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Postal Services Bill

Woman using a mobile telephone standing by post box

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The Secretary of State gave the following response to a question in the House of Lords on 1 July 2009:

‘Market conditions have made it impossible to conclude the process to identify a partner on terms that we can be confident would secure value for the taxpayer. There is therefore no prospect in current circumstances of achieving the objectives of the Postal Services Bill. When market conditions change we will return to the issue.

We remain convinced that Hooper’s combined package offers the best chance of securing the universal postal service while protecting Royal Mail pensions.’

Why legislate?

Royal Mail is part of the UK's economic and social fabric. It is the only operator that can provide the universal service at affordable prices, ensuring that 28 million homes and businesses across the country receive letters six days a week.

But the way we communicate is changing. More and more people each year are turning to digital communication to get in touch with each other, such as e-mails, text messages and broadband internet. This has put the Royal Mail and the universal postal service under threat. Every 1% decrease in the number of letters Royal Mail handles costs the company £70m in lost revenue. Last year Royal Mail handled 5.5% fewer items of post than the previous year, and the company estimates that it will handle 10% fewer letters next year. The independent Hooper review of the postal services market cited forecasts saying that if things do not change the Royal Mail will make annual losses every year until at least 2013. The numbers speak for themselves.

Government wants to put the Royal Mail back on a sustainable financial footing for the long term, so that it can continue providing the universal service. We are therefore proposing action on three fronts as a coherent package:

  1. Measures to accelerate Royal Mail’s modernisation by bringing in a partner to deliver commercial expertise and capital to the company;

  2. Steps to tackle the Royal Mail's pension deficit;

  3. Changes to the way in which the UK postal services sector is regulated to reflect the reality that post is now in competition with electronic communications services.

The Bill enables Government to implement these measures.

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