Schedule 9
Postal Services Bill
2:00 pm

Nia Griffith (Llanelli, Labour)

I beg to move amendment 67, page 99, line 18 [Schedule 9], leave out ‘Except as mentioned below,’.

Jimmy Hood (Lanark and Hamilton East, Labour)

With this it will be convenient to discuss amendment 68, page 99 [Schedule 9], leave out lines 24 to 29.

Nia Griffith (Llanelli, Labour)

Schedule 9, which is introduced by clause 64, contains transitional provisions in relation to the coming into force of part 3 of the Bill. Amendment 67 would delete from paragraph 4(2) of the schedule the words “Except as mentioned below”. Amendment 68 would delete the exception mentioned in paragraph 4(3), which states:

“Sub-paragraph (2) does not apply to consumer protection conditions (and, accordingly, references elsewhere in this Schedule to initial conditions do not include consumer protection conditions).”

Sub-paragraph (2) specifies that the initial regulatory conditions that apply to postal operators must be substantially similar to the licence conditions that applied before the Bill’s provisions came into force, except for a specific exemption in relation to consumer protection conditions and a caveat allowing Ofcom to exclude any licence conditions that it determines are not necessary.

The Bill should be amended to remove this exemption, as it heightens concerns that consumers’ interests will not be given sufficient consideration by postal operators. Indeed, I find it extraordinary that an exemption is being made in respect of consumer protection conditions. I am sure that the Minister will be familiar with European legislation on the matter. Under article 19 of EU Directive 2008/6/EC, member states should ensure that transparent, simple and inexpensive procedures are made available by all postal service providers for dealing with postal service user complaints. In the UK, that is covered by the Postal Services (Consumer Complaints Handling Standards) Regulations 2008 and the Postal Services Regulated Providers (Redress Scheme) Order 2008.

We would have expected the Government to ensure similar protection for the consumer to that which is currently available and that, at the very least, they would need to comply with the EU directive. We are therefore surprised to find that although everything else is supposed to reflect current practice, consumer protection conditions have been singled out not to enjoy any of that protection. I should be grateful if the Minister would tell us the reason for this specific exemption. The Under-Secretary of State for Business, Innovation and Skills seemed to acknowledge earlier the importance of consumer protection conditions, so it is particularly odd that those conditions are not going to be quasi-copied or reflected in the new framework.

Edward Vaizey (Parliamentary Under Secretary of State (Culture, Communications and Creative Industries), Business, Innovation and Skills; Wantage, Conservative)

I am grateful to the hon. Lady for her remarks. They give me an opportunity to set her mind at rest and to make it absolutely clear that we take the issue of consumer protection extremely seriously. The Bill will actually extend consumer protection into areas where hitherto it may not have been.

Schedule 9, as the hon. Lady indicated, makes transitional provisions in relation to the regulatory part of the Bill. The objective of the schedule is to ensure a smooth transition between the current and the new regime to provide as much certainty to the market as possible and to enable Ofcom to carry out certain functions during the transitional period between Royal Assent and when Ofcom takes full responsibility for postal regulation on the appointed day. We expect the transitional period to last approximately three months. As such, schedule 9 enables Ofcom to start work on developing a new regulatory regime as soon as possible following Royal Assent.

During the transitional period, Postcomm will continue to be responsible for regulating the sector. However, from Royal Assent, Ofcom will be able to exercise some of its powers under the new regime in advance of the substantive provisions in part 3 coming into force. Those powers will allow Ofcom to work during the transitional period on the forthcoming regulatory regime, with a view to making an order of designation, or imposing conditions as soon as is practical after the rest of part 3 comes into force. So far, none of that is really controversial. It is plain common sense to allow Ofcom to get on with preparing for its new role.

During the transitional period, Ofcom must determine the regulatory initial conditions that will come into force on the appointed day. They will apply until they are modified, if at all, to all postal operators once part 3 comes fully into force and we move from a licensing regime to a general authorisation regime. Those initial conditions will apply to postal operators who have, or would need to have, a licence under the current regime and would include, for example, price control and access provisions. Importantly, as is clear from the Bill, initial conditions must have substantially the same effect as current licence conditions, except when it appears unnecessary for Ofcom to maintain those conditions. As such, initial conditions can apply only to those who had licences under the old regime, or who would have required them.

That brings me to the amendments that the hon. Lady has tabled because, quite laudably, she wants to ensure that consumers are adequately protected during the transitional regime. However, perversely, I would argue that the amendments could have, to a certain extent, the opposite effect. They would ensure that consumer protection conditions are included as initial conditions. However, the fact that under the Bill they are not included under initial conditions does not mean that consumers are unprotected. In terms of consumer protection, the current licence regime requires that licence operators have a complaint handling system in place and that they are members of an approved redress scheme. That protection stems from the Consumers, Estate Agents and Redress Act 2007, which was passed by the previous Government.

The first thing to note is that the initial conditions ensure that the current licence conditions are captured and maintained beyond the transition, so at present,  operators, such as couriers, who do not currently need to hold a licence, are actually excluded from having consumer protection provisions in place. During the transitional period between Royal Assent and the appointed day when Ofcom assumes regulatory responsibility, the regulatory regime, including consumer protection, will remain the same. As I have already said, during the transitional period Ofcom will determine the initial conditions that will come into force on the appointed day.

There is good reason why consumer protection conditions are excluded from the initial conditions. Initial conditions are used to replicate existing licence conditions. They cannot be used to introduce new regulations. I will try to set out briefly why this matters for consumer protection conditions. The European postal services directive requires all postal operators, not just those who would have been captured under the old licence regime, to have a simple complaints handling system. Because initial conditions have to be substantially the same as existing licence conditions, it would not be possible to extend this requirement to all postal operators using initial conditions. So, instead of using initial conditions, Ofcom will use its powers in part 3 to impose the consumer protection conditions in clauses 49 and 50, which were debated this morning, to implement this requirement. These conditions will be applied from the day Ofcom takes over regulatory responsibility.

I hope that reassures the hon. Lady and other hon. Members that there will not be a gap in consumer protection. Furthermore, the Bill will ensure broader consumer protections than the amendment would have provided. I am sure that the Committee would welcome that outcome. The amendments would have another potential impact: Ofcom would have to replicate every single existing licence condition as an initial condition, whether it thought that necessary or not. The Committee has already spent a great deal of time debating “may”, “must” and “will” and I do not intend to spend any more time on that issue. In this case, it is clearly totally inappropriate to force Ofcom to impose initial conditions on operators that it considers to be unnecessary.

Let me give an example. Royal Mail’s current licence has a condition that relates to competition investigations. This will not be necessary in future because Ofcom has concurrent competition powers. It would be regulation for regulation’s sake and would serve no purpose other than to maintain unnecessary regulation. Given what I have said about the consumer protection conditions in the Consumers, Estate Agents and Redress Act 2007, in clauses 49 and 50 and in the EU postal services directive, to which the hon. Lady referred, I hope she will be reassured that there is a strong consumer protection regime in the Bill and that consumer protection will now extend to all operators that provide postal or postal-like services. That is surely something that all hon. Members can welcome.

Nia Griffith (Llanelli, Labour)

I do feel that my amendments would strengthen the situation. They do not contradict what the Minister said and would enhance the clause and would be in line with it. If good regulation is working now there is no reason why it should not be mentioned in more than one place or be covered in more than one  piece of legislation. Obviously, there is some overlap between the European directive and the other pieces of legislation we have mentioned. I feel very strongly that it is strange to make an exception here when the sentiment is to give consumers as much protection as possible. I therefore want to press the amendment to a vote.