Postal Services Bill [HL]

House of Lords, 20 April 2009.

Committee (3rd Day)

Lord Clarke of Hampstead (Labour)

First, I declare my interest. I do not want to repeat it because it is on the record, but I was a Post Office worker and have had other contacts with the Post Office. I also apologise to the Committee for my voice. Until about three o'clock this morning, I did not think that I would be able to speak at all, but some of you may be pleased about that.

My amendment 70 would follow Clause 19 and is headed, "Protection for certain members and prospective members of RMPP". As I shall say later, the protection for members of the Royal Mail pension plan contained in the new clause has antecedents arising from the privatisation of other formerly state-owned industries. The new clause would spell out in unambiguous terms what the protection would be. It would not be an interpretation at a later date but a clear and meaningful addition that I believe is necessary.

As I said earlier, the proposal has antecedents. When the electricity supply industry and the railway industry were privatised, a new sectionalised scheme was created. There was the electricity supply pension scheme in the first case and the railways pension scheme in the second. Employees of the new private companies could lose all their future service rights under the newly created industry-wide scheme if the employer took the simple expedient of opting out of the scheme. The employer would have to pay off the deficit but, subject to that, could offer whatever future service provision it thought it could get away with.

In the case of the Royal Mail pension plan, the problem is heightened. The basic idea behind the Government's proposal is to create a new sectionalised scheme that has no deficit, or a vastly reduced deficit. In that situation, the new companies would be mad not to walk away from RMPP as soon as they could. My new clause empowers the Secretary of State to make "protected persons" regulations similar to those applying in the electricity supply and railways protected persons regulations. The wording is substantially derived from the electricity supply regulations.

New paragraph (a)(i) states that no member can be placed in a worse position if his or her employer winds up their section of the RMPP, or if the RMPP winds up in its entirety. That means that the employer would have to create a new mirror-image scheme. New paragraph (a)(ii) states that the scheme cannot be worsened by amendments cutting benefits or increasing contributions. Otherwise, the employer could achieve the same basic purpose of walking away from the scheme by cutting benefits to a minimum level.

Proposed new paragraph (b) deals with the situation in which a member moves from one Royal Mail or Post Office company that participates in the scheme to another company. In that event, if the member's continuity of employment is not broken, the member retains the right to participate in the RMPP. Proposed new paragraph (b)(i) would require continuity of employment, so if a member left the industry and then returned, their protected person status would be lost. Proposed new sub-paragraph (ii) would require both companies already to be participants in the RMPP.

Proposed new paragraph (c) deals with the situation in which an employee transfers from one company that participates in the RMPP to another related company that does not. Typically, that situation will arise when an employer creates a new subsidiary and transfers employees to it. The new company could open a new section of the RMPP, in which case proposed new paragraph (b) would apply. If it did not, under proposed new paragraph (c) the new company would have to make alternative pension arrangements that were at least as favourable.

The proposed new clause would be an important protection for members. Without it, the very first thing that will happen if the Government assume responsibility for the deficit is that the new employers will opt out of the RMPP for future service. They will be free from the deficit, which is what prevents them from closing the scheme now. If they did so, they would have to pay for it. That is the imperative. I beg to move.

Lord de Mauley (Conservative)

When the Minister responds, will he clarify whether the circumstances contemplated by proposed new paragraphs (a) and (b) of the amendment—respectively, a winding-up, which incidentally I would like to think we have no reason to expect, and a new partner changing the pension rules—would not more appropriately be a matter for the trustees rather than the Secretary of State?

On proposed new paragraph (c), is there any circumstance in which an employee could, without his consent, be prevented from participating?

Lord McKenzie of Luton (Labour)

Part 2 of the Bill sets out the Government's proposals to address the deficit in the Royal Mail pension plan to facilitate a strategic partnership. As a result of this support, Royal Mail would be in a much better position to act as a sponsoring employer for the RMPP. In addition, the use of a clear cut-off date, which is intended to be 16 December 2008, allows the Government to provide certainty for members on the effect of the Government's proposals, and to define and limit the liabilities for which the Government, and ultimately the taxpayer, will take responsibility.

On our previous day in Committee on Part 2, we covered the extensive protections for members that are at the core of the Government's proposals. These protections are set out in Clause 19 and it may be helpful if I briefly go over them. The first layer of protection in subsection (2) limits the Secretary of State's key powers in Clause 16 to establish a new scheme or to transfer rights to a new scheme, in Clause 17 to divide the RMPP into sections, or in Clause 18 to amend the RMPP. The Secretary of State must ensure that in exercising these powers he does not negatively impact the pension position of members of the Royal Mail pension plan.

The second layer of protection for members is in subsection (6). This limits the Government's ability to amend the new public service scheme to protect the accrued benefits of members that have been transferred across from the RMPP.

As set out in our policy document, the RMPP will be in a much improved funding position as a result of the Government's proposals in Part 2. In addition, existing pension legislation provides a number of protections for members of an occupational pension plan that will also apply to the RMPP in the future. These include: the statutory priority order for the distribution of assets, as set out in Section 73 of the Pensions Act 1995; the statutory debt, which is calculated on a buyout basis, which falls on an employer under Section 75 of the Pensions Act 1995 if a winding-up is triggered; and the creation of the Pensions Regulator and the Pension Protection Fund in the Pensions Act 2004.

Under this amendment, if the company and trustees decide to wind up the scheme, the Government would have the power to make regulations to secure that no member is placed in a worse position. However—I think that this is the point that the noble Lord, Lord De Mauley, raised—there is no reason to conclude that by achieving a properly funded RMPP, which is the right size for the business, it will lead to the winding up of the scheme. That is especially the case given the recent reforms to the RMPP which began to take effect from April 2008. These reforms, which included the closure of the scheme to new members, were designed to improve the affordability of the RMPP going forward.

Under the RMPP's scheme rules, the company has no express power—I repeat, no express power—to wind up the scheme and would need the agreement of the RMPP trustees to amend the rules to do so. This agreement would also be required for any modification to the basis of accrual of benefits by members. Indeed, removing the cost of paying off the historic deficit should in fact significantly increase the viability of the scheme, not the reverse.

The proposed amendment would also give the Government power to take steps to preserve the pensions rights for members who transfer employers in certain circumstances, so that they would retain the right to belong to the RMPP or to a scheme that provides the same benefits as the RMPP. This goes well beyond what the Government have set out in their policy statement and could provide members with a new right that they do not currently have. In summary, the proposed amendment would give power to the Government to constrain the future pension arrangements made by the Royal Mail Group Ltd. We believe that decisions on future pensions provisions are rightfully an operational matter for the Royal Mail board and therefore we do not think that this amendment is appropriate.

My noble friend prayed in aid precedents; namely, the electricity scheme and the rail industry scheme. In relation to the latter, the protection provided to employees of the rail industry privatisation related to circumstances which I suggest are very different. In that case, the historic BR pension scheme was abolished and replaced with a new industry-wide scheme. In addition, employees were transferred from British Rail to a new employer—one of the newly created private sector rail companies. Neither of those changes applies here. The Government do not propose any changes to the RMPP and Royal Mail will continue to be the sponsoring employer of the scheme, together with Post Office Ltd. Both will remain under public ownership—Post Office Ltd will remain in 100 per cent public ownership—as enshrined in Part 1.

I hope that that provides reassurance to my noble friend and that we have made it clear that the Government are underwriting the accrued rights, as well as scaling down the scheme for RMPP going forward, which should make it much more viable. I should stress again that the sponsoring company, which I would suggest could not be overly influenced by a minority partner in any event, does not have the power to wind up the scheme. It could do so only if changes were introduced into the arrangements, which would require the agreement of the RMPP trustees, as well as RMG. I should remind my noble friend that the trustee board has an equal number of company-nominated and member-nominated trustees, plus an independent chairman. The trustee board is not controlled by RMG. I hope that that provides sufficient assurance to my noble friend to enable him to withdraw the amendment.

The noble Lord, Lord De Mauley, asked whether there were any circumstances in which a company might act in such a way as effectively to transfer the employment arrangements for an individual and therefore take them out of the scheme. Technically, that could happen at the moment, although there is no increased risk from the proposed arrangements. Clearly, if an employer sought to do that there would be substantial issues around employer relationships.

Lord Clarke of Hampstead (Labour)

I thank the noble Lord, Lord De Mauley, and the Minister for their comments. When dealing with this sort of amendment, one of the problems we face is the trust we have in the words of the Bill as a whole. My noble friend said that the existing provisions give the protection that my amendment seeks to get, and I am directed towards those parts of the Bill that purport to give these rights to the people concerned. I am surprised that the railway scheme was put to one side by my noble friend because the scheme has been abolished. You could have fooled me, because the scheme being proposed here as good as abolishes the Royal Mail pension schemes as they exist at the moment. However, the amendment gives me the chance to ask the Minister for an assurance that every single employee of Royal Mail, from the top to the bottom, will be in the scheme. Alternatively, will there be two separate schemes, one for senior management and one for the rest of the staff? If people move from one status to another, these things have to be clear.

I tabled this amendment to look at the question of trust. This has to be spelt out in the Bill because when we say we are going to protect members' interests, we mean it. As I said when moving the amendment, we want this to be clear, unambiguous and meaningful. We have had some difficult experiences over the years with trustees and the pension fund, with the ownership of the fund and with the rights of the fund members. My suggested new clause would do away with the smoke and mirrors and deal with exact wording. Clearly there is a lot to consider in what the Minister has just said and I will look at the parts of the Bill he referred to. However, I want to know categorically whether we are talking about every member of Royal Mail being part of the same scheme, or whether there will be two schemes so that senior management gets an enhanced scheme over the rest of the staff. Perhaps he could comment on that before I decide what to do with my amendment.

Lord McKenzie of Luton (Labour)

I am happy to try to place as much on the record as I can to give my noble friend the quite reasonable assurances he seeks in a number of areas. As we touched on during the last Committee day, at the moment there are effectively three schemes: the RMPP scheme, the executive scheme and the new DC scheme into which all new entrants are directed. The DC scheme will continue to operate for new entrants. No proposals in this Bill impact on those arrangements, and neither do they impact on the current executive scheme. That will stand and fall going forward on the same basis as it does at the moment.

The provisions in relation to the RMPP, as we discussed on the last occasion, are meant to apply to qualifying members as defined. We have tried to make it clear that, subject to all the issues around state aid, it is meant to apply to all the existing members of the scheme at the relevant date.

Lord Clarke of Hampstead (Labour)

I thank my noble friend for that further clarification. If I have understood him aright, and I am not the brightest person in this House, there will still be an executive pension scheme which differentiates between senior people and the rest of the staff. Having said that, I need to consider carefully what my noble friend has said before we move on to Report. For the moment, I beg leave to withdraw the amendment.

Amendment 70 withdrawn.

Clause 20 : Transfer of assets of the RMPP

Amendment 70A

Moved by Lord Hoyle

70A: Clause 20, page 10, line 31, leave out paragraphs (a) and (b)

Lord Hoyle (Labour)

What I have to say in relation to this amendment is very simple. Where the Bill states that:

"The Secretary of State may by order make provision for the transfer of assets to the RMPP",

we want to delete paragraphs (a) and (b) referring to the "Secretary of State" and a "nominee of the Treasury". That is what we are asking for. It is pretty straightforward and I hope that my noble friend will be able to agree to the amendment. I beg to move.

Lord Clarke of Hampstead (Labour)

Although my name is not on the amendment, the name of my noble friend Lady Turner is and, in supporting the amendment, I take the opportunity to tell the Committee that I spoke to her last night. She has had major surgery on her knee but she is in very good spirits and hopes to be back among us as soon as possible. In the mean time, she sends her best wishes to all her friends. It was nice to speak to her last night because her heart and mind are on the Bill, to which she is so committed.

As my noble friend said, the clause deals with the assets of the RMPP that will be transferred to the state in return for the state's agreement to underwrite the past-service deficit. In other words, it is about the money, not the pension rights. The assets will consist of cash, government bonds, gilts and equities. The gilts and equities could be sold by the RMPP and transferred as cash, but that would suit no one as they might be sold into a falling market. The Government's intention, as outlined in the debate on 31 March at col. 1023 of Hansard, is that gilts will go to the Treasury, cash to the Consolidated Fund, and other assets to a freestanding fund which would gradually sell them when the market was right. The effect of the amendment would be that all the assets were transferred to the freestanding holding fund. In other words, the gilts and cash would not be simply swallowed up by the Government.

The purpose of the amendment is that there should continue to be a fund available to underwrite the transferred pension rights. It would exist as a kind of trust fund, albeit managed by the Secretary of State's nominees rather than by trustees. It would give additional security for benefits that might still be in payment 80 or 90 years from now. If the benefits are paid on a pay-as-you-go basis, they are only as secure as the political willingness of Governments over that period to leave them intact. In similar past cases, including rail and coal, the assets were left as a trust fund and not transferred to the Government's coffers.

The Minister should remember that these assets are, in part, funded by the contributions paid by members over a number of decades; it is their money that we are talking about and not some mythical money that has been spirited out of the Treasury. I do not know what my noble friend Lord Hoyle intends to do, but I see this as a probing amendment and I ask the Secretary of State to give a formal, on-the-record guarantee that the transferred pension rights will be paid, come what may, if they are not underwritten by a fund.

Lord de Mauley (Conservative)

The amendment raises some important concerns about what the Government propose will happen to the assets they are transferring out of the RMPP. The Government's policy paper says that their intention is to sell the assets,

"over a number of years to protect value for money for the taxpayer".

That, of course, is sensible so far as it goes. We have debated the Government's interesting timing in choosing to sell off a large minority stake in Royal Mail during a severe economic crisis, which has already raised concerns about whether the taxpayer will get value for money. The same, of course, applies to the pension assets. How are the Government going to decide when the assets will be sold? Do they have a target level for the Financial Times Stock Exchange index or some other index at which they will sell, or do they intend to sell the individual bonds and shares when they each reach what the Government regard as a satisfactory price? If so, how will they recognise a satisfactory price when they see one? We need to know a little more about the Government's decision-making process.

Where possible, assets should be held on to until the best return can be got. To do anything else needlessly increases the taxpayer liability, already calculated to be somewhere north of £6 billion. I hope the Minister will be able to go into more detail on how long the Government are prepared to wait before liquidating the pension assets. Are they looking to offload them as soon as is reasonable, given the economic situation, or will they hold on to them until they need to be liquidated to meet the associated pension liabilities? What will be the remit of the person charged with the administration and management of the fund under subsection (3)?

Lord McKenzie of Luton (Labour)

Amendment 70A relates to the treatment of assets that are transferred to the Government. I shall start by setting out the Government's intended approach to the treatment of assets and how we expect the pay-as-you-go scheme to be governed. Clause 20 covers the transfer of assets from the RMPP to the Government. The Government's intention to transfer members' qualified accrued rights to the new public service scheme represents an estimated £29.5 billion liability.

To partially offset that cost to taxpayers, Clause 20 provides that the Secretary of State can, by order, transfer assets from the Royal Mail pension plan to the Government. Based on the 2007-08 scheme accounts, the Government estimate that they will use their power under this clause to transfer something like £23.5 billion of assets, which amounts to 80 per cent of the cost of the liabilities transferred. At the point of transfer, the Government intend to leave the remaining RMPP with sufficient assets to meet its liabilities, currently estimated by the Government to be £3 billion. That will require state aid approval.

A transfer of assets will not affect the qualifying accrued rights transferred to the new public service scheme. To be clear to my noble friend, these will be protected in law and paid on a pay-as-you-go basis, as with many other public service pension schemes.

The Government are conscious that these changes could entail a significant transfer of assets out of the scheme. Those assets have been accumulated over many years through the contributions of scheme members, as my noble friend said, and of Royal Mail as the sponsoring employer, as well as returns on the scheme's investments.

I stress that any such transfer of assets can take place only if the Government have also taken responsibility for the relevant liabilities—the qualifying accrued rights. In other words, at the point that the assets are transferred, the Government will also have taken on responsibility for the payment of past-service benefits to which those assets relate, as well as the responsibility for the shortfall in funding that will almost certainly be the case. It should also be remembered that, under Clause 19, members' accrued rights that are transferred to the new scheme will be protected in law.

A number of questions have been raised with regard to the governance of the new pay-as-you-go scheme; the noble Lord, Lord De Mauley pressed some of these matters as well. Because many public service schemes are not established under trust and do not have assets to manage, they do not have trustees. Instead, the responsibility for the management of such schemes is delegated to a professional scheme manager, who is able to draw on the full range of professional advice available to a trust-based scheme. The interests of members are reflected through statutory protection for benefits, and through other stakeholder consultation arrangements as part of the broader governance of the scheme.

It is envisaged that similar arrangements to those applicable in other public service schemes will be developed in respect of the new scheme created under Clause 16. However, as the new scheme has no active members and there is no employer, many of the decisions that need to be made by other public service schemes, such as those relating to future benefit accruals, will not arise.

As a public service scheme, it is envisaged that the new scheme will prepare an annual set of resource accounts. These will be informed by regular actuarial assessments and updates of the key assumptions used to calculate the scheme's liabilities, including longevity.

Given the nature of the liabilities that will be transferred to the new scheme, and the protection for members provided through the Bill and in the related secondary legislation, the Government regard the established model for governance of public service schemes as the most appropriate model to be applied in this case.

I turn to the detail of Clause 20. Subsection (1) contains provisions for where the assets will be transferred. We intend for any gilts and cash transferred to go to the Treasury's Debt Management Office and the Consolidated Fund respectively. The intention is that the other transferred assets will go to a fund established by the Secretary of State and will be sold over a number of years, with proceeds going to the Consolidated Fund.

Clause 20(1)(a) allows for a transfer of the assets directly to the Secretary of State. That would allow for the transfer of any cash to the Secretary of State, who could then pay it into the Consolidated Fund. It is also a contingency measure, should the fund envisaged under Clause 20(1)(c) not have been established when the transfer of assets is required to take place. Clause 20(1)(b), which gives the power for the assets to be transferred to a nominee of the Treasury, is designed to allow gilts to be transferred directly to the Debt Management Office. I hope this has provided noble Lords with clarity on our proposed treatment of assets and how that relates to the transfer of qualifying accrued rights.

Amendment 70A, which I accept is probing, proposes to remove paragraphs (a) and (b) from subsection (1). The effect would be that assets could only be transferred from the RMPP to a fund established by the Secretary of State rather than directly to the Secretary of State or a nominee of the Treasury. That would have no beneficial effect for members, whose qualifying accrued rights would already be protected in law, and would be funded from general taxation and not from the fund established by the Secretary of State. However, it would restrict the flexibility which the Government may need in the interim to implement the transfer successfully and could add to the costs of asset disposal.

The noble Lord, Lord De Mauley, asked a number of questions about how the assets would be dealt with and, in particular, what we mean by their being sold over a number of years. Let me be clear that the Government are not interested in a fire sale of any assets; they are committed to selling the assets over a number of years. It would not be appropriate to include a timeframe in the Bill because it is not possible at this stage to predict when sales will be appropriate and deliver value for money. Similarly, it is not appropriate at this stage to predict when sales will be possible. Therefore, the decisions will be for Ministers and the BERR accounting officer to make. The BERR accounting officer will be responsible for ensuring that asset sales deliver value for money for the public sector as a whole. This follows the standard procedure used for all public sector bodies, as set out in HM Treasury's publication Managing Public Money.

The Government recognise the importance of transparency on the pension proposals. We are currently considering the various options for how best to achieve this, including that of setting out a disinvestment strategy, but that is just under consideration.

