1. THE FUTURE OF THE UK POSTAL SECTOR A CWU Perspective 9 th February 2006

2. Introduction This presentation will cover: Overview of the CWU’s Position The Challenges for the Union The Competitive Environment Our Vision for a Successful Royal Mail Our Political Agenda

3. Overview of the CWU’s Position Everybody in the Union must acknowledge a new environment The Union can only benefit from understanding the position of key industry players Royal Mail cannot face up to the challenge of competition without us The CWU is in a powerful position. We can embrace and influence change in a way that is acceptable to our members We continue our political campaigns to oppose privatisation, Postcomm’s approach and ensure a level playing field

4. Key Challenges for the Union – 1 Dealing with Royal Mail Letters Strategy is our biggest challenge yet Part of Royal Mail’s response to competition is to transform the whole pipeline, seeking large cost savings linked to a programme of extensive automation The Union accepts that some change will be necessary – we can’t defend genuine inefficiencies, we must make Royal Mail pay for efficiency We must develop our own clear solutions to the problems facing the company The race to the top, or the race to the bottom

5. Key Challenges for the Union - 2 The liberalisation of the postal market has forced some new issues for the CWU to consider We should not demonise the competition. Our members also have a choice In the future do we want to be a Royal Mail trade union or a UK postal sector trade union? Can we work with other trade unions who already represent workers in private postal operators? Can we help drive up pay and conditions across the postal sector

6. Key UK Competitors – 1 At the present time there are a number of key competitors in the UK Market. These include: DHL (Part of Deutsche Post World Net) TNT Mail (part of same group as Dutch national operator TPG) UK Mail (part of the Business Post Group) DX Network Services Ltd (including DX Mail; formerly part of the Hays Group) In addition, private investment companies (such as CVC Partners which holds large stakes in the Danish and Belgian post offices) are actively seeking to acquire shares in European state postal operators

7. Key UK Competitors – 2 DHL and TNT are currently utilising different strategies in the UK: TNT’s clear target in the UK is to become a rival market leader in key areas. Currently focussing on door-to-door items as a way of building relationships with business customers. The parent company is looking at selling off its logistics business to focus on mail services TNT is currently attracting attention from German investors who are looking to purchase the company DHL appears to be playing more of a waiting game. However it is continuing to acquire private postal companies across Europe

8. Key UK Competitors – 3 UK Mail (part of Business Post) is the other large UK player. First to reach a downstream access agreement with RM. Recently its parcel division has experienced financial difficulties DX Services is the other notable player. Provision of document exchange services to professional sector In addition there are a growing number of smaller licensed postal operators

9. Our Vision for a Successful Royal Mail - 1 The Union will play its part: Dedicated to delivering a successful publicly- owned company Need to expand and improve RM’s products and services in a competitive environment Better training and equipment is key to delivering a quality service But we also need to raise the status and value of a postal worker’s job

10. Our Vision for a Successful Royal Mail - 2 Raising the value and status of a postal worker’s job: Higher basic pay – the UK national average A better work-life balance Maximise job security and full time employment while improving opportunities for part-time workers Safeguard our members’ pensions

11. Our Political Agenda Successful campaign against privatisation Want a review of the Postal Services Act, the Impact of Liberalisation and the role of Postcomm Extend the nil dividend Campaigning for additional investment from the shareholder Want a level playing field for Royal Mail Want protection for customers and industry – can’t allow unregulated widespread entry from small operators

12. Summary There will be change The CWU can effectively represent our members in a competitive environment We can grow the Union We are willing to work with Royal Mail to raise the value and status of a postal worker’s job and shape a successful future