Can opponents slow the approach of PIP?

With the time for raising objections to Royal Mail's PIP deadline running out, many of those affected flocked to Postcomm's summit last week to make their final plea. Sebastian Burford reports on whether they made a convincing argument

Postcomm's pricing in proportion (PIP) summit, held in London last week, was billed as the last chance for the industry to voice its concerns, with more than 130 delegates gathering from all corners of the UK to vent their spleens at Royal Mail's proposed scheme.

It may be more than three years since Royal Mail revealed plans to introduce size-based pricing (PM May 24 2002), but the controversy refuses to go away.

Since Postcomm entered its first consultation period on the changes last year (PM April 2, 2004), some 10,000 representations, including 130 individual responses, have been received – an unprecedented number for the industry regulator.

Many critics, such as photo developers and publishing houses, have been appeased, with the former managing to secure the support of MPs by claiming their industry was under threat (PM March 26 2004).

Although most people have now accepted the scheme will go ahead, there are at least two sticking points: levels of awareness of the scheme, and the date of its implementation. The latter has split the industry.

Postwatch North chairman Judith Donovan has slammed the PIP time-table as a "dog's dinner" (PM April 8), and WWAV Rapp Collins Europe chief executive Chris Gordon is also wading into the debate. "Postcomm should have kept to its original plan, rather than thinking it has to fit in with the start of the financial year," he says. "We're the ones who are suffering from the prevaricating."

Another major concern raised at the summit was that direct marketing suppliers and clients are being complacent about the repercussions.

In fact, the consequences for unaware clients – some charities in particular – will come as a shock when control packs need to be resized.

Critics argue that Royal Mail's plan to launch PIP in April 2006, rather than 12 months from the close of consultation on July 4, will saddle the industry with an impossible task: getting to grips with the changes in nine months.

The breadth of those affected by the proposed changes was evident from those present at the meeting.

Representatives came from TV shopping channel QVC, high-volume charity mailers including Cancer Research UK, publishers such as Redwood and De Agostini, envelope manufacturers Bong UK and Chapman Envelopes, and mail order photo developers Bonusprint.

Postcomm chairman Nigel Stapleton's closing summary was bullish – a characteristic some observers believe will further irritate direct marketers.

Though impressed by the range of issues discussed, Stapleton called for an end to awkward prevarication and declared: "Unless the consultation produces something more persuasive than what's been presented today, businesses can plan for it going ahead.

"There are no closed minds on these issues at Postcomm. We've heard some good, and some fragile, arguments. Tell us exactly why you want 15 months' changeover time, and if you want us to listen, support those arguments."

To many, Stapleton's summation would be interpreted as a defence of Royal Mail, which will lose its monopoly on UK postal services on January 1 next year. Stephen Agar, Royal Mail's director of regulatory affairs and wholesale, was not afraid to take on the baying audience, stating: "We should not be expected to carry things at a loss."

But for delegates from catalogue companies Learning Tree International and Scotts of Stow the introduction of PIP can not come soon enough. They argued that they are currently cross-subsidising other companies by paying disproportionately for the weight of items, PIP's introduction would allow more pages in catalogues.

Northern Tool & Equipment UK managing director Nick Hodge offered an extreme example of this inequity: "We sell a full-sized tractor by mail order, so we'll be cross-subsidising your letters until April."

Peter Steele, marketing director at catalogue owner Welconstruct Distribution, was even more forthright: "This should have been implemented last April; these are blatant delay tactics from the losers."

Even the financial 'losers' under PIP accepted the need for Royal Mail's system to be cost-reflective.

Centaur Communications circulation fulfilment manager Diane Foster objected that prices would not be known until December, at the start of Royal Mail's financial year.

"Our budgets start from July 1, and I already need to be thinking about whether magazines need to change format," she said.

But Stapleton reminded attendees that Royal Mail had substantially altered its proposals before, and there was still room for change before July 4.

The issue still divides the industry, after more than three years in the making. It is set to be a summer of discontent for direct marketers aiming to sink the plan, who may well find their hopes pipped.