PostComm plan could be death of Consignia
CONSIGNIA COULD be put out of business because of the way the postal regulator is planning to open up the Royal Mail's monopoly to competition, an influential Commons committee warns today.
The cross-party Public Accounts Committee accuses Postcomm of "decision making in the dark" and says the regulator's actions could mean the death of the universal service that guarantees deliveries to all homes in the country at a single price.
The comments are the most direct criticism yet of Postcomm from an independent body and increase the likelihood of the regulator watering down its proposals later this month.
Edward Leigh MP, the Conservative chairman of the committee, said: "Postcomm have a very difficult task to perform. They have to increase competition, set the price for stamps and ensure the universal service. This task involves delicate management of a conflict of priorities that may be beyond them and which could even result in Consignia going out of business.
"The postal service that we have always taken for granted is under threat. Soon, most of us may not receive our delivery early in the morning."
TELEGRAPH (UK) 1st May 2002
MONOPOLY WARNING TO POSTCOMM
Regulator told to proceed with caution in opening up Consignia's service
THE chairman of the Public Accounts Committee, Edward Leigh, said yesterday that the postal regulator was "making decisions in the dark" that could jeopardise the universal postal service. He added that the regulator, Postcomm, needs to be cautious about the potential consequences of its proposals. Postcomm has indicated that it wants to open up the whole of Consignia's monopoly to competition by 2006. The organisation currently has a monopoly on all letters costing under pounds 1 to post, except those covered by interim postal licences. "Increasing competition is a lever for improving efficiency and services, but Postcomm needs to demonstrate that rapid market opening would not damage Consignia's ability to deliver the universal service at a uniform tariff," Mr Leigh said. He was speaking as the Committee published a report into the work of Postcomm. The Committee also found that Consignia had suffered from a series of problems including poor labour relations, inefficiency in some parts of its operations, constraints on investment and steeply rising costs. A Consignia spokesman said he welcomed the "useful and timely" report. "Postcomm is expected to soon be making a decision that will have a crucial effect on the postal market in the UK," he said. "This provides a useful position on the fast-track competition. We think competition is coming in too quickly." Postcomm also responded to the report, saying that the universal service "will not be allowed to disappear". "Before publishing our proposals for allowing customers a choice of postal operators, we spent more than two years analysing and investigating the postal market," a spokesman said. "We have studied international experience and taken the advice of established experts in the field. "We have now received more than 1,500 responses to our proposals and will take account of all these – and the committee's report – in framing our decision." He said the organisation is hoping to publish its response by the end of March. Consignia is also facing the threat of a postal strike after scrapping its second delivery each day. Hays DX, which posts business letters, said yesterday that it had applied to Postcomm for a licence to deliver business mail in 50 cities in the event of a strike. David Sibbick, who runs regulatory affairs for Hays DX, said that the service would be known as "Peace of Mind". "We are not looking to capitalise on Consignia's misfortune," he said. "Our customers have got more and more nervous about the prospects of a Consignia strike. A lot of them want to make contingency plans and asked to what extent we would be able to help."