I hope that that explanation has dealt with each of the points that noble Lords have raised. I ask that the amendment be withdrawn.

Lord Hoyle (Labour)

This is a probing amendment and I desire to go over in detail what my noble friend has said. We may have to return to this as we are concerned about the protection of members, but in view of what has been said already I beg leave to withdraw the amendment.

Amendment 70A withdrawn.

Amendment 71 not moved.

Amendment 72

Moved by Lord De Mauley

72: Clause 20, page 10, line 41, at end insert—

"( ) The Secretary of State must inform Parliament of the classes of assets transferred under the order."

Lord de Mauley (Conservative)

The amendments in this group address two concerns. Amendment 72 deals with which of the RMPP's assets the Government intend to take. The more substantive Amendment 74A concerns the assumptions on which the safeguard in subsection (1) will be based.

Let me deal first with Amendment 72. Your Lordships will appreciate that some of the assets in the RMPP are of considerably better quality than others. The variety of assets is presumably very wide, ranging from property to overseas equities to index-linked bonds, and so on. Some are subject to much higher levels of risk. If the Government are not intending to take over all the assets, do they intend to take a fair selection of each class of asset, or will they seize only the safest, leaving the highest risk and most toxic assets behind for the ongoing fund to handle?

On Amendment 74A, following our debates on 31 March, the Minister helpfully wrote to my noble friend Lord Skelmersdale concerning the assumptions. It would be helpful if the noble Lord could expand somewhat on how the Government will ensure that an objective analysis of volatility and risk will appropriately be taken into account. I beg to move.

Lord Razzall (Liberal Democrat)

My Lords, I have listened with interest to the debates on the amendments moved by the noble Lords, Lord Clarke, Lord Hoyle and Lord De Mauley, and I am puzzled. Perhaps the Minister can help me. There seems to be considerable concern in your Lordships' House that somehow the Government are going to pinch the assets. We did not devote a lot of time to worrying about that on these Benches, and perhaps we were wrong. I had understood that the taxpayer was going to subsidise this pension fund and that one of the purposes of the Bill is to put in place the mechanism under which the Government—that is, taxpayers—subsidise the shortfall in the pension fund. Why does the Minister think that there is this concern that the Government are going to pinch the assets?

Lord McKenzie of Luton (Labour)

I start by responding to the latter point made by the noble Lord, Lord Razzall. While I cannot, perhaps, articulate why there are concerns, I can tell you why there should not be concerns. The issue is that liabilities—currently estimated to be some £29 billion—are being taken on and underwritten by the taxpayer on a pay-as-you-go basis. The assets of the scheme are being transferred to the Government, except to the extent that sufficient assets will be left with RMPP to cover its liabilities at the point at which the split occurs. The proposition that the Government are somehow pinching the assets is misguided. Liabilities are being taken on that are expected to exceed considerably the value of any assets that the Government will take on.

Lord Razzall (Liberal Democrat)

When the Minister winds up on this point, will he explain why the Government are simply not agreeing to leave the assets there and meet any deficiency? Why does there have to be this transfer of some assets, leaving others behind, which of course is causing concern and suspicion to the noble Lord, Lord Clarke of Hampstead, the noble Lord, Lord Hoyle, and—dare I say—the Tories? Of course, we on these Benches would never suspect the Government of such skulduggery.

Lord McKenzie of Luton (Labour)

I am grateful for what I take to be a measure of support from the noble Lord. The reason for adopting this approach is set out in the impact assessment. Another option would be for the assets to be transferred, for there to be a funded scheme as the noble Lord suggests, and for the Government simply to plug the gap on some ongoing basis. The analysis in the impact assessment very clearly shows concerns over the investment risk that that would involve and leave the Government with. It was not an attractive option. It was estimated that, over time, it would lead to greater costs being borne by the Government and the taxpayer. That is the fundamental reason for adopting the current approach.

Amendment 72 would require the Secretary of State to report on the assets that are transferred from the RMPP to the Government. At present, as the noble Lord, Lord De Mauley, suggested, the assets in the scheme are a mixture of equities, gilts, properties, bonds and cash. The type and mix of assets left with the RMPP will be the subject of discussions with the trustees and actuaries. That is the discussion that must take place to identify the appropriate mix of assets to be left, bearing in mind the ongoing liabilities that the RMPP will have. An exact pro rata mix is unlikely, given the indivisibility of some investments.

The Government fully recognise the importance of transparency in any transfer of assets. Indeed, we would expect an order for the transfer of assets to include details of the classes of assets transferred, including, for example, details of any cash or gilts that were transferred to the Consolidated Fund or to the Treasury. However, the order will need to contain some flexibility on the exact mix of assets transferred, given that a transfer may take place some months after a transfer of liabilities and the time an order is laid. There could conceivably be some changes in the value and composition of the relevant assets to be transferred, so any order cannot be totally prescriptive.

Following a transfer of assets, the Government will also be transparent in publishing the breakdown of assets and the wider public finance impact in the Pre-Budget Report or Budget immediately following the transfer. As this information will already be in the public domain in the ways that I have described, we see no necessity for a separate obligation for the Government to report on the classes of asset transferred. I hope that the noble Lord, Lord De Mauley, will accept that because what he seeks to achieve in respect of transparency will arise from the mechanisms that I have just set out.

Amendment 74A concerns Clause 21. This clause limits the Secretary of State's power to transfer assets out of the RMPP. It provides members with a legal safeguard to ensure that the transfer of assets does not worsen the funding position of the RMPP. In relation to this restriction on the transfer of assets, subsection (4) provides that the values of liabilities and assets will be determined, calculated and verified by a prescribed person and in the prescribed manner, the details of which will be set out in secondary legislation.

Similar to what Amendment 74A proposes, the Government intend to hire an appropriately qualified actuary, but we do not believe that it is necessary to put this on the face of the Bill. There are a number of factors that Government will need to take into account in procurement decisions, and this is just one factor. In addition, the relevant actuarial bodies could change in the future. I understand, for example, that a merger has been proposed between the Institute of Actuaries and the Faculty of Actuaries. It therefore makes sense to set out in secondary legislation the details of who will carry out the valuation and on what basis .

Amendment 74A also requires the valuation to employ,

"a conservative set of assumptions used in the private sector".

This amendment appears to relate more to a full actuarial valuation of the scheme such as the one the trustees are currently undertaking. The purpose of the valuation referred to in subsection (4) is different and much narrower in its scope. It is purely to ensure that the restriction on the transfer of assets in Clause 21 is met. It is important that the assumptions used are appropriate to the RMPP and protect both scheme members and the taxpayer. As such, it is entirely legitimate for the Government to set out the assumptions in an order after consultation with the trustees. By contrast, the proposed wording of Amendment 74A is unclear and could hold the Government and the taxpayer hostage to fortune.

I hope that that explanation has reassured the noble Lord, Lord De Mauley, and that he will be able to withdraw the amendment.

Lord de Mauley (Conservative)

I am most grateful to the Minister. I am also grateful to the noble Lord, Lord Razzall, who, as always, goes right to the heart of the matter, even if it was not the specific matter that I was raising in this amendment—but no less important for that.

I shall consider the Minister's response in the context of his recent letter. For today, I withdraw the amendment while reserving my right to return to it later.

Amendment 72 withdrawn.

Clause 20 agreed.

Clause 21 : Restriction on power to transfer assets

Amendment 73

Moved by Lord De Mauley

73: Clause 21, page 11, line 4, leave out subsection (1)

Lord de Mauley (Conservative)

Once again, the noble Lord, Lord Clarke, who spoke earlier about trust, like us appears to have similar concerns about the discrepancy between government promises and the drafting of the Bill. At Second Reading, the Secretary of State made a clear statement, echoing what had been published in his policy paper, that:

"At the point the historic liabilities are transferred to the new public scheme, we will leave the Royal Mail pension plan with sufficient assets to meet its liabilities".—[Official Report, 10/3/09; col. 1067.]

That seems completely unambiguous. The RMPP is to be left fully funded, albeit, as we have discussed, on the 2006 valuation. However, this is not what the Bill says. Clause 21(1) is equally clear that the Secretary of State is not to be held to the promises that he has made. According to the Bill, the Secretary of State must only make sure that the RMPP is not left with a worse ratio between its funding levels and its liabilities than before the relevant time. Which is it to be—the soothing promises of the Secretary of State or the wording of the primary legislation?

If the Government intend to leave the RMPP fully funded, why have they not drafted the Bill in that way? This is just one more example of unnecessary and deeply concerning ambiguities in the drafting of this Bill. Do the Government intend that the RMPP should be fully funded or not? I beg to move.

Lord Clarke of Hampstead (Labour)

This group includes Amendments 74 and 76. In Amendment 74, I am saying:

"The power of the Secretary of State to make an order under section 20 (a "transfer order") may only be exercised if the assets of the RMPP are sufficient, at the relevant time, to enable the RMPP to be wound up and all of its liabilities discharged in accordance with section 74 of the Pensions Act 1995 (c. 26) (discharge of liabilities by insurance, etc)".

This is an important clause, because it defines the amount of assets that can be transferred to a new public scheme or a segregated section of the RMPP, sponsored by the Secretary of State. The value is defined negatively. Clause 21(1) tells you what must be left to the RMPP, rather than what it can transfer. It says that the funding ratio in the rump RMPP must not be worse as a result of the transfer. The funding ratio can be determined in a number of different ways; the relevant ones are on an ongoing basis or a winding-up basis. The winding-up basis is more stringent; broadly speaking, it is the cost of buying out the benefits by purchasing annuities.

Members of the scheme want the RMPP to be as strong as possible after the division. The strength of the new free-standing Royal Mail and Post Office companies is not all that clear—and I venture to suggest that there are not that many people either here or in any other place or in the Government who are clear on what is going to happen. That is why, when I talk about trust, it is difficult to have trust in something that is not very clear. In the case of a similar separation in the private sector, the trustees of the remaining section—that is, the rump RMPP—would insist that they are left with enough to buy out all benefits if the sponsor collapsed shortly after the separation into a number of different companies. Amendment 74 therefore says that once the assets are divided, the RMPP should be fully funded on a buy-out basis. The addition of new subsection (6) in Amendment 76 may not be strictly necessary until such times as we hear something that blows away some of the fog about the future of the company.

I have raised the question under Amendment 74, so I shall leave Amendment 76 as it stands and hope that it is not necessary to return to it. We want to suggest that the scheme should not be wound up. In an earlier contribution, the noble Lord, Lord Razzall, put his finger on it. If you go outside this building and talk to a Post Office worker who remembers what happened in the early days of my Government with pension funds—the way in which they took money out of not only that but many other pension funds—you will find that they are not terribly keen on seeing something that has been in place since 1969 being swept aside. It was made clear that this could be overcome by saying simply that there was a problem with the deficit—but why muck up the whole of the other scheme? Why destroy the trustee-based scheme that has served well, other than in the question of the deficit? Massive surpluses of billions of pounds used to be run up, until such time as both Conservative and Labour Governments allowed the terrible business of a holiday, with no money going into the scheme from the employer, although 6 per cent of members' money still went in. That is why I speak very forcefully about the fact that it is our members' money that we are talking about and not something handed down as some sort of gift.

There is suspicion, and these amendments attempt to put that suspicion to one side and to clarify things. In fairness, I ought to say that even though we have been on a break I have been very pleased to have contact with Ministers about the need to get these things right. I am sure that there will be time between now and Report to see whether some of the fog can be blown away and we can come back with something that the Government can be proud of in its transparency, accountability and commitment to a structure allowing trustees to pay their full part. I shall be very interested to hear what my noble friend has to say.

Lord Hoyle (Labour)

I rise to support my noble friend. What we are on about here is the members and trying to protect them, because, as he said, while the two Governments were taking a holiday, the members were making their contributions to the scheme in any case. There has been talk of suspicion, fog, mist and a lack of clarity. I hope that when the Minister replies he will try to meet our misgivings; indeed, that he will end them and give us assurances that we have no need to fear what might happen. That will be a big test, because as my noble friend Lord Clarke has said, the members of the scheme are extremely suspicious of what might happen to the scheme and, indeed, what might happen to them. They have paid into a pension fund for such a long time and they want to ensure that it is protected. It is part of their security for the future and was part of wages they deferred in the past in going forward. Therefore, I hope that my noble friend Lord McKenzie can give us some reassurances, or at least some details that we can look at to see whether we have the kind of reassurances that we actually need.

Lord McKenzie of Luton (Labour)

I will again do all I can to try to make sure that on the record we give the assurances that I believe are embedded in the legislation. We will do all we can, both in these proceedings and, if necessary, at meetings outside to lift some of the fog that my noble friend may feel is still present around these proceedings. I say to my noble friend Lord Hoyle that protection is very much at the heart of what we are proposing in Part 2.

Amendments 73 and 74 concern subsection (1) of Clause 21. As we have discussed, subsection (1) requires that the ratio of assets to liabilities in the RMPP is no worse immediately after the transfer of assets and liabilities than immediately before it. The restriction applies to all sections of the RMPP, including the new sections for Post Office employees and Royal Mail Group employees. This represents an important legal safeguard for the trustees and for members with accrued rights remaining in the RMPP.

Amendment 73—I accept it is a probing amendment—removes subsection (1) and would remove this protection. It could allow the Secretary of State to leave the RMPP in a relatively worse funding position than at present. Not only could this be detrimental to the members of the RMPP, it would also present a barrier to partnership because of the additional risk that it would impose on any potential partner in Royal Mail Group. Therefore, the Government cannot accept the amendment.

Amendment 74 aims to require that a transfer of assets to Government may only be made if the RMPP is left fully funded on a buyout basis. That is the most cautious basis for funding pension liabilities, often used to assess the cost of winding up a pension scheme. It would require that following a transfer of assets and liabilities, sufficient assets are left in the RMPP to fund the purchase of insurance company annuities covering all members' benefits that remain with the RMPP.

Amendment 76 is consequential on Amendment 74 and clarifies that this does not imply an intention for the scheme to be wound up. I certainly accept that. In dealing with these amendments, we should bear in mind that both the Royal Mail pension plan and its sponsoring employers will be, as we discussed a moment ago, in a significantly improved position by virtue of the measures in the Bill. It would be perverse to argue in this context that the trustees somehow need full funding on a buyout basis to protect members going forward. Nor is it desirable to specify a particular funding basis for the purposes of Clause 21. The Government have stated their intention that when transferring assets and liabilities from the Royal Mail pension plan, sufficient assets will be left to cover its liabilities. In calculating those liabilities, the Government will work with the trustees to find an appropriate valuation basis that delivers value for money without putting members' accrued benefits at risk. The details of the valuation will be set out in secondary legislation.

Let me repeat, as I think it addresses the point the noble Lord, Lord De Mauley, raised directly, that the Government intend to leave the RMPP with sufficient assets to cover its liabilities. That will require state aid approval. It is not appropriate, therefore, to include a requirement to that effect in the Bill. Although the Government are confident that it will be possible for state aid approval to be obtained, they cannot pre-judge the Commission's detailed decision or rule out the possibility of modification to the proposals. That is why the Bill is not written in those terms, but the protection is written in there as I have just outlined.

Funding on a buyout basis could involve a large cost to Government and the taxpayer but provide members with little extra protection. It would also—I think my noble friend Lord Clarke identified this—provide an incentive for the company to wind up the scheme, which the Government have no intention of doing.

I can confirm in relation to Amendment 76 that, as we discussed earlier, there is no express power in the RMPP rules for the scheme to be wound up. There are, as I have said, state aid implications. The pension proposals, including the value of assets left with the Royal Mail pension plan, will require state aid approval. That is why it is not appropriate to include a requirement on the funding basis in the Bill.

Given the difficulties I have mentioned, I hope that the noble Lord, Lord De Mauley, and my noble friend Lord Clarke will not press the amendments, and that I have provided the assurance that I think they are seeking. If I have not, I am very happy to have another go and put something further on the record if that would help.

Lord de Mauley (Conservative)

I am grateful to the Minister for his response. I would like the chance to think a little more about what he has said. Therefore, for today I am prepared to beg leave to withdraw my amendment.

Amendment 73 withdrawn.

Amendments 74 and 74A not moved.

Amendment 75 had been withdrawn from the Marshalled List.

Amendment 76 not moved.

Clause 21 agreed.

Clause 22 : Taxation

Amendment 77

Moved by Lord Clarke of Hampstead

77: Clause 22, page 11, line 41, at end insert—

"(5A) Regulations shall be made under this section that shall ensure that, for the purpose of any relevant tax, benefits payable or prospectively payable under—

(a) the RMPP, and

(b) a new public scheme,

are treated as benefits payable under a single registered pension scheme."

Lord Clarke of Hampstead (Labour)

The amendment tries to get a single scheme for tax purposes. First, I am advised that the current basic rules for tax limits are that everyone has a right to contribute up to 100 per cent of his or her taxable earnings to one or more pension schemes. I am not worried about that: members will not be contributing to the new public scheme at all. They can contribute whatever they like to the RMPP going forward or to a personal pension to buy additional pension.

Secondly, everyone has a single limit on the total value of the pension rights that they can have from every pension scheme that they hold. This total value is described as the lifetime allowance. For example, if a member has three pension schemes—schemes A, B and C—the limit applies to the total benefits that they get from all three schemes. If pension A comes into payment at age 60 for instance, you work out the value of pension A and knock that off the value of the total to see what is still available. You do that again when pension B comes into payment and again when pension C comes into payment. Each time a pension comes into payment it is called a "benefit crystallisation event".

The way in which the value of a pension is calculated is complex, but the key point is that it is the capital value of the pension. A defined benefit pension is valued at 20 times the value of the initial pension; for example, if pension scheme A produces a pension of £20,000 per annum, £400,000 of the lifetime allowance is used up.

The lifetime allowance is set at £1.75 million for the tax year 2009-10 and will not bother many people. It certainly will not bother many postmen or postwomen; I can assure the Minister of that. This is not a big concern for most members, but might affect some high earners. Perhaps those people in the executive scheme that we heard about earlier on would fall into the lifetime allowance that I have just described. It just makes their lives a bit more complicated if one or other of their Royal Mail pensions comes into payment before the other.

Thirdly, there is a limit on the amount of pension that you can convert into a cash lump sum. This is the rule that matters: in short, you can convert up to 25 per cent of the value of your pension when it comes into payment. In my example, when pension A comes into payment, its capital value is £400,000, as I have just said, and the maximum lump sum is £100,000. In the case of the Royal Mail pension plan, let us imagine a member with a pension payable by the new public scheme that is worth £10,000. When the member retires, he or she has built up a further pension under the RMPP worth another £10,000. Each pension is worth a capital value of 20 times £10,000—£200,000. If he or she takes both pensions at the same time, the maximum lump sum is 25 per cent of £200,000 plus 25 per cent of the other £200,000, or two lump sums of £50,000 making a total of £100,000, just as before.

However, what if he or she takes one pension at the age of 60 and the other at age 62? If it is a single scheme for tax purposes, he or she can take the whole £100,000 out of the first pension at age 60. If there are two schemes, he or she can only take £50,000 at age 60 and the other £50,000 at age 62.

This is probably not the most important point in the world, but it affects some members who want to draw their pensions in two parts. Other tax rules have different effects, depending on whether it is one scheme or two. The tax administration of two schemes becomes twice as complex. If the RMPP trustee is going to administer both schemes, as the Secretary of State suggests, why not treat them as a single scheme? I beg to move.

