UK post chief criticised for Highland threat
THE regulator for the UK's postal service yesterday accused the head of the Royal Mail of "holding customers hostage" following a warning that the Highlands' postal service may be scrapped.
Martin Stanley, chief executive of Postcomm, said that comments made last week by Allan Leighton, chairman of the Royal Mail, threatening to increase the isolation of remote communities, were "inexcusable".
In an open letter, Mr Stanley said that any failure to deliver a full postal service to the Highlands area would be met with "vigorous enforcement action by Postcomm".
Last Thursday Mr Leighton warned Highlands and Islands customers that a daily collection and deliver service may have to be stopped.
Mr Leighton, previously chief executive of Asda, said that it currently cost five times the price of a stamp to deliver mail in the Highlands, and in some of the smaller, remote islands up to 15 times as much. He said a decision will be taken within the next 12 months to determine whether Royal Mail will be able to continue fulfilling the same role at the same price in the area.
Mr Leighton's warning was triggered by moves to open up the market, which he fears could leave the Royal Mail being forced to cover "expensive" rural areas, while lucrative urban markets are opened up to competitors such as Deutsche Post.
However, Postcomm, the regulatory body, insisted that the Royal Mail's Universal Service Obligation (USO) would have to continue under the terms of its licence.
The USO guarantees that the cost of using the post is the same across the country. At present, 94% of people enjoy next-day delivery.
Mr Stanley said in his letter yesterday: "Royal Mail is not Asda. It provides an essential public service. The universal postal service – at a fixed national tariff – is therefore managed by UK law and by the law under which Royal Mail operates.
"We understand that Mr Leighton may not be happy with everything we do. He can appeal to the courts if we act unreasonably. But there are no circumstances in which it could be right for the Royal Mail to hold its customers hostage in its battles with government."
He added that Mr Leighton's "threat" was particularly bizarre when Royal Mail had just accepted a price control – the 1p increase on stamps to be implemented on May 8 – that would allow it sufficient revenue to manage all foreseeable risks.
However, a spokeswoman for Royal Mail said it needed to obtain a realistic subsidy for delivering to rural areas if the USO is to be maintained.
"Mr Leighton's comments were not a threat but a serious warning. With the opening up of the market there are still a lot of financial aspects to be worked out so that Royal Mail is on a level playing field with other companies," she said.
She added that having spent almost a year agreeing modest price rises of stamps, Royal Mail's concern was to get back to profitability and to drive up customer service.
She said the Royal Mail's recovery programme was progressing from a loss of £320m last year, but claimed that tough access restrictions being considered by the regulator could lose the service anywhere between £250m and £1.2bn.
The Royal Mail expects Deutsche Post, the Dutch TPG, and Business Post to be its main competitors, and says the debate is about those companies being able to cherry-pick the most lucrative parts of the postal services market when it opens in 2006.
If Royal Mail ends up with the scenario where it has to sort and deliver mail for other companies then it wants to ensure this remains financially viable through subsidies.
– April 9th
