Postal Services Bill
House of Commons, 27 July 2000.
Alan Haselhurst (Deputy Speaker, Saffron Walden)
I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 33, 34, 124, 125, 149 and 154. If the House agrees to any of these Lords amendments, I shall ensure that the appropriate entry is made in the Journal.
PROVISION OF A POSTAL SERVICE: MEANING.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
This group of amendments relates to the rights given to universal service providers in connection with the provision of the universal service. Amendments Nos. 1, 30, 31, 44, 45, 91, 92 and 94 are drafting amendments, which deal with the definitions of postal services, postal operator, post office, universal postal service and related consequential amendments.
David Wilshire (Conservative, Spelthorne)
The Minister referred to amendment No. 31. Will he explain why it is considered necessary to remove the word "transports" and insert "conveys", as I am struggling to understand why it is worth taking up the time of the House to make such a footling little pedantic change?
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I will do my best to explain when I get to that amendment. The amendments narrow the definition of postal services, postal operator and post office to prevent catching persons or places only involved in the provision of services related to postal services, such as the sale of stamps at a newsagent or the sale of envelopes by a stationer. They also ensure that those related services are only caught if they are provided in conjunction with the conveying, receiving, sorting, collecting and delivering of relevant postal packets. Amendment No. 2 is intended to ensure that it will be possible to identify a universal service provider or providers in the United Kingdom for the purposes of the Bill in the event that the current requirement to notify the commission of their identity under the postal services directive lapses. Amendment No. 101 is a minor, consequential amendment resulting from amendment No. 2 to the list of expressions in clause 1. Amendment No. 49 inserts a new clause into the Bill, which replaces the provisions in the Post Office Act 1953, to enable a universal service provider to require the owner or operator of a ship or aircraft to carry mailbags in connection with the provision of the universal service. It also provides for the transport tribunal—or, where relevant, the Department of Economic Development in Northern Ireland—to decide the level of remuneration where the remuneration for providing such a service cannot be agreed. The clause proposed updates the 1953 Act provisions so that they apply to universal service providers and apply only in those areas where such provision is still thought to be justified; for example, where ships and aircraft are operating to places not readily accessible by road. On some air and sea routes, there may be a single provider. Unless the prices charged to universal service providers are reasonable, the cost of delivering postal packets to remote areas will increase and could threaten the maintenance of the universal service at a uniform tariff.
David Wilshire (Conservative, Spelthorne)
On amendment No. 49, has the transport tribunal the power solely to deal with price, or can it deal with the length of time allowed for delivery? That is not a pedantic point: if there is no time limit, there will be problems, but a time limit would surely mean that passengers would have to be taken off transport in order to deliver the mail, which would be unfair.
Michael Jack (Conservative, Fylde)
Can the Minister satisfy my curiosity about what happens when one of the universal Post Office people is told that he cannot put his mailbags on some mode of transport? What mechanism exists to resolve such a dispute?
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
The point of the clause is that such transportation providers cannot say no. That would affect the Post Office's ability to provide a universal service. This provision relates to the costs of the service. Transporting the mail will be a requirement of the Act. Amendment No. 133 addresses the legal authority relating to the installation of post boxes and postal pouch boxes in the street, which is unclear in the current legislation. The amendment puts universal service providers on the same basis as other statutory undertakers in relation to the New Roads and Street Works Act 1991 and reduces the unnecessary administrative burdens involved in installing postal apparatus.
David Wilshire (Conservative, Spelthorne)
Subsection (7) of amendment No. 133 states: Sub-paragraph (1) does not free the universal service provider concerned from obtaining any other consent, licence or permission which may be required. What does that mean when it comes to obtaining planning permission? The erection of a post box technically involves a structure. How will that be handled?
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
At present, permission is not required for the construction of a pillar box, but is required for placing a post box in the street. The Bill will not change that. We must ensure that delays are not caused in the installation of postal pouch boxes, which are important to ensure that letters are delivered on time. Pouch boxes are secure receptacles from which postmen and postwomen collect additional mail sacks without returning to the delivery office. That enables health and safety legislation to be observed as well as responding to increasing volumes of mail. The alternative would be to deliver extra sacks to postmen by van, which would be environmentally undesirable. The other amendments are minor drafting amendments to the compulsory acquisition and other land provisions in schedules 5 and 6.
