Postal Services Bill

Baroness Wilcox Excerpts

Wednesday 6th April 2011 Lords Chamber

[Lord Laming]

My Lords, perhaps I may speak very briefly in support of Amendments 24J, 24K and 24N, in the name of my noble friend Lord Low of Dalston, that were so ably introduced by my noble friend Lord Tenby.

The Minister helpfully assured the House that the Government intend that the changes introduced by this important Bill will be open and transparent. These amendments have the virtue of combining simplicity with clarity. Amendment 24J leaves absolutely no doubt or ambiguity about the responsibilities of Ofcom in enforcing the minimum standards that together make up a universal postal service that we all value so highly. Amendment 24K seeks to reinforce the importance of the universal postal service obligation that is central to this. Amendment 24N seeks to ensure that no significant changes can be made without adequate consultation with the postal service user groups.

These amendments are not controversial. They are aimed at strengthening the Bill and making sure that, together as a community, we continue to enjoy a reliable, efficient and enduring universal postal service. I hope that the Minister will feel able to accept the amendments.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, the primary purpose of the Bill is to protect the universal service. The Bill requires Ofcom to secure the provision of the universal service and to ensure that it is meeting the reasonable needs of users. Indeed, that latter point is a requirement not just of this Bill but of the European postal services directive.

The noble Lord, Lord Stevenson, suggested that Ofcom’s duty to secure the future of the universal service was in some way on a par with its duty to have regard to the financial sustainability and efficiency of the universal service. I am happy to reassure noble Lords that this is not the case. Ofcom’s overriding duty in relation to postal services is to secure the provision of a universal service. In doing so, Ofcom must have regard to the need for financial sustainability and efficiency, but these considerations cannot outweigh the need to secure a universal service.

Clause 29 requires Ofcom to assess the needs of users and to set the universal postal service order at a level that meets those needs. The provision is a necessary tool to ensure that the postal market remains flexible and responsive to user needs. I know that there has been some confusion and concern about the relationship between the universal postal service order and the minimum requirements in Clause 30. The order will set out the particular products and services that Royal Mail must provide, over and above the minimum requirements and the standards that the company must meet. These products are currently set out in Royal Mail’s licence. As we are abolishing the licensing regime, they will need to be set by order in the future.

Amendment 24HZA, tabled by my noble friend Lord Eccles, seeks to constrain the scope of the universal postal service order. Clause 29(2) provides that the universal postal service order must include “as a minimum” each of the services set out in Clause 30. The subsection allows Ofcom to include more services or higher requirements—for example, it can specify the percentage of first-class letters that must be delivered the next day. Given that the universal service must evolve in line with user needs, this is appropriate. I understand where my noble friend is coming from and it is important that we hear the arguments he has made so well. However, I should say to him that to be compliant with the directive, we must allow Ofcom the flexibility to ensure that user needs are met. It is right that Ofcom, as the expert regulator with all the market information, is the body that makes the judgment. Given that explanation, I hope that my noble friend will withdraw his amendment.

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[Baroness Kramer]

I shall speak briefly to Amendment 24AB in my name and that of my noble friends Lord Razzall and Lord Cotter, as the argument for the need for stability and certainty for Royal Mail as a universal service provider has been made extensively in the House today in discussion of the previous group of amendments and by the noble Lord, Lord Stevenson, on this group. However, there is a glaring gap in the Bill, because there is no set timetable for the period during which Royal Mail would continue reliably to carry that role. The amendment would set a period of 10 years before Ofcom may make a procurement determination that would change that position.

The case was well made in the other House by a Member of the Opposition—some people will think that I am supporting those on the Benches opposite more today than those on mine. The honourable Member for Ochil and South Perthshire, I think, said that moving to the 10-year period,

“gives Royal Mail the certainty to make investment and business decisions, confident that it will remain the universal service provider for a reasonable amount of time”.—[Official Report, Commons, Postal Services Bill Committee, 7/12/10; col. 648.]

The point was also made that, for Royal Mail to have a secure future, significant investment will be required, much of it in equipment. Given the lifespan and cycles of equipment, 10 years becomes a reasonable minimum for that kind of stability.

