Postal Services Bill

Andrew George Excerpts

Wednesday 27th October 2010 Commons Chamber

[Vince Cable]

We are providing a framework in which a sale could take place and we are not setting timetables or limits. Those are the conditions in which we are most likely to get value for money. This is a framework piece of legislation. That is why we are likely to do better than before. I shall come to the details regarding Royal Mail shares in a moment.

[Andrew George (St Ives) (LD)]

The Secretary of State will be aware that people in west Cornwall and the Isles of Scilly are reassured that the universal service obligation will be retained. However, the access arrangements that were agreed, with regulatory intervention from Postcomm, have left Royal Mail in the very weak position of delivering letters for its competitors at a price that, frankly, undermines its commercial viability. I note that clause 48 addresses this issue, but can he reassure me that Royal Mail will have a far better crack of the whip when those terms are negotiated?

[Vince Cable]

I assure my hon. Friend that will be the case. My colleague the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), who has responsibility for postal services, will spell out later today and in Committee exactly how the process will operate. My hon. Friend is right: at present the deregulation provisions do not give the Royal Mail sufficient protection against unfair competition. We want to make sure that there is more protection in the deregulation process.

--- Later in debate ---

[Vince Cable]

I am not making these commitments as political commitments. They are enshrined in regulation—regulation that will be strengthened and has the force of law. Of course, that is political in the widest sense if one regards this Parliament as political. The protections are going to be legal and regulatory; this is not a matter of political discretion for individual politicians.

We will also be taking other measures to secure the universal postal service. The greatest threat to postal services comes from the decline in mail volumes and the rise of e-mail and the internet. It therefore makes sense for the postal sector to be regulated alongside the broader communications market. For that reason, the Bill will transfer responsibility for the regulation of the postal services sector from Postcomm to Ofcom. Ofcom has a deep understanding of the wider communications markets and will be well placed to take decisions as regulator of postal services. The Bill will also give Ofcom a primary duty to exercise its functions as regulator of postal services in a way that it considers will secure the universal postal service—and it will need to consider the financial viability and efficiency of the universal service in taking its decisions.

We want to ensure that the new regulatory framework is proportionate to the needs of the market. We want to allow for rapid deregulation where there is competition. All mail providers need to be able to operate in a fair and effective market as soon as possible. As an ultimate protection for the universal service, the Bill includes provisions for special arrangements should a universal service provider be at risk of entering into insolvency proceedings—a remote risk but one that we have to consider. The arrangements would allow the appointment of a postal administrator whose objective would be to ensure that the universal service is maintained. We do not expect ever to have to use these provisions, but they provide an additional safeguard for the universal service. These measures mirror those that have been taken in the energy and water sectors.

[Andrew George]

rose—

[Vince Cable]

I will take one more intervention and then move to a conclusion.

[Andrew George]

I am much reassured by what the Secretary of State is saying. Further to my earlier intervention, I am merely seeking reassurance that the access agreements between the new Royal Mail and its competitors will be set in a regulatory framework that gives it a fair crack of the whip when negotiating the terms and the price. Under the present arrangement, Royal Mail is clearly, in effect, subsidising its competitors because it is delivering their mail.

[Vince Cable]

I believe I have given my hon. Friend that reassurance. Royal Mail will not subsidise its competitors, protections will be built in and there will be a genuine regulatory level playing field in a way that has not been quite true in the past.

Previous attempts at legislation on Royal Mail have not had a great history of success. I anticipate that there may be some opposition to the Bill both inside this House and elsewhere, although I believe that after 20 years of false starts, there is now a willingness to do what needs to be done. There is no easy way out, and the problems that Royal Mail faces will not go away. There will be no winners if we fail to act. Royal Mail’s employees will face continued uncertainty over their pensions and their jobs, customers will face a declining service and taxpayers will continue to bear the risks. Ultimately, Richard Hooper was clear that without this action, Royal Mail would fail.

Royal Mail needs this Bill. The company says so, Richard Hooper says so, the previous Government said so and I say so. I therefore strongly commend this Bill to the House.