John Bercow (Conservative, Buckingham)
It is a pleasure to joust with the Minister this evening. First, I should explain my presence and the absence of my hon. Friends the Members for Rutland and Melton (Mr. Duncan) and for South-West Hertfordshire (Mr. Page). Both my hon. Friends have been indisposed and have experienced hospital treatment. The House will be pleased to know that both are making a full and rapid recovery and will return to active service 'ere long. I have been posted—if I may use that term without being accused of a pun—on a free one-day transfer to the shadow Trade and Industry Front-Bench team. I have discovered that it is en route to the shadow Home Office team shortly thereafter. I wondered why the Opposition Whip's Office chose me to deputise for my hon. Friend the Member for Rutland and Melton. The only explanation at which I could arrive was that they were looking for someone of a similar size and shape to my hon. Friend. The House will understand, therefore, that necessarily there was in more ways than one a very short shortlist. I have a simple query on Lords amendment No. 2 for the Minister, with which I feel sure he will be able to deal speedily. In what circumstances would the amendment apply? That is not entirely clear to me. The amendment specifies the circumstance in which there would be no "obligation to notify" the European Commission of the identity of the universal service provider. Although I read the amendment and re-read it, as I was duty to bound to do, it became none the clearer. However, with the great talents that the Minister brings to bear in debates in the House, I feel sure that he will be able to put my mind at rest and tell me that the amendment has a good purpose. Briefly on amendment (a) to Lords amendment No. 133, my noble Friend Baroness Miller of Hendon flagged up this issue in another place some time ago. She took up the cudgels on the matter on 8 June—if I remember rightly, it was in an amendment No. 19. We are concerned about the power that exists under the amendment to alter the designation of a letter box or a universal postal service pouch box in a street. Paragraph (2)(b) of Lords amendment No. 133 refers to inspecting, maintaining, adjusting, repairing, altering or renewing such apparatus which has been so placed, changing its position or removing it. We could legitimately debate a number of those matters, but my concern is the reference to the entitlement to alter. This is no trifling matter. I hope that the Minister will accept that many people in local communities—especially in rural areas and small villages—can be considerably exercised about the location of post boxes and what they may in some cases consider to be any unjustified changes to them.
Michael Jack (Conservative, Fylde)
I am following my hon. Friend's argument keenly. Does the existing law as it applies to the Post Office, give the facility for moving, changing or altering, which are his causes of concern about these new universal providers?
John Bercow (Conservative, Buckingham)
I am not sure that my right hon. Friend has it right. Until now, I have not had a particular concern, but I am concerned in the context of the amendment. My right hon. Friend is a patient chap. If he will hold on a moment, he will find out why. The reason for our concern is that the amendment did not occur to the Government at an early stage of the Bill; it made a late entrance. That prompts me to ask the Minister—although I have looked at the record, I cannot find it anywhere—when the idea occurred to Ministers, whom did they consult and why did they decide at such a late stage to insert so apparently substantial an amendment? I wait with eager anticipation, bated breath and beads of sweat upon my brown to learn the hon. Gentleman's response.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
We are delighted to see the hon. Member for Buckingham (Mr. Bercow) on the Opposition Front Bench. He has been recruited as a type of Christmas casual to the post office team in the shadow Department of Trade and Industry, while the hon. Members for South-West Hertfordshire (Mr. Page) and for Rutland and Melton (Mr. Duncan)—who made important contributions to the Bill in Committee—are both indisposed. We wish them a speedy recovery. I hope that the hon. Member for Buckingham does not catch whatever is going around the Opposition DTI team.
John Bercow (Conservative, Buckingham)
I would not want there to be any confusion, so I should explain that my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who is still in considerable pain—although making a good recovery—is suffering that pain because he fell off his horse.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I hear that the hon. Member for South-West Hertfordshire was trying to use his mobile phone at the same time, but that is probably a vicious rumour. I was asked about the reference to determining universal service providers. That attaches to a European directive whose life itself stretches until 2004. It is almost inconceivable that there will not be a replacement provision in that directive after 2004. However, we need to be wary and to ensure that, if that European provision should be subsumed or disappear, there will be provision in the Bill so that universal service providers can be properly listed and put on record. That is the reason for Lords amendment No. 1. On amendment (a) to Lords amendment No. 133, the hon. Member for Buckingham referred to pouch boxes. They are a source of considerable concern, although not so much in rural areas, where postal staff use vans for deliveries and are thus able to deal with the extraordinary increase of mail that has occurred during the past 10 to 15 years. Postmen or postwomen in urban areas, who have to deliver, on cycle or on foot, by 9.30 am, have an increasing amount of mail. That is why pouch boxes have crept on to the scene during the past 20 years. The hon. Gentleman asked at what stage we considered the matter. We addressed it after Committee stage when it was realised that there was no provision to deal with it. There have been provisions on pillar boxes for more than 100 years, but pouch boxes are different. The only change that we are making is to a costly and bureaucratic system under which providers have to apply for street works licences to cover alterations to postal apparatus, although they are exempt from that requirement when they inspect, maintain, adjust, repair or renew such apparatus. The provision was introduced after discussion with the Post Office and the Department of the Environment, Transport and the Regions—because there is an environmental aspect. The discussions continued for some time and it was not until the Bill had gone to the Lords that we could table the amendment. People are understandably concerned when pouch boxes are erected at the end of their street. The boxes are usually free-standing. We have not changed any provisions that relate to planning applications. The right of the public to oppose such an application remains. The problem with the Opposition amendment is that the removal of the word "altering" might prevent the postal service provider from undertaking sensible work; for example, changing the metal plates that inform the public of clearing times for the pouch boxes. If the pouch box is attached to a pillar box—which would also be covered by the provision—that could create unwarranted interference to improvements to the service to the public. The provision could prevent the Post Office from blocking up pillar boxes when there is a terrorist attack or a postal strike. That would be an alteration. Nothing horrendous would result from alteration that could not also be caused when such an appliance was replaced, renewed or adjusted. Therefore we believe that the amendment may prevent innovations of a type that may result from a more competitive marketplace. We cannot see that the schedule as it stands would be improved in any way by removing the word "altering", and we are very anxious to ensure that the public still have the right to oppose planning permission for pouch boxes, because that is an essential safeguard for communities throughout the country. On that basis, I hope that the Opposition will see fit not to press amendment (a) to Lords amendment No. 133.
