modification of regulatory conditions in a postal transfer scheme. We hope that the amendment will ensure that any such modifications are in the interests of fair competition, and do not place the old company at a competitive disadvantage. 

Amendment 136 relates to clause 80. It seeks to ensure that should a privatised Royal Mail go bankrupt, the Secretary of State is not tempted to act, or permitted to act, in an arbitrary manner when assessing the regulatory conditions. 

The first point is to ensure that the Secretary of State considers regulatory conditions, not just from the perspective of the individual firm but from that of the postal market as a whole. In a recovery period for a bankrupt firm, it will be necessary to ensure that new imbalances in competition are not introduced as a result of unintended consequences. As the Minister and I have pointed out, we have not yet experienced a bankrupt Royal Mail,

Column number: 725 
and we hope that that never happens to any such service provider. It is, therefore, speculative to suggest what actions may be considered, but it is worth our while to debate it. We must insert a safeguard that ensures that the Secretary of State considers the impact on all postal operators and on the market as a whole. 

The second point gives an element of accountability to the process by obliging the Secretary of State to make statements once a course of action is being prepared. Amendment 136 would require the Secretary of State, before giving effect to any modification or revoking any regulation, to have considered the issue of fair competition and issued a statement to that end. That would provide some opportunity to question, influence and engage with the Secretary of State before an action is undertaken that could have a major impact on the future of the industry. 

That is a theme on which we have tried repeatedly to engage the Secretary of State throughout the debates. I am glad to say that the amendment continues our attempts to introduce much more debate and reporting back to Parliament from page 1 of the Bill onwards. I hope that the Government see the good sense of the amendment, given that we are debating what to do in the worst possible circumstances that the industry, the company, the employees and the country might face. 

Mr Vaizey:  The amendments, which relate to both schedule 11 and clause 80, concern the need to ensure fair competition when modifying and revoking regulatory conditions in a special administration scenario. Amendment 136 provides that before the Secretary of State can 

“modify or revoke regulatory conditions applicable to other postal operators” 

he must first consider 

“whether it is in the interest of fair competition” 

and issue a statement that he considers that the modification or revocation is in the interests of fair competition. Amendment 145 seeks to ensure that in the event of a postal transfer scheme any consequential modifications of regulatory conditions to which the old or new company was subject 

“are in the interest of fair competition and do not place the old company at a competitive disadvantage.” 

I want to reassure the hon. Gentleman that safeguards are built into the procedure in relation to the power to modify regulatory conditions in clause 80(7), because by virtue of clause 80(12) the Secretary of State will be under a duty to exercise the power in a way that is objective, transparent and proportionate and does not give rise to undue discrimination. Those safeguards ensure that any interference is necessary and proportionate. 

In addition, any decision by the Secretary of State under clause 80(7) or paragraph 8 of schedule 11 would have to be compatible with the European convention on human rights—which I know has an immense amount of support in Committee—and with principles of general administrative law. That will ensure that the Secretary of State, before modifying or revoking regulatory conditions, would have to take account of all relevant factors including the need for fair competition. 

Although I understand the thrust of the amendments, I venture to suggest that they are not necessary. I am grateful to the hon. Gentleman for tabling them and

Column number: 726 
giving me the opportunity to spell out the implications of the clause. I also point out, however, that if we were ever to find ourselves in a special administration scenario, foremost in the Secretary of State’s mind—and, I hope, in the minds of all Committee members—would be the need to secure the universal service. That would also, of course, be our legal obligation under the postal services directive. 

As has been made clear over the past few weeks, we are fully supportive of fair competition, but it cannot be at the expense of the universal service. I am sure that hon. Members do not disagree with that. I hope, therefore, that the Opposition will not press the amendments. 

The Chair:  Order. May I assist the Committee? We cannot have a vote on amendment 145, because we have taken amendment 148. If the hon. Gentleman wants, we can vote on amendment 136, when we reach it later. You also have an option to vote against the schedule. 

Gordon Banks:  Thank you for your guidance, Mr Hood. I have listened to what the Minister said. He expanded on some of the points and has given me a degree of reassurance. As it is important that we make some progress, I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Schedule 11 agreed to.  

Clauses 72 to 76 ordered to stand part of the Bill.  

Clause 77 

Grants and loans 

Question proposed, That the clause stand part of the Bill.  

Gordon Banks:  I will not detain the Committee for too long. I refer the Committee to subsection (2) under which the Secretary of State may, with the consent of the Treasury, make grants or loans to the company to which a postal administration order applies. Is that a blank cheque? Is it a blank cheque that could be seen as encouraging the failure of a privately owned business? Why do the Secretary of State or the Treasury have no responsibility in the Bill to report these grants or loans to Parliament? Finally, will he address this last point on Report and bring forward a Government amendment compelling either the Secretary of State or the Treasury to make this information known to Parliament, preferably for debate—I would settle for his ensuring that the information is “popped” into the Vote Office, as my hon. Friend the Member for Telford put it earlier? That is short and sweet and I look forward to the Minister’s response. 

Mr Vaizey:  I love the fact that I can get up immediately. The hon. Gentleman asked four very important questions about the clause. He wants to know whether the Secretary of State’s power in subsection (3) is the equivalent of a blank cheque and whether it is also a blank cheque for a failed company. He also wants to know whether the grants or loans to the company should be reported to Parliament. He is considering tabling an amendment on Report— 

Gordon Banks:  I did not say that I am considering tabling an amendment on Report; I invited him to do so. 

