The Universal Postal Service
The Universal Postal Service is an obligation on Royal Mail to deliver a postal service to everyone living in every part of the UK for the same cost and standard. The key principles are
- At least one delivery and collection of letters every Monday to Saturday; and
- At least one delivery of postal packages every Monday to Friday; and
- At least one collection of postal parcels every Monday to Friday from every access point in the UK used for that purpose; and
- A service of delivering postal packets and registered items from one address to another, by affordable and geographically-uniform prices throughout the UK
It doesn’t matter if you live in London, Belfast, John O’Groats or Lands End – you pay the same and get the same postal service. This is particularly crucial for people living in rural areas and those who find travel difficult. It is a fundamental principle of postage in the UK.
Post and Politics
The UK Government passed the Postal Services Act 2011 which paved the way for the privatisation of Royal Mail through a stock market floatation in 2013. This created Royal Mail Group plc and ended nearly 500 years of full state ownership. Royal Mail, as the designated provider of the Universal Postal Service, was therefore subjected to further regulation to ensure the continuation of the Universal Postal Service and Ofcom was given the role of the postal service regulator to ensure the Universal Postal Service continues into perpetuity.
Threat to the Universal Postal Service
The Universal Postal Service is expensive for Royal Mail to operate – the revenue per letter is the same to deliver a letter to a city address 1 mile away as it is to deliver to a remote farm house on the other side of the country. The effort required and marginal costs differ substantially for the same letter and service. Royal Mail is the only letter delivery company to have a duty to provide a Universal Postal Service however it does not have a monopoly on letter delivery. Like almost any market, the letter delivery market in the UK is open for third party competition and there are multiple operators.
Royal Mail, as a publicly listed company, has a duty to maximise shareholder value but feels the Universal Postal Obligation hampers its business in a competitive market where third parties can just cherry pick profitable letter delivery and ignore the costly deliveries. However, economically, politically and socially, the Universal Postal Service is a critical backbone and principle for UK delivery.
The Future of the Universal Postal Service
The Universal Service is continually reviewed and assessed and Ofcom do not believe that the Universal Service is under immediate threat, but they recognise that market conditions are changing rapidly. Ofcom has the regulatory power to place conditions on other postal operators in order to protect the Universal Service and Ofcom has a difficult role in ensuring the Universal Service is both financially fair and sustainable.