Bulk mail removed from UK's universal service obligation
The UK’s postal regulator, the Postal Services Commission (Postcomm) has amended Royal Mail’s licence to remove bulk mail from its universal service obligation.
Read MoreTag: OFCOM
Hooper to help shape Royal Mail’s future
Vince Cable, business secretary, will announce on Thursday that he has commissioned Richard Hooper to update his findings and help shape the coalition’s ambitious privatisation plan for Royal Mail, reports the Financial Times.
Read MoreLord Currie appointed to Royal Mail board
Lord Currie was the founding Chairman of Ofcom and has led the regulator since 2002. He will be stepping down in March 2009.
Read MoreRoyal Mail cuts may end Saturday post
The proposal to reduce deliveries to five days a week will also see fewer first class letters arrive the day after they are sent.
The recommendations, to be submitted in the next 10 days as part of a review into the future of the postal sector, are included in a radical plan by the regulator Postcomm to shore up finances at the Royal Mail.
It hopes to secure the future of the “universal service”, which means the company promises to deliver letters to each of the 28 million add-resses in Britain for the same price.
Moving from a six-days-a-week delivery would mark a further reduction of services by Royal Mail, which has already been allowed to end twice-daily deliveries in an effort to restore profitability.
The average delivery time has slipped and post boxes are no longer emptied on a Sunday. Any attempt to drop the Saturday delivery would be fiercely opposed, not least because it is enshrined in law under the Postal Services Act of 2000. Politicians, consumer groups, businesses and the unions say Postcomm’s proposals would lead to a further diminution of the service.
It is the first time that the Royal Mail has ever made a loss from this service.
Postcomm’s recommendations about cutting the six-day service are included in its submission to the review, the Telegraph understands.
The regulator also suggests that the Royal Mail’s delivery targets should be lowered.
Read MoreNationwide post service could end as Royal Mail faces finance crisis (UK)
The Royal Mail could become incapable of maintaining its commitment to delivering a UK-wide price structure for its letter and parcel service, says a government-commissioned review.
At the same time, competition in postal services has delivered no benefits for domestic consumers and small businesses, according to the review set up to advise John Hutton, the Business Secretary.
Details of severe financial pressure facing the organisation have emerged just a year after it received a GBP 3.9 billion government rescue package. Royal Mail has a GBP 3.4 billion pension deficit and last year its profits fell by a third to GBP 223 million.
The review, which will make final recommendations later in the year, said that Royal Mail’s finances are so precarious that they could derail its obligation to the universal service, which allows stamped mail to go anywhere in the country for the same price.
The review was led by Richard Hooper, a former deputy chairman of Ofcom, the communications industry regulator. It criticises the Royal Mail for being slow to modernise and also cautions that modernisation in the future will be more difficult because of a decline in the letters market.
Domestic consumers and small businesses have failed to win any of the advantages from the liberalisation of the market that have been enjoyed by big business, the review says. While large businesses have secured better rates and service from Royal Mail and rivals, stamp price rises and fewer services have affected households and small companies.
Postcomm, the regulator, gave warning that the review that “without extensive change, the Royal Mail’s business model will become unsustainable”. If there are no significant changes at the organisation, the regulator envisaged negative cash flow of GBP 400 million a year by 2012.
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