1 Introduction
General Background
1. The 1999 White Paper Post Office Reform: A
World Class Service for the 21st Century set out the Government's
policy for the reform of the postal services market in the UK.[1]
The UK is bound by EU law on postal matters. In the UK, the Postal
Services Act 2000 gives effect to the requirements of the
EU 1997 Postal Services Directive[2]
(subsequently amended in 2002[3]),
including the requirement to maintain an universal service.
2. Following postal services market liberalisation
in the UK, the 2006-2010 agreement on price controls between the
Postal Services Commission (Postcomm) and Royal Mail Group, and
an announcement from the Government that it was prepared to assist
Royal Mail Group financially, we decided to hold a brief follow-up
to our previous inquiries into the Royal Mail Group. The issues
we were interested in finding out about were areas where discussions
between the Royal Mail Group and the Government are continuing,
specifically: the extent to which the refinancing package, announced
by the Government, will help Royal Mail to pay for modernisation
and deal with its pension fund deficit; the structure of the 'shares'
scheme proposed by Royal Mail Group's managers; and the future
of the Post Office Card Account ('POCA') and the impact its demise
will have on the Post Office network.
3. We last looked at the postal services market at
the end of 2005 in the lead up to the full liberalisation of the
market in the UK.[4] It
was during this inquiry that many of our witnesses suggested that
the Royal Mail Group would become uncompetitive, given that there
had been large scale capital underinvestment in the past and a
large deficit in its pension fund had developed. Witnesses also
drew our attention to the question of the future ownership of
Royal Mail Group, particularly a proposed employee share scheme.
Our predecessors looked at the POCA as part of their inquiry into
the implementation of Direct Payment.[5]
Our predecessors were led to believe that the POCA would replace
the Government business that would be lost through a change in
benefit payments arrangements. There was no suggestion then that
it would be temporary.[6]
4. In the course of our inquiry we took oral evidence
from representatives of the Royal Mail Group, the Communication
Workers Union (CWU) and the National Federation of SubPostmasters
(NFSP), as well as from Jim Fitzpatrick MP, Parliamentary Under
Secretary of State for Employment Relations and Postal Services
at the DTI. We also received seven written memoranda from other
companies, trade associations and interested bodies, which are
listed on page 37. We express our gratitude to them and to all
who contributed to our inquiry.
1 Cm 4340 Back
2
European Commission Directive 97/67/EC Back
3
European Commission Directive 2002/39/EC Back
4
Trade and Industry Committee, Royal Mail after Liberalisation,
Second Report of Session 2005-06, HC 570 I & II (hereafter,
Royal Mail after liberalisation) Back
5
Trade and Industry Committee, People, Pensions and Post Offices:
The impact of 'Direct Payment' on Post Offices and their customers,
Eleventh Report of Session 2002-03, HC 718 Back
6
Q 165 Back
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