Business, Innovation and Skills CommitteeWritten evidence submitted by OFCOM

The Implications of Scottish Independence for Postal Services

Ofcom is the independent regulator for, amongst others, postal services in the UK. Under the provisions of the Communications Act 2003, Ofcom is independent of both the Scottish and UK Governments and has no position on whether there should be any constitutional change within the UK. Ofcom has not undertaken any work on the potential implications of Scottish Independence for postal services and has no plans to do so in advance of the referendum vote. We will, of course, continue to work with both governments, as we always have, and we will continue to be open in providing information about how the sectors we regulate work.

In this context, we thought the Committee might find it useful to have a short description of the framework for postal services at a European level. If an independent Scotland remained or became a member of the EU it would also be subject to this European framework, or if an independent Scotland was not a member of the EU it may wish to adopt the framework fully or in part (such as Norway and Switzerland) to be consistent with their European neighbours given the importance of cross-border trade.

European Postal Legislation

The stated purpose of European policy in the postal sector is:

“to complete the internal market for postal services and to ensure, through an appropriate regulatory framework, that efficient, reliable and good-quality postal services are available throughout the European Union to all its citizens at affordable prices. The importance of postal services both for the economic prosperity and social well-being and cohesion of the EU make this a priority area for Community action.”1

The European postal legislation comprises three Postal Services Directives:

Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of Community postal services and the improvement of quality of service.2

On 10 June 2002, the European Parliament and the Council formally adopted the Postal Directive 2002/39/EC, which amends the initial Postal Directive (97/67/EC) by defining further steps in the process of gradual and controlled market opening and further limiting the service sectors that can be reserved.3

On 20 February, the European Parliament and the Council formally adopted the Directive 2008/06/EC, which amends the initial Postal Directive (97/67/EC) as amended by Directive 2002/39/EC by defining 2010, and for some Member States 2012, as a final step in the process of gradual market opening.4

As the subsequent Directives amend the previous versions it is easier to refer to a consolidated version of the Directives.5

The Requirements of the Postal Services Directives

In summary the European postal legislation requires all member states to provide a universal postal service meeting, as a minimum, the following requirements:

Collections and deliveries five working days per week of national and cross-border:

Postal items up to 2kg;

Postal packages up to 10kg (although Member States have discretion to increase this weight limit to 20kg); and

Services for registered items and insured items.

Prices for these services must be affordable and cost-oriented, while tariffs must be transparent and non-discriminatory; and

The density of points of contact (ie post offices) and access points (ie post boxes) must take account of the needs of users.

The Directives also set out provisions relating to, among other things, quality of service standards, the designation of a universal service provider, the funding of the universal postal service by a universal service fund and the establishment of an independent postal regulator in each Member State.

The Third Postal Service Directive required all postal markets in the EU to be opened to competition from January 2012. Previously, Member States could define ‘reserved areas’ of services which could only be provided by the designated universal service provider. The UK postal market has been open to competition since 2006.

The Situation in the UK and Other Member States

Although one of the intentions of the Postal Services Directives is to harmonise the provision of postal services across the European Union, there remains considerable variation in services between Member States. This is illustrated by the report Main developments in the postal sector (2008–2010) commissioned by the DG Markt in the European Commission.6

For example, the UK’s current framework for postal regulation is determined by the Postal Services Act 2011 (and to a lesser extent the Postal Services Act 2000, as amended by the 2011 Act). This sets out the minimum requirements for the universal postal service in the UK which in some important aspects go further than the European requirements. In particular, the Postal Services Act 2011 requires the universal service provider to:

Make collections and deliveries six days a week for letters;

Carry parcels up to 20kg;

Have geographically uniform prices, ie the same price goes anywhere in the UK; and

Provide specified free services to blind or partially sighted persons.

While, as we noted above, we are not in a position to make any contribution regarding the potential implications of Scottish Independence for postal services, we would be happy to assist the Committee with regard to any questions they had about the current arrangements either in the UK or overseas.

7 June 2013