Postal Services Bill

Public Bill Committee, 2 December 2010.

Sir David Amess (Conservative, Southend West)

Order. It is obvious that a few colleagues are missing, for all sorts of reasons, but the Committee is quorate, so our proceedings will not be disrupted.

Clause 28

Nia Griffith (Labour, Llanelli)

I beg to move amendment 74, in clause 28, page 15, line 14, at end insert

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following:

Amendment 75, in clause 28, page 15, line 15, after ‘receptacle’, insert ‘, Post Office Branch’.

Amendment 78, in clause 30, page 16, line 33, at end insert—

Amendment 89, in clause 35, page 19, line 44, at end insert

Nia Griffith (Labour, Llanelli)

It is a great pleasure to serve under your chairmanship again, Mr Amess, even if not everyone has managed to get here. Obviously, we hope that our missing colleagues are not stuck in uncomfortable circumstances.

We are dealing with another set of amendments relating to clause 28, where we left off last time. First I shall discuss amendments 74 and 75 and then I shall discuss the other two. Amendments 74 and 75 relate to subsections (4) and (5) respectively. Maintaining the link between Royal Mail and the Post Office is essential. It is unthinkable that the historic link with our post office branches—be they the bigger branches on our high streets or the smaller ones in corner shops, perhaps in scattered rural areas or less-frequented urban areas—which has existed over so many years should be broken.

There is a good reason why the existing structure of Royal Mail Group includes Royal Mail and Post Office Ltd. That structure is historical, and it integrates in one organisation the two sides of postal services: the collection points where people hand in the items that they want conveyed, if they are anything other than what can be put in a post box, and the delivery service. The modern Royal Mail Group employs 160,000 staff and has two main functions: delivering 70 million letters and parcels a day from post boxes to 28 million households and businesses, and running the network of 11,900 post office outlets.

The idea that anyone would want to separate the mail and the Post Office is unthinkable. In fact, many people are incredulous that the proposed legislation for privatising the Royal Mail would result in there being no direct link between the post office network and the Royal Mail, and that any such link would depend purely on whether Royal Mail happened to choose to enter into an inter-business agreement to use the post office network.

The separation of the Post Office from Royal Mail fundamentally threatens the future of the post office network. The Bill does nothing to guarantee an IBA between Royal Mail and the Post Office, unlike the current situation, whereby the Post Office provides counter services for Royal Mail. Obviously, we understand that that is a commercial agreement; if we had a privatised Royal Mail, it would be an agreement between two private companies, or two separate companies. Therefore it is, as the Minister has said, something that he has not seen, that he is not party to and that he is unlikely to be party to in terms of the finer details. The IBA is not included in the Bill, so when the current IBA ends and is renegotiated, there is no guarantee that Royal Mail will continue to use the post office network as the primary retail outlet for some or all of its products. It will be a strictly commercial negotiation, with no thought of the social consequences.

We could face the surreal situation of a post office network without postal services. It has to be admitted that that would be bizarre—post offices but no postal services. Perhaps post offices would get something from the Department for Work and Pensions, if they were very lucky. Perhaps they would get additional work from the DWP if they were super-lucky. Perhaps they would even keep the green giros, but it would be bizarre if Royal Mail’s services were not linked to the Post Office. Post offices are, after all, the first place most people think of going to post anything other than a normal letter. Off they go, to their nearest branch, with large envelopes, packages and items destined for foreign parts—anything on which they cannot stick just an ordinary first or second class stamp. Where else in the world are there post offices without postal services? People all over the world go to post offices to post items. We have heard fine words from Moya Greene, the chief executive of Royal Mail, and I do not for a moment doubt her sincerity, but people move on and circumstances change.

The National Federation of SubPostmasters is still concerned. It is absolutely desperate to see a minimum 10-year IBA, but it would rather see a longer one. There is no hope of that, if it cannot even get a guarantee of a 10-year one. As the Minister has pointed out, the IBA is a commercial agreement and as such cannot be put into the Bill. We therefore have to find another way for Royal Mail and the Post Office to have a link, and for that link to be guaranteed.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Lady has just said something interesting. In rehearsing my arguments, she seems at last to accept that the IBA cannot be put into the Bill. Is that now her position?

Nia Griffith (Labour, Llanelli)

I would much rather see the IBA in the Bill. The Minister has explained, however, that, as far as he understands it, it cannot be put in the Bill, and so I will suggest another mechanism if that is the case.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I understand that that is the hon. Lady’s argument, but does she now accept what we have said in the Committee?

Nia Griffith (Labour, Llanelli)

I would not wish to accept that—not one bit. I would not wish to accept that one cannot change things if one wishes to. What I am saying is that we have been told so many times that we cannot have the IBA in the Bill that we want to consider another way of tackling the problem.

So, what have we come up with? We are trying to find a way in which the link between Royal Mail and the Post Office can be guaranteed. Everyone tells us that that is what they want, and so it seems logical to try to find a way to do it. Post Office Ltd obviously wants that, because it wants its business guaranteed, and Moya Greene tells us that Royal Mail wants it, too. Labour members of the Committee certainly want it, and I believe that the Minister wants to help to secure the future of the post office network, as do many Government Members. I think that they recognise that to secure the network’s future, post offices need to secure business streams; indeed, several of them have mentioned that necessity. At the moment, when there is no guarantee that the Post Office will get a renewal of the DWP contract for the green giros, never mind any additional work from the Department, what on earth would be the point of putting lots of effort into searching high and low to secure new business streams for the post office, if the substantial revenue brought in by the IBA with the Royal Mail, which accounts for a third of the Post Office’s income, cannot be secured?

I thought that I would help the Minister this morning, because he likes to think of names for the amendments. I suggest that this group be called the Christmas cake amendments, because the Conservative and Liberal Democrat parties seem to be trying to find lots of icing and decorations to put on the Christmas cake. In their wonderful glossy blue document, there are wonderful ideas about what the Post Office will look like, with the lovely little local post offices and the computers and chairs that will be moved in. They have all those different little aspects—the decorations and icing—that will make the post offices so absolutely beautiful, but they will take away the cake. There will be no cake, because there will be no Royal Mail IBA on which to base all that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Lady probably does not know that my birthday is on Christmas day. As I thoroughly enjoy Christmas cake, my late mother always used to ensure that my birthday cake was a second Christmas cake. The Government will ensure Christmas cakes are bigger and better than when the Opposition were in government.

Nia Griffith (Labour, Llanelli)

We would like to see a cake that is the Royal Mail IBA with the Post Office. That is the fundamental bit, because it is a third of the Post Office’s business. We would also like to have a nice thick slice of marzipan, which would be the Government business being channelled through post offices. On top, we would like everything else—foreign currency exchange and all the exciting additional extras—bringing in much more revenue for local post offices that branch out into diversification projects. Without the good cake underneath and a nice layer of marzipan, however, the icing and the little Father Christmases and snowmen on the top will just collapse—I know that from baking cakes. I hope, when the Minister is enjoying his second Christmas cake on Christmas day, that he will be giving considerable thought to that issue.

If the IBA is not in the legislation, as the Minister seems to be indicating, what will the Government do to guarantee that the post office network continues to receive Royal Mail business? I am aware that the Government have not yet come up with how any such guarantee might be made. As ever, we are ready to help the Minister and to propose another way that that might be achieved.

David Wright (Labour, Telford)

The Minister wants to have his cake and eat it.

Nia Griffith (Labour, Llanelli)

Absolutely. We are proposing two amendments to seek another way to preserve the historical link between the post office network and the Royal Mail. It is a straightforward idea—we simply want to add post office branches to clause 28. The amendments would place an obligation on Ofcom to include post office branches in the provision of access points to meet the needs of users of the universal postal service. By seeking to insist that Ofcom includes post office branches in that way, our intention is to secure the future for the post office network. That future would be secure whatever the will or whim of a future Royal Mail, which might be a privatised Royal Mail or might be one whose chief executive officer or priorities might change.

Unless in the mind of Government there is a desire to break the link between Royal Mail and the post office network at some time in the future, I see no reason why there should be any objection to amendment 74. Refusing to accept it is tantamount to an admission that the Royal Mail may well choose to make different arrangements for access points and move away from using post offices, and that the Government condone that thinking. Therefore, if the Government are serious about their interest in the future of the post office network and about responding to the demand of the National Federation of SubPostmasters for a guarantee of at least 10 years’ custom from Royal Mail, the Minister should accept amendments 74 and 75.

I cannot see any reason why the Minister should not welcome the amendments with open arms. This is his opportunity to be the saviour of the Post Office, which is what he wants to be. If I am not careful, we might start another Christmas theme—about his coming down to save the Post Office.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Can my hon. Friend think of any reason why the Government would not consider access points part of the universal service, in the same way that six-days-a-week delivery and pick-up are?

Nia Griffith (Labour, Llanelli)

I have been caused considerable puzzlement in trying to understand why one would not wish to have that element in any agreement for our post office network. It seems clear that other countries manage to have agreements covering delivery ends as well as access ends, and that their post office networks are established along those lines in accordance with the legislation. As my hon. Friend has pointed out, if we go down the route of the Bill as it stands, with a privatised Royal Mail working with partners from other countries, we might find that the taxpayer here is subsidising those networks in another country. That seems a crazy idea.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I thank my hon. Friend for beginning to try to solve the puzzle. The Dutch and the Germans have statutory provision for access points—counter services—enshrined in legislation. Is one answer that a buyer of a privatised Royal Mail having to pay for 12,000 post office access points might reduce the sale price for Royal Mail?

Nia Griffith (Labour, Llanelli)

My hon. Friend is extremely perceptive. What he suggested might indeed be a factor.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

To help the hon. Lady in enlightening the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, when the German Government sold Deutsche Post, they were not worried about any statutory link. Therefore, had that been an issue, we would have learned from the Germans that there was no problem. The hon. Gentleman is absolutely wrong in his analysis.

Nia Griffith (Labour, Llanelli)

It is fairly unlikely that my hon. Friend could be so wrong, and I am sure that he will enlighten us further in a moment. What is clear to me is that access points are extremely important in the networks in other countries.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Will my hon. Friend confirm that Deutsche Post has to work in a system that includes statutory provision for access points? There are 12,000 access points—post offices—across Germany, because of provision in law. The criteria are similar to those that the previous Government maintained. However, for a privatised Royal Mail, the criteria will be informal, although the Germans have put them into statute, for good reason.

Nia Griffith (Labour, Llanelli)

Indeed, I can. We should learn the lessons from that and note them. I find it extraordinary that the Minister wants to sign the death warrant of the post office network, when he has the opportunity not to do so. He has the opportunity to save our post offices.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister is confident about the future of the post office network, but we are all aware that the issue is not straightforward. There is clearly an issue with retaining post offices. Given the Minister’s confidence in the future of the post office network, I cannot for the life of me understand why he would not back up that confidence with statutory provision—front up, as Australians would say.

Nia Griffith (Labour, Llanelli)

The Minister is probably too busy arranging the Santa, the sleigh and the reindeer, and he has forgotten altogether about the cake underneath—but he needs the cake. He is too busy thinking of all the little things that could make post offices look nice, but he has forgotten the fundamental business, which is a real problem. He has to learn about getting back to basics, stirring in the currants and all the wonderful spices that make a Christmas cake, which is the IBA.

The IBA is complex and not simply about using the access points. It is about intertwining all the different ingredients that make it up and that bring considerable revenue into Post Office Ltd.

Damian Collins (Conservative, Folkestone and Hythe)

Does the hon. Lady not agree that it would be almost unthinkable for the Royal Mail to want to go to sale without a strong IBA in place, securing the retail base? Managers of the Post Office know that they will have such a trump card to play when in the negotiations.

Nia Griffith (Labour, Llanelli)

If Royal Mail and the Post Office are so determined to work together, what would be the harm in having some such provision enshrined in the legislation? That is the issue. As discussed, everyone’s will seems to be for that to happen. However, at the moment, it could very well be another outlet—an outlet with far fewer branches across the country. We have seen what has happened to banks in local villages—they have all closed, effectively. We have seen what has happened to some of the smaller branches of the big chains—many people have seen local Co-ops close, for example. The problem is that people fear—I certainly do—that without something written down, there is the option to go somewhere else with fewer access points.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

On things closing down, the problem with the hon. Lady’s argument both earlier and today is that she cannot explain why, when the IBA was in place and Royal Mail and Post Office Ltd were in the same group, 7,000 post offices closed in the past 13 years, if such things provide the protection that she claims. Under the previous Government, they failed miserably to provide such protection, so why is she putting such reliance on them?

Nia Griffith (Labour, Llanelli)

The Minister knows that probably about 4,000 post offices will be commercially viable, and that we introduced access criteria requiring 7,000 or 8,000 post offices to be open to meet those access criteria. He endorsed those access criteria in his document. Not only that, but we put in money to enable 11,900 post office branches to remain open and, yet again, he has chosen to continue that subsidy for the next couple of years. He has actually been following the policies that we laid out.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Is my hon. Friend as struck as I am by what the Minister has just said? The Minister will have been recorded in Hansard as saying that, given that 7,000 post offices had closed, the IBA could not have been that important. But that speaks for the importance of the IBA, because despite the fact that it provides a third of post offices’ income, we still have only 4,000 economically viable post offices. There is a point about the commercial relationship between Royal Mail and Post Office Ltd post-privatisation of the Royal Mail. Royal Mail will be in a much stronger bargaining position than Post Office Ltd. The Minister said earlier that Post Office Ltd will have some bargaining power. I understand that it already provides a service to at least one other postal collection and delivery company, so the notion about vacating its exclusive agreement that Royal Mail is worried about does not stand. Even if that were true, it is redundant, because the other businesses in the market are basically bulk pick-up and delivery.

No other company is a proper letter business. No other company is in that market, and it is unlikely that anyone else for the reasons given by the Minister are likely to be in the last mile. The notion that there will be a commercial negotiation in which Royal Mail, given that it is 10 times the size—it has £10 billion turnover compared with £1 billion turnover—and is the prime player in the business market, will not be in a dominant market position beggars belief.

Mr Davey rose—

Nia Griffith (Labour, Llanelli)

I could not have put that argument better myself. I wonder what the Minister wants to intervene about so keenly.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The intervention of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East was so long that I almost forgot why I originally wanted to intervene. Not for the first time, he has completely misquoted our proceedings by suggesting that I do not think that the IBA is relevant. Of course I think that the IBA is relevant. It happens to be an agreement between Post Office Ltd and Royal Mail, not Her Majesty’s Government. In respect of the IBA, given that the same access points and criteria existed under the Labour Government and yet 7,000 post offices closed, why should the protections that the hon. Member for Llanelli says are absolutely needed continue? She has failed completely to answer that question, so we cannot take her seriously.

Nia Griffith (Labour, Llanelli)

The matter has been explained well by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East. Royal Mail business is crucial business for the post office network. If there had not been the commitment from the Government to the additional subsidy, access criteria and such business with the Royal Mail, the future for the post office network would have been a lot bleaker. It must be said that we kept a lot more post offices open than were commercially able to be open. The Minister knows that we kept the best part of 7,900 post offices open.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

My hon. Friend is as interested as I am in what the Minister is saying. We can all agree on a perfectly reasonable formulation. The IBA is important, nevertheless 7,000 post offices have closed because the economic climate for them is difficult. The Minister has said that he will introduce new ways in which to do business with Post Office Ltd, which will make more post offices viable, but that is not in tension with the view that the IBA is critical.