Tony Baldry (Conservative, Banbury)
I shall be brief. I believe that I am the only Member on the Conservative Benches who served on the Standing Committee of the Bill and is also a member of the Select Committee on Trade and Industry, which has several times considered the working of Post Office services. I believe that it would be in order for me to put my argument on practically any group of amendments to the Bill, so I shall make it briefly on this group and make it relevant. Under the Bill, Ministers are giving themselves powers to introduce social and environmental guidance to the Post Office that will give Ministers the power to direct the Postal Services Commission to do various things, but that guidance will not be issued until the Bill receives Royal Assent. In other words, until that happens, we have no idea what the guidance will say. We have some indication of that guidance, however, because it was issued in draft in February. Rather presumptuously, it describes itself as draft guidance to the Postal Services Act 2000, and in paragraph 4.9, under the heading "Access to the Universal Postal Services", it says that the commission has a duty to ensure that sufficient access points are provided to facilitate the universal postal service. It also states that the commission will wish to consider, as part of its duty to ensure the provision of a universal postal service, the number, type and distribution of access points necessary as a minimum to ensure that the licence holder so required for providing a universal postal service can operate. It makes it clear that access points are considered to be pillar boxes and post offices and other places and points clearly marked as such, provided for users to deposit postal items for collection by UPS providers. On Monday, when the Minister gave evidence to the Select Committee on Trade and Industry, he said that until the Bill receives Royal Assent, there is no social and environmental guidance to tag it on to. Ministers have, however, promulgated draft guidance which, once the Bill comes into being, they will impose by way of policy. That guidance could say anything. The draft guidance is totally relevant and germane to the points that the House is now considering, but it is otiose for the House to consider those points if, irrespective of the Government's ability to drive the Bill through with their majority and regardless of what is said in that legislation, they have an all-embracing clause that says that they are enabled to issue environmental and social guidance. What is more, under that guidance they can then promulgate any policy that they wish, which has never been considered by the House but which, regardless, will have statutory force. If that is so, one really wonders what the House is doing. Why are we here if, effectively, somewhere in the Bill, there are powers for Ministers to issue guidance that will never be considered by the House, but which will have far-reaching effects on everything from the provision of postal boxes to how many post offices are allowed to stay open? My argument, which I can put succinctly, having sat through the Committee proceedings and having considered the Bill on the Trade and Industry Select Committee, is that this is a rottenly drafted Bill, and that it simply gives Ministers, through so-called social and environmental guidance, almost unlimited powers, which will never be subject to any parliamentary scrutiny. It is a sad but appropriate note that the last Bill to be considered on the last day before the recess treats the House with such contempt that, effectively, Ministers are taking unto themselves universal powers to impose policy on the universal postal providers and others by way of a device called guidance. If such a device was introduced in any and every Bill, Ministers would easily be able to bypass Parliament. I would not wish the House to accept the amendment without noting what is happening here. We are giving the Government a blank cheque to issue any further policy. I suspect that few hon. Members have heard of the social and environmental guidance. The consultation period ends on the 31st of this month. This is a rotten Bill that is rottenly drafted, and it is contemptuous of the House and the scrutiny of Parliament. Lords amendment agreed to. Lords amendment No. 2 agreed to.
LICENCES: CONDITIONS AND OTHER PROVISIONS
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)
With this it will be convenient to discuss Lords amendments Nos. 4, 5, 8, 9, 11, 12, 15 to 19, 21, 23 to 26, 32, 41 to 43, 47, 48, 55, 56, 87 to 90, 93, 95 to 98, 100 and 141 to 144.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
These are all drafting and consequential amendments intended either to clarify various references or to ensure consistency within the Bill. On that basis, I ask the House to accept the amendments. Lords amendment agreed to. Lords amendments Nos. 4 and 5 agreed to.
FINANCIAL PENALTIES
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
This group of amendments deals with a number of issues relating to the Postal Services Commission's duties and powers. It will place a cap on the financial penalties that can be imposed on licence holders for contravening a licence condition.
