ANTI PRIVATISATION : BRIEFING NOTE ON POSTAL SERVICES BILL

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Letter to Branches

No. 926/10 Ref: 24209 Date: 22nd October 2010


TO: ALL BRANCHES WITH POSTAL MEMBERS


Dear Colleague

ANTI PRIVATISATION CAMPAIGN – BRIEFING NOTE ON POSTAL SERVICES BILL

In addition to specific campaign initiatives, we are also undertaking detailed work to assess the full implications of the Government’s Bill.

We have attached an initial briefing note explaining the structure and main provisions of the Bill.

The Union are developing a strategy which will allow us the opportunity, through the Parliamentary process, to submit amendments to all aspects of the Bill.

We will also continue to engage the Government in direct dialogue. This will enable detailed discussions on how the Government’s Bill affects our members’ future pensions arrangements.

Yours sincerely


Billy Hayes Dave Ward
General Secretary Deputy General Secretary (P)




POSTAL SERVICE BILL 2010: BRIEFING NOTE


• The first reading of the Postal Services Bill was given in the House of Commons on 13 October 2010.

• The Bill consists of the five parts containing the following key points.


Part 1: Restructuring of Royal Mail


Ownership of Royal Mail

• The Bill removes a restriction on the ownership of Royal Mail and allows for a future sale, though does not specify the form a sale would take. The Secretary of State would have to report a future decision on the form of sale to Parliament.

• Arrangements for an employee share scheme of at least 10% must be in place before the rest of the company is sold.

• The legislation regarding an employee share scheme allows for shares to be held either by or for the benefit of employees of the company. It therefore allows for the shares to be held in a trust or to be transferred directly to individual employees.

Post Office

• The Bill restricts the sale of the Post Office. Shares must either remain with the state or be transferred as part of the establishment of the Post Office as a mutual.

• Such a mutual would be expected to exist for the public benefit by promoting the services provided by the Post Office. Its members would have to be people with an interest in the public using Post Offices. This would include employees but could also include the Crown and customers.

• The Secretary of State will make the decision as to whether the Post Office is established as a mutual and must report on the issue to Parliament.

• The Post Office will be required to provide a report to the Secretary of State on the network each year.

Transfers

• Employees affected by the reorganisation are to be covered by TUPE regulations.






Part 2: Royal Mail Pension Plan

• The Secretary of State is given the power to remove the historic pension liabilities from Royal Mail and transfer them to the state.

• Royal Mail and Post Office Ltd will bear the cost of pension obligations going forward. They will be responsible for decisions on future entitlements of employees.

• The Bill allows for the division of the RMPP into sections and the allocation of assets and liabilities between those sections.

• The Secretary of State must ensure that the pension provision is as good immediately after the transfer as it was prior to transfer. Of concern to the CWU will be the extent to which pension provision is protected in the future.

• Following the transfer, the ratio of assets to liabilities left in the scheme with Royal Mail must be at least as good as it was prior to transfer.

• “Qualifying accrued rights” for transfer exclude money purchase benefits , but include other benefits related to AVCs (such as purchased added years).

• “Qualifying accrued rights” for members still in service will be calculated with reference to service up to the qualifying time and to their salary at that time, in accordance to the rules of the RMPP. If further rights accrue in relation to service after the qualifying period (eg where a pension is linked to final salary) then responsibility for these further rights will remain with RMPP.


Part 3: Regulation of Postal Services

• Responsibility for the regulation of postal services will pass from Postcomm to Ofcom.

• The licensing regime will be removed allowing for private postal operators to handle mail without a licence. Instead they will be covered by regulatory conditions set by Ofcom.

• Ofcom’s primary duty will be to secure the provision of the provision of a universal postal service.

• The USO retains its conditions of collection and delivery of letters 6 days a week and packets 5 days a week. It must also remain at an affordable and uniform tariff. It must include a registered items service, an insured items service, services to the blind and partially sighted and the free conveyance of legislative petitions and addresses.





• The Bill purports to safeguard the USO by introducing the following ‘safeguards’:

o No proposal to reduce the USO until and dependent upon the outcome of Ofcom’s review of user needs;
o Any to amend the minimum requirements would be subject to the affirmative resolution procedure (a Statutory Instrument requiring a vote in both Houses);
o Any reduction in the USO cannot change its universal nature: service and price must remain the same across the UK.

• Ofcom can review the items covered by the universal service and may make recommendations for change to the Secretary of State who can then institute such change.

• Ofcom can designate more that one postal operator as a universal service provider.

• Ofcom can impose a USP condition on a universal service provider requiring the provider to provide either all or part of the universal service over the whole UK or in a specified area. It can also ask a provider to supply access points only.

• Ofcom must ensure that: prices are affordable; they take account of the cost of providing the service; and they provide an incentive to provide the service efficiently.

• Any designated USP will be required to publish quality of service information.

• Ofcom can impose a USP access condition on a universal service provider.

• Ofcom can impose a USP accounting condition on a provider to, for example, ensure it maintains separate accounts for USO and non-USO products.

Review of USO costs

• Ofcom can review the extent of the financial burden of reviewing the USO.

• If there is found to be a financial burden for the USO provider, Ofcom may recommend a course of action which can consist of:

o Carrying out a review of minimum requirements;
o Requiring contributions from other postal operators;
o Or, allowing for procurement of all or part of the USO.

• The Secretary of State will make any final decision on the course of action to be pursued.

• Unless directed by the Secretary of State, Ofcom cannot undertake a review of the financial burden of providing the USO for three years.

Access

• Ofcom can impose an access condition on any postal operator requiring it to allow access to its infrastructure and to maintain separate accounts.

Consumer protection

• Ofcom can impose consumer protection conditions on every postal operator and require them to: assume liability for loss of damage; establish and maintain procedures, standards and policies; and make payments to the National Consumer Council or the Office of Fair Trading.


Part 4: Special Administration Regime

• The Bill allows for a “postal administration order” to be made by court to ensure the continued provision of a universal postal service, should a privately-owned Royal Mail, or an alternative USO provider, be at risk of insolvency.

• Only the Secretary of State (or Ofcom with his or her permission) can make an application.

• The Secretary of State can make grants or loans to a universal service provider in “postal administration”.

• Part 4 must be reviewed within 5 years of the provisions coming in to force.


Part 5: General

• The fifth part of the bill introduces a range of minor general conditions.





CWU Research
18 October 2010