Nia Griffith (Labour, Llanelli)

Separating out and not having that vital link between post offices and Royal Mail will exacerbate the problem that post offices already face. Our amendment’s purpose is to put into the legislation the requirement to use post office branches, and, later, we shall discuss specific numbers of post office branches and access points. There are two aspects: wanting to secure that link with the post office network, and the need for a specified number, which will have a tremendous bearing on the consumer.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

So that we can have a constructive debate, will the hon. Lady at least admit that this Bill, compared with the Postal Services Act 2000, strengthens the position regarding access points?

Nia Griffith (Labour, Llanelli)

I do not want to sound like a stuck record player, for those people who remember what record players were like. However, we have said on a number of occasions that the Bill is different from the previous one, because we are discussing a privatised Royal Mail. What might happen between a privatised Royal Mail and the business agreement that it chooses to make is different from the IBA that we were considering, which concerned sister companies within the Royal Mail Group. In the 2009 Bill, we had always intended to keep Royal Mail in majority public ownership, so that link would have remained, but it certainly will not do so in the new scenario that the Minister envisages when this Bill is enacted.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

With respect, I am not discussing the IBA; I am discussing the legislative protections and requirements on access points, which are stronger in this Bill than they were in the 2000 Act. I am simply asking her to admit that we are strengthening the regulatory framework.

Nia Griffith (Labour, Llanelli)

I do not want to pre-empt later discussion on the nature of access points, but my point concerns using post office branches as access points. We shall discuss later the type and range of such points, and what we want from the consumer point of view.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Again, I am trying to be constructive—post offices already count as access points.

Nia Griffith (Labour, Llanelli)

We want the Bill to state that post offices will be used as part of the Ofcom choice of access points that are used by the universal provider of the universal postal service.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Access points are considered part of the universal postal service in clause 28, but they are not included in the list of minimum requirements in clause 30, so there is no mandatory requirement for them to be included to any extent.

Nia Griffith (Labour, Llanelli)

I do not wish to repeat what the Minister has, rather derogatorily, called the musty amendments—I do not know whether you have been told about that, Mr Amess, but he named them that because we wanted to change the words “may” to “must”. That will be one of the problems when we consider what the regulator can and cannot do with regard to access points. I will be delighted if the Minister has found something with a “must” in it in relation to access points.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

This may be a willy point, because under requirement 2(2) in clause 30 there is a reference to access points, which the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East has clearly missed. He is therefore in danger of—I will not say misleading the Committee—giving a wrong interpretation of the legislation. He fails to admit that clause 28(4) makes it absolutely clear that when Ofcom is carrying out its duty to secure the provision of universal service, it must secure the provision of sufficient access points. It could not be clearer; it is in the legislation—I wish he would read the legislation.

Nia Griffith (Labour, Llanelli)

I will come on to clause 30, and I do not wish for the Minister to have to listen to that twice. The issue with clause 30 is on the collections from those access points. It is about collection rather than the access points themselves and about how frequently collections may take place. Those are the inputs of these clauses, so we will return to that later.

Let us get back to the actual idea of the post office network as an access point, because I am sure that the Chair would like me to move on to amendments 78 and 89. We have said a considerable amount about amendments 74 and 75.

Amendment 78 inserts into clause 30 new requirement 3A, which would cover access to postal services via the post office branches. The reason for this amendment is that, as they stand, the requirements of clause 30 do not provide for that particular item. They may provide for collection from access points, but they do not provide for post office branches to be those access points. We have tabled amendment 78 with the same aim as amendment 74. The purpose of the amendment is to enshrine in legislation the requirement that Ofcom should include post office branches as access points to the services of the provider of the universal postal service, which at the moment is Royal Mail.

The purpose of amendment 78, as with the previous amendment, is to find a way in which people can be certain of being able to use the post office network to access the services of the universal service provider. This is not about saving post offices for post offices’ sake; this is about the consumer. This is about people being able to go somewhere local and not having to go into the middle of a town 20 or 30 miles away. Put simply, they should be able to go to their local post office to post a package or register a letter.

In this instance, it is about not only enshrining in legislation the principle that the post office network should provide access points, but giving the Secretary of State the power to specify exactly how many access points there should be. The reason for that is, as has been suggested, a universal service provider might think that its needs could be served by a network of some 4,000 outlets. Currently we have 11,900 post offices. Of that number, perhaps 7,000 or so would be adequate to meet the access criteria that were introduced by the previous Labour Government and, as I have said, have been accepted by the Government and restated in their recent document on the future of the post office network in the digital age.

Those access criteria clearly state that, nationally, 99% of the population are to be within 3 miles of the nearest outlet, and 90% are to be within 1 mile. In deprived urban areas, 99% are to be within 1 mile. Some 95% of the total urban population are to be within 1 mile, and 95% of the total rural population are to be within 3 miles. Overall, 95% of people in each postcode district are to be within 6 miles.

Obviously, the purpose of those access criteria is to ensure reasonable access to post offices in both urban and rural areas. Without the criteria, there would be no control of the overall shape of the post office network. We believe that a viable, sustainable post office network is a critical part of the social infrastructure for many communities. We introduced the access criteria to ensure that such communities would continue to be fairly served by a national post office network.

As I have said, the access criteria could be met with a network of some 7,000 post offices, but we made additional investment to keep open 11,900. If the Government are serious about keeping open that number of post offices and about keeping the network as we know it now, here we have a mechanism that they could use. The Secretary of State would have the power to specify the number of post offices to be used as access points to the services of the provider of the universal postal service.

The Minister may argue that it is up to the privatised business to decide what it does, how many access points it uses and where those access points are located. Here, we are talking about a national network; it is a universal service, which we want to be easily accessible for everybody in the UK. Given that all parties now agree on the access criteria for post offices, the Secretary of State should have the power to specify that the provider of the universal service should use post offices as access points, as well as how many post offices that should be, and I can see no good argument against that.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I am interested in my hon. Friend’s points on the criteria for access points and counter services. Does she agree that when the Dutch and Germans privatised their mail services, they wrote statutory protection into law simply because they did not want the privatised entity to make profits at the expense of keeping a full post office network?

Nia Griffith (Labour, Llanelli)

It is helpful to have that spelled out. One cannot imagine any rational person who would not want that to be the case, but it seems that we are still not getting any indication from the Government that they understand the nature of the problem.

To return to the point about the Secretary of State, if the Government are serious about protecting the post office network, the straightforward solution would be for the Secretary of State to have and exercise such powers. What is the point of using large amounts of taxpayers’ money to subsidise the post office network, if everything in our power is not done to secure the most obvious source of income for the post office network, which is the work involved in providing access points to the universal postal service? It seems positively perverse not to do that, when such powers could so easily be there. Other countries, as my hon. Friend has mentioned, have no such hang-ups about not letting the Government have a say in this. Elsewhere, where there has been privatisation of the mail service, there has also been legislation to protect the post office network and to specify its use for the access points for the universal postal service.

While we do not want to see the privatisation of Royal Mail services, if it is going to happen, what on earth is wrong with including a mechanism to protect the post office network in the legislation? That is clearly what the overwhelming majority of the public want to see. Most people cannot imagine that the situation would ever be any different. The Government specify all sorts of regulations that private providers have to comply with—I am sure that the hon. Member for Bedford would love to regale us about some of those, and there are many. Look at the various schemes that the energy companies are expected to participate in; there is nothing wrong with a specification in that respect.

I feel that the Government are being obstinate and not listening to the public, while refusing to take the necessary steps to secure the post office network’s future. This is the ideal opportunity for the Secretary of State to specify the use of the post office network and to stipulate a minimum size for it. The alternative outlook is very bleak indeed. We have been told that nothing can be done about an IBA—the Minister has said so—because it will be a private commercial matter. Therefore, sub-postmasters and other Post Office employees are supposed to hope that Royal Mail will want to use the post office network.

There is absolutely no sign yet that there will be anything like the guarantee of a 10-year IBA, or of any continuation after the current IBA expires. Even if the Royal Mail decides to use the post office network, what is to stop it from negotiating a much reduced IBA? The Royal Mail could decide that, in the interests of cutting costs, it prefers to have a much smaller network, and it could therefore choose to use only a certain number of post offices as its access points—if it even chooses to have post offices as preferred access points.

This issue presents the ideal opportunity for the Minister to secure the future of the post office network, so I ask him to look favourably on our amendment. He should support the post office network; rejecting the amendment will send a clear signal out, not only to all who work in the post office network but to the many people in our communities who use it, saying that the Government do not care if post offices survive or not.

Amendment 89 would insert the words,

“including those provided by a Post Office Company”.

Clause 35(2)(b) would then read:

“to provide…access points for the purposes of a universal postal service, including those provided by a Post Office Company”.

It should be clear that amendment 89 is simply in keeping with the amendments that I have already discussed. It is about enshrining in legislation the role of post offices as access points for the universal postal service. I want the Minister to explain why he is so busy moving around the decorations on the top of the cake without actually having a cake to start with. He needs to take this seriously and to find a mechanism. That is a mechanism, and if he does not like it, perhaps he could come up with a better one that would actually guarantee Royal Mail business for the post office network.

Karl Turner (Labour, Kingston upon Hull East)

I rise to support the amendments in the names of my hon. Friends.

We have heard evidence from both Ofcom and Postcomm, and it is accepted that Ofcom will be the vehicle for the regulation of the privatised Royal Mail. However, the apparent agreement does not mean that proposals, as they stand, are perfect. Effective regulation is vital, especially when we bear in mind that the Bill takes a publicly owned company and makes it subject to 90% privatisation with 10% employee mutualisation, which is effectively complete privatisation. We must, therefore, ensure that the legislation gives Ofcom the necessary tools to be able to regulate a privatised Royal Mail not only in the market interest, but in the public interest.

The privatisation proposal is set against a backdrop of regulatory uncertainty. Postcomm is reviewing and reforming its practices, and the handover to Ofcom will naturally provide some challenges. If we add the uncertainty arising from the Postcomm review and the vagueness of what the private versus public share of Royal Mail will be following the sale, we can all agree that it is quite a task for any regulator to undertake.

That emphasises two points. First, as I have alluded to previously, the Bill is being introduced—in much the same way as the Government’s agenda for reducing the deficit—too soon and too fast. I urge the Minister to slow down and review the Royal Mail’s position following modernisation and regulatory review.

Secondly, bearing in mind the uncertain territory that we find ourselves in, we must ensure that the Bill is watertight in guaranteeing that the universal service obligation and the Post Office will be protected in the interests of consumers. Ensuring that the universal service obligation is protected is what motivates my objection to subsection (3) and is the reason why I firmly support amendment 73. The Bill, as it stands, specifically states that Ofcom must have regard to the universal postal service’s financial sustainability and efficiency.

Why is there no mention of the public service element of postal services? Why do the public not have express protection in the Bill? A privatised Royal Mail will clearly be delivered and regulated according to profit and loss, and the consequences of that have no boundaries. I do not consider that suggestion as completely out of the realms of reality. On the contrary, it seems more like a business reality that any business would take in the interests of its shareholders. Subsection (3) guarantees that Ofcom’s regulation will be driven by profit and loss, and, without a firm provision to protect it, the universal service obligation will become a victim of the accountant’s pen.

More stringent regulation is vital to protect both the universal service obligation and our post offices. The Government seem to have an unbridled belief that the USO will be safe in private owners’ hands. However, we only have to look to the Netherlands to realise that that might not be the case. Within a year of the mail market being fully opened to competition in April 2009, the managing director of TNT’s European mail network, Mr Kunz—I have struggled to pronounce his surname—has said that the universal service obligation was

“a kind of Jurassic Park and we should get rid of it”;

I have the page of the journal where it was reported, should the Minister wish to have a look. The company now plans to move towards a three-day delivery week, claiming that it would not finance a six-day week.

I fear that the universal service obligation is not sufficiently protected by the Bill. When instructing Ofcom, the Bill expressly points to financial sustainability and efficiency without taking into account larger considerations, which puts the USO at risk. That obligation is vital to many groups, and once again I would like to consider small-business owners.

Last night, Neil Haylock, who owns a small business in my constituency, shared his genuine concerns. He thinks that his business would suffer as a consequence of the Bill. The mutual relationship between Royal Mail and small businesses is important—they depend on each other. The research undertaken by the Federation of Small Businesses shows that a large majority of small businesses use stamped mail and are regular users of post offices. Exposure to market conditions and ineffective regulation will hurt small-business owners. The pressures of unrestrained competition will result in a diluted universal service obligation. There is a real chance that the obligation will become nothing more than a “Jurassic Park” relic.

Small businesses rely on the universal service obligation, access points and the footfall created by post offices on the high street. Those businesses are the key drivers for growth in our economy, and it is vital at this time that they receive all the support that they need. The Government should be helping, not harming, them. They need to grow and innovate rather than change their business models to compensate for a diluted universal service obligation and a change in the provision of post office services. The Government have not thought through the impact of the Bill on all members of our communities, who, without strong protection for the USO, will be damaged.

It is vital that the link between Royal Mail and the Post Office remains. The inclusion of post offices in the Royal Mail Group is historic, and ensures a synergy between delivery and collection, leading to an effective service. As illustrated by my hon. Friend the Member for Llanelli, the idea of separating the Post Office from the Royal Mail is such an outrageous thought that Government Members have convinced themselves, I think, that the Bill will not do that, but one wonders whether they can see the wood for the trees. The link between the two is ensured by entering into a contract that confirms that the Post Office is to be the primary retailer for the Royal Mail. That guarantees one third of the Post Office’s business. Without that income, there will be closures and substandard service. That contrasts starkly with the current position, in which post offices are given the security of contracts with Royal Mail. The Bill does nothing to guarantee the inter-business agreement, which the Post Office so heavily relies on.

A privatised Royal Mail will renegotiate existing contracts in an effort to reduce costs, and if a cheaper alternative is found the Post Office will, in my view, be dropped more quickly than the Liberal Democrat manifesto promises and pledges.

Opening up Royal Mail to the brute force of private markets will create a situation where financial considerations squeeze out social consequences and that is nowhere more true than with regard to Post Office contracts. As an IBA between Royal Mail and Post Office Ltd cannot be placed in legislation as it is a contractual agreement, the Government have not managed to find another solution that ensures that the future of the link between Royal Mail and Post Office Ltd is protected. Amendments 74 and 75 offer the Minister a solution to that problem and guarantee that the historic link between Royal Mail and Post Office Ltd will remain.

By accepting these amendments we can make certain that Ofcom is obliged to protect post offices by including them as access points. The amendments will ensure the long-term future of post office branches, a future that is free from the threat of the ever-changing nature of a private company. Post offices will be secure regardless of the intentions of the management at a privatised Royal Mail. Unless the Minister’s intention is to see the link broken I can see no reason why he and Government Members should not support these amendments and guarantee the future of the post office network.

