Union pleased with Royal Mail pricing decision

Postcomm’s decision to allow Royal Mail to raise bulk mail prices has been welcomed by the Communication Workers Union (CWU). As well as giving the green light to price increase proposals, the UK regulator also said it would reduce a number of the regulatory restrictions that the operator currently adheres to.

It is hoped the move will help Royal Mail fulfill its modernisation programme.

However, the CWU said that there is still work to do in order to “level the playing field in the postal market”.

The Union believes that the future of the universal service obligation (USO) is under threat under current regulatory restrictions.

Dave Ward, CWU deputy general secretary, said: “This is, in reality, just a small step in what is a bigger picture. There’s much more still to be done to create the level playing field that our industry needs.

“There is no doubt that the way regulation was introduced into the UK meant that Royal Mail was being set up to fail and that the universal service obligation would become unsustainable.

“New market entrants have had guaranteed profit margins at the expense of Royal Mail and the USO and this cannot be allowed to continue.”

CWU believes that Postcomm has failed to protect the USO and that regulation has damaged Royal Mail’s ability to deliver the six days a week, one-price-goes-anywhere service.

The move comes at a time when postal operators around the globe are being hit by falling mail volumes.

Postcomm believes that although rising prices could see volumes fall even further, it is left with little choice.

A statement said: “The impact that such price rises are likely to have on customers and the risk that this may result in a further decline in mail volumes.

“However the Hooper Report, published in December 2008 and updated in September 2010, clearly identified that the universal service will remain under serious threat if Royal Mail fails to modernise and tackle its long standing inefficiency.

“We agree with this assessment. We have therefore concluded on the basis of the information presently available that agreeing to Royal Mail’s request will provide a much needed contribution to funding the company’s ongoing modernisation programme.”

A document detailing Postcomm’s final position on these measures will be published early next week.