Lord de Mauley (Conservative)

The noble Lord, Lord Clarke, has highlighted another complication that might fall on pensioners as a result of the Government's policy. I hope that the Minister will be able to reassure us that members will not be disadvantaged by the new arrangements as to their tax liability.

It is notable that Clause 22 gives powers to the Treasury, which is not bound by the material detriment safeguard in Clause 19. It therefore seems quite possible that new rules could be imposed on members to their detriment. Is that the case?

Once again, this clause allows the Government to do pretty much anything. As far as I can see, there would be nothing to stop the Treasury, by regulation, imposing 100 per cent tax on the income that members receive from both the new public scheme and the ongoing RMPP. I am sure that this is not the Government's intention—or, if it is, that we are not going to hear of it today—but it seems that this clause would allow for it.

More realistically, it appears that the Treasury intend to tax the fund set up under Clause 20(1)(c). Is this the case? Why are the Government considering taxing a fund owned by themselves? I cannot think of a single beneficial effect except for the useful massaging of current account figures.

Similarly, in what circumstances do the Government envisage withdrawing relief on the ongoing RMPP? Would this not breach the spirit of the Clause 19 safeguard?

Lord McKenzie of Luton (Labour)

I think that the understanding of the noble Lord, Lord De Mauley, on the clause is a little misplaced, but I hope to put something on the record to clarify matters. I think that I followed my noble friend Lord Clarke's example, but would need to read the record. Certainly, his exposition of lifetime allowances, benefit crystallisation and issues of lump sums was correct. I certainly accept that you could see an anomalous situation arising from the possible reorganisation if the clause were not available to address it, as it is intended to do.

The Government have outlined the framework for the pension proposals. However, the specific detail of the proposals for the reorganisation of the pension provision will be set out in secondary legislation and the reorganisation could result in unintended consequences. For example, a tax charge might arise solely as a result of the reorganisation.

Clause 22 will allow the Treasury to change how a relevant tax would apply to: the Royal Mail pension plan or its members; changes relating to the Royal Mail plan or its members; a new public scheme or its members; and a fund set up to hold the assets of the Royal Mail pension plan. This clause is necessary so that the Treasury can neutralise any tax disadvantage or advantage that may be caused by changes to the pension arrangements; its purpose is to neutralise the potential impact of tax in these circumstances. So where a reorganisation of the pension arrangements would otherwise create an unintended tax charge, that tax charge can be removed by amending the relevant legislation.

For example, Clause 22 will allow regulations to be made to treat the new public scheme as a registered pension scheme. So when members' rights are transferred from the RMPP to the new scheme, tax charges of up to 70 per cent—equating to the amount of tax relief that will have been received—of the amount transferred will not arise.

Clause 22 also provides the power to make provision to remove the tax charge where assets of the RMPP are transferred to a fund in Clause 20(1)(c). If the fund is not a registered pension scheme, the transfer of the assets and the income and gains that arise on the investments would be taxable. This clause would allow regulations to be made so that the investments may attract tax relief as if they had been transferred to a registered pension scheme. To answer the point of the noble Lord, Lord De Mauley, on whether we are looking to tax the fund set up under Clause 20, I say no. The impact of this is to enable the fund that holds the assets to be treated in the same way for tax purposes as though those assets continued to be held by the scheme.

Without the power, these amendments could not be made otherwise than by primary legislation at some time down the line. If this clause were removed, tax charges of up to 70 per cent on payments out of the pension savings could arise simply because of the reorganisation of the pension arrangements.

This sort of clause to neutralise unintended tax charges is not novel. In 2005, a similar power—Section 102 of the Finance Act 2005—was taken in relation to the Pension Protection Fund, the Fraud Compensation Fund and the board of the Pension Protection Fund. It was taken for similar reasons, essentially as a precautionary measure to ensure that, when the detail was finalised, unintended consequences could be dealt with. Therefore, it is important that this provision is flexible. The tax consequences will depend on the specific detail which will be set out in secondary legislation. Clause 22 provides the power to make regulations to meet any concerns that may arise on the taxation of the pension reorganisation.

Amendment 77 would require the Treasury to make regulations ensuring that, for tax purposes, benefits paid out of the Royal Mail pension plan and the new public scheme are treated as if they were paid out of the same pension scheme. This is both unnecessary and could cause difficulties. Current Royal Mail employees will probably receive benefits from both the Royal Mail pension plan and the new public scheme. In previous debates on this matter, I have confirmed that the Government's aim to protect members is at the core of these pension changes. For tax purposes, the Government aim to treat the members of the RMPP and the new public scheme, as far as is possible, as if the reorganisation had not taken place.

That is why we have Clause 22. If inadvertent tax charges arise out of the changes, Clause 22 provides the power for the Treasury to make regulations to vary the tax rules. The clause is included in the Bill to cover precisely this sort of detail. So where unintended tax charges arise from the pension proposals, Clause 22 allows the regulations to neutralise tax disadvantages that may be caused by changes to the pension arrangements. The amendment would oblige the Treasury to make regulations to treat the benefits as payable under a single registered pension scheme whether or not such regulations were an appropriate way to resolve the potential problem.

Even more seriously, creating the fiction that the benefits of the two schemes are paid out of the same registered pension scheme for tax purposes would introduce unnecessary confusion over which scheme is responsible for the payment, without providing any additional tax advantage over what is already possible under the existing version of Clause 22. This is because each registered pension scheme has to appoint a person responsible for its tax issues—the scheme administrator. This amendment would create uncertainty over exactly who has that responsibility and may even restrict the ability to make changes which neutralise the tax position.

The amendment provides a rigid requirement for the Treasury to make regulations when the tax consequences of the detailed pension proposals, and whether and in what form tax changes will be needed, are still unknown. The Government think that the flexible provision in Clause 22 is the best way of dealing with the tax consequences that may arise out of the pension proposals. My noble friend Lord Clarke asked why we should not treat as one scheme pensions taken two years apart. My note says that the treatment would be the same if £100,000 were taken first and another £100,000 were taken two years later, irrespective of whether the sums were in one or two schemes. The thrust of the point I am seeking to make is that the concerns on which my noble friend has alighted can be dealt with by Clause 22. That is the purpose of that clause. We believe that is a better and more flexible approach than having the rigid approach of treating the two schemes as though they were one for tax purposes, given the difficulties that could generate, as I have explained. I therefore ask that Clause 22 stand part of the Bill and I hope that my noble friend will withdraw the amendment.

Lord Clarke of Hampstead (Labour)

I am left with a feeling that my noble friend has been helpful, although I shall not become too euphoric about that but take it as it comes. However, some of his comments add to the problem. The framework of the scheme is there but not the detail, and secondary legislation might have to be introduced. These matters are uncertain; anything could happen in the future. That is why I have made such a fuss about the need for transparency and to get as much detail of the Government's intentions as possible in the Bill. I leave my noble friend with the following comment. If the RMPP trustee is to administer both schemes, as my noble friend said, why not treat them as a single scheme for tax purposes? However, for the moment I shall withdraw the amendment as I am pretty sure that we shall return to it at a later stage.

Amendment 77 withdrawn.

Clause 22 agreed.

Clause 23 : Information

Amendment 77A

Moved by Lord De Mauley

77A: Clause 23, page 12, line 15, after "otherwise)" insert "that is not legally privileged"

Lord de Mauley (Conservative)

Our final amendment on Part 2 from these Benches is very simple and I hope can be dealt with quickly. Our concerns here are about the drafting of the Bill, not the Government's intentions; at least, I hope that they are not, because, having said that, it occurs to me that there has as yet been no indication of what the Government's intentions are with this clause.

Have the Government had any difficulty extracting the necessary information from the relevant people? Indeed, the only people whom I can imagine holding relevant information are the trustees of the RMPP, and the Minister has said many times that the Government are working closely with them. Therefore, I cannot see why this clause is necessary.

The amendment suggests the barest possible safeguard as regards how this provision might be used, which would be to protect legally privileged information. It is a common safeguard that has been drafted into many precedent pieces of legislation. Will the Minister explain why it has not been included here? I beg to move.

Lord McKenzie of Luton (Labour)

Before I deal with the amendment, I wish to deal with the question that the noble Lord raised about our having difficulty getting information from the trustees and their having been reluctant to provide information. The answer to that is a very clear no. The power that we seek here is to safeguard future information requirements connected with the establishment of the scheme. To date there has been no requirement to exchange detailed information. We have been dealing with aggregate data in looking at the projections and the work that has been done.

I would like to explain the purpose of Clause 23. In order to implement the measures set out in Part 2, the Secretary of State will need access to certain information. We would expect such information to be readily provided by the appropriate parties but, should this not be the case, the clause provides a power for the Secretary of State to make an order requiring the provision of that information.

The information covered under this power will comprise principally details of the scheme's assets and the liabilities related to individual members, which are currently held by the RMPP. The Government will require access to that information in order to make orders concerning the transfer of certain liabilities to the new public service scheme under Clause 16 and for the payment of benefits to members by that new scheme; to establish the new section for Post Office employees under Clause 17; to transfer assets from the scheme under Clause 20; and to ensure that any asset transfer order meets the requirements set out in Clause 21. The power to obtain information can be exercised only where it can be demonstrated to be required for the provisions under Part 2. Before it is exercised, there is a further requirement under Clause 24 for consultation with the RMPP trustees.

We will be discussing, as part of the ongoing meetings that we are already having with the RMPP trustees, the information requirements. We do not envisage that this power will in practice be used, other than in exceptional circumstances. However, access to the relevant information is important not just for the effective exercise of the powers under Part 2 but in order to safeguard members' and taxpayers' interests. The clause therefore provides the necessary powers, should they be needed.

The amendment would exclude from the power in Clause 23 any information that is "legally privileged". The meaning of legal privilege is well defined. The British courts have been clear that legal privilege is a fundamental right, which cannot be abrogated by statute unless done so by express words in the statute or as a necessary implication of the words of the statute. The Government have not put in any such wording in relation to this power because they fully recognise the fundamental right of legal privilege and do not intend to encroach on this right. We do not therefore think that this amendment is necessary. I hope that the noble Lord understands our reasons and that he will withdraw it.

Lord de Mauley (Conservative)

I hear what the Minister says, although I believe that there is precedent for including these words. However, for today, I am happy to withdraw the amendment while reserving the right to come back to it later.

Amendment 77A withdrawn.

Clause 23 agreed.

Clause 24 : Orders and regulations

Amendment 78 not moved.

Amendment 78A

Moved by Lord Clarke of Hampstead

78A: Clause 24, page 12, line 21, at end insert—

"(1A) The Secretary of State may not make an order under any provision of this Part which adversely affects a relevant pension provision contained in the RMPP without the consent of the trustee of the RMPP.

(1B) For the purpose of subsection (1A), "relevant pension provision" has the meaning set out in section 19(3).

(1C) Regulations made under section 259 of the Pensions Act 2004 (c. 35) shall apply to a proposal to make an order under this Part as they apply to a proposal by an employer to make a decision prescribed for the purposes of that section."

Lord Clarke of Hampstead (Labour)

Amendment 78A is really a rehash of my amendment to Clause 18. I said then that any amendment to the RMPP should require the consent of the trustee in consultation with members. On the subject of trustee consent, my noble friend Lord McKenzie said at col. 1060 of Hansard that the Secretary of State needs to be able to amend the structure of the scheme as regards investment, governance and funding without risking a veto from the trustee.

The amendment that I propose today says that the trustee should have to consent to any relevant pension provision, which essentially means any benefits; in other words, the trustee should be able to comment on, and veto, amendments to the benefits structure. As regards consultation on members' requirements, my noble friend Lord McKenzie said that members are adequately consulted because they have member-nominated trustees. That entirely misses the point that member-nominated trustees are subject to confidentiality obligations.

I will spend one moment on the confidentiality obligation of the trustee. One day, when the Secretary of State is in his place, I will be able to ask him questions directly. I will return to the question of the letter from the chairman of the current pension scheme, who, on 18 February, wrote to the Secretary of State after a meeting with him. The letter was published by the Secretary of State on 23 February. As I have told noble Lords before, that date is important, because it was the day when Post Office workers, responding to the lurid headlines of, "Posties' pensions now at risk", attended rallies and meetings convinced that their pensions were at stake. It did not matter how many times I or others who had some knowledge of the subject were able to say, "Not to worry". We could not say very much, because the confidentiality obligations of the member-nominated trustees are paramount.

I asked some of my friends who are still trustees, as I once was, to tell me more about the sequence of events of the meeting, the letter, the publication and the retraction by the chairman—noble Lords may have missed that—in which, effectively, she disowned some of the things that she said in the letter following the meeting with the Secretary of State. I shall ask about those things again, because one day I will try to get a clear answer on the sequence of events.

The member-nominated trustees have this confidentiality responsibility. That is why the second part of the amendment would require consultation with members if benefits are changed. The reference to Section 259 of the Pensions Act 2004 is a reference to the provision that says that members must be consulted if benefits are amended. It would not give members a power to veto any change or even to delay changes.

I ask noble Lords to note that those two proposals go no further than what is required in every other private sector scheme and what currently applies to the Royal Mail pension plan. I ask the Committee to carefully consider and support the amendment, which I beg to move.

Lord de Mauley (Conservative)

The noble Lord, Lord Clarke, returns to the question of the Secretary of State amending the RMPP without the trustee's consent. The Minister has dwelt on the close consultation that the Government are already engaged in, but I have not detected that he has made clear what would happen if any disagreements remained at the end of that consultation. Indeed, the whole matter is rather complicated by the possibility of plan B, which the Minister also went into on the last day of Committee on 31 March.

If the Government were unable to gain the necessary permissions to take over the old liabilities directly and were forced to sectionalise the old RMPP under Clause 17, there would presumably be much more government interference in the day-to-day running of that section and so even more scope for disagreements to come up between the Secretary of State and the RMPP trustee. Having said that, I have a hunch that the Minister will tell us that he has quite a bit more work to do on this whole area and, if he does, we will clearly need to come back to it in some detail on Report. I very much hope that the noble Lord, Lord Clarke, will not feel the need to press his amendment today.

Lord Hoyle (Labour)

I support what my noble friend said. He is right to draw attention to what has happened in the past in relation to the chairman and the strange behaviour that took place. It is no wonder that there are some suspicions, which no doubt my noble friend can clear up for us. Again, there is the question of where we are going to draw the line and there is the question of the responsibility of the trustee. At the end of the day, we are trying to make sure that the members are protected in the best way possible. That is why we are saying,

"without the consent of the trustee".

I hope that my noble friend can throw some light on this and on the role of the trustee in the future because, at the end of the day, we are trying to get rid of the fog, the mist and the mistrust that appear to exist at the moment with the members of the pension scheme.

Lord Whitty (Labour)

I will intervene in the debate with a word of advice to the Government. If they want to avoid some of the mistrust to which my noble friend referred, which relates not only to the pension scheme but to the total package before us in the Bill, the full details of which are not yet clear, they would be as well, either by adopting my noble friend's amendment or in some other way, to indicate that the Government do not have any intention of altering the terms of the pension scheme by Secretary of State decree.

I am not sufficiently informed to know whether my noble friend's wording is the correct way to do this, but it seems to me that in Clause 19 we have made it clear that transfer would not immediately adversely affect any person in the scheme. However, the suspicion remains that the Secretary of State may have a power to change subsequently the entitlement of a member of the scheme and that therefore the guarantee in Clause 19 is not sufficient for the members of the scheme to feel safe that things would not be changed subsequently. As my noble friend Lord Clarke has said, the normal way of changing the terms of a scheme remains, which would have to involve consultation and eventually consent and agreement at the trustee level with the employer or, in this case, the Government.

I am not sure that the Government would lose anything by accepting the amendment, but they would remove a suspicion that the intention is to dilute or adversely alter the nature of the scheme some way down the line and thereby avoid expenditure by the Government. We should not avoid putting this in a broader context. We know that the Government and the Opposition have made some rumbling noises about public sector schemes in general. This is about to become a public sector scheme more explicitly than previously and it would be appropriate for the Government to give some reassurance to postal workers on this front, which may help them in their general dealings with the postal workers and their unions over the total package.

Lord McKenzie of Luton (Labour)

This has been an interesting, if somewhat compacted, debate. Let me try to unpick one or two issues. My noble friend Lord Clarke raised several points about the communications between the chair of the trustees and what had transpired. Forgive me that I have no briefing on that. I have a copy of the letters. If there is a way in which we can add further clarification, I am happy to take that away.

My noble friend Lord Whitty asked for an assurance about the Government's intentions going forward. He is right to say that there are clear protections for the RMPP members at the point that the scheme is effectively split into two. I will come onto that in a little bit of detail in a moment So far as the new public sector scheme is concerned, the Secretary of State would similarly be constrained by Clause 19(6) in respect of any adverse change to qualifying and accrued rights, and those would be dealt with only under very narrow circumstances, one requiring consent and one being amended in the prescribed manner for which, as we debated last time, we were trying to replicate what is in Section 67 of the 1995 Act.

The other principle is that the Government take responsibility for accrued liabilities going forward for the operation of the pension scheme, which is the routine, normal manner of the Royal Mail Group and Post Office Ltd in respect of their action, and that the protections that are currently available generally in pension legislation would continue to apply. The Government have no particular powers in the Bill to seek to amend the scheme, as far as I am aware, and I will certainly write if the contrary proves to be the case. The Secretary of State does not have that power going forward. The operation of the slimmed-down scheme will be a matter for Royal Mail Group, as should be the case. We have made that policy clear from the start.

More specifically, the amendment raises a number of issues regarding consultation that we touched on in our discussions on earlier amendments. I appreciate the importance of the issues raised by noble Lords and I hope that my response to these amendments will address any remaining concerns.

The first part of the amendment requires the consent of the RMPP trustee to be obtained where an order is made that adversely affects any relevant pension provision contained in the RMPP. In other words, although the general requirement under Clause 24 is that the Secretary of State must consult with the trustee before any order is made under Part 2 which affects the RMPP, the effect of the amendment would be to require the consent of the trustee in circumstances where pension provision within the RMPP was adversely affected as a result of an order being made.

I question how, given the existing protections in the Bill—this comes back to my earlier point—the circumstances to which this amendment is addressed would arise. Under Clause 19(2), an order by the Secretary of State to establish a new scheme, transfer qualifying accrued rights to the new scheme, sectionalise the RMPP or amend it cannot be made unless relevant pension provision for RMPP members is, in all material respects, at least as good immediately after the exercise of the power as it was immediately before. As I explained in response to an earlier amendment, the definition of "relevant pensions provision" at Clause 19(3) is broad in its effect.

These provisions in Clause 19 are a significant constraint on the powers of the Secretary of State and reflect the importance that the Government attach to protecting members of the RMPP from being detrimentally affected by the Government's proposals. The clause explicitly rules out the possibility that the Secretary of State would amend the RMPP in a way that had a material adverse effect on relevant pension provision. Accordingly, I cannot see circumstances in which the amendment, if accepted, would serve any purpose. By definition, if there is no possibility of an order being made that had a material adverse effect on relevant pensions provision contained in the RMPP, the trustees would never have to agree to such an order being made.

Turning to the final part of the amendment, subsection (1C), I should make it clear that it is indeed important that members of the scheme, both current and former employees, should be made aware of what changes are being made and the effect of the changes particularly in terms of issues such as administration. The Government have already met representatives of current employees and pensioners to explain the proposals in the Bill. The Government intend to keep those organisations informed as the Bill progresses and we move towards implementation.

