Government to secure future of Postal Service
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The Government today published a Bill and detailed policy statement to secure
the future of a successful publicly-owned Royal Mail.
Business Secretary Lord Mandelson said the Postal Services Bill is vital to
maintaining the six-day-a-week, fixed price 'universal postal service', which is
The Bill keeps the post office in public ownership, while allowing for a
strategic partner to bring experience and investment to transform the Royal
Mail, with the Government taking on its pension deficit.
Business Secretary Lord Mandelson said the Government's plan was the only
credible option to save the Royal Mail, which has been severely affected by
decreasing mail volumes due to the rise of email and online technologies.
"Our policy will keep Royal Mail in the public sector and this legislation
makes this clear. The Royal Mail will run out of money to sustain its current
universal, six day service unless its pension fund deficit is solved and its
"Faced with this challenge, I am determined to protect the universal service
and secure Royal Mail's future.
"The public deserves the best possible mail service. And if we are asking the
taxpayer to take on Royal Mail's huge pension deficit, it must deliver a full,
improved letters service in return.
"Royal Mail is lagging behind its international counterparts and this needs
to change. A partnership must not just bring access to capital, it must bring
expertise. A partner experienced in driving forward change in postal companies
will help transform it."
The Government's policy will:
* Enable a fund to be created, if it should be necessary to do so, to support
the provision of the universal service.
* Allow for private sector investment for a minority shareholder to modernise
the company, but with a firm commitment that the Royal Mail remains publicly
owned. Primary legislation will be required for any future changes.
* Allow the Government to take on the pension deficit. This will secure
staff's historic pensions, which the pension trustees have confirmed are at
risk, while freeing Royal Mail from paying £280m per year to service this debt.
* Appoint Ofcom to regulate the postal services market and make upholding the
universal service obligation its paramount duty in relation to postal services.
It will regulate to ensure greater benefit for consumers and place postal
services in a broader communications market context.
* Retain Government ownership of the Post Office and committing to helping it
build a diversified, successful future.
* Ensure the Government's right to appoint the Chair and approve board
The Government's policy follows recommendations from Richard Hooper's
independent review of postal services which reported in December 2008.
The report's stark findings warned that Royal Mail's precarious finances were
placing the universal postal service in grave danger, with losses likely to
rise. The report found major change is required at Royal Mail to adapt to the
structural changes occurring in the market.
However, the report predicts that, with the appropriate action, there is a
positive future for postal services, with a range of trends creating new
opportunities, including the growth of home-delivered on-line shopping on-line.
Access the Government's detailed policy statement at:
Access the Postal Services Bill at
The Hooper Review final report is available at
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Article Published/Sorted/Amended on Scopulus 2009-02-26 12:38:48 in Business Articles