Postal and Parcel Services (Amendment etc.) (EU Exit) Regulations 2018

Lord Henley Excerpts

Tuesday 4th December 2018 Lords Chamber

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 29 October be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

The Government are confident that an agreement on EU exit will be achieved, but, as I said earlier, we must be prepared for all outcomes. If the UK leaves the EU without an agreement in place, these regulations will provide legal clarity for the regulator and postal operators. These draft regulations are made under the powers conferred by the European Union (Withdrawal) Act 2018, and correct deficiencies in the statute book associated with exiting the EU.

The Secondary Legislation Scrutiny Committee agreed with the Government’s recommendation that these regulations should follow the negative resolution procedure, when the draft was originally presented in July. However, at the time, the European Statutory Instruments Committee in another place felt that further explanation was required regarding the changes that these draft regulations present because of exiting the EU, and recommended that the draft regulations should be upgraded to the affirmative procedure. The Government accepted that recommendation.

If approved, the regulations would not change the operation of postal and parcel services beyond the changes that are necessary to ensure the regime is fully functional on exit day. There are four necessary changes. First, they amend the Postal Services Acts 2000 and 2011, to remove or replace references to EU obligations which will no longer apply once the UK leaves the EU. They also remove provisions which impose duties to notify the European Commission. Secondly, they remove from statute the Postal Services Regulations 1999, which implemented Article 22 of the postal services directive and required member states to designate a national regulatory authority for the postal sector. Thirdly, they revoke the European Commission’s decision of 10 August 2010 that established the European Regulators Group for Postal Services—the ERGP. Finally, they revoke Regulation 2018/644 on cross-border parcel delivery services. I will explain each in turn.

The Postal Services Acts 2000 and 2011 set out the minimum requirements of the UK’s universal postal service. The amendments to primary legislation governing postal services in these regulations will not affect the UK’s universal postal service. These regulations ensure that any remaining obligations under retained EU law are maintained in the Postal Services Act 2011 and remove redundant provisions. The regulations also remove obligations of the EU postal services directive, such as sharing information with the European Commission, because the UK will no longer be subject to the directive’s provisions or to the authority of the European Commission after we leave the EU.

The Postal Services Regulations 1999 designate Ofcom and the Secretary of State as the UK’s national regulatory authorities for postal services, a requirement of the postal services directive. Duties and functions of Ofcom and the Secretary of State relating to postal services are set out in the Postal Services Acts 2000 and 2011, so there is no longer a requirement to “designate” them under separate regulations.

The 1999 regulations will become redundant when the UK leaves the EU and are revoked in full by these regulations. The European Commission decision of 2010 established the European Regulators Group for Postal Services. The group consists of national regulatory authorities of member states. It provides advice to the European Commission and aims to facilitate consultation and co-operation between national regulatory authorities of member states.

Ofcom is a member of the group as the UK’s national regulatory authority. After we leave the EU, the UK will no longer hold membership status, as it will cease to be an EU member state, and therefore Ofcom will not be entitled to participate formally as a member of the group. The regulations therefore revoke this EU decision which contains a list of members, one of them being the UK.

The withdrawal from the ERGP was an issue of interest for the House of Commons sifting committee. The House requested further information on the effect of the UK’s non-participation in the ERGP and any alternative future arrangement. Ofcom intends to seek permanent observer status after the UK has exited the EU, in the way that NRAs of the European Economic Area states, Switzerland and EU candidate countries participate at present. Although observer status would remove Ofcom’s right to vote, the impact would likely be minimal given the co-operative nature of the forum. The group generally makes decisions based on consensus. If required, issues that would be voted on are the final work programme, published reports or opinions and the elected officials of the ERGP; that is, the chair and two vice-chairs. If granted observer status, Ofcom will still be able to engage in strategic discussions, negotiations and the sharing of best practice after we exit the EU.

I turn now to Regulation (EU) 2018/644 on cross-border parcel delivery services. The aim of this EU regulation, which came into force in May this year, is to increase regulatory oversight and price transparency of cross-border parcel delivery services within the EU. These regulations revoke the EU regulation in full. The EU regulation requires regular submission of information on cross-border parcel delivery services to the European Commission with the aim of publishing tariff information on member states’ cross-border parcel operators. This duty should no longer apply after the UK leaves the EU, as the UK will cease to be a member state and will no longer be subject to the authority of the European Commission. In any event, the principal information-gathering powers of Ofcom, the UK’s postal regulator, are provided under the Postal Services Act 2011. Ofcom already draws on this as part of its regulatory monitoring of postal services.