As I mentioned earlier this month, we are also discussing with the trustees and Royal Mail on how they should best engage with current employees and other scheme members as the proposals are developed. While this legislation is progressing through Parliament, it is right that member engagement is the responsibility of the trustees and not the Government. But we are rightly maintaining a close interest and have discussed with the trustees appropriate communications that would meet the needs of the scheme members, stressing the strength of feeling expressed in this House during our earlier debates in Committee.

I now turn to the proposed application of the consultation requirements set out in the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, which are the regulations made pursuant to Section 259 of the Pensions Act 2004, as is envisaged by this amendment. Those regulations require employers with more than 50 employees to consult affected employees about a proposed significant change, known as a listed change, to their pension scheme for at least 60 days before implementing the change. Listed changes include closing the scheme to new members, changing the accrual rate in a defined benefit scheme, changing a defined benefit scheme to a money purchase scheme, reducing employer contributions and increasing member contributions. The requirement to consult gives affected employees the opportunity to have their say about future changes to the pension scheme. It ensures that affected employees are fully aware of the changes and the implications for their future pension provision.

The key point is that the Government are not proposing any such changes to the RMPP. Members' pension entitlements accrued up to the cut-off date—the qualifying time—are not changing as a result of the Government's proposals. Members' future accruals in the RMPP will remain, as at present, a matter for the Royal Mail and the trustees. The Government are not proposing any changes. Were Royal Mail or Post Office Ltd to propose changes to the scheme, as employers they would be subject to the obligations under the regulations that I have described. However, no such changes are proposed as a result of the measures set out in the Bill, so the requirements under those provisions are not relevant here.

I hope that the explanation has provided some reassurance. I accept that my noble friend may wish to dwell on the precise wording, because it is important that we provide reassurance to people and make clear the protections that are available under these provisions. Accordingly, I hope that he will feel able to withdraw the amendment.

Lord Clarke of Hampstead (Labour)

I thank my noble friend for that very informative response to this short debate. He started by saying that it was interesting; it was certainly interesting to me once again to see that the willingness to talk about consultation and transparency is there in the Minister's mind. I welcome that. It is another thing not to see that in the Bill.

It is said that the Government are not proposing any changes at the moment. We cannot live on the basis that it will always be "at the moment", because at a different moment different people will be administering different things. That is why throughout these debates I have said there is a need for trust, consultation and accountability so that people can understand the situation.

There is not very much wrong with the first part of the clause. My noble friend is saying that there is no need to require the consent of the trustees. Over the years, consent in pension schemes has been as my noble friend Lord Whitty described; when a change is proposed, whether on an investment policy, the benefits structure or the administration of the scheme, there has been consultation. As I said at the time of the first deficit of £1.18 billion in the scheme in 1973, which was accumulated after only four years of the scheme, common sense prevailed and the parties came to an agreement.

All that this amendment says is you have to have the consent of the trustees. They are not out to try to hoodwink the employer or the Government; they represent the members. The trustees are looking after members' money and investing on their behalf. It could be agued that some of the trustees may have not done that very well in the past few years, but I have explained time and time again that that was a direct result of the policies of former Governments and the present Government in allowing that almost obscene pensions holiday to take place, whereby the money accumulated from members' contributions, not from the employer. At the same time money was pumped into the Exchequer from the external finance limit. So you could say that in the past the trustees may not have done their job as well as they might have done.

The noble Lord, Lord De Mauley, asked me not to test the opinion of the Committee this evening. I got the impression that he may want to bring something back to make this issue clearer. As I have said—now for the third time—if we do not get on the face of the Bill a clear and concise commitment to consultation, I shall, without any shadow of a doubt, support any amendment that states that there should be consultation. I know that consultation is provided for in other parts of the Bill, but when people read legislation, they want to see it wherever it is necessary. My amendment states that it should occur on this matter.

Lord McKenzie of Luton (Labour)

I think that sometimes in this discourse we are in danger of interchanging consent and consultation. I refer my noble friend to Clause 24, which makes it absolutely clear that the Secretary of State must consult the trustee of the RMPP before making an order under Clause 16 or any order under any other provisions of this part. That is embedded in the legislation and it is very clear. Perhaps we may look at what happens with the process going forward once the Government have taken on board the accrued liabilities. As I said a moment ago, in the normal course of events, going forward it is a matter for Royal Mail Group Ltd and the trustees. However, there could not just be a spurious adjustment to the terms of the RMPP going forward without requiring the processes set down in general pensions legislation to kick in. Therefore, a requirement for consultation is set down in the Bill.

Lord Clarke of Hampstead (Labour)

I thank my noble friend for that comment. He draws attention to Clause 24, which deals with orders and regulations. If it is good enough to put that in the orders and regulations, why not put it in here? If it is a principle worthy of putting into a later clause, why not put it into this one?

I look forward with great interest to the letter that I think will come regarding my comments on the relationship between the chairman of the existing pension fund trustees and the Secretary of State. I wish that the Secretary of State were here so that I could say this to his face but I shall say it once again anyway. I believe that there was some scaremongering in the department that sought to frighten decent people regarding the future of their pensions.

Lord McKenzie of Luton (Labour)

I have not been involved in the detail on this but I have certainly been in the presence of the Secretary of State—I think that it may have been said in this very Chamber—when he has made it clear that he published the letter and did not leak it. He published it because he believed that it was a significant issue that should be taken account of in the deliberations that were then under way. I do not think that it is fair to attribute to my noble friend any underhand or devious motivation, which I do not believe was present.

Lord Clarke of Hampstead (Labour)

My old employers used to say that that sort of argument was the salami treatment, cutting one slice off at a time, but we have gone a bit further than that. My point is that we have not yet had a public explanation of why the chairman of the trustees has, in effect, withdrawn her comments regarding the Hooper review in relation to pensions. Some of those things had nothing to do with pensions; they were to do with quality of service and administrative matters relating to Royal Mail. That is the answer that I will continue to try to get. Why was it necessary for someone of as high standing as the chairman of the pension scheme to write to all the members assuaging their fears?

I am sure that we will come back to that when my noble friend has had a chance to have the drains up and has had a good look round and seen the sequence of events relating to the letter written on 18 February and published on the 23rd, and later when, following lurid headlines, some of the comments in that letter were withdrawn. Taking the advice of the noble Lord, Lord De Mauley, I shall not test the opinion of the Committee on this occasion but I shall continue to come back to the question of consultation and the relationship between the trustees and the Government. In the mean time, I beg leave to withdraw the amendment.

Amendment 78A withdrawn.

Amendment 79 not moved.

Clause 24 agreed.

Clauses 25 to 27 agreed.

Clause 28 : Duty to secure provision of universal postal service

Amendment 80

Moved by Lord Clarke of Hampstead

80: Clause 28, page 14, line 17, at end insert—

"( ) In carrying out its functions in relation to postal services, OFCOM shall have regard to the interests of—

(a) individuals who are disabled or chronically sick;

(b) individuals of pensionable age;

(c) individuals with low incomes;

(d) individuals residing in rural areas;

(e) small and medium size enterprises;

but that is not to be taken as implying that regard may not be had to the interests of other descriptions of users."

Lord Clarke of Hampstead (Labour)

We now move on to a series of amendments dealing with the duty of the future regulator. Amendment 80 seeks to reinsert into legislation the duty that was previously imposed on Postcomm—without me getting too excited about the way that it has helped to bring the Post Office to this parlous state—in the Postal Services Act 2000. That duty meant that Postcomm had to consider, in relation to the postal industry, the specific problems facing people with particular needs. I refer to the disabled, the chronically sick, pensioners, the poor and people living in the countryside. Of course, it can be said that Postcomm did not display any great energy in defending the needs of such people, but that must not be an excuse to ignore their needs in the new Bill.

There is no reason why Ofcom should have fewer obligations than Postcomm. Changing the regulator does not change the circumstances of the users of Royal Mail. I am pleased that the Bill restates the need to maintain a service for blind people but it is not clear whether the deletion of those additional duties on the regulator is due to oversight or deliberation. If it is an oversight, I expect the Government to accept this amendment. If it is a deliberate exclusion, we must have an explanation from the Secretary of State. After all, the current recession is, in part, a result of Governments around the globe deregulating services to excess.

The market does not provide solutions to many problems. Left to the market, postal companies see only higher costs in providing rural services; left to the market, the disabled, the low paid and pensioners find themselves with a bad bargain. It would be a great mistake to lower the social concerns of the regulator. I cannot accept that the loss of this duty is somehow compensated for by the ability of the Secretary of State to offer guarantees on,

"the attainment of any social or environmental policies",

set out in Clause 52. Such guidelines should supplement the permanent concerns covered by the amendment.

In the interim report published by Richard Hooper in May 2008 entitled The Challenges and Opportunities Facing UK Postal Services, we find a fine observation:

"The postal service enables daily communications across all 28.4 million business and household addresses in the UK, regardless of the location, and beyond. It helps social cohesion by linking rural communities with more densely populated areas of the country, and ensures that older people and those with disabilities have an accessible, reliable means of communication and the capacity to send and receive physical goods".

Unless your Lordships accept this amendment, that statement by Richard Hooper's team will no longer be true, for those elements of social cohesion referred to in the report will be removed with the passage of the Bill as it stands. I cannot for one moment believe that this House wants to see, for example, a deterioration in the service offered to rural communities by the universal service provider.

There is an important difference between the duties listed in my amendment and those outlined in the Postal Services Act 2000. In this instance, I have added the category of small and medium-sized enterprises. I omitted them in my first submission on this clause and am now pleased to say that they feature as part of this amendment.

In Hooper's interim report, there were many useful observations on the impact of competition on the mail market. Unfortunately, much of that work was forgotten by the time the final report was published—presumably because the final report is more concerned with justifying the privatisation of Royal Mail—so it is necessary to return to the interim report to get a clearer picture on the issue of competition. The report makes it quite clear. It says:

"There have been no significant benefits for small businesses yet as a result of liberalisation".

It continues by pointing out that,

"small businesses have relatively little choice. The vast majority use Royal Mail's services. Their dependence on Royal Mail seems to reflect an assumption that they are unable to attract alternative carriers, particularly if located in rural areas, based at home, or do not have high volumes to offer. Penetration by alternative carriers in the small business sector will increase over time, as owners have more information about their choices, are able to set out their needs, and new products are designed".

Surveys so far carried out show high levels of satisfaction with the quality of service offered at today's prices. Some 83 per cent of small businesses believe that first class mail offers good value for money. The response is higher still for a medium-sized enterprise at 92 per cent. But they do not believe that the service fully meets their particular needs. In some cases, recent changes in collection and delivery have made it more difficult to carry out their business.

In spite of advances in technology and online banking, many small businesses are dependent on the postal network to organise financial transactions. More than 50 per cent of companies surveyed by the Federation of Small Businesses send over three-quarters of their bills and invoices through the post. When profit margins are tight, the ability to receive payment and avoid penalties for the late settlement of bills is vital. With that in mind, small businesses want later collections and earlier predictable delivery times. Liberalisation has not delivered that yet.

The introduction of a new cost-reflective pricing structure based on weight and dimension known as pricing in proportion means that consumers are more likely to need advice about sending their letters. Small business representatives in particular have expressed concerns about the growing complexity of sending mail. These changes will have the greatest impact on those who work and live in more rural areas as well as domestic consumers unable to travel to the nearest post office, including the elderly and those with disabilities. We can see that there is no real gain for small and medium-sized enterprises.

Market innovation by competitors has been almost entirely confined to the skimming off of the conveyance of bulk mail to Royal Mail sorting and delivery offices. Neither Postcomm nor Hooper suggested how liberalisation could actually deliver benefits to small and medium enterprises. Postcomm was convinced that there would be some sort of trickle-down benefit, yet that has not occurred. Why should competitors develop a highly dispersed customer base? Only Royal Mail has the network and coverage to address the needs of small and medium-sized enterprises. Therefore, it is appropriate to impose on Royal Mail the duty to consider the specific needs of small and intermediate enterprises and I hope that noble Lords will see the logic and sense in this amendment. I beg to move.

Lord Hoyle (Labour)

I support my noble friend. Once again, he has stated the facts. Certainly, Postcomm, once it was charged with the provision of a universal postal service, was always more concerned about competition rather than provision. The emphasis in Hooper, in putting forward Ofcom as the best regulator, was to say that universal service provision must take priority. We should back that up in a little more detail for those who are absolutely dependent on a universal postal service.

It goes without saying that for those who are disabled, chronically sick or not mobile, the universal postal service is part of the value and quality of life, but the universal service must serve their actual needs. Once more, I could use a similar argument in relation to those on pensions because pensioners become less mobile as they get older—apart from those who attend this House, of course, who are the notable exceptions. Nevertheless, it is generally true that people of pensionable age require the provision of a universal postal service. Those with low incomes are always most adversely affected by any change and that would particularly be so if we did not ensure that the universal postal service served their needs.

My noble friend talked about rural areas. While I cannot be said to live in a rural area because, after all, our village has about 6,000 people, we are part of a rural area as my noble friend knows. Again, it is absolutely dependent. Information carried on the national news this weekend rang alarm bells. In remote parts of Scotland, the postal van has also acted as a people carrier and people have been passengers in it, but they are now told that that is not commercially viable. I should like to know from my noble friend why that is so. Surely it cannot be costing a large amount, yet those without a car will now have to walk. Their standard of living will certainly go down.

That is the kind of thing that will occur. The market cannot provide for that: it is about a universal service provision that caters for those people who so require it. As I said, it alarmed me when I heard about that. This is the first sign of going down that road, knowing that privatisation may mean that the service side will come second to the commercial side and the making of profit. It will be about efficiency, whatever that means. Efficiency can certainly mean depriving people who need it of the universal postal service, particularly in rural areas.

My noble friend was right to say that small and medium-sized enterprises depend on it. Certainly, competition has benefited large businesses: there is no doubt about that. It has given them a choice, but small and medium-sized businesses are absolutely dependent at this stage of their development. Certainly, as Hooper admitted, there has been no trickle-down to them to enable them to improve their choice from the competition that has already taken place. We must protect them. They are suffering at the moment in the economic squeeze that is going on. They do not need in addition to that to be affected by changes to the postal service being provided to them. Many of them will not be able to continue in business.

Listing all those categories, my noble friend and I are right to say that this is not to be taken as implying that regard must not be had for other descriptions of users. We are trying to protect the rights of those individuals in our society who are absolutely dependent on the universal postal service—one that can be provided not on the basis of competition or profits but on the basis of need. They certainly need it. I hope that my noble friend will reply to me and assuage the fears that I have expressed in all of these categories but particularly in relation to rural areas. As I said, developments have occurred in Scotland before partial privatisation has even taken place. I support my noble friend in this.

Lord Whitty (Labour)

I also support my noble friend in this amendment or something very like it. I declare an interest as the chair of Consumer Focus which inherited the duties of Postwatch. I also want to emphasise that I support the broad thrust of Part 3 of the Bill. I support putting the universal service obligation on the face of the Bill in unequivocal terms. There were fears that that would not be done. It ensures that the individual or business expects the same service on the same terms and at the same price whether they are in the furthest reaches of Fermanagh or based in inner London. I greatly welcome that.

I also welcome the transfer of responsibility—the abolition of Postcomm—for reasons that my noble friend hinted at and has previously expounded on. Postcomm's tradition and attitude to consumers has not always been of the best, whereas Ofcom has a positive reputation in this regard, at least in general terms. I draw attention to a recent publication by Consumer Focus which rated Ofcom as one of the better regulators in relation to consumer interest. No doubt the Minister, the noble Lord, Lord Carter, who has just joined us, will take some credit for that in one of his earlier capacities. So I welcome the general direction of this part of the Bill.

However, two things are missing. One is that unless we say otherwise, the interests of consumers can be interpreted as the interests of the mainstream or average consumer. We need to make it clear that the interests of vulnerable consumers—whether geographically vulnerable or vulnerable because of their personal circumstances—need to be taken especially into account in Ofcom's deliberations. In general, I am happy that the details of the regulatory framework are left to Ofcom, but it needs to be clear in the Bill that that consideration of vulnerable consumers is an obligation on the regulator. I hope that the Government would indicate through my noble friend that they are prepared to move in that direction.

The other point is that, despite the stipulations on the universal service obligation in the Bill, it will always be possible for the Government to alter or interpret it. It is very important that it is clear in the Bill, or at least in a ministerial commitment, that any change in the universal service order contemplated would be subject to consultation with consumer organisations including Consumer Focus—I repeat my interest there—and with representatives of organisations that purport to talk for small businesses, to which my three noble colleagues have already referred.

We need the double guarantee that the vulnerable consumer will be given special attention by the new regulator and that any change in the USO will be spelt out and subject to clear consultation. Both of those things need to be somewhere in the Bill.

Lord Hunt of Wirral (Conservative)

In intervening for the first time today, I remind noble Lords of my interests as set out in the Register of Members' Interests, including my having been a partner for more than 40 years in the national commercial law firm Beachcroft LLP.

I am very sympathetic to the amendment moved by the noble Lord, Lord Clarke. When looking at designating the UPS, Ofcom should consider not only the average user but those groups for whom an effective universal postal service is of the greatest importance. I was very interested to hear what the noble Lord, Lord Hoyle, and, in particular, the noble Lord, Lord Whitty, said. I had been reading Consumer Focus's March 2007 publication, Rating Regulators, about Postcomm. I quote from page 10, where Consumer Focus argued against designating in the way in which the noble Lord proposes in the amendment. It said that this,

"labels everyone falling into these groups as vulnerable, which ignores the diversity of capability within these groups and feels patronising to the individuals targeted".

I was not quite sure from what the noble Lord, Lord Whitty, said, whether Consumer Focus has changed its mind about that or whether that comment is now out of date, because Consumer Focus went on to suggest that a statutory framework—putting it into the Bill—

"may lack the flexibility to allow regulators to respond to changing ideas about the nature of consumer disadvantage".

In expressing my sympathy with the amendment, I say to the noble Lord that I hope that the Minister will be able to reassure the Committee that the list of minimum criteria, such as that there be an affordable uniform tariff, will be assessed against the sort of groups that the noble Lord's amendment highlights. Surely that is the main purpose of today's debate.

Lord Whitty (Labour)

As the noble Lord has asked the question, perhaps I can respond briefly. My point is that there needs to be some reference to vulnerable consumers or those who are likely to be more disadvantaged. The previous documentation objected to a list that implied that everyone within the list was vulnerable and that people who were not on the list were not vulnerable. The final paragraph of my noble friend's amendment covers the second point. There may be other ways to cover the first point, but the principle is that particular attention must be paid to the more vulnerable and disadvantaged consumer, not simply the average consumer.

Lord Hunt of Wirral (Conservative)

I am grateful to the noble Lord for that explanation. It highlights the fact that we are now dealing with some important issues that are causing considerable concern to a wide range of people in this House, another place and outside. I hope that the Minister will be able to reassure us. It also gives me the opportunity to mention that the Business and Enterprise Committee in the other place has produced a report since our previous Committee sitting—it was published on 1 April—which raises a whole series of points that must give us all cause for reflection and, in various cases, concern. For example, the Select Committee in the other place pointed out in paragraph 88 of its report:

"The Communications Act 2003 requires Ofcom to have a Consumer Panel, advisory committees for different parts of the United Kingdom and on elderly and disabled persons. We are concerned about the extent to which Ofcom will be required to take into account the interests of vulnerable or marginal members of society in provision of postal services. Under the Bill their interests would have to be taken into account as part of Ofcom's duty to review whether the universal service provider is meeting the reasonable needs of users, but members of particular groups may feel better protected if the requirement to address their needs is listed expressly on the face of the Bill, or if the Government can give an assurance that the advisory committees of the Communications Act 2003 will be expected to advise on postal services in addition to their existing tasks".

