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In March 2006 Royal Mail accepted a new quality of service and price control regime proposed by Postcomm, the regulator of mail services in the UK. The new arrangements replaced the existing regime introduced in 2001 and will run from April 2006 to March 2010. The new regime allows Royal Mail to increase the price of first and second class stamps by 6 and 5 pence respectively over the period. It also has new quality of service targets and associated financial incentives aimed at improving mail services.
Postcomm had to introduce the original regime quickly in 2001 and it suffered from major flaws. For example, important aspects of mail service quality, like lost mail, were ignored and a complex system of financial incentives resulted in Postcomm undertaking burdensome investigations.
The new regime covers more aspects of service quality and has greater clarity and simplicity than the previous system. The new system will, however, only reduce burdens on Royal Mail if Postcomm can implement it in an informed and proportionate manner. Postcomm needs to monitor Royal Mail in areas where it is performing poorly or where there are no quality of service targets. For example, performance in some postcode areas in London is still poor and Postcomm is only now starting to monitor whether Royal Mail meets its internal targets for the times of collections and deliveries.
The postal market has been subject to some fundamental changes in the last year: full liberalisation; the agreement of the new price control settlement; and August saw the introduction of pricing in proportion, a new system in which price will be determined by size as well as weight. During the 2006-2010 regime, Postcomm needs to take measures which will create a thriving competitive market while at the same time protecting the universal service. Postcomm has recently launched a consultation on its strategy for the postal market in 2010 and beyond, including what consumers want from the universal service, how the universal service can be best protected and what more can be done to create a competitive environment.
On the basis of a report by the Comptroller and Auditor General,[1] the Committee took evidence from Postcomm (the Postal Services Commission) on its role in the design and implementation of the new quality of service regime and the progress made towards achieving Postcomm's longer-term goal of introducing competition to the UK postal market.
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