MARCH 2005 GOVERNMENT
RESPONSE TO THE "INVEST IN QUALITY" POSTCARD CAMPAIGN
Issued by the DTI Shareholder
Executive - Royal Mail & Postal Services Team
The Government remains confident that the framework put in place by the Postal
Services Act 2000 is the right one for postal services.
The Royal Mail Group has been given greater commercial freedom, as the management and unions themselves requested, and Government has assumed an arm’s length role as a shareholder in a public limited company.
Subject to agreeing its strategic plan with us, the Board can structure the business as it decides best to meet the challenges of market development and changing customer needs.
The Government has established an independent regulator, Postcomm, and a strengthened consumer body, Postwatch, to oversee industry and market reforms.
Reforms will lead to a stronger, better managed company and will help ensure that the postal market is competitive, more efficient and responsive to the changing needs of customers.
At the beginning of 2002, Royal Mail was losing over £1.2 million each day. This could not be allowed to continue and the company has had to regain control of its costs and become more efficient. A strong management team has been put in place to bring about the changes that are required to make the company more efficient and competitive and to return it to profitability.
During the first half of the 2004/05 Financial Year Royal Mail made a £217 million profit on its operations and delivered a significant improvement in customer service. The company is now making more than £1 million a day on its operations. Nobody should underestimate the scale of the problems that the company was facing and the return to profitability is a real achievement. Royal Mail must now build on the work started under the renewal plan and continue to improve its efficiency and quality of service to ensure its future success in a competitive market.
Since April/May 2004, when significant changes in Royal Mail's operations were implemented, Royal Mail's quality of service has been improving and 1st class mail is running just below target. These are some of the best results produced by Royal Mail in almost a decade. Maintaining and improving on this performance is the Royal Mail Board's top priority.
Privatisation of the Royal Mail is not on the Government's agenda. There are no plans to dispose of the Government’s shareholding in the Royal Mail.
The Government remains committed to opening up the UK postal services market to competition and has charged Postcomm with the task.
Postcomm’s announcement to advance full market opening of the UK postal sector from 1 April 2007 to 1 January 2006 was taken after full public consultation and does not affect its primary statutory duty to ensure the provision of a universal postal service. Postcomm’s decision document ‘Giving customers a choice: a fully open postal services market’ can be viewed on its website.
The decision is concordant with the provisions of the EU Postal Services Directives, which allow Member States to fully open their postal markets and with Government policy towards Royal Mail, which aims to establish a strong and profitable company, responsive to customer needs, and providing innovative services in a fair and competitive market.
Postcomm Website
http://www.postcomm.gov.uk/Index.html