There we have the problem; it is causing concern elsewhere. I wonder whether in responding to Amendment 80 the Minister might tell us what the Government intend to do about that detailed report, in which many points are raised. We could, during all these debates and when we return on Report, ensure that all the concerns are raised, but it may be easier and quicker if the Government publish their response to the Select Committee report within the normal timescale, which I understand is within two months. If the Government could by the end of this month or during next month respond in detail with their answers to all the questions raised by what I feel is a very good report raising all sorts of issues that we should consider more carefully, that would not only assist our understanding in relation to the noble Lord's amendment but probably shorten a lot of our other debates.

Lord Carter of Barnes (Labour)

I thank my noble friends for tabling the amendment. Before we delve into the detailed amendments, of which there are many to this section on regulation, I thought that, as this is the opening debate on this section, it might be worth making a couple of comments.

The first observation to be made on the Government's behalf is that the purpose of the change is to achieve a clear rebalancing and reprioritisation of the regulatory regime for postal services. It is not to remove any element of competition from the postal services market. Indeed, Royal Mail, in both its written and its verbal response to the Hooper review, made it very clear that competition was a significant force for good. However, there was a clear question about balancing priorities where the search for competition sits alongside the universal service obligation and the nature of the regulatory regime.

I hope noble Lords will forgive me if I do not join the long queue of people rather gleefully burying Postcomm, as I have sat alongside it as a regulator—my noble friend Lord Whitty referred to this—and have been regulated by it, albeit in a non-executive capacity, when I sat on the board of Royal Mail. Postcomm in many ways did an admirable job, but it was working within a specific regime which we propose to change. Everyone, including Postcomm, is aware of that and welcomes it. It is time for a change. That change comes in many forms, not least in the overall regulatory regime change from a licensing regime to an authorising regime, which brings with it flexibility for the regulator which Postcomm did not have.

My noble friend Lord Clarke raises a number of issues, which I will come to in a second. He asked about small and medium-sized enterprises and the need to ensure that the regulatory regime takes their needs into account. He can rest assured that that is the case. Indeed, Section 405 of the Communications Act, which controls Ofcom's overall responsibilities, specifically requires Ofcom to take into account the needs of small and medium-sized enterprises and the business consumer in the exercise of its responsibilities. The same is true of the at times vulnerable groups to which noble Lords have referred. I will come back to that.

My noble friend Lord Hoyle asked about the use of Royal Mail vans in remote areas. He might be reassured, and possibly amused, to know that I spoke only this morning to the current chief executive of Ofcom, who spent his Easter vacation on the remote Western Isles of Scotland, where he discovered, as a result of hitching a lift, the value of the Royal Mail vans in location.

Lord Clarke of Hampstead (Labour)

Will my noble friend get this right? They are post buses, not Post Office vans, and they are constructed for the conveyance of passengers.

Lord Carter of Barnes (Labour)

I stand duly corrected. As I was going to say, the use of the post bus service is an operational question for Royal Mail's management, but I am sure that this evening's debate will raise those issues.

On the security of the universal postal service, Clause 28 gives the Bill one of its essential features: Ofcom's primary duty in this rebalancing is to secure the provision of the universal postal service. Amendment 80, tabled by my noble friend Lord Clarke, seeks to ensure that Ofcom takes into account the needs of the disabled, pensioners, those on low incomes and those living in rural areas when it carries out its primary duty to secure the universal postal service. This is a laudable aim from my noble friend and one which the Government share wholeheartedly. The wording proposed by Amendment 80 replicates Section 5(2) of the Postal Services Act 2000, which requires Ofcom to have regard to the needs of special interest groups when carrying out its duties. The Bill does not include the same wording simply because Ofcom is already required under the Communications Act 2003 to take into account the needs of the disabled, pensioners, those on low incomes and those living in rural areas. This requirement applies to all Ofcom's functions, including its new responsibilities for the postal services.

Section 3(4) of the Communications Act 2003 requires Ofcom, in performing its general duties, to have regard to the needs of persons with disabilities, the elderly and those on low incomes and to the different interests of persons in the different parts of the United Kingdom and persons living in rural and urban areas. In fact, the Communications Act 2003 goes further than Amendment 80, as it requires Ofcom to take into account and explain a wider range of interests, such as the vulnerability of children, regional differences across the UK and ethnic minorities.

I therefore hope that I can reassure your Lordships that Ofcom will have to have regard to the needs of the disabled, pensioners, those on low incomes and those living in rural areas in carrying out its postal duties. There is no extra protection to be had by accepting this amendment, as it is already there in statute and, perhaps more reassuringly, already operates in practice.

Amendment 86 from my noble friend deals more broadly with the needs of users in accessing the universal postal service. It relates to Clause 32 on the designated USP conditions—conditions that Ofcom can impose on the designated universal service provider to secure the provision of the universal service. Those can require the universal service provider to do a variety of things, including,

"to provide, or make arrangements for the provision of, access points for the purposes of the universal postal service".

My noble friend wishes to add to this his amendment to take into account the needs of users. I reassure noble Lords that the needs of users are at the heart of what we propose with this Bill and why we propose it. We have repeatedly argued that the universal postal service is part of the social and economic glue that binds us together as a society. It is therefore paramount that the needs of users in accessing that service are given a central place in the new regime that we are setting out.

Clause 28(3) clearly provides Ofcom with a duty to,

"secure the provision of sufficient access points to meet the reasonable needs of users of the universal postal service"—

all users whom Ofcom will be required to take into account. Clause 29 then requires at least one collection from access points for letters and packets within the universal postal service order. The Bill therefore ensures reasonable access to the universal postal service. I would add that in this respect, on a practical level, the Bill mirrors the current system whereby, through its licence granted by Postcomm, Royal Mail is required to provide access points that meet the reasonable needs of users.

On the broader points made by the noble Lord, Lord Hunt, and my noble friend Lord Whitty about the role of advice from the consumer panel and my noble friend's own organisation, Consumer Focus, noble Lords can rest assured that Ofcom will be well advised by its own consumer panel—a critical friend that is within the regulator but is without it in terms of its ability to offer advice across the new extended remit—and by Consumer Focus's broader responsibility to represent the consumer interest in these discussions. I assure my noble friend Lord Whitty that Ofcom will consult fully and in the normal manner on any changes to the universal postal service order following the general duties that apply in best regulatory practice.

I hope that these comments have reassured noble Lords that the needs of users generally and the particular groups mentioned in the amendment are catered for in the Bill and that my noble friend Lord Clarke will see fit to withdraw his amendment.

Lord Hunt of Wirral (Conservative)

I am sure that the Minister is about to deal with my question, which could help to shorten some of the debates not only on this issue but on others: do the Government intend to respond to the very detailed report by the Business and Enterprise Select Committee? The report raises a whole series of questions not only in this area, which the Minister has dealt with in part, but elsewhere. It would be of great assistance if he could reassure the Committee that the Government intend to respond in detail, certainly in the next month. Any advance information would be very useful to your Lordships in dealing with a whole series of issues that we have still to debate.

Lord Carter of Barnes (Labour)

My apologies: as the noble Lord has said, it is an important and excellent report. I am afraid that my official briefing says that we will of course look and publish our response as soon as possible. I am not sure I find that terribly clarifying and I suspect that he does not. I will do my best to get a more specific response to him forthwith.

Lord Clarke of Hampstead (Labour)

This debate has been interesting. I am astounded that we have someone in this House who has confessed to being a supporter of Postcomm and followed that up with the words that it is time for a change. The time was eight years ago. I have dug out a copy of Hansard which reports my, approximately, fifth attempt to expose not only the bias and unfairness, but the almost sleight of hand, of an organisation which purported to be a regulator, but was so biased against the Royal Mail and the Post Office. I am tempted to go into more detail, but I will not. However, I will refer to some of the things I said in 2006. I spoke about cherry-picking, downstream access and the cost to the Royal Mail of subsidising our competitors. I said that a number of times in this Chamber.

Eight years after I first raised that issue, the Government have said it is a time for a change. That time has gone. I have the greatest respect for my noble friend Lord Carter, who takes responsibility for Postcomm. I wonder whether later this evening he will be able to advise me on my issues with Postcomm. When will the French liberalise their post? The answer might be that it has nothing to do with us. Why do you interfere with the tariffs of the Post Office? He might answer that that is the Government's responsibility. Why do you not charge the right amount for the downstream access? Again, the answer might be that it is nothing to do with us. It is late so I will not go on. However, anyone who wants to can read about the times I have raised the unfairness of a regulator that did not ever regulate, but which promoted Federal Express, Business Post and all the competitors, and showed them how they could make money off the backs of postmen and postwomen who were delivering mail that was collected under the arrangements that Postcomm agreed. I had better leave that there before I get excited.

I am delighted that my noble friend Lord Carter described the business report referred to by the noble Lord, Lord Hunt, as excellent. I would say that, wouldn't I? From Second Reading, I have been trying to say that the Government have got this issue wrong, that it has been ill thought-out and has been dressed up as a group of things to try to justify selling off the Post Office and the Royal Mail. I thank all those who were able to see the picture clearer than those who have brought this discredited Bill to this House.

When people mention post buses, I get a little emotional because I was one of the officers who negotiated the provision of post buses in the Highlands and various parts of the rural community. I remember our arguments with management about the insurance, the seats, the seat belts and all the rest of it, but we won. My colleagues in the Post Office provide an excellent service, which is why I reacted to my noble friend calling them vans. They are not vans. They convey passengers and are doing a first-class job in many parts of the country.

I have nothing but admiration for people who can link their jobs with giving a valuable public service, which is at the base of this issue. Do we or do we not want a public service? If you want a public service, you have to pay for it and will the means to do it. If you do not want it, you can do what our political opponents are likely to do, which is to sell the blooming lot off in one go. That is what would happen. I hope that all my colleagues who were so sure that this bit of ownership would be temporary until we get another Labour Government are right. Last Friday, I was 77 and I do not know whether I will live long enough to see what will happen to my Post Office.

Lord Clarke of Hampstead (Labour)

I thank my noble friend very much for that. But, quite seriously, will we always have this benevolent Government who say that we do not have to worry about getting the relevant words in the Bill because something is already inherent? Yes, it is time for a change. I thank all those who have taken part in this debate. I am conscious of the time and we have lots more to do today. I hope that what has been said in this debate will be taken away and that the report referred to by the noble Lord, Lord Hunt, is read. Noble Lords do not need to read it all; they can read just the bottom of the first page and part of the second page of the summary. The Government have not thought this matter through and it is about time that this House raised its voice. We do not want to be awkward people, but deep down we have a belief in the public service.

Amendment 86, to which the Minister did not give much credence, would insert,

"taking into account the needs of the users".

Is that a bridge too far for the Government? We are asking them to take into account the needs of the people who we aim to serve. I have no doubt that I shall come back to this amendment, and I shall probably be armed with pages and pages of my reports about the activities of Postcomm. For the moment, I beg leave to withdraw the amendment.

Amendment 80 withdrawn.

Clause 28 agreed.

Clause 29 : The universal postal service

Amendment 81

Moved by Lord Clarke of Hampstead

81: Clause 29, page 14, line 37, at end insert—

"( ) a network of access points and postal offices whose density and adequacy ensure universal access to the service provided for in this subsection,"

Lord Clarke of Hampstead (Labour)

Amendment 81 deals with access points, to which my noble friend Lord Whitty referred at Second Reading. When he referred to the obligation imposed on Ofcom he noted that the Bill was silent on Ofcom's duties towards Post Office Counters. It is very difficult to talk about the Post Office without realising that the brand is not just those people running around in post buses, but is about such things as counters, delivery people and trunking. When we look at the services of the Post Office, we also have to look at the access referred to in this amendment.

As the noble Lord, Lord Whitty, noted, Postcomm had the duty to look at the level and adequacy of the number of post offices. I am one of those people who will rejoice when we emblazon across all the newspapers what the Secretary of State recently told this House: namely, that there will be no more closures. Was it not good news for those people on all sides of this House who have spoken about people walking with their Zimmer frames to a post office that is more than a mile away? Wonderful people from various parts of this House have said that it is wrong to deprive decent, ordinary, hard working and sometimes very vulnerable people of access to a post office. Now we have it: there will not be any more closures. I suggest that wherever noble Lords go they make sure that the Secretary of State's words are repeated. They might even do some good if noble Lords are canvassing for a candidate.

It would be a grave mistake to leave the network of post office branches without statutory protection. This amendment locates the network of branches within the universal postal service. In future, the universal service provider, which in reality can be borne only by Royal Mail, would be obliged to maintain a branch network which guaranteed universal access for all customers. I welcome the recent move by the Government to underpin the work going through the network of post office branches. I particularly congratulate the Government—I nearly said the Secretary of State—on ensuring that the Post Office card account replacement is to be managed by the Royal Mail. Further, I greatly welcome the suggestion that the Government are anxious to examine ways of increasing the products and services delivered through local post office branches. I hope that this will lead them to look favourably on the proposal for a Post Office bank offering comprehensive and innovative services.

Given the continued turmoil in the financial markets, it is noticeable how the Post Office is a trusted and reliable brand for large sections of the public. Such good will needs to be built upon. This will not be possible if the existing network collapses through neglect or by design. The amendment would ensure that such a scenario was not possible. Local post offices are a powerful platform for delivering the universal service, and the regulator will have to take this into account with its guarantee in legislation. I notice that during the second day in Committee the Secretary of State said that no more post offices would be closed, and I hope I live long enough to see that promise fulfilled.

I know that such a statement is generally welcomed, and the noble Lord, Lord De Mauley, did exactly that in summarising the debate around Amendment 31. However, I will draw the Secretary of State's attention to the Labour Party manifesto of 2005. The document represents a promise made to the British people, who responded favourably enough to give the Labour Government a further term in office to honour it. In particular, I draw attention to the commitment which states that,

"we have given the Royal Mail greater commercial freedom and have no plans to privatise it. Our ambition is to see a publicly owned Royal Mail fully restored to good health, providing customers with an excellent service and its employees with rewarding employment".

I shall stop there because I was going to repeat the long quote when we first heard that in the 2000 Act. At the time, Stephen Byers MP gave certain assurances to the British people. We might get a chance to return to the point when it is not such a late hour and I will be able to tell noble Lords exactly what we told the world in 2000 and 2005.

It still sticks in my throat that we are debating plans to privatise Royal Mail, or as they say, at least part of it—I say "they" meaning the Government, who I do not agree with. Given that, what begins to emerge is the commitment made by the Secretary of State to the future of the counters network. Does he mean that the Government have no intention of supporting any programme of post office closures before a general election or does he mean that the Government would actively say to the electorate in 2010 that they oppose any further programme of post office closures and will wish to be elected on that basis? The seriousness of our concerns about the future should lead the Government to consider embracing Amendment 81. I beg to move.

Lord Cotter (Liberal Democrat)

I support the noble Lord, Lord Clarke, in the points he has made, including that about no more closures. We all welcomed the Secretary of State's words, and indeed had I not been sitting down I might have collapsed in a heap. Such a specific commitment was very welcome and pertinent to what we are talking about, particularly the commitment of noble Lords on these Benches to post offices and the universal service. The noble Lord, Lord Clarke, also asked whether the commitment to no more closures is to last for ever. I assume so because it seemed to be made on that basis, but certainly it is welcome, as indeed is his Amendment 81.

I shall speak to Amendment 85A, tabled in my name, which addresses a more specific point. We seek to provide for access points specifically "within each postcode district". The general commitment to provide a reasonable number of access points, while well made, does not address the specific argument that has been put to us by a number of people. Using "specifically" again, my colleague the Member for Argyll and Bute has said that his constituency shares a postcode with urban Renfrewshire. This means that many parts of the constituency of Argyll and Bute could be left without a post office. So I look forward to the Minister's response because this is a key issue, since we are all dedicated to the concept of universal service provision. If the point made in our amendment and that of the noble Lord, Lord Clarke, is not answered specifically, a situation could arise where if delivery of your mail is attempted when you are out, you will be required to go somewhere else to retrieve your post—and that place might well be an unsustainable distance away.

I am making this specific point in addition to what the noble Lord, Lord Clarke, has said, and I look forward to the Minister's specific answer.

Lord Hoyle (Labour)

In supporting my noble friend once again on access points, I say that he is right that many of us were surprised but delighted at the Secretary of State's statement that there are to be no more closures. I hope that when the Minister comes to reply, he will underline that. We are still reeling at the news and wondering whether it is exactly true. Did the Secretary of State mean it? I am sure he did because I have great respect for him, but if the Minister could say, "Yes, that is what we mean", that would be a great help. As my noble friend Lord Clarke pointed out, the Government were elected on that.

I am concerned about a town like Chorley, which I know very well. After the main post office there are only two sub-post offices for the whole area, despite its density of population. One widely used post office was closed. There was no reason for closing it, and it means that people are now finding it difficult to access a post office because they are often over a mile away. The speaker on the Liberal Benches was right to make the point that someone may have to travel several miles to collect post that could not be delivered. If you have not got transport of your own, access can be very difficult.

Given all that has been said, I cannot see any reason why my noble friend could not accept these extremely reasonable amendments. After all, he would only be reiterating what the Secretary of State has said. The fact that we are not to have any more closures is very important indeed. If my noble friend accepts these amendments, we will not need to return to them, which would be quite positive in relation to the Bill, and indeed there is no reason why they cannot be accepted in view of the categorical assurance given to us by no less than the Secretary of State.

Lord de Mauley (Conservative)

These amendments raise some very important questions about what sort of network of access points will be maintained under the new regime. The importance of an access point is unrelated to the number of users who rely on it. The lack of alternatives to the universal postal service, especially in rural areas, makes those access points critical. The idea of the noble Lord, Lord Cotter, of assessing a proper network by means of postcodes is interesting, but I think I would prefer to see the UK-wide network safeguarded by ensuring that Ofcom keeps the importance of rural access points in mind. I hope that the Minister will reassure us that there will be no pressure to cut costs by getting rid of services in far-flung regions.

The amendment of the noble Lord, Lord Clarke, also mentions post offices. As amendments we tabled to Part 1 showed, we are completely in support of maintaining the current post office network, and if possible even reopening some of the post offices that have recently been closed under this Government. Having said that, I am not convinced that the post office network should be protected through regulation by Ofcom. We feel that it should be a matter for the Secretary of State, and we will certainly return to this issue on Report.

Lord Tunnicliffe (Labour)

Both Amendment 81, tabled by my noble friend Lord Clarke, and Amendment 85A, tabled by the noble Lord, Lord Razzall, deal with the issue of users' access to the universal postal service. I should like to reassure your Lordships that the needs of users are at the heart of the Bill. The universal postal service is part of the social and economic glue that binds us together and it is paramount that the needs of users in accessing that service are given a central place in the new regulatory regime.

Access to the universal service for consumers is via both post boxes and post offices. With respect to Amendment 81, I understand my noble friend's concern that Postcomm's existing duty to review the post office network is not being transferred to Ofcom. Section 42 of the Postal Services Act 2000 requires Postcomm to provide advice and information about the number and location of post offices. This power is not transferred to Ofcom because, in our view, it is not needed. Consumer Focus, the body which represents consumer interests, can already investigate anything in relation to the number and location of post offices and, under the Communications Act 2003, Ofcom already has the power to undertake research in relation to any matter relating to its functions.

