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The Postal Services Act 2000 was designed to provide both social and business consumers with a more efficient and effective postal service by introducing competition and greater commercial freedoms for the Royal Mail to operate within a liberalised market while maintaining the universal service obligation. The Government remains committed to that vision.
There had been significant developments in the market in the seven years since the Act was passed (see below) and in light of these developments Government believed that it was the right time to conduct a review of the postal market.
The postal services market was fully liberalised on 1 January 2006. In total, 18 companies are now licensed to provide postal services for mail weighing below 350 grammes or costing below £1;
New technology is changing the way in which we communicate. In 2007, nearly 15 million households in Great Britain had access to the internet. This represents an increase of 4 million – 36% - since 2002;
E-commerce is having a huge impact on the way we do business. In 2006, the value of internet sales by UK businesses rose to £130 billion: an increase of over 29% over the figure in 2005;
the volume of the UK addressed letter market declined by 2.3% between 2006 and 2007;
The Government has invested £2.1bn to enable Royal Mail to modernise and to support the pension fund;
Royal Mail has moved to one delivery per day before 2.00 pm in urban areas, and 3.00 pm in rural areas; and has discontinued Sunday collections;
Royal Mail’s achieved a record level of performance in 2006-7 against targets for quality of service set by Postcomm. Over the year, 94% of first class mail was delivered by the next day. In all, 11 of the 12 targets were met.
Further changes are expected:
Postcomm’s projections suggest that market volumes no longer mirror economic growth, as they have historically, and may change in the range of +1% to -3% over the next few years.
The European Union has set a timetable to establish a fully liberalised European postal services market by the end of 2010.
