UK Royal Mail could lose its monopoly years early
ROYAL Mail could lose its monopoly on delivering letters years early after a damning report found it beset by ‘abysmal failures’.
Rival companies may be allowed to run competing postal services sooner than planned because of the’ dramatic decline’ in standards.
The market was not due to be opened for three years, but regulators are considering introducing competition much earlier to give longsuffering customers a choice.
Postal watchdog Postcomm made the announcement yesterday in its annual report which concluded that Royal Mail standards were ‘deteriorating’.
The organisation was heavily criticised for missing all 15 of its performance targets covering first and second-class deliveries.
Just 88.3 per cent of first class mail arrived the next day – well below its goal of 92.5 per cent – in the April to June period.
It failed to meet this objective in 115 of the country’s 121 postcode areas.
The slump means 1.7million letters and parcels arrive late every day, while every year an estimated 14million items of post are lost. Postcomm said the failures could cost Royal Mail GBP70million in compensation.
It may also be hit by extra fines, potentially running to tens of millions of pounds, as punishment for its poor standards. The regulator has launched an investigation into how, after improvements in the early part of last year, standards plummeted in the six months from October 2003 to March 2004.
Postcomm’s chief executive, Martin Stanley, said while Royal Mail provided a good service in some areas, ‘the average service has been poor, and this average hides some abysmal failures in other parts of the country, and particularly the South-East.
‘Customers in these areas deserve to be able to take their business elsewhere, and potential competitors deserve to be able to develop innovative new services to meet the demands of 21st century communicators.’ He added: ‘We are examining the possibility that we might open the whole market much earlier than our original date of April 2007.’ Royal Mail, which made losses of GBP1million a day two years ago, recently announced it made GBP 240million during the last financial year.
But future profits could be hit if increased competition is given the goahead. Currently 11 companies have a licence as rivals to Royal Mail, but are limited to delivering bulk mail or items over 350grams.
Royal Mail blamed its problems on an unofficial strike last year and the upheaval caused by major changes, including scrapping the second post.
A spokesman said: ‘We readily accept that we still have a lot to do.
But there has been a lot of improvement since last spring.’
