Review of the universal postal service and other postal regulation: Citizens Advice’s response to Ofcom’s consultation
Postal services - both in the UK and across Europe - are at a crossroads. On the one hand, post remains a fundamental pillar of our communications network. On the other, we’ve witnessed a digital upheaval in the way we communicate and letter volumes have declined as a result. Ofcom’s consultation is therefore timely. Although the UK parcels market is competitive, Royal Mail holds a virtual monopoly over letter post, making the targets and conditions set by the USO central to consumer protection.
Reform is necessary - the USO is not providing effective consumer protection in its current form, leaving people facing ongoing service failures combined with steeply rising prices. We’re concerned that the lack of effective regulation at present means that, at best, there are few incentives for Royal Mail to meet targets, and at worst, there is a risk of creating commercial advantages to ongoing poor service.
Ofcom has now put forward its proposals for a revised USO. However, the key proposals set out in the consultation paper also raise a range of concerns from the consumer perspective, which we need to see addressed before implementation.
We also remain concerned that Ofcom’s overall approach is unbalanced. The consultation proposes generating significant savings for Royal Mail through cuts to the service and a reduction of quality of service targets, but at this stage offers no reciprocal measures to ensure the company is then incentivised to tackle the issues that matter most to consumers.
We note that no attempt has been made to balance an assessment of the financial sustainability of the USO with an assessment of the efficiency of the service, as is required by the primary legislation. Without an assessment of Royal Mail’s efficiency, there is a real risk that Royal Mail is simply being allowed to pass inefficiency costs on to consumers or government - something the regulatory provisions in the 2011 Postal Services Act clearly sought to avoid. Citizens Advice urges Ofcom to advise Parliament on a way forward, rather than push regulatory changes through the backdoor that go against the spirit of the legislation.