Ofcom Concludes Review Of Royal Mail Regulation

Ofcom has today (1st March 2017) issued a press release announcing it’s completion of the latest comprehensive review of Royal Mail and its delivery of the universal postal service.

The CWU has responded with a cautionary welcome to Ofcom’s review document which you can read by clicking on the link at the bottom of this page.

The salient points of the press release are detailed below and you can download the full press release by clicking on the pic. You can also download the full review document here

As the postal regulator, Ofcom secures the universal postal service. This requires Royal Mail to deliver to every address in the UK, six days a week, at a standard price, and is relied upon by millions of people and businesses.

The universal service had been under significant pressure, incurring a loss of more than £100m in 2011, as people continued to send fewer letters.

These concerns prompted Ofcom to introduce a new framework for postal regulation in 2012 to secure the universal postal service. This included greater commercial freedom for Royal Mail, alongside a safeguard cap on Second Class stamp prices to protect vulnerable consumers.

Ofcom’s review, completed today, has found that these rules and safeguards are generally working well for people and businesses who use the post.

Therefore, we have decided to retain the current framework for postal regulation – which had been due to expire in 2019 – until 2022.
Ofcom’s review has also concluded that:

  • Royal Mail’s profit margin for 2015/16 was within, but at the lower end of, the 5-10% range, which Ofcom considers likely to be consistent with a sustainable universal service.
  • Royal Mail has made efficiency improvements in recent years, but there is scope for it to go beyond those currently planned.
  • The company’s delivery performance has improved since Ofcom’s framework was put in place in 2012, but some targets are still being missed. If this continues, Royal Mail could face significant fines.
  • Consumer satisfaction with postal services, and value for money, are generally high.
  • Consumers in the UK benefit from having one of the most competitive parcels markets in the world. However, Royal Mail retains a strong position in the delivery of small, individual parcels.

Ofcom has decided not to impose new controls on Royal Mail’s wholesale or retail prices, as the company already has strong commercial incentives to improve its efficiency.

Dowload the full review document in PDF format here

See also: CWU Gives Cautious Welcome To Ofcom Review

Source: Ofcom

Posted: 1st January 2017

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