DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2009/42)
issued by COI News Distribution Service. 26 February 2009
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 under threat.
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 business transformed.
"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 appointments.
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.
Notes to Editors
Access the Government's detailed policy statement at: http://www.berr.gov.uk/files/file50274.pdf
Access the Postal Services Bill at http://www.tsoshop.co.uk
The Hooper Review final report is available at http://www.berr.gov.uk/files/file49389.pdf