We have heard again in this House real concern about cherry picking. It is clear to me that your Lordships do not want others coming in to cherry pick pieces or aspects of the universal service. I am sure that that is true for the public at large, who perhaps matter the most; it will certainly matter to Royal Mail itself and future investors. Given the widespread concern, it strikes me that an amendment such as Amendment 24AB neatly covers a variety of concerns by providing fundamental stability over a 10-year period. That may alleviate many of the other issues raised in this important debate.

[Baroness Wilcox]

My Lords, this group of amendments relates to the actions that could be taken if Ofcom found that there was an unfair financial burden on the universal service provider as a result of its complying with its universal service obligation to ensure that consumers are protected under the new regulatory regime. Clause 43 sets out three options if there were found to be an unfair burden: a review of the minimum requirements; a procurement process; or the establishment of a compensation fund. If it considered that action would need to be taken, Ofcom would have to recommend to the Secretary of State which of those options would best address the unfair burden.

I speak first to Amendment 24X, in the names of the noble Lords, Lord Razzall and Lord Cotter, and the noble Baroness, Lady Kramer. The noble Lord, Lord Cotter, made an eloquent case for the amendment. It is right that we should consider it alongside the other amendment that would prevent a procurement determination for 10 years; the two need to be seen in balance. Your Lordships will need no reminding that our central objective in the Bill is to protect the universal postal service. We have been clear that Royal Mail must continue to modernise and, to that end, have included a new requirement on Ofcom to have regard to the efficient provision of the universal service.

No one would dispute that Royal Mail needs to improve its efficiency, and the company has already taken significant steps on its modernisation journey. However, without further modernisation, costs will remain high, increasing the risk of substitution by other forms of communication, in turn exacerbating volume decline and further threatening the universal service. The package of measures in the Bill will greatly assist Royal Mail in its modernisation. We believe that it is important to allow Royal Mail to continue on this modernisation path for a few years, able to take advantage of the benefits of the Bill, before the regulator assesses whether the universal service represents an unfair burden. This would also give certainty to all those who might be required to contribute to a compensation fund, given the reassurance that that would not be on the table for at least three years after the Bill came into force. This is clearly a fine balance. There is no right number; it is a judgment. I would therefore like to take the amendment away to consider it, so I hope that the noble Lord will, for now, consent not to press it.

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[Lord Jenkin of Roding]

We tried to give notice to my noble friend’s office that this amendment would not be moved, but the message has obviously not got through.

[Baroness Wilcox]

I apologise. Scrap that. How about Amendment 24NZA? This amendment is tabled in the name of the noble Lord, Lord Young, and is concerned with removing the ability to designate, in extremely limited circumstances, more than one company as a universal service provider. The intention of Clause 34 is to give Ofcom the power to designate more than one universal service provider in two specific circumstances only in order to ensure the provision of the universal service. As with other elements of the Bill, Clause 34 has been drafted to ensure that the Bill is future-proofed. It enables the regulatory regime to adapt when it needs to in order to ensure the continued and long-term provision of the universal service. The measures that we are taking are designed to put Royal Mail on a sustainable footing so that it can continue to provide the universal service that we all value so highly. However, it makes sense to future-proof the legislation in this way to ensure that the universal service could continue to be provided in two specific and extreme circumstances.

Clause 34 will allow Ofcom to designate more than one provider in only two specific cases. The first case is where providing the universal service is found to represent an unfair financial burden on the universal service provider. The Secretary of State agreed with Ofcom’s advice that the best way of addressing that burden was through a procurement exercise provided for by Clause 43. This would assess whether another company could provide the relevant part of the universal service with less of a burden. In that event, that company could be designated the universal service provider for that part of the universal service.

The second circumstance is where Royal Mail has become insolvent and has entered special administration. Where a postal administration order has been made under Part 4 and it is not possible to rescue Royal Mail as a going concern, some of its activities could be transferred to another company. Ofcom could then designate that company as a universal service provider as well in order to secure the universal service.

