Lower Edmonton Royal Mail sorting office, in London
The Royal Mail can trace its history back to 1516, when Henry VIII established a "Master of the Posts", a position that was renamed "Postmaster General" in 1710.
Upon his accession to the throne of England at the Union of the Crowns in 1603, James VI moved his court to London. One of his first acts from London was to establish the royal postal service between London and Edinburgh, in an attempt to retain control over the Scottish Privy Council.
The Royal Mail service was first made available to the public by Charles I on 31 July 1635, with postage being paid by the recipient. The monopoly was farmed out to Thomas Witherings.
In the 1640s Parliament removed the monopoly from Witherings and during the Civil War and First Commonwealth the parliamentary postal service was run at great profit for himself by Edmund Prideaux (a prominent parliamentarian and lawyer who rose to be attorney-general). To keep his monopoly in those troubled times Prideaux improved efficiency and used both legal impediments and illegal methods.
In 1653 Parliament set aside all previous grants for postal services, and contracts were let for the inland and foreign mails to John Manley. Manley was given a monopoly on the postal service, which was effectively enforced by Protector Oliver Cromwell's government, and thanks to the improvements necessitated by the war Manley ran a much improved Post Office service. In July 1655 the Post Office was put under the direct government control of John Thurloe, a Secretary of State, and best known to history as Cromwell's spymaster general. Previous English governments had tried to prevent conspirators communicating, Thurloe preferred to deliver their post having surreptitiously read it. As the Protectorate claimed to govern all of Great Britain and Ireland under one unified government, on 9 June 1657 the Second Protectorate Parliament (which included Scottish and Irish MPs) passed the "Act for settling the Postage in England, Scotland and Ireland" that created one monopoly Post Office for the whole territory of the Commonwealth. The first Postmaster General was appointed in 1661, and a seal was first fixed to the mail.
At the restoration of the monarchy, in 1660, all the ordinances and acts passed by parliaments during the Civil War and the Interregnum passed into oblivion, so the General Post Office (GPO) was officially established by Charles II in 1660.
Between 1719 and 1763, Ralph Allen, postmaster at Bath, signed a series of contracts with the post office to develop and expand Britain's postal network. He organised mail coaches which were provided by both Wilson & Company of London and Williams & Company of Bath. The early Royal Mail Coaches were similar to ordinary family coaches but with Post Office livery.
The first mail coach ran in 1784, operating between Bristol and London. Delivery staff received uniforms for the first time in 1793, and the Post Office Investigation Branch was established. The first mail train ran in 1830, on the Liverpool and Manchester Railway. The Post Office's money order system was introduced in 1838.
Uniform penny postage
Royal Mail Post Office Regulations handbill
giving details of the Uniform Penny Post, dated 7 January 1840
In December 1839 the first substantial reform started when postage rates were revised by the short-lived Uniform Fourpenny Post. Greater changes took place when the Uniform Penny Post was introduced on 10 January 1840 whereby a single rate for delivery anywhere in Great Britain and Ireland was pre-paid by the sender. A few months later, to certify that postage had been paid on a letter, the sender could affix the first adhesive postage stamp, the Penny Black that was available for use from 6 May the same year. Other innovations were the introduction of pre-paid William Mulready designed postal stationery letter sheets and envelopes.
As Britain was the first country to issue prepaid postage stamps, British stamps are the only stamps that do not bear the name of the country of issue on them.
By the late 19th century, there were between six and twelve mail deliveries per day in London, permitting correspondents to exchange multiple letters within a single day.
The first trial of the London Pneumatic Despatch Company was made in 1863, sending mail by underground rail between postal depots. The Post Office began its telegraph service in 1870.
