Estimating the
Economic Value of PAF®
___________________________________________________________A report by thebased on work by ESL & Network, Europe Economics, and Data Advance.

Version: 2.0 September 2012

Estimating the Economic Value of PAF®:
Report produced for the PAF® Advisory Board. v. 2.0. September 2012.
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Table of Contents
FOREWORD .................................................................................................................................................... 3
EXECUTIVE SUMMARY ................................................................................................................................. 4

1.1

Introduction ............................................................................................................. 6

1.2

The History of PAF® Development ......................................................................... 6

1.3

The Postcode Address File (PAF®) today............................................................... 7

1.4

The social value of PAF® ....................................................................................... 8

1.5

The limitations of PAF® .......................................................................................... 9

2. METHODOLOGY FOR ESTIMATING ECONOMIC VALUE ................................................................... 11

2.1

Methodology for assessing current value .............................................................. 11

2.2

Impact Assessment .............................................................................................. 12

2.3

Differentiating between the value of PAF® and that of the postcode subset ......... 12

3. UNDERSTANDING THE COUNTERFACTUAL TO PAF® .................................................................... 13

4.

5.

3.1

The current users of PAF® .................................................................................... 13

3.2

Is there an existing alternative to PAF®? .............................................................. 15

3.3

Illustrations of how PAF® directly benefits users................................................... 20

QUANTIFICATION OF THE COUNTERFACTUAL ............................................................................... 23

4.1

The methodology revisited ..................................................................................... 23

4.2

The current cost of PAF® to users ........................................................................ 23

4.3

Quantification challenges ...................................................................................... 25

4.4

Calculating the economic value of PAF® .............................................................. 26

CONCLUSIONS ..................................................................................................................................... 28

GLOSSARY ................................................................................................................................................... 30
ANNEXES ...................................................................................................................................................... 31

Annex 1: What is PAF®? ................................................................................................. 31
Annex 2: CASE STUDY: The history of postcodes in the Irish Republic .......................... 32
ACKNOWLEDGEMENTS.............................................................................................................................. 33

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FOREWORD

In 2011 the Advisory Board commissioned a study of the economic value of the Postcode
Address File PAF®1 from the ESL Network. As far as we know, their work based on
estimating the extent to which PAF® users could substitute other information for that within
the PAF® dataset is the first time such an approach has been attempted. It revealed just
how much individuals and businesses trust and have come to depend on address andpostcode information in commerce.
These findings were then used as the basis for further consultation and validation withexperts in the use of PAF®. The resulting analysis is contained in this report from the PAF®
Advisory Board. The estimates are necessarily speculative but in broad measure,considering the business turnover of those organisations which act as value-added resellers
of PAF® and the uses to which their clients and other end users make of information
incorporating the data from PAF®, we estimate its value to the UK economy to be between£992m – £1.38bn per annum for which businesses currently invest £27m per annum.
Roughly 40% of that value arises from postal and goods distribution services. That is not tosay, however, that the value of PAF® as a commercial asset to Royal Mail is in the order of£1bn. Such a valuation would normally be calculated as a multiple of PAF® turnover inlicence fees.
The estimates underline the importance of safeguarding the integrity and quality of the
PAF® dataset and having clear incentives for the owner and manager of the dataset toinvest in improvements to widen its use. They point to the importance of citizens’ trust in theownership and management of PAF®.

Ian Beesley
Chairman, PAF® Advisory Board

1

PAF® - See Glossary for definition

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EXECUTIVE SUMMARY

The role of the Postcode Address File (PAF®) is very considerable in the UK; providing datathat underpins all types of public sector, financial, and commercial activity with citizens andcustomers.
The main uses of PAF® include:

in postal services and goods distribution

address data capture software

database cleansing, and data quality managementmarket research and statistical work

geo-location products and services e.g. in-vehicle navigation

identification and authentication tools

direct marketing and location based marketing services



public services planning and provision

acting as a core reference tool, enabling data sharing and integration

The use and application of postal address datasets vary considerably across the world, andwhilst the resulting economic value is not unique in the UK it is reflected by the differences ininstitutional, cultural, commercial and public sector developmental history and practice.
This study estimates that the direct economic value the UK obtains from PAF® as being
between £992m – £1.38bn per annum. This has been calculated via a methodology thatconcentrates on a breakdown of its main uses, then arriving at an estimated range of value
expressed in £m.
Royal Mail’s PAF® has become the UK’s standard address dataset by default and not bydesign. Due to specific UK conditions, PAF® has become an essential "building block" forpublic and private users’ activity across all sectors:PAF® is a prerequisite for high quality postal services, itself driving commercial,administrative and financial transactions - now enabling vibrant e-commerce, direct
marketing and goods distribution.
PAF® fuels a vibrant software addressing application market, using address data toprovide functionality for a countless number of different commercial, financial and social
activities. Software suppliers have embedded and further augmented high quality
addressing data into all types of business, public and voluntary sector activity in the UK.
PAF® supports the majority of public sector databases and citizen activities, including
crucial non-economic ones such as emergency services.

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There is significant complexity attached to pinpointing the economic value of PAF®. Whilst
the main categories of use and resulting value are clear cut, there are distinctions between
direct and indirect benefit streams. For example, PAF® based address capture software
affords call centre operatives direct benefit via removing manual data gathering and input.
However, in another example, banks using postcode data as part of fraud deterrent activity
before bank card distribution, is an indirect but still financially valuable application of PAF®.
That PAF® is used to obtain such benefits, contributes significantly to the assessment of its
economic value even if the quantification of indirect streams would require significant
detailed research, and a myriad of value judgements, speculations and assumptions beyond
the scope of this report. In November 2011, Post and Parcel stated that "even in one of thebest address systems in the world, in the UK, research has suggested that a 1%
improvement in the government's own address data would bring a EUR 25bn reduction incosts" 2. This report estimates only the direct benefit of PAF®.
There are also severe difficulties assessing in any meaningful way, that if PAF® did not exist
whether alternative innovations could be employed to provide such comparable value. As
PAF® presently supports the other material national address registers within the UK, a fullalternative is not currently apparent. Whilst it could be possible to create a viable alternativeto Royal Mail's PAF®; it is not clear that doing so would create significant additional
economic value for the UK. Nor would the existence of a competing address dataset
necessarily diminish the economic value the UK obtains from high quality address data
(though duplication and adoption costs would require evaluation). At a national level it could
simply split the role of providing the essential "building block' addressing data which enables
highly valuable application and use. In summary, it is unlikely PAF® would be replaced by asingle alternative and therefore some of the benefits of PAF®s independent adoption as astandard would be lost.

2

Reference: Post and Parcel: Addressing the world: How geo-codes could help billions start using the mail. Author: James Cartledge

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1. INTRODUCTION AND BACKGROUND TO PAF®

1.1

Introduction

The Postcode Address File (PAF®) can often be mistakenly thought of as a dataset of
postcodes. Whilst postcodes are inextricably linked to PAF®, and play an essential role intheir own right, arguably the intrinsic value in PAF® lies in it being a high quality, robustly
validated, UK postal address dataset.
From acting as a business efficiency tool to supporting personal mobile “Where’s mynearest?” search enquiries, PAF® based solutions are accessed millions3 of times, every
single day, by all types of organisations, to drive commerce and efficient citizen service
delivery.
The objective of the study is to estimate the value of PAF® to the UK economy at current
take-up levels and to consider the potential for further use.

