For Royal Mail to innovate and remain competitive in the marketplace we need to continue our transformation. External capital will help to deliver our long term strategy, here are a few simple facts regarding the transformation:
Six-day-a-week delivery at a uniform, affordable price
The Universal Service - six-day-a-week collection and delivery at a uniform price – is enshrined by the Postal Services Act 2011. Any change would have to be passed through an affirmative vote in both Houses of Parliament. EU law also obliges member states to provide affordable universal postal services five days a week.
Saturday delivery
Regardless of ownership, Royal Mail will be the provider of the universal postal service. That service is protected in primary legislation – the Postal Services Act 2011. The Government has said that it has no intention of downgrading it. Six days per week delivery and collection at uniform and affordable prices are requirements protected in legislation. This can only be changed by Parliament. For Royal Mail, Saturday is a very important delivery day – for the same reason it is important to our customers.
Quality of service
In a very competitive market, Quality of Service is one of the key drivers of success. That would not change if Royal Mail were sold. The Quality of Service regime that applies to Royal Mail under public ownership will continue to apply under private ownership - Ofcom has specified the minimum standards under the Universal Service Order, set in law.
Prices
Stamp prices, whether set under public or private ownership, are subject to significant competitive pressures. Customers have many alternatives to the post. It is pure speculation to suggest that stamp prices could reach £1 in the next few years – in fact in 2013 there was no increase in the price of first class or second class stamps for letters.
Ofcom set safeguard price caps on Second Class stamped mail in 2012, which also covers Second Class parcels up to 2kg. The safeguard cap is set for seven years, for letters it was set at 55p, rising in line with CPI. Ofcom is legally obliged to ensure an affordable postal service and can reintroduce regulation on any Universal Service product.
In 2012, Ofcom said that Royal Mail’s financial position meant “there is a risk to the financial sustainability of the Universal Service”. Ofcom recognised the need for Royal Mail “to materially increase prices in order to support the sustainability of the universal service.” Stamp prices, whether set under public or private ownership, are subject to significant competitive pressures. Royal Mail has chosen to keep letter stamp prices unchanged in 2013. Ofcom found last month (March 2013) that Royal Mail’s services were affordable to consumers and small and medium sized businesses.
UK stamp prices are among the best value in the EU. In five of the six weight steps for First Class and Second Class mail, the cost of UK stamps are ranked in the bottom half of prices when compared with other EU countries. In some cases, the UK is the cheapest.
Rural areas
Royal Mail is honoured to provide the Universal Service to over 29 million addresses in the UK. Rural areas will continue to receive a full, six day a week collection and delivery service at a uniform tariff. The Universal Service is enshrined by the Postal Services Act 2011. Any change to service levels or the uniform tariff would have to be passed through an affirmative vote in both Houses of Parliament.
The quality of service standards that apply to Royal Mail, set by Ofcom in the Universal Service Order, would also continue to apply after any sale. These are amongst the highest of any major European country and include:
Universal Service
Performance measure Standard
Delivery routes completed each day 99.90%
Access points served each day 99.90%
Postal packets deemed delivered 99.50%
First class mail delivered next working day 93.0%
Second class postal packets up to 1kg delivered within 3 working days 98.5%
Second class postal packets more than 1kg delivered within 3 working days 90%
Special Delivery up to 10kg delivered by 13:00 next working day 99.0%
International Mail going to the EU delivered within 3 working days 85.0%
First class mail delivered next working day in each of 118 postcode areas 91.5%
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Small businesses
Royal Mail is very proud to provide the Universal Service and of the role we play in the economy. We make commerce happen by connecting companies, customers and communities across the UK.
The services used by small businesses are protected by law. The Postal Services Act 2011 and the EU Postal Services Directive 1997 require universal postal service prices to be affordable. Ofcom found last month (March 2013) that Royal Mail’s services were affordable to small and medium sized businesses. Ofcom said (in their report on the affordability of postal services, published 19 March 2013):
“The evidence we have collected indicates that universal postal services are affordable for both residential consumers (including low income and other vulnerable consumers) and businesses (including small and medium businesses) at current prices. We have reviewed the price changes that are due to take effect from 2 April 2013 (as announced by Royal Mail in March 2013), and consider that universal postal services will continue to be affordable following these changes .”
