Earlier this week Mario Dunn of Save Our Royal Mail wrote a post claiming that privatisation of the postal service could see the price of a stamp rise to £1. In the interests of debate we’ve allowed Royal Mail to reply.
Royal Mail makes commerce happen by connecting companies, customers and communities across the UK. We are proud to deliver the Universal Service – the one-price-goes-anywhere, six days a week delivery to the UK’s 29 million addresses.
Last year Ofcom said that Royal Mail’s financial position meant “there is a risk to the financial sustainability of the Universal Service”. Since then we’ve made huge progress in putting Royal Mail and the Universal Service on a more secure footing for the future, but more remains to be done.
Royal Mail needs investment
Royal Mail needs to innovate and remain competitive in the marketplace. We are transforming our business. We need access to external capital to deliver our strategy.
The passage of Postal Services Act 2011 paved the way for Royal Mail to attract external capital.
The Postal Services Act also ensured protection of the Universal Service by law. Six days a week delivery and collection across the UK, both urban and rural, is in the statute book and would require an affirmative vote in both Houses of Parliament to change.
And just last month, Ofcom made clear that following a review of the needs of consumers and businesses, it is ruling out any changes to the scope of the Universal Service.
The suggestions that these protections are not strong enough is misguided – the PSA 2011 states the UK universal service must be provided ‘at affordable prices determined in accordance with a public tariff which is uniform throughout the United Kingdom.’. There is no room for manouevre here.
There must be a uniform tariff, it must be affordable and it must be applicable across the country. 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.
Last month Royal Mail announced that stamp prices for letters and large letters will remain unchanged. Speculation that stamp prices would rise is just that – speculation. Stamp prices, whether set under public or private ownership, are subject to significant competitive pressures. Customers have many alternatives to the post now so we have to fight for our share of market, along with our competitors.
Additionally the freepost services for the blind and partially sighted are also protected by law and we are proud to deliver them– they will not change, no matter who owns Royal Mail.
Similarly, Royal Mail is very proud to deliver a free of charge service to our armed forces undertaking operations. The Ministry of Defence fully reimburses Royal Mail for provision of these services.
There has also been speculation that Royal Mail’s USO services – including stamps – would no longer be subject to a VAT exemption. The European VAT Directive allows VAT exemptions for core postal service delivery products such as stamps for Universal Service Providers (USP) – that’s Royal Mail in the UK. These exemptions are in place in the vast majority of EU countries, whether the USP is publicly or privately owned.
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.
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