As I said, the full package of measures in this Bill is designed to secure the future of Royal Mail and the universal service and therefore to ensure that we do not end up in either of these scenarios. Both the procurement process and the special administration provisions are backstops to be used only—I repeat, only—if the future of the universal service is at risk. However, as I mentioned, having the ability to make multiple designations in these specific cases is a sensible and pragmatic safeguard.

It is also important to make it clear that having more than one designated universal service provider in no way provides for or permits a varying level of minimum service across the country. Provisions elsewhere in Part 3 have the effect of guaranteeing that the minimum requirements of the universal service must remain uniform. Given these assurances, I hope that noble Lords who tabled these amendments will feel able not to press them.

Amendment 24AHA, in the name of the noble Lord, Lord Young, relates to the power that Ofcom has under Clause 49 to impose a consumer protection condition on either,

“every postal operator, or … every postal operator of a specified description”.

The amendment would replace these categories with a single category that allows for the imposition of consumer protection on,

“every operator appropriate to the postal service each provides”.

The intention of this amendment may be to ensure that regulation can be applied with greater precision or to ensure that all circumstances are captured by regulation and that none falls through a perceived loophole. However, I hope that I can reassure noble Lords that it is unnecessary and has the potential to create confusion for the regulator and postal operators.

Giving Ofcom the power to describe separate categories of operator enables it to direct the consumer protection conditions very precisely. This follows the model in Section 52 of the Communications Act in relation to Ofcom’s functions in other regulated sectors. This approach is consistent with other parts of the Bill and allows for the clear and effective targeting of regulation to where it is required. I can therefore assure noble Lords that there are no loopholes.

I do not believe that this amendment would help Ofcom to regulate, nor would it offer any greater protection to consumers than is already provided for by Clause 49. However, it might leave the regulatory system open to challenge and confusion, which I believe all involved will wish to avoid. With these reassurances, I hope that the noble Lord, Lord Stevenson, will feel free to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her full reply. It was good of her to take the time to go through the detail we have raised because some of these are very technical points. Obviously we will need time to read through what she has said because she covered a lot of ground. I have not been keeping score, but my sense is that rather a lot of concessions were emerging in the previous two or three groups, which we are pleased about. We seek no vainglorious victory on this, but simply to improve the legislation, which is always the role of Her Majesty’s loyal Opposition in these matters. However, I am pleased that we are beginning to see a degree of discussion and debate around the issues that is not on the lines of “We have made the legislation and we will keep it”. We look forward to seeing what the Minister brings forward on Report.

Most of what has been said in this debate and in the debates on the two previous groups has really been about the type of regulation that must apply to the universal service provision and to the universal service obligation within that. There is bound to be tension between economic regulation on the one hand, which the noble Lord, Lord Jenkin, spoke to very fully, and the more social regulation which this side of the Committee wishes to see strengthened in order to ensure that the citizenship approach to the service is preserved. As many noble Lords have said, this is in a sense a fault-line across all the regulation that applies to former public utilities. I do not think that anyone has got it right yet and that there are going to be tensions. You cannot have at the same time the best possible public provision and the most profit-generating and economically appropriate way of doing these things because the two are in conflict. Profit will often—not always, but often—drive out the best. We have to live with that, and as the Minister said, we have to find a judgment that will work not only now but in the long term.

Although noble Lords who have spoken in the debate come from different places, we are all trying to seek one thing, which is that in times of change there will be some stability in the processes we are engaging with in this Bill. I felt that the Minister did respond in a way that gives us some assurance that on Report we will be able to see that built into the Bill. She also tried to explain why the Bill spends a lot of time future-proofing the arrangements. This may be simply because the advice she is getting from her civil servants is that, having gone through this in 2009, having walked up the aisle towards the altar and having been jilted at that point, they are experienced in these issues and therefore able to work towards producing what could be a divorce-proof marriage going forward. Perhaps there is a pre-nup situation here that we should be thinking about and using in other places, or perhaps not.

Having said that, the last part of the Minister’s speech stressed that future-proofing does not necessarily open loopholes, but we feel a little sceptical about that. We would like to look at it in some detail and I suspect that it will form one of our debates on Report. However, given what the Minister has said and the assurances we have received, which are extremely welcome, I beg leave to withdraw the amendment.

