Post watchdog delays delivery (Opinion)

ALLAN LEIGHTON has won his first important battle as chairman of Consignia and persuaded the postal regulator to delay the onset of competition in its core market.

His tactic was straightforward: he opened the books and showed just how precarious was the position the business had been allowed to deteriorate into under its previous management. "Frightening" was the word used by Postcomm's Graham Corbett to describe the picture that Leighton put before him.

The full horror had not been clear to the regulator when he suggested his original timetable for allowing competition to enter the market. The months since then have left little doubt that Consignia simply could not cope with a genuine commercial challenge on any front. Protection and careful nurturing is what the business needs now if it is to have any chance of survival. Competition, it is always argued, is the spur that makes businesses improve but not if they are as sickly as this one.

Corbett has been besieged by supporters of Leighton's call for a little more mollycoddling, with even the Women's Institute rushing to the cause. Many of them were motivated solely by the desire to save rural post offices, which is not something that is guaranteed by the latest stay of execution and was not an argument that held sway with the regulator. Neither was he influenced by the fact that many of those who made representations were politicians and even ministers.

He was not, he insists, bullied into making his decision. It would be appalling if ministers had tried to use their position to dictate to a regulator who is supposed to be independent, but it would not have been the first time.

The unlamented Stephen Byers tried that tactic with Tom Winsor but found the Rail Regulator unwilling to jump to his commands. Mr Winsor, therefore, remains in office, although Byers tried to shunt him out. Perhaps he will be able to establish a more convivial working relationship with Alastair Darling.

But Corbett insists that he was not put under political pressure, merely made aware of the facts. And since the Government is the sole shareholder in Consignia, it was able to plead its case with passion. After all, given the chaos on the railways, it would hardly be keen on the idea of the Post Office operator heading to financial collapse. It had toyed with the idea of simply selling Consignia, and the Royal Mail, to the Dutch or German postal services. Perhaps realising what the public reaction might have been, those plans were dropped and Leighton recruited.

He has set himself a three-year schedule to try to restore Consignia to some degree of health. But competition cannot be kept out of the market entirely until Leighton declares Consignia fit. The regulator has merely put back his timetable by a year. After that, competition will be introduced in stages. The second, and probably crucial, one comes when the regulator insists that 60 per cent of the market should be up for grabs. That will now occur in 2005, just when Leighton's three-year plan should be complete. The timing is deliberate: the regulator believes that it will provide the organisation with the incentive to push through the plan and not let it drift.

He knows that without a fully functioning Consignia, any attempt to reform the postal services would not result in improved services for the majority of users. Leighton believes that he can produce that strengthened Consignia but he will need a little more indulgence first. The next battle is going to be over pricing. He looks likely to be given the benefit of the doubt on that, too. For the time being, he is in that strong negotiating position which usually involves a barrel.