Pillar box dating from the reign of Queen Victoria
Royal Mail GR VI cast iron wall postbox in Clackmannan, Scotland still in use
The first Post Office pillar box was erected in 1852 in Jersey. Pillar boxes were introduced in mainland Britain the following year. British pillar boxes traditionally carry the Latin initials of the reigning monarch at the time of their installation, for example: VR for Victoria Regina or GR for Georgius Rex. Such branding is not used in Scotland due to dispute over the current monarch's title. Some Scottish nationalists argue that Queen Elizabeth II should have simply been Queen Elizabeth as there had been no previous Queen Elizabeth of Scotland or of the United Kingdom of Great Britain and Northern Ireland (Elizabeth I was Queen only of the pre-1707 Kingdom of England). The dispute included vandalism and attacks on pillar and post boxes introduced in Scotland that displayed EIIR. To avoid the dispute, pillar boxes in Scotland were either marked 'Post Office' or use the Scots Crown.
A national telephone service was opened by the Post Office in 1912. In 1919, the first international airmail service was developed by Royal Engineers (Postal Section) and Royal Air Force. The London Post Office Railway was opened in 1927.
In 1941 an airgraph service was introduced between UK and Egypt. The service was later extended to: Canada (1941), East Africa (1941), Burma (1942), India (1942), South Africa (1942), Australia (1943), New Zealand (1943) Ceylon (1944) and Italy (1944).
Under the Post Office Act 1969 the General Post Office was changed from a government department to a statutory corporation, known simply as the Post Office. The office of Postmaster General was abolished and replaced with the positions of chairman and chief executive in the new company.
The two-class postal system was introduced in 1968, using first-class and second-class services. The Post Office opened the National Giro Bank that year.
In 1971, postal services in Great Britain were suspended for two months between January and March as the result of a national postal strike over a pay claim. Postcodes were extended across Great Britain and Northern Ireland between 1959 and 1974.
Postal workers held their first national strike for 17 years in 1988 after walking out over bonuses being paid to recruit new workers in London and the South East. Royal Mail established Romec (Royal Mail Engineering & Construction) in 1989 to deliver facilities maintenance services to its business. Romec is 51% owned by Royal Mail and 49% by Haden Building Management Ltd which became Balfour Beatty WorkPlace and now Cofely UK, part of GDF Suez in a joint venture.
British Telecom was separated from the Post Office Corporation in 1980 and demerged as an independent business in 1981. Girobank was sold to Alliance & Leicester in 1990 and Royal Mail Parcels was rebranded as Parcelforce. The remaining business continued under public ownership as privatisation of this was deemed to be too unpopular. However, in the 1990s President of the Board of Trade Michael Heseltine began investigating a possible sale and eventually a Green Paper on Postal Reform was published in May 1994, outlining various options for privatisation. The ideas though, proved controversial and were dropped from the 1994 Queen's Speech after a number of Conservative MPs warned Heseltine they would not vote for the legislation.
After a change of government in 1997, the Labour administration decided to keep the Post Office state-owned but with more commercial freedom. This led to the Postal Services Act 2000, where the Post Office became a public limited company in which the Secretary of State for Trade and Industry owned 50,004 ordinary shares plus 1 special share, and the Treasury Solicitor held 1 ordinary share. The company was renamed Consignia plc in 2001 and the new name was intended to show that the company did more than deliver mail; however, the change was very unpopular with both the public and employees. The Communication Workers Union (CWU) boycotted the name, and the following year, it was announced that the company would be renamed Royal Mail Group plc.
In 1999 Royal Mail launched a short-lived e-commerce venture, ViaCode Limited, aimed at providing encrypted online communications services. However it failed to make a profit and closed in 2002.
As part of the 2000 Act the government set up a postal regulator, the Postal Services Commission, known as Postcomm, which offered licences to private companies to deliver mail. In 2001, the Consumer Council for Postal Services, known as Postwatch, was created for consumers to express any concerns they may have with the postal service in Britain.
In 2004, the second daily delivery was scrapped in an effort to reduce costs and improve efficiency, meaning a later single delivery would be made. That year, the travelling post office mail trains were also axed. The following year Royal Mail signed a contract with GB Railfreight to operate an overnight rail service between London and Scotland (carrying bulk mail, and without any on-train sorting); this was later followed by a London-Newcastle service.