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[Lord Young of Norwood Green]

Amendment 24PA, standing in my name, would ensure the continuation of the current inter-business agreement between Royal Mail and Post Office Ltd. The agreement should be in force before any disposal of an interest in a Royal Mail company and should include the definition of the relationship between that Royal Mail company and Post Office Ltd after the disposal.

Amendment 24P, in the name of the noble Lords, Lord Laird and Lord Rogan, seeks an inter-business agreement of 15 years’ duration, while that in the name of the noble Lord, Lord Bradshaw, seeks one of 10 years’ duration. We share the view that that would be a reasonable period, although Amendment 24PA makes the point at a different clause in the Bill. At this stage, I am sure that if Ministers could accept the principle then we could between us find the best place in the Bill to insert it.

The noble Lord, Lord Skelmersdale, made a point about setting things in tablets of stone. I should have thought that there ought to be the capacity to review some of the detail of an inter-business agreement. The important thing is to establish it.

The Post Office is dependent on Royal Mail's business for a significant part of its survival strategy. More than one-third of its revenue, some £343 million, and one-third of sub-postmasters' pay, £240 million, is generated by selling Royal Mail products and services. If the two businesses are to be forced to separate, our concern is that a privatised Royal Mail might look elsewhere for a better bargain and for other retail outlets to sell its products. There is no guarantee it will use post offices to the same extent. The Bill does not safeguard the inter-business agreement through which Royal Mail guarantees use of the Post Office as its retail arm. When it comes to be renegotiated, a privatised Royal Mail could look to reduce costs by using other outlets such as supermarkets or high-street chains instead of post offices. To date, the Government have not agreed to undertake to extend the current, five-year IBA to 10 years.

Without an extended IBA, there is no guarantee that Royal Mail will continue to use the Post Office. In evidence to the Postal Services Bill Committee, the Minister, Ed Davey, stated:

“No previous Government have thought to put it on any different footing”.

But then no other Government have needed to intervene on the inter-business agreement because no other Government have separated the Post Office from Royal Mail. The Minister tried to reassure stakeholders by arguing that both Royal Mail and the Post Office want an extended inter-business agreement. He further said in evidence to the committee:

“I refer the Committee to what the chief executive of Royal Mail, Moya Greene, and Donald Brydon, the chairman, said. Moya Greene said it was unthinkable that there would not be a long-term relationship between Royal Mail and Post Office Ltd. Donald Brydon said that he wanted to have the longest possible legally permissible agreement”.

The stated aims of the current management of Royal Mail, while welcome, are insufficient reassurance. The relationship between the two companies is one of imbalance. The Post Office cannot survive without Royal Mail, yet Royal Mail could succeed without the Post Office. Ed Davey went on to argue in his evidence to the committee:

“If you actually wrote that there should be a contract between two companies that are going to be separate companies into law, I think that it would be subject to serious legal challenge”. —[Official Report, Commons, Postal Services Bill Committee, 11/11/10; cols. 121-23.]

However, he has provided no evidence to support this position. Given the importance of retaining the relationship between the two businesses and the risk of leaving its maintenance to the discretion of Royal Mail, the Government should instead require a 10-year IBA as part of the Bill and ensure that this meets the requirements of EU competition law. To do so could only strengthen the position of the Post Office. As I understand it from a recent discussion with the Post Office, it is indeed seeking to establish a legally binding agreement with Royal Mail.

Consumer Focus has warned of the risk to the Post Office of the lack of a long-term IBA. It has argued that the number of post offices could fall by 37 per cent, from its current level of 11,900 to a minimum number consistent with the Government’s access criteria, 7,500. The National Federation of Sub-Postmasters believes that a minimum 10-year IBA is essential and that, in order to avoid further post office closures, the existing levels of Royal Mail work at post offices must be maintained, with a minimum 10-year IBA between the two companies.

