Postcomm’s access plans could be “A huge spanner in the works” says Allan Leighton

Royal Mail’s Chairman Allan Leighton said today he was shocked at Postcomm’s plans to give courier firms access to Royal Mail’s delivery network.

“We were alarmed at the way Postcomm was moving last autumn to an access price of 14p for Royal Mail against a full price for First and Second Class basic postage of 28p and 20p,” he said.

“Postcomm’s plans today propose an access price of just 11½p so the regulator has moved the access price even lower than we feared.

“We are going to have to analyse the 140-page proposal from Postcomm very carefully. If the regulator has got the access arrangements wrong then it means the destruction of the universal one-price-goes-anywhere service. It will mean a two-tier or even a multi-tier postal service where the price of sending a letter depends on the distance it is travelling.

“Inevitably, mail going to distant or remote addresses would have to be priced a lot more than at present if the regulator’s calculations are wrong.”

Mr Leighton added: “Royal Mail will shortly be announcing its results for the last financial year and they’ll show we’ve cut significantly our losses and started to turn the company around. I’m confident we can get back to profitability – but not unless Postcomm’s plans give Royal Mail a realistic commercial price for access. Just as we have turned a corner, along comes the regulator and throws what could be an almighty spanner in the works.”

Under Postcomm’s proposals, the UK Mail delivery firm would pay Royal Mail as little as 11.46p for mail it had collected from customers but was handing to Royal Mail for local sorting and delivery. If Postcomm confirms the draft plans for UK Mail, they will become a template for every other courier and distribution firm that wants access to Royal Mail’s network.

Mr Leighton said: “Postcomm has issued a 140-page document to try and justify its scheme. There’s a huge amount of theory in it, and it’s accompanied with complex mathematical equations and a draft legal agreement. The real test will be to see if the theory can work in practice. We’ve not had time to study the document fully but I’m not convinced Royal Mail can continue to provide a one-price-goes-anywhere postal service when rival firms can hand it mail for as little as 11½p.”

Mr Leighton said Royal Mail had never objected to the principle of access arrangements.

“Royal Mail has created the unique nationwide network of sorting and delivery offices with a national distribution system. We’ve invested in it and our people are on the ground every day providing a mail service to the entire country,” he said.

“We are prepared to give other firms access to our network – but it’s got to be at a fair and realistic commercial price.”

Mr Leighton warned: “If Postcomm’s plans amount to a green light for rival firms to creamskim profitable mail and leave Royal Mail without the means to provide the universal service, then we will not hesitate to fight the regulator’s plans in the High Court and, if necessary, the European Court.”

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