MPs warn competitive pressures threaten ability to cross-subsidise

Competitive pressures on Royal Mail are “inevitably threatening” its ability to cross-subsidise unprofitable activities, MPs will today warn, in a report highlighting concerns about the government’s plans for the loss-making Post Office network.

The trade and industry committee is likely to examine the impact of existing price controls on the state-owned postal operator, its chairman told the Financial Times. “There may well be a case for looking again at the regulatory regime,” Peter Luff said. His committee’s report cites a number of state contracts Royal Mail has lost to rivals since the postal market was opened fully to competition last year. Royal Mail’s loss of profits is “inevitably threatening the cross-subsidisation of its unprofitable elements, including the post office network”, the report states.