1.2

The History of PAF® Development

Royal Mail has invested in postal address data in the UK and consequentially thedevelopment of the PAF® database. The timeline below summarises these developments.
Timeline for the development of PAF® in the UK:
Pre 1840

Mail was addressed using postal town and county name.

1857-1858

Sir Rowland Hill implemented a scheme to add London City compass point
districts (example Central London EC and WC). Other major cities thenfollowed London (Manchester and Glasgow and then Liverpool 1864).

1916–1917

Postal districts adopt alphanumeric format with numbered subdivisions (NW1,
SW2, etc).

1959

Ernest Maples trialled first full 6-digit postcode in Norwich (NOR plus 3
characters). This was not fully successful.

1974

Norwich renumbered and postcodes were assigned to postal addresses. The
PAF® database was developed and the postcode system rolled out across thecountry

1984

PAF® products developed and made available to external users for the first
time.

1986

Royal Mail launches PAF® on CD.

3

Source – Indicative figures provided by the Address Management Unit

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1991

National Postcode centre established.

1992

PAF® on-line data maintenance established1994

Walk log maintenance system introduced and used by postal workers tomaintain PAF® data quality.

1994

PAF® Reseller Licence introduced.

1995-1996

Delivery Point 4 Suffix introduced for customer bar-coding and added to PAF®
(as is Alias 5 data)

2005

Unique Delivery Point Reference Number (UDPRN6) added to PAF®,
increasing interoperability with other datasets.

2007

PAF® is “ring-fenced”. Formal Service level Agreements (SLAs) between
AMU and Royal Mail operations are put in place for the maintenance of
PAF®.

2010

New PAF® licensing arrangements introduced for the market place

2012

Expected licence development and consultation

1.3

The Postcode Address File (PAF®) today

What is PAF®?
PAF® is a UK-wide address dataset containing c.29m postal address records, groupedaround 1.8m postcodes. Each record contains core data elements such as building number,street name, post town and postcode as well as up to 30 additional data elements (a fulltable of these can be found in Annex 1). PAF® also includes 1.4m business names and200k vacant properties.
PAF® is continually maintained. On average c.3k updates are made to PAF® every day,
identified by 62,000 postal workers across the UK, and validated by a central team ofexperts.
PAF® is recognised as being UK complete, standardised, and able to provide application
developers and users with a stable, adaptable and interoperable dataset that can be used tounderpin a wide-ranging, valuable set of mailing and non-mailing solutions.
Regulation and the management of PAF®
UK PAF® is regulated as a discrete postal service by Ofcom. Whilst specific arrangements
are under review, in essence Royal Mail is currently required to: Maintain the dataset for the purpose of good addressing
4

Delivery Point - see Glossary for definition
Alias – see Glossary for definition
6
UDPRN - see Glossary for definition
5

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




Make the dataset available on reasonable terms
Ensure that PAF® IPR is adequately protected
Operate a “Ring-fenced” arrangement to ensure transparency of Royal Mail’s use of
PAF®
Work with a pre-determined profit cap

To facilitate this, the Royal Mail Address Management Unit is responsible for the
management of PAF®. The Address Management Unit (AMU) is structured as a ring-fenced
business unit with full Profit and Loss accountability, operating a licensing model thatenables citizens to access PAF® for free, whilst organisations pay licence fees reflective ofuse.
Table 1.3.1 - Address Management Unit PAF® P&L

1.4

2009 /10£m

2010/11£m

2011/12£m

Revenue

24.9

25.7

27.1

Cost

22.3

22.7

24.5

Profit

2.6

3.0

2.6

The social value of PAF®

1.4.1 The cultural value
The postal address is generally thought of and used as the de facto address standard in theUK, whilst the postcode has arguably become ingrained in the national psyche. The
ingenuity of the postcode comes from a combination of memorability and user-friendliness.
The borough or major town with which the postcode is associated is often easily decipheredby the user through the two letter prefix. The mnemonic qualities of postcodes are further
enhanced by the 4/3 or 3/3 composition of each postcode as opposed to one continuous
number.
With 38 years of widespread use the general public are familiar and comfortable withpostcodes and the address structure popularised via PAF®, such that if required to use adistinctly alternative system, intuition suggests that users may automatically find themselvesreferring back to the postcode system.

The postcode as a signifier of location
In addition to supporting mail delivery, the primary value of the postcode lies within its keyrole as a signifier of location. In operation for some decades, full postcodes are widely
recognised and used by citizens as a rapid way of honing in on predefined geographicalareas.

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Pinpointing a set geographical area allows for significant levels of confidence in orientationand mapping. In addition to uses such as locating addresses and deciphering optimum
routes to reach them, lists of addresses organised according to small, set geographicalzones (postcodes) can also facilitate the collection of data by the public sector andcommercial parties. This data can then go on to form marketing ventures, advertising
campaigns and government policies.
Postcodes are the reference point for pinpointing locations in the UK on an everyday level
and with advances in mobile technology the use of postcodes for a wide range ofapplications is increasingly crucial to citizens and organisations alike.
The postcode as a signifier of social status and social need
Additionally the value of postcodes in terms of social status and social need should not be
underestimated especially within urban zones. Connotations, both positive and negative
associated with postcode areas can be a source of practical significance and considerable
pride for inhabitants or frequenters of particular postcode zones which are consideredwealthy, trendy, unsafe etc. The desirability of postcodes plays a key role in the property
sector and to large degree determines the prices of residential and commercial property.
Another example of a generalised perception within the UK are postcodes as signifiers ofdesirability as a recent concept of “postcode lotteries”, where postcodes are synonymouswith alternately low, high or mediocre standards in services including healthcare andschooling.
Public Sector organisations such as the NHS use profiling data based on postcodes tohighlight disparities in health and well-being across a broad topic range – using analyses toprioritise service provision, allocate resources and to integrate care responses. Businesses
such as insurers use postcode and addressing data in similar ways, for example as part oftheir assessment of the likely wealth and lifestyle of citizens, thereby improving their risk
management.
1.5

The limitations of PAF®

PAF® has been developed for postal purposes and therefore is wholly concerned with maildelivery points. As such, some user requirements for address and location based information
fall outside of the scope of PAF®, including:The exclusion of non-postal addressable objects from PAF®. These may include
public spaces such as parks and woodlands, or objects such as monuments. Thisadditional data is not of great importance to business service sectors, but it is essential
for others, e.g. emergency services.



PAF® addresses are not geo-coded at source. PAF® provides comprehensive accessto 29m UK delivery points, but only the postcode element of each address record (ofwhich there are c.1.8m) provides an indicator of location historically geo-coding has notbeen relevant to PAF®s core business.

PAF® does not include full Multiple Residence information e.g. halls of residence,and sub-divisions within buildings. Royal Mail does provide this data but holds it as a

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9separate dataset because the data is not required for postal delivery purposes (though it
can help identify addresses).


Postcode boundaries. As postcodes were originally designed with the facilitation of
postal services in mind, postal boundaries may be considered arbitrary or at least
illogical to other address dataset users; local authorities for example or other public
sector bodies looking to gather demographic data might find county or borough specificzones more pertinent.

