Consignia: Hays licence is threat to universal postal service
Consignia: Hays licence is threat to universal postal service
By Barrie Clement, Labour Editor
18 September 2001
Consignia warned yesterday that its ability to provide a universal postal service was under threat after the industry's regulator took the historic step of granting the first licence to a competitor.
Senior managers at the state-owned Consignia, formerly known as the Post Office, declared last night that Hays Commercial Services was being allowed to cream off the most lucrative trade. It is the first time the British mail service has encountered competition since the initial monopoly was granted in 1654.
Hays has been given a year-long licence to deliver business documents before 8am in parts of London, Edinburgh and Manchester, which have been the preserve of the Royal Mail.
Leaders of the Communication Workers' Union said the regulator, PostComm, had set about "destroying the British postal service" and warned that the union nor the public would allow it to happen "without a fight".
Some employees' representatives expected postal workers would walk out if they were asked to handle mail processed by private sector competitors.
The union had agreed last week to suspend any official ballots for industrial action for at least a month while talks continue over improving industrial relations in the service.
However, the regulator also announced yesterday it was considering issuing a licence to a firm for the delivery of mail for local authorities if the postal service is disrupted by industrial action or other problems.
Hays is likely to be given permission to provide a UK-wide service for councils to step in and deliver mail such as housing benefit payments. The CWU said the regulator seemed to be planning a "strike-breaking" operation at a time when the industry was attempting to resolve its problems.
Consignia said yesterday it was concerned that the intervention of Hays would undermine its ability to ensure that addresses everywhere in the United Kingdom received mail at a uniform price. However, Consignia said it welcomed Postcomm's commitment to review the effect of the Hays licence on the universal service.
"Postcomm is now prepared to look favourably on applications for postal licences from any company that wants to pick its customers and offer a mail service at less than the basic 27p first class stamp," said Stuart Sweetman, Consignia's managing director for business development.
Hays could "cream off" the market by picking and choosing its customers, he said. Because Consignia was state-backed, competition law prevented the group selectively lowering its prices, which was the most effective way it could compete with an operation such as Hays.
Mr Sweetman said there was "nothing innovative" about the overnight service Hays wants to provide. "It carries no guarantee and is essentially the same as Royal Mail's first class service," he said. "Its main selling point will be its price, which is bound to undercut the 27p basic postage."
Mr Sweetman said Consignia fully supported the introduction of fair competition because it was convinced it could compete if "level playing field" rules apply to all operators.
Hays said the new licences were designed to provide new benefits and alternatives for postal users. A range of features and options, using the latest in postal technology will be introduced for Hays' customers, said managing director Neil Tregarthen.
"This licence will enable us to begin the process of revitalising and expanding the mail market, complementing the universal service provided by Consignia," he said.
Sources at Consignia, however, argued that Hays would ensure the universal service was not undermined before the regulator reviewed the situation after 12 months.
The consumers' postal watchdog, Postwatch, welcomed the decision, saying that some customers would have a choice for the first time."For the Post Office it is the day competition arrived," said Gregor McGregor, chief executive of Postwatch. "This could act as a real spur to improve services to its customers."