The prices of Royal Mail franking services used by business have lagged behind inflation for many years and continue to do so. Franking customers benefit from good value prices and significant discounts, saving over 21 per cent on the price of a First Class letter and 34 per cent on the price of a Second Class letter.
Ofcom has set safeguard price caps on Second Class stamped mail, which also covers Second Class parcels up to 2kg. The safeguard cap is set for seven years, for letters it was set at 55p, rising in line with CPI. Ofcom is legally obliged to ensure an affordable postal service and can reintroduce regulation on any Universal Service product.
Our heritage
Royal Mail is proud of its heritage. It is one of the best brands in the country. This will be a strong and valuable asset for potential investors. There would be no incentive to rebrand or change its iconic visual symbols like post boxes. The Sovereign will continue to approve all stamp issues. The Secretary of State has the power to ensure her image appears on stamps. This process is safeguarded in the Postal Services Act 2011 (Section 62 – “UK postage stamps bearing an image of Her Majesty”).
The British Postal Museum and Archive
Royal Mail established the BPMA in 2004 to manage the public records of The Royal Mail Archive. Stamps form part of the public record and could only be sold with the agreement of the National Archive and other Government bodies. The Postal Services Act enshrines in law the obligation to protect the archive. The long-term funding agreements signed between Royal Mail and the BPMA will continue beyond privatisation.
Post to the Armed Forces
Royal Mail is very proud to deliver a free of charge service to our armed forces undertaking operations. Free post to the armed forces does not depend on Royal Mail remaining in public ownership. The Ministry of Defence fully reimburses Royal Mail for provision of these services. It is a Government decision, whether Royal Mail is under public or private ownership.
Free postal services for the blind
The Government, for the first time, made free services for the blind one of the minimum requirements of the universal postal service in the Postal Services Act 2011. Only Parliament can decide to downgrade these minimum requirements. Royal Mail is very proud to provide this much needed service, which costs around £6.2m each year to deliver. We work closely with the RNIB, as the UK's charity leading supporting those with sight loss, to ensure that the Articles for the Blind scheme meets the needs of blind and partially sighted postal users.
Jobs at Royal Mail
The ownership structure of Royal Mail has no bearing on the number of people employed in the business. Whether it is in the public sector or the private sector, Royal Mail will need to be a smaller and more efficient company. The difficult and demanding process of change is being undertaken in close co-operation with the union.
The Post Office
Royal Mail and the Post Office are now separate companies with independent Boards. Royal Mail is the company that delivers parcels and letters – the provider of the universal postal service. The Post Office is the nationwide network of branches offering a range of postal, Government and financial services. The Post Office is not for sale. The Post Office will remain in public ownership. That is irrespective of whether Royal Mail is sold.
Royal Mail and the Post Office are natural partners and the Chief Executive of Royal Mail has said it would be "unthinkable" that there would not always be a strong commercial relationship between the two companies. A long term commercial agreement between the Post Office and Royal Mail for the continued supply of services was signed in 2012.
The Post Office network
The Government has made a clear commitment no further programme of Post Office closures. The network is now at its most stable for 25 years, at around 11,500 branches. It is also committed to maintaining the network at its current size and is giving the network £1.34 billion of funding for transformation. The two companies have signed a long term commercial agreement that secures their close relationship. It is in both Royal Mail and Post Office Ltd’s interest to ensure a strong, comprehensive post office network.
VAT exemption
Rules governing the implementation of VAT are a matter for HMRC, not Royal Mail. VAT exemptions for core postal service delivery products such as stamps, by Universal Service Providers (USP), are in place in the vast majority of EU countries under the European VAT Directive. Under the Postal Services Act 2011 Royal Mail is the USP in the UK.
The VAT exemption would apply regardless of whether Royal Mail was in public or private ownership. Similar VAT exemptions are in place for Universal Service products in Germany, Austria and the Netherlands. In each country the USP is privately owned.
PR obviously gone into overdrive,it's coming soon,somebody give HQ a nudge.
