1 Introduction
Post matters. It is important for the productivity
of the economy and for social cohesion.
[Richard Hooper][1]
1. The universal postal service has its genesis in
the Penny Post—a stamp costing a penny, which assured the
postage of a letter anywhere in the United Kingdom—which
was introduced in the Postal Act of 1840. Today, the minimum requirements
of the Universal Postal Service—set out in the 2011 Postal
Services Act—include the following:
· At
least one delivery of letters every Monday to Saturday, and at
least one delivery of other postal packets every Monday to Friday;
· At
least one collection of letters every Monday to Saturday;
· At least
one collection of other postal packets every Monday to Friday;
· And
a service of delivering postal packets and registered items from
one address to another by affordable and geographically-uniform
prices throughout the United Kingdom.[2]
2. The Universal Postal Service is vital to many
people living in the United Kingdom. The majority of our evidence
highlighted the benefits of the Universal Service to many people,
including older people, people living in rural and remote communities
(where internet connections can also be sporadic or non-existent),
and those less able to travel.[3]
The Universal Postal Service also provides a free postal service
to blind and partially-sighted people.[4]
The National Federation of Occupational Pensioners (NFOP) wrote
of the benefits of the Universal Service to its members:
The members of the NFOP rely on postal communications
to remain in touch with relatives and friends and it provides
a vital lifeline and contributes to avoiding loneliness. Although
there is an increased use and accessibility to electronic communications
the elderly and most vulnerable are often excluded from access
either through cost or disability.[5]
3. The Citizens Advice Service also described the
essential role that the Universal Service provides to wide numbers
of groups:
Consumers still rely on and value the universal
service as a communications tool and the USO acts as a critical
safety net to avoid social exclusion and the potential lack of
services due to market failure. Traditionally, rural consumers
value and appear to have a greater reliance on postal services
than users in other geographical locations and recent research
published by Ofcom in their user needs review, also showed that
other categories of users such as older, disabled or housebound
users, are more likely to use post and to feel cut off from society
if they could not send or receive post. Access for vulnerable
and rural consumers (at affordable rates) must be maintained as
this is becoming increasingly important for their effective participation
in the economy.[6]
4. Royal Mail is the only postal company currently
designated to provide the Universal Service. However, the postal
sector as a whole covers more than the Universal Service, and
Royal Mail is working within an increasingly competitive postal
industry, with competition from many rival companies. We received
evidence which argued that such competition is driving down standards,
driving down terms and conditions of staff, and driving down the
quality of service to customers.[7]
Indeed, during the course of this inquiry, the effects of this
competition were clearly demonstrated, when the postal operator
City Link was placed into administration on 24 December 2014.
This resulted in up to 5,000 of City Link's employees, employed
drivers and third-party workers losing their jobs and contracts
with City Link.[8] We have
held joint evidence sessions on this with the Scottish Affairs
Committee.[9]
The Social Market Foundation wrote about the current
state of the postal services market:
The postal services market has seen substantial
change over the past decade. It has become more competitive. The
regulatory regime has changed, and with it, Royal Mail has been
given more flexibility to set its own prices. And, most recently,
Royal Mail has been privatised. In many ways, these changes are
similar to those experienced in other sectors such as telecommunications,
gas and electricity, although there are important differences
too. So the postal services market has started to look much more
like a private sector market. But in common with many other sectors
that have followed the same path, regulatory intervention has
been needed to ensure that wider social objectives continue to
remain at the heart of the market.[10]
5. There has been a decline in the volume of letters
in the United Kingdom for several years, with volumes falling
by 6.3% per year from 2008 to 2013, at the same time as a burgeoning
parcels market, largely in response to the growth of e-trading,
which according to Ofcom increased by 3.7% per year over the same
time period.[11] Ofcom
has been the regulator of the postal market, including the Universal
Service, since 2012, and Ed Richards, the Chief Executive of Ofcom
until December 2014, highlighted uncertainties in the postal sector:
It is an unusual case. In some of the other areas
we work, the story has been just of growth and growth and more
growth. This is an unusual and difficult case, because you have
obviously a decline of our propensity to send letters, but you
also, on the other hand, have the revolution of e-commerce and
the delivery of parcels, so it is a complicated beast with a very
subtle balancing act.[12]
6. This balancing act—ensuring that the minimum
standards of the Universal Service are maintained, while encouraging
a competitive market—is the main issue that will be explored
in this inquiry. It should also be noted that since privatisation,
Royal Mail is a private sector company.
7. On 24 September 2014, the Committee asked for
written evidence on the following terms of reference:
The BIS Committee will conduct an inquiry into
Competition in the UK postal sector and the Universal Service
Obligation.
The inquiry will consider:
· access
and end to end delivery of mail;
· Parcel
delivery services and the impact of competition in these services
on the Universal Service Obligation.
We received 59 written submissions, and two oral
evidence sessions were held on 26 November 2014 and 10 December
2014, where we heard representatives from: Royal Mail; Whistl;
UK Mail; TNT UK; Amazon; the Communication and Workers Union;
Community; the Mail Users Association; Citizens Advice; and Ofcom.
We would like to thank everybody who gave written and oral evidence,
and who informed this inquiry.
1 Richard Hooper (USO 06) para 2 Back
2
Section 31, Postal Services Act 2011 Back
3
Written evidence highlighting the benefits of the Universal Service
included: Cornwall Chamber; the Farmers' Union of Wales; the Scottish
Chambers of Commerce; the Consumer Council; the National Federation
of SubPostmasters; the Welsh Local Government Association; the
Scottish Council for Development and Industry; the South Wales
Chamber of Commerce; the National Federation of Occupational Pensioners;
the Civil Service Pensioners' Alliance; the Institute of Directors
Wales; the Countryside Alliance; the Rural Services Network; the
Royal National Institute of Blind People; the Campaign for the
Protection of Rural Wales; the Council of the Isles of Scilly. Back
4
The Postal Services Act 2011, Section 31 Back
5
The National Federation of Occupational Pensioners (USO 11) para
3 Back
6
The Citizens Advice Service (USO 18) para 5.1 Back
7
For example Unite the Union (USO 17) CWU (USO 18) Royal Mail (USO
37) Back
8
Scottish Affairs Committee oral evidence session, Impact of
Closure of City Link on Employment in Scotland, 13 January
2015, Q67 Back
9
Scottish Affairs Committee, inquiry into the impact of the closure
of City Link on Employment, accessed 5 March 2015 Back
10
The Social Market Foundation (USO 19) page 1 Back
11
Ofcom, Royal Mail access pricing review, 2 December 2014,
para 3.3 Back
12
Q204 Back
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