The reform of the Postal Services 1997-2011
The note summarises the last Labour Government’s policies on postal services before outlining the main provisions in the Postal Services Act 2011 that was bought in by the Coalition Government. Subsequent developments are set out in two further Standard Notes on Privatisation of the Royal Mail (SN/EP/06668) and on the Post Office: recent developments (SN/EP/06718).
In 2008, the Hooper Review recommended a package of measures to modernise the Royal Mail Group and sustain the universal service. Its proposals included the creation of a strategic partnership between Royal Mail Group and one or more private sector companies; the transfer of historic pension liabilities from Royal Mail Group to government; and a new regulatory regime with the transfer of responsibility for regulating the postal service market from Postcomm to Ofcom. The Labour Government introduced the Postal Services Act 2008-09 to legislate for the Hooper Review recommendations, but the Bill did not proceed to Second Reading due to difficulties in identifying a private sector partner.
The Coalition Government asked for a ‘Hooper Update’. This found that while a private sector partner was no longer required, the potential to privatise Royal Mail remained and with it, the need for access to private sources of capital funding. The Coalition Government therefore legislated for the rest of the Hooper recommendations in the Postal Services Act 2011.
As a result of the legislation:
• Ofcom has taken over regulatory responsibility for postal services;
• Royal Mail’s and the Post Office’s historic pensions liabilities have been transferred to the Government;
• Royal Mail Group and the Post Office have become separate companies; and
• The Government plans to offer shares for sale in the Royal Mail Group before April 2014 and plans to move the Post Office into a ‘mutual structure’ before 2015.