There is already provision within the Bill to address my noble friend's concerns. Clause 28(3) will widen Ofcom's functions to include ensuring the provision of access points, such as post offices and post boxes, to meet the reasonable needs of users. It is therefore part of Ofcom's primary duty in respect of post. This means that Ofcom would, in any event, have the power to monitor the size and distribution of the post office network. On a practical level, the Bill mirrors the current system whereby, through its licence granted by Postcomm, Royal Mail is required to provide access points which meet the reasonable needs of users.

Amendment 85A, in the name of the noble Lord, Lord Razzall, seeks to require that an access point for the universal service exists in every postcode district. I believe the reference to access point actually means a reference to post offices. "Access point" can also mean post boxes, so it is important to be clear. A sufficient number of access points is crucial to the provision of the universal postal service. I have already pointed your Lordships to the requirement that Clause 28(3) puts on Ofcom but I will repeat it again because it is so important: Ofcom must carry out its functions in relation to postal services in a way that it considers will secure the provision of sufficient access points to meet the reasonable needs of users of the universal postal service.

Your Lordships will know that in 2007 the Government set minimum access criteria for the post office network, the first time that any protection of this kind had been provided. These criteria are indeed more stringent than was previously thought necessary by the regulator for access to the universal service. The post office access criteria reflect the important social and economic role that these branches play in their communities and this Government's commitment to maintaining a post office network with national coverage. As the Secretary of State has said, we have no intention of supporting a further programme of post office closures.

The criteria that must be met in respect of post offices include that 99 per cent of the UK population nationally must be within three miles, and 90 per cent of the population nationally be within one mile, of their nearest post office outlet. Furthermore, there is a criterion requiring that in each postcode district at least 95 per cent of the population should be within six miles of their nearest post office outlet. Currently 99.8 per cent of postcode districts comply with these criteria. I hope your Lordships will agree that these are very stringent criteria. Indeed, given that postcode districts vary in size, specifying, as we already do, that the vast majority of the population must be within a maximum distance from their nearest post office may actually be more stringent than merely having at least one in each postcode district, as the amendment seeks.

It is the Government's view that it would not be proportionate for us to set further criteria on the number and distribution of post offices. The criteria that exist for the post office network already provide for a broad distribution of outlets providing reasonable access on a nationwide basis and specific protection for remote and sparsely populated areas across the country. It is much better for the issue of access to the universal postal service to be tackled, as it is within the Bill, by reference to the needs of users.

The Secretary of State made a statement about post office closures. He stated during earlier Committee stage debates that the Government have no intention of supporting any further programme of post office closures and in no way did he caveat that statement by time. The Government have established access criteria to ensure a truly national network of post offices. For the first time ever the criteria have a minimum carriage level and Post Office Ltd is required to exceed or meet them. Given the size of the post office network, with some 97 per cent of offices privately owned and operated, there will always be changes resulting from natural churn. The new code of practice jointly agreed by Post Office Ltd and Consumer Focus sets out detailed arrangements to inform and consult customers and local stakeholders on the reasons for any substantive changes in service and proposals for future provision.

The Secretary of State has separately recognised the value of wider use of the post office network and we are considering a people's bank. We fully endorse the idea that the Post Office should do more on financial services. It already provides a wide range of financial services products, which are very popular, and there are a number of good suggestions which we and post offices will consider.

As to postcode districts and the Argyll problem, as I will call it, the present requirement on postal districts is that 95 per cent of people in each postcode district shall be within six miles of a post office. The current situation is that all but five of the 2,796 postcode districts comply with the access criteria. As at the end of February, there were four failing postcodes, but four out of these five will be compliant by 12 May. Whether or not the fifth is Argyll I am afraid I do not know; my notes do not tell me.

I hope I have addressed the points on access made by the noble Lord, Lord De Mauley. De facto, the Government set the requirements on the post offices by their legally binding contract with Post Office Ltd and we anticipate that arrangement continuing. No time limit has been put on the assurance and the criteria that I have referred to are set out in that agreement.

With those reassurances, I hope that my noble friend will not press the amendment.

Lord Clarke of Hampstead (Labour)

Amendment 85A is a little sweeping in the way it is drafted but there is some merit in considering the possibility of having an access point in most postcode districts. One of the by-products of this is what is known as the 739 service. When they get the grey envelope it tells the postal delivery officer not to 739 it. If it gets 739'd, it goes back to the office and people then have the problem of going to the office, which could be miles away. Even given the six mile criteria that the Minister mentioned, that can be difficult.

I think there is a way around these things, given good will towards the new watchdog, or whatever you want to call it. I have been through this with the Post Office Users Council and then Postwatch, and now my noble friend Lord Whitty is going to take over some of those responsibilities. With some understanding between the parties, there could be a system that avoided the long treks to the delivery office that happen now. I am lucky; I can drive to the one in St Alban's, although it is about six miles away and it is a nuisance.

We have to find a way for people to call a number and get through to a human being in the area they were talking about. Sometimes you will get an operator in Belfast who will tell you they do not know when the delivery can come out because they are nowhere near the place where your parcel or recorded delivery is. There is some merit in trying to find access points in and around a postcode district, so I would not dismiss the idea, although it needs some work. I am sure that the new regime under my noble friend and others along with Ofcom will look favourably on it, so long as they have in mind what the Minister has repeated—that is,

"take into account the needs of the user"—

although the Government would not accept that in the previous amendment, which is why we will have to come back to it.

I think I have answered the point made by the noble Lord, Lord De Mauley, about the sort of access point that we are talking about. There is a way that it could be done, but it would require some understanding of what we want at that point—do we want to post mail, collect it or use other services provided by the Post Office or Royal Mail?

It is tempting to talk for longer about the regulation by Ofcom, but it is very late. I wish Ofcom every joy in what it wants to do. As my noble friend Lord Whitty will be putting consumers' interests into the melting pot, I hope we will get back to the idea that we are providing a public service. It is costly and difficult, but we should have it in our minds that we are here to serve, not to try to cut things. I am pleased that we have had a reassurance again about no closures of post offices.

I was delighted to hear the comment about the people's bank. There is no need to spend too much time or money; all it requires is someone to go down to the archive and dig out the files on an organisation that started its life as National Girobank. It was a successful and simple banking operation that served so many people who had never even seen a chequebook in their lives, let alone owned one. To my sadness, there is still only one paper in this country that has printed the truth about that: the Scotsman. The bank was almost given away, even though some of us tried to form a consortium to buy it. I will not go too far, but I have said on previous occasions that it was a giveaway to the Alliance & Leicester, and we have had to pay the price. Do not spend too much time looking at the people's bank that might be; go and get the Girobank files out, and then build on it so that it provides the financial services that a good people's bank should.

As I say, it is late, so I shall cut most of the end of my speech. I assume we are going to have a break soon—I hope so—and I beg leave to withdraw the amendment.

Amendment 81 withdrawn.

House resumed. Committee to begin again not before 8.44 pm.

Committee (3rd Day)(Continued)

Lord Cotter (Liberal Democrat)

I rise with pleasure to move the amendment and to speak to Amendment 83. I do not think that I will have to give a long explanation. Exactly what we are talking about is clear from the wording of the amendments.

In the debates on Amendments 80 and 86 of the noble Lord, Lord Clarke, reference was made to provision for all categories of people and users. We on these Benches and others are very committed to the universal service obligation. It is in that spirit that we put forward this amendment. The Government are committed to a universal service obligation and that is welcome, but our concern, which is shared by others, is that on scrutiny of the Bill it appears that the six-day-a-week, one-price-goes-anywhere universal delivery service will be only for letters and not for parcels and packets. That is the sum total of the amendments. They are intended to probe the Government's rationale for apparently exempting Saturday deliveries of postal packets from the universal postal service. That certainly does not fulfil the vision of the universal service that we have on these Benches. As I said, I will be brief and to the point. What we are looking for is clear: we are looking for the Government to accept that universal means universal and that it should apply to both letters and packages. I beg to move.

Lord Clarke of Hampstead (Labour)

I support both these amendments for a very simple reason: a postal packet can be described as just a large envelope, and if people want to have their postal packets collected on a Saturday, that should be allowed.

One problem with this part of the Bill is that it gives overzealous, cost-cutting managers the chance to cut out essential services. Packets, as opposed to letters, which are referred to in Clause 29(3)(a), are all sorts of shapes and sizes. You may go into a sub-post office or a Crown office on a Saturday morning to send some documents or even a large birthday card, and such items may be seen as packets. However, if the Bill is allowed to stay as it is, the ability to send such things could be cut. There will be no obligation on the Post Office to deliver packets. I expect we will be told that the guarantee of only a five-day commitment has something to do with Europe, but I hope that we will stop this erosion of a public service.

I have mentioned several times how the then Secretary of State, Stephen Byers, told the world that we would have a postal service that would be fit for the new century. Some of us were a bit sceptical but we believed him at the time. However, over the years we have seen the loss of Sunday collections, the second delivery and late collections from key collection points, all in the name of economy. I hope that common sense will prevail and that we will allow people in this country to post packets on a Saturday. It is as simple as that, and I support the amendment moved by the noble Lord, Lord Cotter.

Lord Hunt of Wirral (Conservative)

As the noble Lord, Lord Clarke, pointed out, our Amendment 83A in this group probes a different aspect of the UPS order—the apparent requirement that a uniform tariff be made available for all types of mail. I have sympathy with the points made by the noble Lord, Lord Cotter, but my main attitude to the arguments that he put forward is that I am sure that Ofcom, when undertaking the market assessment, will consider whether such a requirement is needed by users. I am concerned that to add in all sorts of frills to the minimum criteria risks adding unnecessary expense to the provision of the UPS. We feel that that makes the imposition of a levy more likely. We are as committed as other noble Lords to the UPS and I refer noble Lords to the points that we have made in earlier speeches.

I understand that Royal Mail offers a bulk mail service to retail customers with zonal pricing. I hope that the Minister can reassure me that there is no intention to restrict the choice available to business and other operators. As long as the uniform tariff requirement is in place for the man in the street, we would not want to prevent any additional service that Royal Mail felt able to provide to high-volume clients, nor would we want to see bulk mail, where there are considerable opportunities for operators other than Royal Mail to offer competitive alternatives to businesses, brought into the scope of the UPS order unnecessarily. That is why I await with great interest the response of the Minister to this group of amendments.

Lord Mandelson (Labour)

I am grateful for the opportunity to respond to the interesting comments that have been made in contributions to this debate and the opportunity to discuss Clause 29 in more detail.

Clause 29 is the keystone of this Bill. It reflects the Government's first, top priority: to secure the provision of a strong universal postal service. It is to sustain this service that we are proposing action to turn round the Royal Mail's finances and business. With consumers having ever greater access to e-mails, text messages and other electronic media, the letters business is in structural decline. That decline seems to be accelerating. In the UK, volumes fell by 2.3 per cent in 2006-07, by 3.2 per cent in 2007-08 and, according to Royal Mail's results, by 4 per cent for the first half of 2008-09.Yet mail remains part of our social and economic fabric and way of life in this country. People value the ability to receive and send a letter at the same affordable price everywhere in the UK, six days a week.

We have heard little about customers in debates about the Bill so far, yet it is precisely customers we want to protect by securing the universal postal service. There will always be a need to post mail and packets. That is why, in the face of falling letter volumes, the Government are taking decisive action. Clause 29 enshrines in legislation the minimum requirements of a universal postal service, at the current standards that we enjoy in the UK now. We agree with the Hooper report that the option of degrading the universal service as a response to the worsening finances and trading conditions of the Royal Mail should be rejected. That is not the path along which we want to go.

Amendments 82 and 83 would add Saturday collection and delivery of non-letter postal packets such as parcels to the minimum level of the universal service. In our view, the amendments are not necessary or appropriate. That requirement is not currently part of the universal service. None the less, Royal Mail already collects and delivers parcels or postal packets six days a week, despite not being bound to do so by the universal service obligation. It does so now, and it does so because it is convenient for customers.

Furthermore, the parcels business is a competitive and vibrant market. As Adam Crozier told the BERR Select Committee in another place, Royal Mail expects 75 per cent of its profits to come from parcels in five years' time. Customer demand and an effective market should therefore ensure that consumers retain the ability to send and receive parcels on a Saturday through either Royal Mail or another postal operator. In those circumstances, we believe that adding an additional regulatory burden to the Royal Mail at this stage is neither helpful nor necessary.

Finally, the Bill allows for flexibility in the regulatory structure. Should Ofcom in future decide that the market is not meeting the reasonable needs of customers, it may add services to the universal service under Clause 29. That could indeed include Saturday collection and delivery of parcels if necessary.

The Bill gives Ofcom the power it needs to protect users while allowing for less regulation and more flexibility for both Royal Mail and other operators where the market works well. I hope that, in view of that reassurance, the fact that Ofcom has within its power under the Bill to introduce such a regulatory requirement should it prove necessary in future and that the service is already currently provided, the noble Lord, Lord Cotter, will be content to withdraw his amendment.

The amendment in the name of the noble Lord, Lord Hunt, proposes to remove expressly bulk mail services from services that need to be provided at a uniform tariff. The requirement for a uniform tariff is provided by Clause 29(3)(e). I believe that the intention behind the amendment is to make clear that there does not have to be a "one price goes anywhere" service for bulk mail. I understand the background to that proposal. The Hooper report indeed suggests that there is a strong case for Ofcom to consider whether competition is sufficiently well developed to remove some bulk mail products from the universal service specification.

I assure the noble Lord that we do not intend to restrict the choice of consumers. On the contrary: we seek the opposite. The amendment he proposes is unnecessary. Clause 29(3)(e) does not require Ofcom to secure that bulk mail is provided at a uniform tariff in the whole of the UK. However, there is the option. In principle, we want to leave that question open for Ofcom to judge and decide because it will be best placed to reflect the changes in the postal market. We do not believe that it is appropriate to fix the details of the individual specific products to be provided to the specification of the universal postal service in the Bill. Frankly, it is for the market, for customers and for the regulator, responding to customer demand, to form such a judgment if necessary, in due course. I therefore invite the noble Lord, Lord Hunt, in the light of what I have said, not to press his amendment.

Lord Cotter (Liberal Democrat)

I thank the Minister for responding as he did. As he says, Clause 29 is extremely important and a key part of the Bill. That is why we thought it appropriate to raise this issue. The fact is that Saturday is excluded, notwithstanding the fact, as the Minister says, that packages are currently delivered on Saturdays. None the less, we have had this debate. It has been put on to the record that this could be an area of concern, and the Minister has said that Ofcom needs to take this into account. In debates only a short while ago, we talked about the need for the universal service to meet the needs of all users, and to do so there could sometimes be an urgent need for packages to be delivered on a Saturday. However, in the light of what the Minister has said, and given that Ofcom will consider this issue very seriously and, we hope, address what we think is a concern, I beg leave to withdraw the amendment.

Amendment 82 withdrawn.

Amendments 83 and 83A not moved.

Amendment 84 had been withdrawn from the Marshalled List.

Amendment 84A

Moved by Lord Hunt of Wirral

84A: Clause 29, page 15, line 21, at end insert—

"( ) A universal postal service must not include services exempted under the Postal Services Directive."

Lord Hunt of Wirral (Conservative)

I thought that the previous debate gave the Secretary of State an excellent opportunity to set out the background to the agreement which I think has been reached on all sides of the Committee about the vital importance of the universal service obligation. As we debated a little earlier, the review recommended a completely new regulatory regime, not just a new regulator. The independent review of the UK postal services sector by Richard Hooper, Dame Deirdre Hutton and Ian Smith last December has met with general approval. We certainly accept those recommendations in principle.

As was debated a little earlier, we are dealing not only with a new regulator, Ofcom, but with a whole new set of tools, including much wider-reaching regulatory powers. The Bill certainly gives those powers. Indeed, the new and improved drafting of the regulator provisions places significantly fewer limits on Ofcom's powers than the limits which the previous Postal Services Act 2000 placed on Postcomm. There are some safeguards on when certain conditions can be imposed, although I confess that they are so buried in the schedules that it has taken a little while to dig them out. Unlike in the Postal Services Act 2000, no clear exemptions from regulation are laid out in this legislation.

The Government like to claim that the Bill is deregulatory. The move from a licensing regime to an authorising one might indeed be useful for achieving deregulation, and Ofcom certainly has a duty to be proportionate. However, we know from experience that regulatory creep has happened elsewhere with stronger safeguards than that. We are very glad to see that the Bill states unambiguously that Ofcom's primary duty is to preserve the universal postal service, but the question of what is covered by that term is left entirely open beyond the minimum set out in Clause 29. Our Amendments 84A and 89E therefore seek to ensure that regulation in the UK does not gold-plate the European Union's postal services directive. Of course, the amendments may not be perfect since services are not exactly exempted in this directive. They are protected from being reserved to the USP. But I seek to ensure that the services that were exempt under the Postal Services Act, such as document exchange, express services and so on, continue to be excluded from the UPS.

I understand that Ofcom will naturally have to comply with the directive, but it will have the power to go beyond the limits indicated by the directive under Clause 29 and, especially, Clause 36. It certainly has the power and, possibly, the duty to go beyond previous regulatory limits in its market assessment. Even being included in the review will be a burden for many operators and will add significantly to market uncertainty. I am looking therefore to the Minister to confirm that not only will Ofcom not extend the UPS into previously exempted services, but also will not assess those areas within the review.

I have to say that, from time to time, this Government seem to believe that every aspect of our lives should be regulated to a greater or lesser extent. But on these Benches we do not support the state's intrusion into sectors where there is no important social benefit to regulation. Services such as document exchange and courier services were established as an unregulated alternative to the UPS and should remain that way.

Our second amendment highlights the same concern, this time in Ofcom's assessment under Clause 36 of whether a service falls within the scope of the universal postal service. We have later groups of amendments looking at the objectivity of that assessment, but for now I want to restrict my concerns to the possibility that Ofcom will have the authority to decide that an exempted service is within the scope. For precisely the same reasons as in Clause 29, exempted services should remain exempted and should be clearly seen to be so. The loss of specific exemptions in primary legislation means that the sector has lost a considerable amount of legislative certainty. Businesses operating in a fluid and competitive market need that sort of certainty. In view of the words a few moments ago from the Secretary of State about the way in which this whole market is changing, and his implication that innovation in this sector should be encouraged and will undoubtedly increase, I hope he would accept that to try to extend the regulatory burden on exempted services is not the way to do this.

It might also be of assistance to the Committee if we could be brought up to date as to exactly where Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008 is at the present time because there has been some talk of further amendments to this directive. It would be helpful if the Minister could place on record exactly where we are as regards the directive. I beg to move.

Lord Carter of Barnes (Labour)

As has already been discussed today, the Government's first priority is to secure the provision of a strong universal postal service. Clause 29 defines the minimum requirements of the UPS, valued by individuals and businesses alike. The amendments proposed by the noble Lord, Lord Hunt, are, if he will forgive me, potentially open to interpretation. These amendments may seek to exempt services listed in certain recitals of the original, unamended postal services directive from being regulated. The recitals mention certain services and say that these services are different from or do not form part of the universal service.

These are, as he has alluded to, express services, document exchange, new services and self-provision. The recitals do not say that the services are "exempted" from the whole of the application of the directive. Whether these recitals mean that these services are "exempted" from the provisions of the directive concerning the universal service could no doubt give rise to long legal debate. We believe that they do not mean that. Recitals, as he will know, are guides to interpretation and not operative laws in themselves.