Column number: 727 

Mr Vaizey:  I see. So the hon. Gentleman has clearly recognised my superior skill in drafting amendments. He has invited me to amend the Bill so that it is a duty for the Secretary of State or the Chancellor to make the information available to Parliament. He asks why a statement does not need to be laid in Parliament for any loan or grant given to the company or any indemnity given to a postal administration. A statement is required for any guarantee under clause 79. The requirement for a statement on any guarantee given is to satisfy and comply with the current public expenditure rules in relation to the giving of guarantees by Government to create transparency, because guarantees would create future contingent liabilities. That is why that is in clause 79. 

If necessary, nothing would prevent the appropriate Minister from reporting to the House at the time with details of the loan, grant or indemnity given. Indeed, given Mr Speaker, with whom we are currently blessed in Parliament, it is almost certain that he would grant an application for an urgent question. 

Public spending rules do not expressly require such a position, but it might reassure the hon. Gentleman that such information would, of course, be readily available from the relevant Department’s annual reports and accounts. I hope that I have cleared up the matter. 

Question put and agreed to.  

Clause 77 accordingly ordered to stand part of the Bill.  

Clause 78 ordered to stand part of the Bill.  

Clause 79 

Guarantees where postal administration order is made 

Question proposed, That the clause stand part of the Bill. 

4 pm 

Gordon Banks:  In some respects, I shall carry on from the clause stand part debate on clause 77. The Minister said in that debate that the Secretary of State must report to Parliament on guarantees that he might make to the company. I am pleased that subsection (4) creates the responsibility for the Secretary of State to lay before Parliament a statement of such guarantees, but although I let the Minister off the hook without coming back to him about clause 77, I am still confused about why the necessity under clause 79 does not apply to that clause. 

I wish to return to the line of inquiry that I have used twice this afternoon. Do the words “as soon as practicable” mean days or weeks, or are we back to what it says on the tin? I ask the same question in relation to subsection (7), especially as it covers the paying out of a guarantee. It creates the opportunity for the Secretary of State to wait until after the end of the financial year in which the guarantee has been paid before making his report to Parliament. Will the hon. Gentleman explain why that is so, and why the statement will not be forthcoming within, say, 28 days or 120 days? Will the words in the Bill mean that the values of guarantees paid will constitute part of the report, because that is not particularly clear? 

Mr Vaizey:  As the hon. Gentleman has pointed out, I said in my previous answer that I anticipated he would draw attention to the fact that the guarantee has to be reported to Parliament, but not the loan as set out

Column number: 728 
under clause 77. The loan is not required to be reported under public spending rules, but the guarantee is because it creates contingent future liabilities. In any event, I reassured the hon. Gentleman that, under clause 77, the loan would appear in the Department’s annual reports and accounts and that any Minister is free to report to Parliament about a loan. 

The hon. Gentleman asked again about the words “as soon as practicable”. We have covered that issue before, and my views have not changed. It is obviously important to maintain flexibility when getting the relevant information together to make a statement before Parliament. Under the Bill, the Secretary of State will be under a greater burden than the previous regimes, because he would not necessarily be subject to a court order and judicial review. He would be subject to Mr Speaker, who we know takes the rights of Parliament extremely seriously and is keener than ever to invite Ministers to address it. 

As for being impractical after the end of the first financial year, clearly a guarantee is a guarantee. Parliament would be aware of the nature of that guarantee. It is important that, having given the guarantee, which is effectively a draw-down facility under the postal administration order, Royal Mail, or the provider under the postal administration order, is free to draw down that guarantee throughout the financial year. In some ways, it would be misleading and almost unhelpful if every time the universal service provider under the postal administration order called on the guarantee during the financial year, the Secretary of State reported to Parliament—particularly if, two months later, the provider drew down on the guarantee again. It is much simpler to have the report on the financial year, so that when the financial year is concluded—given that that is when accounts are prepared—it is simpler for the Secretary of State to come to Parliament to explain what has happened during that financial period. 

Gordon Banks:  I seek a little clarification from the Minister, if he does not mind. I trust that he is not saying that there would be no need to report on the guarantee unless the whole guarantee had been drawn down. 

Mr Vaizey:  I am certainly not saying that. I am saying that, given that Parliament would know the nature of the overall guarantee, it would be simpler for the Secretary of State to report at the end of each financial year, so that Parliament knew during that financial year what element of the guarantee had or had not been used by the universal service. 

Gordon Banks:  That was the final point that I made in my opening remarks. In the Bill, it is not clear that the value of the guarantee that has been drawn down—or the value of the guarantee and the percentage drawn down—will constitute part of the report. I take it from what the Minister has just said that the value will definitely be there in the report in pounds, shillings and pence. 

Mr Vaizey:  That is my understanding, but if I am wrong about that, I will keep talking until I can read the note that my colleague will pass to me. A guarantee is a guarantee of a loan made to the company, and if the

Column number: 729 
company defaults on the loan, the guarantee will be triggered. Any payment by the Secretary of State would need to be reported. 

Question put and agreed to .  

Clause 79 accordingly ordered to stand part of the Bill.  

Clause 80 

Regulatory powers exercisable during postal administration 

Mr Vaizey:  I beg to move amendment 102, in clause 80, page 48, line 38, leave out from ‘29’ to end of line 40. 

The Chair:  With this it will be convenient to discuss Government amendments 103 and 104. 

Mr Vaizey:  It has been the most fascinating compare and contrast afternoon. As I have already indicated to members of the Committee, we have cracked through almost 30 clauses in less than two hours. That says something about the Minister currently taking the Bill through. If you wanted further confirmation, this is the first Government amendment to be moved in the Bill, and it has been left to me to take it forward. That is an interesting development. 

The Chair:  Is that it? 

Mr Vaizey:  No. I just wanted to see whether you wanted to add anything, Mr Hood; one never knows. What I want to say is that these amendments are minor and technical, and only serve to provide legal clarity to the clear policy intentions of the clause. I hope that hon. Members found my note to the Committee—it may have been the note from the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the hon. Member for Kingston and Surbiton—useful in explaining the purpose of the amendments. 

