POST OFFICE REVOLUTION: Company and unions shocked at the speed of break-up
Postcomm’s review of postal competition has been anticipated for many months but the speed of the regulator’s proposals to break-up Consignia’s monopoly has taken almost everyone by surprise.
Union leaders are particularly shocked, fearing more than 30,000 jobs could go if Consignia is forced to speed up its cost-cutting programme. Their arguments are given extra weight by the rail crisis, where competition led to a similar collapse in service levels.
The Communication Workers’ Union, which dominates Consignia’s workforce, attacked the Postcomm proposals as irresponsible wrecking of a public service, and pledged to fight them.
“The regulator appears to have no concern for the industry it is supposed to protect and improve,” said Billy Hayes, general secretary. “It sees that Royal Mail is in a precarious financial situation, but instead of offering assistance to ensure the continuation of the universal service, it seeks to undermine it.”
He accused Postcomm of ignoring instructions from the government that its first priority was to protect the universal service.
The type of competition to be introduced was “calculated to undermine the universal service and the universal pricing system,” said Mr Hayes, who urged the Department of Trade and Industry to rein in Postcomm. Consignia is also poised to ask the DTI to intervene and appeared in a state of shock last night as the scale of the proposed changes began to sink in.
Alan Leighton, who recently agreed to become interim chairman, said: “The Postcomm proposal to open up 30 per cent of the market in just a few weeks’ time threatens the universal service. Competitors can now cherry-pick the profitable parts of our business, which substantially pay for the ‘one-price-anywhere-in-the-country’ promise of universal service.”
In the past Consignia has supported the introduction of competition, in principle, providing it was granted greater freedom in return. Now it accuses the regulator of forcing “a death by a thousand cuts”.
“We want to improve our customer service levels, become a great place to work and to be profitable. To do this we need to be competitive. Regulation should support a competitive environment, not stifle it,” added Mr Leighton.
Neither group of opponents received much support last night from the trade and industry department, which was sticking to its now-familiar line that the introduction of competition was a matter for the independent regulator. But few expect this silence to last as the government faces attack from almost every direction.
Only one body came out in support of Postcomm’s radical surgery last night. Postwatch, which was set up by the government as the voice of consumers, said it was the first good news for months.
“We agree that competition as well as offering customers choice will incentivise Consignia to get its act together and provide customers with the services they want,” said Peter Carr, chairman of Postwatch.
“The regulator should be applauded for destroying the myth that provision of the universal service is incompatible with a competitive market. In other markets the elimination of monopolies has delivered lower prices and better service to customers.”