The postal directive has evolved over time, and the recitals of 1997 are less targeted to the present times. The first postal services directive, the 1997 directive, was principally concerned with which services member states were allowed to reserve as an absolute monopoly to their main postal service provider—in the United Kingdom, the Royal Mail. That does not equate to saying that the UK could not require Royal Mail to provide an express service if, in the light of changing national circumstances, it were appropriate to do so. Indeed, the directive as it is now, 12 years later, requires member states to allow the universal service to evolve with society. It does not list or otherwise set out any "exemptions" except in Article 3 for packets that are very heavy or of unusual dimensions.

The services listed in the recitals can be unclear; new services, for instance, are difficult to define. We would suggest, therefore, that the proposed amendments would not provide clarity but potential uncertainty, and this could cause confusion if they were taken to apply to the minimum requirements of the universal service as defined in Article 3 of the postal services directive. The central reason for this is that these are the key areas where the United Kingdom has explicitly gone beyond the minimum requirements of the postal services directive for the universal service here in the United Kingdom. These amendments could have the unfortunate consequence of the universal service being degraded. That could potentially reduce the requirement of a service of letter delivery six days a week in the United Kingdom to five days, and remove the requirement to have a service at an affordable price that is uniform throughout the United Kingdom.

The noble Lord may be seeking to replicate some of the exemptions under Section 7 of the Postal Services Act, which result in some services not being regulated at present. Moreover, as he rightly suggests, the fact that these exemptions are not mirrored in the Bill simply reflects the change in the regulatory regime from licensing to authorisation. It will no longer be an offence to convey a letter without a licence or exemption because where everyone can provide a service and licences are not required, there is by definition no need for exemptions.

A particular consequence of the change is to remove the exceptions applicable to some operators such as couriers and other parcels businesses. We believe it is important that Ofcom, with the necessary controls that the noble Lord has alluded to, has the discretion to develop the future regulatory regime, albeit subject to appropriate levels of public consultation. I hope he will be reassured that Ofcom will not want to regulate everything which could fall within its potential scope. As required by the terms of its founding statute, it will regulate only where it is necessary, proportionately and in the interests of consumers and competition, and specifically in this area, to secure the provision of the universal service.

Ofcom is an experienced regulator subject to the principles of ensuring proportionate, transparent and targeted regulation in all its decision-making. It is required to exercise those responsibilities with appropriate levels of consultation. The Bill is explicit in requiring Ofcom to consult on the original specification of the universal service, both in its detail and in products and services.

I move on to the point made by the noble Lord about potential gold-plating, which is one we would recognise. The amendments may seek to reduce the requirements of the UK universal service to those of the postal directives, which could also have the effect of diminishing the universal postal service we enjoy today. The postal services directive defines in article 3 the minimum requirements of the universal service. The Postal Services Act 2000 and now the Bill mostly reflect those requirements. There are three areas where the United Kingdom, again, has explicitly gone beyond the minimum requirements of the postal services directive for the provision of a universal service: first, the six-day-a-week delivery of letters; secondly, the one price goes anywhere service or a uniform price across the United Kingdom; and, thirdly, the imposition of a 20 kilogram weight limit on domestic package, which can be part of such a service.

I shall now address the main consequence of this. The Bill aims to protect customers by securing the universal postal services we currently have. I am sure this aim is shared by the noble Lord, Lord Hunt. We believe that it is right that the United Kingdom continues to have a service of letter delivery six days a week and at a price that is uniform throughout the United Kingdom. Reducing letter delivery to five days a week, as is the minimum required by the postal services directive, and potentially removing the one price goes anywhere requirement, would rightly be seen as a reduction of the protection afforded to customers. Individuals and business customers would not, therefore, receive their letters on Saturdays and may have to pay different postal prices depending upon where they live or do business. Royal Mail could lose business to other communications channels as a result of the additional complexity and inconvenience to its customers. The wider postal market would also suffer a decrease in mail volumes as a result of that lack of clearly specified convenience.

Another consequence of the amendment would be to restrict the postal items and packets which could be included in the universal postal service to postal items up to two kilograms and postal packets up to 20 kilograms for all UK mail. These are the minimum requirements, again, of the postal services directive. The directive allows member states to increase the weight limit of the universal service for postal parcels delivered in their territory, again up to 20 kilograms. The United Kingdom has decided to take advantage of this flexibility, both in the original Postal Services Act and in this Bill. This means that the Bill sets the limits of letters and packages which can be considered as part of the universal service at 20 kilograms.

The Bill will enable Ofcom, however, to carry out a thorough market assessment, a robust and public consultation, and to decide which specific products should be provided as a universal service, anticipating future changes in the market but within that specified framework. If Ofcom changes the services it considers should be provided in the United Kingdom as a universal service from the ones currently provided, this will be on the basis of an evidence-based review. We expect that the future regime will lead to better, more targeted and transparent regulation, not to more.

We appreciate that the noble Lord, Lord Hunt, wishes to avoid the gold-plating of European legislation. Indeed, the Government are committed to reducing red tape and making sure that regulation is appropriately targeted. But, at the same time, it is crucial in this debate to retain the six-day-a-week letter delivery as an essential feature of the current universal service and a protection for customers.

On the noble Lord's last question, the Bill will implement the 2008 postal services directive which amends the original directive. The directive needs to be implemented by 2010 and there are no further amendments beyond implementation at the current time.

Lord Hunt of Wirral (Conservative)

That was a helpful response by the Minister. We both recognise that the purpose of these amendments is merely to reflect on the fact that Ofcom certainly has the power to go beyond previous regulatory limits in its market assessment. I was concerned about possible gold-plating and the uncertainty that might be introduced into the marketplace. Although the Minister's response goes some way towards alleviating those concerns, I should like to reflect on them. In the mean time, I beg leave to withdraw the amendment.

Amendment 84A withdrawn.

Amendment 84B

Moved by Lord Hunt of Wirral

84B: Clause 29, page 15, line 21, at end insert—

"( ) The Secretary of State may by order subject to affirmative resolution amend subsection (3) above."

Lord Hunt of Wirral (Conservative)

This amendment seeks to explore another difference between the Bill and the Postal Services Act that went before. In the Act there was a power to amend the universal postal service; in the Bill, the minimum criteria laid down in Clause 29(3) are fixed in primary legislation. This is another opportunity to refer to the Select Committee report in another place, and I was greatly heartened by the resolve of the Minister—in extensive consultation with his colleagues, no doubt, particularly the Secretary of State—to bring forward the Government's response to that report, if possible. I recognise that he did not make a firm commitment, but it was the set of his jaw that I so greatly admired when he said that he was a little concerned that the normal time limit for response might not be appropriate. I am grateful to him for agreeing to consider that.

The Select Committee report highlighted the difference and questioned it. I would be interested to hear the Minister's rationale for the removal of this power. I share with many of your Lordships the concern that, throughout the all the changes that Royal Mail is about to undergo under the Bill, a proper level of service must continue to be provided to the public. However, the idea of what a proper level of service actually comprises is not universally agreed upon. We have had one debate already on other possible criteria that should be included in the universal service, and more amendments are tabled that relate to the same issue.

I am grateful to the Minister for clarifying the position over the postal services directive. As I understand it, however, it has now been amended twice and may well be modified again in the future. What we consider to be set in stone now could easily become irrelevant and inadequate in future, especially as the market continues to change in the way that the Secretary of State referred to before, as new technologies develop and new methods of communication spring up and are extended. I look forward to the Minister's response, and I beg to move.

Lord Carter of Barnes (Labour)

I am learning, and I appreciate the guidance from the noble Lord, Lord Hunt, that a poker face, or perhaps a poker jaw, is perhaps a better way to deliver answers to specific questions. I had the good fortune to bump into my noble friend the Secretary of State during the break, and I was reassured that he shared my view that a response to the Select Committee's report that was speedier than two months would be the order of the day, in part for the reasons that the noble Lord raised earlier. Other noble Lords can take it in good faith that the Government will seek to get that response into the public domain as soon as possible.

The amendment seeks to provide the Secretary of State with the power to amend the minimum requirements of the universal service by affirmative order. That, as the noble Lord suggests, reflects one of the suggestions made in the BERR Select Committee's recent report on the Bill. Although the committee suggested otherwise, no power in fact currently exists to change the specification of the universal service by affirmative order. Instead, there is a power in Section 8 of the Postal Services Act 2000 to change the exemptions provided by the Act. The power suggested by this amendment would therefore be an entirely new one, and, as we have discussed today and will return to throughout this debate, the Government's first priority is to secure a strong universal postal service.

We believe that it is right that the minimum requirements of the universal service should be able to be changed only by primary legislation, as that will have the effect of providing full scrutiny and agreement by Parliament.

Of course, it is more appropriate for Ofcom, as the proposed guardian of the universal postal service, to decide not what the minimum requirements of the universal service should be but which specific detailed products should be provided to those minimum requirements. That is an appropriate distinction between the role of Parliament and that of the regulator. As an aside, in real time, as we are having this debate, a similar debate is taking place on the definition of universal service in the telecommunications market, where the requirement is a function of primary legislation but the specification is a matter for regulatory consultation.

Ofcom will, therefore, be able to make a robust, evidence-based decision on the universal service after a full and comprehensive market evaluation and consultation has been carried out, focusing on the needs of users.

As the noble Lord rightly points out, this is an ever changing market, which is one of the reasons why the Government wish to put in the Bill a requirement for Ofcom to engage in the first instance in a strategic review to ascertain the specification of the products. We believe that this strikes the right balance and, as we discussed earlier, much of the Bill is about rebalancing. We believe that our provision does that, and I hope that the noble Lord is content to withdraw the amendment.

Lord Hunt of Wirral (Conservative)

The noble Lord is; I beg leave to withdraw the amendment.

Amendment 84B withdrawn.

Clause 29 agreed.

Clause 30 agreed.

Clause 31 : Designation of universal service provider

Amendment 85

Moved by Lord Clarke of Hampstead

85: Clause 31, page 16, line 42, after "operator" insert "which is or was a Royal Mail company"

Lord Clarke of Hampstead (Labour)

Amendment 85 is quite simple. It is a recognition of the reality of the postal market. Only Royal Mail is capable of providing a universal service. No other operator has anything like the network capable of answering the call to provide a collection and delivery service covering 28.4 million addresses for six days a week. That is why I think I can be excused for seeing the competitive market in the postal industry as limited and artificial.

No competitor is seeking to tender for the universal service. Rather, competitors prefer to take advantage of Postcomm's rigging of the access market against Royal Mail. Even the two major postal operators which have been named as potential buyers of Royal Mail have shown no real ambition to match its services. TNT, that much heralded and wonderful organisation, which is running at a loss, has run some small delivery trials in major cities, but no serious observer believes that it will move on to anything other than deliveries which are limited both geographically and by frequency.

Do noble Lords remember the wonderful stories about Deutsche Post? It has gone downhill since we started this debate a couple of weeks ago. It has made no real moves to set up a delivery network outside the parcels network, and for good reason. As was said earlier, it is a profitable part of the service so is tailor-made for giving away by our Government under the guise of privatisation.

Neither of those companies has a serious aim of providing a universal service. Why do the Government not face facts and designate Royal Mail as the universal service provider? Does not Royal Mail deserve more stability in its forward planning? After all, it is carrying the burden of the best quality of service results in its long history. The basic recognition of this by the Government should surely be the least reward to which management and staff are entitled. It may be argued that it is pre-emptive of Ofcom's function for Government to define Royal Mail in legislation as the universal service provider. But Ofcom can regulate only what is there.

One would have thought that the Government, having examined the outcome of the Hooper review, must have concluded that Royal Mail, unlike its supposedly superior competitors—which can bring in these wonderful brains to revolutionise the British Post Office but are running their own companies at a loss—is providing a universal service, and the legislation should recognise that. Let us be proud of having a British Post Office providing a universal postal service.

Amendment 86A states:

"Page 17, line 31, at end insert—

'() to provide annual reviews of the trends and factors likely to affect the future development and delivery of the universal postal service and their impact on the provision of Post Offices to all City and County Councils throughout the United Kingdom;

() to provide to such persons as OFCOM may consider appropriate information about:

(i) environmental matters;

(ii) the employees employed by the universal service provider in the delivery of the universal postal service; and

(iii) social and community issues;

including information concerning the policies of the universal service provider and the effect of those policies'".

Amendment 86B suggests that we insert at line 34 on page 17,

"to provide annual reports on the provision of the universal postal service throughout each of the United Kingdom and the geographical areas covered by the Greater London Authority, the Northern Ireland Assembly, the Scottish Parliament and the Welsh Assembly".

Amendment 86A is a new amendment. During the last Post Office branch closure programme, it was noted by many city and county councils how unsatisfactory the current arrangements were for notification of appeal on closures. The problem is that for the Post Office management, this was often a formality rather than a genuine consultation. Anybody who ever attended a consultation—they were sometimes chaired by the wonderful group called Postwatch—will know that it was a formality. You could have protests, film stars and God knows what up and down the road, but it was just a formality. There was no genuine consultation.

The Government provided sufficient support to retain 11,500 branch offices. Therefore, if an office was saved, another had to be closed to balance the books. In these circumstances, with the best will in the world, Post Office management cannot be regarded as having a substantial interest in being genuinely responsive to local needs. As a consequence, the closure consultations acquired the reputation of being an empty formality. This is a tremendous loss, as the relationship between the community, the Post Office and local councils needs to be engaged and supportive if all are to flourish. I therefore put forward a proposal whereby Royal Mail and Ofcom will ensure that annual reviews will be provided for city and county councils to examine the trends and factors likely to affect the future development and delivery of the universal postal service, including the provision of post offices. This will force Royal Mail management to enter into a more constructive relationship with the local community and councils. This is highly desirable, given that the industry is a unique blend of social and commercial needs. Therefore, to inform the customers and councils is to allow them to be more active and to help them actively to shape the future development of the network.

This, in turn, encourages management to forward-plan and to plan services with community and council involvement. There is a growing interest among councils in the future of postal services. One notable example is the move by some councils to support financially post offices facing closure. I know that Essex County Council is doing so; we have heard it from the Benches opposite. I think that the leader of the council told us that it has taken the debate further by producing a document on the relationship between councils and post offices. This is an interesting debate and I suggest that it mirrors a more extensive policy stance by the Conservative Party, which is its right and privilege.

My concern is what my Government are doing to the Post Office. I am afraid that I cannot endorse the central idea of Essex County Council, which is to turn the assets of the Post Office over to local councils and to buy in postal services from Royal Mail or someone else. Breaking up the assets of the network in this manner would remove the element of universal provision by Royal Mail. It would mean that those councils that had the most favourable financial base could have superior services, while those councils in the poorer areas of the country would have the worst services. It is crucial to maintain a national system of postal service provision. However, unless the service is made more responsive to local demands, there is a danger that calls for its break-up will become more popular. I therefore hope that the Government will see that there is nothing to be afraid of in supporting the provision of the information suggested to city and county councils. Not only does that go with the Government's concerns about transparency, but it also answers a real demand among local communities for a more responsible management culture.

On Amendment 86B, at present a national annual report is published by the Royal Mail. Unfortunately, the report is becoming less lucid as the years go by. I remember well the late Lord Dearing, who sat on another side of the House, scrutinising the Post Office's annual reports and being able to bring forward things that were buried in the small print. As I say, the annual reports are becoming less lucid; since 2001, they have contained less information than they previously did, which is entirely due to the limited commercial freedom under the Postal Services Act 2000, resulting in a more protective attitude to industrial data by Royal Mail management. Nevertheless, we must try to strengthen the accountability of the Royal Mail.

Probably the most telling example of a lack of accountability has been the difficulties encountered by campaigners in communities up and down the country who challenge branch closures. How many of your Lordships have raised the fact that they could not get information from their local people? Of course, the Minister in this place at the time, the noble Lord, Lord Sainsbury, threw up his hands many times saying, "Oh, it's a matter for management, nothing to do with us".

Many in this House and the other place will have encountered a brick wall when they tried to understand the rationale behind Royal Mail decisions to close particular offices. Things are much easier now that we have a cast-iron assurance from the Secretary of State that there will be no more closures. The issue of consultation is still the same, however. It would rarely be clear why one office was closing rather than another, nor were there constant criteria, such as profitability. There were a number of instances of profitable offices closing. With one office that I visited, the Postwatch people were supporting the closure when it was making a profit; the post office had queues at every one of its positions. But that is in the past.

It is with that in mind that I have tabled the second part of the amendment, requiring the publication of,

"reports on the provision of the universal ... service".

Noble Lords will see that that takes the form of a report on general UK-wide provision and distinct reports for the areas of authority covered by the devolved Governments. The UK-wide report would be of interest to this House and the other place; certainly, it would allow for closer scrutiny and annual debate on the workings of the Royal Mail and the universal postal service.

Of equal importance is the publication of reports covering the devolved bodies. I draw the Committee's attention to the implementation of the last programme of post office closures. It was impossible to discern a consistent rhyme or reason behind individual closures, but there was a very clear basis for reducing the size of the network by 2,500 offices, from around 14,000 to 11,500. That reason was the size of the government subvention; it was made clear that, for the subvention offered of £150 million a year, the network would have to be maintained at 11,500 offices. Had the Government offered more money, more offices would be open today and there would be more within postcode areas, which was the subject of an earlier amendment from the Liberal Democrat Benches, but those offices have gone, probably for ever. Had the Government offered less money, the network would be even smaller than it is today.

I cannot think of a system of planning that is less responsive to the community served. A highly centralised management structure takes a decision, based on cost accounting, without reference to anyone other than central government. If the postal service is to become more responsive to customer needs, as probably all would agree in principle that it should, we have to introduce some mechanism whereby management fiat can be reduced. For example, the people of Scotland are entitled to consider how responsive postal services are to their needs. The publication of an annual report on provision of current postal services in Scotland would not amount to a devolution of authority to the Scottish Parliament on these issues, but it would allow the people of Scotland to have a serious debate, whether through their Parliament or elsewhere. Inevitably, such a debate involves an element of public clamour, which means that there is pressure on Royal Mail management to ensure that its services are actively tracking the needs of Scotland rather than simple imperatives such as the size of the government subvention on post office counters.

Without the amendment, these distinct bodies of government have already shown a great interest in Royal Mail. Both the Scottish Parliament and the Welsh Assembly have in place some mechanism to provide assistance to Post Office branches. It may be said that I am placing all my emphasis on Post Office branches and not on universal postal services. However, I must insist that these branches are a crucial access point to the universal postal service.

I can use another illustration, that of sorting office closures. Here again the issue has a greater local impact than is often considered by central management. For example, it is not unreasonable for Assembly Members in Wales to have some opportunity to examine the potential impact of mail centre closures in Wales, should these be part of Royal Mail's management plans. After all, some local businesses are in part dependent on the site of major sorting offices. We must consider how the interests of consumers, businesses and communities can be better served in reporting on the function of a universal service. My amendment would go some way towards serving that general need.

I move to Amendment 89. Clause 35 talks about a universal service provision accounting condition, but does not require one to be imposed. The amendment would require Ofcom to impose a universal service provision accounting condition, making it compulsory rather than optional. I beg to move.