Rejecting the amendments sends a message to all post offices that a privatised Royal Mail may move away from using them and may find alternatives for access points. Alternatively, if the Minister wants to stand up for post offices, to guarantee their future and to put their minds at rest, he should support these amendments and encourage his hon. Friends to do the same. It is vital that the Minister considers these amendments. He should not leap to his feet and begin by customarily christening amendments in his rather tiresome way.

To ensure that the regulatory framework laid out in the Bill is strong enough to protect the service that so many of our constituents rely on, whether it be small and medium-sized businesses or those that rely on the services—and when I talk of services I mean full services—decisions about Royal Mail cannot be taken solely in relation to profit and loss with no consideration of the social and economic impact. If the Minister chooses not to take these amendments on board the Government may not be forgiven by the consumers.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I rise to discuss amendments 74, 75, 78 and 89. Amendment 74 would make it clear that Ofcom should include post office branches as access points. Amendment 75 would make it clear that access points include post offices. Amendment 78 would mean that the universal service provider must be in compliance with a universal postal service order under clause 29 and provide a universal service in compliance with clause 30. The amendment includes post offices to be set in regulation laid before Parliament by the Secretary of State. Amendment 89 refers to the universal service conditions to be set by Ofcom under clause 35 and would add access points

“provided by a Post Office Company”.

Currently the minimum set of universal services does not include post offices. That would seem strange. As we know, other countries include collections and deliveries on the one hand, and access points, counter services and post offices on the other, as part of the universal service obligation. The Dutch and the Germans are the two prominent examples. Why do they do that? They do it because it is vital to do so when a mail service is privatised; otherwise, the obvious way for executives of a newly privatised mail service to make cuts and to maximise their remuneration and bonuses is to cut costs. A simple way to cut costs is to cut the number of post offices for which Royal Mail will have to pay.

I say that it seems strange not to include post offices, but it is only strange if we think that one of the objectives of the public authority is to set the level of public service, because that is what we are talking about here; there is a tension between a commercial imperative and a social utility. It is not strange if someone thinks that the Government’s objective should be to sell any assets for the highest possible price. This is where I may be able to add to what my hon. Friend the Member for Kingston upon Hull East said. I do not think that the Minister wants the Post Office network to decline—not at all—but he finds himself in a situation where the intention is the objective of keeping a Post Office network and that objective is in tension with the imperative to get a decent sale price for Royal Mail. That is where the tension lies.

I would say that the whole of the Bill is deliberately structured to alert potential buyers of Royal Mail to the fact that post offices are expendable and therefore that potential buyers should take that into account when bidding.

Let me enumerate the way that the Bill seeks to avoid protecting post offices. First, the definition of access points does not include post offices. Secondly, when Ofcom looks at determining—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I reassure the hon. Gentleman now, before I do so again later, that everyone understands that the definition of access points in the clause does include post offices. So, on that first point, may I reassure him that he should have no concerns?

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I suspect that we will come back to that point, and I thank the Minister for his intervention.

Secondly, when Ofcom looks at determining the USO it must prioritise the financial needs of the USO provider, which is what we discussed earlier when we debated amendments 73 and 76 to clause 20.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That is incorrect. The clause does not refer to the financial needs of the USO provider; it refers to the financial sustainability of the USO provider. That is very different.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Clause 28(3) states:

“In performing their duty under subsection (1) OFCOM must have regard to—

(a) the need for the provision of a universal postal service to be financially sustainable, and

(b) the need for the provision of a universal postal service to be efficient.”

If that does not give Ofcom an imperative to consider the financial health of the USO provider, then I do not know what would.

Does the Minister want to intervene again? He seems rather exasperated. [Laughter.]

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I was not exasperated. I was really grateful to the hon. Gentleman for reading out those two paragraphs of clause 28(3), because they confirm what I had said and they argue against what the hon. Gentleman himself had said.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

As I was saying, let me enumerate the ways in which the Bill seeks to avoid protecting post offices.

Thirdly, if the Secretary of State considers that Ofcom is still too generous, having taken into account:

“(a) the need for the provision of a universal postal service to be financially sustainable, and”—

as the Minister said—

“(b) the need for the provision of a universal postal service to be efficient”,

the Secretary of State can direct Ofcom to reduce the services in the USO at his complete discretion.

We discussed that point earlier and the Secretary of State gave me the reasonable response that the discretion is included for other, narrowly focused reasons. It is essentially to stop Ofcom imposing requirements on partial companies.

I accept that that is what the Minister intends but the way it is written means that it can be used more broadly, not by a Secretary of State as honourable as the current one but by a Secretary of State in a different set of political circumstances.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

To reassure the hon. Gentleman on that point, clause 29(5) refers only to the first universal service order.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

That is somewhat reassuring, but in the context of the first universal postal service order it means that the Secretary of State can exclude services from the universal service.

This is not necessarily a partisan point, because I suspect that the previous Government performed a similar rhetorical trick—if indeed it is a trick—but the Government have said frequently in Committee, “We have good intentions, and we will not do this. Trust us; we are good guys.” I prefer to have details in statute, however. This may be the pessimism of the intellect that Gramsci famously wrote about, but I prefer to have the good intentions of the Secretary of State in statute. I have asked the Minister whether he has read “Politics as a Vocation,” because it is very clear that good intentions do not matter; consequences matter. As the clause is written, the Secretary of State can exclude services from the universal service but he cannot add them. That point is worth considering.

In introducing the Bill, the Secretary of State made much of the fact that a review of the universal service would be subject to parliamentary affirmation. Ofcom is not required, however, to conduct such a review prior to the first universal service order. In addition, as I have said—I suspect that an intervention is coming from the Minister—clause 30 does not refer to access points. It is worth considering that there is no parliamentary approval relating to post offices.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman has requested an intervention, and I do not want to disappoint him. In clause 30, requirement 2 specifies:

“At least one collection of other postal packets every Monday to Friday from every access point in the United Kingdom used for that purpose.”

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I am not a lawyer, but as far as I can see the requirements are the delivery of letters or other postal packets; the collection of letters or other postal packets; service at affordable prices in accordance with uniform public tariff; a registered items service; an insured items service; services to blind or partially sighted; and legislative petitions and addresses. I cannot see access points in that list of requirements.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

No constituent has ever talked to me about an access point. They have talked to me about where their mail can be collected from—letterboxes, post offices and so on—and requirement 2 deals with collection of letters or other postal packets. In other words, it is written in phrases that constituents might use. Access points are referred to elsewhere in requirement 2:

“At least one collection of letters every Monday to Saturday from every access point in the United Kingdom.”

I do not quite know what we have to do for the hon. Gentleman; he needs to read the Bill.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I would be delighted if the Minister would put into statute provision for access points, and statutory criteria for access points. I take his point; I will go away and look at it, and I will come back this afternoon. I am not a lawyer, and I am fairly sceptical of how things are written in such Bills. There often seems to be wriggle room and unintended consequences.

Damian Collins (Conservative, Folkestone and Hythe)

Respecting the fact that the hon. Gentleman is not a lawyer—neither am I—does he agree that the difference between the German postal network, which I know he has made some study of, and the British network is that the private leadership of the German network is investing in expanding its network and access points, rather than retracting them?

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Danke schön. The hon. Gentleman may be right—the German network may be expanding and it is an effective service, but there is statutory protection for access points at its 12,000 post offices. Does he not support statutory provision for post offices?

Damian Collins (Conservative, Folkestone and Hythe)

If the German network has only 12,000 post offices for a population of 80 million, they have a considerably lighter post office network than we have in this country. I hope that we maintain ours at that higher level.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Again, that is a fair point, but statutory provision is important. This is not an easy issue. The Minister has a difficult task, because technology and how people live their lives has made the services less heavily used. There is also the political dimension, because a Liberal Democrat will have made much of his career on tuition fees and post offices, but there are now difficulties in both areas. I do not mean that as a partisan point. I have some knowledge of the hon. Member for East Dunbartonshire, and she has campaigned on those issues very effectively in the past.

It is a difficult issue. The hon. Gentleman made a fair point on Germany having 12,000 post offices for 80 million people, but I would be delighted to see statutory provision for post office numbers in the UK, because it would give important reassurances to consumers. The Minister’s optimism on the future of the post office network is exhilarating in some ways. If he is so confident, I cannot see any reason why he would oppose writing into statute the informal access criteria that we have currently. I suspect the answer is—this is not a criticism of him, because politicians have to deal with competing imperatives—that if the Government want the money for the Royal Mail privatisation, they have to make it worth the bidder’s while. That is why the Minister is uneasy about writing statutory provision.

To protect the post offices, the Minister should create a regulation that defines the level of service, such that the informal Government access criteria are maintained and, consequently, so is the overall number of post offices. If the Minister genuinely believed his claims that a purely commercial relationship between Royal Mail and the Post Office would deliver that, he would have no reluctance in doing so. If he is right, it would make no difference to the commercial reality and would have the benefit of reassuring all stakeholders, because they would have the best of both worlds.

The Minister has stated on a number of occasions his confidence that something like the IBA will continue after privatisation, when Royal Mail and Post Office Ltd will be separate companies. He has also noted statements from senior Royal Mail management to that effect—statements that we heard in evidence. What do those statements amount to? They amount to good intentions and rhetoric, as opposed to something that we can hold on to and grasp firmly—that is, statutory protection. The Minister admits that he has never seen the IBA and that he will not see any future iterations of it. He says that he does not know to what extent its terms can be changed in accordance with the contract, and that no Secretary of State or Minister would. In any event, the IBA could be renegotiated at any point following privatisation, to the detriment of Post Office Ltd. It happens all the time in the commercial world.

The Minister’s response to such an argument is to say, “Well, Post Office Ltd will be in a strong bargaining position.” As the Committee may know, I do not think that Post Office Ltd vis-à-vis Royal Mail will be in a position of any strength in a commercial negotiation. As we know from an answer that the Minister gave us the other day, Post Office Ltd is one tenth of the size of Royal Mail. It is dependent on securing Royal Mail’s contract for counter services. After the separation of Post Office Ltd and Royal Mail, any agreement between the two organisations will be purely commercial as Royal Mail seeks profits and dividends. Bearing down on suppliers such as Post Office Ltd will be inevitable and natural for a privatised Royal Mail, which will also be working to cut costs. That is what business does, and rightly so. It is also worth considering that the bonuses of most of the senior executives—again, it is the way of the world—will be dependent on cutting Royal Mail’s costs.

Robin Walker (Conservative, Worcester)

Will the hon. Gentleman accept that Royal Mail as a private company will also want to grow markets, as well as cutting costs? We have heard a lot of evidence about the growing importance of the parcels and packaging business. The post office network provides a vital route into that business, which our constituents use very heavily. The post office network will have a strong negotiating position owing to its importance for that vital growth market for Royal Mail.

When we consider the interests of a privatised Royal Mail and the executives, most of whom hope to go to a privatised Royal Mail, we must treat their words with caution. The Minister insists that statutory protection for post offices is unnecessary. We have heard that that is not an approach taken in other countries. When the Dutch and Germans privatised their post offices, they provided statutory protection, because they did not want the privatised entity making profits by cutting the post office network, which is an obvious way to do so. No one is criticising the privatised entity for wanting to do that; it is what private companies do in the commercial sector, as they have a legal duty to maximise shareholder interest. The question is how to frame regulation so that those natural imperatives of the privatised entity are constrained.

Damian Collins (Conservative, Folkestone and Hythe)

I respect the hon. Gentleman’s point, but the danger with his great concern—I am sure that it is not a party political concern about privatisation per se—is that it suggests that all private companies do is cut to make profits and that they never innovate. It would be rather like a debate on telecoms privatisation—I have not checked Hansard to see whether that was debated in Committee—in which the only concerns were about cutting call boxes and the time it takes to install new lines, which would now seem totally archaic arguments.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

That is a fair point, but if a privatised entity is looking to cut costs as well as to invest, an obvious place to start is the post office network, in which 8,000 of the 12,000 branches are unprofitable, and we might not have reformed corporate governance by that stage. I hope that the hon. Gentleman agrees that the post office network seems an obvious place to start for a privatised entity that is looking to create a leaner and more profitable business, but I take his point about investment.

I have made this point in an intervention and so will not labour it, but I think that the reason why the Minister is so reluctant to insert statutory criteria for access points, by taking the informal criteria that previous Governments have worked from and putting them into the Bill, is not that he has some desire to—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am sorry to interrupt, but the hon. Gentleman keeps referring to the access criteria as informal criteria. They are legally binding and set out in a contract, which is hardly informal.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Will the Minister expand on what he means by that? Which criteria are legally binding in the contract?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

When the Government provide funding for Post Office Ltd, they enter into a contract for what Post Office Ltd will deliver for that funding. We have announced £1.34 billion of funding over the next four years and have a detailed contract with Post Office Ltd for what it will deliver for that funding, which includes a post office network of at least 11,500 post offices.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I thank the Minister for elaborating on that point, which is important because it brings us to the concern underpinning our position. He is right about the contract with POL, but his gamble is that he can turn around the post office network and the 8,000 economically unviable post offices and make them profitable, with post office local and the other innovations with which he is associated. That is an admirable aim, but I am sceptical.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I have made it clear that there is no long-term intention to remove subsidy totally from the post office network. We understand that there will always be some remote, rural post offices that are unlikely to become commercially viable. We have made it clear time and again that we recognise the social importance of the post office network and so expect that for the foreseeable future there will have to be some sort of subsidy and, therefore, some sort of payment between the Government and Post Office Ltd. I intend to say more on that in my remarks on what might happen if every single post office became financially viable in its own right and how I believe we could still make protections in that case.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I thank the Minister for elaborating further. According to his remarks, about a third of Post Office Ltd’s funding comes from the IBA, and other moneys come from subsidy and from whatever is generated in revenue. He has rightly referred to the fact that the Government currently have a contract with POL, but my worry is about what might happen in future. It is a gamble, and one that the Minister has to make, certainly in terms of trying to generate more revenue. His gamble is that we can put £1.3 billion in, and I am sure that he would admit that not all that will be subsidy. The pie chart showed that about 48% of it was going to be subsidy, so what is that? My maths is not very good, but it will be about £650 million in subsidy, with the rest supplied in various ways, including the roll-out of the new services.

Even a partial success would be a huge success, given the technological changes, the different ways in which people live their lives and the challenge of trying to get the Government to do everything through the Post Office—it was pointed out earlier that that is like the previous Government, which is a fair point. Unless the Government are prepared to have the maintenance of the post office network as a strategic imperative in everything that they do, even if that comes at the expense of efficiency because things can be done quicker online, the Post Office is in a difficult position. I suspect that that is what happened under the previous Government. Although I was not in the previous Government—I was not even an MP—I suspect that there were cheaper ways to do things.

