Consignia may fail to deliver argument – little time to influence Regulator's plan

Time is running out for Allan Leighton, chairman of Consignia, to convince regulators their plans to open the postal service to competition could ruin the renamed Post Office.

There are only two weeks left for submissions.

The former Asda boss is no stranger to red-blooded capitalism but he insists moves to allow private operators a limited role in bulk mailing for corporations will force Consignia to compete on unfair terms.

Sources close to the regulator Postcom reckon, with Consignia’s losses mounting despite its virtual monopoly, Leighton’s pleas will fall on deaf ears.

Logistics corporations who want a role in the corporate mail-shot business expect to be given a green light when final proposals are published later in March.

But they rubbish apocalyptic predictions from postal workers that there is a process of creeping privatisation which will spell the end of the post office and universal home deliveries.

Postwatch, the customer lobby group which will be canvassing opinion at a conference in Edinburgh today, favours moves to introduce competition.

Changes scheduled for April will allow private companies only to collect mailings of more than 5000 letters from businesses in major cities for transfer to post office centres near their final destination. The last mile of the delivery process will still be handled by Consignia, which will charge for that service.

No change in domestic services is expected before 2006, when complete liberalisation of the postal system is planned.

Leighton says by removing the monopoly on bulk mailing collection, Postcom will take away the most profitable part of the company’s business. Consignia complains it will still have an obligation to provide loss-making universal delivery services, noting that delivering an undisclosed number of 27p letters to Scottish islands costs (pounds) 2 each.

Consignia is losing (pounds) 1.5m daily but should be allowed time to change, says Leighton.

He is about to unveil plans to cut annual costs by (pounds) 1.2bn. The company yesterday announced a pilot scheme under which it will provide only one delivery a day in 14 areas, including parts of Edinburgh. As many as 30,000 redundancies may follow.

Sources close to Postcom say Consignia has had plenty of time. Business Post, the Birmingham-based group granted

a licence to collect bulk mail-ings for transfer between 12 cities including Edinburgh and Glasgow from April, agrees.

It expects to be joined by Hays and European players, including Deutsche Post, in a collections business in which more flexible private players will outperform Consignia.

Significantly, however, Bill Wallis, marketing manager, said Business Post would aim to compete on flexibility and reliability, not price.

As yet, it had no idea whether bulk collection services, operated in competition with Consignia, could turn a profit.

But with an investment of billions required to match Consignia’s delivery capabilities, private players already knew they could not hope to compete with Consignia on services such as final-mile delivery or running post offices.