UK Revenue to deliver work over to Royal Mail rival

REVENUE & CUSTOMS has become the first key government body to drop Royal Mail for part of its work as the postal service prepares to open up to full competition.

The Revenue has chosen UK Mail, part of Business Post, for the post associated with taxpayers setting up online accounts. In order to file tax returns online taxpayers have to receive security information from the Revenue in the post.

The decision to stop using Royal Mail was approved by the Cabinet Office, which oversees government administrative spending. A large number of government departments, including the biggest mailer, the Department for Work and Pensions, is believed to be considering switching to rival postal groups.

Royal Mail is concerned that it could lose a lot of big business customers in the run-up to full competition in postal services. The market opens completely on January 1, allowing rivals, who are currently only able to work with business customers, to offer all services. Royal Mail fears that it could lose much lucrative work in business post and be left with a disproportionate amount of unprofitable domestic mail.

The state-owned group is pressing the Government to tackle its Pounds 4.5 billion pension deficit and to allow it to raise Pounds 2billion for investment in new machinery. UK Mail said that Royal Mail was still paid something for the Revenue work it lost, because rivals have to pay it to use parts of its system including the “last mile” delivery by postmen and women.

Rival operators have to pay Royal Mail 13p per letter for access to the system.