Sir Philip Green provided the Government with a report on efficiency. Being a businessman, he suggested that such a massive organisation—the biggest—needed to use its bargaining power and squeeze suppliers down. He spoke about operating like a business. If the Government operate like a business, they will not put services through the post offices, because there are other, cheaper, ways of doing things. Perhaps the Government have a social dimension.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am grateful to the hon. Gentleman for giving me a chance to further explain our post office policy. We take a rather different approach to providing Government services through the post office network from that of the previous Government, when Ministers from the Department for Business, Innovation and Skills simply defended the status quo. We think that if Departments want to be more efficient, make savings in processing or other public services and introduce online services, they should be encouraged to go ahead. Those people who cannot go online should think of using the post office network. That is a completely different, 21st-century approach that helps Departments to make savings while ensuring that Government services are accessible to all citizens, and it is why we have a better chance of success than the previous Government.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

More people are going online all the time. I took the Minister to mean—he will correct me if I am wrong—that although many people carry out transactions online, the post office will provide services for people who do not. Is that a fair assessment? The problem with that approach is that it is a declining share of the market, and the number of people who are not online will go down and down. Even my mother, who is 70, has started doing things online. My father is nearly 90, and he has not. Perhaps this is about 90-year-olds. All jokes aside, my point is serious.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman makes a valid point, and I am glad that he is dealing with the impact that new technology is having on the markets. He is right that it is a challenging problem, and I have made no secret of the fact that sorting it out will require a range of approaches. For some Government services, however, even those who do almost everything online will need to use the post office. The policy statement makes it clear that we wish to see the post office network positioned to deal with things such as identity verification, which will be required to help people digitally access more Government services.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister has real enthusiasm for trying to roll out services to the post office network. However, to use one of his words, a lot of it is “musty”—we must do this, but are we going to? We are dealing with a declining part of the population that transacts business offline. The Government will provide a subsidy and have a contract with Post Office Ltd to provide services. However, what happens if the Minister’s laudable attempts fail to turn round those 8,000 post offices, which is two thirds of the network? Even if he partly succeeds, he will still fail. Unless he can turn round 8,000 post offices, there will be a gaping hole at the heart of Post Office’s revenue. That is where the IBA becomes important. A third of any business’s income is important, but this case is particularly important, because five years down the line, the Minister might have rolled out some services.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman is in danger of obscuring the point. The IBA is related to mail services. As the Committee knows from the evidence session, part of the challenge in the digital era concerns the reduction in mail services.

Sir David Amess (Conservative, Southend West)

I remind the Committee that with this we are discussing the following:

Amendment 75, in clause 28, page 15, line 15, after ‘receptacle’, insert ‘, Post Office Branch’.

Amendment 78, in clause 30, page 16, line 33, at end insert—

Amendment 89, in clause 35, page 19, line 44, at end insert

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

After this morning’s sitting, I went away, as the Minister suggested, and had a close read of the Bill.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

And you now agree with us, Gregg.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister will be surprised to learn that I do not necessarily agree with him. He made a suggestion to me in relation to the provision that was being referred to, clause 28(3), which relates to clause 29. Clause 28(3) states:

“In performing their duty under subsection (1) OFCOM must have regard to—

(a) the need for the provision of a universal postal service to be financially sustainable”.

Having looked again at the clause, I believe that it prioritises the financial needs of the universal service provider over all other stakeholders whose needs should be considered by the regulator. My understanding is that that prioritisation is not normal in respect of universal service obligations. With regard to Ofcom—I see that the Minister who straddles both camps, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey), is not in his place—there is no such prioritisation in the communications industry, for example. Instead, statute makes consumer interests the priority interest. According to my understanding of these provisions, the regulator is required to adapt the level of public services required, depending on the profitability of the service.

This Minister suggested that our earlier disagreement was about what is meant by “financially sustainable”.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I want to ensure that the hon. Gentleman has read the provision properly, because it talks about the need for the provision of a universal postal service, not of a provider. It is the service to the consumers. I am afraid that the hon. Gentleman is wrong again.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister will not be surprised to learn that I do not agree with that interpretation, but I want to pick up his earlier contention about what is meant by “financially sustainable.” My understanding is that it means profitable. I say that because a non-profitable universal service is not, in economic terms, sustainable. What does “financially sustainable” mean, if it does not mean profitable?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I want to state for the record that we seek for Royal Mail to be a profitable company. Part of the problem and the threat to the universal postal service is that under the way in which the previous Government operated the policy, it has not been making profits and has been a drain on the taxpayer.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

You see the tactic, which I understand, of diversion, Mr Amess. This morning, the Minister suggested that “financially sustainable” does not mean profitable. As I have said, a non-profitable universal service is not, in economic terms, sustainable, so what does “financially sustainable” mean, if it does not mean profitable? Does the Minister want to tell me that? Does he have an answer? I suspect not.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

For the record, I gave the answer previously. The hon. Gentleman just chose not to listen.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister referred back, as is his wont, to the 2009 Bill. I say again that “financially sustainable” must mean profitable, because it is not possible to have a non-profitable universal service—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I was not referring back to the 2009 Bill, because the 2009 Bill did not have this provision in it. That was one of its mistakes, and that is why this Bill is a much better Bill.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister is doing his best to move off the key point, which is that “financially sustainable” must mean profitable, because a non-profitable universal service is not, in economic terms, sustainable. It is not possible to see what else the phrasing could mean, if it were litigated. It seems to me illogical to have a universal service obligation tied to a requirement of profitability. The whole point of the universal service obligation, in all the utility sectors, is to require the bidder to carry on providing services that would not be provided by the market because they are not profitable. The universal service obligation as a concept was first invented—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

What I do not quite understand in the hon. Gentleman’s argument—as much as it is understandable at all—is that he seems to suggest that if Royal Mail operates in a profitable and financially sustainable way, it is somehow bad news for Post Office Ltd. I put it to him that the reverse is the case.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I am surprised at the Minister for saying that. There is no suggestion of that. If I am right, his contention this morning was that my reference to profitability in clause 28(3) was untrue, because the words used were “financially sustainable”. I think that that is what he said. My response is that financially sustainable must mean profitable, because a non-profitable universal service is not, in economic terms, sustainable. He shrugs his shoulders. [Interruption.] I am not sure whether he is confused—I certainly would not want to say that anyway. He might want to come back to me when he reflects on the matter, as I have, and I take the further point that he makes.

The provision, as it is written, potentially empties the universal service obligation of any sensible meaning. It means that the regulator is legally required to provide only services that are profitable, because “financially sustainable” cannot mean anything but profitable in economic terms. How can we have a non-financially sustainable universal service in economic terms? I see that my hon. Friends the Members for Middlesbrough South and East Cleveland and for Kingston upon Hull East are nodding in assent. Running 12,000 post offices is not profitable. The effect of prioritising the financial sustainability of the universal service provider will be to increase the price that a purchaser will pay for Royal Mail.

I will explain why that is the case. Let us reflect for a moment on the bidding process: No. 1, a number of buyers want to buy Royal Mail; No. 2, the statute does not require Royal Mail to maintain post office numbers or use post office services; No. 3, not maintaining unprofitable post offices lowers Royal Mail’s operating costs; No. 4, lowering Royal Mail’s operating costs increases Royal Mail’s profitability; No. 5, given that those four points hold, buyers must thereby increase their offers vis-à-vis their rivals, and I will explain why; No. 6, if a bidder bids too low and its potential profit is too high, it will effectively allow a rival to buy Royal Mail. If a bidder bids too high, the cost of the debt taken out to finance the acquisition will eat into profits, and there is no reason to buy Royal Mail over any other potential investment.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Yet another flaw in the hon. Gentleman’s argument is that he seems to suggest, from his economic analysis of Royal Mail’s fortunes, that Royal Mail’s profit and loss is fundamentally dependent on its relationship with Post Office Ltd. If he looks at the revenue flows of a postal administration such as Royal Mail, he will see that they are—surprisingly enough—from delivering letters and parcels, and its relationship with the post office with a retail counters network is not as significant to its financial fortunes or profitability as the hon. Gentleman makes out.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I thank the Minister for that intervention. Let me complete my interpretation of the bid process, leave it on the record and allow the Minister and others to reflect on it or otherwise. As I was saying, if a buyer bids too low and its potential profit is too high, it will effectively allow a rival to buy Royal Mail, but if it bids too high, the cost of the debt taken out to finance the acquisition will eat into profits and there is no reason to buy Royal Mail over any other potential investment. No. 7 is that the bid price will therefore rise until operating costs, plus the costs of servicing debt, produce a “normal” level of profit for a potential buyer. If operating costs are lower, debt costs can be higher, and competition between bidders will raise the price of Royal Mail.

Finally, the Government can thereby raise the sale price of Royal Mail by refusing to adopt statutory protection for post offices. That is my interpretation of a bidding process; there may well be others, but I want to put that on the record for others to reflect on. On that point, I will sit down.

Graeme Morrice (Labour, Livingston)

I rise in support of the amendments tabled by my hon. Friends. I do not wish to take up too much of the Committee’s time, as I appreciate that we have a lot to cover over the next few hours and that we need to get home. The situation is difficult with the adverse weather conditions, particularly in the north and Scotland.

My hon. Friend the Member for Llanelli talked eloquently about this group being the Christmas cake amendments—a very topical theme. The only thing that she did not mention was the fairy on top of the Christmas tree. As far as the Minister is concerned—no relation—it appears that he wishes to have his cake and eat it, because, as my hon. Friends have said, there is no point in warm words and honourable intentions if they are not backed up by clear and specific clauses in legislation.

I suggest a descriptive analogy for the current clauses in the Bill, the “Fifteen Ways To Lose Your Mail Services” clauses, because the Bill contains no less than 15 provisions that will allow Ofcom to either alter or water down the universal service obligation. The Government claim that the one-price-goes-anywhere, six-days-a-week universal service obligation is protected by the Bill in its current form under a privatised Royal Mail. Indeed, the Secretary of State said as much in the House on 27 October. If that is the case, why does the Bill require Ofcom to review the universal service obligation within 18 months? And, as I have mentioned, why does it contain those 15 provisions? Why do the Government continue to refuse to correct the apparent loopholes in the Bill, which our amendments seek to do?

We all accept that the USO is costly to provide, and we have already heard from my hon. Friend the Member for Kingston upon Hull East that at least one private mail company has said that it is not economically viable and needs to change. Therefore, the commercial imperative for a privatised Royal Mail company would be to seek to reduce the scope of the universal service obligation or at least—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I think it would be wrong if the statement that delivering the universal service is necessarily loss-making stayed on the record. We heard in evidence from Tim Brown, the chief executive of Postcomm, that had Royal Mail made 1.5% annual efficiency gains since 2005—1.5% per annum annual efficiency gains—it would now be making a profit of £600 million. The hon. Gentleman’s argument is based on something that is simply not the case.

Graeme Morrice (Labour, Livingston)

I note what the Minister has said, and, of course, he disagrees with our position on this, as we disagree with his position.

A privatised Royal Mail company may well look at commercial alternatives, if this were to be blocked, rightly, by the Government in terms of the USO being too expensive. After all, a privatised Royal Mail company’s prime obligation will be to safeguard the profits of its business and the dividends of its shareholders. What if a privatised Royal Mail company were ever offered a cheaper alternative to the post office network? That is not an impossibility. What if a national retail chain decided to provide such services? We have heard about many examples of shops, and indeed pubs, providing post office services, so why not provide services to Royal Mail, too?

There is absolutely no guarantee whatsoever that a privatised Royal Mail will continue to use the post office network. Likely? Perhaps. Definitely? No. In a way, it is like TUPE—fine at the time, but no guarantee that employment terms and conditions would be protected once employees had transferred. It is, therefore, vital that the Government enshrine in legislation, as we have often heard in the cases in other countries, the statutory requirement for a privatised Royal Mail company to use the post office network.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The debate has been enjoyable so far. In terms of naming groups of amendments, I hope that I can add to the merriment. The hon. Member for Llanelli wished to christen the group the Christmas cake amendments. Given that it is her first attempt at christening a group of amendments—I do not want to discourage her—perhaps I should stop there, but at times, listening to the debate, I thought that the Santa Claus amendments would have been a better name. Now we have progressed through childhood, we all know that Santa Claus is a figment of our imagination. Many of the arguments seem like that—

Gordon Banks (Labour, Ochil and South Perthshire)

What?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I fear I have entered a controversial area and shattered the understanding of the hon. Gentleman.

I reflected whether the group should be called the letterbox amendments, because the definition of an access point also includes letterboxes, and yet we have not heard a single mention of them during the debate. There are 115,000 letterboxes around the country, part of our great tradition, and we have not heard a single defence of Royal Mail’s letterboxes with Her Majesty’s insignia upon them. I am shocked, frankly, that Her Majesty’s Opposition have failed to mention the case for letterboxes.

Nia Griffith (Labour, Llanelli)

My understanding is that we need to defend things that are under attack. How is the Minister attacking postboxes?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I assure the hon. Lady that I am not, but I thought that she would seek to defend letterboxes—but defence came there none. Perhaps that is because she knows that they are not under threat from the Government.

I have actually decided to christen the group the Francois Greeff amendments, which I will explain later. I want to keep the Committee in anticipation of my explanation.

The problem with the amendments is that many of them are unnecessary. They would include post office branches in the definition of access points and place a statutory commitment on Ofcom to include post office branches as access points. The definition of an access point used in the Bill should be familiar to hon. Members, because it is drawn from the definition used in the Postal Services Act 2000 and is identical to the definition used in the 2009 Postal Services Bill.

Let me be clear: as drafted, the definition already includes post office branches. Currently, post office branches are access points through which Royal Mail satisfies its universal service obligation. That is because they are a

“facility provided for the purpose of receiving postal packets…for onwards transmission by post.”

The same situation will continue, so amendment 75 about which we have heard so much is absolutely unnecessary, and I ask hon. Members not to press it.

Amendments 74 and 89 seek to oblige Ofcom to include post office branches as access points. Amendment 78 seeks to include, as a minimum requirement of the universal service, a number of access points that must be provided by post office branches.

The basis of the amendments seems to be Opposition concern about the long-term sustainability of the post office network. That is in spite of the Government’s recent announcement on the future of the post office network and the clear pledge that there will be no further programme of post office closures, as seen under the previous Government. That is in spite of the commitment that the network of at least 11,500 outlets will be maintained throughout this Parliament. That is in spite of the innovations that will see the network of outlets open for longer, a reduction in queues and offering access to new services. That is in spite of the £1.34 billion funding package, which will enable the Post Office to deliver all things. That is in spite of the fact that the Government have acted swiftly to end the cycle of decline that, for years, previous Governments did so little to arrest. If Opposition Members had done a rather better job of defending post offices, we might have taken the amendments seriously. We have a clear policy to deliver and support the post office network; they do not.

Karl Turner (Labour, Kingston upon Hull East)

I wonder whether the Minister will reflect on the comments of Mr Kunz, the managing director of Dutch mail operations, who said:

“In the Netherlands, we will make 11,000 people redundant in the next couple of years. They will be replaced with part-timers and franchisees…Mail collection and delivery will be outsourced, and TNT will become ‘managers of mail’”,

and what is particularly important is that

“Operations will be reorganised into deliveries on three days a week in the next two or three years.”

According to Mr Kunz,

“If politicians want six days a week, they will have to finance it. As a company, we will not finance it”

and that the universal service obligation is

“a kind of Jurassic Park and we should get rid of it.”

