In the United Kingdom, the postcode lottery is the unequal provision of services such as healthcare, education and insurance prices depending on the geographic area or postcode. Postcodes can directly affect the services an area can obtain, such as insurance prices. Despite having many non-postal uses, postcodes are only determined based on Royal Mail operations and bear little relation to local government boundaries. More broadly, there is an unequal provision of services around the country, especially in public services,^[1] such as access to cancer drugs in the healthcare system^[2] or quality of education.^[3] These are more likely to be a result of local budgets and decision-making than actual postcodes.

Postcodes were devised solely for the purposes of sorting and directing mail and rarely coincide with political boundaries. However, over time they have become a geographical reference in their own right with postcodes and postcode groups becoming synonymous with certain towns and districts. Further to this, the postcode has been used by organisations for other applications including government statistics, marketing, calculation of car and household insurance premiums and credit referencing.

Changing postcodes

There are several groups, mostly on the fringes of major population centres, who are affected in one way or another by the associations of their postcode. There is a movement in the Royal Borough of Windsor and Maidenhead to change the first two characters of their postcodes from SL to WM for vanity, so as not to be associated with Slough.^[4] A businessman in Ilford wishes to have the postcode district of IG1 changed to E19 as he claims customers do not realise his business is based in Greater London.^[5]

Some residents of West Heath in SE2 asked to have their postcodes changed to that of adjacent Bexleyheath, citing higher insurance premiums as reason to change.^[6] Some residents of Kingston Vale in SW15 wish to have their postcodes changed to adjacent Kingston upon Thames for the same reasons^{[citation needed]}.

In all these cases Royal Mail has said that there is "virtually no hope" of changing the postcode, referring to their policy of changing postcodes only to match changes in their operations.^[7] Under this policy residents of the Wirral Peninsula had their postcodes changed from the L (Liverpool) to CH (Chester) group when a new sorting office was opened.^[8]

Some postcode areas straddle England's borders with Wales and Scotland. Examples of such postcodes include CH4, SY10, NP16 and TD15. This has led to British Sky Broadcasting subscribers receiving the wrong BBC and ITV regions, and newly licensed radio amateurs being given incorrect call signs.

Extended use of postcodes

The Postal Services Commission says the following regarding the extended use of postcodes and the Postcode Address File (PAF):

Many organisations – including new postal operators, banks, insurance companies and others offering to deliver goods to your door — have a need for this information. It would be very time-consuming and costly for anyone to try and replicate the list, so Royal Mail licenses PAF data, for a fee, allowing others to use it. ... Although we have a role in ensuring that PAF is managed well, Postcomm does not intervene to resolve disputes involving individual postcodes. A postcode is a routing instruction, allowing a postal operator to sort and deliver mail accurately and efficiently. It is not necessarily a geographically accurate description of where a property is located.^[9]