Loosen price reins or I quit says Royal Mail Chairman
Allan Leighton warned yesterday that he would walk out of the Royal Mail if the regulator continued to interfere unreasonably with his plans for restructuring the loss-making business.
The Royal Mail chairman also told a trade and industry select committee he would seek an immediate – albeit high risk – referral to the competition commission if Postcomm reacted negatively to a new plan for raising basic postage prices by 1p.
He also disclosed that his company was working on a new range of services to be provided from post offices within nine months, including insurance and a wider offering of savings products.
There has been increasing speculation that the former supermarket boss was close to resigning and when asked to comment by a committee member on an article on that topic in Monday’s Guardian Mr Leighton left no one in doubt where he stood.
If the government – Royal Mail’s shareholder – wanted to see a turnaround of the business then he was the right person to do that, Mr Leighton said. But if the business was going to be continue to be managed by the regulator “then frankly you do not need me. If you need somebody to sit on top [as just a figurehead] of the business, get someone else to do it,” he responded in characteristically blunt fashion.
His latest outburst was triggered by reports at the weekend that statutory consumer watchdog Postwatch was looking at whether Royal Mail should be broken up.
Mr Leighton told the committee that this was the last thing the company needed at a time when it was concentrating on turning a business around to halt losses of more than £1m a day.
But the core of the chairman’s anger was aimed at the regulatory straitjacket imposed by Postcomm and the slow speed with which it dealt with issues.
“It’s nine months since we proposed an ‘immediate’ one penny price rise for first and second class basic stamps. All we have got, after we’ve submitted more than 1,000 detailed pieces of evidence, is a set of hugely complicated, fatally damaging proposals which are totally unacceptable – flawed and disastrous in their impact.”
He believed it should take seven hours not three-quarters of a year to take these kinds of decisions and that the business was running out of time, with the postal market opening up to competition on January 1.
The regulator is offering to allow a 1p stamp rise but only in return for tough price caps throughout the business, while bringing unregulated parts of Royal Mail under Postcomm control. This would turn a £510m revenue over three years into a £460m “black hole”, Mr Leighton argued.
Postcomm should scrap its complex price restraints and instead allow first and second class basic postage to rise by 1p with pro-rata rises for heavier letters and packets.
If this “straightforward” proposal was not accepted then Royal Mail would demand a referral to the competition authorities, even though this would take six months to complete, cost the business about £150m and endanger a complex external funding programme.
Mr Leighton said four candidates were being interviewed for the post of chief executive at Royal Mail, with an announcement expected in the next two weeks.
