Liberalizing postal services

By Alex Singleton | 18 February 2005

Royal Mail, Britain's state-owned postal service, is to lose its legal monopoly on the delivery of letters from January 2006. Currently, Royal Mail faces competition on letters if they are sent in batches 4000 or more. Now any quantity of mail will be legally allowed to be delivered by a competiting firm. The liberalization follows on from the success of similar measures in New Zealand and Sweden.

Trade unions are livid. Billy Hayes, general secretary of the Communication Workers' Union, said that: "The Dutch and German post offices in particular must be rubbing their hands in glee at this ill-advised and regrettable decision."

Hayes suggests an often-argued point: it is unfair to liberalize your markets until others do the same.

Should the British therefore protect their postal service until others agree also to liberalize? The British could do that, but it would not be in their interest to do so. Liberalizing the postal service will bring in new ideas from other operators. It will reduce pricing for consumers, and lower costs for business. It will force the monolith that is Royal Mail to modernize. This is good for Britain. Since the British benefit regardless of what other countries do, it is worth doing regardless.