Select Committee on Delegated Powers and Deregulation Twenty-Fourth Report


ANNEX 4

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

Introduction

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 of Parliament.

Purpose

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.

Procedure

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


 
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