Postal Services and Competition (Hansard, 17 December 2002)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the European Postal Services Directive requires that the level of services that may be reserved will reduce to 100 grams in 2003 and to 50 grams in 2006, leaving the final step to a decision in 2006. Postcomm also has a primary duty under the Postal Services Act 2000 to ensure the provision of a universal postal service and, subject to that duty, to further the interests of users by promoting competition. In line with those obligations, and after consultation, Postcomm has published its market opening strategy.

§ Lord Hoyle
My Lords, will my noble friend comment on the fears expressed by Royal Mail about the Postcomm proposals; namely, that even if there is an increase in postal charges for letters there will still be a black hole of £463 million in its finances? Is that not putting at risk part of our heritage; that is, the delivery of a letter anywhere in the UK at the same price?

§ Lord Sainsbury of Turville
My Lords, as everyone knows, Postcomm was established by the Postal Services Act 2000 as an independent regulator to make decisions on price increases. I remind my noble friend that its primary duty is to ensure the provision of a universal postal service and, subject to that duty, to further the interests of consumers by promoting competition. Having taken the Government out of decisions about price increases, it makes no sense for the Government to second guess Postcomm or to comment on the underlying cost structure of the decisions that it takes.

§ Lord Clarke of Hampstead
My Lords, does my noble friend agree that, although it is not good for the Government to second guess something they have given to someone else, they have a responsibility in relation to pricing policies directed by Postcomm? Will he take from me the assurance that a universal postal service cannot succeed unless Postcomm is brought back under control? Given that Postcomm commissioners are meeting on Thursday, will he take the opportunity to remind them of their responsibility to the Royal Mail, the public and staff? Instead, they give the impression to all and sundry that their only interest is to open the Post Office business to predators who are waiting like vultures to get into the Post Office network? I should declare my interest as a former postman.

§ Lord Sainsbury of Turville
My Lords, I do not think that I do agree. The obligation to consider price increases lies firmly with Postcomm. I remind the House again that its primary duty is to ensure the viability of the universal postal service. Its market opening proposals are entirely in line with that obligation.

§ Baroness Miller of Hendon
My Lords, the Minister has repeated once or twice his remark about the primary duty of Postcomm and has referred to the universal postal service. Does he not agree that the Post Office may disappear altogether, given that there is no longer a level playing field? That would not create the competition that the Government wanted when they introduced the relevant legislation. The noble Lord, Lord Clarke, referred to the competitors who are waiting to come in as "predators". I am not saying that; I would call them "competitors", because we all want competition so long as it does not knock out the Post Office. Will international competitors offer the same opportunity to the Post Office to operate in their countries. if it should so wish?

§ Lord Sainsbury of Turville
My Lords, I shall deal directly with that question because it is of interest. Three licences have been given so far: to TPG, which is the Netherlands post office, to Deutsche Post, which is the German one, and to Hayes Commercial Services Ltd. The Netherlands and Germany both have liberalised markets for postal services. In this case, as one would expect, international competition is coming not from markets that have been protected but ones that have been liberalised. Both the Netherlands and Germany have considerable liberalisation but, interestingly, in both cases the main Post Office has retained a very large share of the market.

§ Lord Newby
My Lords, does the Minister accept that the increased revenue that will accrue to the Post Office from the penny increase in stamp prices is being undermined by all the changes proposed by Postcomm? Does he agree with Alan Leighton, chairman of the Royal Mail, who described the package as the regulator giving with one hand and grabbing even more back with the other? That is regulation gone mad.

§ Lord Sainsbury of Turville
My Lords, I simply reiterate that it is the job of Postcomm to make those decisions. We have a duty to open up and liberalise our markets. It is Postcomm's job to decide what price increases are reasonable, and it has done so based on the facts and after lengthy consultation.

§ Lord Tebbit
My Lords, does the Minister agree that, in an integrated Europe, there must be a case to be made for a universal postal system in the European Union? What is the Government's view on that?

§ Lord Sainsbury of Turville
My Lords, it is always interesting to see the noble Lord, Lord Tebbit, as ever, promoting the cause of an integrated Europe. No doubt when the federal government, about which he is so concerned, takes place. that will be one of the first things on their agenda. The Government fully support competition between national postal organisations, which we believe will be healthy for the consumer.

§ Lord Hoyle
My Lords, will my noble friend take back the comments made in this House that the Postcomm proposals appear to put at risk the universal postal service? That is a strong fear expressed on all sides of the House.

§ Lord Sainsbury of Turville
My Lords, Postcomm was established by the Postal Services Act 2000. It is an independent regulator, has statutory duties and, like other regulators, can be held to account by Parliament via a Select Committee. If it is felt that it is not discharging its duties, that is the action that should be taken.

Lord Berkeley
My Lords, will my noble friend tell the House whether the proportion of first-class letters 535 being delivered the next day is going up or down? In my experience, it is getting worse and worse. I am not sure how the new liberalisation will help that.

§ Lord Sainsbury of Turville
My Lords, one of the usual things that follows from more competition is an increase in the quality of service. I shall write to my noble friend with the most recent figures.