As I have already stated, the provisions in part 4 of the Bill are very much reserve provisions. It is our hope and expectation that they will never be used. It is, however, sensible for the Government to prepare for future scenarios, even though we consider them remote. If a special administration scenario were ever to materialise, it would be crucial to ensure that—if required—swift and decisive regulatory action can be taken to bring an end to the administration and secure the ongoing provision of the universal postal service. Clause 80 provides for that. It enables the Secretary of State to modify the universal postal service order made by Ofcom under proposed section 29 to amend proposed section 30, which refers to the minimum requirements, and to revoke or modify any regulatory conditions that the Secretary of State considers appropriate for, or in connection with, achieving the objective of the postal administration. Before modifying the universal postal service order or modifying and revoking regulatory conditions, the Secretary of State must consult Ofcom and other interested parties as appropriate. Any order to amend proposed section 30 is subject to the restrictions contained within the European directive, which provide an absolute backstop in terms of minimum service. 

Column number: 730 

Under clause 80, further safeguards are provided in the form of parliamentary scrutiny. The order must be subject to approval after being made—it must be laid before Parliament after being made—and ceases to have effect unless it is approved by a resolution of each House within 28 days. The Government amendments make it clear that the Secretary of State may not exercise his power to modify the universal postal service order or amend proposed section 30 at any time before the postal administration order has ceased to be in force. This makes it absolutely clear that the powers can be exercised only in a scenario where the universal service provider is in danger of entering insolvency proceedings and thus the universal service itself is under threat. 

The Secretary of State’s power to revoke or modify any regulatory condition is similarly constrained in that it can be used only for, or in connection with, achieving the objective of the postal administration. This formulation, as opposed to the timing limitation placed on the power to modify the universal postal services order or amend proposed section 30, is important. Without it, it would potentially mean that the provisions contained in clause 81 could not be used to secure any necessary funding for the postal administration. 

I will conclude by restating that the Government’s overriding objective for the clause, for part 4 and indeed for the whole Bill is to secure the future of the universal postal service. Members of the Committee must be bored with my saying that. The special administration regime is the final layer of protection. We do not expect to have to use the powers, but a reasonable Government must be realistic and plan for all scenarios. 

Gordon Banks:  Mr Hood, is it appropriate to discuss amendments 102 and 103? 

The Chair:  Yes. 

Gordon Banks:  I have a quick question for the Minister. When I looked at the amendments, I could not see what was gained by them. May I ask the Minister why he feels it appropriate to remove the relevant words in subsections (2) and (5) but not subsection (7)? 

Mr Vaizey:  When I wrote to the hon. Gentleman and other colleagues on 26 November 2010, I tried to set out clearly why the amendments were required. I am disappointed that he feels that they are unnecessary. I made it clear that it has become apparent that minor technical amendments are needed to ensure the policy intention of clause 80. He has asked why we have not amended subsection (7). He is really asking why the amendments do not sunset the power to modify or revoke regulatory conditions as they do with the other two powers, but he thought he could confuse me. It is our firm intention that all the Secretary of State’s powers in the clause are not open-ended. The clause without the amendments, when read in connection with other associated clauses in part 4, created circularity that would in effect render the clause largely meaningless. The amendments solve this by removing the references to 

“for, or in connection with, achieving the objective of the postal administration” 

from the powers to modify the universal postal service order and the power to amend proposed section 30. The amendments now provide that the powers are effectively sunsetted when the postal administration order ceases to be in force. 

Column number: 731 

However, the issue of circularity did not apply to subsection (7), which concerns the power to modify or revoke regulatory conditions. Furthermore, it is important that the reference to 

“for, or in connection with, achieving the objective of the postal administration” 

remains in that subsection. Rather than the power immediately ceasing to be available at the end of the postal administration, this formulation of wording provides for a slightly extended time scale. That is needed to ensure that clause 81, which contains powers for securing funding for the postal administration, can be fully effective. 

4.15 pm 

Clause 81, which we will come to shortly, provides a mechanism, if it is needed, to ensure that the full cost of the postal administration can be secured by modifying price control provisions. As it is highly unlikely that the Secretary of State will know what that full cost is until after the administration ends, the power to modify regulatory conditions, including price controls, needs the slightly extended time frame that is provided by clause 80(7). I reiterate that that is not an open-ended power, as it can only be used 

“for, or in connection with, achieving the objective of the postal administration.” 

As such, the power would only be relevant in that scenario. I am delighted to have enlightened members of the Committee. 

Amendment 102 agreed to.  

Amendment made: 103, in clause 80, page 49, line 3, leave out from ‘30’ to end of line 5.—(Mr Vaizey.)  

Gordon Banks:  I beg to move amendment 135, in clause 80, page 49, line 5, at end insert ‘but not so as to reduce the extent of the minimum requirements of the universal postal service.’. 

The Committee will be glad to hear that this is my last contribution, unless we reach new clause 5, on which I want to make a small contribution in support of the hon. Member for Angus, but I will deal with that if we get to it before 5 pm. 

The objective of amendment 135 is to ensure that anything that the Secretary of State does using powers to amend proposed section 30 will not 

“reduce the extent of the minimum requirements of the universal postal service.” 

We do not want the Secretary of State to do anything negatively to affect the minimum requirements set out in that proposed section. We would be happy for him to improve them by, for example, increasing collections or deliveries, but we will leave that to him and for another time. We do not wish to leave to the Secretary of State, who has a lot on his plate, especially today, the possibility of taking action to water down proposed section 30. 