John Bercow (Conservative, Buckingham)
I shall focus my remarks on our amendment to Lords amendment No. 6 and other Lords amendments in the group, especially amendments Nos. 13 and 14. The purpose of amendment (a) to Lords amendment No. 6 is to restrict any fine that is levied under the Bill to 10 per cent, of turnover. We are concerned that the period in which turnover is taken into account should be a period of only one year, or certainly not exceeding one year. It is at least arguable and it has been argued in other contexts, not least by my right hon. and hon. Friends, that a 10 per cent, fine is excessive. We contend that one such fine imposed on a company in respect of three years of its turnover would be extortionate. The Conservative Opposition moved a similar amendment, as the Minister will be aware, in Committee in another place. It was flagged up and eloquently argued for by Baroness Miller of Hendon on 8 June. She objected to what she thought was the potential for grossly excessive fines. It is interesting that on that occasion the Minister rejected the amendment tabled by my noble Friend on the grounds that the clause stated that any fine that was imposed would have to be reasonable. I observe, almost in parenthesis, that it was a slightly curious line of argument for the noble Lord representing the Government to deploy. On several instances during the other House's consideration of the Bill, my noble Friends argued for the insertion of the word "reasonable" in respect of other clauses and amendments. They were swiftly rebutted on each and every occasion by the noble Lord on the ground that reasonableness was implicit in all the clauses and amendments to the Bill. It would thus be otiose to insert the word in the Bill. However, when it suited the Government to argue that their plans were reasonable and did not require our amendment, that is what Lord Sainsbury did. As the Minister knows, I am a fairminded chap and, in continuing my description of the chronological sequence of events, I must tell the House that, by Third Reading, the Government had had a change of heart. I am sure that that was the result not only of the intellectual ferocity but of the personal charm of my noble Friend Baroness Miller of Hendon, which I could not possibly hope to emulate. Nevertheless the Government changed their mind and tabled an amendment. The draft Competition Act 1998 (Determination of Turnover for Penalties) Order 2000 was made on 10 February and it implemented section 36 of the Competition Act 1998. Although the order owes its origin to section 36(8) of the Act, that section says: No penalty fixed by the Director under this section may exceed 10 per cent, of the turnover of the undertaking (determined in accordance with such provisions as may be specified in an order made by the Secretary of State). Therein lies the reason for the continuing dissatisfaction of Conservative Members. The Government have shifted their position and that is welcome. However, it would help if they changed their position somewhat further so as to recognise the force of the argument, made not least by commercial undertakings, that it is unfair and excessive for the fine to be able to apply to three years of turnover. There is nothing in what the Government have so far provided for to suggest that the period could exceed one year but equally, there is nothing to say that a limit of one year will be observed. That, therefore, is the problem with the provision. The Secretary of State could issue an order that would triple the figure from 10 per cent, to 30 per cent. There was no mention in Committee or on Second Reading that turnover would exceed one year, but out of the blue last August, the Department of Trade and Industry issued a press release that said that companies engaging in anti-competitive practices will face a maximum penalty of 10 per cent, of their UK turnover for each year of the infringement, up to a maximum of three years. That could amount to tens of millions of pounds in some cases. It beggars belief, but the Minister and his colleagues in the Department of Trade and Industry were not merely acknowledging that they were providing for the application of a fine on three years' turnover, but were bragging about it as though it was something of which to be proud. First, the Government gave no sign that they would do that and then they did it. They then talked about an amendment in the Lords Committee, assuaging, in some way, the Opposition's legitimate concerns. However, at heart, the Government still want there to be a punitive fine regime. Although there is indubitably a case for a fine regime, that regime should be fair. It should not be punitive or extortionate and it should assuredly not be used as a source of revenue for application elsewhere. The suspicion exists—my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) will confirm it after three years of this Government—that such moneys can be regarded as stealth taxes. In this case, those stealth taxes are imposed not on individuals, but on businesses. 8 pm As the Minister will acknowledge, consultation revealed a long hostility towards the new penalty regime. The Confederation of British Industry is especially critical of the order. A Government who pride themselves on their apparently close relations with at least some representatives of business, and with the CBI in particular, should at least have taken on board those comments and changed the order accordingly. The CBI said: The proposed maximum penalty for breaches of the Act is excessive. It could lead to extremely large fines, and affect the viability of businesses, potentially leading to insolvencies and consequent job losses…The CBI believes the imposition of a maximum fine on a three-year basis to be contrary to the principle of section 60 of the Act; the equivalent time period at EU level is only one year. It went on to say: The proposed level of maximum fine may also be contrary to the general Community law principle of proportionality. It continued: Such a level of penalty goes beyond normal bounds, whether in terms of deterrent, retribution or proportionality, and arguably runs counter to the Government's stated goal of creating a healthy, pro-business environment. My next concern relates to paragraph 4 of the Competition Act 1998 (Determination of Turnover for Penalties) Order 2000, to which I direct the Minister's attention. It reads: Where an undertaking consists of two or more undertakings that each prepare accounts then the applicable turnover shall be calculated by adding together the respective applicable turnover of each, save that no account shall be taken of any turnover resulting from the sale of products or the provision of services between them. That seems further to emphasise the punitive character of the fine regime. One can have a substantial number of companies only indirectly and tangentially involved with the main culprit, whose turnover is contributing to the sum on which the 10 per cent, fine over three years is levied. That does not seem fair. The Minister is an immensely reasonable specimen. He is the closest approximation to reasonableness that one can expect in this Government.
Patrick McLoughlin (Conservative, West Derbyshire)
He never used to be.
