Inquiry will back investment claim, says UK Royal Mail chief

TRADE and Industry Secretary Alan Johnson is expected to start the Government review into the future of Royal Mail within the next three weeks.

The inquiry, focusing on the impact of market competition, precedes the abolition of the last traces of the Royal Mail monopoly next January. From the start of 2006, door-to-door postal services will be thrown open to rival operators.

TRADE and Industry Secretary Alan Johnson is expected to start the Government review into the future of Royal Mail within the next three weeks.

Royal Mail has been urging an early start to the review because it believes it will strengthen its case for more cash support from the Government.

Chairman Allan Leighton, who is masterminding the privatisation, has said the review will recognise the need for Pounds 2.5 billion of investment.

Plans to raise stamp prices to improve Royal Mail finances ran into opposition last week from regulator Postcomm. Royal Mail might now seek a Competition Commission inquiry into the issue.

The company’s pension fund is Pounds 4.4 billion in the red and there are fears that once the market opens up, Royal Mail will be put under more pressure by large private overseas postal services, which will try to win slices of its most lucrative operation business post.

The Department of Trade & Industry review is seen as the first step towards the controversial plan to privatise Royal Mail, which is opposed by the Communication Workers’ Union.