Post offices—predominantly those in rural areas—are still struggling to survive; they are finding it hard. Only 4,000 of the UK’s 11,905 post offices are economically viable and, despite assurances from the Government, which we welcome, that there will be no further programme of post office closures, branches are still closing every week. More than 150 post offices have closed on a long-term temporary basis this year alone, with no absolute guarantee that they will reopen. So there is genuine concern here. The 900 post offices that are currently up for sale, an issued referred to George Thomson, the General-Secretary of the National Federation of Sub-Postmasters, is an unusually high number. Many sub-postmasters are retiring or leaving the business because of the low levels of revenue generated in sub-post offices and the Post Office is struggling to find alternative premises and service providers.

The post office network can ill afford to lose any more work. That is why it was unfortunate, to put it mildly—it is my attempt at irony—that the Post Office’s contract to award 400,000 green giros a week has recently been lost. This provided 400,000 transactions a week, a significant of level of footfall supporting the network and around £70 million in revenue over five years to Post Office Ltd. It strikes an unfortunate note given the recent statements by the Government that they are determined to ensure that post offices will be the front office for a number of government services. I would welcome the Minister’s comments on that decision.

As I have said, the Government have rejected a number of opportunities to make that commitment firm in this important legislation. They have declined to accept a statutory commitment, as exists in countries such as Germany and the Netherlands, to a figure of 11,500 offices; they have rejected embedding into the Bill the access criteria stating how close your nearest post office will be; and they have even rejected empowering Ofcom to adjust the statutory commitment over time. We do not doubt the Government’s good intentions but it will take more than that to require a privatised Royal Mail to use the post office network to the same extent as now.

European competition law is trailed as a possible obstacle to an inter-business agreement. The Minister for Postal Services told the Public Bill Committee in another place:

“I am unaware of any statutory precedent for requiring particular commercial terms between two independent businesses”.—[Official Report, Commons, Postal Services Bill Committee, 23/11/10; col. 360.]

However, there is no precedent for separating the Royal Mail from the post office network. The National Federation of Sub-Postmasters has said that there is nowhere in the world where this has happened. It is the role of new legislation to create precedents. It is because of the precedent of totally separating the Post Office from a privatised Royal Mail that we seek to underpin the relationship with the post office network.

We hope that the Government will reconsider this vital business agreement, which will ensure not only an enduring relationship but the future of the Post Office. I am conscious of the time and I shall cut short my contribution. I look forward to the Minister’s response.

[Baroness Wilcox]

In these amendments, noble Lords express a concern that has been debated at length in the other place and in other fora—namely, that taking Post Office Ltd out of the Royal Mail group of companies will put at risk the commercial relationship between Royal Mail and Post Office Ltd, and therefore the post office network. The amendment also seeks to provide for any situation where the universal service provider may no longer be Royal Mail alone. I share the noble Lords’ laudable interest in ensuring that a strong commercial relationship is maintained between Royal Mail and Post Office Ltd but the approach taken in the amendment—legislating for a contract of a certain length—is not the way to achieve our shared objective.

In the evidence given by various stakeholders to the Public Bill Committee in the other place, strong backing was given for the separation of Royal Mail and Post Office Ltd. Let me reassure this House that the separation of Post Office Ltd and Royal Mail will not lead to dangers for the post office network. Operationally, these companies are reliant on one another. Post offices carried out more than 3 billion transactions for Royal Mail in 2009. They will continue to be partners because there will remain an overwhelming commercial imperative for the two businesses to work together.

In her evidence to the Public Committee in the other place, Moya Greene, the chief executive of Royal Mail, called the post office network,

“the best and strongest network in the country, by any yardstick”.

She also said that it would be “unthinkable” for there not always to be a very strong relationship between the Post Office and Royal Mail. To underline this point, Donald Brydon, Royal Mail’s chairman, pledged in his evidence to the same committee that, before any transaction took place, a continued long-term commercial contract will be put in place between the two businesses for the longest duration that is legally permissible. On Report in the other place, the Minister for Postal Affairs pledged to the House that the Government will ensure that this commitment is upheld. I repeat that pledge to your Lordships today.

