Letter from Peter Mandelson

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From: Peter Mandelson, Secretary of State for Business, Enterprise and Regulatory Reform

You will have been aware of much discussion and speculation over the future of Royal Mail. I would like to reassure your readers – the Government has absolutely no intention of privatising the Royal Mail.

Today it stands alone as the only company with the capacity to send mail to any of the 28 million companies and households in the UK, six days a week, with the promise that one price goes everywhere. This – the universal postal service – is incredibly valuable to the public and country and we want to ensure its survival.

However, Royal Mail is facing severe difficulties. In just over three years, the volume of mail sent has fallen by five million items a day as people turn to alternative methods of communication such as email, the internet and text messaging. Last year, the letter-delivering business made a loss, while its European counterparts recorded profits of between 13 and 15 per cent. We cannot ignore this. We have put together a comprehensive package of reforms to ensure the universal postal service survives and that the postal service evolves to match the demands of today's market.

Our plan is three fold: to give greater pension security for Royal Mail staff and ease the burden of the pension fund deficit on the company; to keep Royal Mail as a publicly owned postal service but to bring in a minority partner to help to modernise the business for the future; and third, to reform the regulation with the aim of maintaining the universal postal service.

The Government has invested billions in supporting Royal Mail, but simply investing public money has not, and will not, secure the future of the company. A new approach is needed.