UK Postage Prices: Regulation

UK postage prices are a popular discussion point amongst consumers and businesses that use UK postal services. This article provides some information about how UK postage prices are regulated.

Royal Mail

From Wikipedia

Royal Mail is the national postal service of the United Kingdom. Royal Mail Holdings plc owns Royal Mail Group Limited, which in turn operates the brands Royal Mail (UK letters), Parcelforce Worldwide (UK parcels) and General Logistics Systems. Post Office Ltd, which provides counter services, is a wholly owned subsidiary.

Royal Mail Holdings is a public limited company in which the Secretary of State for Business, Innovation and Skills owns 50,004 ordinary shares plus 1 special share, and the Treasury Solicitor holds 1 ordinary share.[1]

Historically, the General Post Office was a government department which included the Royal Mail delivery business, represented in government by the Postmaster General, a Cabinet-level post. It became a statutory corporation in 1969.[2] Most of the duties were passed to Consignia plc in November 2001,[3] and the old Post Office was dissolved in 2007.[3] Consignia changed to Consignia Holdings plc, then Royal Mail Holdings plc, the current name.[4]

Royal Mail was not privatised in the 1980s and 1990s, but remains a limited company owned by the UK government. A bill that arrived in the House of Commons around 4 June 2009 would, if passed, partly privatise the company. However the bill was postponed due to the current recession.[5]

Royal Mail is responsible for universal mail collection and delivery in the UK. Letters are deposited in a pillar or wall box, taken to a post office, or collected in bulk from businesses. Deliveries are made at least once every day except Sundays and Bank Holidays at uniform charges for all destinations within the UK. First Class deliveries are generally made the next business day throughout the UK.[6]

Royal Mail delivered 84 million items every working day and had a network of 14,376 post offices with a revenue of £9.056 billion, and profits before tax were £312 million in 2006.[7] Since that time, profits have dropped year on year – £233 million in 2006-7 falling to a £10 million trading deficit in 2007. In 2008, the BBC reported that Royal Mail's trading position had worsened to an annual loss of £279 million/yr in financial 2007.[8] For the financial year 2008-9 Royal Mail had an operating profit of £321m, with all four group businesses in a full year profit for the first time in two decades.[9]

In Wales, the service carries the Welsh name Post Brenhinol, as well as the English name. Both names are normally used on vans, postboxes etc. It is also compulsory for all Post Offices in Wales to have the name Swyddfa'r Post on display outside.[10] In parts of the highlands and islands of Scotland, post office branches also display the name Oifis a' Phuist, which means post office in Scots Gaelic

Pricing in Proportion (UK postage prices)

Pricing in Proportion (UK postage prices) is a Royal Mail postage prices structure in the UK introduced on 21 August 2006. It is also a pricing structure used on the Isle of Man by Isle of Man Post, but not on the other island post networks Jersey Post and Guernsey Post. The postage prices system has three bands - letter, large letter and packet. The postage prices of mail is based on the size of the item as well as weight. It was started by the Royal Mail to make the pricing of mail reflect what was the actual cost of the postage.

Royal Mail originally claimed that 80% of items would be unaffected by the change which would also be "revenue neutral". This was then revised down to 70% (i.e. 30% cost more or less than before).

Letter - UK postage prices
The size is a piece of mail that has a maximum length of 240 mm (9.45"),[1] a width of 165 mm (6.50") and a thickness of 5 mm (0.20"). Its weight must not go over 100 g (3.53 oz). In simple terms, it a letter that is no bigger than an C5 envelope with no more than a few sheets of A4 paper. Examples are most letters, bills and statements. UK postage prices.

Large Letter - UK postage prices
The size is a piece of mail that has a maximum length of 353 mm (13.90"), a width of 250 mm (9.84") and a thickness of 25 mm (0.98"). It can weigh up to 750 g (26.46 oz). In layman's terms, it is anything smaller than a C4 envelope with about 100 pieces of A4 paper. Example of this are many brochures, catalogues and company reports, some magazines, or DVDs in their boxes. UK postage prices.

Packet - UK postage prices
Anything bigger than a large letter is classed as a packet, so catalogues like the Argos book or some of the stationery catalogues, VCR tapes, posters in their cardboard tubes and parcels. UK postage prices.

Postal Services Commission

From Wikipedia
The Postal Services Commission, known as Postcomm, is a non-ministerial department of the Government of the United Kingdom charged with overseeing the quality and universal service of post in the United Kingdom (and UK postage prices). It was established by the Postal Services Act 2000.

Most of Postcomm's role involves regulating Royal Mail Ltd (which does letter delivery, and guarantees a universal postal service and UK postage prices) and its two subsidiaries, Post Office Ltd and Parcelforce. Postcomm is also charged with the licensing of the UK's postal operators. Its 'sister' organisation, Postwatch, the independent watchdog of postal services, is to be merged with the incoming 'Consumer Focus' in late 2008.

In May 2008, Postcomm called for the part-privatisation of Royal Mail to safeguard the universal service (and UK postage prices). Business Secretary Vince Cable confirmed the privatisation of up to 90% of the business in October 2010. The proposal, which also includes the possible mutualisation of the Post Office, will go through Parliament in the Postal Services Bill. Any purchasing business would be required by the bill to retain the universal service of collection and delivery of mail six days a week at affordable postage prices. Royal Mail staff will be offered the remaining 10% shares while the Government will take on the group's pension liabilities.[2]

The UK Government confirmed in October 2010 that the roles fulfilled by Postcomm will be absorbed into the communications regulator Ofcom as part of the Postal Services Bill