I also remind your Lordships of my commitment to consider the amendment to Clause 2 proposed by the noble Lord, Lord Whitty. His amendment would have ensured that information regarding the relationship between the two companies is included in the report laid before Parliament when a decision has been taken to dispose of shares in a Royal Mail company. I hope to bring forward a government amendment on Report to address those concerns which I believe will also provide greater comfort to the noble Lords bringing forward these amendments today. However, I would like to explain why I cannot accept these particular amendments.

In these amendments, the noble Lords, Lord Laird and Lord Rogan, seek to place the agreement between Royal Mail and Post Office Ltd on a statutory basis, requiring a minimum duration to the contract of 15 years. The noble Lord, Lord Young, and his colleagues on the Front Bench also specify that the Secretary of State should ensure that an agreement of at least 10 years is in place. As was discussed in the other place, legislation is not the appropriate place for the commercially sensitive terms of a relationship between two independent businesses to be settled. These negotiations are best left to the businesses themselves, which know far better than we in this House their customers, the markets they serve and the services they require of one another. Contractual negotiations between these businesses will involve a complex interaction of many different factors, such as pricing, volume, service levels and duration. Focusing on the duration of the contract would simply not achieve our shared objective of ensuring the strongest possible commercial relationship between Post Office Ltd and Royal Mail. The experts—the businesses and their advisers—should negotiate and agree the commercial relationship between the two businesses for the long term, rather than us in Parliament. What the Secretary of State and indeed the Government can and will do is to ensure that there is a contract in place between the two businesses before separation. Most importantly, government can of course help to create the conditions in which both businesses can flourish in partnership with one another. One thing is certain: a struggling Royal Mail will lead to problems for the Post Office. This Bill introduces the ability to bring in much-needed private capital for Royal Mail to invest in its transformation so that it can offer the very best service.

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[Lord Young of Norwood Green]

My Lords, I thank the Minister for her response. I have a couple of comments to make. She talked about a long-term contract that is legally permissible. I would welcome some elaboration on what the Government envisage. We constantly talk about this long-term contract that is legally permissible, but somehow we seem to be short on finding out what is the longest contract that is legally permissible. That creates a feeling of uncertainty. If she does not envisage that this is the appropriate place for that contract, in the legislation, can she make it clear that the Government will ensure that there is a contract in place before separation?

Although we welcome the £1.3 billion funding package, the other concern that I addressed in my contribution, to which she did not respond, was that the funding package is good but that it also requires commitment in business coming from the Government. As I pointed out, in the first test that we saw on this, on the green giro cheques, the Post Office did not get the contract. In our view, and in that of a number of people, that was a significant contract. Before I make up my mind, I would welcome a response on what is legally permissible with a long-term contract, or an explanation of what the Government are doing to get that answer if the noble Baroness does not have it, and on the commitment to ensuring that government business will go to the Post Office.

[Baroness Wilcox]

We have gone on record in the other place and I have repeated it here today. I have no doubt that the noble Lord will read it but I will write to him to clarify further, as best I may. I understand about the business. In fact, the contract was not that big but the Post Office had to bid for it. We are very encouraging of all government departments to bear in mind the work they may be doing themselves but which the Post Office could do better for them. We are encouraging all departments to look again and think carefully about what work they can start to bring forward that could be better done by the Post Office.

[Earl Attlee]

My Lords, I remind the Committee that the amendment was moved by the noble Lord, Lord Laird.

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[Lord Young of Norwood Green]

My Lords, I suspect that everything that needs to be said has been said already and I do not want to fall into the trap of saying “but not by everyone”. There is a common thread relating to heritage. I think that keeping the Queen’s head on stamps would be a reasonable tribute as we come up to her Diamond Jubilee. An amendment on that matter was the only amendment passed in the other place, and I look forward to hearing a confirmation of that. Other noble Lords have eloquently stressed the importance of the archive. When companies are privatised, that poses a real threat to their records, and I witnessed what happened to British Telecom’s archive and heritage. Therefore, I, too, look forward to the Minister’s response.

[Baroness Wilcox]

My Lords, I very much understand and appreciate the sentiments behind these amendments. Royal Mail has a tremendous history and heritage. I know that the noble Lords, Lord Clarke and Lord Christopher, have both campaigned to secure Royal Mail’s future for many years, and they have a strong desire to protect the company’s proud heritage.