Other context:
In the UK there is already significant dependency on PAF®, which, along with the regulatory
profit cap, could be thought of as a limitation, for example in terms of Royal Mail’s
development of new licensing models.
The UK’s reliance on PAF® can in part be attributed to a consequence of its attitude to data
overall, its national culture, institutional history and citizens perspective of the implied role ofgovernment (for example the idea of a centralised ID register has historically been received
with suspicion by the UK public). Unlike in the UK some other countries’ non-postal address
registers are maintained by placing obligations on Local Authorities/Municipalities andindeed citizens themselves – their attitudes to government, personal and addressing data
vary considerably alongside attitudes to the scope on commercial and public sector
exploitation of such assets.
In the UK core public sector national address registers have historically been developed andare maintained using PAF®. In 2011, GeoPlace, a joint venture between Ordnance Survey
and Local Government Association was inaugurated to create and maintain a definitive
national spatial address dataset for Great Britain; the PAF® forms a key component of thisdataset.

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2. METHODOLOGY FOR ESTIMATING ECONOMIC VALUEThis section sets out the methodology for estimating the current value of PAF® to the UK
economy.
2.1

Methodology for assessing current value

Key elements for estimating the value of PAF® include:
1) Understanding the key uses to which the data is put and estimating the value that is
obtained from those uses.
2) Categorising the losses and costs incurred if PAF® was not to exist:When organisations and others would still gather the required data by other means i.e.
the difference in cost of using PAF® and gathering it elsewhere.
When organisations and others would not use the data, the losses and gains from tradeand commercial activities if PAF® did not exist.

3) Seeking to identify the true categories of cost described above through a questionnaire
and interview programme with affected bodies. In particular the study has sought toestablish;






How much it presently costs to access PAF® and from whom they procure it.
To what uses they put PAF® data.
To what uses they may put PAF® data to in the future.
How costly it would be to access alternative datasets in the absence of PAF®.
Whether they would continue to provide these services in the future.

4) Calculating the costs of obtaining suitable alternative data from other datasets the report
has used a questionnaire and interview programme to consider what such alternative
datasets would be. This information has then been substantiated with other information on
data costs available in the literature. This has allowed calculations of the total incremental
increase in business costs across the various categories of business/public sector activity.
Approach taken to the questionnaire and interview programme
Having presented the methodology to the MRS Census and Geo-demographics Group for
discussion and comment, a questionnaire was distributed to 20 organisations from a
representative sample of interested parties. There was a good return rate of 75% from adiverse range of bodies, including, postal operators, the market research community, data
management companies, postal engineers, major retailers and government bodies. Several
responses were the result of the questionnaire being distributed to the respective
membership of the organisations who then undertook to collate the responses. To gain
more in-depth views, we followed up the questionnaire with personal interviews, 7 being face
to face and 5 by phone.

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2.2

Impact Assessment

This study has used specific Impact Assessment techniques to consider the economic valueof PAF® based around the counterfactual of its absence from the UK in the pursuance ofsocial, economic and public sector activity i.e. what would happen if such an address dataset
did not exist.
In this regard the study makes a distinction between the absence of a high quality UK
address dataset and PAF® itself. Whilst recognising the “on the ground” reality that PAF® isthe dataset that currently provides certain strands of economic and social value right now,the underpinning notion of this study is not to say that this is the only dataset that could do
so in the future.

2.3

Differentiating between the value of PAF® and that of the postcode subset

The differing user requirements between those for postcode data vs. PAF® have been
particularly well illustrated since 2010 when Royal Mail voluntarily released the postcode
data free at the point of use as part of Open Data (available via www.data.gov.uk).
Access to ‘free’ postcode data helps developers innovate and launch valuableapplications, but has not removed the growing need for full delivery point level addressdata.
For the purposes of this study the counterfactual is considered in the context of
postcodes being inextricably linked to PAF®. However, where there are known instancesof postcode level data being sufficient (for example in some types of Market Research)
consideration has been given to the potential for alternatives to the existing postcode
system.



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3. UNDERSTANDING THE COUNTERFACTUAL TO PAF®
This section explains the findings related to the counterfactual to PAF® (which can beconsidered to be what would happen if PAF® did not exist).
3.1

The current users of PAF®

In identifying what would happen if PAF® did not exist there is a need to understand how
demand for access to PAF® works, who it is used by (and the benefits it confers upon) in the
public and private sector organisations and possible alternatives to PAF®.
Accessing PAF®
Predominantly users interact with PAF® via specific address based software applications.
This circumstance facilitates the need for data supply arrangements and licensing frameworkthat defines and determines the basis of use.
a) Data Supply arrangements
PAF® is distributed to entities via the terms of a generic Data Supply Agreement.
Approximately 250 Solutions Providers and 1200 Direct End-Users regularly receive PAF®
supplies. Updates to the dataset are available on a daily, monthly and quarterly basis.
Additionally a developer licence offers free access to sample PAF® data for innovation
purposes.
b) Licensing framework
The Royal Mail Address Management Unit operates a primarily indirect licensing model. In
more than 95% of cases PAF® is licensed to an End-User as part of a wider software
solution or service.

Illustration 3.1.1: PAF® licensing framework.

Licensing Structure
PAF®
Royal Mail

PAF® is distributed via the terms of a generic Data
Supply Agreement
Solutions Providers license End-Users (legal entities)
to access PAF®-based solutions via generic terms

Solutions
Providers and Third
Party Solutions
ProviderDirect End-Users (and Corporates) also license PAF®
directly from Royal Mail via generic terms (generating <5% royalties)
EndUsers

A PAF® Digital Mapping Agreement supports specificsolution development.

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Over the last 20 years this business model has supported exponential growth in the use of
PAF®. However, with ever increasing demands for data access, advancing technologies andthe need for simplification, there is perhaps now a need to consider the possibilities ofalternative models.
Who currently uses and benefits from PAF®?
A highly innovative, and now mature, address management industry exists with more than
250 PAF® Solutions Providers and 150 licensed Bureaux. Many of these organisations wereonce start-up software suppliers, who, spurred by PAF®, have flourished into thriving
businesses. The harnessing of PAF® to develop commercial, public sector and social tools
and applications that are of intrinsic value to users is perhaps the key ingredient inunderstanding the benefits it provides.

Figure 3.1.2: Demand for PAF®

It is also important to note that the majority of Solutions Providers and End-Users require
access to “Full” PAF® -i.e. premise level data rather than Part PAF® (or postcode leveldata)7.

7

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Solutions Providers and volatility of demand
Under this pattern of demand it could be argued that organisations that use PAF® to provide
application and services for others are likely to have keen awareness of the relativeadvantages of doing so in comparison with other datasets, and of the development of
substitutes for PAF®.
To date, the content, quality and provision arrangements of PAF® do not seem to haveconstrained innovation, commercial application or yet driven organisations to seek
alternatives where the cost, quality or End-User cognisance of the data formula differ fromthe postal address standard.
However, the actual and diverse requirements of addressing data is changing anddeveloping - it could be argued that such users may switch away from PAF® en masse if
and when cheaper or more effective alternatives become available. This potentially highcross elasticity of demand may therefore create some volatility in demand for PAF® in the
future.
However, it may be that this diverse mix of PAF® uses and indeed types or organisations
that provide PAF® services, mean that a one size fits all substitute is not likely to be viable(particularly if the alternative is not compatible with address standards used by mailoperators or with the established norms and preferences of UK citizens).

3.2

Is there an existing alternative to PAF®?

In considering the candidates that may be considered as an ‘alternative’ to PAF® thefollowing assumptions have been made:Assumptions







8

Some users require ‘postcode’ level data – i.e. data that reliably provides a useful
location indicator.
The majority of users require access to a dataset that enables the identification of UK
premises as well as postcode (i.e. a viable alternative to Full PAF®8).
The majority of users require the premise level dataset to be UK complete and robustly
maintained to ensure accuracy.
The dataset needs to be stable, guarantee supply and interoperable with other datasets.
Where existing national address registers currently rely on PAF® they are classed as
non-viable alternatives (as they are reliant on PAF® being available)
The study considers full alternatives to PAF® rather than substitutes which might be
viable for certain market segments.