Why is there no requirement for the Secretary of State to report to Parliament actions that he is empowered to make under subsection (5)? The way in which the provision is drafted does anything but create accountability, so I am sure that the Minister will agree with our sentiments and go along with us on this occasion, as we have been encouraging both Ministers to do over our weeks in Committee. Otherwise, the Government will

Column number: 732 
be seen as wanting to give the Secretary of State the power to reduce the minimum requirements of the universal postal service. Our amendment would protect the minimum requirements as they are. We want to keep them as they are, and I hope the Minister does, too. 

Karl Turner:  I rise to speak in support of amendment 135 and to continue a theme that I have developed throughout the Committee, which is the protection of the universal service obligation. As the Government are intent on privatisation, it is only right that hon. Members do all we can to ensure the best outcome for employees and, importantly, for consumers. The amendment would guarantee that, if the universal service provider is subject to administration, the Secretary of State must ensure that the universal service obligation is provided at the level set out in clause 30. 

The complete privatisation of Royal Mail brings forward an issue that we have not been obliged to consider in previous proposals. In Committee, I have made no secret that I am entirely opposed to that privatisation, which may make me an old-fashioned socialist, but so be it. The full privatisation means that Royal Mail could be declared bankrupt, which concerns me greatly. I say that in the knowledge that the Government have been kind enough to investors to pre-empt such an occurrence by allowing the Secretary of State, with the approval of the Treasury, to grant loans to achieve administration and, therefore, protect investors. Although that may be good news for potential investors, I doubt whether the taxpaying public are as happy about it. I am sure that they are not enthusiastic at the prospect of public money being pumped into a potentially failing private company. The Government clearly accept the principle of underwriting a private venture with public money. It was, after all, the same system that led to vast public subsidies for rail companies. Recent events in the banking industry have also led to taxpayers having to foot the bill for irresponsible financial practices. It is safe to assume that the public lack the stomach to embark on a course of action that could lead to more of the same. 

In the event that Royal Mail’s new private owners find themselves in a dire situation and a postal administration order is made, its consumers should not receive a diluted universal service. I firmly believe that the amendment would prevent that from happening. The public would not expect a diluted service. If the Government are required to underwrite a private business venture, the public should be guaranteed the universal service for which the Government have legislated and which the provider is contracted to provide. 

I have, time and again in this Committee, rejected the argument that the universal service obligation can be reduced by the Secretary of State under any circumstances, and the circumstances under discussion are no different. In fact, in the case of bankruptcy, it is even more paramount that the universal service obligation is protected from any interference. If administration occurs—of course, we hope that it does not—it is reasonable to expect that it will be due to irresponsible or faulty management decisions. It would not, therefore, be fair to reduce a service that is relied on by so many due to events that are far from their control. 

Although postal services come in for criticism from time to time, many of our constituents have come to rely on them. That ethos should continue regardless of

Column number: 733 
privatisation and administration. The amendment would remove the power of the Secretary of State to circumvent the settled view of Parliament on the minimum universal service obligation requirements. It is often said that two heads are better than one, so I wonder whether the Ministers could put their heads together and consider a concession by accepting the amendment. 

Mr Vaizey:  I am grateful for the opportunity to respond to the hon. Members for Ochil and South Perthshire and for Kingston upon Hull East, whose earlier intervention I did not get the opportunity to respond to. I tried to flatter the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, but that fell on stony ground, so I hesitate to say that it is a great opportunity to debate with the hon. Member for Kingston upon Hull East. I would not describe him as old-fashioned. In fact, the more I have got to know him over the past few weeks, the more I have come to regard him as someone who has stepped off the set of “Mad Men”. He is a sharply dressed, cool-looking guy. I remind hon. Members that I am the Minister with responsibility for fashion, so I am entitled to make that comment. 

Gordon Banks:  That is difficult to believe. 

Mr Vaizey:  The hon. Gentleman imitates the reaction of most of the fashion industry when they meet me. I understand that the hon. Member for Kingston upon Hull East is a barrister on the northern circuit. 

Karl Turner:  North-east. 

Mr Vaizey:  It was a good guess, and I gather that he has a formidable reputation. 

This amendment concerns the modification of regulatory conditions during a special administration. It would in effect limit a potentially important power of the Secretary of State—I am pleased that the hon. Member for Ochil and South Perthshire has indicated that the right hon. Member for Twickenham (Vince Cable) will be Secretary of State for quite some time—might need to protect the long-term security of the universal service. 

If a special administration scenario were to occur—obviously, we both expect and hope that it will never happen—it would mean that the universal service provider could no longer continue to fulfil its universal service obligations, and the provision of the universal service in any form would be at risk. In such a scenario, the Secretary of State would need the ability to make swift and decisive changes to protect the universal service. Furthermore, it is only right that the Secretary of State has the ability to make any and all changes necessary to protect the universal service. Perversely, amendment 135 would restrict the Secretary of State’s ability to protect the service, because it would restrict his ability to make changes. Were he to decide that it was necessary to amend the minimum requirements in order to secure the universal service and end the administration, he could not do so in such a way that reduced those requirements. 

Are Labour Members seriously suggesting that in such extreme and extremely unlikely circumstances, they would rather see the complete failure of the universal service than some form of amendment? It seems counterintuitive to restrict the Secretary of State’s ability

Column number: 734 
to secure the universal service, especially in such a time as the continued provision of any, let alone all, of the universal service is in danger. 

The power to amend the minimum requirements is, of course, not without constraint. The hon. Member for Ochil and South Perthshire has asked about parliamentary accountability. Any amendments are subject to approval by affirmative resolution, and, of course, the minimum requirements, which are the concern of the hon. Member for Kingston upon Hull East, could not be amended in such a way that they fail to comply with the requirements of the postal services directive. 

On those two counts, that more than answers the concerns of both hon. Members. I ask that the amendment be withdrawn and that the clause stand part of the Bill. 

