Post Office gets a free run: No rival in sight for troubled service

The Post Office, which on Monday officially loses its monopoly over
the 80m letters delivered daily, is likely to continue to be the
sole provider of mail to the UK’s 27m addresses for months to come. No
would-be rival operator has applied to the new regulator,
PostComm, for a licence to supply mail costing less than pounds 1
despite the prospect of hundreds of new local operators being
allowed to mount the greatest challenge to the Royal Mail for 350
years. PostComm, which is expected to finalise the Post Office’s licence
later today, backed off plans to launch a handful of licences after
John Roberts, PO chief executive, threatened to resign over the
issue, according to industry sources. The corporation, which becomes
Consignia and acquires plc status on Monday, has, insiders said, mended fences with the new regulator which is chaired by Graham Corbett and gets its new powers to issue licences the same day. A PO spokesman said yesterday that it was ‘absolute nonsense’ to suggest Mr Roberts had threatened to resign or pull out of negotiations with PostComm over its first licence. The PO chief is
said to be ‘bewildered and amused’ at such reports. But the PO is reeling
from the twin impact of rail delays and a spate of wildcat strikes that have seen it lose 56,000 working days so far this financial year (to March 31) compared with just 22,000 last year. Mr Roberts admitted this week only 89% of first class letters would have been delivered the next working day – compared with a 92% target. He has had to agree new targets of 92.1% this year and 92.5%
next year. One third of the 56 Royal Mail night trains are still arriving
late every night, five months after the Hatfield crash, with the date for
normal service to be resumed constantly put back. It is understood that
some senior PO directors are so incensed that they are urging the board to rescind the 10-year contract with the rail industry even though it still has five years to run. A PO spokesman said that, while it was technically feasi ble to switch to air and road, it would be impossible to do so overnight.
‘We have no plans to pull the contract but we do need to get a more
efficient, faster and more flexible service – and compensation worth
tens of millions when calm is restored to the rail network,’officials said. Frustrated by the lack of competitors beating a path to the door,
Postwatch, the consumer watchdog launched this week, wants 1p off
the price of first class stamps to be imposed by the regulator over
the next two years while PostComm decides on its price control
formula. The watchdog claims that almost 2m first class letters fail to be
delivered on time every day while 1m items of mail are ‘lost’ each
week, a figure hotly disputed by the PO. Mr Roberts admitted this week
that further problems of delivery caused by strikes and transport would drive customers into the hands of eventual competitors. But the PO expects – and hopes – that eventual competitors, who will be able to undercut it substantially, will merely serve niche markets such as business clients seeking an enhanced courier service.
Copyright 2001 The Guardian.
Source: World Reporter (Trade Mark) – FT McCarthy.THE GUARDIAN, 23rd March
2001