Lost post drives Royal Mail's compensation bill to GBP 1 m a month
Royal Mail is paying out more than GBP 1million a month in compensation for its failures – including settling vast numbers of claims for lost and damaged items.
More than 800 claims a day are paid out for letters and packages that have been lost. There are another 80 a day for damaged parcels and 150 per day over delayed items.
The GBP 13.6million annual bill to settle claims represents the tip of the iceberg of Royal Mail failings because the company has become notorious for refusing to pay up over complaints.
It received complaints and compensation claims for 651,582 lost items in the 2006-07 financial year, yet paid out on only 311,005.
The Federation of Small Business claims the decline in services has reached crisis point and is damaging the economy.
The price of a first class stamp went up by 2p in April to 32p. It will go up to 34p next April, while further rises to 37p are in the pipeline. Similarly, second class stamps went up 2p in April to 23p and will rise to 24p in April. By April 2009 the cost will be 29p.
Royal Mail’s reorganization and automation plans, which will cost 40,000 jobs, will also include delaying the daily post to 60 per cent of homes and businesses until after midday, the Daily Mail revealed last week.
The proposals, which have angered consumers, will also mean postmen not delivering any normal mail before 10.30am.
Royal Mail’s GBP 13,623,473 compensation bill for 2006-07 is likely to rocket in the current financial year because of industrial action by the Communication Workers Union, according to reports to the federation.
The consumer body, Postwatch, has in the past accused Royal Mail of “cheating” customers by failing to pay proper compensation when items are stolen.
It was particularly worried that compensation was being refused even when customers paid more to send items “special delivery”, which is supposed to guarantee a secure service.
It emerged in June that Royal Mail auctions up to 75,000 items a year that have been lost in the post and not reunited with their owners.
Lost items cause more complaints than any other issue dealt with by Postwatch. Another major problem is damaged parcels.
For lost items, Royal Mail customers can claim compensation up to 100 times the cost of a first class stamp or the market value, whichever is lower. Compensation for damaged goods is awarded at the same rate, but not for glass or ceramics.
Royal Mail confirmed that it sells off around 15 per cent of items lost in the post. A spokesman said: “Each year 500,000 parcels are undeliverable because they are either incorrectly addressed or have no address or the intended recipient has moved. We do all we can to reunite them with their owners at a cost of GBP 10 million a year.”
The company said that complaints and compensation claims fell in 2006-07 and were around 200,000 fewer than the year before.
Royal Mail, which employs 195,000 staff, handled almost 21 billion letters and parcels last year. A spokesman for industry regulator Postcomm said: “In real terms, comparing the volume of mail they carry, the number of items lost and damaged is very small.”
