RECOVERY OF COSTS OF THE COUNCIL ETC. (Hansard, 18 April 2000)

§ Mr. Alan Johnson
I beg to move, That the clause be read a Second time.

§ Mr. Deputy Speaker (Mr. Michael J. Martin)
With this it will be convenient to discuss Government amendments Nos. 35, 45 and 48.

§ Mr. Johnson
We turn to more prosaic matters. New clause 2 will enable the Secretary of State to require the Postal Services Commission to include a condition in any licence that part of the annual fee will be for the expenses of the Consumer Council for Postal Services—the replacement for the Post Office Users National Council—or the start-up costs in relation to that body. New clause 2 will also enable the Secretary of State to direct the commission on any matter that falls to be determined under such a licence condition.
It is now judged as proper that those being regulated should pay for all aspects of regulation, including the costs of the consumer body. It would not be sensible to give the consumer council its own licensing and 898 fee-raising powers. It is more efficient for a single body to collect all the necessary funds and to pay over the money required for the consumer council.
The establishment of the council will cause the Secretary of State to incur start-up costs above those normally associated with supervising the consumer council—which are budgeted for in the normal way—and it is appropriate that some, at least, of these should be recovered.
Government amendments Nos. 35, 45 and 48 are technical amendments that provide that the Postal Services Commission will have its own vote, like any other non-ministerial Government department. That will put it on a similar footing with the other utility regulators, and the amendments will, I hope, address the concerns raised in Committee by the hon. Member for Rutland and Melton (Mr. Duncan)—to whom we send our best wishes for a speedy recovery, although perhaps not speedy enough to participate in this Report stage—with regard to the provisions in schedule 1(12) for the Secretary of State to pay the expenses of the commission.
Government amendment No. 35 will delete clause 43(6), which would be otiose in the wake of Government amendment No. 45. There is no need for the provision for the commission to recover expenses from the Secretary of State, because the commission will, as a non-ministerial Government department, have its own vote. Funding of activities and any transfers between departments will be dealt with as with any other Government expenditure. Government amendment No. 45 provides that there shall be paid out of money provided by Parliament any expenditure incurred by the commission in consequence of this legislation. Government amendment No. 48 will delete schedule 1(12), because those provisions are no longer required, given the proposal effected through Government amendment No. 45.
Before I commend these technical amendments to the House, it might be helpful if I remind right hon. and hon. Members of our intention that the cost of operating a licensing regime, and the regulation of that regime, will be met through licence fees. Any expenses of the commission that were not related to those activities will need to be covered through moneys voted by Parliament.

§ Mr. Page
I start by thanking my hon. Friend the Member for West Dorset (Mr. Letwin) for his guest appearance at the Dispatch Box, as I was not allowed to wind up the previous debate for the Opposition. The Minister, if I may say so, sounds dreadful. It is obvious that the curse of the Postal Services Bill has struck him, although not as severely as it has struck my hon. Friend the Member for Rutland and Melton (Mr. Duncan). I hope that the Minister is restored to health soon and is a little more sympathetic to some of our amendments when they re-emerge in the other place.
I am not able to welcome new clause 2 with even the cautious optimism that I expressed on new clause 1. The Bill already makes provision in clauses 12 and 13 for those applying for licences to the commission to be subject to paying a reasonable fee upon application and to pay further sums when a licence is granted or during its operation, or indeed both. Unfortunately, it is still not clear what level of payments may be anticipated under those arrangements. Now licence holders face the prospect of paying towards the costs incurred by the Consumer Council for Postal Services or the expenses of the Secretary of State in establishing the council.
899 The truth is that the costs of the council will eventually be borne by consumers of postal services, but the Government prefer to disguise the impact of their regulatory requirements behind the payments to be made by licence holders. In the short term, it will be the poor old Royal Mail that will have to divvy up and provide the money to underpin financially the whole shooting match.
As the Minister has said, new clause 2 provides that the Secretary of State may give direction to the commission as to the inclusion of conditions in a licence requiring the payment of sums relating to the expenses of the council or incurred in setting up the council. Once again, we are being asked for a blank cheque. It might not be all that big a blank cheque, but we have already been asked to approve the money resolution today, and we have no idea what sums of money will be involved.
Neither do we know how much money will be involved under new clause 1. My hon. Friends pointed out on several occasions during the debate on that clause, which took some four hours—an indication of the level of concern and worry that they were feeling—that it was open ended and they would like some clue about the likely liabilities. However, we had no pointers from the Government. The same applies here, although at a lower level, and when we tried to get some limits set for both the commission and the council in Committee, we were brutally beaten down by the massed ranks of the Government.
What safeguards will exist to limit expenditure? Will we see a similar situation to that of the Office of Gas and Electricity Markets, which was formed following the merger of the Office of Gas Supply and the Office of Electricity Regulation? It bears repetition that Ofgem's budget has leaped from the £29.8 million spent by the predecessor authorities to an expected expenditure this year of £64.5 million, which is an increase of more than 100 per cent. As we keep saying, the extra expenditure will eventually feed its way through to the consumer—and it could turn out to be merely for extra bureaucracy. Once again, the Secretary of State will pull the strings and, as the costs work through the system, the extra money will have to found by the consumer.

§ Mr. Johnson
I thank the hon. Member for South-West Hertfordshire (Mr. Page) for his sympathy for my voice: if it does not last out, I shall complete this speech in semaphore.
In Committee, the hon. Gentleman made great play about the level of payments. The point that I made then, I shall repeat now. Yes, it will be what he called "poor old Royal Mail" or the Post Office that will have to pay the cost of the regulator and of the CCPS. That is because the Post Office is likely to be—in fact, it is inconceivable that it will not be—the only licence holder.
The principle that the regulated pay for the regulation is well established. Indeed, it was established in the Electricity Act 1989, the Water Industries Act 1991 and the Gas Act 1986, as amended by the Gas Act 1995, all of which legislation was passed under the previous Government. I ask the hon. Gentleman to bear in mind that, unlike all those other industries, the Post Office will operate in a privileged position because it will have a limited monopoly. The regulator will not regulate the 900 whole of the industry, as in telecommunications, gas and water, but only that part of the postal industry related to the universal service obligation and the reserved areas. It is right that those costs should be paid by the Post Office or any other licensed operator in the future.
I shall try to be helpful on costs. I have not had time to consult the Hansard reports of the Committee stage, but I did give some figures under the considerable hostile pressure of the Opposition. I have said that the cost of the commission is expected to be no more than £5 million and the cost of the consumer council is expected to be around £3 million. That is an increase on the cost of the present consumer body, the Post Office Users National Council, which costs about £1 million a year. However, although POUNC does a fine job on a shoestring, the new Consumer Council for Postal Services will invigorate the approach to consumer issues.
The arrangements are no different from those in place for the other regulatory bodies. We have given examples of the costs, and I remind the hon. Gentleman that clause 60 requires that both the commission and the council publish a forward work plan every year. That plan will include details of their projected costs, thus aiding transparency and scrutiny.
The projected costs are very modest, and it is right that the regulated should pay for regulation. I hope that the House will accept new clause 2 and the associated technical amendments.