Gordon Banks:  I do not share the confidence of the Minister’s closing remarks. I also do not share in his scaremongering on the amendment’s potential impact. We think that the introduction of negative changes to universal service provision should be prevented, and the amendment does that, so I would like to press it to a vote. 

To pick up a point raised by the Minister, I expect the right hon. Member for Twickenham to remain Secretary of State for a considerable period of time—until at least 6 o’clock tonight. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 51 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Amendment made: 104, in clause 80, page 49, line 32, at end insert— 

‘(12A) The power conferred by subsection (2) or (5) may not be exercised at any time after the postal administration order has ceased to be in force.’.—(Mr Vaizey.)

Clause 80, as amended, ordered to stand part of the Bill.  

Clauses 81 to 89 ordered to stand part of the Bill.  

Schedule 12 

Minor and consequential amendments 

4.30 pm 

Nia Griffith:  I beg to move amendment 69, in schedule 12, page 128, line 13, at end insert 

“unless it can be identified that the packet was incorrectly priced by— 

Column number: 735 
(a) the postal operator, or(b) the access point provider.”.

I will be brief. The Bill intends to provide post operators with the power to detain packets and impose a surcharge when there has been underpayment or no payment of the postage required. There are circumstances when the underpayment is not the fault of the sender, but is due to incorrect pricing procedures by the postal operator or the point of access. The Bill, therefore, should be amended to specify that an item may not be detained and no surcharge may be imposed when it can be identified that the packet was incorrectly priced by the postal operator or access provider. It is only reasonable to recognise that there can be fault on either side, and if that incorrect advice has been given to the consumer, then the consumer should not be penalised. It is for that reason that we have tabled the amendment. 

Mr Vaizey:  The issue of surcharging is difficult. To have a sustainable universal service, and indeed sustainable postal services more generally, Royal Mail and other postal operators need to be able to cover their costs. If an item of post has entered the system with either no postage or insufficient postage, then before delivering that item, the postal operator should be able to get the postage that should have been paid, which is only reasonable. If that were not the case, the whole system would start to unravel. 

New section 104A, which paragraph 35 of schedule 12 inserts into the Postal Services Act 2000, clarifies the legal position. It allows postal operators to detain post and packets, if there has been insufficient postage paid, and to impose a surcharge. Once the correct postage and any surcharge has been paid, the operator may no longer detain the item. The new section also gives an oversight role to Ofcom in respect of the extent of the surcharge and the period of time for detention. The amendment seeks to prevent detention or surcharging in two specific cases: if the postal operator itself prices the postage incorrectly, and if the provider of an access point does so. I have some sympathy with the idea behind that. If customers have paid the postage that they were told in good faith should be paid, it does not seem fair that the recipient should have to pay the extra postage or surcharge. 

The problem with the amendment is that it is difficult to see how it will work in practice. I do not believe, therefore, that it offers a solution. The fact is that there is no way to identify whether it is the person posting, the postal operator or the Post Office that has priced and revised the postage. Unless and until there is, I can see no way to support the amendment, because it would not and cannot achieve what it seeks to do. We need some joint work between postal operators, the Post Office and consumer and user groups to understand how widespread the problem is. My hon. Friend the Minister with responsibility for consumer and postal affairs tells me that he has not had any correspondence on the issue. However, that is not to say that that is not an issue. [ Interruption. ] That may well be because the people who are writing to him about the issue do not realise that they have to put a stamp on the envelope. I understand from Post Office Ltd that it received 300 complaints on that matter between April and July 2010. To put that in context—it

Column number: 736 
was a typical quarter year—it had more than 100 million label or stamp transactions across its counters during that same period. 

If the joint work that I referred to earlier finds that that is a serious problem, those parties should then start trying to find a workable solution between them that protects consumers, does not undermine the universal service and does not impose huge burdens on those operating in the postal services market. It may be, for instance, that the Post Office needs to emphasise to staff the importance of ensuring that customers are advised of the correct cost of postage. Legislation is not the answer, so I invite the hon. Lady to withdraw her amendment. 

Nia Griffith:  I am not convinced by the Minister’s comments. Mistakes are made at times by the service provider. I therefore want to press the amendment to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 52 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Nia Griffith:  I beg to move amendment 46, in schedule 12, page 136, line 28, after ‘consult’, insert 

‘and have regard to the opinion of’. 

The Chair:  With this it will be convenient to discuss the following: 

Amendment 47, in schedule 12, page 136, line 29, leave out ‘it has’ and insert ‘that have been’. 

New clause 6—British Postal Museum Collection  

‘Companies in the new postal market must continue to have regard to the integrity and united custodianship of the British Postal Museum Collection as a social obligation.’.

Nia Griffith:  The amendments and new clause concern a different theme from the ones debated to date, namely the British Postal Museum Collection, which is currently owned by the British Postal Museum and Archive and supported financially by Royal Mail. 

I have been in touch with staff at the museum, as has the Minister. They have extended an invitation to visit the museum, and I understand that the Minister has proposed a date in January. I hope that that will be a cross-party effort. 

What I have learned so far about the museum is fascinating. I hope that we can reach a consensus on the best way to protect a unique national treasure. Our

Column number: 737 
purpose in the amendments and new clause is to maximise the protection given to the museum. I hope that, even if the Minister cannot accept the exact wording proposed, he might bring forward some Government amendments and a Government new clause with the same effect. 

Specifically, amendment 46 seeks to strengthen paragraph 83(1) in part 3 of schedule 12, so that a company must not only “consult” but 

“have regard to the opinion of” 

the keeper of public records, should any change to the historic collection be contemplated. That will ensure that the officially approved arrangements for this nationally significant heritage are not unduly jeopardised. 

