Conservatives call for break-up of Consignia

John Whittingdale, shadow Trade and Industry Secretary, will this week wade into the dispute over Consignia, by claiming the postal monopoly should be split in two.

The Conservative MP will use a keynote speech at a London conference of mail industry executives to launch a twin attack on both Consignia’s management and the Government. Mr Whittingdale will claim on Tuesday that by spinning off its Post Office network from the Royal Mail business, Consignia would be able to compete more effectively with private companies entering the market.

“I am strongly in favour of the argument that Royal Mail needs commercial freedom in the marketplace,” he told The Independent on Sunday.

Mr Whittingdale said the Post Office and Royal Mail are “fundamentally different businesses” and there was a “commercial logic” in separating them.

Mr Whittingdale will offer his endorsement to the postal regulator Postcomm, which has laid out far-reaching plans to liberalise the bulk-mail market. But he will stop short of calling for the outright privatisation of Consignia.

Consignia is wholly owned by the Government. Mr Whittingdale said Trade and Industry Secretary Patricia Hewitt has “washed her hands” of the problems surrounding the loss-making business.

“There has been an almost total silence from the Government,” Mr Whittingdale said. “It has decided to keep its 100 per cent stake but at the same time it says that [the problems] ‘are nothing to do with us’.”

As well as losing an estimated £1.5m a day, Consignia has warned of significant job cuts and outlined plans for a reduced service in an attempt to save money. At the same time the company has missed its delivery targets. “There has been a catalogue of appalling gaffes and a failure to really get to grips with the problems,” he said.

“While [Consignia] is worrying about competition, the very last thing it should be doing is cutting the standard of its service.”

Mr Whittingdale said the Government should offer more support to the Post Office: “I accept that there may well be a case for intervention and support, especially for sub-post offices in rural communities.

“But so far the Government has failed,” he continued. “The Universal Bank? Where’s that? Where are all the internet surfing opportunities they talked about? There has been very little done to get these in place.”