News and press releases

  • Royal Mail
    Royal Mail Cruciform logo
    9 April 2013
    A strong, protected Universal Service, which Royal Mail is honoured to provide

This statement sets out the extensive legal and regulatory framework which is in place for Royal Mail’s customers across the UK. This framework applies whether or not Royal Mail is sold.

1. The one price goes anywhere, six day a week service
The uniform, affordable tariff across the whole of the UK is protected by law. The Postal Services Act 2011 (Section 31) obliges a “postal service “at affordable prices determined in accordance with a public tariff which is uniform throughout the United Kingdom.” The Universal Service, including six-day-a-week collection and delivery, is enshrined in statute. It can only be changed if voted for by both Houses of Parliament.

Ofcom has made it clear in March 2013 that, following a review of the needs of consumers and businesses, it is ruling out any changes to the scope of the Universal Service. Royal Mail is honoured to deliver the UK’s six-day-a-week, one-price-goes-anywhere Universal Service. 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.

2. Stamp 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.

3. 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.

4. Rural areas
Daily deliveries to rural areas will not be reduced in the event of the sale of Royal Mail. It is legally obliged to deliver to every address, whether urban or rural, under the minimum requirements of the Universal Service. These are defined in law and cannot be changed unless voted for by 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: 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine out of ten customers consider Royal Mail a core part of the community – particularly in rural communities, where we are part of the lifeblood of day to day communication. We have an extensive network of over 115,000 postboxes across the UK, the highest level of provision per square kilometre of Western European nations.

5. Supporting 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.

6. Articles for the Blind
Royal Mail is very proud to provide the articles for the blind scheme, which cost a total of £6.2 million to provide in 2011/12. The service, which provides free postage for blind or partially sighted people, is protected by law. It is included as a minimum requirement of the Universal Service in Section 31 of the Postal Services Act. 

A change to the Articles for the Blind scheme can only happen if directed by the Secretary of State and voted for by both Houses of Parliament.

7. Free post for HM 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.

8. Our heritage
Royal Mail wants to combine the best of the private and public sectors. Delivering a public service and making it profitable are not contradictory objectives. Our business strategy is to ensure a sound and sustainable Universal Service for the benefit of everyone in the UK.

Government has legislated to protect Royal Mail’s heritage. The Government included an additional safeguard in the Postal Services Act 2011 to enable it to ensure that the Queen's head remains on stamps regardless of who owns the company in the future. Royal Mail is very proud of its heritage, for example, we maintain 115,000 distinctive red postboxes across the UK. Royal Mail is also required by legislation to report annually to Parliament on its heritage activities.
Royal Mail made a number of commitments around post boxes in a joint policy statement with English Heritage in 2002. This included repainting post boxes every three years or more often if required.

The policy states: “All Royal Mail letter boxes will be painted in standard red and black livery. No variation is allowed, except in very exceptional circumstances where there are genuine historical reasons, such as the use of green and black livery for some early boxes or Air Force blue for surviving George VI airmail boxes.

For further information contact:
Royal Mail Group Press Office

020 7250 2468