Watchdog may delay opening up postal market
Ministers are confident the postal regulator will water down plans to open the market to competition when it reveals its plans next week.
Postcomm has faced criticism of the speed of its plans, which would open the UK market to competition ahead of Europe. Patricia Hewitt, trade and industry secretary, is privately confident that it will slow the introduction of competition.
In a letter to Postcomm, Ms Hewitt pressed the commissioners to “consider very carefully as to the size and timing of market opening”. She wants Postcomm to minimise the risk that Consignia cannot finance its activities.
But the regulator is expected to stop short of demands by trade unions that it adopt the European Union timetable. Europe is unlikely to see full liberalisation of its postal markets before 2009.
Postcomm in January set out proposals to open the whole of the letters market to competition by spring 2006, starting with the lucrative bulk business mail market. It is expected to delay competition, with full liberalisation by spring 2007 an option. This would allow Consignia more time to turn itself round.
MPs on the public accounts select committee said Postcomm was making “decisions in the dark” that could hit the universal postal service.
Consignia, the renamed Royal Mail, warned in its response to Postcomm’s proposals that a 1p rise on the cost of a stamp might not be enough to stave off a crisis caused by the ending of its monopoly. It fears private sector operators will undercut the price of a first-class stamp on profitable routes. Postcomm is likely to agree to at least a 1p rise.
Dutch post office TPG, likely to be a key beneficiary of a fully liberalised market, said Consignia “will not be able to defend itself” if European rivals are able to muscle in on the UK market before Consignia can enter all European markets.