As noble Lords have heard, I recently visited Royal Mail’s archive and saw for myself some of the public records, including a sheet of Penny Black stamps—something that I thought I would never see—and museum artefacts on display in the archive. I also saw on my visit the designs for stamps commissioned by the then Postmaster-General, Tony Benn, working with the artist David Gentleman, which did not include the image of Her Majesty. Thankfully, as I think the Committee will agree, these stamps were never issued and the tradition that the noble Lords are seeking to preserve through Amendments 25A and 25B continues to this day.

Clause 60 provides the Secretary of State with a power of direction that can be used to require the universal service provider to maintain that tradition and to make sure that the stamps receive royal approval before they are issued. Amendment 25A would require the Secretary of State to issue such a direction, while Amendment 25B would require that any such direction was subject to the affirmative resolution procedure.

This clause was discussed in the other place and, as was mentioned by the noble Lord, Lord Young, the Government subsequently introduced an amendment to strengthen the safeguards for protecting the future of this unique tradition. We are not here today to remove that amendment in any way. The current voluntary framework governing the approval of stamp designs has been in place for more than 40 years and it has worked well.

Royal Mail has been, and is currently, doing just what a direction would require it to do. I would therefore like to draw on a piece of timeless wisdom that says, “If it ain’t broke, don’t fix it”. That is not to say that we should not have the tools in place to fix it, if fixing were ever required. That is precisely what this clause provides for. However, this power is a failsafe that should be drawn on only when required. It can easily be drawn on by the Secretary of State if there is ever a justifiable need to do so.

On Amendment 25B, we take the view that if there is ever a need to use the power of direction, the direction itself will not be of a nature to warrant the use of the affirmative resolution procedure. This power of direction can be used only for a limited and focused purpose, in effect to re-impose time-honoured practice and processes. Furthermore the direction will be imposed only on the universal service provider, and Clause 60 allows for any such direction to be varied or revoked by subsequent directions. We believe that this clause as it stands is fit for purpose and proportionate to the important task of protecting the future of the sovereign’s image on UK postage stamps, if such protection is ever needed. I hope that I have been able to reassure the noble Lords on this.

On Amendment 29A, and as noble Lords will recognise, archive status and museum collection status are different, although both are currently maintained by the British Postal Museum and Archive—the BPMA. The archives of Royal Mail and its predecessors are part of the public record, and they will remain part of the public record after we dispose of shares in Royal Mail. The Bill makes this clear and ensures that no changes can be made to the way in which the records are kept without consultation with the Keeper of Public Records, which is the National Archive. As public records, the archive must be preserved, maintained and made available to the public in accordance with the Public Records Act 1958. Amendment 29A would, however, place additional requirements on Royal Mail that would not apply to other organisations which have responsibility for keeping public records. I do not think that it would be right to place an additional burden on a privately owned Royal Mail that Parliament does not place on publicly owned bodies.

The museum collection is not part of the public record; I understand that its ownership was passed to the BPMA in 2004. Although the Government, like noble Lords, wish to see the collection maintained, we do not believe that this should be a statutory requirement on Royal Mail. It is currently not a statutory requirement for Royal Mail to maintain the collection. Royal Mail funds the BPMA because it recognises the importance of its heritage; it does so not because it is publicly owned but because heritage is part of the Royal Mail brand. I would fully expect this approach to continue in the future. Royal Mail, whether privately or publicly owned, should be proud of its history and use it to positive advantage in an open and transparent way.

I read in my brief that British Telecom is a good example of a privatised company respecting and maintaining its heritage, although the noble Lord, Lord Young, has just given us an instance of when it was not. It has a purpose-built repository for the archive which is located in Holborn; and although the dedicated British Telecom Museum closed in 1997, it has invested some £6 million in establishing its Connected Earth initiative which provides access to its museum collection online and at its 10 partner museums located around the United Kingdom, including the National Museum of Scotland, the Museum of London and the Amberley Museum and Heritage Centre.