Amendment 47 clarifies that what is meant is the arrangements that have been made, rather than arrangements that a new company might make—in other words, the arrangements that are already in place, before the new company starts making arrangements, so the danger of their being watered down is much less. 

The amendments seek to ensure that the work of the BPMA can go on following the passage of the Bill, and that the heritage cared for by the curators of the museum can be protected. The protection needs to be strengthened, because the Bill moves us away from a situation in which there is only one company, Royal Mail, that is owned by the Government and that is clearly responsible for supporting and safeguarding our postal heritage, to a situation in which there will be at least two companies with different ownership models. There will also be the potential for a privatised Royal Mail company to be taken over, perhaps by foreign postal administrations or other companies with no intrinsic interest in supporting Britain’s postal heritage. 

The amendments would strengthen the protection that the Bill gives the archive and help to ensure that the present position is preserved. That is why they matter. The BPMA is the leading resource for British postal heritage. It cares for the visual, physical and written records of more than 400 years, including stamps, poster design, photography, staff records and vehicles. The BPMA is the custodian of two internationally significant collections, namely the Royal Mail archive and the collection of the former National Postal Museum. 

The Royal Mail archive contains records of the Post Office and Royal Mail from the 17th century to the present day. It is designated as an outstanding collection by the Museums, Libraries and Archives Council. It is a public record equivalent in status to the material held at the National Archives in Kew. Given the key role played by the UK in the development of the post and the postage stamp, the collection is of world importance. 

The museum collection includes some of Britain’s most iconic objects and spans more than 400 years of postal history, innovation and service. The objects range from the large, such as pillar boxes, vehicles and sorting machines, to the small, such as hand stamps, medals and badges. Alongside the items of historical note, there are everyday things that illuminate the day-to-day work of a service that has grown to become part of everyone’s lives. 

Together, the museum and archive collections form a unique record of a national institution and offer a fascinating perspective on the history of British society, design and industry. I am sure that the Committee will recognise the considerable historical importance of the

Column number: 738 
two collections, which is why we want the strongest possible protection for the future of the museum and why we should press amendments 46 and 47. 

New clause 6 states: 

“Companies in the new postal market must continue to have regard to the integrity and united custodianship of the British Postal Museum Collection”— 

alongside the archive— 

“as a social obligation”, 

alongside the universal service. Relating primarily to the museum, new clause 6 would mean that the companies in the new postal market must at least think about Britain’s postal heritage and consider its continued preservation and availability to everyone. The intention of this latter duty to “have regard to” postal heritage is on a par with similar requirements in the Bill relating to providing the universal service and maintaining the post office network, because the collection is of immense importance and significance. 

Mr Davey:  Because I am so interested in the hon. Lady’s proposition, I am keen to discuss amendments 46 and 47. She quite rightly said that I am hoping to arrange, if members of the Committee want to join me, a visit to the BPMA in the new year. I am particularly fortunate to have the excellent supporting services of the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wantage, who has this afternoon shown his skill, dexterity and deep knowledge of and acquaintance with the fine minutiae of the Bill. I am particularly pleased, because he is the Minister with responsibility for museums, and he may well wish to help me out during this debate and support my response. 

Amendments 46 and 47 and new clause 6 encompass the activities of the BPMA. It is a charitable trust, which was developed by Royal Mail to manage the heritage of Royal Mail, Parcelforce and the Post Office. In particular, it acts as a place of deposit for the Royal Mail’s archives and as a custodian of its museum collection. The archive and the museum collection, while brought together in the BPMA, are distinctly different. The archive contains material considered to be public records, and there is, therefore, a legal requirement placed on Royal Mail by the Public Records Act 1958 to permanently preserve selected records. On the museum, Royal Mail voluntarily contributes to the preservation of the collection in recognition of the company’s heritage. There are, however, no legal requirements for it to do so. 

Amendments 46 and 47 concern the provision relating to public records in the Bill. I will discuss those first and will then move on to new clause 6. The Government have included the provisions in paragraphs 82 to 84 of schedule 12 to ensure that the necessary consequential amendments are made to schedule 1 of the Public Records Act 1958 to delete references that will be made redundant by the Bill, and insert new references to Royal Mail or the post office company as defined in clauses 2 and 6 of the Bill. That will ensure that the companies’ records continue to be classified as public records, where appropriate. Paragraph 84 also enables the Government to ensure that a Royal Mail company continues to have responsibility for the preservation and maintenance of its archives, which I agree are of historical importance—the hon. Lady made something of that—even after a Royal Mail company is no longer part of the public sector. 

Column number: 739 

4.45 pm 

I emphasise that the provisions are consequential amendments, and that there is no intention to redesign the policy on the keeping of public records set out in the 1958 Act. Section 3 of the 1958 Act requires the person responsible for the records to make arrangements to select records, under the guidance of the National Archives, for permanent preservation and safekeeping. Section 5 of the 1958 Act also requires that arrangements be made to allow members of the public to inspect and obtain copies of public records that are held. The 1958 Act is not prescriptive about exactly how the records should be held or about the public access arrangements. That harks back to the register that Ofcom will have to keep, which has been mentioned. The body that looks after all that, the BPMA, was set up by Royal Mail in 2004 to maintain the company’s current and past public records. I understand that the service it provides is considered to be over and above the requirements in the 1958 Act. That is why we have included a provision that requires the company to consult the National Archives before any significant changes can be made to the current arrangements. It is implicit that in conducting such a consultation Royal Mail should take into account what National Archives tells it. 

