By Claire West

Royal Mail have welcomed the Government's plans for rapid deregulation of the competitive postal services market and its intention to resolve the £10.3bn historic pension deficit. The company also welcomed the proposals in the Postal Services Bill to allow Royal Mail flexible and timely access to capital in future as it continues to invest in modernisation to provide customers with the services they want while at the same time protecting the one-price-goes anywhere Universal Service to the UK's 28 million homes and businesses.

Moya Greene, Royal Mail Group Chief Executive, said: "Deregulation of the UK postal services market is long overdue and I'm delighted that the Government has made it clear that where there is competition, the shackles of regulation should be rapidly removed.

"Royal Mail is a great organisation which has made enormous strides in modernising over the last few years but with mail volumes continuing to fall quickly and competition intensifying we need to step up the pace. That means we need more capital, deregulation to allow us to compete fairly while safeguarding the USO, and the removal of the historic pension deficit. I hope that the Bill published today can deliver on that.

"It's simply wrong that this suffocating regulatory approach should apply at all in a competitive market - and that it applies only to Royal Mail, which is the only company able to provide the Universal Service on which so many people depend."

Over the last few years Royal Mail has embarked on a £2billion modernisation and efficiency programme including the introduction of hundreds of new automatic sorting machines and equipping postmen and women with the modern tools they need for the job. However the rapid and continuing contraction and change in the mail markets in the UK and around the world means that these plans must be accelerated:

* In 2009-10 there was a 7% reduction in Royal Mail inland addressed letter volumes - while in 2008-10 and 2007-8 the market contracted by 6% and 3% respectively.

* Richard Hooper said in his recent report that the UK postal market is expected to decline by up to 40% over the next 5 years.

* Wholesale "access" mail - mail carried by Royal Mail rivals - rose from 4billion items in 2007-8 to 6.4billion last year and is expected to reach 7.1billion items by the end of this financial year. This means that mail volumes handled by rivals are likely to be more than half of the total by 2011/12.

* The combination of market decline and increased postal competition means that by 2015 Royal Mail's end-to-end delivery volumes will have shrunk by 75% in just over a decade.

Ms Greene said: "We are absolutely committed to making this modernisation work and our people are of course central in that. We know that change is difficult and we're determined to take our people and the unions with us.

That's why we're pleased that the Bill also includes provision for employees to have at least a 10% share in Royal Mail."

Royal Mail also said it would be working with the Government on its plans to explore a possible mutualisation of Post Office Limited, which will not be included in any sale of Royal Mail and which the Government has
confirmed will be properly funded, maintained at 11,500 post office outlets and will always be run for the public benefit.