Post Con
A problem for ministers is that independent regulators can sometimes act more independently than expected. Postcomm, the postal regulator, is the latest to offend its political masters over its plan to phase in competition in the post from April. It has now pushed this back by a year, with Consignia, as the Post Office calls itself, and its unions claiming victory for their argument that the organisation is not yet robust enough to cope.
The immediate damage to the postal market should be small. The principle that Consignia’s monopoly must be dismantled entirely within a set timetable is intact. New entrants were also worried that Consignia’s universal service could slip if its market share were eroded too quickly. Most seem prepared to wait the extra few months in exchange for reliable delivery sharing.
Far more damage has been done to the credibility of Postcomm and Graham Corbett, its chairman. Mr Corbett argues that his plans were watered down as a sensible reaction to concerns expressed during the extended consultation. Consignia’s finances are worse than the regulator realised. His responsibility is to ensure the survival of a universal service and that requires a healthy Post Office.
But this was Postcomm’s fourth consultation on competition within two years. Postcomm also sets the rules governing Consignia’s financial disclosure and should not have been surprised to find it was badly run.
A more likely explanation is that Consignia’s effective lobbying campaign scared Postcomm’s commissioners. Allan Leighton, the former Asda boss appointed as chairman, has convinced the government that he needs more time to push through tough restructuring measures.
Mr Leighton’s defence of Consignia’s interests is admirable but Postcomm has primary responsibility to consumers. It is in danger of undermining its previous argument that Consignia suffers from too little competition rather than too much. Mr Leighton’s restructuring is proof that the threat of competition is a spur to improving efficiency.
What made the real difference was a lack of backing from the government. After initially refusing to intervene, Patricia Hewitt, trade secretary, has made little secret of her support for Consignia’s position. Postcomm argues that her opinions were received like other submissions – but such overt pressure is unlikely to have gone unnoticed by the public sector grandees who dominate its board. Until the government is prepared to stand behind its independent regulators rather than leave them to the mercy of powerful vested interests, they can never be truly independent.
