They were separated to spread the risk and somehow they believed it generates compitition which translate into more profit and efficiency, didn't quite work out like that, they also split off Parcels and turned into Parcelforce, now most of the Parcelforce workers are self employed contractors on piece work.
Royal mail collects from firms and offices not just Post Offices which makes up a small proportion of the overall collection, bulk mailing is where RM makes its money and letter boxes is a fraction of that.
RM process and distribute them for delivery.
Post Offices network is getting smaller and the recent Horizon scandal where Postmasters were wrongfully convicted of theft and false accounting because the Horizon software is full of bugs creating double entries and false entries. Recent court victories have vindicated the Postmasters.
I think the root cause of the problem of the entire postal network is applying market principles to what was a cohesive social network that is greater than the sum of its parts, loss of monopoly will in time threaten the network especially to remote areas as RM needs volume to sustain it, large urban centres subsided the countryside.
It was also considered a job for life if you worked for them, the certainty meant you would be more confident in taking long term financial commitment benefitting the general economy, pay was initially rubbish but overtime made up for it and the promise of a final salary pension more than made up for it.
All that has changed since privatisation.
So in short separating all these once cohesive cooperative cross subsidising services didn't make sense at all.
The consultants made a lot of money out of it.
