Postal Services Bill EXPLANATORY NOTES

These notes refer to the Postal Services Bill
as brought from the House of Commons on 19th April 2000 [HL Bill 57]

Postal Services Bill
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EXPLANATORY NOTES
INTRODUCTION
1. These explanatory notes relate to the Postal Services Bill as brought from the House of Commons on 19th April 2000. They have been prepared by the Department of Trade and Industry in order to assist the reader of the Bill and help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament. The notes comprise a summary of the Bill, an explanation of its background and a clause by clause commentary.

2. The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.

SUMMARY
3. The Postal Services Bill provides for the Post Office to be converted from a statutory corporation to a public limited company formed and registered under the Companies Act 1985, with ownership remaining with the Crown.

4. The Bill introduces a new system of licensing and regulation for postal services operators/providers operating in the area of the market currently reserved largely as a monopoly for the Post Office. This is called the reserved (or licensed) area. The Bill gives the independent regulator, the new Postal Services Commission (the Commission), new duties and powers to protect the interests of users of postal services. In particular, it enshrines the universal service obligation in primary legislation and makes it the duty of the Commission to ensure the delivery of this universal service at a uniform tariff. Subject to this duty, the Commission is required to further the interests of users, wherever appropriate by the promotion of greater competition in postal markets. The Commission will be able to promote competition through recommending changes to the scope of the reserved area and by permitting licensed competition within the reserved area. The Commission will also have responsibility for setting quality standards and regulating prices.

5. Consumers are given greater protection through replacing the Post Office Users’ National Council with the Consumer Council for Postal Services. The creation of this body brings consumer representation in the postal services market into line with the provision for other utilities.

BACKGROUND
6. This Bill implements measures proposed in the White Paper, Post Office Reform: a world class service for the 21st century, published on 8 July 1999. The White Paper sets out the Government’s proposals to modernise the Post Office and postal services markets through a number of key reforms. The reforms are intended to:

introduce a more arm’s-length commercial relationship with Government, including the approval of a five year strategic plan within which the Post Office has greater freedom to develop new products and services; invest; price commercially; and borrow for growth investments;

create a new independent regulator, the Postal Services Commission, to promote and protect customer interests, regulate prices, and promote competition;

strengthen consumer representation through the restructuring of the Post Office Users’ National Council;

increase resources for the Post Office company, by more than doubling the proportion of post tax earnings which the Post Office company can use for investment;

convert the Post Office to a plc to underline the commercialisation of the business;

protect the universal service obligation and uniform tariff;

maintain a commitment to a nationwide network of post offices with the Government for the first time setting minimum criteria for access to counters’ services.

7. A number of these measures have been implemented already, through administrative action and the Postal Services Regulations 1999 (SI 1999/2107). These include givi