I do not, therefore, consider amendment 46 to be necessary. It might be that the intention behind it is to ensure that existing arrangements for the archive are maintained, but I do not believe that that is appropriate, not because I want to see change but because I see no reason why a privatised Royal Mail should be subject to more stringent requirements than those set out for public bodies in the 1958 Act. That would make no sense. What is important is that the archive is preserved and maintained and that the public have access to it, in both cases to at least the standard specified by the 1958 Act, and the provisions will ensure that. 

Amendment 47 changes the tense in paragraph 83(1) of schedule 12, but not the sense. The schedule refers to arrangements that a Royal Mail company “has” made, and it is clear that that means the arrangements that a relevant company has put in place—in this instance, those made through the BPMA. Changing “it has made” to “that have been made” does not affect beneficially or detrimentally the intention of the clause. 

Turing to the museum collection and new clause 6, I agree that the collection held by the BPMA is important, but there should not be a statutory requirement on companies in the new postal market to have regard to the museum “as a social obligation.” I assume that the new clause is meant to cover Royal Mail and Post Office Ltd, rather than other companies in the sector—for example, TNT or UK Mail. I see no reason why such companies should have an obligation towards a collection that has nothing to do with their history. I can find no precedent in legislation for a statutory duty of that kind in relation to any other privatisation of public companies or organisations. Even as a publicly owned company, there are currently no statutory duties on Royal Mail in relation to the museum collection but, despite that, it already, as a company that operates on a commercial basis, pays due regard to the maintenance of the museum. It was instrumental in setting up the BPMA as a charitable trust to maintain and preserve the collection. Royal Mail continues to recognise the importance of its heritage,

Column number: 740 
not because it is publicly owned, but because it is part of the Royal Mail brand and all the history that comes with that. 

I fully expect Royal Mail, once it is privatised, to continue its approach, noting how much importance and value is in the Royal Mail brand. Post Office Ltd will obviously continue to have an interest in the museum collection, as some of the artefacts and material apply to its business, but there is no advantage in dividing the collection into separate post office network and Royal Mail collections. I expect Post Office Ltd to work with Royal Mail, so that the heritage of their previous and continued association is not lost. We may wish to continue this debate when we visit the BPMA—I hope hon. Members will join me and the hon. Lady—no doubt with light refreshment. Prior to that meeting and that discussion, I hope that the hon. Lady will withdraw the amendment. 

Mr Vaizey:  I am grateful for the chance to contribute to this important debate about the museum. I want to put on record my gratitude to the hon. Member for Llanelli for moving the amendment, because although my colleague, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton is resisting it for perfectly valid reasons, the debate has enabled us to highlight the importance of Royal Mail’s heritage. It is also important that he has put on record his expectation that a future Royal Mail with injections of private capital will maintain the integrity of the collection. 

David Wright:  Does the Minister accept that the BPMA works very closely with partner museums? The Blists Hill museum at Ironbridge gorge has a whole display set up in one of the recreated streets in partnership with the BPMA, which shows what the postal service has done over the past 200 or so years. It is very important in the cultural sector to understand that the BPMA also works with partner museums and together they generate interest in our heritage. 

Mr Vaizey:  That is an incredibly important point. Given that as well as being the Minister for Culture, Communications and Creative Industries, partner in crime of the Minister for Employment Relations, Consumer and Postal Affairs and Minister with responsibility for fashion, I am also the Minister with responsibility for museums. I therefore understand the importance of co-operation between museums, which we are keen to encourage. I am grateful to the hon. Gentleman for highlighting that partnership working. I visited the BT archive two or three years ago, which showed me the importance of keeping an archive intact. The Association of Business Historians does a very good job in helping businesses to keep their archives. Another business archive that I have visited is HSBC’s private business archive, which is kept in immaculate condition. Basically the reason why I rose to speak was to invite myself on the trip with the hon. Lady and my hon. Friend. I would love to see this collection. I will do all that I can for so long as I remain the Minister with responsibility for museums to help either the hon. Lady or my hon. Friend secure that important collection. 

Column number: 741 

Nia Griffith:  In order to provide the strongest possible protection for the museum I press the amendment to a vote. 

Question put, That the amendment be made. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 53 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Question proposed, That the schedule be the Twelfth schedule to the Bill. 

Nia Griffith:  I wish to speak extremely briefly about consultation and listening to the state of public opinion. Although I shall be using a pantomime metaphor, I assure the Committee that my message is serious and genuine. We should remember that the public might be looking in at us at the moment and can see the Minister with responsibility for postal services enjoying the role of fairy godmother, having come to dress the Cinderella Post Office in finery and to transform post offices from pumpkin to fine coach pulled along by fine horses, with the funding that will be given to them. 

All the fuss over the Post Office has annoyed the ugly sisters, who are busy touting their wares to the young “royal male” Prince Charming. The royal family has fallen on so many hard times that we can see the king rubbing his hands—a bit of a rest from cutting the wisteria. We can imagine the queen and king in their modern civil partnership having lost the script, and borrowed one from the dwarf about Snow White saying, “Mirror, mirror on the wall, am I the most confused of all?” The ugly sisters sidled up to the royal Prince Charming, looked down on him and smothered his face in their false bosoms. 

Mr Vaizey:  May I say that, given the immense strain that we have all been under throughout the length of the proceedings, we completely sympathise with the position in which the hon. Lady clearly finds herself. 

Nia Griffith:  I did say that it was the civil partner of the queen who was somewhat confused, and had picked up the script from a dwarf in Snow White. The ugly sisters sidled up to the young, “royal male” Prince Charming and were looking down on him and smothering his face in their false bosoms saying, “We run a high street chain called ‘Ugly Fashion’, and we could offer you a very good price for using our shops as access points. Yes, of course, customers would have to drive into the multi-storey car park and pay an extortionate fee, drag themselves across the town and pay a few pounds’ worth of parking fine if they do not get back in

Column number: 742 
time—just to post a parcel in our store. Prince Charming, we could offer such a service to you at a discount price. Your red logo would look so good on our lurid awnings—pink, purple and orange.” 

