Royal Mail has won a “significant” mail contract to provide delivery services for 14 councils within London.
The UK’s universal postal service said today that the deal to collect and deliver mail for the councils will be a collaborative contract that will be the first of its kind for Royal Mail and the councils themselves.
Royal Mail has provided delivery services for these councils individually before, but this deal sees the local authorities purchasing their mail services together for the first time ever, in order to achieve efficiency savings.
Royal Mail secured the two-year contract following a competitive tender process with the councils, which include Barnet, Brent, Camden, Ealing, Enfield, Harrow, Hackney, Havering, Haringey, Hounslow, Islington, Newham, Redbridge and Tower Hamlets.
The Government Procurement Services contract was secure with Royal Mail facing increasing competition in the UK capital for delivery services.
The contract will include the collection and delivery of important documents including Council Tax letters and election cards.
The company privatised last October said as well as collecting and delivering bulk mail, its contract will see it providing hybrid mail services for those councils that wish to take it up.
This will mean councils saving money by printing their letters centrally before mailing them.
Rachel Winham, head of elections and local government for Royal Mail, said the contract was significant for the company.
“This contract is great news for Royal Mail, and for our employees. We look forward to working closely with the councils over the course of the contract and providing them with an excellent service,” she said.
Terry Brewer, divisional director commercial, contracts and procurement from London Borough of Harrow, and Chair of the London Postal Services Board, said: “The participating London boroughs are delighted with the results of the tender process which has seen Royal Mail being awarded the contract. We look forward to working with Royal Mail to continue to provide a quality service and achieve further savings and efficiencies.”
The collaborative mailing contract for the London councils comes following a review by the Talis Consultancy back in 2009/10 that suggested that by procuring a contract together, the London councils might achieve savings of 6% to 28% on postal costs. Originally a contract was awarded to UK Mail Group in early 2012, promising £1.2m savings between the 17 authorities involved, but since the company wanted to change key clauses of the deal, the tender process was restarted.
Some of the councils involved in the contract had already switched from using First Class to Second Class. One authority said it had a trial period with Royal Mail’s rivals TNT Post UK from April to July 2013 but said that while the cost benefit was an advantage, “the quality of service was not acceptable”.
The terms of the Royal Mail contract were being kept confidential today.
However, council papers from the London borough of Haringey, which mails about 500,000 items of post each year, spending about £220,000 a year on postal services, suggests that the new contract will save it £31,000 a year, a 14% saving. In London, average spend on postal services for councils is about £300,000 a year according to borough group London Councils.
Terry Brewer will be speaking at this years Mail & Express Delivery Show, 13th May. For more information and to see who else will be there, please visit: www.triangle.eu.com/meds or call (0)1628 642 910
Source: Post&Parcel/Royal Mail