Memorandum by the Postal Services Commission
1. The Postal Services Act 2000 (the Act)
established the Postal Services Commission (Postcomm) as the independent
regulator for postal services with powers to license postal operators.
It is thus the most recently established sector regulator, having
acquired its main functions two years ago. The Act lays down Postcomm's
four key statutory duties. Postcomm's primary duty is to exercise
its functions in the manner which it considers is best calculated
to ensure the provision of a universal postal service. Therefore
Postcomm's further key duties are to:
Further the interests of users and
disadvantaged customers, wherever appropriate by promoting competition
between postal operators;
Promote the efficiency and economy
of postal operators; and
Have regard to the need to ensure
that licence holders are able to finance activities authorised
or required by their licences.
In addition, Postcomm has a role to provide
advice to the Secretary of State for Trade and Industry about
the network of public post offices.
2. The Act requires Postcomm to publish
a Code of Practice setting out how it will exercise its
functions. Postcomm's Code
explains Postcomm's licensing, information and advisory functions
and identifies eight over-arching principles that it follows:
to act in accordance with its statutory
to act in accordance with its duties
as a public body;
to act in an open consultative manner,
subject to confidentiality obligations;
to seek to establish a firm factual
basis for its decisions and advice;
to apply sound governance and decision
to act in accordance with good regulatory
to co-ordinate its activities with
other regulatory bodies.
This Code is intended to provide users of postal
services with an explanation of how they should expect to benefit
from the regulation of the industry and to provide postal operators
with a greater degree of regulatory certainty.
3. Postcomm summarises its purpose and its
vision in the following terms:
"Postcomm's purpose is to help the UK postal
industry provide the best possible postal services for its customers.
Postcomm's vision is . . .
a range of reliable, innovative and
efficient postal services, including a universal postal service;
valued by customers; and
delivered through a competitive postal
4. Postcomm is a non-ministerial government
department and is thus subject to all of the ethical and other
constraints that apply to Departments of State and the Civil Service.
Postcomm's staff are civil servants.
5. From the outset Postcomm has had a corporate
structure with policy being determined by a college of seven commissioners:
a Chairman who works part-time, five non-executive members who
are each contracted to work about forty days a year and a full
time Chief Executive. The chairman and the five non-executive
members, are appointed by the Secretary of State for Trade and
Industry and come from a wide range of backgrounds bringing a
variety of experience to the business of Postcomm. The Act requires
that the roles of Postcomm's Chairman and Chief Executive are
separate. The Chief Executive is appointed by the Commission after
consulting the Secretary of State.
6. Postcomm's corporate structure
means that key decisions in pursuance of its statutory duties
are taken by the full Commission which contributes both the accountability
and informed decision-making. The structure is also intended to
de-personalise the regulatory process and to increase the scope
for continuity and consistency when new members are appointed.
7. The Commission's annual expenditure,
including its annual pay settlement, are subject to the approval
of HM Treasury. Postcomm recovers its costs through the licence
fees it charges to postal operators (principally Royal Mail).
8. As is the case with other sector regulators,
Postcomm is independent of Government and is required to carry
out its functions in accordance with its statutory duties. Whilst
the Secretary of State for Trade and Industry is responsible for
the appointment of the Chairman and members of the Commission
(except the Chief Executive), she does not have responsibility
for the work of the Commission and has only limited powers to
give directions to the Commission (for example, in the interests
of national security and in order to ensure that the UK complies
with European law). Postcomm can also be asked by the Secretary
of State to provide advice and information both generally and
in relation to the post office network.
9. Under the Act, the Secretary of State
has given guidance to Postcomm about the Commission's contribution
towards the attainment of the Government's social and environmental
policies. Postcomm must have regard to this guidance in carrying
out its functions. 
10. The postal services market is different
from most other regulated sectors, in that the principal postal
operator (Royal Mail) is a company which is owned by the Government.
Accordingly, the Secretary of State is responsible for overseeing
the regulatory framework, including the appointment of the members
of Postcomm, and, as shareholder, also appoints or approves the
members of the Board of the company that under the terms of its
licence must provide the universal postal service. This combination
of responsibilities means that it is especially important that
the respective roles of the Secretary of State and Postcomm are
clearly understood and respected, including Postcomm's independence
and direct accountability to Parliament.
11. Postcomm must act in accordance with
its statutory duties and is accountable to Parliament for its
decisions and its activities. This accountability to Parliament
is in practice achieved through the specific scrutiny of the Trade
and Industry Select Committee and the general oversight of the
Public Accounts Committee.