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3.2.1 The Candidates and Key Findings
This section considers the potential for existing datasets to be used as substitutes for PAF®.
Table 3.2.1

Candidate

Description

Viability

1. The National Address
Gazetteer, including related
data products:

GeoPlace creates and maintains
the National Address Gazetteer(NAG) Data for England andWales, providing definitive
sources of spatial address andstreet data for Great Britain.

The National Address Gazetteer and related
products rely on PAF® and should not therefore
be thought of as an alternative to PAF®.

- AddressBase product suite- Ordnance Survey AddressPoint and Address Layer 2- National Land and Property
Gazetteer (NLPG)- One Scotland Gazetteer2a) Local and Land Property
Gazetteers (LLPGs)

PAF® forms a key component of
the National Address Gazetteer(and derived products).
Each Local Authority in Englandand Wales is responsible formaintaining address data to
BS7666 standards. (Scottish
authorities and Northern Irelandalso maintain their gazetteers)
Local Authorities have statutory
responsibilities for street namingand numbering. New addresses
are co-created with Royal Mail.

2b) National Street Gazetteer

Definitive dataset of street names
and location data for England andWales.

3. BT OSISBT OSIS is the central databaseof residential and businesstelephone numbers. The dataset
contains more than 27m records
including names and addresses.
rd
The dataset can be licensed to 3
parties but can only be used in
Directory products and services.
The dataset is updated on a daily
basis.

The BS7666 address standard includes thepostcode. Historically some LLPGs have used
PAF® derived data in their development. LLPG
data is fed into the NLPG / NAG and at a national
level is matched & updated using PAF® as part ofthe maintenance processes (see above). The
LLPGs should not be thought of as an alternative
to full UK PAF®.
It is important to note that the Local Authorities
manage the early part of the address lifecycle. Aspart of the street naming and numbering processeach property is assigned a Unique Property
Reference Number (UPRN), and geo-coordinate.
The UPRN is successfully used as a unique ID
number.
Therefore, if PAF® had not existed, nor become
the de facto monopoly of postal address
information that it now is, it could be expected that
Local Government would self sufficiently maintainaddress data.

This street data is maintained separately, and can
only be used by authorised organisations (e.g. forstreet works etc). It cannot be thought of even as
a part alternative.
The OSIS raw address data does not meet postal
standards and the dataset is not permitted to be
used for direct marketing purposes.
It is interesting to note that in some developing
countries, where a postcode system and address
dataset is not held by the postal operator, (mobile)
telephone directories are used to identify
individuals and allow goods to be delivered tothem as an alternative to PAF®
If PAF® were not to exist there may be somebenefit in considering the potential for OSIS,
although in the UK it is unlikely to provide a viable
alternative.

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4. 192.com is an UK online
directory, that contains morethan 700m data records from a9wide variety of sources .

192.com is a powerful people
search tool, focused on services
such as people finding and ID
verification as well as providing
business information andtelephone directory services.
192.com uses the Edited Electoral
Roll as well as OSIS as key data
sources and is known to be theUK’s most extensive dataset ofnames and addresses.
Fair usage limits of up to 20 per
day are put on data searches, theresults of which cannot be madeavailable for commercial reuse.

5. Edited Electoral Rollregister.
Currently the electoral roll (orelectoral register) is compiled foreach polling district by sendingan annual canvass form to every
house. The full register contains
the elector’s name and address
information. Reforms areunderway in England and Wales
to migrate to an individual
electoral register (moving awayfrom household). Only an edited
electoral roll register is availablerdfor 3 parties to use, ensuring
anyone can opt out from having
their details shared.
6. Other public sector
datasets - for example
Valuation Office and Council
Tax records, DVLA user
generated address data, or Land
Registry data.
Alternatively raw data that the
public sector intends to releaseas part of Open Data may offer
opportunity for the private sector
to augment and amalgamate asalternative address register.

9

Unlike other public sector datasets
the Electoral Roll data is kept
distinct from PAF®.
The Edited Electoral roll data is
incomplete but remains the largest
UK people dataset. In 2012
26.5m records could be used aspart of the edited version. Unlike
PAF® commercial properties are
not included.
The proposed reforms to theelectoral roll aim to ensure data isstandardised and consistent withother datasets. It is intended that
the National Address Gazetteer
will assist in this task.
Datasets sourced fromgovernment departments andagencies such as Land Registry
and the Valuation Office could be
used to base such an address
dataset, but this approach would
require significant investment, andpotentially changes in legislation.
The data would need to be
separately sourced from Scotland
and Northern Ireland to ensure UK
coverage.

192.com is primarily concerned with identity
verification and connecting people to places.
Users can search using postcode information andfull addresses may be displayed if available.
(These may have been cleansed against PAF®).
192.com uses a wide range of data sources andtechniques to maintain its dataset.
Whilst 192.com offers users significant amounts ofdata that can be searched for free, currently 100
searches of the Edited Electoral Roll via 192.com
cost £84.95 (compared to £8 for 100 internal
PAF® transactions – raw data). This difference inprice point reflects the difference in the nature of
the data, business purpose and the additional
value 192.com is adding to primarily personal
data.
This study does not consider 192.com to be a
viable alternative to PAF®.
Whilst the Edited Electoral Roll data is the closest
public sector asset to being an available
alternative to PAF®, there is a significant amountof missing address data and a lack ofstandardisation which makes it less suitable foraddress management purposes.
The move towards individual electoral
registrations in 2014 is unlikely to make this data a
viable alternative data source to PAF® in the
future, as it will focus less around the household
and more around the individual.

The study considered a large number of public
sector datasets as possible substitutes for PAF®.
The 2 key findings were:
1) Almost all public sector refined data relies tosome degree on the need for PAF®, even if
only for the use of the postcode. Therefore
they cannot be classed as viable alternatives
in their current form.
2) Unrefined public sector data would needsignificant upfront and on-going investment tomake the data anything near comparable to
PAF®.

Taken from 192.com

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17

Candidates vs. PAF® - points of comparison
Table 3.2.2
National
Address
Gazetteer (andrelatedproducts)
Is the candidate
currently
independent of
PAF®?

Does thecandidatedataset offer UK
Coverage?
Is the dataset
comparable inaccuracy to
PAF®
Is the dataset
regularly androbustly
maintained on adaily or at least amonthly basis?

LLPGs

OSIS

192.com

EditedElectoral Roll

Othergovernment
datasetsNo

No

Yes (Primarily
a dataset of
telephonenumbers)

Yes (thoughrelies on
postcode anduses postal
address
standards)

Yes

In partGreat Britain

Each Local
Authority
maintains
their own
Gazetteer

Yes

Yes

The data is
incomplete.
There areseparateelectoral
commissions foreach country

The data is
country
specific andin theunrefined
cases,
incomplete

Yes

Yes

Not for a
postal address
perspective

Yes

Not currentlyNo

Yes, but notcomparable to
PAF®

In some
cases

Yes

No

Yes (PAF®
plays a role)Is the datasetrd
supplied to 3
parties?

