UK Ministers announce postal review

The Royal Mail’s 350-year monopoly ended at the start of 2006 when other licensed operators were given the right to collect and deliver mail.

Strike action by postal workers this summer damaged Royal Mail’s reputation.

Business Secretary John Hutton said retaining the universal postal service remained a “top priority”.

At the same, ministers announced that Royal Mail chairman Allan Leighton would have his contract extended by a year to March 2009.

Unions criticised Mr Leighton’s handling of a bitter pay dispute earlier this year which, although now resolved, is estimated to have cost Royal Mail more than GBP 200.

There can be no doubt that the market has evolved with new technologies such as email and text messaging having a huge effect on the way we communicate

Although it has faced increased competition for two years, Royal Mail is still the dominant postal supplier in the UK, with a market share of more than 90 pct.

But the amount of mail it handles has fallen and social changes which have seen more people using email to communicate.

‘Evolving market’

Mr Hutton said liberalisation had brought “considerable benefits” to consumers.

But he added: “There can be no doubt that the market has evolved with new technologies such as email and text messaging having a huge effect on the way we communicate.

This is a crucial review which will help to shape the future of the postal sector

Billy Hayes, CWU

Postal unions applauded the move, saying Royal Mail’s future was “fundamental” to the success of the economy.

“This is a crucial review which will help to shape the future of the postal sector,” said Billy Hayes, general secretary of the CWU.

“This review must address the needs of customers, workers and mail businesses to ensure that the UK has an effective and successful publicly owned postal service and efficient postal sector.”

Terms of review

– Assess impact of market liberalisation
– Look at future market trends
– Consider how to maintain universal service

The review, led by former Ofcom deputy chairman Richard Hooper, will conclude next summer.