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I would like to comment in detail, but what the hon. Gentleman has said is completely irrelevant to the amendments. He is talking about the universal service in respect of the mail service, which is more relevant to clause 30.

The Francois Greeff amendments are all about post offices and the fear, which the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East described in his speech, that somehow the clause is hostile to the future of the post office network. It would have been better if he had explained why five post offices closed in his constituency under the network change and urban reinvention programme and apologised for the previous Government’s appalling policy.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The hon. Gentleman should have figures to hand, as I have suggested. The post office where my father collects his war pension was closed, so I am well aware of post office closures. The Minister’s answer to the amendments seems to be that this Government will do a much better job at making the Post Office efficient and, more importantly, economically viable. If we accept that for a moment, what is the danger of writing into statute provision for access points to give reassurance to all parties?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I will come to the details of the rest of the amendments, but I have dealt with amendment 75 and made it clear that it is completely unnecessary.

It is through our measures to protect the post office network, not through additional layers of regulation, that we will create conditions to ensure local people continue to see post offices as a natural, convenient place to access Royal Mail services. Royal Mail will continue to see the Post Office as its retail partner of choice as long as that is what its customers want. That was made absolutely clear to the Committee by the Royal Mail chairman and chief executive. It is by attracting customers for all types of services that the Post Office will ensure its future success, and the Government’s support and funding will help the Post Office to achieve that.

The amendments go much further and would impose requirements on Ofcom to tie the Post Office and Royal Mail together through regulation. When we debated the inter-business agreement, we had a long discussion about such matters and I lost the drift of the arguments then, and I am losing it today. As Conservative Members know, we discussed in relation to new clauses 3 and 4 why legislation is not the right vehicle for establishing the terms of trade between two independent businesses—or any businesses, in fact. We do not need to go through those arguments again, as I have made them clear.

One argument that was completely unacknowledged by Opposition Members is that the Bill will strengthen the current position of access points. We are enshrining in law that the reasonable needs of users have to be taken into account when ensuring there are sufficient access points. At the moment, that is just in Royal Mail’s licence, but we will have in the statute that the regulator must take account of those needs, and I want to say a little more about that later. Moreover, when making its decisions on that, Ofcom has a wide range of general duties to which it must have regard—far more than Postcomm has—so that is an improvement.

Sometimes, it feels as though Opposition Members have not read the Communications Act 2003. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wantage, who is not in the room at the moment, is a fantastic Minister and has responsibility for Ofcom, and I am sure that he has read some of the 2003 Act. He will be able to refer Opposition Members to the relevant duties that will apply to Ofcom as it regulates the postal industry. I refer Opposition Members to section 3(4), which states:

“OFCOM must also have regard, in performing those duties, to such of the following as appear to them to be relevant in the circumstances…

(l) the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas”.

I could read out many of the other paragraphs in that subsection, but the point is that when Ofcom is judging whether there are sufficient access points, under the Bill there are much more specific and detailed duties involved in its reassuring itself that it has taken account of consumer needs, and that is a real strengthening of the current regulatory framework, which was put in place by the previous Government. The hon. Gentleman and the hon. Lady have utterly failed to take account of that.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I, too, have been reading the 2003 Act. Section 3(1) states:

“It shall be the principal duty of OFCOM, in carrying out their functions—

(a) to further the interests of citizens in relation to communications matters; and

(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition.”

My point about how Ofcom operates is that commercial interests are not prioritised in the 2003 Act in the same way as in clause 28(3) of the Bill.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am afraid that the hon. Gentleman has misread how the Bill works with the 2003 Act. The Bill could not be clearer about Ofcom’s primary duty when dealing with postal markets. Clause 28(1) states:

“OFCOM must carry out their functions in relation to postal services in a way that they consider will secure the provision of a universal postal service.”

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Will the Minister give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

That could not be clearer, but I am happy to give way again.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

We have, of course, to look at every subsection of a clause. Clause 28(3) states:

“OFCOM must have regard to—

(a) the need for the provision of a universal postal service to be financially sustainable”.

I am sorry to reiterate the point, Mr Amess, but what could “financially sustainable” mean in that context, other than profitable?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman has failed to read the beginning of clause 28(3), which states:

“In performing their duty under subsection (1)”

—the duty of securing the provision of a universal service—

“OFCOM must have regard to”.

The issues that he keeps referring to, about “financially sustainable” and about the need for the provision of a universal postal service to be efficient, are things to which Ofcom must have regard in meeting its primary duty. So, I am afraid that the hon. Gentleman has again misunderstood.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister keeps telling me that I have misunderstood the issues. I do not comment on that; it is for other people to judge. He skilfully went on to clause 28(3)(b), but what does “financially sustainable” mean? If it is, as he has said, all about protecting the universal services as stated in clause 28(1), why then have clause 28(3)(a), and what does “financially sustainable” in that paragraph mean in this context, if it does not mean profitable?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am keen to engage the hon. Gentleman in the debate, but it is shame that he did not rise to his feet and make his points when we were discussing the amendment tabled by the hon. Member for Llanelli that would have removed clause 28(3). His points are not related to the Francois Greeff amendments, but I am happy to deal with them.

The hon. Gentleman is showing his true colours. As a historian of guild socialism, it is quite clear that he does not believe that organisations should be financially sustainable or profitable. That is exactly why his party has landed Royal Mail and other organisations in such a complete and utter mess.

Gregg McClymont rose—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman wants to have another go. One has to hand it to him; he is brave.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Again I will let the Committee judge who is showing more courage. I am sure it is the Minister because he does not have a stable peg to hang his jacket on.

I never suggested that I was a historian of guild socialism; I just perked up when the Minister mentioned it. I know that that is the way his arguments go, but he is trying to move away from the point that I am trying to get him to address. What is the point of having subsection (3)(a) mention “financially sustainable” unless it means that the provider must be in profit? I just do not get it.

The past is another country. I was not in Parliament during the time of the previous Government, or responsible for their successes or otherwise, and I am sure that the Minister has good points to make about his feelings. However, I ask him to address what “financially sustainable” means in this context for a provider, if it does not mean profitable.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It means financially sustainable. If we wanted to use the word “profitable”, we would have used it. One of the reasons why legislation in this area tends not to use the word “profitable” is because defining that word can be quite difficult, as accountants are aware. “Financially sustainable” is a much better understood phrase.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Will the Minister give way?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Before I let the hon. Gentleman in yet again, I should say that it is bizarre—quite remarkable—that he does not believe that Ofcom should ensure that the universal postal service is financially sustainable. It will be no good to our constituents, to businesses, to our economy and certainly to the long-term viability of the universal postal service if it is not financially sustainable. Why is he so worried about the phrase?

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister just said that the Bill does not say “profitable” because the word is difficult to define, which is why the Government put in “financially sustainable” instead. Does that not make my case for me?

Mr Davey rose—

Richard Fuller (Conservative, Bedford)

Does the Minister agree that there are a number of companies that are unprofitable but financially sustainable? Does he also agree that from one year to the next, a company may or may not be unprofitable, but it is always financially sustainable? Therefore, does he agree that “financially sustainable” is a much better term than “profitable”?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

My hon. Friend anticipated the exact argument that I was going to use against the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, who may want to come in again to deny the strength of my hon. Friend’s argument.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister said a moment ago that the Government used the term “financially sustainable” because “profitable” is difficult to define. The hon. Member for Bedford made a fair point. Words are always capacious, and getting to the heart of what is meant in a definition is difficult. That is what I am trying to tease out. What does “financially sustainable” mean? Even if the hon. Gentleman is right, which I am sure he is, that from one year to the next a company may be sustainable but not profitable, is it not in the logic of a privatised Royal Mail entity to be profitable at some point in the short to medium term?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

It is not a duty of Ofcom to worry about the profitability of the universal service provider on a year-to-year basis. The Bill makes it clear that to perform its duty under subsection (1), which is to secure the provision of the universal postal service—I keep coming back to the words of the Bill because I think they are what the Committee is supposed to be looking at—Ofcom must

“have regard to…the need for the provision of a universal postal service to be financially sustainable”.

That is the key point. We had an interesting debate earlier when Opposition Members tried to suggest that we had written “universal postal provider”, and I had to keep reminding them to look at the words in the Bill. There is a specific reason why we did not put those words in the Bill. We put “universal postal service” because that is the service that we are concerned about. That is what our constituents use and what small and medium-sized enterprises depend on, and it is Ofcom’s duty to defend it. That is why we won the argument last time and why—I think—we are winning the argument this time.

Gordon Banks (Labour, Ochil and South Perthshire)

The Minister and I had an exchange over the universal service provider and universal service provision. That exchange came about because the Minister used the words “universal service provider” in his remarks to the Committee, not because Opposition Members have promoted it. Hansard will show that.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am sure we will all be poring over Hansard to check who was right or wrong in that particular exchange.

In setting the appropriate density of access points—not only post offices but letterboxes, which Opposition Members forgot to mention—Ofcom will be subject to its general duties under section 3 of the Communications Act 2003. That is the point that the Opposition seem obstinately not to take on board. The 2003 Act includes duties to have regard to:

“the opinions of consumers in relevant markets and of members of the public generally…the needs of persons with disabilities, of the elderly and of those on low incomes…the different interests of persons”—

including businesses—

“in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons”—

and businesses—

“living in rural and in urban areas”.

If that is not strengthening the requirement, I do not know what it is. I am therefore extremely confident that, in meeting its duties, Ofcom will ensure that the needs of all users of postal services throughout the country are properly reflected. I am equally confident that the right measures are in place to ensure a vibrant, ongoing, long-term relationship between Royal Mail and the Post Office, based on mutual commercial benefit rather than regulatory obligation.

Nia Griffith (Labour, Llanelli)

Will the Minister explain what he thinks the relationship is? I am still confused by the belief that it will happen.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

We are going back to the arguments about the IBA, when I made it very clear that Royal Mail would not absent itself from the largest and, arguably, the most popular retail network across the country, because it would not want to vacate that to its competitors.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The Minister is not as delighted as usual to give way. The Minister wants to draw our argument in a caricature, which is either/or—there either is an IBA or there is not. If we accept, as we do, that the agreement will be a commercial negotiation between two organisations with different bargaining positions, will it be as good an agreement as the Post Office currently gets from the IBA? Our view is that, when everything is taken into account, and given the relative size of the two organisations, there is at least a question mark about what the agreement will be.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman clearly wants to go back to our previous debate, when we made it absolutely clear that, currently, the IBA is negotiated not by the Government but between Post Office Ltd and Royal Mail. It is not an open and public agreement; it is commercial and it goes into huge detail. I am told it is more than 100 pages. That is why we resisted the legally dubious proposal from the Opposition when we debated whether it could be enshrined in statute. It is why, very interestingly, the chairman of Royal Mail, Donald Brydon, made it clear in his evidence to the Committee that before privatisation he would secure the longest possible IBA that was legally permissible. One would have thought that that would have reassured the hon. Gentleman. The hon. Lady almost accepted and then rowed back. It is impossible to put such an agreement into statute.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

Throughout our discussions, the Minister has suggested that we are antipathetic towards the market, but I am only applying what should be obvious market logic. We will have negotiations between two organisations, which should consider their relative strengths. It seems to me that Royal Mail is in a stronger position.

More fundamentally, Donald Brydon can say that there will be an IBA, and we can agree with him. As the Minister has pointed out, however, that agreement goes to thousands of pages. What is in it—the stipulations, when it is renegotiable, the terms of the deal? We have no idea; neither does the Minister. That is the slow-burning fuse that is at the heart of the debate.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The differences between us are ultimately about philosophy. The hon. Gentleman and the Labour party seem to believe that it is the job of Government and Parliament to put complicated business agreements into legislation. That was not the Labour party’s view when it was in government—not only in this area, but in others—and it is certainly not our view. I want to discuss matters in the Bill—not just the words of Donald Brydon—that relate to the process that we have put in place, which should give Opposition Members much comfort.

The hon. Gentleman has discussed the statutory protections in Germany, Holland and elsewhere, which he lauded as superior to this country’s protections. However, unlike Germany or any other country that I looked at when I asked for some analysis, we have a double protection: we have the access points, which are regulated by Ofcom on to the universal service provider; and in addition we have the access criteria, which relate to Government funding of Post Office Ltd. The combination of those two protections is extremely powerful. We have the power of the regulator, and the power of the Government through a legal contract that relates to the funding that they have provided, which, in the case of this Government, has been very generous.

Nia Griffith (Labour, Llanelli)

First, I understand that the access criteria apply to the post office network, but if Royal Mail is not obliged to use that network, I am not sure how the criteria are relevant.

Secondly, if Royal Mail were to use the Post Office—obviously, in an IBA—it could ask for a certain number of outlets; it would not have to use the whole network. Will the Minister explain how the access criteria that are relevant to post offices can be put together with the access points in the Bill, which could be any outlets and any number of them? The two do not seem to match up.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I was trying to respond to the thrust of the hon. Lady’s remarks, and to those of other Opposition Members. It seems that they tabled the amendments to protect the post office network and I have been making a set of arguments to suggest that those are unnecessary. I have discussed the funding, the services and stability, and I am now discussing the access criteria that Post Office Ltd is legally obliged to meet. In a previous debate I explained how Post Office Ltd’s access criteria are monitored on a monthly basis. The criteria are therefore extremely significant and have been completely downplayed by Opposition Members during this debate.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

I do not want to misquote the Minister, but he suggested that our amendments are unnecessary. I understand that he is confident in what he is doing, and as we know from his tour around Mexico, Argentina and elsewhere, he clearly has knowledge of mail services. However, can he understand why we are somewhat dubious about his confidence in the measures that he is taking to improve the post office network’s viability? It is not that we do not think he is doing a good job, or that we think he does not have some good ideas; but when two thirds of the network is economically unviable, as Paula Vennells said, there needs to be a remarkable turnaround, and we merely looking for some statutory protection. If the Minister gets it right, what is the harm? He has protected the network and the statutory protection is in place if it goes wrong. That is not an unreasonable position.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I am afraid the hon. Gentleman is wrong for a whole set of reasons. I started my remarks—astonishingly, the Opposition have failed even to comment on this point—by saying that the legislation tightens up the requirements on Ofcom to meet consumer needs. That is a greater requirement than on Postcomm. The truth is that consumer needs change over time, so it may well be that how such things are defined and implemented will have to change. Tim Brown, the chief executive of Postcomm, made that point in his evidence to the Committee. I want to come back to comparisons with other postal networks, but at this point I should move on.

Consumer needs might change in the future, and therefore how the service is defined and how it is regulated by Ofcom might need to change. For example, because there has been such an increase in parcels, particularly due to online retail, one would expect that Royal Mail will need to invest in changing its production processes to meet that increasing consumer demand. Equally, one would expect that Ofcom, to meet its requirement to respond to consumer needs, might have to change how it considers access points and other obligations set out in the Bill. One can easily imagine that it might want to think about that in a much broader way than the Opposition have talked about.

