Universal Postal Service - House of Commons Business

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Katy Clark (North Ayrshire and Arran, Labour)
I beg to move,

That this House
believes that the Universal Service Obligation as set out in the Postal Services Act 2011 is under threat from unfair competition from organisations which are rapidly expanding end-to-end delivery services in low-cost, high-density urban areas while leaving high-cost, low-density rural areas to be covered by Royal Mail, the universal service provider;
and calls on the Government to instruct Ofcom to bring forward proposals to protect the Universal Service Obligation and the commercial viability of Royal Mail against this threat.

I am very grateful to the Backbench Business Committee for allowing us to have this important, timely, and indeed urgent, debate, given the threat to the universal service obligation. I refer to my entries in the Register of Members’ Financial Interests and advise the House that I have worked with Royal Mail, the Communication Workers Union and Unite the union on the issue in the run-up to the debate.

The London assembly yesterday passed a similar motion expressing concern at the expansion of end-to-end postal services by TNT Post and the ability of such organisations to cherry-pick services that provide the most lucrative work. The assembly was particularly interested in that, as TNT started off providing end-to-end services in London. The motion it passed went further than the one we are considering today, as it called on Royal Mail to be brought back into public ownership.

Royal Mail is the UK’s universal service provider. It is required under the Postal Services Act 2011 to deliver to 29 million UK addresses six days a week, and five days a week for other packets, all being delivered at an affordable, geographically uniform price.

Ofcom became the official regulator of postal services on 1 October 2011. Its primary duty is to secure the provision of the universal service obligation for postal services. It also has a duty, under the Communications Act 2003, to further the interests of citizens and consumers, where appropriate, to promote competition, but its duty to secure the universal service obligation always takes precedence.

There are two types of competition in postal services. The first is downstream access, which allows providers other than Royal Mail to collect and sort mail and then give it to Royal Mail to deliver over the so-called final mile. Obviously, it is not always only a mile, and sometimes it can be less than a mile, but that final part of the process is the part that Royal Mail has a legal obligation to carry out. The other type is the end-to-end service, which is the direct delivery of mail to the customer without any need for Royal Mail to get involved in the process. That is what I will focus on today.

TNT Post is currently Royal Mail’s main competitor in the end-to-end market. In 2012, it launched a direct delivery trial providing a full end-to-end service in west London. Since then, it has rapidly expanded into other parts of London and into Manchester and Liverpool. It plans, by the end of 2017, to cover over 42% of households in the UK, although only about 8.5% of the UK’s geographical area.


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