Postal Services Review Finds No Benefits To Customers

The independent review of the UK postal sector commissioned by the government. Has found "no significant benefits for either households or small businesses", and warns there was now a threat to the Royal Mail's financial stability, and that this in turn posed a "substantial threat" to the universal service - the collection and delivery to all UK addresses.

Today’s published findings by the review body summarizes evidence submitted under the first two terms of reference and gives the panel's initial response. Looks at the market, the impact of liberalisation and future challenges for Royal Mail. Invites further evidence, deadline is 19 May 2008.

The reports conclusion states:

“There is now a substantial threat to Royal Mail’s financial stability and, therefore, the universal service. We have come to the conclusion, based on evidence submitted so far, that the status quo is not tenable. It will not deliver our shared vision for the postal sector.

There is a strong case for action. The policies needed to establish a sustainable
future will be the focus of our report later this year. As we see rapid changes in
the way people communicate, the way in which the postal sector is regulated will
also need to change. And we need to establish how best to create the incentives
for Royal Mail to modernise its operation, providing a stable, financial future.
Most important of all, policies must provide a high standard of service for consumers.”

The Royal Mail's 350-year monopoly ended at the start of 2006, when other licensed operators were given the right to collect and deliver mail. Following on from that, the Government announced a review of the postal services sector on 17 December 2007. The review’s terms of reference are:

* to assess the impacts to date of liberalisation of the UK postal services market, including on the Royal Mail, alternative carriers and consumers;

* to explore trends in future market development and the likely impact of these on Royal Mail, alternative carriers and consumers; and
* to consider how to maintain the universal service obligation in the light of trends and market developments identified.

Both the CWU and Postcomm submitted evidence to the review body.

Commenting on today’s report, the CWU HQ website says:

The Communication Workers Union has welcomed the announcement by the government review team that "liberalisation of the UK postal service has produced no significant benefit for either households or small business." This statement underlines what all industry experts, including the CWU, have already said.

CWU deputy general secretary Dave Ward said: 

"This report is just an analysis of the problem, but the key now for the review team and for the government is to finally get the policy on Royal Mail right.
 
Currently, the policy and funding of Royal Mail makes its future untenable and damages the service to customers, the terms and conditions of workers in the industry and the future of the universal service. This means that Royal Mail is preoccupied with managing decline rather than meeting customers’ requirements."

The CWU has submitted a report to the government review team today, reiterating that a solution must be found that gives the company a more sound financial footing, a less obtrusive regulatory frame work and clearer direction from the government on the company’s social obligations.

The public wants an innovative, publicly owned postal service that provides customers with the service that they want.

Postcom have also welcomed the initial findings in the report and issued this statement:

"Postcomm, the independent regulator for postal services, today welcomed the emerging views of the independent review panel on the UK postal services market.
Postcomm chairman, Nigel Stapleton said: “We will be considering the emerging views of the panel and will use them to inform our second submission.” 

Postcomm’s first submission highlighted the positive impact for customers since the addressed letters market was opened fully to competition in January 2006. Since then:
* larger customers have enjoyed lower prices and increased innovation;
* residential mail users have experienced record levels of service quality from Royal Mail; and
* smaller businesses and public sector customers are now beginning to reap the benefits of choice.

Postcomm believes the future health of Royal Mail, the universal service, and the addressed letters market are inextricably linked. Decisions about fundamental reform must be taken swiftly if Royal Mail is to lead a healthier mail market and provide a strong universal service."

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