John Bercow (Conservative, Buckingham)
As my hon. Friend points out from a sedentary position, the Minister used not to be reasonable, but that was when he was representing the forces of organised labour—he was veritably an old-fashioned trade unionist in those days. Of course, he has since made the transition to new Labour, and he is an aspiring and rising Minister. His tune has changed, but we will dig out what he has said on previous occasions. If he can persuade us that the provision is reasonable, we will be interested to hear how that can be so. This is a matter of particular concern at a time when the Post Office is trying to expand. It has recently made several acquisitions—German Parcel being the most notable example—and it is in the process of forming important and potentially profitable strategic alliances. When it is getting bigger, the scope for hefty fines to be imposed is a legitimate source of anxiety, and I hope that the Minister will at least reflect on that point. In the DTI press release to which I alluded earlier, which was issued on 9 August last year, the Government proudly flagged up the fact that they were providing for tough penalties. If memory serves me correctly, in 1996, when my right hon. and hon. Friends were considering proposed reforms to competition law, there was consideration of a new fine regime, which was to be determinable by, or at least capable of being heard by, a tribunal. The idea was to impose a maximum limit on a fine of about £1.5 million. Here we have a proposal that could result in extortionate sums of money being taken from companies. On the principle of reasonableness and proportionality, I hope that the Minister will reconsider. I turn now to Lords amendment No. 13, which is also a matter of legitimate concern to the House, and the Opposition seek to amend it. This amendment is intended to place the commission under an obligation to conduct benchmarking operations with other postal operators in order to ensure a competitive market place. The present commission has indicated a willingness to do that, but the commission should be under an obligation to do something, rather than simply consider whether it is practicable. The Government have talked about the prospect of benchmarking where it is "practicable" to engage in it. We think that that is not a persuasive case. If benchmarking is a good idea—if it is in the national and commercial interest to be able to compare the performances of different service providers, it is not clear, given that there is to be a regulatory structure, why this should be only an opportunity and not a formal obligation. We welcome the Lords amendment based on the amendment tabled by my hon. Friends the Members for Rutland and Melton (Mr. Duncan) and for Banbury (Mr. Baldry) in Committee in the Commons, but we want to strengthen it. In doing so, we would be meeting a function of the commission under clause 5(3), requiring that the commission shall exercise its functions in the manner which it considers is best calculated to promote efficiency and economy on the part of postal operators. Accordingly, this amendment proposes that the commission collect information about the effectiveness of the Post Office, as compared with similar operations, and then report on the information that it has collected. It is difficult to see how the commission will be able to discharge the function referred to in, and provided for by, clause 5(3) without the benefit of such information. The proposal provides the information necessary to enable the commission to carry out its functions and the reassurance that that information will definitely be sought. Thus the amendment that we commend is similar to that tabled by my hon. Friend the Member for B anbury in Committee, and I ought properly to add that it is supported by the Periodical Publishers Association. It is designed to ensure that the Post Office make efficiency savings and offer a competitive service. When a similar amendment was tabled in Committee, the Minister rejected it, as it would have required licence holders to arrange and fund the carrying out of annual independent reviews of the efficiency and economy of its operations. Our contention is that the amendment seeks the same ends, but the commission will be responsible. Because the Post Office is, for the time being, the only realistic carrier of magazines, PPA members want it to operate in a manner calculated to promote efficiency and economy. I shall detain the House only briefly to say something about the amendment to Lords amendment No. 14—[Interruption.] The Minister for Trade is a distinguished denizen of this place. He has detained this House on many occasions. I have listened with wide-eyed enthusiasm to the sheer power of the hon. Gentleman's oratory, so I hope that he will forgive me if, in performing my duty on behalf of the Opposition, I briefly detain the House on the amendment to Lords amendment No. 14. If the hon. Gentleman knows me well, he will know that it is much better for him to keep quiet and not provoke me. If he insists on provoking me, it will take a great deal longer, and the blame and responsibility for that will be his, not mine. The amendment to Lords amendment No. 14 is designed to ensure that a reference to transparency and accounting appears in the Bill. It would ensure that the commission considers any potential cross-subsidy and reports on it each year to ensure fair competition. The Government amendment was tabled in response to concerns expressed by my noble Friend Baroness Miller on 15 June. It seeks to highlight how the commission is performing its functions under the European directive. I emphasise to the Minister that this is a welcome concession from the Government, but we would like to see in the Bill a direct reference to transparency in accounts. It might be helpful if I explain to the House that the wording of the amendment is taken directly from article 14 of EU Postal Services Directive 97/67/EC. The Minister will understand that the background is the July 1999 White Paper "Post Office Reform: A world class service for the 21st century", which emphasised the importance of transparent accounting and limiting cross-subsidies to a level necessary for the preservation of essential services. It stated that the regulator would need to ensure that the necessary accounting transparency was in place to give credible