One of the frustrations for consumers using the postal service is not so much the question of where they can take a parcel—I have never had a complaint about that, although I do live in a suburban constituency—as the fact that people cannot be at home all the time to receive a delivery. Traditionally, as defined in the European directive and as reflected in how Opposition Members want to amend the Bill, the provision of access points takes no account of the point that consumers want to be sure that they can pick up their parcel if they were not at home when a delivery was attempted.

There has been an awful lot of innovation, which we will come on to when we debate a group of amendments about parcels, but some examples are germane to the point about Ofcom needing flexibility over how it meets its obligations to reflect consumer needs on access points and such matters. In the future, we will see more innovation on how people can receive a parcel: there will be secure lockers outside homes, including—I should not advertise—two well-known devices, the Hippo box and the ParcelPod, that are being used; there is the Safeplace scheme, which has been introduced by Royal Mail; and several parcel operators offer a service under which they will text a consumer about when they expect a parcel to be delivered and the consumer can phone back to say, “I won’t be in, so can you deliver at another time?”

What we are most aware of is the need for Royal Mail to think in a more customer-friendly way about how late its depots open, so that people can collect a parcel that could not be delivered. I am keen on the notion of using post offices as depots in the future. They can actually be already, but this is a potential growth market. At the moment, people can pay £1.50 to pick up a parcel from a local post office. In considering access points and the way those markets will deliver, we will have to think differently—in ways that the Opposition have not thought of, but in ways that Ofcom will be empowered to think by the Bill. We are trying to future-proof the Bill and not to set in rigid statute, or by regulation, ideas that in five, 10 or 15 years might be completely the wrong way of protecting the consumer interest.

I want to go back briefly to that point, because I want to put to rest the issue of legislating. The access points that Ofcom regulates and the access criteria that the Government funding agreement will uphold provide a double protection. If we analyse whether the impact of our access criteria and access points is more effective in ensuring a viable post office network than in Germany or other countries such as France—I am using Postcomm material—the evidence suggests that we have stronger, not weaker, protections.

Let us look at individual countries, which I have had research on. If we look at the statutory protections in Germany, which the hon. Gentleman is so keen on, I am not sure whether he is aware that the protection in rural areas is for a post office every 80 square kilometres—I am sorry, but we are not keen on that protection, because it would undermine the needs of consumers. Our protection, which comes from the access points and access criteria, is stronger for rural users. Once again, I am afraid, the hon. Gentleman has shot himself in the foot by citing Deutsche Post.

Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East)

The number of times that I have shot myself, it is a surprise I am still standing.

The Minister makes an interesting point and his colleague, the hon. Member for Worcester, made a reasonable point about the German position. However, the Germans have statutory protection, which we do not. The Minister referred to a double lock, as he may or may not call it, but if we look at subsection (3)—

“In performing their duty under subsection (1) OFCOM must have regard to…the need for the provision of a universal postal service to be financially sustainable”—

as we stand, 12,000 post offices are not financially sustainable and only 4,000 are.

The Minister then referred, rightly, to the fact that the Government contract is with Post Office Ltd. Unless his optimistic plan—I am sure “gamble” is the right word—for the future of the post office network comes off, we will be left with Ofcom bearing down on post office numbers, on the “financially sustainable” criterion, because at some level “financially sustainable” must mean profitable, and certainly it does not mean unprofitable. More importantly, we will be left with the taxpayer picking up the tab to maintain the post office network. All we would like to see is, in those circumstances or otherwise, some statutory protection. Is that too much to ask?

What is the downside? I do not understand the downside to having statutory protection for all the likely things that the Minister says will happen. He will reply, “You’re socialists, you want to over-regulate,” but why is enshrining six days a week in statute not over-regulation, whereas having access points is?

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The hon. Gentleman is beginning to irritate his own Whip, so I caution him against going on.

Once again, the hon. Gentleman has completely misread the Bill. The provision refers to how Ofcom regulates the universal service provider—mail, collection, sorting and delivery services—not to how Ofcom regulates the post office network. If he reads Hansard, he will see that that is exactly what he said. He was implying that in this way Ofcom is regulating the post office network to make it financially sustainable, but that is not what the clause says.

One of the great things about being a constituency MP is having regular surgeries. I do not know how many surgeries my colleagues have, but I have two a week, one at 8 am every Monday morning at 21 Berrylands road, Surbiton, and the second one on Thursday or Friday night, or Saturday morning, depending on the week, at different locations. One makes oneself accessible, with many access points and open access criteria for one’s constituents. When one does that, one gets lots of good ideas from constituents, and that is why I have christened the group the Francois Greeff amendments.

Only a week last Monday, Francois Greeff came to see me. He had a letter with him which I am passing on to the chief executive of Royal Mail, Moya Greene, because it contained four interesting ideas about how we could cut costs at Royal Mail—he said at the Post Office, but he meant Royal Mail. That is already worrying the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. Three of the ideas might be tricky to implement in the UK. Paragraph 3 of the letter states:

“In America, each house has a post box at the gate, on the perimeter of the property. The postman never leaves the pavement, except for recorded deliveries. He covers a far shorter route.”

The suggestion is that every property in the UK have a postbox at the end of the drive. We are not going to take up that idea, but I am happy to pass it on to the chief executive.

There are two other ideas that I am not sure will catch on. One is:

“selling and installing standard post boxes offers a merchandising opportunity that will raise revenue, and from which a profit can be made.”

We know that the hon. Gentleman would obviously not want profits to be made. The third proposal is:

“wheels are more efficient than walking. Offer all postmen an optional pair of free rollerblades or a scooter.”

I think that there would be some serious health and safety issues with that innovation, so I could not agree to it.

The idea that has direct relevance to our debate today about access points is that

“the national standard post box”

in America

“has two tiers so that the postman also collects outgoing mail. Each post box has a flag to signify whether it contains outgoing mail. Moving into this system means that the entire cost of maintaining the pillar box system and vans that collect mail is removed from the Post Office.”

That is an ingenious idea, and I have discussed it with officials. It would mean 28 million access points for the collection of mail, which would be a radical shift. I am afraid, however, that there are a few practical difficulties, and I therefore do not think that we will introduce the idea by way of a Government amendment. I suggest, however, that Francois Greeff shows an ingenuity in thinking about access points that is sadly lacking in the Labour party.

There is something in my constituent’s suggestion, in the sense that in rural areas it might well be appropriate for the Royal Mail employee who delivers letters also to collect parcels. I am not saying that that is Government policy; Royal Mail operates at arm’s length, of course, and in due course will be privatised. It shows, however, that the crux of the debate is that consumer needs change and that we need our universal service provider, supported by the regulator, to be responsive to those needs and not be tied up in knots by statutory and regulatory provisions. The approach that we have put forward is in the interests of the users of both the post office network and Royal Mail and I therefore invite hon. Members not to press the amendments.

Nia Griffith (Labour, Llanelli)

Members will be pleased to hear that I shall be very brief. Many things have been said today, but I am not sure that we are any the wiser. The matter is of immense importance to us, and we shall certainly wish to return to it at a later stage of the Bill.

I shall try to understand the Minister’s comments. On the one hand, he is extremely keen to see the maximum number of access points, even talking about 28 million boxes. I am really surprised that among all the exciting ideas that he cited he did not mention his friend the former MP for Montgomeryshire, Lembit Öpik, and the idea of every postman and woman having a Segway, to roll along the pavement with and from which to hop off and deliver letters. If anyone does not know what a Segway is, I am sure that they can google the former MP for Montgomeryshire, if he can be found behind the Cheeky Girls somewhere.

There is a gap between wanting to ensure that the consumer has all the access points—something we seem to agree on—and not having in the Bill any firmer statement than “reasonable needs of users.” We are told that the great strengthening of the Bill is the fact that Ofcom has to take note of the reasonable needs of users. To me, that does not give much of an indication of the number of necessary access points. It is very dubious indeed whether any provision would make sure that the access points are well distributed throughout the country and within a certain distance of peoples’ homes. That is not covered by the Bill. It seems to have nothing to do with the post offices and the good work that everyone wants put their way.

We seem to have one mention of the access points, but we have nothing in the Bill that will make those access points happen. Furthermore, we do not have anything that will tie the post office in with the Bill. It is a tremendous lost opportunity because that would be a way forward, and at one fell stroke would link in the post office network. If it was for the Royal Mail to use the post office network and access points with a specified number of outlets, obviously that would give a tremendous boost to the Post Office. However, the Minister clearly does not wish to give the Post Office that reassurance.

There does not seem to be the will to make the fine words translate into a proper guarantee for the Post Office. That is a tremendous disappointment to the National Federation of SubPostmasters, which said that it would have liked a 10-year IBA, but cannot see it coming. Our proposal is a way that it could have had such security for the post offices in the future. It is a great disappointment for many customers that, without such a guarantee, a third of post office business could disappear. It could be difficult for some local post offices to be kept open and some people could miss out.

I am worried that we have not received a better proposal than that Ofcom be required to take note of the “reasonable needs of users”. That is not helpful. It is not good enough. I wish to return to the topic later in our proceedings, so I shall not press the amendment or amendments 75, 78 and 89 to a Division. I beg to ask leave to withdraw the amendment.

Clause 29

Gordon Banks (Labour, Ochil and South Perthshire)

I beg to move amendment 76, in clause 29, page 15, line 28, at end insert

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: Amendment 41, page 15, line 29, leave out subsection (4) and insert—

Amendment 77, page 15, line 31, leave out ‘before the end of the period of 18 months beginning with’ and insert ‘not before 5 years after’.

Clause stand part.

New clause 7—Universal service obligation—

Gordon Banks (Labour, Ochil and South Perthshire)

When talking to the previous clause, the hon. Gentleman destroyed my belief in Santa Claus. I hope that he will not be so brutal with me this time. Tread gently, Minister.

Amendment 76 is designed to ensure that any universal postal service order is made or modified by Ofcom not only by the assessment stipulated under subsection (3), but that that the conditions laid down under proposed paragraphs (a) to (g) of the amendment are also acknowledged and that nothing in the order or modification immediately disadvantages those affiliated with the conditions.

I argue that it is possible for the review in clause 29(3) to be carried out with results that satisfy the Bill’s criteria, but fail to take into account one or more of the groups that are stipulated in the amendment. I shall highlight the importance of such groups.

First, paragraph (a) refers to individuals who are living in rural areas. I represent many such constituents, as do many of my hon. Friends, including my hon. Friend the Member for Llanelli. We know the importance of taking them into account in ways that ensure that they are not disadvantaged by any changes that Ofcom might make. Why is that important? I can speak for myself only, but I do not believe that I, or my constituents in rural areas, should be subject to an inferior level of service, or to a more expensive one than people who live in other areas. Without providing for such individuals, we run the risk of having a universal service that is not universal in content or context and, as a result, is multi-layered and disadvantages great swathes of the United Kingdom.

Just as individuals in rural areas should be protected by paragraph (a), those in urban areas should be protected by paragraph (b). I can probably hear a few cogs turning as the Minister thinks, “First rural areas—now urban areas.” The proposal aims to ensure the protection of the service, and its availability to individuals throughout the UK. A future review might be focused on, for instance, business mail, and if that were the case, it would be unacceptable. The proposals in paragraphs (a) and (b) would also be of great service to businesses because although business-to-business communication is important, so is business-to-individual communication.

At present, businesses do not necessarily make a judgment about whether to deal with someone in a particular area based on the quality of the available communication networks, but they might do so in future. We might see individuals who are currently disadvantaged because they have poor access to, say, digital communications networks, becoming even more disadvantaged by a reduced or more expensive access to the mail network. That will not happen if the Minister accepts the amendment.

Paragraph (c) is a safeguard in reverse to paragraphs (a) and (b)—I hope that hon. Members are still with me. I am not saying that one section—public or business—is more important in relation to any universal postal service order or modification, but the amendment is all about that—it is about spelling out what is important in such a consideration.

In discussion on an earlier amendment, which concerned the inclusion of medium-sized businesses in clause 11(3), I accepted the Minister’s assurances that “small” would include up to 250 employees. I shall do the same in relation to this amendment, however the Minister may have some work to do, because this subsection does not mention businesses at all. As ever, I want to help the Minister, but for me to do so, he must accept that the important interests of small and medium-sized businesses have not been considered in this part of the Bill. We have heard how, in future, small and medium-sized businesses may make up the core of Royal Mail’s business, therefore we must ensure that their interests are not overlooked in any order or modification.

Paragraph (d) calls for any order or modification to consider disadvantaged individuals. The proposal would not make any judgment of whether such people were disadvantaged and living in a rural area or in an urban area; it goes one step further to protect all individuals living in all areas. We want those who are disadvantaged— wherever they live—to have a status in any order or modification in relation to clause 29(3). They do not have such a status in the Bill as it is written. It is important for those disadvantaged individuals to have additional rights in this situation, and any modification or order that resulted in their being further disadvantaged would be unacceptable.

We have heard evidence that people who may be more disadvantaged than others rely on mail services and post office services. I understand that the relevance in this case is to postal service orders, but we know that there is a dependence and a reliance on post offices and Royal Mail. We must also recognise that those potentially disadvantaged individuals may be disadvantaged in a temporary way, so Ofcom would therefore have to ensure that the work it did in preparation for any order or modification was complex. Surely that is nothing less than the Minister would expect.

It is very important that disadvantaged individuals, as in paragraph (d), are not confused with low-income individuals. On occasion, they may be the same, but often they are not. The amendment would ensure that there was no confusion and that both sections of the population would have proper recognition. Low-income individuals would be recognised as having a dependence on a mail service that does not disadvantage them because they are low-income earners.

On paragraph (f), I hope that the Government would always take those with disabilities into their considerations in a positive way. As written, the Bill does not do that, but our amendment does. The rights of an individual with disabilities should be protected in the clause, as should the rights of those in paragraphs (a) to (g), who I have already referenced. Disabled individuals have every right to have as full and as competitive a service as others, but the Bill does not recognise that.

The clause, as amended, would allow individuals and support groups to play a role in the construction or amendment of any order, to ensure that they were not disadvantaged by the outcome. The challenges of life with a disability are severe enough, and it is little to ask of the Minister to recognise that and take action here and now to ensure that the impact on disadvantaged individuals of any future action by Ofcom is fully evaluated, so that individuals are protected in the immediate future. Of course, if the Minister wants to go further and extend our amendment from “immediately disadvantage” to “permanently disadvantage”, my hon. Friends and I would not object. The amendment, with the inclusion of paragraph (g), would protect the service experienced by elderly individuals. Some might argue that I am being selfish here. I know that I am getting on and that I am not as young as I used to be, but we all have elderly family members and the argument for them is the same as it is for the others who are mentioned in the amendment. It is only by considering all the sectors of the community that are referred to in the amendment that the Government’s objectives in subsection (3) can be met.

I admit, once again, that we are pushing the Government a lot further than they would like to be pushed, but that is because my hon. Friends and I feel that the clause as it stands is deficient. All sectors of UK life deserve to be referred to in the clause. They deserve to have their needs and requirements evaluated and not disadvantaged by any such order or modification. The amendment does that and the Bill, as is stands, does not. The amendment is designed to ensure that those living in rural and urban areas, small and medium-sized businesses, disadvantaged, disabled and elderly individuals, as well as those on low incomes, are not disadvantaged by any actions that Ofcom may take in modifying or making a universal postal order. As I have said, those groups do not have their specific needs recognised in the Bill. My hon. Friends and I believe that the Bill should recognise those groups, which is why we tabled the amendment. I am interested in the Minister’s response to amendment 76.

