Post rivals urge watchdog to bare teeth over Royal Mail privileges

Private postal operators are calling on the Government to take a “brave” decision to end Royal Mail’s monopoly on large parts of the market as it considers the future of Britain’s mail services.

Operators including TNT Post and DX, which employs a fleet of private sector postmen in Scotland, are pressing the Government to end the special privileges afforded to Royal Mail, such as VAT exemption, which they say prevent equal competition.

As the regulator PostComm considers responses to a consultation on the future of postal services, which closed on Friday, the operators are urging Sir Nigel Stapleton, PostComm’s chairman, to take a brave stance. They hope the PostComm inquiry will set the tone for a wider review by the Department for Business, Enterprise and Regulatory Reform, which is due to report this summer.

James Greenbury, chief executive of DX, said: “The first decision PostComm and the BERR (Department for Business, Enterprise and Regulatory Reform] have to take is to actually take a position on Royal Mail. Our view is that Royal Mail is an institution left over from the 1970s. It has a number of advantages over all of the competition which have to be levelled out. They don’t have to charge VAT and we do. It takes out 40% of the market.”

Nick Wells, chief executive of TNT Post, said: “We need a level playing field. The market is still overshadowed by VAT distortion which closes off 40% of mail volumes to competitors.”

The UK postal market was opened up to competition in 2006 but private businesses say they are still unable to break into key parts of the market.

Sources say Stapleton is likely to be sympathetic to their view, and PostComm has previously argued for a flat VAT rate of 5% for all providers – the Royal Mail included.

However, the change would need to be sanctioned by the Government and passed as legislation.