Question to the Department for Business and Trade:

To ask the Secretary of State for Business and Trade, what assessment he has made of the effectiveness of Ofcom’s financial penalties in improving Royal Mail’s ability to meet its performance targets; and if he will take steps to ensure that future fines are reinvested to increase (a) staffing levels and (b) service quality within Royal Mail rather than being paid into the Consolidated Fund.

Ofcom’s financial penalties are regulatory decisions in which the government does not have a role. The government expects Ofcom, as the independent regulator of postal services, to ensure the provision of a financially sustainable and efficient universal postal service.

Financial penalties are designed to incentivise compliance and deter future breaches, rather than to fund specific operational improvements. As with other regulatory fines, any sums collected are paid into the Consolidated fund in accordance with standard Treasury practice, unless explicit statutory provision or a Treasury-approved agreement allows otherwise.

It is for Royal Mail, as an independent company to determine its staffing levels and improve its performance to ensure it meets its Universal Service Obligation. It is clear that Royal Mail’s improvements have not been good enough. As such, Ofcom has told Royal Mail it must publish and deliver a credible improvement plan.