New clause 7 is designed to strengthen the universal service obligation through the publication of a report from the service provider to the Secretary of State on the fulfilment of the obligation. The implications of the new clause are, arguably, not too dissimilar to the requirement in clause 11, where a post office company must send the Secretary of State a report each year on its network of post offices. My hon. Friends and I tried to strengthen that at that point in our deliberations, but the Minister would have none of it. When we look at this part of the Bill, there appears to be nothing that mirrors this requirement on Royal Mail as a service provider. My hon. Friends and I believe that this is unwise, because under clause 34 it states:

“OFCOM may designate one or more postal operators as universal service providers.”

As such, a report—or reports—becomes even more necessary. That should not be confused with any role that Ofcom has to play in the matter. It is something that we should hear straight from the horse’s mouth or, indeed, the horses’ mouths.

Many of the requirements in new clause 7 are similar to those in amendment 76, to which I have just spoken. Amendment 76 refers to Ofcom making or modifying a universal postal service order. When it is approved by the Committee, new clause 7 will form a relationship between universal service providers and the Secretary of State, and a relationship between all universal service providers and, indeed, Parliament.

To continue my remarks on new clause 7, such a report would be useful if there were a single provider, but invaluable if there were multiple providers. The providers should be able to put in an official report of their own creation their view on the fulfilment of the universal service obligation and provide this to the Secretary of State, who must lay it before Parliament

Clause 36 calls upon the universal service provider to publish information about the extent to which it is providing specified postal services in accordance with specified standards, and also to publish an independently audited performance report. We believe that new clause 7 goes further in some respects, but we would not be averse to keeping anything in the Bill that was felt to be superior.

In the Bill as drafted, the report that a universal service provider has to produce does not appear to have to be passed to any specific person. As a result, it could be argued that there is an opportunity missed here for the Secretary of State and Parliament to be legally entitled through powers in the Bill to scrutinise the report. Furthermore, the report does not seem to be held to any timetable. It does not appear to be expected annually, as per clause 36. Perhaps the Minister will explain why.

New clause 7(2) stipulates the details that must be covered by the report, and I will go through each of these in a little more detail. Paragraph (a) states that the report must contain details of

“the range and extent of the service, including access points”

about which there was a significant discussion earlier. The range and extent of the service are important as they empower the reader of the report, and therefore the Secretary of State and Parliament, with details of the service being provided, and how the provider views their own efforts to meet with the content of the Bill in relation to the minimum requirements set out in clause 30. This section would also require details on the access points. My hon. Friends would be delighted to see that as it will allow the inter-determination between the universal service provider and the access points to be clear. It would allow further scrutiny, and comparisons between such interdependency and multiple universal service providers, if there were to be more than one, as the Bill provides for.

We have heard throughout our sittings about the importance of access points— dare I say post offices?—in relation to Royal Mail. I do not wish to be criticised by the Minister at this moment in time, but I will come to something else later. With a third of Post Office Ltd footfall and revenue coming from mail services, there is an importance both ways, and it would be useful to monitor it provider by provider. It could be argued that, whereas post offices are currently the access points we refer to, there is no guarantee, as we have heard this morning and early this afternoon, that that would be the case in future. No doubt the Minister is thinking “here we go again”, but it is true.

With the possibility of varying providers comes the possibility of varying access points. This part of new clause 7 would allow a comparison to be made not only between providers but also between the added value that access points deliver to the varying universal service providers and their universal service provision. Not wanting to be subjected to the wrath of the Minister, for forgetting about postboxes, we should put on the record that we also consider postboxes as access points and we intend them to be so treated in this part of the Bill.

New clause 7(2)(b) would allow for the report to give details of

“the utilisation of the service by its customers.”

It may be argued that that is already covered in clause 30, but as that clause has no reporting requirements, it is important and necessary to include customer service utilisation here. The service provider will or should have that information, and I would argue that it needs to have such information. The information should also be available for consideration by the Secretary of State and Parliament.

Subsection (2)(c) would ensure that the report contained details of “any surveys, or studies,” on the use of the universal service. That would be important for gauging how, how often and to what level providers are engaging with their customers and markets. Some of the studies might be published in their own right at different times throughout the year, but such reports would have to contain an analysis of each of the pieces of work, by referring to the availability of those various surveys and studies. At a time of multi-layered universal service providers, that would be excellent information for making a comparison on the level of engagement that each business was embarked on, and for allowing different solutions to the same problems to be made clearer and to be better evaluated.

Paragraph (d) is self-explanatory. It would require any exceptions to the universal service provision to be detailed, which would in turn not only allow there to be public provision of such a fact, but provide closer scrutiny and allow comparisons to be made between universal service providers with similar exceptions.

In new clause 7(3) there is a similarity of detail to the words in amendment 76, which I have already discussed. I was going to say that I do not want to go into them all again; I do want to, but that would probably try everyone’s patience, so I will make only one or two references. New clause 7 would place a responsibility on the universal service provider, whereas amendment 76 would place a responsibility on Ofcom. It could be argued that both are required for consistency, and that in each case they are required to ensure that the areas covered in paragraphs (a) to (g) remain at the core of what Ofcom is regulating and of the service that is being provided by potentially more than one universal service provider. As I said earlier, paragraphs (a) to (g) would possibly be of added importance if there were numerous providers of the service.

I will comment on one or two of those areas in relation to new clause 7. The report would call on the service providers to give details of how they were adapting their service continually to ensure that the universal service provision is accessible to the aforementioned groups. That is a very different proposition from Ofcom having a responsibility under amendment 76, as it would allow each of us and each of the provider’s customers to see clearly the steps that it was taking to comply. A particular service provider may have little or no responsibility for those living in a rural area if it is predominantly concerned with covering an urban area, but another provider may have a huge responsibility in an area of rural coverage and provision.

Reports from universal service providers would allow scrutiny of performance of that responsibility to take place on a provider-by-provider basis in the Department and in Parliament. Subsection (4) would allow the Secretary of State to expand on our very reasonable list as he felt was appropriate. My hon. Friends and I are very happy to have that power bestowed on the Secretary of State by new clause 7, and we are reasonably sure that he would use it appropriately and fairly.

With the new clause would come a responsibility for the Secretary of State to lay a copy of the report before Parliament. Again, I can imagine that cogs are going around about there being more responsibility for the Secretary of State, and about his doing something that would enable Parliament to have some scrutiny.

We have tried to be consistent throughout the Committee stage, and have argued well for increased parliamentary scrutiny of the many actions that result from the Bill. We have asked that Parliament be consulted on the final offer accepted by the Secretary of State for the purchase of Royal Mail, but the Minister has refused. We have argued for Parliament to be consulted on the employee share scheme, but again he has refused. We have argued for Parliament to be consulted on Post Office ownership but, guess what, the Minister has refused. He has built up a bit of a reputation, not only for wrecking my Christmas by saying that there is no Santa Claus, but also as someone who appears not to want to extend parliamentary scrutiny to the proposals in the Bill. This is an opportunity for him to redeem himself. I do not suppose that he can reinvent Santa Claus, but he can accept the new clause and the amendment. He can wipe the slate clean and embrace our requests for greater parliamentary scrutiny.

The Minister knows that we have asked him only to lay a copy of the report before Parliament. We are not asking for a vote, or even a debate on the matter, although it would be acceptable to Members on the Opposition side of the Committee should the Minister want to take that extra step. We have asked him to ensure that the Secretary of State behaves in the same manner in relation to new clause 7 as he expects him to behave in relation to clause 2. In the words of my hon. Friend the Member for Telford, the Secretary of State could just

“pop it in the Vote Office”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 127, Q252.]

if he so wished. Whatever the Secretary of State does—whether he decides, as his way of informing Parliament, to pop the report in the Vote Office, or to do something a little more extensive—that is a better level of scrutiny than is currently in the Bill. We will settle for him popping it in the Vote Office, because that will allow for scrutiny that does not currently exist.

I have rushed through this, but I am trying to catch up on time. Amendment 76 and new clause 7 are important because they strengthen the Bill, and they strengthen the ability of the sections of the community to which they refer to have a greater say—any say, in fact—in the regulatory process and in the business plans of individual service providers.

I wish that the amendment and the new clause were not necessary, but as the Minister is hellbent on flogging Royal Mail, they are. [Interruption.] To counteract that comment from a sedentary position, he is hellbent on flogging all of Royal Mail. The amendment and the new clause follow the spirit of openness and empowerment in which we have approached the Bill. I am sure that the Minister wants to be open and to empower our communities, and indeed Parliament, and he can do that by agreeing to the amendment and the new clause.

Nia Griffith (Labour, Llanelli)

I rise to speak to the new clause and to all the amendments in the group, but as we are short of time I shall ensure that I do not repeat what my hon. Friend has said.

Amendment 77 is on the possible assessment by Ofcom of the universal postal service. The timetable in clause 29(4), for an assessment to take place within 18 months of new arrangements being put in place, is misguided. The cynic might say, “Oh, we can see what’s going to happen here. The Ministers would like to get the privatisation out of the way and, as soon as that’s done, the regulator can come in and decide to change things, probably in some sort of negotiation with a privatised monopoly that might of course influence how things go.” Lo and behold, things might be changed—respecting the norms of the EU directive, obviously—and made detrimental to the service, giving a less good service. That could happen very quickly. A five-year period, however, would give us the opportunity for a sense of stability and for the newly privatised company to be required to meet certain standards for a long enough period to embody those standards and make them more likely to be upheld in the future.

Moreover, we need to look at how the timing will work out in practice. If we look more closely, we will see that if the review or assessment is conducted within 18 months of the privatisation of Royal Mail, that review or assessment might well—depending on the pace at which privatisation takes place—occur around the time when the current inter-business agreement between Royal Mail and the Post Office is up for renewal. Depending on the exact timetable, by the time the privatisation of Royal Mail goes through, only about 18 months might be left of the current IBA—what a coincidence! We could, therefore, see a privatised Royal Mail driving a hard bargain with whichever provider it chooses to make its contractual arrangements with when the current IBA comes to an end. At around the same time, Ofcom could be conducting some sort of consultation as part of the assessment, so it would not be at all surprising to find a privatised Royal Mail not only driving a hard bargain with potential providers of counter services, but also exerting pressure on Ofcom to relax the requirements that it imposes on Royal Mail as the universal service provider.

What would we be left with? Fewer access points, fewer deliveries, higher prices, and different prices in different parts of the country and for mail going to different parts of the country. The temptation to maximise profit and reward shareholders will always exist, because that is how private companies work. The pressure will increase against the background of ever-falling mail volumes and Royal Mail’s desire to continue investing in new high-tech equipment, not to mention an economy that will be making a slow recovery—slower than from the recessions of the 1980s and 1990s, and that is official, from the Office for Budget Responsibility this week.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Did the hon. Lady notice the figures yesterday, on output increasing faster than it has in 16 years and as fast as France and Germany?

Nia Griffith (Labour, Llanelli)

The worry is that we might not see a speedy recovery, but a sluggish one.

Tom Blenkinsop (Labour, Middlesbrough South and East Cleveland)

The leader in today’s Financial Times has documented that manufacturing output in America is outgrowing most of the figures for Britain. I have also just seen that the boost in retail sales in America is outstripping Britain’s economy, mainly due to our barmy state interventionist policies.

Nia Griffith (Labour, Llanelli)

I return to the matter in hand. Such things as falling mail volumes, the desire to invest in new high-tech, responsibility to shareholders, maximising profit and so on will no doubt put a lot of pressure on the privatised Royal Mail, and in turn on the regulator, to make the conditions less stringent. That will happen at the same time, potentially, as the negotiation of a new contractual agreement with someone to provide the access points. That is why it would be much better to have stability, which could be offered by keeping the present requirements for a full five years. That would enable the current requirements to become the established norm for a privatised Royal Mail. For those reasons, as explained, we would like to see the Bill amended.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Before I address the points made by the Committee on the group of amendments, I will say a little on what the clause does. We have discussed how clause 28 gives Ofcom the primary duty to secure provision of the universal service, and we will soon discuss the minimum service requirements of the universal service under the hard-wiring of clause 30.

Clause 29 recognises that the postal market might change over time. It must continue to meet customers’ needs as it develops, and we must therefore make sure that Ofcom is able to reflect those changes. That is why subsection (1) gives Ofcom flexibility within the bounds of the minimum requirements of the universal postal service to describe the specific services to be provided as a universal postal service and the standards those services must reach. That is not a new responsibility. Currently, Postcomm determines the specific products that Royal Mail as the only universal service provider in the United Kingdom must provide as a universal service. Under old legislation, Royal Mail did that when the licence was granted by Postcomm. Now such provision will be under the universal service order.

The aim of amendment 76 is laudable. The hon. Member for Ochil and South Perthshire wants to ensure that the result of the making or amending of a universal postal service order is that none of the main categories of persons would be put in any worse position than they were before. Indeed, it is such a laudable amendment that we have already provided for it. Under section 3(4)(i) of the Communications Act 2003, Ofcom is already required to take into account the needs of

“persons with disabilities, of the elderly and of those on low incomes”,

while section 3(4)(l) of the Act deals with

“the different interests of persons in the different parts of the United Kingdom, of the different ethnic communities within the United Kingdom and of persons living in rural and in urban areas”,

and

“the vulnerability of children and of others whose circumstances appear to OFCOM to put them in need of special protection”

is covered under section 3(4)(h). We are extending such duties to Ofcom’s functions in respect of post, so amendment 76 would offer no new protections and I urge Opposition Members to withdraw it.

Amendment 41 would put responsibility on the first universal service order in the hands of the Secretary of State rather than the regulator. Before I come to the detail, it might be helpful if I explain what the universal postal service order will do. To put it in context, clause 30 sets out the minimum requirements for a universal service. They replicate those requirements currently in place. The order will play a similar role to that currently played by Royal Mail’s licence, as I said a few moments ago. It is the level of detail below the minimum requirements that will specify more precisely the types of products and services that Ofcom, having assessed the market, considers should be provided as a universal service. It is important that that is based on a detailed understanding of the market and of user needs. For that reason, it is appropriate for it to continue to be specified by the regulator.

As the independent regulator, Ofcom will have a detailed understanding of the market, the powers and ability to assess the needs of users. The Secretary of State does not and will not. That is just as true for the first universal service order to which the amendment refers as it is for any other. If the concern of the hon. Member for Ochil and South Perthshire is that, for some reason, Ofcom decides to make sweeping changes to that currently required when it makes the first order, I shall reassure him about that. Ofcom will have little incentive to do that and will face a big risk. It would need a compelling set of evidence, and will have had no time to gather it. It is its intention to make an order at the end of 2011, to come into force in spring 2012. Our expectation, following discussions with Ofcom, is that it would simply roll over into the order whatever the Royal Mail licence at the time requires to be provided as a universal service.

