Postal Services Bill

Debate between Lord Flight and Lord Young of Norwood Green

Wednesday 6th April 2011 Lords Chamber

[Lord Young of Norwood Green]

My Lords, I shall comment on some of the other amendments and points that have been made in this debate, which the noble Baroness, Lady Kramer, was right to say has been rather wide-ranging and complex. Perhaps such a large group of amendments has both benefits and disbenefits.

I was interested in the assessment of the noble Lord, Lord Jenkin, of the cost of regulation and his points about regulators paying. He said that we should create a level playing field. That seems a difficult objective to achieve, given that, as the noble Baroness, Lady Wheatcroft, candidly observed, competitors can cherry pick. We have seen that under the current regulations they go where it is easiest to operate, which is usually in city areas. We do not see them clustering around the rural areas, because, as we know from the correspondence that was helpfully sent to us by the noble Baroness, Lady Wilcox, the cost of doing so is prohibitive, and there are special circumstances in London which increase their costs—for example, wages.

Our amendments would ensure that Ofcom protects the universal service obligation and the universal service provider. We want to make sure that Royal Mail can fairly account for all the costs—I stress, all the costs—of providing that universal service. The noble Lord, Lord Jenkin, provided an interesting figure for the cost of regulation in his proposal that the competitors should pick up some of it. It is an interesting approach.

We are opposed to Amendment 24Q in the name of the noble Lord and the noble Baroness, Lady Wheatcroft, because the imposition of an access condition here is premised on market power. In reality, that applies only to Royal Mail. By excluding the notion of efficiency as a criterion for access, the amendment would exclude the need for Royal Mail to secure its network while providing access. If it is inefficient for Royal Mail, the terms of access are unfair. The amendment would allow Ofcom, in theory at least, to endorse inefficient and therefore unfair access to Royal Mail.

I said at the outset that I was interested in Amendment 24H in the name of the noble Viscount, Lord Eccles, and moved by him with a focus on the costing approach. If it is the intention of the amendment, as I think it is, to ensure that Ofcom has an obligation to allow the universal service provider to cover the proper costs of the universal service, it would be welcome. If, however, the minimum standards for the universal service obligation have to be subject to a set of costing systems, we could be worried about whether it would undermine the force of the obligation to maintain the universal service standards as they are.

It seems that we are all united in trying to ensure that we preserve the universal service and the universal service provider. Where there is an important difference of opinion is how competition should be introduced. We have tried to ensure in our amendments that Ofcom takes into account the true and total cost of providing that universal service.

Amendment 24PB, spoken to by the noble Baroness, Lady Wheatcroft, and my noble friends Lady Dean and Lord Brooke, is an important probing amendment. We will listen intently to what the Minister says on this subject.

[Lord Flight]

My Lords, we have had an extremely important discussion of the Bill today. The real logic of what I believe the noble Lord, Lord Jenkin, the noble Baroness, Lady Wheatcroft, and in particular the noble Viscount, Lord Eccles, have drawn to our attention is that there is no need to regulate the monopoly issue—the Competition Commission can do that. There is not a real monopoly when you look at it; you are just cluttering up the business with an unnecessary cost. The issue is whether a regulator is needed to regulate the universal service. I can see some argument for that being the case, although, in principle, if provision of the universal service is written into the legislation and, as it were, into the charter, whether regulation is needed to make sure that it is delivered, or whether it can be done by another method, is a question. However, in terms of the competition aspect, I simply do not see any realistic case for the need for regulators to monitor it.