assurance that there was no undue cross-subsidy from the business units operating in the monopoly area to those competing in other market sectors. That point was expanded upon at page 25, paragraphs 25 to 26, which no doubt the Minister could reproduce off the top of his head and with which I will not therefore weary the House. The White Paper made it clear that, until the regulator was established, responsibility for ensuring transparent accounting and for monitoring cross-subsidies rested with the Government. The Select Committee on Trade and Industry in its 12th report reached a similar conclusion. Transparency of accounting and the limiting of cross-subsidies are central themes of the European postal services directive. That is clear from recitals from that directive. In article 14, there is an express requirement to keep separate accounts and to allocate costs to each of the non-reserved and reserved services. The amendment would ensure that the Bill gives appropriate weight to the stated aim of the directive, of the White Paper and of the Select Committee report, that competition should be fair and cross-subsidies be limited to cases where they are necessary to maintain the universal service obligation, and necessary to the transparency of accounts. The amendment seeks to enhance, rather than to detract from, the existing provisions of the Bill. On 14 March, in Committee, the Minister said that the Government had considerable sympathy with our aims. I hope that he will accept that our amendment is a robust means by which to achieve them. It would have the advantage of transparency and predictability for commercial operators, which have long complained about unfair cross-subsidies to the Post Office's Parcelforce. It is a powerful case. I hope that the Minister will reflect on it on his feet, if I may put it that way, and accept the wisdom of our arguments.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
All throe of the issues that we are debating and that were covered by the hon. Member for Buckingham (Mr. Bercow) have come about as a result of us listening to points that were raised at Committee stage in the House and in the other place. I am a little surprised that Conservative Members have tabled amendment (a). The Lords amendments that they seek to amend or to remove concern issues on which the Government have accepted changes to deal with particular concerns in the other place. The hon. Gentleman was right to say that we took note of the intellectual ferocity and charm of Baroness Miller of Hendon. She said about our amendment, which the Opposition are trying to amend: We have no difficulty in accepting this amendment— amendment No. 6. We argued for it quite strongly either in Committee or on Report. We thank the Minister for bringing it back in this form.—[Official Report, House of Lords, 11 July 2000; Vol. 615, c. 171.] The people whose intellectual ferocity and charm convinced us to table the amendment have said not one word in support of amendment (a). Lord Dearing of Hull, who knows one or two things about the Post Office, also warmly welcomed the change. Amendment (a) would define the applicable turnover for determining the maximum fine under clause 30 as being for a period of not more than 12 months, and being either the period of the business year preceding the date when the contravention ended, or the date of the imposition of the penalty if the contravention had not ended. It would also effectively make the order-making power of the Secretary of State—which is a crucial element of that part of the Bill—unnecessary. It would, in that sense, be a backward step. The amendment is overly prescriptive. We believe that it is technically deficient. I know that arguments about technical deficiency are always the bane of those on the Opposition Front Bench, but it makes no provision, for example, as to whether the relevant turnover is to be restricted to that of the business in the UK, or extended to cover worldwide turnover. Nor does it allow for the possibility of the detailed provisions to change over time. Careful consideration is needed to define turnover for those purposes. That will entail a level of detail that would be inappropriate in the Bill. Detailed provisions should be set out in an order made by the Secretary of State, as provided for in Lords amendments Nos 14 and 83. Such provisions would mirror the procedure adopted for the analogous provisions in the Competition Act 1998, and in the Utilities Bill. 8.15 pm The hon. Member for Buckingham made a valid point. He was concerned about whether a Government would use the power to impose burdensome fines on what could be the Post Office but could, in the future, be other universal service providers. That is the whole point about the licensing regime. The time to raise the issue, however, will be when the Secretary of State lays the order before the House by means of a statutory instrument. That, entirely properly, will give the House an opportunity to decide whether there are any problems relating to the fine.
Michael Jack (Conservative, Fylde)
My hon. Friend the Member for Buckingham (Mr. Bercow) made an entirely reasonable point. The Minister batted it off, saying, "We can discuss this later, when an order is laid". Given that my hon. Friend raised an important point, however, will the Minister assure me that there will be a period of open consultation, so that when the order is laid, the important accounting and equity issues raised by my hon. Friend can be properly discussed?
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
We are talking about circumstances in which the terms of a licence have been breached. We were originally reluctant to put a cap on the fine imposed, but the forceful arguments advanced in another place convinced us that we should do so. That is entirely consistent with the Competition Act and with the Utilities Bill, and it is perfectly reasonable for us to say that we should not be burdened in the Bill by the form that the penalty should take.
John Bercow (Conservative, Buckingham)
May I press the Minister on the question of the entitlement to fine on three years' turnover? This is a matter of grave concern. We do not dispute the principle that fines should be imposed, but business representatives out there believe that the scope for fining of three years' worth of turnover is excessive. How will the Minister reassure them?