Ofcom has the power to remove a licence provision that it considers no longer necessary, which is to say that it has the power to deregulate where appropriate. I hope that I have reassured members of the Committee that it is wholly appropriate that the first universal service order should be set by the acknowledged independent experts, Ofcom, and I ask the hon. Member for Ochil and South Perthshire to withdraw the amendment.

Amendment 77 deals with a fundamental feature of a universal service, which is that it must be able to respond to user needs. Indeed, that requirement stems from a European directive. The effect of amendment 77, however, would be to prevent Ofcom from assessing user needs for five years. It would be unable to reflect in the universal postal service order any change in user needs for that length of time. That is an incredibly bad idea in such a fast-changing market. It is partly the rapid pace of change in the communications market that has led to the need for the Bill in the first place. Users must be able to have confidence that what is in their universal service reflects their needs. To ensure that, Ofcom needs to be able to research those needs and have the flexibility to make regulatory decisions based on sound evidence. Given that, I hope hon. Members will withdraw the amendment.

New clause 7 would require the universal service provider to send an annual report to the Secretary of State on the provision of universal services. I accept the importance of ensuring that there is transparency about the provision of the universal service; in many of our debates I have willingly accepted that, but I cannot see how the amendment would contribute anything new to that aim. Clause 36, which we will come to, already provides that if Ofcom is to impose any condition on the universal service provider, that condition must include a requirement

“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 report must contain

“information about the provider’s performance in complying with specified requirements under the designated USP condition”.

I can see that the proposed new clause is more specific in seeking to be precise about the issues that the USP should cover in its report. However, it is for the regulator to set out the universal service requirements on the universal service provider in accordance with the provisions in the Bill. It would be a significant additional burden if the universal service provider was required to produce a report covering similar but not identical grounds as a separate requirement.

The points covered in proposed new subsections (2) and (3) seem to be things that must have been considered by Ofcom in setting the universal service standards, and are therefore likely to be covered in the report on performance against those standards. No such requirement was included in the 2009 Bill, because it simply was not necessary. It is an additional burden when there are already reporting provisions in the Bill. That remains the case, and that being so, I ask the hon. Members to withdraw their amendments.

Before I conclude, Mr Amess, you will have noticed, in your usual perceptive way, that I have not yet given a name to the amendments. I was intrigued by the notion that the hon. Member for Ochil and South Perthshire needed his faith in Santa Claus to be renewed. I am not quite sure where that is going to lead me, but I should say in a Christmas spirit that I am appearing in a pantomime this Saturday.

Gordon Banks (Labour, Ochil and South Perthshire)

Oh no you’re not.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Oh yes I am. I have a walk-on part with the St Paul’s Players of Chessington in Hook parish hall. I think it is at 2 o’clock. I believe there are still a few tickets left. I play another little dwarf, so perhaps we should call the amendments the little dwarf amendments.

I will conclude by restating that the Government’s first priority is to secure the provision of a strong universal postal service. People value the ability to receive and send a letter at the same affordable price everywhere in the UK six days a week. That is why the Bill enshrines in legislation—in clause 30—the minimum requirements of a universal postal service. We also recognise that the postal market will change over time. It must continue to meet customers’ needs as it develops. We must ensure that Ofcom is able to reflect those changes. Clause 29 provides the necessary powers and flexibility to enable Ofcom to determine which services should be included in the universal service, based on the sound evidence of customer need and the changing market. That is why we do not need the little dwarf amendments.

Gordon Banks (Labour, Ochil and South Perthshire)

I am tempted to say, “Now we know why the Minister is grumpy.” We have got a number of things into these debates that we could never have imagined at the beginning. I have listened to the Minister’s remarks, and I will make some comments—if it is appropriate—on amendment 77, which my hon. Friend the Member for Llanelli spoke to. None of us spoke to amendment 41; it was tabled by the hon. Member for Angus and he is not here to speak to it. We think that amendment 77 is better, so my hon. Friend the Member for Llanelli spoke to that.

Amendment 76 gives significant advantages to the individuals and organisations referred to in paragraphs (a) to (g). I have listened to what the Minister has said, but I have not been tremendously moved by his contribution. Amendment 77 strengthens the USP as we know it, and it is something that we feel strongly about in relationship to the Bill as a whole. I believe, Mr Amess, that we will consider new clause 7 further at another point. We want to press amendment 76 and amendment 77 to a vote.

Clause 30

Nia Griffith (Labour, Llanelli)

I beg to move amendment 56, in clause 30, page 16, line 3, after ‘letters’, insert ‘and other postal packets’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: Amendment 57, in clause 30, page 16, leave out lines 8 and 9.

Amendment 7, in clause 30, page 16, line 8, leave out ‘Friday’ and insert ‘Saturday’.

Amendment 58, in clause 30, page 16, line 14, after ‘letters’, insert ‘and other postal packets’.

Amendment 59, in clause 30, page 16, leave out lines 19 to 21.

Amendment 8, in clause 30, page 16, line 20, leave out ‘Friday’ and insert ‘Saturday’.

Gordon Banks (Labour, Ochil and South Perthshire)

On a point of order, Mr Amess. I said that we wanted to press amendments 76 and 77 to a vote, but we had a Division only on amendment 76. I seek your advice.

Sir David Amess (Conservative, Southend West)

The advice is that we cannot take the vote on that amendment now, which is what I was trying to indicate to the hon. Gentleman.

Nia Griffith (Labour, Llanelli)

I rise to speak to amendments 56 and 57, which relate to clause 30. Clause 30 details the minimum requirements that should be required in the universal postal service. Requirement 1 of the clause states that there has to be:

“At least one delivery of letters every Monday to Saturday”—

to every home in the UK and—

“to such identifiable points for the delivery of postal packets as OFCOM may approve.”

Although there have to be six-days-a-week deliveries of letters, requirement 1(2) provides that there has to be at least one delivery of “other postal packets” on only five days a week, namely from Monday to Friday, where the term “other postal packets” means any parcel, packet or other article transmissible by post other than a letter. As it stands, the clause implies that there does not have to be a delivery of such items on a Saturday.

Amendments 56 and 57 would remove the distinction between letters and postal packets by including “other postal packets” in requirement 1(1) and deleting requirement 1(2). That would make the requirement stronger and would much better reflect the needs of real life. Letters can be pushed through letterboxes without anyone being at home, but, by definition, “other postal packets” might easily include items that are too big to push through the letterbox and require someone to open the door to receive them. When are people more likely to be able to be at home to receive such parcels? It is on Saturdays, of course. Plenty of people have to work on Saturdays, but children do not go to school and many offices are closed, so people are far more likely to be at home.

In addition, with internet shopping and activities such as eBay, there has been an increase in the number of packets sent through the post, at the same time that the volume of letters is declining. Therefore, it seems sensible to move forward by providing the sort of service that people want, which is to have all shapes and sizes of parcels and packets included in the obligation to provide a delivery six days a week, from Monday to Saturday. That would be a definite improvement on the universal postal service as required under the clause. Certainly, it would please the public, as it can be difficult and time-consuming for people to get to their nearest depot to collect packages if they are out when the postman calls. If there were a requirement to deliver such items on Saturday, people who were not at home to receive a package during the week would have the option of asking for a Saturday delivery.

In its oral evidence, Consumer Focus said that the public valued the Saturday delivery, and it is precisely for items that will not go through the letterbox that that is so important. I am speaking about all those people who do not have a Hippo box outside their house, although perhaps the Minister might at some point decide to provide all the 28 million homes in the UK with a Hippo box.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

I do not think that I will be providing Hippo boxes for 28 million addresses, but I should tell the hon. Lady that, interested as I have been in this subject for many years, I will not ask whether the previous Government were going to change planning policy to make it a permitted development right to install Hippo box-style containers.

Nia Griffith (Labour, Llanelli)

That is absolutely fascinating. [ Interruption. ] We shall find out the answer later, I suspect.

Our amendment would ensure that it is a requirement to provide a better service for the public, which I am sure would be very welcome. I hope that the Minister will consider including in the Bill the requirement for a higher level of service, as that better reflects what people want. It does not seem too much to ask of him, as it would strengthen the universal service provision and is something that people want.

Amendment 7, in the name of the hon. Member for Angus, seeks to achieve a similar purpose by a slightly different means, in suggesting that we keep requirement 1(1) and (2) as in the current text of the Bill, but that we strengthen requirement 1(2) by replacing “Friday” with “Saturday.” As this is in keeping with what we are asking for, we would support such an amendment to some degree, but we feel that our amendments are much stronger, because they make it absolutely clear that all such postal items would be in one category, with no case for separating them out or for making any kind of differentiation. We feel that our amendments are better, but we understand the spirit in which the hon. Gentleman tabled his. The needs of small businesses are important, as well as those of the home consumer, because small businesses also value that Saturday service. People can do a lot of work from home if they have that facility and can use services on a Saturday, as well as from Monday to Friday.

I shall discuss amendments 58 and 59, which are in my name and that of the hon. Member for Ochil and South Perthshire, and I shall refer to amendment 8, which is in the name of the hon. Member for Angus. Amendments 58 and 59 would make a similar change to requirement 2 of clause 30, which concerns the collection of postal packets. In the Bill, the requirement is that on a Saturday there must be a collection of only letters from every access point in the UK that is

“used for the purpose of receiving postal packets, or any class of them”.

Our amendment would strengthen such a requirement to reflect the needs of the public.

Many people find that Saturday is the best day to be at home to receive a package—equally, Saturday is the only day on which they can easily get to an access point. At present, “access point” means a post office, and our amendments relating to other aspects of the Bill seek to ensure that that remains so. Amendments 58 and 59 reflect lifestyles—we aim to improve matters for consumers and ensure that they get an improved level of service. The only way to do that is to include stronger requirements in the Bill.

Again, we understand that the hon. Member for Angus wants to achieve something similar—by slightly different means—by keeping requirements 1(2) and 2(2), but altering the word “Friday” to “Saturday”. That would be in keeping with what we seek, but it is not quite the same, therefore we support, first and foremost, our amendments. If they were not successful, however, we might consider supporting amendment 8. For the sake of guaranteeing a better service for the public, I hope that the Minister considers our proposals and accepts our amendments accordingly.

Edward Davey (Liberal Democrat, Kingston and Surbiton)

The whole point of the Bill is securing the future of the universal postal service. The Committee is aware that the market is undergoing big structural changes. Postal volumes have declined by 15% in the past five years; Richard Hooper predicted declines of up to 40% in the next few. The evidence that was presented to the Committee was unanimous in acknowledging that action must be taken to save the universal postal service.

Clause 30 sets out the minimum requirements of the universal service, which are identical to those in the Postal Services Act 2000, and to those that were proposed by the previous Government in their 2009 Bill. Although one might say that our approach to ownership is different, I cannot see how ownership could affect minimum requirements. It is interesting that the hon. Lady seeks to change minimum requirements that are identical to those that were in the 2009 Bill.

I have mentioned more than once that the minimum requirements in clause 30 gold-plate the minimum requirements of the European postal service directive. I assure hon. Members that we share the view that it is possible to regulate too much, and Whitehall often gold-plates directives that come from Europe. I make no apology, however, for gold-plating the European postal directive. It is important to set that out to the members of the Committee, who I am sure have read the directive, which goes back to December 1997.

The directive sets out in detail what is required, but we gold-plate that. We have a six-day instead of a five-day collection service, and we have a six-day instead of a five-day delivery service. We have uniform and affordable pricing instead of just affordable pricing. We have a free service for the blind and partially sighted, which is an option but not a requirement for member states. Also, we have, under requirement 7, on “legislative petitions and addresses”, a free service to convey a qualifying list of petitions and addresses, which is not required in the postal directive from Europe. We have gold-plated the European requirements, and the effect of the amendments before us would be to impose even more gold-plating and additional regulation on Royal Mail’s operations, which would risk undermining the provision of the very universal service that we are trying to save.

In evidence to the Committee, Royal Mail spoke of the need for deregulation in competitive parts of the market if it is to survive. The most competitive part of the market is in packets and parcels. The amendment, therefore, would do precisely the reverse of what Royal Mail says that it needs. It would thus risk undermining the universal service, rather than enhancing it, so we cannot accept it.

The parcels and packets part of the postal market is a growth area, and it is highly competitive. As things stand, there is no requirement on Royal Mail to provide a six-days-a-week parcels service in the Postal Services Act 2000, passed by the previous Government, or in the licence issued by Postcomm. Yet Royal Mail provides a six-days-a-week parcel service. Why, if it is not required under legislation, would Royal Mail provide a six-day service?

The answer is simple and goes to the heart of many of our debates in Committee. Opposition Members want to do everything by regulation, but Government Members have said that commercial, common-sense competitive pressures will make Royal Mail provide for the needs of consumers, if that is what consumers want. Royal Mail provides a six-days-a-week parcel service, over and above what is required, because it makes commercial sense to do so. That is the best incentive for any business.

The Government are committed to reducing regulatory burdens. We do not wish to impose regulation when not necessary. It is vital that businesses are able to operate free of the spectre of excessive bureaucracy that serves no purpose. If, as predicted, that part of the market continues to grow and become ever more competitive, a six-days-a-week parcel service from Royal Mail is likely to become even more attractive to customers. A combination of customer demand and an effective market should ensure that consumers still have a six-days-a-week service for packets and parcels. There is, therefore, no need to require Royal Mail to provide six days a week something that it would do anyway.

In short, the amendments are unnecessary, as the outcome they seek already happens for commercial reasons. Interestingly, we had a press release last week from Royal Mail, in which it unveils the fact that not only will it keep to its normal six-days-a-week delivery of parcels and packets, but in order to assist in the run-up to Christmas, it will extend that. That is an example of Royal Mail gradually beginning to listen to consumers and consumer pressures—I give it credit for that—which means that it will have extra delivery rounds and will extend the opening hours of delivery offices for the two weeks beginning 13 December, increasing convenience for customers who need to pick up packets and parcels. Royal Mail is improving its service in response to the needs of consumers.

To be helpful, I remind the Committee that the last recommended posting dates before Christmas are Saturday 18 December for second class items, Tuesday 21 December for first class mail and packets and Thursday 23 December for special delivery. I always like to be of service.

I would like to continue the debate, especially in respect of packets and parcels in Scotland, but in the absence of the hon. Member for Angus I cannot address the points that I think he would have made. He might wish to return on Report, and we could have the debate then. I do not wish to detain the Committee when we have not heard his arguments, and I urge hon. Members not to press the amendments that we have discussed.

Nia Griffith (Labour, Llanelli)

I appreciate what the Minister has said, and I appreciate that Royal Mail can decide to do good. However, it could also decide to do otherwise, which is why there is a regulator with the strongest possible framework. I therefore wish to press—

Edward Davey (Liberal Democrat, Kingston and Surbiton)

Before the hon. Lady presses the amendment to a vote, I wish to apologise for not naming the group of amendments. Given her references, I ought to name them the hippo amendments.

Nia Griffith (Labour, Llanelli)

My hon. Friend the Member for Telford, whose constituency is flat compared with Wales, talks from a sedentary position about pushing a hippo.

I wish to press amendment 56 to a vote, because it strengthens the regulatory framework and is therefore highly desirable.