These regulations are a sensible and necessary use of the powers of the withdrawal Act, which will ensure that postal and parcel services continue to operate effectively after the withdrawal of the United Kingdom from the European Union. I commend them to the House.

[Baroness Burt of Solihull (LD)]

My Lords, I am grateful to the Minister for his explanation. My understanding of this piece of legislation is that it pulls us out of retained EU law that will no longer be applicable on our withdrawal from the EU if we get no deal and crash out; unfortunately the noble Lord, Lord Framlingham, who asked the “crashing out” question, is no longer in his place. Again, there is no impact assessment. I take the point that the Minister made earlier but I ask for his patience and for assurances on a couple of issues. I am sure he will be able to supply them.

My first question relates to the directives that we are rejecting which opened up the sector to competition and defined a universal postal service as a right. What will the situation be post Brexit for remote communities, for which the universal postal service is vital, even though it might not be economically viable to provide? As the Minister said, Regulation (EU) 2018/664 increases price transparency and regulatory oversight of cross-border parcel delivery services. Can the Minister explain for the ignorant what difference this is likely to make to price transparency and the prices of cross-border parcels to and from the UK?

Finally, what do the Government assess will be the effect of removing us from these EU regulations? Will our ability to send and receive parcels cross-border be affected in the future? I am not asking the Minister to look in his crystal ball here, although it would be helpful if he had one to hand, but does he think that it will be harder or easier? The Government have produced no impact assessment, but how can there be no effect of withdrawing from this legislation?

[Lord Stevenson of Balmacara (Lab)]

My Lords, again, I am very grateful to the Minister for the very full letter about this SI that I received last week. He covered all the points that he has made in his speech—and, in fact, a few more—and it was very useful in getting us ready for this debate.

However, there was one thing that I wanted to pick out relating to the Postal Services Regulations 1999, which were set to become redundant and will be revoked in full. I presume that the rationale for wishing to revoke them is that they are derived from an EU directive, I think, rather than a regulation, and they require member states to designate a national regulatory authority in the UK. In this case, Ofcom is the designated authority. The letter goes on to say that the functions of the Secretary of State and Ofcom in regulating the sector are set out in the Postal Services Acts 2000 and 2011, but I question whether the removal of the 1999 regulations, which designate Ofcom as a specific post of national regulatory authority in the UK, does not in some way discriminate against Ofcom as being the likely regulator for postal services in the UK. It is really a question of whether there will be any diminution in Ofcom’s authority as a result of this. I would be grateful for reassurance that there will be no change in substance, even though there will be a change in the legal basis on which it is appointed.

The noble Lord has spent a lot of time discussing the role of the ERGP and the future of that body with Ofcom as an attendee. It is an obvious point but attending is not the same as being a participant, and even though it is an informal body largely operating by consensus, there will still be a difference, so we will be a rule-taker and not a rule-maker in a very real sense. Again, I would like reassurance that there is no question that we will lose out in terms of how our postal services flow and our parcels are delivered in the future.

I have two further points. Like many noble Lords, I am sure, we have received a number of representations from those involved in cross-channel activities, particularly about getting access to goods and bringing them through the Channel Tunnel to make sure that markets in the UK are satisfied. Therefore, this is about inward goods but it is also about external goods. A lot of material flows out through the tunnel to other places, and a particular issue is time-sensitive goods. Is there anything that the noble Lord feels it appropriate to share with us, particularly in relation to recent comments by his colleagues in the Department for Transport about the difficulties in ensuring that goods move backwards and forwards? Would that impact on anything that these regulations should do? Time-sensitive goods are obviously the most important, such as fresh goods and other materials that need to arrive at a particular time. These will be affected by blockages and changes in the overall system. Where they are postal, additional regulatory authority and other issues may be engaged, and there may be costs involved that we are not yet aware of. I would be grateful for some comments on that.

