UK Royal Mail Chairman Leighton calls for curbs on Postcomm

Allan Leighton, chairman of Royal Mail, is on Wednesday expected to spell out a series of radical reforms to Britain’s regulators. In what will be interpreted as a sideswipe at Graham Corbett, the postal regulator, Mr Leighton will tell a House of Lords select committee that the Government needs to keep a tighter rein on the regulators.

Since he has been chairman of Royal Mail, Mr Leighton has had a series of run-ins with Mr Corbett’s Postcomm. Mr Leighton is now considering whether to launch a judicial review over Postcomm’s plans to cap the price at which Royal Mail can charge its competitors to use the postal network. Royal Mail, which last month reported a loss after tax of pounds 559m, claims that Postcomm’s plans could cost it between pounds 500m and pounds 1.2bn.

At the Lords’ select committee hearing Mr Leighton is expected to make three main proposals: first, he will point out that, at present, if a company wants to appeal against a regulator’s decision, the only route is though a judicial review. He will describe this as “the nuclear option”, since a review can take months to complete and cost millions. Royal Mail will propose the creation of a new “regulatory disputes panel”, which would be part of the Competition Commission. This will attempt to settle arguments between regulator and company in around a month.

Second, Mr Leighton will argue that the duties of the regulator need a clearer definition in law. Royal Mail is aggrieved that Postcomm is attempting to open up the British postal market to competition quicker than even European rules require. Royal Mail believes the principal role of Postcomm should be in the protection of the universal postal service, which ensures that everyone in the country is covered by Royal Mail.

Third, Mr Leighton will argue that there needs to be better scrutiny of the regulators by the Government. At present, select committees and the National Audit Office are the only two bodies that have real powers to investigate the activities of regulators.

The independence of regulators has riled even ministers. Brian Wilson, the Energy minister, famously fell out with the energy regulator Callum McCarthy over the operation of Neta, the electricity trading market. Department of Trade and Industry ministers were also understood to be unhappy with Postcomm’s recent decision to restrict Royal Mail’s ability to increase the price of a stamp.

While Mr Leighton’s comments will by their nature be directed at Postcomm, they will also have a bearing on other controversial industry regulators, such as Oftel, which covers telecoms, and Ofgem, which covers energy.