Lord Hoyle (Labour)

My noble friend has said most of the things that should be said in relation to the very important amendments he has put forward. He is certainly right to say that the Royal Mail can provide a universal service. In fact, the Hooper report agonises about this and hopes that possibly in the future others may come forward who might provide that. As he rightly said, as regards TNT I think that liberalisation in the Netherlands occurred only in March. It is already squealing before the competition has taken effect. Already it is facing difficulties in its own country, so it is very far from being in a position to provide a universal service here, and of course, it prefers the part privatisation that has been put forward, and that we are bitterly opposed to, in this Bill.

Deutsche Post, far from being in the black, is now in the red. It is in difficulties as well. Therefore, I think my noble friend is quite right to start off by saying that only Royal Mail could possibly, in the foreseeable future anyway, provide the universal service that is desired and is the core of the Bill, and what Ofcom should be doing. That is quite different from Postcomm, which seems to regard its mission as being about competition rather than provision of a universal service.

My noble friend again is quite right when he talks about the sham called consultation that took place when post offices were closed in the past. He is right to say that it has been asserted—I notice that my noble friend is back with us again—that there will be no more post office closures. That is very welcome news. However, I think it is right that we spell out in these amendments what the provisions are likely to be and what should be taken into account when we are considering these things. It is quite right to say that the local authorities' alarm at the development that was taking place, the lack of consultation that occurred in the past and the importance that they apply to the universal postal services is extremely desirable. That again is spelt out in the report.

The amendment provides the conditions that Ofcom may consider appropriate and require information about. It is quite right to mention that environmental matters come into the equation when we are considering this.

Looking at other points, of course consultation should be taken up with the employees of a universal service provider as well. At the end of the day, they deliver the universal service. We must never forget that and we should keep repeating it. It is important, and their views have certainly not been taken into account in the past.

The next paragraph, "social and community issues", is, again, extremely sensible. Of course, if anything is going to affect the provision of the universal service, whether it is a post office closure or the service itself, it is important to the people in that area, to their social condition and to the community as a whole. It is important that we consider that.

The noble Lord includes, in addition,

"information concerning the policies of the universal service provider and the effect".

Of course we are talking about the effects, and going through all of them to ensure that the people most affected, those who are absolutely dependent on that service, have all of these issues taken into account.

What my noble friend has put in is important. In considering the United Kingdom, debates should not only occur here, but provision should be made for them to take place in the Greater London Authority—very important indeed—and especially the Northern Ireland Assembly, the Welsh Assembly and, of course, the Scottish Parliament. The issues affect their communities, and it would be wrong if it was not possible that they should—

Lord O'Neill of Clackmannan (Labour)

The whole nature of devolution is about the separation of powers and responsibilities. That means that there are elected representatives in the other place who have responsibilities that are quite clear and well defined. The Scottish Parliament and the other bodies have no powers whatever over post office services in the United Kingdom. It is an absolute waste of the public's and elected representatives' time if they are afforded debating opportunities in which they have no powers to enact and with which they can do nothing.

My noble friend is therefore misleading the Committee when he suggests that everybody should have a chance to debate everything regardless of whether or not they have any responsibility for it. It is an absolute nonsense as far as devolution is concerned. Those of us who advocated devolution long and hard did not want to create in Cardiff, Belfast or Edinburgh meaningless debating clubs with people talking about things over which they have, at the end of the day, no power, responsibility or legislative effect. My noble friend is misleading us in every respect in suggesting that the Scottish Parliament and the Assemblies are in any way entitled to talk about things over which they have no power whatever.

Lord Hoyle (Labour)

I always respect my noble friend for his views, but I do not think that that view would be shared by the people of Scotland. I think that they want their representatives there to be able to debate something as important as a universal service.

Lord O'Neill of Clackmannan (Labour)

Their representatives are here.

Lord Hoyle (Labour)

Their representatives are here, but part of the point of having a Scottish Parliament and Welsh Assembly is that these are very important matters that affect the people—

Lord O'Neill of Clackmannan (Labour)

They are not talking shops.

Lord Hoyle (Labour)

Well, if my noble friend is saying that they will become talking shops, that view might not be shared by all the people of Scotland. I realise that my noble friend is putting a Scottish point of view, but that certainly might not be shared by the people of Wales or Northern Ireland. What is the point of having these bodies if important issues such as a universal postal service cannot be debated by them? I am surprised that my noble friend does not want people to have the opportunity to debate this matter here, in the Welsh Assembly, the Scottish Parliament and the Northern Ireland Assembly. I do not live in those geographical locations but, as I say, my noble friend may not be expressing the views of all the people north of the border, never mind those in Wales or Northern Ireland. I always respect and listen to his views, and I thank him for his intervention, but I rather think that a lot of people may not share them although I am sure that they will read with interest what he had to say. He must accept the consequences that might flow from that.

I was coming almost to the end of my remarks. I thank my noble friend Lord Clarke for explaining the measure, which I am pleased to support, in detail and for saying what should be taken into account. That is very important and underlines what should be undertaken in relation to the universal service. I hope that the Minister can give a positive reply, as he did earlier in our debates, and accept some of the suggestions proposed in this group of amendments.

Lord Hunt of Wirral (Conservative)

I do not want to get involved in the latter discussion but I was very interested in the amendments of the noble Lord, Lord Clarke of Hampstead, concerning future reporting requirements on the universal service provider. He gave a very helpful analysis of that. I look forward to hearing from the Minister what information Royal Mail will be expected to produce publicly. We are, of course, undertaking a rebalancing process, in the course of which we are setting up an entirely new regulatory regime. Although Ofcom has experience in handling a similar regime in the telecommunications market, it has admitted that the postal services market is different in important respects. Proper transparency will, therefore, be essential in seeing the results of this new regime.

While we are talking about reporting requirements, I should be interested to hear from the Minister how much information he believes Ofcom must produce annually on its work. Given the very wide powers it is being given under this legislation, I hope that there will be stringent transparency and reporting requirements in order to allow the public and Parliament to assess how they are being used.

Lord Carter of Barnes (Labour)

We have had an appropriately detailed discussion on a range of significant questions. I hope noble Lords will forgive me if, despite the lateness of the hour, I do my best to try to answer the points that have been raised. As I listened to the debate, it seemed to me to fall into three broad categories: specification and designation; protection and local impact, and the consultation processes and protections around that; and the provision of information, not to mention an interesting side debate on devolution.

Amendment 85 in the name of my noble friend Lord Clarke relates to Clause 31, which deals with the designation of the universal service provider. As he rightly pointed out, that is the Royal Mail. The clause gives Ofcom the power to designate a single postal operator as the universal service provider so as to ensure the provision of the universal service. Ofcom may impose a designated USP condition, USP access conditions and USP accounting conditions only on the designated universal service provider. It is primarily through these conditions that Ofcom can secure the provision of a universal service.

As we can all agree, currently the only operator that is able to provide the universal service is Royal Mail, so it will by default become the designated universal service provider. My noble friend's proposal is that the Bill explicitly states that Ofcom may only designate a postal operator which is or was a Royal Mail company as the universal service provider. I hope that he will agree with our view that this amendment will make no difference practically because, for the foreseeable future, only Royal Mail could conceivably be in contention for this designation.

There is, however, a further issue that we must consider—it may sound procedural—which concerns our European obligations under the postal services directive. Under Article 4, designations of universal service providers must be,

"based on the principles of transparency, non-discrimination and proportionality".

There is a concern about whether naming a specific company in the Bill, however obvious that choice may be, would be in technical breach of that obligation.

Furthermore, the directive also requires that the designation of a universal service provider must be subject to a periodic review. If Royal Mail was explicitly named in the Bill, and if at any point in the future a periodic review found that another postal operator could and should be either the designated universal service provider or a contributor to a universal service activity, new legislation would be required. It would thus be more likely that a challenge would be brought against us on the basis of Article 4.

I appreciate that that may sound like speculation, but I remember similar debates being held in 2001 about the specification of the provision of a universal service in telephony, where everyone at the time believed that there could be only one company. Only seven or eight years on, we are facing the prospect of considering changing the pool of contributors to that activity. It is our view, therefore, that the amendment is unnecessary, could cause us difficulty in relation to our European obligations and is not necessary to gain the securities that I believe my noble friend is seeking.

Amendment 87 relates to Clause 32 on the designated universal service provider condition. My noble friend has proposed that the whole of subsection (2) be removed. This subsection limits Ofcom's discretion as to when it can impose a designated USP condition. It means that Ofcom can only impose these conditions if it believes them to be necessary to secure the provision of the universal postal service. As such, it is designed so that the regulatory burden on the universal service provider is not increased needlessly.

To remove this subsection as proposed in the amendment would mean that the regulatory burden on Royal Mail might be greater than necessary, which Royal Mail itself would presumably not wish. That would be in contrast to one of our aims in this Bill—it was raised earlier—which is to reduce the regulatory burden on postal operators, including the universal service provider. Furthermore, the postal services directive provides that certain conditions can be imposed only where necessary to secure the provision of the universal service. These provisions are caught by that requirement of the directive.

Closely related is my noble friend's Amendment 89, which seeks to remove Ofcom's discretion with respect to the imposition of USP accounting conditions and has the effect of requiring them to be imposed on the universal service provider. This amendment would not, in the view of the Government, have any beneficial effect in terms of regulating the universal service provider. In fact, over time, and as the market develops, the amendment has the potential to hamper both regulation and the Royal Mail as the universal service provider.

To regulate effectively—in my view this is at the heart of this debate—it is clear that Ofcom must be able to obtain accurate information about Royal Mail's costs. Obtaining cost transparency will support Ofcom in monitoring the universal service; it will support the user, in setting appropriate universal service prices for users; it will support Royal Mail, in allowing it to have the necessary transparent information to run its business; and it will support the level of competition that we wish in that it will be competition based on real prices rather than on estimated numbers.

The Hooper review highlighted the persistent disagreements between Postcomm and Royal Mail over the allocation of costs as one of the core reasons for the dysfunctionality in that relationship, and recommended that Ofcom addresses cost transparency as a priority. The Government entirely agree with the analysis of Hooper in this area and have set out in Clause 35 the requirements that Ofcom may impose on Royal Mail in order to assist in establishing cost transparency.

The requirements that Ofcom may impose are broad, as they should be, particularly given that this is being done in the first instance. Like other network businesses, many of Royal Mail's products use common systems, such as sorting machinery or delivery vans, and it can be complex to identify the individual costs of particular products. We assert that it is not in anyone's interest for Ofcom, particularly in the first outing to ascertain the baseline of these costs, to be constrained in its ability to determine them as accurately and precisely as we would wish.

However, as the market changes and Royal Mail modernises it is also essential that Ofcom retains the ability to be flexible when dealing with USP accounting conditions. By replacing Ofcom's discretion to impose a USP accounting condition with a requirement to do so, this amendment would bind Ofcom's hands and fix an obligation in perpetuity on the universal service provider. While there may be a compelling case now for USP accounting conditions, to legislate in perpetuity on this matter risks imposing a higher regulatory stasis and burden than we believe is necessary at this time. Ofcom has a demonstrable track record of cost determination, for example with BT in the telecoms sector. In the Government's opinion, the final decision on the detail and necessity of any USP accounting conditions should rightly remain with Ofcom, which should rightly be held to account for it.

I turn to my noble friend's Amendment 86A. As we have said, securing the universal service is our primary aim. While an annual review of trends and factors affecting the future development and delivery of the universal service would certainly be interesting, it is not, I am afraid, the Government's view that the nature and frequency of market reviews should be mandated in the legislation. These are properly matters for Ofcom.

However, I should say two things to my noble friend, from which I hope he will take some reassurance. The first is that the central reason for asking Ofcom to conduct a strategic review around the universal service and to have the powers in relation to cost transparency is to ensure that we have the quality of data and evidence in the market that we can rely on. That will provide us with objective information, which has been sorely missing from much of the discussion—even the Hooper report acknowledges that. Secondly, it is true that Ofcom has established a track record and a reputation for an enthusiasm in publishing annual reviews and data statements—although it has been criticised by some for that. The communications market review is a case in point. I am willing to place on the record the Government's view that we would expect Ofcom to adjust its annual publications to take account of the importance of this new responsibility.

My noble friend's amendment also requires the universal service provider within these annual reviews to assess the impact that these trends and factors will have on the provision of post offices. The regulatory provisions in this Bill are focused on the mails market. Provision of mail services is of course an important function of the post office network, as he and my noble friend Lord Hoyle highlighted. Changes in the provision of the universal postal service will have an impact on the business of the Post Office—a point rightly made by my noble friends—just as developments in the other markets that the Post Office focuses on will. We would expect Royal Mail and Post Office Limited to have regard to this as a matter of course. It accounts for approximately 30 per cent of the Post Office's revenue.

However, the Post Office's role, as my noble friend knows far better than I ever will, is about far more than mail. The Post Office offers an array of financial services products and provides access to government services and benefits to millions via its unrivalled national network. The Government will continue to take steps to ensure the Post Office can take advantage of opportunities as its markets develop. The Government have already demonstrated their commitment to a sustainable future for the Post Office by their current investment of up to £1.7 billion in the network. As the Secretary of State made clear at Second Reading and again this evening, we will continue to provide significant funding for the network and will not support any further programme of post office closures.

On the specific question asked by my noble friend Lord Clarke concerning the decisions on where post office locations are too centralised, the access criteria for the post office network were introduced precisely to ensure that the company maintained a national network providing reasonable access to service throughout the United Kingdom. I make no apology that this Government have sought to provide these national protections. It is the first time, I would say, that any Government have taken a planned and strategic view of the availability of post offices across the country. Consumer Focus, the statutory consumer advocacy body, also has existing powers under the Consumers, Estate Agents and Redress Act to investigate any matter relating to the number and location of public post offices across the UK.

So far as concerns the other information that my noble friend is proposing to require the designated universal service provider to have at its disposal, it is, again, unclear why that needs to be explicit in the Bill or to what end it would be put. The lack of any definition for each of the three areas that my noble friend has identified is also concerning. The Government's view is that forcing Ofcom to require the designated USP to provide this information would be unreasonably burdensome for the universal service provider and that it would not add to the protection of the universal service that my noble friend seeks.

Amendment 86B would require the designated universal service provider to produce separate annual reports on the provision of the universal postal service across the United Kingdom and in each of the devolved Administrations, as well as for the Greater London Authority. The amendment is unclear as to what aspect or in what respect the reports should discuss or provide information about the universal service. It is also silent on how the costs of producing such reports should be met, to whom they should be made and the use to which they would be put. However, I point my noble friend to Clause 33, headed "Publication of information about performance". Under this, a designated USP condition must require the universal service provider to,

"publish information about the extent to which it is providing specified postal services in accordance with specified standards, and ... to publish annually an independently audited performance report".

The Bill thus already contains some requirements for information on performance of the universal service provider.

With regard to the specific points about Wales, Scotland and Northern Ireland, although it is the case that postal services, like the remainder of the communications market, are a reserved matter, it is also the case that Ofcom has established a regulatory capability on the ground in each of those countries, as it is required to do. It is also the case that Ofcom has a standing advisory panel for each of those countries, as it is required to do. It is the case, too, by custom and practice, that Ofcom has acted in consultation with the devolved Administrations in an open and transparent manner on major issues of policy across the communications market. I hope that my noble friend takes that as some reassurance.

Penultimately, it is worth adding that Ofcom will have to produce an annual report about its performance, during the year, of its duty to secure the universal postal service, as outlined at paragraph 69 of Schedule 10, where there is an express new obligation in relation to postal services.

Amendment 87A covers much of the same ground as Amendment 86B, although it is incorporated within Clause 33, which I have already discussed.

As we have said, securing the universal service is our primary aim. We do not believe that the information sought in the amendments will help to secure that universal service, although I hope that some of the comments this evening will have given my noble friend some reassurance. Given those explanations, I hope that he will see fit to withdraw his amendment.

Lord Clarke of Hampstead (Labour)

This has been an interesting and long debate on a group of amendments and I apologise if I take a few minutes more in reply because we have so many more amendments to deal with this evening. I start by thanking my noble friend Lord Hoyle. I am grateful for his support not just for the group of amendments that he spoke so eloquently to, but for the encouragement that he has given me. It has been a bit lonely looking around the Benches of the socialist pioneers of change. There is so little interest at this time of night. I can understand the timing, but it is nice to have Doug, my noble friend Lord Hoyle. Just looking at him makes me feel that I am not entirely alone in trying to do something to save the Post Office that has given me so much.

I am sorry that my noble friend Lord O'Neill has left his place. Of all the places in politics that could be described as talking shops, without the authority to make changes, you would have to go a long way to find somewhere better than this. Every week we have debates where we beg leave to withdraw at the end, but the important thing is that debates take place. In Scotland, Wales and Ireland and whatever Boris's group is called—the Greater London Authority—it is necessary to debate things because they can have influence—sometimes people listen. Unfortunately, the Government I support and have worked for all my life have not listened very much on Post Office matters over the past 10 years.

My noble friend said that it was time for change and that the Government have seen the folly of downstream access charging—he did not use those words but that is what he meant—and that they were going to change the role so that a proper pricing policy can be looked at by Ofcom. That is good, but why has it taken 10 years? Why has it taken all these years when some of us actually said it at the time, and have said it repeatedly?

The Library is very good in this place; staff there gave me a whole bunch of the things that I have been saying on a couple of subjects. I get no pleasure out of it because this is my Government. I was so proud when we got power and then I find that in an essential area like the Post Office somebody wanted to give it away, as they did with Girobank. Now we have this privatisation. If it was the other side of this House I could understand it, as I said before—that is their policy. Our policy and manifesto commitment, underpinned by the Warwick agreement, is that we would not do certain things.

I am grateful to my noble friend the Minister: I thought that his response was constructive and accommodating and I am not being patronising because it is good to hear such clear terms, but when you talk about Europe, that is why we are in this state. People have forgotten that the postal services directive actually told us to liberalise our Post Office. We did it. The noble Lord, Lord Sainsbury, said that we had to be at the cutting edge and the forefront of this liberalisation so that we could be ahead of the market. Again, when will the French start the process of liberalisation? When will some of the other countries accept the conditions that we have run into?

All right, we were playing cricket and the others wanted to play rugby: that is fair enough. We are nice people in this country, but what has it cost us? It has almost cost us our Post Office and that is why I am determined to get as much out of this Bill as we can.

I am glad that the noble Lord, Lord Hunt, found that the amendments have been helpful in starting the debate, because it will not end here. Ofcom will be an important part of our discussions in the future. All that I ask the Minister about Ofcom is, please let it be fair. Let it treat us fairly. I say "us" in the context of a Post Office worker, because we have been treated unfairly for the best part of the decade. It has to stop. We do not want any favours. The Post Office does not deserve any favours from Ofcom, but it deserves fairness. I hope that Ofcom approaches its job in that light. What do they call it in Europe—an even playing field?

Lord Hunt of Wirral (Conservative)

Level playing field.

Lord Clarke of Hampstead (Labour)

I thank the noble Lord, Lord Hunt. That is all that is required in this debate—fair treatment.

I could say many more things; I have made quite a lot of notes; but obviously, I want to get to the next amendment, so I respectfully beg leave to withdraw the amendment and look forward to reading exactly what my noble friend said, because he said quite a lot of constructive things and I look forward to reading them tomorrow. In the mean time, I beg leave to withdraw the amendment.

Amendment 85 withdrawn.

Clause 31 agreed.

Clause 32 : Designated USP condition

Amendments 85A to 87 not moved.

Clause 32 agreed.

Clause 33 : Publication of information about performance

Amendment 87A not moved

Clause 33 agreed.