Finally, paragraph 7.6 of the Explanatory Memorandum deals with Article 7 of the EU parcel delivery regulation. I recently saw documentation from the Institute for Government, which has been looking at the Government’s readiness for Brexit in the case of a no-deal crash out. One issue flagged as red, and therefore not ready, is parcels. Does the Minister have any information on that, given that it falls within his brief? Is there a problem here and, if so, is it something that he wishes to share with us? The Explanatory Memorandum makes the point that the EU parcel delivery regulation is largely covered by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. It goes on to say:

“Therefore, the EU Parcel Delivery Regulation will become substantially redundant following the UK’s exit from the EU”.


But “substantially redundant” is not the same as “completely redundant”. Will the Minister spell out the differences that are envisaged?

[Lord Henley]

My Lords, I thank noble Lords for their contributions to the debate. I hope I can answer the questions that have been put to me. Again, let me assure noble Lords that these amendments to primary legislation governing the postal services will have no impact whatever on the UK’s universal postal service and will preserve, as far as possible, the rights, responsibilities and protections offered by the existing system. They make only those changes necessary to ensure that the regime continues to be fully functional on exit day. As I said on previous regulations, this will increase legal clarity and be of benefit to national regulatory authorities, businesses and consumers.

The noble Baroness asked about the cost to the taxpayer. This will have minimal impact. The regulations qualified for the de minimis threshold, which means that direct impact on business or civil society organisations is less than £5 million annually, and as such a full regulatory impact assessment was not considered necessary. As I have made clear, we will continue to offer the same postal and parcel services throughout the United Kingdom as we do now, and as we do to remote communities. There will be no change in liabilities or obligations. Royal Mail will continue to deliver that universal service in line with requirements set out in domestic law.

The noble Baroness also asked what will happen as a result of revoking the cross-border parcel services regulation. Revoking that regulation will mean that the UK will not be required to share pricing information for cross-border parcel deliveries with the European Commission. Ofcom can request pricing information under the UK’s domestic provisions, which will mitigate any data gap between the UK and member states. There are also price comparison websites that provide information about prices for parcel deliveries from the UK’s service providers. Therefore, comparing prices for cross-border parcel services between the UK and EU member states will continue to be available to consumers.

The noble Lord, Lord Stevenson, asked why the Postal Services Regulations 1999 are being revoked by these regulations. The 1999 regulations designated Ofcom and the Secretary of State as our national regulatory authorities for postal services, as was a requirement of the postal services directive, and that simply no longer applies after EU exit. In any event, the functions and duties of Ofcom and the Secretary of State relating to postal services are set out in the two Acts I referred to: the Postal Services Act 2000 and the Postal Services Act 2011. There is therefore no longer a requirement to designate them as the national regulatory authority under separate regulations.

[Lord Stevenson of Balmacara]

I may not have made myself entirely clear. This may be a point that is not worth exploring further, but just to be precise, the existence of the 1999 regulations requires the Government to appoint a single national regulatory authority for post, which is Ofcom. Removing that, as is proposed in these regulations, means that in theory it is possible for the Government to appoint other regulators to take over Ofcom’s rules and functions. I wondered if that was the implication and therefore whether there was any danger to Ofcom’s position.

[Lord Henley]

There will be no change in the position. There is no hidden agenda that a shadow Ofcom will be set up or some such other body. I can give that assurance to the noble Lord.

The noble Lord was also concerned about Ofcom’s new role on the European Regulators Group on Postal Services, and whether it was now, as he put it, a rule-taker rather than a full participant. I stress that the ERGP is just an advisory body. It does not make any binding rules or take any decisions. Leaving that and merely having an observer status will not have a detrimental impact on Ofcom’s ability to participate in it or its ability to regulate the postal sector and engage with other EU regulators. As I said, Ofcom wishes to have that observer status just to ensure that it can continue to participate to the full extent necessary.

The noble Lord also asked about customs arrangements and whether they might affect the post. We will obviously be engaging with businesses about new customs arrangements if the UK leaves the European Union without an agreement. The Government have published the customs White Paper and sent out technical notices. Royal Mail is working with HMRC to ensure that it is prepared for changes so that we can continue to operate in the same way after exit.

I hope that that deals with all the questions. As I said on the earlier regulations, the regulations do not represent a policy change to the operation of postal services and they preserve, as far as possible, the rights, responsibilities and protections offered by the existing system. I commend these regulations to the House.

Motion agreed.