In the United Kingdom, the term postcode lottery refers to the way the allocation of postcodes, which often bears little relation to local government boundaries, can affect such things as insurance prices. The term is also used to refer to the way local budgets and decision-making can lead to different levels of public services in different places especially with regard to health and social services, e.g. access to cancer drugs or quality of education.
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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.
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. 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 London.
Residents of West Heath in SE2 wish to have their postcodes changed to that of adjacent Bexleyheath, citing higher insurance premiums as reason to change. Some residents of Kingston Vale in SW15 wish to have their postcodes changed to adjacent Kingston upon Thames for the same reasons.
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. 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.
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.
Postcomm says the following regarding the extended use of postcodes and the Postcode Address File (PAF):