News Release issued by
the COI News Distribution Service on 10 September 2010
The Government has
today published Richard Hooper’s update to his December 2008
Report on the maintenance of the universal postal service in the UK.
Since June Hooper has been analysing developments in the postal
sector in the last 18 months. He has found that the underlying
issues that threatened the universal postal service - the same
price goes anywhere and a collection and delivery of letters six
days a week - remain and that urgent action has to be taken:
The decline in the number of letters being sent is greater than
forecast in the 2008 report and will continue to deepen -
worldwide falls in the next five years of between 25% and 40% are
likely. The continued growth in parcels (a result of internet
shopping) will not make up for the decline;Royal Mail’s financial
position has deteriorated and the pension deficit, of around £8bn
as at end March 2010, is even more unsustainable than 18 months
ago; andDespite important steps forward on modernisation, Royal
Mail still lags well behind the leading postal operators.
Hooper believes the Royal Mail management, workforce and unions
must accelerate the pace of modernisation. His recommendations are
broadly similar to 2008:
A new less burdensome regulatory framework is needed with
responsibility for regulation moving from Postcom to Ofcom;The
pension deficit should be taken over by the Government as part of
the wider range of measures; andPrivate sector capital must be
introduced into Royal Mail in the form of sale to a partner/trade
investor or an IPO.
Hooper argues that access to private capital will:
Ensure that cash is available to fund modernisation -
acknowledging that the state of the public finances means that
Royal Mail will find it even harder to compete for Government
capital against other public spending priorities;Inject private
sector disciplines into the business;Reduce the risk of political
intervention in commercial decisions; andEncourage within Royal
Mail a more customer-focussed commercial strategy/diversification
for the digital age.
He also states that an element of employee ownership could have
the benefit of encouraging greater employee engagement within
Royal Mail.
Business Secretary Vince Cable said:
“This update reaffirms the findings of Richard Hooper’s original
report and the views he has given me during the course of the
summer. He paints a very clear picture - Royal Mail is facing a
combination of potentially lethal challenges – falling mail
volumes, low investment, not enough efficiency and a dire pension
position.
“We are determined to safeguard Royal Mail for the future and
help it tackle these challenges. We will come forward with new
legislation in the autumn. It will draw heavily on Hooper’s
analysis and recommendations and the Government’s wider
objectives, including the need for employees to have a real stake
in the future of the business.”
Richard Hooper said:
“If all the recommendations in my updated report are implemented
without further delay, and Royal Mail modernises to best in class
with management, workforce and unions working together, then
despite the very real market difficulties the company has a
healthy future. Building on its unique ability to visit 28 million
addresses on a daily basis, it can aspire to be the delivery
company of choice for a wide range of physical mail from letters
to parcels”.
The Queen’s Speech set out that a Postal Services Bill will be
introduced during this session of Parliament. The Bill will enable
the modernisation of Royal Mail, in partnership with employees,
and will ensure it benefits from private sector capital and
disciplines.
The Coalition Agreement committed that the Government will seek
to ensure an injection of private capital into Royal Mail,
including opportunities for employee ownership. The Post Office
will be retained in public ownership due to its hugely important
social and economic role in communities throughout the UK.
Notes to editors:
1. The update can be viewed here http://www.bis.gov.uk/hooper-report
2. Its terms of reference were:
To consider developments in the postal sector and Royal Mail
since the publication of the Review's final report.To
test whether the underlying issues which threatened the
maintenance of the universal postal service remain.To consider
whether the recommendations in the report still provide the best
solutions to maintaining the universal service.
3. An independent review of the postal services sector, chaired
by Richard Hooper, was undertaken between December 2007 and
December 2008. The review looked at changes taking place in the
postal and wider communications markets and what the implications
of those changes were for the UK postal service, in particular the
provision of the universal postal service.
The review published its final report on 16 December 2008
("Modernise or Decline: Policies to maintain the
universal postal service in the United Kingdom"). At the
heart of the report were three linked recommendations:
Pension deficit: as part of a package of changes, the government
should take over responsibility for reducing substantially the
pension deficit.Partnership: to improve the Royal Mail’s
performance it should forge a strategic partnership with a postal
operator with a proven record in transforming its business,
working closely with the workforce.Regulation: Hooper proposed
that Ofcom should take over responsibility from Postcomm for
regulating the postal market. Its primary responsibility being to
maintain the universal service in the wider context of the other
changes taking place in communication markets.
4. Richard Hooper
CBE was Deputy Chairman of the Office of Communications
(Ofcom) between 2002 and 2005. He was Chairman of the Radio
Authority for 3 years until 2003. He stood down as Chairman of
Informa plc in May 2007. He is currently Chairman of Artilium plc
and a non-executive Director at YELL Group plc. Previous
directorships include non executive director of MAI plc (1993 to
1996), non executive director of United News & Media (1996
to 1997), non executive director of Superscape plc (2000 to 2002)
and non executive Chairman of IMS Group plc (1997 to 2002). He was
also Director, Prestel, at Post Office Telecommunications between
1980–81 and Chief Executive Value Added Systems and Services, BT (1982–86).
5. A Postal Services Bill will be introduced during this session
of Parliament. The Bill will help to safeguard the future of the
Royal Mail and the Post Office network - giving employees a secure
future and consumers and businesses a service they can continue to
depend on. The Government has made the following commitments.
20 May Coalition Agreement: "We will seek to ensure an
injection of private capital into Royal Mail, including
opportunities for employee ownership. We will retain Post Office
Ltd in public ownership."20 May Coalition Agreement: “We
will ensure that Post Offices are allowed to offer a wide range of
services in order to sustain the network, and we will look at the
case for developing new sources of revenue such as the creation of
a Post Office Bank.”25 May Queen's Speech: “My Government
will modernise the Royal Mail, in partnership with employees, and
will ensure it benefits from private sector capital and
disciplines.”
5. BIS' online newsroom contains the latest press
notices, speeches, as well as video and images for download. It
also features an up to date list of BIS press office contacts. See
http://www.bis.gov.uk/newsroom
for more information.
6. It may be possible to facilitate an interview with Richard
Hooper on the day of publication. Please contact Henry Tanner in
the BIS Press Office on 020 7215 5947.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Henry Tanner
Phone: 020 7215 5947
henry.tanner@bis.gsi.gov.uk