Royal Mail

If such a restriction on disclosing information to Parliament exists in legislation, this Committee’s strong view is that this should be amended. (Conclusion, Paragraph 12)

We have not heard persuasive evidence to refute the previous Business, Energy and Industrial Strategy Committee’s finding that Royal Mail has deprioritised delivery of letters. (Conclusion, Paragraph 14)

We urge Ofcom to investigate this as a matter of urgency. (Recommendation, Paragraph 15)

There are many reasons for Royal Mail’s persistent poor performance and today it is a private company, operating in a market that has changed beyond recognition in the 13 years since privatisation. Ofcom however is directly accountable to Parliament, and through Parliament to the public, for ensuring the nation’s postal service meets the standard expected. Today, we conclude Ofcom is failing as the statutory regulator of the postal service to deliver on the task it has been set by Parliament. (Conclusion, Paragraph 18)

We are concerned that Ofcom’s regulatory approach has for years now failed to bring about the required step change in Royal Mail’s performance. Three consecutive years of fines and a demand for an “urgent” improvement plan were not enough, as both short-term improvements and long-term USO reform became ensnared in an industrial dispute between Royal Mail and the CWU. It appears to have taken the Secretary of State’s direct 9 intervention to resolve this crisis. We are grateful to the Secretary of State for his action, but he is not the statutory regulator of the postal service. (Conclusion, Paragraph 19)

Beyond the immediate concerns with Royal Mail, we also have growing concerns that Ofcom is not up to the job of regulating a postal market that is growing in competition and complexity. Much of the mail that our constituents rely on, from hospital appointments to energy bills, falls outside the Universal Service Obligation regulated by Ofcom. The public increasingly expects next-day delivery by e-commerce outlets and competitors to Royal Mail make extensive use of its infrastructure without contributing to its costs. It is clear that Ofcom needs to reset its approach to regulating of postal services. The evidence we have heard indicates that the public do not distinguish between mail that is outside the USO and mail that is within it. A common complaint is that important correspondence such as medical appointments is being missed. There should be an assessment of whether this mail should be covered by the USO. (Conclusion, Paragraph 20)

Ofcom must deliver better regulation of the postal market. It should produce a clear roadmap for achieving this which sets out the statutory and non-statutory tools Ofcom currently has at its disposal, and how it intends to use these to bring about demonstrable improvements in public satisfaction with postal services. This must not be limited to services covered by the Universal Service Obligation, but also include Access mail and services delivered by Royal Mail’s competitors. Where Ofcom is of the view that it currently lacks the remit and/or powers to address particular issues in the postal sector, it should clearly set out these gaps to this Committee. This reset should include the ability to provide basic operational performance data to Parliament, including the specific number of letters and parcels delivered outside performance targets. It should also include a far more assertive approach to spot-checking whether and how often parcels are prioritised over letters. (Recommendation, Paragraph 21)

We respect Ofcom’s operational independence, and in the first instance it should be for the regulator itself to reform its approach. However, Ofcom is ultimately given its remit by Parliament. This remit can be changed. (Conclusion, Paragraph 22)

If the improvement plan we have recommended fails to deliver meaningful change within six months of this Report, the Secretary of State should consult on statutory changes to Ofcom’s duties and/or powers, to ensure it is fit for the 21st-century postal market. As a first step, the Secretary of State should present a proposal to this Committee for levelling the playing field between Royal Mail and its competitors. This should ensure that competitors are not able to free-ride on Royal Mail’s infrastructure, nor undercut employment conditions through gig economy models. Ministers 10 should consider a wide range of options, including a levy on competitors to reflect the benefit they enjoy from the use of the network, or minimum standards for other operators to adhere to, from both a consumer and worker perspective. (Recommendation, Paragraph 23) 11