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Hooper Review update

Business Secretary Vince Cable announced on the 24 June 2010 that Richard Hooper CBE would be updating his December 2008 Report ('Modernise or Decline') on the maintenance of the universal postal service in the UK, following the Government's announcement of its intention to legislate in the Queen's Speech in May 2010.

Richard Hooper invited those who contributed to the original Review to send in their further views in light of developments since the original report was published and he specifically asked:

Question 1

To what extent, from today's vantage point in the Summer of 2010, does the 2008 Report's diagnosis of the problems facing the Royal Mail and the universal postal service (pages 30-60 of that report) need updating in terms of the current state of the UK postal market and the issues being faced by Royal Mail as the universal service provider?

Question 2

What are current views of the main recommendations set out in the 2008 report (pages 70 to 105) to resolve the problems diagnosed:

  • Royal Mail needs access to capital, greater commercial confidence and expertise through the introduction of a strategic partner or partners;
  • Royal Mail's historic pension deficit needs to be taken over by the Government; and
  • A new regulatory regime should be put in place including a transfer of regulation from Postcomm to Ofcom.

The Government published Richard Hooper's update to his December 2008 Report on 10 September 2010 'Saving the Royal Mail's universal postal service in the digital age' (Command Paper 7937).

Hooper found that the underlying issues that threatened the universal postal service at the time of his original review remained and required urgent action. In particular:

  • The decline in the number of letters being sent was greater than forecast in the 2008 report and will continue to deepen - worldwide falls in the next five years of between 25% and 40% are likely.  The continued growth in parcels (a result of internet shopping) will not make up for the decline;
  • Royal Mail’s financial position has deteriorated and the pension deficit, of around £8bn as at end March 2010, is even more unsustainable than 18 months ago; and
  • Despite important steps forward on modernisation, Royal Mail still lags well behind the leading postal operators.