Yes

Is the dataset
available forcommercial
reuse

Yes as part of
Address-Baseproducts

Broadly, is thedataset more orless expensive
to access than
PAF®

More expensive(a central deal
covers public
sector use)

Can the dataset
be classed as a
viable‘alternative’
today?

No (as PAF®
dependent)

Yes

Via theNational
Address
Gazetteer(NLPG)
Yes as partof AddressBase
products
Moreexpensive (acentral deal
covers public
sector use)

No, not as a
postaladdress
datasetYes. Daily
basis

Yes

Various data
sources areused, each ofwhich ismaintained
differently
The dataset is
not licensed tord
3 parties.
Searches canbe performed

Yes (as part ofa directory)No

Yes – the edited
versionNot currently

UnknownMoreexpensive (notcomparable)

Unknown (Noncomparable)

Unknown

No

Only in part(private sector
organisation
may be able toaugment thisdata, but analternative topostcodewould berequiredNo

No as thedataset does
not include
postaladdresses

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In summary whilst there are a number of options to consider, evidence, supported by awealth of the industry actually suggesting that a truly viable alternative option to PAF® does
not currently exist.
Could an independent alternative to PAF® be developed?
If required, alternative address data could be collected, sourced and maintained from parties
other than Royal Mail. However an alternative to the postcode system would need to be
defined, developed and adopted to enable a true alternative to exist.
Existing reference systems such as the Unique Property Reference Numbers (UPRNs) or
geo-coordinates could be used as an alternative to postcodes but are not currently known by
more than the expert community. But even with existing options, significant investment
would be needed to educate the nation to use an alternative to the postcode. Furthermore, itwould require a full change to the whole infrastructure for postal operators and goods
distributors, and migration for all commerce and public service provision to an alternative to
PAF®. The return of investment that could be achieved from such an initiative is not in any
way evident, particularly as postcode data is already made available free at the point ofreuse and citizens are able to access PAF® for free (via royalmail.com).
However, the advances in technology and social media do make the option of crowd
sourcing address data a much more viable option than ever before. In other countries
obliging citizens to maintain government data, rather than always rely on postal workers is
not uncommon. It is important for this study to therefore also consider the future needs for
PAF® and provide some indication of what viable options may exist.
Table 3.3.1
This table further considers complete alternatives to PAF®.
Concept

Viability?
How could it work?

Feasibility

1. Build analternative
address andpostcode (orequivalent)
dataset.

There are a number of options available.
For example, by combining digital datafrom city maps with geospatial data fromsatellites each property could be
identified and assigned an address andgeo-coordinate. Effectively each
property would have a unique reference
number which with standardisation andfurther validation could be used as abase addressing and location indicatorsystem

2. Exploit theexisting
address life
cycle process(but remove therole of PAF®.

Local Authorities have statutory duty toprovide property numbers and street
names. As part of the address life cycle
Local Authorities also assign Unique
Property Reference Numbers (UPRN)
and geo-coordinates to each property.
Each Local Authority feeds into anational hub (GeoPlace). Currently data

- The UK has for many years been
consolidating the number of address
registers available and specifically its
approach to address standards andspatial addressing.
- Enormous investment and education
would be required to build a new
address register.
- The study therefore deems thisoption as unfeasible and out of scope
due to required infrastructure, cost andunnecessary duplication.
- The BS7666 address standard
includes postcode information. As thisstudy has already highlighted whilst analternative system to postcode could
be implemented (or even existingreferencing like UPRN or
property/street geo-coordinates) it
would take enormous effort toN.B This option

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does not fully
take into accountrelated IPR
issues which
would need full
resolution.

is maintained using PAF®. If PAF® were
not available then the data would needto maintained via new data supply
arrangements.

3. Maximising thepotential of“Open Data”

As part of the Open Data agenda it may
be possible to release public sector
datasets that include non PAF® address
information. Using this it may bepossible to enable citizens andbusinesses to input, validate and update
the dataset with their own address data.
Robust address data standards would
need to be defined and complied with. A
central body would need to develop andmaintain the dataset appropriately
assigning postcode, or equivalent topostcode data, to each address data
record.
The resulting dataset would become
available to developers andorganisations via Open Government
licence terms.

3.3

implement such a system in the UK.
- Postal operations, commercial
entities and public sector organisations
would need to change their systems
and citizens would need to be reeducated. This could cost billions(based on up to 30% loss of efficiency
for mail operations) and therefore is
not thought of as feasible.
- Whilst in theory doable the raw
publicly owned data is likely to bepatchy and incomplete.
- The very significant benefits to mailusers and operators would be lost andcould cost £billions.
- Who would fund such a project in the
UK is unclear.
- Cost of change could be enormousand unlikely to worthwhile. With thereliance on the postcode in the UK it
would be extremely costly to
implement, and in particular to educate
the nation to use an alternative
system.
- The high quality of PAF®, due to its
continual maintenance by 62k postal
workers would be expensive tomaintain by alternative means.

Illustrations of how PAF® directly benefits users

Tables 3.3.2

1. Reducing costs and mis-deliveries for postal operators Goods Distributors andMail Users
Description of how
PAF® is currently
used
Key Benefits

Impact of PAF® notbeing available /alternative

Customer records and databases are corrected and standardised against PAF® tobe ‘postally’ correct. Mailing lists can be built or enhanced using PAF® address
validation. Targeted Direct Marketing campaigns can be developed.
- Mail Operators can automate the sortation of PAF®-cleansed mail efficiently,
and significantly reduce operational costs.
- Goods distributors and other organisations benefit from reducing the significant
cost of mis-deliveries.
- Bulk mailers can benefit from discounted postal services, optimise mailing costs
and significantly reduce the cost and negative impacts of mis-deliveries.
Businesses can target their services at particular parts of the UK population- A growing Address Management Industry contributing c.£100m GDP can exist.
- Organisations might be obliged to compile their own databases and mailing lists.
- Organisations may have to license an alternative address dataset, or collectdata themselves.

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approaches

Does a viable
alternative exist?

- Mailing lists may not be accurate and lead to additional costs in production,
increased postal costs, additional staff, data storage etc.
- Significant increased costs (potentially £billions based on 30% loss of
productivity) for postal service operators, not to mention the potential adverse
economic impact due to loss and delays of business.
PAF® is the postal address standard in the UK. If an alternative postal address
dataset had to be developed it would cause postal operators and goods distribution
enormous additional cost.

2. Using PAF® address data capture software solutions as a business efficiency tool
Description of how
PAF® is currently
used
Key Benefits

Impact of PAF® notbeing available /alternative
approaches
Does a viable
alternative exist?

Employees can efficiently capture and verify customer address details at the pointof entry using PAF® based software.
- Over and above bulk mail discounts, these solutions save organisations
significant time and money and help streamline customer interaction and improvecustomer experience.
- Supports effective customer database management.
- Supports the growth of an ‘address management industry’.
- An alternative data source would be needed to power address data capture
software. This could significantly increase costs and/or impact the effectiveness ofthese solutions.
- Alternatively, manual address capture could cause significant data quality
issues, and decrease productivity
An alternative dataset i.e. another customer database or non-postal address
register could be used to power the software but the benefits are likely to be
impacted.
Otherwise manual address capture would be required. It is estimated manualaddress capture can take 45 seconds longer than using PAF® address data
capture software.

3. Using PAF® address capture software for e-commerce
Description of how
PAF® is currently used
Key benefits

Impact of PAF® notbeing available

Does a viable alternative
exist?

