Postal Services Bill [HL] [DROPPED BILL]

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A Bill introduced by Lord Mandelson to make provision for the restructuring of the Royal Mail group and about the Royal Mail Pension Plan and to make new provision about the regulation of postal services.

The Bill would guarantee that Royal Mail remains a publicly-owned company, with further primary legislation required if its status is to change.

Postal regulator Postcomm will be abolished and its responsibilities will be transferred to Ofcom, in order to create a universal service.

A compensation fund could also be established, with Royal Mail's competitors having to pay towards maintenance of the universal service if it puts an unfair burden on the state company.

Lord Mandelson said Royal Mail "is part of the fabric of the country".

"But the future of this network is under threat as people increasingly switch to digital technology as their preferred way of communicating,"

The Secretary of State for Business, Enterprise and Regulatory Reform, Lord Mandelson, opened the second reading debate of the Postal Services Bill, on Tuesday March 10.

Lord Mandelson commented “We live in a digital age. As we send more texts and emails, we send fewer letters.”

He added “The fall in mail volumes is happening across many modern economies, but I do not accept that postal services are locked into an inevitable decline. I believe that mail is still a critical part of our social fabric, our communication infrastructure and our economy.”

Lord Mandelson said it was for this reason that he wanted to modernize the Royal Mail and make it “fit for the future.”

He said the government was committed to maintaining the universal service adding “Royal Mail is at the heart of that service. Only Royal Mail has the ability to collect and deliver letters anywhere in the country, six days a week, for a single, affordable price.”

He referred to Richard Hooper’s of the Royal Mail published last year. Lord Mandelson said “We are committed to a publicly owned Royal Mail, fully restored to good health.”

The Bill enabled the government to tackle Royal Mail’s pension deficit, Lord Mandelson argued.

Lord Mandelson added that the Bill made it clear that Post Office Limited would remain owned by the government. He added “the Bill repeals powers in the current Postal Services Act that would let the government sell part of the Post Office business.”

The Bill specifies that Royal Mail, will remain in public ownership, Lord Mandelson highlighted.

He said that Part 3 of the Bill set the standard for the universal service and would require Ofcom to ensure that the universal service is maintained.

Abolishing Postcomm and appointing Ofcom as the new regulator reflects the reality that Royal Mail faces tough competition from digital media, Lord Mandelson argued.

He added “Ofcom is better placed to carry out a full market assessment and, in light of its findings, to remove regulatory burdens where appropriate. Ofcom will have competition law powers so that it can act swiftly and effectively on evidence of anti-competitive behaviour.”

Part 1 of the Bill deals with restructuring Royal Mail Group. It ensures that Post Office Ltd must be owned in its entirety by the Crown, and that Royal Mail, the company providing the universal postal service, must be publicly owned, Lord Mandelson said.

Part 2 enables government to tackle the Royal Mail’s “ballooning pension deficit.” Lord Mandelson said “The pension scheme represents a major burden for Royal Mail in spite of recent changes made to address it. In my view, it is inconceivable that the public will accept such a “bail-out” without the government taking steps to ensure that the company has a transformed future.”

Lord Mandelson argued “This Bill enables the clear, strategic action that is necessary for Royal Mail to respond to market changes, deliver the universal service and secure a successful future.”

Opposition spokesman for business, enterprise and regulatory reform, Lord Hunt of Wirral, commented “I have always believed that a universal postal service at a uniform and affordable tariff is an essential requirement.”

He argued “the viability of the concept of the universal service obligation is increasingly in jeopardy and cannot be sustained under present policies.”

Lord Hunt added “the preservation of the universal service obligation must be at the heart of any reform.”

He added “What matters is not the label we attached to any system of ownership, management or governance; what matters is whether it delivers the necessary reforms and safeguards.

“If the universal service is to survive, Royal Mail needs to be radically transformed. The strategic partnership between Royal Mail and a private sector company with experience of transforming a major business is, I believe, necessary to provide the commercial confidence and the access to capital and corporate experience that will ensure the future both of Royal Mail and of the universal service itself.”

Lord Hunt argued that the Bill contained no provision to allow employees to participate in the part privatisation of Royal Mail.

On Part 2 of the Bill, Lord Hunt argued “Nothing underlines the failure of Labour’s management of Royal Mail for the past 12 years more clearly than the provisions in Part 2.”

He said Part 2 would burden the taxpayer with billions of pounds of unfunded liabilities. this Government’s refusal to address the problems of the Royal Mail in a timely He said the Conservative Party regretfully agreed with Hooper’s conclusions that when a successful private partnership is found for the Royal Mail, the government should step in to prevent the pension scheme going under.

He argued that Ofcom needed some flexibility to respond effectively to the market review, but added “we should not accept the extension of regulation into an entirely new sector without a full debate about this market and the supposed consumer detriment that regulation is supposed to address.”

Lord Hunt concluded “the Bill is welcome so far as it goes.” He added “our support in principle at this stage should not in any way be interpreted as a carte blanche for ministers.”

Liberal Democrat spokesman for business, enterprise and regulatory reform, Lord Razzall, argued that the government had “failed to provide a regulatory system that protected the Royal Mail from unfair competition after removing its monopoly on delivering letters and parcels.”

Lord Razzall said the Bill was a “once-in-a-lifetime opportunity to get the structure of the Royal Mail and the Post Office correct.”

He argued that the Bill must “guarantee the Post Office’s future as a public sector, public service organisation.” He called for the separation from the Royal Mail and an independent board of directors and direct access to finance.

He added “The Post Office must be given the power to enter into business agreements with other businesses in the mail sector.”

Lord Razzall said the Bill must deliver the “substantial investment which the Post Office network desperately needs to give it a sustainable future.”

He also said the Bill must guarantee a full six-day-a-week universal service obligation.

The Bill must ensure a competitive future for the Royal Mail and not leave the company at a disadvantage to its rivals, Lord Razzall argued.

He said that the Royal Mail should have the ability to borrow on capital markets, a point alluded to by the noble Lord, Lord Clarke, but not with the detail that he intended.

He added “We feel that a major way to transform the poor industrial relations that have dogged the Royal Mail would be to provide a fair ownership structure properly reflecting the interests of all the shareholders.”

Progress

House of Lords

First reading: February 25 2009 [HL Bill 24]

Second reading: March 10 2009

Committee of the Whole House:

• 1st sitting: March 24 2009
• 2nd sitting: March 31 2009
• 3rd sitting: April 20 2009
• 4th sitting: April 22 2009
• 5th sitting: April 27 2009
• Bill as amended in committee: [HL Bill 41]

Report stage:

• 1st day: May 11 2009
• Bill as amended on report: [HL Bill 44]

Third reading: May 20 2009

House of Commons

First reading: May 21 2009 [HC Bill 100]

Second reading: no date