The noble Lord, Lord Clarke, mentioned the Post Office underground railway—Mail Rail. He was even kind enough to mention it to me the other day in passing so that I would not get caught out, as I would have done if he had mentioned it only today. I understand that the Post Office (London) Railway Act was passed by a Select Committee of this House in 1913. Construction began in 1914 but was halted during the First World War, when the tunnels were used to store and protect art treasures belonging to the National Portrait Gallery and the Tate. The railway finally opened in 1927. At its height it was carrying an estimated 4 million letters a day. Royal Mail decided to stop using Mail Rail for operational reasons in 2003, primarily because many of the mail centres that Mail Rail serviced had been closed or changed their function. Of the nine original stations, Royal Mail still owns only four of the properties.

Royal Mail is not unique in deciding to disuse such underground railways. The German and United States postal service providers have similar systems, but they also no longer carry mail. In fact, the United States railway in Chicago is now used to carry rubbish, as part of the city's waste disposal system. Royal Mail has not made any decisions about the future of the railway; it does, however, continue to maintain the tunnels, to ensure that they remain safe and sound. Although there have been previous discussions about putting the tunnels to commercial use, no commercially viable solution has been developed so far. Any suggestions that your Lordships may have on good commercial uses for the railway can be sent on a postcard to Royal Mail at 100 Victoria Embankment. I am sure that the company would be only too delighted to offer a prize to any offer put forward and successfully processed.

In all seriousness, in response to the noble Lords, Lord Boswell, Lord Brooke of Sutton Mandeville, Lord Christopher and Lord Young, I assure them that I recognise their concerns about Royal Mail, its heritage and how it should best be preserved in future. I would like to take away the issues that they have raised for further consideration and will return to the matter at Report. I ask that, with those reassurances, the noble Lord will be kind enough to withdraw his amendment at this time.

[Viscount Eccles]

Very briefly, I recall that 55 years ago, I used to be responsible for making 5 foot 8 inch diameter tunnel sections for the GPO tunnel system. The firm was called Head Wrightson, and it made many tonnes of the segments that made up the tunnel. There is no question of them deteriorating. As with the Northern line, which is older, they will be there for ever, because in London clay, cast iron has an almost infinite life. You will notice that when the Underground does things on old lines, it does not have to replace the tunnels.

On a more serious point, I urge my noble friend to have serious thought about the non-public records part—what could be loosely described as the stamp collection. It would be a great shame if it were not kept coherent and whole. I do not know if that can be achieved by some partnership agreement with the British Museum, for example, or some other imaginative idea about who would undertake some combined financial responsibility—perhaps partly charitable and partly public money. It would be a great shame if it was not kept together.

[Baroness Wilcox]

I will of course add the comments of the noble Viscount, Lord Eccles, to those that we have already heard in this debate. They will form part of our discussion before we come back at Report.

[Lord Christopher]

I thank noble Lords who have spoken in support of the amendment, which is very encouraging. I was going to call the noble Lord, Lord Brooke, my noble friend, because, as he said, he has been a friend for about 25 years. One of his remarks reminded me of a true story. I have been thinking about this for some time. The Inland Revenue has—or had; I hope that it still has—a very large and valuable collection of stamps which it seems to me appropriate to put into the museum. Some of them used to be exhibited in three or four large glass cases as you walked into Somerset House. You could view the stamps and they were changed. One day, someone from Stanley Gibbons came in and asked to see the chairman. He said, “Do you know what you have in your glass cases?”. The chairman said, “Well, stamps”. “Yes, he said, but there is £1 million-worth in there”. The stamps were then taken away. As far as I know, they are not being seen by anyone. That seems to me to be a great shame.

I thank the Minister for her remarks. Her early remarks were a bit technical and I will need to take some opinions on them but, in view of the assurances that she has given, I am content to withdraw the amendment.

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Moved by

[Baroness Wilcox]

26: Clause 80, page 49, line 20, at end insert—
“An order under this subsection is subject to negative resolution procedure.”

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Moved by

[Baroness Wilcox]

31: Schedule 12, page 149, line 30, leave out paragraph 174