Customers can efficiently input and validate their address details when ordering
goods and services online.
- Accurate capture of postal address detail speeds up and simplifies the checkout
process and reduces chance of shopping cart abandonments and mis-deliveries.
- Improves customer experience.
- Manual address capture or structuring the address fields around an alternative
address standard would increase mis-deliveries, and cause additional processing
time and costs for organisations.
- Increased time at the checkout is proven to impact the number of shopping cart
abandonments and therefore cause loss of revenues.
- Data quality and customer experience would be impacted.
Browser auto-fill could to some degree provide a viable alternative, although thiswould be dependent on user preferences rather than postal address standards.

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4.

PAF® supporting market research and statistical work

Description of how
PAF® is currently
used
Key benefits

Impact of PAF® notbeing available

Does a viable
alternative exist?

PAF® contains essential information for companies undertaking market research
and marketing activities. PAF® allows these companies to undertake maximallyrepresentative statistical work and sampling, which helps ensure more accurate
results and resulting initiatives.
- PAF® allows for address validation, enhances the representativeness of
research and the resulting effectiveness of marketing campaigns.
- Supports spend on Direct Marketing and other marketing activity.
- Organisations may face incompatibility problems, for example with previous
datasets, and might be obliged to compile their own dataset and mailing lists.
This would involve costs relating to research staff wages and expenses, staffing
costs for inputting data, costs associated with the continual updating of the dataset
and costs relating to the potential storage of outdated information,- More time spent by staff on dataset compilation or address gathering would
mean less time spent on actual research or marketing. This could result in key
moments in the market being missed and business opportunities lost.
- There would also be a higher risk of errors in address information and anincreased likelihood of sending marketing mail to incorrect addresses. Additionally
there is potential for inefficient market reach and loss of new business throughinaccurate targeting, mail being sent to the wrong address and nuisance mail- Inaccurate address details due to keying or spelling errors may also lead to an
impaired business reputation.
- Could result in misplaced conclusions and recommendations – which havewider implications in terms of the misplaced advice market researchers may
subsequently give, based on their research – ultimately jeopardizing the potential
to win future business.
There isn’t currently an obvious alternative to PAF® for this kind of usage.

5. Route Optimisation and Location Based Services (including in-car navigation anddigital mapping)
Description of how
PAF® is currently
used
Key benefits
Impact of PAF® notbeing available

Does a viable
alternative exist?

Users enter postcodes (and/or full address details) relating to journey start andend destinations. Directions are provided using route optimisation software.
Similarly “Where’s My Nearest?” searches are relied on by mobile users.
- Route optimisation software can cut transport costs by 20-40%.
- Users can successfully and efficiently navigate their way from A to B.
- Without a postcode system users would need to manually enter other types ofaddress and location information causing additional time and cost.
- Digital mapping providers would need to source alternative data that could be
both costly and complex to incorporate into their base maps (particularly as
postcodes are currently free at point of use).
- Routes would be calculated using alternative reference points. This could resultin the loss of user-friendliness, additional time and fuel costs.
Yes. In other countries where the postal address and postcode is not so relied on
it is normal practice to use alternatives to postal address and postcode
information.

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6. Supporting database quality management and data sharing
Description of how
PAF® is currently
used
Key benefits

Impact of PAF® notbeing available
Does a viable
alternative exist?

Cleansing customer databases against PAF® helps keep contact data up-to date
and accurate.
Using PAF® can play a key role in linking databases together, enabling attribution
and integration of additional data.
- Supports the ability to plan and make meaningful decisions based on reliable,
accurate data.
- Increases efficiency and reduces duplication of effort, and need for data
matching.
- Enables data sharing.
- Increases collaborative working and can help towards a “single citizen view”
enabling improved customer experience.
Databases would be cleansed and updated using alternative reference sources.
Unique Property Reference Numbers (UPRN) and TOIDs (from Ordnance
Surveys) could provide viable options, though would be significantly more costly
for the private sector based on current licensing arrangements and pricing models.

4. QUANTIFICATION OF THE COUNTERFACTUAL

4.1

The methodology revisited

As set out earlier this study considers the additional costs of a counterfactual to the PAF®
for existing users.
These costs may include additional items associated with PAF® alternatives, or foregone
revenues where it is no longer possible to provide services, as if PAF® did not exist.
The methodology takes the following steps:a) Considering the current cost of PAF® to users.
b) Calculating the costs of revenues foregone if the PAF® did not exist.
c) Calculating the discrete additional cost imposed on postal providers and users of postal
providers if PAF® did not exist and the additional costs which users of PAF® would incur
if PAF® did not exist and where they could continue to provide services.

4.2

The current cost of PAF® to users

Total PAF® royalties generate revenue of approximately £27m per year for the Royal Mail
Address Management Unit. The revenue breakdown on a sector basis are as follows:

Estimating the Economic Value of PAF®:
Report produced for the PAF® Advisory Board. v. 2.0. September 2012.
23

AMU revenues breakdown10
Table 4.2.1% of revenue

2008-09

2009-10

2010-11

Examples of how PAF® might be used

Distance selling

11.9%

12.4%

10.8%




Address validation (E-commerce)
Database cleansing

Education

4.7%

4.5%

3.2%






Academic research and innovation
University and school admissions
Route optimisation
Database cleansing



















Front line address capture
Direct Marketing
Insurance premium calculations
Database management
Identification
Address register development
Database referencing / data sharing
Mapping
E-gov services and frontline address capture
Policy and planningResearch and statistics
Database management and cleansing
Frontline address capture
Direct marketing
Market research and geo-demographics
Database management and cleansing
Location based services e.g. mobile marketing

Financial
Services

19.7%

19.7%

17.3%

Government &Health

17.3%

17.0%

19.0%

Manufacturing

5.4%

5.9%

4.6%

Media & coSuppliers

3.3%

3.1%

3.2%

Other Business

15.2%

15.4%

10.8%

Publishing

3.4%

3.6%

12.4%

Residential

0.0%

0.1%

0.0%

Retail

11.1%

10.8%

10.7%

4.1%

3.5%

4.4%

3.9%

3.9%

3.6%

Utilities

Wholesale &Distribution *Unknown

Direct marketing
Market research and geo-demographics
Database management and cleansing
N/A















Frontline address capture
E-commerce address validation
Database management – e.g. loyalty databases
Data quality initiatives
Planning purposes
Frontline address capture
Mailing and marketing activity
Database management
Mail operations
Frontline address capture
Data quality and database management
Planning and logistic optimisation
Ease of postal communication and distribution
services*Mail operators are included in this segment

10

Source Address Management Unit

Estimating the Economic Value of PAF®:
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24

4.3

Quantification challenges

In the table 4.2.1 above we show the structure of demand for PAF® illustrating royalties bymarket sector. More than 95% of this demand is serviced by Solutions Providers and asthese organisations have a greater potential cross elasticity of demand for PAF® than otherusers the relationship between the usage of particular users and the ability of Solutions
Providers to select different data sources is therefore important to this study.
This raises a number of issues in relation to estimating cost savings including the following:

to what extent may the different types of use require Solutions Providers to use
different datasets (potentially constraining Solutions Provider’s ability to switch toother data sources?)to what extent would there be issues of double counting the benefits of PAF® if
benefits to Solutions providers were estimated alongside benefits to users
channelling their use of PAF® through these services.

To solve these issues we consider that the most efficient method is to start from evaluating
the usage of PAF® outwards and then review the potential impact that Solutions Providers
may have on the counterfactual to this usage. In this respect it is also possible for Solutions
Providers to find it would only be economic to switch away from PAF® when they wereunable to use an alternative address dataset for a high % of users due to economies of scale
in using any address dataset. This could offset the potential for a switch away from PAF®.