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I would reassure them on this basis. As I said earlier—I realise that someone was speaking to the hon. Gentleman at the time—the amendment, as drafted, does not take account of whether turnover in the domestic part of the business is involved, or turnover in its European subsidiaries. There is a technical deficiency. It is impossible to deal with such technicalities in the Bill, but we will ensure that an order is laid before the House so that the issues can be debated. The money obtained from any fine will not go into Treasury coffers; it will go to the Postal Services Commission. There will be no great imperative either to impose too many fines, or to insist that the fines are used to plug a gap in public finances. The money cannot be used in that way: it will go to the commission. I do not think the amendment is necessary. I think the Opposition should quit while they are ahead. They made a good contribution which was accepted in another place, and I do not think we need amend that further. Amendment (a) to Lords amendment No. 13 would require the Postal Services Commission to collect information enabling comparisons to be made between the efficiency and economy of different postal operators, whether in the United Kingdom or abroad. Unlike Lords amendment No. 13, the amendment leaves the commission with no discretion whatever. We do not doubt that comparative information will be essential to the commission when it carries out many of its core duties. The point was raised by the hon. Member for Rutland and Melton (Mr. Duncan) in Committee; we thought it sensible, and we have dealt with it. However, we do not think that we need to be prescriptive in the Bill. It is important to leave operational matters to those who are in the best position to make the decisions—in this case, the Postal Services Commission. It is important that the commission should have some discretion in when it collects comparative information, because it may not always feel that a comparison is useful. The Government do not want to require the commission to do work—for which licence holders will pay—if the commission believes that that work is unnecessary. The commission also does not have the power to require such information from unlicensed operators or from anyone except universal service providers in the United Kingdom. It certainly does not have the power to require information from operators abroad. However, an important aspect of comparisons, particularly of the services provided, will be to consider operations in the private sector and in countries such as Sweden. Removing the element of choice and insisting that the commission must do such work regardless of whether it is necessary would be a backward step and would not be acceptable. We think that amendment (a) to Lords amendment No. 14 is quite unnecessary. I agree entirely with the hon. Member for Buckingham that transparency is essential and absolutely healthy. Indeed, ensuring that a universal service provider keeps separate accounts within its internal accounting systems for each of its reserved and non-reserved services is one of a number of important requirements of the European postal services directive. However, a requirement to report on how it has complied with that duty is already subsumed within the provisions of amendment No. 14, which will require the Postal Services Commission to include in its annual report a report on how it has complied with its obligations under the postal services directive. Highlighting that specific aspect of that duty would have no practical effect and would serve no useful purpose. Now I come to the point that is dreaded by every speaker at the Dispatch Box, when it is necessary to correct an earlier statement. I am told that the money goes not to the commission, but to the Consolidated Fund. However, the commission has no financial incentive to fine companies. I hope that that fully clarifies the point. I cannot accept the amendments to the Lords amendments. Lords amendment agreed to. Lords amendments Nos. 7 to 19 agreed to.
POWERS OF ENTRY AND SEIZURE
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
This group of amendments clarifies and improves the Bill's provisions protecting postal packets in the course of transmission by post. The amendments were made to honour a promise made in Committee that the Bill's provisions on interference with the mail and the connected provisions on inviolability and conditions of transit of postal packets would be clarified. The matter required careful consideration, and I regret that we were not able to complete our consideration of it in time to make the amendments on Report. However, we believe that, with the introduction of the amendments in the other place, the provisions have been clarified. Lords amendment agreed to. Lords amendment No. 21 agreed to.
EXERCISE OF FUNCTIONS: GENERAL
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
This group of amendments relates to the Consumer Council for Postal Services established by clause 2. The lead amendment requires that at least one regional committee must be set up in relation to England, whether for the whole of England or an area within it. That reflects concerns that there should be at least one regional committee in England. The amendment leaves the council free to recommend whatever number of committees it feels is appropriate, but there must be at least one. There are several consequential amendments to schedule 2. Lords amendment No. 28 removes from clause 57 the requirement to notify investigations. Lords amendment No. 68, which inserts a new clause after clause 110, facilitates the transfer of property and staff from the existing consumer bodies and the Post Office Users National Council to the new council. The rest of the amendments are drafting, technical or consequential. I commend the Lords amendments to the House. Lords amendment agreed to. Lords amendments Nos. 23 to 32 agreed to.
LIMIT ON LOANS AND OTHER ARRANGEMENTS WITH GOVERNMENT
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
These amendments relate to the financial and tax provisions in the Bill concerning the Post Office company, and to issues arising out of the transfer from the statutory corporation to the Post Office company. Lords amendments Nos. 33 and 34 amend clause 71 to remove the Government's shareholding from the calculation of the Post Office company's indebtedness to Government while retaining in the calculation any debt securities issued to Government under clause 63. The amendments stem from an agreement in Committee in the Lords to consider further the inclusion of the Government's shareholding in the Post Office company in the light of Lord Dealing's amendment seeking to remove both the shareholding and debt securities issued to the Government from the calculation. Lords amendments Nos. 67 and 146 deal with public records. Amendment No. 67 inserts a new clause recreating a power similar to that in section 75(2) of the Post Office Act 1969, to enable the Secretary of State to vest in the Post Office company the property in the records of the Postmaster General and to give directions to the Post Office company in respect of making those records available to the Crown for inspection and copying. The order-making power in section 75(2) of the 1969 Act has never been exercised, so the vesting of the pre-1969 records remains an outstanding matter from that Act. Amendment No. 146 amends schedule 8 to bring the Consumer Council for Postal Services and the Post Office company into the scope of the Public Records Act 1958 when the bodies come into existence. Lords amendment No. 123 inserts a new paragraph into schedule 3 to ensure that the managers of welfare funds for persons who are or have been engaged in the business of the Post Office, and for their relatives and dependants, have the power to alter the funds to take account of the transfer of the Post Office to the Post Office company. The amendment maintains the rights of persons eligible for assistance under the existing funds. Lords amendment No. 125 is a deeming provision with the effect that, on or after the appointed day mentioned in clause 62, the Post Office company will be treated for all purposes of value added tax as if it were the same person as the Post Office. That will mean, for example, that no charges will arise from changes to the Post Office company's VAT group simply as a consequence of the transformation into the company. Together with the other tax provisions in the Bill, the amendment will ensure that the transfer of properties, rights and liabilities from the Post Office to the Post Office company under clause 62 is tax neutral. The remaining amendments are minor technical or drafting amendments that complete or clarify existing provisions in the Bill. I commend the Lords amendments to the House.