On 1 January 2006, the Royal Mail lost its 350-year monopoly and the British postal market became fully open to competition. Competitors were allowed to collect and sort mail, and pass it to Royal Mail for delivery, a service known as downstream access. Royal Mail introduced Pricing in Proportion (PiP) for first and second class inland mail, whereby prices are affected by the size as well as weight of items. It also introduced an online postage service, allowing customers to pay for postage online.
In 2007 the Royal Mail Group plc became Royal Mail Group Ltd in a slight change of legal status. Royal Mail ended Sunday collections from pillar boxes that year.
On 1 October 2008, Postwatch was merged into the new consumer watchdog Consumer Focus.
In 2008, due to a continuing fall in mail volumes the government commissioned an independent review of the postal services sector by Richard Hooper CBE, the former deputy chairman of Ofcom. The recommendations in the Hooper Review led Business Secretary Lord Mandelson to seek to part privatise the company by selling a minority stake to a commercial partner. However, despite legislation for the sale passing the House of Lords, it was abandoned in the House of Commons after strong opposition from backbench Labour MPs. The government later cited the difficult economic conditions for the reason behind the retreat.
After the departure of Adam Crozier to ITV plc on 27 May 2010, Royal Mail appointed Canadian Moya Greene as chief executive, the first woman to hold the post.
On 6 December 2010, a number of paid-for services including Admail, post office boxes and private postboxes were removed from the Inland Letter Post Scheme (ILPS) and became available under contract. Several free services including petitions to parliament and the sovereign, and poste restante were removed from the scheme.
Following the 2010 general election, the new Business Secretary in the coalition government, Vince Cable, asked Richard Hooper CBE to expand on his report, to account for EU Directive 2008/6/EC which called for the postal sector to be fully open to competition by 31 December 2012. Based on the Hooper Review Update the government passed the Postal Services Act 2011. The Act allowed for up to 90% of Royal Mail to be privatised, with at least 10% of shares to be held by Royal Mail employees.
As part of the 2011 Act, Postcomm was merged into the communications regulator Ofcom on 1 October 2011, with Ofcom introducing a new simplified set of regulations for postal services on 27 March 2012. On 31 March 2012, the Government took over the historic assets and liabilities of the Royal Mail pension scheme, relieving Royal Mail of its huge pensions deficit. On 1 April 2012, Post Office Ltd became independent of Royal Mail Group and was reorganised to become a subsidiary of Royal Mail Holdings, with a separate management and board of directors. A 10-year inter-business agreement was signed between the two companies to allow Post Offices to continue issuing stamps and handling letters and parcels for Royal Mail. The Act also contained the option for Post Office Ltd to become a mutual organisation in the future.
In July 2013, business secretary Vince Cable announced Royal Mail was to be floated on the London Stock Exchange and confirmed that postal staff would be entitled to free shares. Cable explained his position before the House of Commons:
The government's decision on the sale is practical, it is logical, it is a commercial decision designed to put Royal Mail's future on a long-term sustainable business. It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.
Royal Mail's chief executive Moya Greene publicly supported Cable, stating that the sale would provide staff with "a meaningful stake in the company", while the public will be able to "invest in a great British institution". On 12 September 2013, a six-week plan for the sale of at least half of the business was released to the public; the Communication Workers Union (CWU), representing over 100,000 Royal Mail employees, said that 96% of Royal Mail staff opposed the sell-off. A postal staff ballot in relation to a nationwide strike action was expected to take place in late September 2013.
Applications for members of the public to buy shares opened on 27 September 2013, ahead of the company's listing on the London Stock Exchange on 15 October 2013. The government was expected to retain between a 37.8% and 49.9% holding in the company. A report on 10 October 2013 revealed that around 700,000 applications for shares had been received by HM Government, more than seven times the amount that is available to the public. Business Secretary Vince Cable stated: "The aim is to place the shares with long-term investors, we are absolutely confident that will happen." At the time of the report, Royal Mail staff continued to ballot regarding potential strike action.