But, as the clock chimes and the Bill is passed, the public will see the fine Post Office coach turn back into a pumpkin. They will see the fine steeds pulling the coach played by supporters of the Government rat on their fine words about preserving post offices and scuttle away back into the sewers. No glass slipper is left. It has been given to PayPoint by the Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). There is no reason for the young, “royal male” Prince Charming to seek out Cinderella, the Post Office. There are just thousands of ordinary people throughout the land searching in vain for their local post offices that were snatched from them by the ugly sister enterprises. As for the fairy godmother Minister, he disappears in a puff of smoke before the angry mob can accuse him of destroying their post offices. There is no happy ending. On that note, there is a need to listen to the public before the Bill goes through and destroys our post office network. 

Question put and agreed to.  

Schedule 12 accordingly agreed to.  

Clause s 90 and 91 ordered to stand part of the Bill.  

New Clause 5 

Restriction on universal service provider disposals 
‘Any company providing a universal postal service must, prior to selling any part of its business to another entity, first report its intention to OFCOM who must certify the sale does not in any way reduce the company’s ability to deliver its universal service.’.—(Mr Weir.)

Brought up, and read the First time.  

Mr Weir:  I beg to move, That the clause be read a Second time. 

I will be brief. 

5 pm 

Proceedings interrupted (Programme Order, 9 November ).  

The Chairman put forthwith the Questions necessary for the disposal of the busine ss to be concluded at that time (Standing Order No. 83D).  

New Clause 6 

British Postal Museum Collection 
‘Companies in the new postal market must continue to have regard to the integrity and united custodianship of the British Postal Museum Collection as a social obligation.’.— (Nia Griffith.)

Brought up.  

Question put, That the clause be added to the Bill. 

The Committee divided: Ayes 8, Noes 9. 

Division No. 54 ]  

AYES

Banks, Gordon   

Blenkinsop, Tom   

Griffith, Nia   

McClymont, Gregg   

Morrice, Graeme (Livingston)    

Turner, Karl   

Weir, Mr Mike   

Wright, David   

Column number: 743 
NOES

Collins, Damian   

Davey, Mr Edward   

Fuller, Richard   

Harris, Rebecca   

Patel, Priti   

Stephenson, Andrew   

Swinson, Jo   

Vaizey, Mr Edward   

Walker, Mr Robin   

Question accordingly negatived.  

Ordered,  

That certain written evidence already reported to the House be appended to the proceedings of the Committee.—(Mr Davey.)  

Mr Davey:  On a point of order, Mr Hood. I want to take this opportunity to thank you and your co-Chairs Mr Amess and Miss Begg for the way in which you have chaired our proceedings. That has enabled us to make fantastic progress and to ensure that the Bill has been properly scrutinised in good order. I am sure you agree that we should thank the Committee Clerks, the doorkeepers and the police, who have given us such professional support even when we fired them up this afternoon. 

We must also thank the Hansard Reporters, who have somehow managed to record our deliberations. I am not quite sure what they will make of the hon. Member for Llanelli’s final speech, but we are all looking forward to reading it. I am not sure whether they have my pronunciation of “Posstcomm” or “Postcomm” quite right, or our different pronunciation of “schedule” and “schedule,” Mr Hood. 

I want to thank all the officials who have helped me in preparing the Bill, and who have helped me and the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage, to take the Bill through Committee. I particularly want to thank my hon. Friends for their fantastic contributions to our debates. Never have so many people shouted “no” so loudly in the right places. I also want to thank Opposition Members; a special place goes to the hon. Members for Llanelli, for Ochil and South Perthshire and for Angus. I am sorry that we were unable to debate new clause 5; perhaps the hon. Member for Angus will delight us with that on Report. 

We have ranged over a number of topics, and the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East and I have had some interesting exchanges over

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Deutsche Post. Indeed, I have tried to ensure that we had a geographical tour, with Argentina, Chile, Thailand, Mexico, Australia and New Zealand entering our debates. We have also had exchanges on Santa Claus, Christmas cakes, the perils of Cross Hands roundabout and my good friend the sorting machine called Sue. I have tried to christen some of our amendments; we have had “War and Peace”, the Gordian knot, Red Bull, our own Sebastian Vettel—who was detained in airports once or twice along the way—and the Francois Greeff amendments. I am tempted to take the Committee on another world tour and mention Taiwan in particular, but perhaps I should not. I will save it for Report. I hope that, having given the Bill a good going over, we can report back to the House and get other hon. Members to join our deliberations. 

Nia Griffith:  Further to that point of order, Mr Hood. I should like to thank everybody who has been helpful, including the representatives of all parties on the Committee, who have been good humoured. Thank you to the officials, who extended a courteous invitation to us, the Opposition, to contact them, and to our Chairs, particularly Mr Amess, who took the lion’s share of the chairing, as well as Miss Begg and you, Mr Hood, for your patience and indulgence. I thank the Hansard writers for putting up with all manner of scribbled notes. I should particularly like to thank some of the people with whom we have had helpful discussions, including the Communication Workers Union, Consumer Focus, the BPMA, the National Federation of Pensioners and the National Federation of SubPostmasters. 

We have had a full discussion and we have indicated along the way that we may wish to return to certain areas on Report and pursue them on the Floor of the House. We think that there are some unresolved issues, particularly in relation to privatisation, the universal service obligation, the lack of definition of access points, and the need for stronger parliamentary scrutiny and involvement in future proceedings. On that note, I thank you once again, Mr Hood, for your help and support and draw my arguments to a close. 

Bill, as amended, to be reported.  

5.8 pm 

Committee rose.