Postcomm rethinks mail price controls
The postal regulator moved yesterday to defuse the row with Consignia over proposals for tough price controls, by hinting they were only an opening gambit in negotiations.
A furore erupted last week when the regulator proposed a three-year price freeze. But Graham Corbett, Postcomm chairman, said its consultation document had deliberately been pitched “left of centre” to force Consignia to justify its position that the controls would lead to a loss.
While stressing that no final decision had yet been taken, Mr Corbett signalled that he was willing to meet Consignia’s concerns, telling the Financial Times: “As a general point, it is the nature of consultation that regulatory proposals will more often be changed in favour of the regulated company than the reverse.”
He said: “Any regulator who wants to do a responsible job is more likely to pitch any proposals left of centre. This is to leave yourself with some flexibility. You are testing the regulated company to argue its case.”
Allan Leighton, chairman of Consignia, said last week the plan to fix Royal Mail’s average prices until March 2006 would lead to losses of Pounds 460m. The mail operator is already losing Pounds 1.2m a day.
Consignia is calling for controls that would adjust prices to reflect changes in its mix of products. Last week, Patricia Hewitt, trade and industry secretary, weighed in on Consignia’s side over the proposed price controls while last May she said Postcomm should delay the opening of the postal market to competition. Those interventions have led critics to question the independence of the regulator.
But yesterday Mr Corbett insisted that Postcomm had “no issue” with the role the Department of Trade and Industry had played in the row.
He said: “We have no problem with the DTI, either as sole shareholder or as the responsible department, coming forward with responses to our consultations. They are major stakeholders in both capacities. They have not sought to apply pressure on us.”
Ms Hewitt had had no more influence over the consultation than any of the other 2,000 respondents, he insisted. “Many of these said we were pushing for competition a bit faster than they expected. We took account of these views.”
Mr Corbett repeated Postcomm’s intention to support Consignia’s restructuring plan while, at the same time, opening the postal market up to competition next year.
“We want a robust and a healthy and a competitive Consignia at the core of this market because without that we simply don’t believe that it’s possible.”
The three-year timescale Mr Leighton had set for his renewal plan was “realistic and ambitious and we would like to encourage him to push down that very ambitious track”, Mr Corbett added.