The Initial Public Offering (IPO) price was set at 330p and conditional trading in shares began on 11 October 2013, ahead of the full listing on 15 October 2013. Following the IPO, 52.2% of Royal Mail had been sold to investors, with 10% given to employees for free. Due to the high demand for shares, an additional 7.8% was sold via an over-allotment arrangement on 8 November 2013. This left the government with a 30% stake in Royal Mail and £1.98bn raised from the sale of shares.
The CWU confirmed on 13 October 2013 that strike action would occur in response to the privatisation of Royal Mail, with a possible start date of 23 October 2013. A union source stated: "It is likely to be an all-out strike first, then rolling strikes in the run up to Christmas", while the CWU had dismissed the offer of an 8.6% rise over three years as "misleading and unacceptable". Prior to the announcement of the strike ballot results on the afternoon of 16 October 2013, employees were offered £300 to cross the picket line if a nationwide postal strike occurs. The CWU called off strike action on 30 October 2013 while negotiations progressed with Royal Mail's management. The talks were extended on 13 November 2013, with the aim that an agreement be reached by both sides by 20 November 2013. Royal Mail confirmed that both sides had reached a proposed settlement on 4 December, and the CWU confirmed on 9 December 2013 that it would recommend the deal to its members. On 6 February 2014, the CWU confirmed that Royal Mail staff had voted to accept the settlement.
Share prices rose by 38% on the first day of conditional trading, leading to accusations that the company had been undervalued. Six months later, the market price was 58% more than the sale price and peaked as high as 87%—much of this profit was acquired by large investors, such as pension funds and hedge funds, that were given priority during the allocation of shares. Business Secretary Vince Cable defended the low sale price that was finalised—saying the threat of strike action around the time of the sale meant it was a fair price in the circumstances—following questioning from the House of Commons Business Committee in late April 2014. On behalf of both himself and Business Minister Michael Fallon, Cable stated before the Committee: "We don't apologise for it and we don't regret it."
Cable was required to respond to the sale price issue again on 11 July 2014 after a report was published on that date by the Business, Innovation and Skills (BIS) Committee. Chaired by Adrian Bailey MP, the report concluded:
It is clear that the Government met its objectives in terms of delivering a privatised Royal Mail with an employee share scheme. However, it is not clear whether value for money was achieved and whether Ministers obtained the appropriate return to the taxpayer. We agree with the National Audit Office that the Government met its primary objective. On the basis of the performance of the share price to date, it appears that the taxpayer has missed out on significant value.
The report also concluded that the "Government over-emphasised the risk" in regard to the industrial relations between the government and the CWU, with the BIS Committee referring to the Royal Mail share price before, during and after the finalisation of the pay deal with the union. During the presentation of the report, Bailey referred to the underpinning factors of "fear of failure and poor quality advice", and warned that British taxpayers could sustain further losses in the future due to the inclusion of Royal Mail's 'surplus' assets as part of "the most significant privatisation in years". The BIS Committee called on the UK government to publish a list of the preferred investors involved in the sale, including the details of those investors who sold their shareholding. Billy Hayes, general secretary of the CWU, also responded to the BIS report: "The Bis select committee's damning report published today shows the extent of the government's incompetence in the privatisation of Royal Mail."
In 2014, the London Assembly voted to call for the renationalisation of Royal Mail.
On 4 June 2015, the Chancellor of the Exchequer, George Osborne, announced the government would sell its remaining 30% stake. A 15% stake was subsequently sold to investors on 11 June 2015, raising £750m, with a further 1% passed to the company's employees. The government completed the disposal of its shareholding on 12 October 2015, when a 13% stake was sold for £591m and another 1% was given to employees. In total the government raised £3.3bn from the full privatisation of Royal Mail.
As of 13 January 2020, Royal Mail shares are trading below the issue price, as they did throughout all of 2019.