Policy & Research

Background briefings

Postal Services Bill (2009)

On 26 February 2009 the previous Government published the Postal Services Bill and a detailed policy statement. The Bill followed on from the recommendations of the Hooper report, and provided for the restructuring of Royal Mail Group Ltd, changes in the Royal Mail Pension Plan, and a change in the regulation of postal services. It was introduced by Lord Mandelson, former Secretary of State for the then Department of Business, Enterprise and Regulatory Reform. It completed its passage through the House of Lords and received its first reading in the House of Commons on 21 May 2009, but progressed no further due to lack of support for part-privatisation of Royal Mail. 

The current Government has stated that it will re-introduce this Bill to Parliament in the Autumn of 2010. The policies contained in this Bill will have far-reaching changes for the UK postal services sector if it is passed into law. 

The Bill contains several important pieces of Government policy and proposed legislation. It will: 

• allow for a private sector investment – ‘around 30 per cent’ – for a minority shareholder to modernise the company, though the legislation includes a commitment that Royal Mail will remain publicly owned. Primary legislation would be required for any future changes
• protect the six-day-a-week, universal price postal service in legislation, while a fund would be created, if needed, to support the provision of the universal service
• enable the Government to take on the pension deficit. The Government estimated that the total liabilities of the scheme would have been some £29.5 billion. Approximately £23.5 billion in assets would be transferred meaning the Government would absorb a deficit of £6 billion
• establish Ofcom as the regulator of the postal services market and make upholding the universal service obligation its paramount duty in relation to postal services and extend competition law powers to the postal market
• retain Government ownership of the Post Office business 

Consumer Focus believes that within a rapidly changing communication market, substantial change is needed in Royal Mail to build an organisational culture that focuses on the consumer. 

We would welcome re-introduction of this Bill as we believe that it is important to protect the universal service through legislative change and a proposed fund. We also agree with the plans to move postal regulation to Ofcom who would have more powers to act. 

If a possible partnership is arranged in the future, we will judge how effectively Royal Mail is financed and managed, against its success in delivering its services to consumers. It is also vital that plans contained in the Bill, to introduce a new access regime for other postal operators, ensure there is a level playing field for all operators.