John Bercow (Conservative, Buckingham)
The Opposition propose a small but significant amendment to Lords amendment No. 66. Our understanding is that there is a provision for loans to the Post Office and reference is made to the powers of the Secretary of State in that context. What foxes and perturbs my right hon. and hon. Friends is the provision that where sums are made available in currencies other than sterling For the purposes of this section equivalents in sterling shall be calculated as the Secretary of State considers appropriate. Our amendment would ensure that calculations were not made by the Secretary of State, but determined in accordance with the dictates of the market. It seems curious that the Government wish to arrogate to themselves power for the Secretary of State to determine equivalents in sterling where other currencies are involved as their track record over several years is that whenever Ministers have been challenged, they have been very reticent on the subject of exchange rates. It genuinely perplexes me that now, instead of leaving these matters for market determination, they wish to arrogate to themselves the authority to make such judgments. I shall not take the House through the litany of examples of occasions on which Ministers have been challenged. I remind the House of just one pertinent example, namely the proceedings of the Select Committee on Trade and Industry on 4 November 1998, the detail of which I feel sure is still firmly imprinted upon the mind of the then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland. I specifically questioned him on the subject of exchange rates and the relevant issue of economic and monetary union, and whether it should be undertaken at exchange rate mechanism mid-rates. The right hon. Gentleman looked most perplexed and, after reflection, said that he thought that I was jumping a whole lot of hurdles very prematurely. I make the observation simply to underline the surprise of Opposition Members that the Government wish to determine these matters themselves. It could be that there is a peculiarly good reason why Ministers wish to be able to judge the equivalents in sterling where other currencies are made available, but it is not clear to me or to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning). I suspect that, in addition to all his other claims to fame, the Minister for Competitiveness is a financial wizard of the highest calibre. His explanation will be comprehensive and compelling in equal measure, I hope. I wait to hear it.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
Obviously, the hon. Gentleman has heard about my economics O-level.
Jeremy Corbyn (Labour, Islington North)
My hon. Friend is boasting again.
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I am surprised that the hon. Member for Buckingham (Mr. Bercow) proposes an amendment that will have a very short shelf life as it would apply only to foreign currency loans made to the Post Office Corporation. Of course the corporation will cease to exist once the pic company comes into being—hopefully next year—after the Bill has received Royal Assent. Lords amendment No. 66 to clause 109 has nothing whatever to do with the rate of interest applied to foreign currency loans. The hon. Gentleman did not raise that point, but it has been raised elsewhere. It merely provides that, for the purposes of calculating total indebtedness of the Post Office Corporation under clause 109, the Secretary of State will determine the sterling equivalent of any foreign currency debt. That is particularly applicable to the acquisition of German Parcels last year. The amendment ensures that clause 109 mirrors the provision in clause 71(4) regarding the determination of the sterling equivalent of any foreign currency debt for the Post Office company. There is absolutely no doubt that market rates will be taken into account for the purposes of the calculation. The Government amendment creates the flexibility for sterling equivalents to be valued in different ways according to their purpose. It allows for foreign currency loans to be given a sterling valuation first by taking the prevailing exchange rate at the date of the loan for the purposes of measuring the Post Office's outstanding borrowing against its statutory limit, and secondly, by taking the prevailing exchange rate on the balance sheet date for Post Office and National Loans Fund accounting purposes. The key point is that market rates will be taken into account for the calculation. Opposition Members have nothing to fear in that regard. For those reasons, I hope that the hon. Member for Buckingham will not press his amendment, and that he will accept that the Government amendments fully account for the questions that he raised. Lords amendment agreed to [Special Entry]. Lords amendments Nos. 34 to 53 agreed to [some with Special Entry].
APPLICATION OF CUSTOMS AND EXCISE ENACTMENTS TO CERTAIN POSTAL PACKETS
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
I beg to move, That this House agrees with the Lords in the said amendment
Alan Johnson (Labour, Kingston upon Hull West and Hessle)
The amendments in this group modify the detailed arrangements in the Bill to ensure its smooth commencement, and the transition to the new arrangements. Lords amendment agreed to. Lords amendments Nos. 55 to 65 agreed to.