The robustness of the survey findings
To estimate the economic value of PAF® we have surveyed (through questionnaires andsurveys) a high proportion (in terms of PAF® revenues) of Solutions Providers and leading
End-Users.
In this respect whilst our survey was highly targeted we feel that our results are robust inreflecting the views of major PAF® players. However, we are aware it is difficult to imagine
fully what would happen if PAF® did not exist in particular for factors such as foregone
revenues under the counterfactual.
To reflect this we have presented our results as a range between the additional costs notincluding foregone revenues and those including them.

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4.4

Calculating the economic value of PAF®

Step one: Calculating the costs of revenues foregone if PAF® did not exist
Our findings suggest that these lay, in particular, within the areas of address management resellers,market research, marketing as well as online e-commerce.
Table 4.4.1

User of the
PAF®

Usage

1 a) Market
research andstatistics

Full PAF®

Servicerevenues
dependent on
use of PAF®

Possiblealternatives

Not determinedb) Market
research formarketingpurposes

Postcodeonlyc. £2bn

Alternative postcode/geographical zone
system

2. Distanceselling(online ecommerce)

PAF®
address
data
capturesolutionsused for ecommerce
purposesc. £81bn of
online sales in
the UK.

Browser auto-fill may
work as an alternative
to PAF® address
data capture software
for this use case.
(Browser auto-fill isbased on user
generated data)

3. Address
Management- PAF®
Solution
Providersand Bureaux

Developand sellPAF®
based
solutions

A recent study
by theinternational
Fraud
Prevention
Research
Centre revealed
that 44% of UK
shoppers
abandon at least
one shoppingtransaction due
to length it takes
11
to complete.

£100m-£120m

Basis of Calculation

Revenues
foregone

It is estimated thataround 35% of total
market researchrevenues are dependent
on PAF®.

Loss ofrevenue c.
£200-400m

A proportion of research
could be undertakenusing an alternative
system e.g. alternative
boundary system (topostcodes)(conservativ
e estimate of
10-20%)£108m –
£216m lossof revenue

Based on 180m PAF®
12
External Transactions
we conservatively
estimate that 40% of
these relate to online
purchases (72mtransactions p.a.).
Of these we
conservatively estimate
10-20% (7.2m-14.4m
transactions may result inlost revenue because of
the increase in time taken
at the check out
process).
For the purposes of thiscalculation we assume aconservative average
online transactional13
spend of £15

Solutions Providers
could licensealternative address
dataset if they
become available orutilise customer
databases to power
their proprietary
address management
softwareTotals

It is estimated that atleast 50% of address
management software
suppliers’ products andservices are dependent
on PAF® and would noteasily be able to switch toalternative address
datasets as they support
mailing purposes£50m-£80m
loss of GDP£358m-£696m

11

A study conducted by Experian by the international fraud prevention research centre.
PAF® Advisory Board - OPEN MEETING 2011/12 paper 17th January 2012 page 18
13
European Travel Commission – New Media Trend Watch “e-commerce”
12

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Step Two: Additional costs to postal providers and users
Table 4.4.2

User of the
PAF®

Servicerevenues
dependent on
use of PAF®

Additional associated costs.

Financial effectPostal Providers
and Goods
Distributors

Total revenues in
the market
14£11.4bn

Additional sortation costs that would be
16
incurred

Total saving due toautomated sorting for
Royal Mail estimated17
at £288m(Automation of mailsorting saves up to
30% of sorting
15
costs )

E-retailing

Total revenues of
19
£81bn

Additional costs incurred owing to misdelivery

Costs of mis-delivery
due to missing
address andpostcode information
18
£146m
21

Cost of mis-delivery for e-retailers due topoor addressing£100m

Additional labour required to capture andstandardise customer address data

Cost of additional
labour required byorganisations tocomplete manualaddress capture£100m-£150m

Costs of misdelivery to eretailers estimated20
at £1bn per year

PAF® as abusiness
efficiency tool

Not quantified

Based on conservative estimate of PAF®
internal transactions used for this purpose.

Total£634m-£684m

Economic value of PAF®
Table 4.4.3

Category

Estimated Total Value £mEstimated revenues foregone£358m-£696m

Estimated additional cost imposed on postal
providers and other users£634m-£684m

Range Total£992m – £1380m

1415

Source revised Hooper report
Figure based on consideration of discount to bulk mailers offered by Royal Mail and review of industry comparators

17

Sorting costs (including delivery sequencing assume to be 15% of total costs only savings at Royal Mail letters business are
considered here) those total costs estimated at around £6.4bn
18
Source Postcode Anywhere and IMRG report
19
Source IMRG website for 2010/2011
20
IMRG
21
This is calculated as one tenth of total missed deliveries by far the bulk of which will be due to nobody being at home whenitems are delivered.
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5.

CONCLUSIONS

Introduction
The specific postal address and postcode information created and maintained in PAF® has
become universally known and understood in the UK and has therefore created a platform
for interaction and communication between citizens, public and private bodies.
PAF® is deeply embedded within the fabric of the UK’s public services, private sectorbusiness and local communities. Its significant and growing use in commerce, the public
sector and citizen services has resulted in the delivery of highly significant economic andsocial value. In the UK, the use and application of PAF® has been significantly facilitatedand driven by innovative software companies developing and providing applications that helporganisations and individuals exploit these circumstances.
This report has identified and assessed some of the key strands of PAF® use and has
quantified their impact. As a consequence our analysis has conservatively estimated theeconomic value of PAF® to be in the region of £992m – £1.38bn.
In addition to these direct impacts, this report identifies and seeks to underline a verysignificant level of indirect financial and non-financial value being obtained from the PAF®
dataset, although this indirect value has not been quantified.

Implications of the findings
This report has sought to demarcate between the financial value obtained from the UK
having and using a high quality address dataset and the reality that PAF® is owned by Royal
Mail.
Introducing alternatives may reduce PAF®’s role but will probably not increase the overallvalue which is currently derived from using such a high quality address dataset in the UK. To
some degree alternative addressing datasets exist in the UK. Current national address
dataset initiatives, such as the National Address Gazetteer are seeking to become the“definitive spatial address dataset” for Great Britain. Such initiatives aim specifically to
expand the value obtained from addressing data and to do so they use PAF® as an
essential component. This points strongly towards the imperative not to replace PAF® but togalvanise its use in conjunction with other data.
It is the interplay of these datasets that will arguably lead to optimal addressing solutions,rather than one suppressing or replacing the other. This has been the trend for many years
in the UK where the creation of LLPGs (amalgamated into NLPG), the OS addressing
product suite and essential government activity such as the Census have been based on thevarious product partnerships including PAF®.
In order that dataset might be considered viable alternatives to the PAF®, they must be able
to function independently of the PAF®. However, the inclusion of PAF® data within moreadvanced products is advantageous for dataset providers not only as a result of its accuracy
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and reliability, but also because of the trust the wider public has in the postcode system. As
such, it could be argued that future addressing solutions may not act as alternatives to
PAF® but will themselves become users of PAF®.
A key conclusion of this report must therefore be that the use of PAF® produces verysignificant financial value for the UK economy. There are strong forces underpinning thisconclusion:

Postal providers and goods distributors will have an on-going reliance on PAF® to
optimise services.
There remains significant reliance across the spectrum of uses of the inherent
connotations of addresses and postcodes as they are currently constructed.
The attitude of the wider public, long used to postcodes as a universally understoodand internalised piece of data, with any alternative being very hard to implement.

