UK Government will not renew regulator's contract

Graham Corbett, the postal regulator criticised for bringing Royal Mail to the brink of bankruptcy, will not have his contract renewed by the government.

The decision, expected to be confirmed in a House of Commons statement today, is widely viewed in the industry as a sign that ministers wish to see a new era of lighter-touch regulation.

However, Mr Corbett, 68, insists he intended to stand down at the end of his three-year term as chairman of the Postal Services Commission, known as Postcomm. He has agreed with ministers to stay on for up to 12 months beyond next week’s expiry of this contract while a replacement is found.

Patricia Hewitt, trade and industry secretary, is expected to praise his contribution towards allowing competition among postal providers but believes Mr Corbett’s departure will allow a “new phase” in regulation.

Yesterday, Postcomm said Mr Corbett had made it clear since last July that he did not intend to seek a further term in office.

Mr Corbett is also understood to have telephoned Ms Hewitt for reassurance after reports that he was being ousted because of repeated clashes with Allan Leighton, the chairman of Royal Mail.

The Department of Trade and Industry and Postcomm declined to comment ahead of the Commons statement.

Nevertheless, it is unusual for independent regulators to serve such a short term in office. The previous two telecom regulators both had their three-year contracts extended to five years, while the energy and water regulators were placed on five-year contracts from the start.

Industry observers also point out that Postcomm has alienated almost all its supporters during a year in which it clashed with Royal Mail over a number of issues from pricing of stamps to the speed at which new competition would be allowed.

“Regulators don’t seek, and rarely achieve, popularity, and Graham had a very difficult job. But it is important to be clear and determined to take this industry with you and we feel that he occasionally lost his way,” said Peter Carr, chairman of Postwatch, the consumer watchdog set up by the government to monitor Postcomm and Royal Mail.

Others confirmed rumours that ministers were unhappy with the way Postcomm had handled the tricky task of navigating between the needs of consumers and rival postal operators.

“We hope this marks a new phase in how the postal service is regulated and are pleased that the government seems to have taken on board our criticisms about the way that Postcomm has operated,” said Peter Skyte of Amicus, which represents Royal Mail middle managers.

Those close to the government predicted that any changes in Postcomm’s stormy relationship with the Royal Mail would be gradual. “Graham Corbett has laid out the way in which postal services will be opened up to competition and once this die has been cast it is hard to see how any replacement is going to change things radically,” said Martin O’Neill, chairman of the Commons industry select committee.