Last post for mail in the Highlands; full service in rural areas 'impossible to maintain'
THE head of the Royal Mail has warned Highlands and Islands customers that their full postal service may be scrapped.
Allan Leighton, the organisation’s chairman, said a decision will be taken within the next 12 months to determine whether it will be able to continue fulfilling the same role at the same price as elsewhere in the country.
However, Postcomm, the regulatory body, insisted last night that the Royal Mail’s Universal Service Obligation (USO) would have to continue.
The USO guarantees that the cost of using the post is the same across the country. At present, 94% enjoy next-day delivery.
However, Mr Leighton, speaking during a visit to Inverness and Stornoway yesterday, said that it could prove impossible to maintain such a service.
He said: “If the USO is under threat anywhere, it is here in the Highlands and Islands because the cost is significantly more than the price of a stamp.
“I think it costs us five times as much as a stamp to deliver mail up here in the Highlands, but in some of the smaller, remote islands it could be up to 15 times as much.”
The warning has been triggered by moves to open up the market, which the service fears could leave it being forced to cover “expensive” rural areas while lucrative urban markets are opened up to competitors such as Deutsche Post.
Mr Leighton said: “If the regulator, Postcomm, imposes a tougher regime, it could put the USO under threat. If regulation reduces our ability to turn the business round, then it puts a threat over the USO.
“We believe in the USO, but if it comes under threat where do you start? You start where it is most expensive.”
The former Asda chief said the Royal Mail’s recovery programme was progressing from a loss of (pounds) 320m last year, but claimed that tough access restrictions being considered by the regulator could lose the service anywhere between (pounds) 250m and (pounds) 1.2bn.
He expects Deutsche Post, the Dutch TPG, and Business Post to be the main competitors seeking access, and said: “They could come to Inverness, Glasgow, Edinburgh, collect all the post, drop it off and ask us to sort and deliver it.
“I wouldn’t object, but I would want to make some money doing it. That’s the big debate. We think we should be able to charge about 21p a letter, but the regulator reckons it should be about 14p. At that price, we would lose up to (pounds) 1.2bn.
“I am supportive of the principle. We effectively become a wholesaler. But wholesalers don’t do it for nothing. They need profit margins.
“The one thing that is sure is that, while competitors may want to come to Inverness, they will not want to go out into the remote areas So we would either have to abandon the USO or say we will only deliver and collect once a week in these communities.
“Alternatively, the government would have to fund services to these communities.”
A spokesman for Postcomm said: “The USO has got to be provided one way or another under legislation. We are trying to get an acceptable access agreement.
“But it is worth mentioning that the horror stories about Royal Mail losses relate to Parcel Force, Post Office Counters and some of their overseas investments.”