The future of PAF®
Current PAF® arrangements are the result of historical circumstances and very significant
practice in the use and embedding of it as the UK’s available high quality address dataset. It
was not logically designed to meet a set of pre-determined needs and requirements. It
began as a means to aid postal services; it is now used to service a huge diversity ofrequirements across sectors, markets and applications. PAF® is compatible and adaptableto other future applications and it is likely to continue to act as a cornerstone for future
innovations.
The majority of the demand for the PAF® is channelled through Solutions Providers. This
could imply that there is scope for a significant shift in demand for PAF® if an alternative
non-postal address dataset, with data element signifying location were to emerge. However,unlike in some other countries this study suggests that in practice an alternative viable UK
address dataset, without reliance on PAF®, does not yet exist and currently new
developments involve participation of the PAF® as an essential component of new data
sources.
The diversity of the application of PAF®, both current and projected is so significant that it
can only strain the capability of the dataset and any alternative similarly constructed. The
future may therefore see alternatives that aim to meet specific parts of the diverse
requirements more precisely and more logically than PAF® does or can.
The wide ranging use of PAF® in the UK is historically unique and is gathering pace - For
example in the personal mobile location services sector. The ability for Royal Mail to provide
a high quality postal address dataset to meet such varied needs is also a bi-product of
circumstance and history. Therefore, in response to a purely theoretical position that PAF®
no longer exists, building a replica dataset would certainly not be a rational exercise. The
creation of a suite of datasets to precisely match specific needs and categories of use would
best serve users and maximise the economic value derived from the data.In order to ensurethat PAF® maintains its position as a fundamental building block in the development of UK

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addresses, consideration might now be given to how the use of PAF® can be further
extended.

GLOSSARY

Alias

the database known as the ‘Alias File’, which contains ‘Locality’,‘Thoroughfare’, ‘Alias - Delivery Point’ and ‘County Alias’ details

BureauAn organisation who uses a licensed copy of the PAF® Data toclean data from another organisation before passing thecleansed address data back to them

Delivery Point

A complete postal address (business or residential), including a
Postcode, to which mail is delivered

End-UserA single legal entity, which uses addressing Solutions for its own
use

PAF®

The dataset, or any part of it, known as the 'Postcode Address
File' containing all known delivery address and Postcode
information in the United Kingdom

Solutions

A Solutions Provider is an organisation licensed by Royal Mail touse its
Postcode Address File - PAF® - to create, modify and enhancetheir products and solutions. Solutions Providers sell their
PAF® powered solutions onto Third Party Solutions Providers
and to End-User customers and return a Licence Fee to Royal
Mail for using PAF® data

ProviderThird Party
Solutions
ProviderA licensee that wishes to obtain Solutions from Solutions
Providers to enhance their own Solutions for resale onto EndUsers

UDPRN

PAF® Unique Delivery Point Reference Number

UPRN

Unique Property Reference Numbers (assigned by Local
Authority street naming and numbering function at the earlystage in the address life cycle process – does not form part of
PAF®)

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ANNEXES
Annex 1: What is PAF®?
The table below indicates which PAF® record elements comprise Full and Part PAF®
®

PAF record element®

A whole PAF record®
for full PAF
comprises thefollowing elements

Organisation Name
Department Name
PO BoxSub Building Name
Building Name
Building Number
Thoroughfare
Dependant Thoroughfare
Dependant Locality
Double Dependant Locality
Post Town
Postcode
Delivery Point Suffix
Checksum Digit
UDPRN
Postcode Type (small or large user)
Small User Org Indicator
Delivery Point Count for Postcode
Mailsort code
Concatenation Indicator
Address Keys
Organisation Key
Number of Households
DP Use Indicators
Alias – Delivery Point
Alias – Thoroughfare/Dependent Thoroughfare
Alias - Locality
Alias – Traditional County
Alias – Former Postal County
Alias – Administrative County®
For Welsh PAF Records only:
Welsh - Dependent Thoroughfare
Welsh - Dependent Locality
Welsh – Double Dependent Locality
Welsh – Post Town

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A whole PAF record®
for part PAF
comprises thefollowing elements

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Annex 2: CASE STUDY: The history of postcodes in the Irish Republic

The history of the development towards a postcode is as follows:
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1917: Postal districts introduced in Dublin city and suburbs by the British government with theprefix "D", and retained after independence without the prefix.
1961: Public begin to use district numbers; street signs displayed postal district numbers
rather than just displaying the street name in Irish and English.
1990s: Automated sorting machines for mail were introduced by An Post. By then, the opticalcharacter recognition (OCR) systems were advanced enough to read whole addresses as
opposed to just postcodes, thereby allowing An Post to skip a generation. Consequently, mailto addresses in the rest of the Republic does not require any digits after the address.
May 2005: When Minister for Communications, Noel Dempsey, announced that postcodes
would be introduced in Ireland by 1 January 2008, the National Statistics Board supported apoint-based postcode system that used grid reference/GPS technology to provide a relatively
clear-cut, low cost approach to allocating a postcode to an address. This avoids trying togroup households together into small area clusters.
Announced that postcodes would include the one- or two-character county codes currently
used in vehicle registration plates, making them alphanumeric, with the existing Dublin
system retained.
February 2008: Eamon Ryan proposals included a 6 character format postcode: "D04 123"
where "D04" corresponds to the current Dublin 4 postal region and "123" is a specific group ofbuildings, similar to British and Dutch postcodes, which cover groups of buildings, rather thansimply suburbs or towns.
April 2010: The Oireachtas Committee on Communications, Energy and Natural Resources
published a report recommending instead that any postcode implemented must be capable ofsupporting "developing technologies such as internet mapping, Google maps and iphones",
applying a unique identifier to each property. It suggests that the previously mentioned D04
123 model will not satisfy this requirement and may, in fact, make matters worse.
15 April 2010: Cancellation of tendering process to select a consultant to advise the Ministeron the implementation of a postcode.

Estimation of the economic impact of postcodes in the Irish Republic
A report by PA Consulting, which evaluated the monetary benefits of national postcodes at
the request of the minister, estimated that it would save public bodies, including the
emergency services, €22 million and would create efficiencies in all areas of social andeconomic planning.
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Cost savings were identified in a number of government departments, including Revenue
and the Department of the Environment, along with Health, and Social and Family Affairs.
A postcode system would facilitate cross-departmental sharing of public data andinformation dramatically cutting waste and duplication.
The country’s rapid heterogeneous population growth also increases the need for an
efficient dataset based on postcodes reducing inefficient service delivery andinfrastructural planning.
In addition, postcodes are seen as vital to efficient spatial planning and aiding healthresearch, education, housing social care and employment integration.

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The business sector has said that a postcode system would lead to increased efficiencies,
while the insurance sector has estimated that it would result in annual savings of around €40
million by improving their risk management assessments.
In the voluntary sector, the charity BreastCheck said it relied on accurate postal services for
efficiencies in its own service.
The Irish Exporters Association previously estimated that the lack of postcodes added up to
30 per cent to Ań Post’s sorting and routing costs.

ACKNOWLEDGEMENTS
Base data used within this report has been compiled by ESL UK and Europe Economics
who were commissioned by the PAF® Advisory Board to estimate the present and likely
future economic value of PAF® to the UK economy. Additional input has been provided by
Data Advance Ltd.

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