POSTAL SERVICES BILL THIRD READING
Letter to the Chairman from Mr Alan Johnson
MP, Parliamentary Under Secretary of State for Competitiveness
Further to the memoranda submitted to the Committee
on 2nd May, 6th and 27th June and subsequently cleared, I am writing
to advise you of a proposed change to the Postal Services Bill
at Third Reading in the House of Lords. This amendment will entail
the introduction of further delegated powers.
Clauses 30, 31 and 32 of the Postal Services Bill
relate to the imposition of financial penalties for contravention
of licence conditions. Under the Bill as currently drafted, there
is no specific upper limit on penalties, although they are limited
to that which is reasonable in all the circumstances of the case.
There has been pressure in the context not only of this Bill but
also in relation to the Utilities Bill to put a cap on such penalties.
The suggestion has been that the Bill should be amended along
the lines of the Competition Act 1998, in which fines are limited
to 10% of the UK turnover of the person or business concerned.
The Government has been reconsidering the issue.
Following that consideration, the Government has
decided that it would be appropriate to amend to the Bill so as
to limit financial penalties to 10% of the turnover of the licence
holder on whom the penalty is imposed, with detailed provisions
to be set out in an order made by the Secretary of State. This
will bring the provisions of the Utilities Bill into line with
those in the Competition Act 1998 in this respect.
Whilst the wording of the amendment has not yet been
worked up I though it best to write to you immediately given the
limited time before Third Reading of the Bill.
I attach a memorandum setting out further details.
3 July 2000
Third Supplementary Memorandum by the
Department of Trade and Industry
This memorandum supplements the memoranda on the
Postal Services Bill submitted to the Committee for consideration
on 2 May, 6 and 27 June. It explains the proposed use by the Secretary
of State of certain delegated powers contained in a further Government
amendment to the Bill, to be considered by the House of Lords
at Third Reading.
It is the Government's intention to insert a limit
on financial penalties imposed under clause 30 of the Bill of
10% of the turnover of the licence holder, determined in accordance
with provisions specified in an order made by the Secretary of
State. The new provision will also provide that such an order
shall not be made unless a draft of the instrument containing
it has been laid before and approved by a resolution of each House
The Bill proposes powers to impose financial penalties
for contravention of licence conditions. Under the Bill as currently
drafted, there is no specific limit on penalties, although there
is a requirement that they must be reasonable in all the circumstances
of the case. The Government intends, however, to respond to concerns
about the concept of limitless fines by laying amendments to limit
the scope of financial penalties imposed to a maximum 10% of the
turnover of the licence holder on whom the penalty is imposed.
The detailed provisions, which are very complex - such as definition
of turnover - are, under the Government's proposals, to be determined
by the Secretary of State by order.
Reasons for proposing delegated powers
The detailed provisions, such as those relating to
the definition of turnover, may need to change over time and would
also entail a level of detail that would be inappropriate on the
face of the Bill.
Affirmative resolution, mirroring the procedure adopted
for the analogous provisions under the Competition Act 1998 and
offering equal opportunity for Parliamentary scrutiny.
3 July 2000