UK postal watchdog may force private operators to pay for rural services

The postal regulator admitted last night it was considering forcing private postal operators to pay to keep Royal Mail deliveries alive in remote areas such as the Highlands and Islands.

The bombshell was delivered in written evidence to the Commons trade and industry committee by senior Postcomm executives, who claimed that universal delivery was their top priority.

But this failed to reassure critics, with Angus SNP MP Mike Weir, a member of the committee, warning that country dwellers may be forced to travel to central collection points in towns and villages to pick up their post if the Royal Mail suffered heavy losses when the mail was opened up to competition on January 1.

Postcomm’s evidence said: “As a last resort, there is also the possibility (requiring primary legislation) of a universal service compensation fund. This would require other operators to contribute to the costs of providing a universal service, if it were in jeopardy.”

The regulator’s chief executive, Sarah Chambers, earlier told the committee: “Our first duty is to protect the universal service and we have to do it before we get out of bed in the morning.”

She guaranteed that the service – providing letter and parcel deliveries anywhere in the UK for the same rate – was “completely safe”, despite fears that rivals would move in to cream off the most profitable business in cities.

Postwatch chairman Peter Carr, representing consumers, claimed that, far from being a loss-maker, the Royal Mail benefited to the tune of £500million profit a year from offering universal deliveries because no one else could offer a competing door-to-door service.

Mr Weir said country dwellers had seen, from what had happened to rural petrol stations when supermarkets creamed off business by selling fuel cheaply, what would be their fate if Royal Mail lost its most profitable business.

He said the number of garages had dwindled and forecourt prices soared.

The MP said that, as far as private companies were concerned, “the rest of us can whistle”, whether in the Highlands or other remote areas.

Mr Weir said Postcomm had admitted rural deliveries would be in danger if Royal Mail failed to make substantial efficiency savings.

“My worry is that, to keep any form of universal service, we may end up with central collection points and no door-to-door deliveries at all in the country,” he said.

Orkney and Shetland Liberal Democrat MP Alistair Carmichael said Postcomm’s fall-back levy plan did not reassure him the universal service would continue.

He said Postcomm had demonstrated “breathtaking complacency” and now seemed to be adopting a Lib Dem policy.

Argyll and Bute Lib Dem MP Alan Reid said: “I am glad Postcomm has learned from my party’s policy. We forecast years ago a levy would be the only solution if private operators rip off the best business.”