Call to part-privatise Royal Mail

The Royal Mail should be part-privatised, or mail deliveries on Saturdays may be axed, according to a report from PostComm. The report warns that the Post Office is in desperate need of a cash injection to halt its deterioration.

It adds that the Government needs to support a partial sell-off of some of Royal Mail’s other services, such as its licence to deliver post in certain parts of the UK, as part of a radical transformation of the service. The report says that the removal of Saturday deliveries could save £270m a year. The Post Office recorded a £279m loss for the year to end-March.

PostComm chairman Nigel Stapleton says the Royal Mail may require a government subsidy, and adds that private sector partnerships had worked in other European countries.

Royal Mail’s 350-year monopoly on the postal system ended in 2006, when other licensed operators were given the right to collect and deliver mail. Royal Mail has lost business in the bulk mail collection and sorting market, but still has to offer the less profitable universal delivery service.

PostComm says more competition in the sector is required to ensure high quality service. In order to encourage new operators, PostComm says that Royal Mail VAT exemption should be scrapped.

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