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Royal  Mail  Chief  Executive Adam Crozier today said: “Royal Mail welcomes the  package of proposals from the Independent Review Panel, led by Richard Hooper,  which  we  firmly  believe  will  help  secure  the  future of the one-price-goes-anywhere  Universal  Service  which is a crucial part of the social  and  economic fabric of the country and underpins the entire postal industry in the UK.

“Royal  Mail  also welcomes the recommendation by the Panel that Royal Mail and  Post  Office Ltd should each be allowed to develop and thrive in their different  marketplaces,  with  the  ability  to  focus  on  serving  their particular  customers’ needs. Our initial view is that the proposals, which have  the  full  endorsement  of  the Government, offer a strong and secure future for Royal Mail and Post Office Ltd, and the ability to invest in the best  interests  of  their people and their customers. We will of course be examining  the  document in more detail to assess the full implications for the company.”

Under  the  terms of the proposals Royal Mail will be allowed to enter into partnerships with private sector companies, bringing in investment into the postal  operations  to  help  accelerate  its  transformation  plans  while securing  the  future  of  the Universal Service. The report states clearly that  Royal  Mail’s  postal  operations  should  remain  as  an  integrated end-to-end  business. Post Office Ltd, also part of Royal Mail Group, would remain  entirely  in  public  ownership,  reflecting  its strong social and community role, and would continue to deliver both Government and financial services  to  communities around the UK. The report specifically recommends that  Post  Office  will  continue  to play an important role in helping to provide the Universal Service throughout the UK.

Mr  Crozier  said:  “We are also announcing today that Royal Mail Group and the  Government  have  received  an  expression  of interest from the Dutch postal  operator,  TNT, in a postal partnership with Royal Mail. We welcome this  approach  and  will  be  having  discussions  with them and any other potential partners over the coming weeks and months.”

Mr Crozier added: “The report recognises that the rate of structural volume decline  in the UK postal market – as in the rest of the postal world – has accelerated,   with  all  postal  operators  now  competing  in  the  wider communications  market where there is increasingly intense competition from broadband  and  other electronic media. There is therefore a clear need for Royal  Mail to have access to private capital to accelerate the pace of our modernisation plans while continuing to provide the one-price-goes-anywhere Universal  Service.  Competition  from  electronic media is already costing Royal  Mail  at  least  £500m  a  year  in  profits,  while  the  impact of competition  from  other  postal  operators  is  around  £100m. The Panel’s proposals  will allow greater investment in new technology to achieve still better  quality  of  service  and  efficiency  and to develop other revenue streams  which  will  help  support the future of the Universal Service and underpin  the  future  success  of  the  company.  At the same time we will continue  to  bring  in  skills and talents from outside the business as we drive forward our transformation plan.”

The  independent  review  team has also proposed that Royal Mail’s historic pension  deficit,  which  is  costing  the business hundreds of millions of pounds  a  year,  should be addressed by the Government in a form yet to be determined – as has already happened with many of its major rivals.

Mr Crozier added: “Earlier this year Royal Mail reformed the pension scheme to reduce the risk going forward. However, the Panel’s report, again wholly endorsed by the Government, recognises that Royal Mail simply cannot afford the  unsustainable  legacy  financial  burden,  nor  can  we  pass it on to customers  in  an  increasingly  tough  commercial marketplace if we are to compete  and  succeed in the future. The Panel’s proposals will help ensure that  the  financial  benefits of modernisation and greater efficiency will flow  through  to our customers in the form of better services, rather than simply be absorbed by increasing payments into a volatile pension fund. The proposals   will  also  clearly  be  of  benefit  to  our  people  and  our pensioners.”

During  the  review,  the  Panel  looked  at the way in which the sector is regulated  and  concluded  that  in  the  light  of  market  developments – especially   the   increasing   switch   away   from   mail  to  electronic communications  -  the  postal  industry  should  in future be regulated by Ofcom.  Royal  Mail said it welcomes the Government’s decision to implement this  change in order to reflect the reality of the marketplace in which we now  operate,  and  we will be working closely with Ofcom as we move to the new regime.

Mr  Crozier added: “Central to all of these proposals is the need for Royal Mail  to  modernise its operations at pace. We already have a clear plan in place  to  do so and we will now be driving forward that transformation and ensuring that everyone in the organisation plays their part in delivering a world class postal service to our customers.

“This package of proposals underlines the Government’s strong commitment to the  future  of  Royal Mail Group – both the Royal Mail postal business and Post  Office  Ltd. Importantly for the company, these proposals are in line with  our  submission to the Independent Review Panel and we firmly believe they  are  in the best long term interests of our people, our customers and the security of the Universal Service.”