12. Over the last year, Postcomm appeared
before both the Trade and Industry Select Committee (TISC) and
the Public Accounts Committee (PAC):
|PAC hearing on NAO report "Opening the post";
|April 2002||TISC hearing on Postcomm's market opening proposals;
|February 2003||TISC hearing on Postcomm's proposals on the regulation of Royal Mail's prices and service quality
Postcomm has also held a number of informal meetings with
other Parliamentary bodies, including members of the devolved
13. The Commission is also held accountable to Parliament
through its Expenditure Plans Report and Annual Report.
The Chief Executive is Postcomm's Accounting Officer and as such
is personally accountable to Parliament for the propriety and
regularity of Postcomm's finances. Postcomm is subject to examination
by the National Audit Office (NAO) whilst suspected injustices
(and suspected failures to comply with the Code of Practice on
Access to Official Information) can also be investigated by the
14. Postcomm can also be called to account in other ways
Postcomm gives effect to many of its decisions through the provisions
of its licences. Once Postcomm has issued a licence, it can only
modify the licence with the agreement of the licence holder. If
the licence holder does not agree the proposed change, and Postcomm
wishes to proceed with the modification, Postcomm must refer the
matter to the Competition Commission. More generally, as a public
body, Postcomm's decisions can be challenged by any interested
party under the judicial review process.
15. The involvement of interested parties in influencing
the terms of Postcomm's work is provided for under the Act which
requires Postcomm annually to prepare and consult on a Forward
Work Programme setting out how it proposes to carry out its work.
Postcomm's final Forward Work Programme and Business Plan
summarises its aims, strategy, objectives, projects and workstreams
and takes account of comments received. The outcome of the Forward
Work Programme is described in an Annual Report which Postcomm
is required to publish.
16. Commissioners have adopted a consultative and transparent
approach to their procedures, activities and proposals. In the
interest of openness Postcomm always publishes the reasons for
its decisions and has developed a consultative culture which complements
the collegiate nature of its decision making processes. Postcomm
recognises the value of being open in its work. The disciplines
that accompany openness, explaining decisions and publishing the
evidence and analysis that underlies them, contribute to good
and consistent decision taking. Consistent decision taking helps
give regulatory certainty. Postcomm therefore aims to consult
everyone likely to be affected by, or having a role in, significant
decisions it takes on the development of its policy and in the
application of policy.
17. In October 2000, Postcomm published its approach
to conducting its public consultations.
Postcomm's procedures are based on a number of key principles:
Building consultation into the planning process.
This is done right from the start of a policy proposal so that
sufficient time is allowed for responses from all those affected;
Using the most appropriate approach to reach
people. Written consultation is not always sufficient to canvas
views. Postcomm has therefore also used less traditional methods
such as workshops and road-shows around the country to invite
views and inform its approach;
Being clear and focussed. Postcomm seeks
to ensure that all consultations are clear, concise and focussed
with a summary of the key questions and option on which views
Consulting in a user-friendly way. Postcomm
is committed to ensuring that consultation is accessible and easy
to respond to, for example by electronic means.
18. Postcomm believes that the end result is a more informed
understanding of the issues and better decisions based on the
views of all stakeholders. Since it was established, Postcomm
has issued consultation documents on a range of different issues
including: Royal Mail's initial licence, Postcomm's approach to
competition, its standard licences, the Postcode Address File,
Royal Mail's price control and quality of service standards and
compensation arrangements. All of Postcomm's consultations are
available on the website at www.psc.gov.uk together with its decisions.
19. The Act also established a consumer body, the Consumer
Council for Postal Services (Postwatch), which is independent
of government, postal operators and Postcomm. Postcomm works with
Postwatch consulting them on a wide range of issues. Whilst Postcomm
and Postwatch have different roles, they are both responsible
for promoting and protecting customer interests and, as provided
for in the Act, have agreed a memorandum of understanding
to help users understand how the two organisations work together.
20. Postcomm works with the other sector regulators to
promote consistency in regulatory actions and to share best practice.
A significant body of work has been developed by other sector
regulators over time, and as a relatively new organisation Postcomm
is keen to learn from this experience particularly in relation
to issues such as consumer protection, communications, service
delivery standards and price control.
22. Postcomm also works closely with the Office of Fair
Trading (OFT) and has agreed and published a Memorandum of Understanding
with the OFT to clarify
and ensure consistency in the roles of the two bodies in considering
complaints of anti-competitive behaviour in the postal sector.
The Code of Practice is available at www.psc.gov.uk Back
"The Constitution and Procedures of the Commission"
which lays down its internal decision making process are available
at www.psc.gov.uk Back
"Social and Environmental Guidance" issued to Postcomm
by the Secretary of State. Back
Forward Work Programme and Business Plan, and Annual Report are
available at www.psc.gov.uk Back
Postcomm's consultation procedure "How should Postcomm consult"
is available at www.psc.gov.uk Back
Memorandum of understanding between Postcomm and Postwatch is
available at www.psc.gov.uk Back
Memorandum of understanding between Postcomm and the OFT. Back