Call to save Royal Mail by levy on rivals

The UK Government was urged last night to prepare to impose a levy on Royal Mail’s competitors to keep universal letter deliveries going — or risk the collapse of the service.

The warning came after Business Secretary John Hutton renewed the government’s commitment to a universal service — a nationwide delivery service at a single tariff — but insisted he must not pre-empt a study into Royal Mail’s future.

His comments followed publication of a report from a team in his department warning that opening up postal markets to competition has only benefited large companies, not small businesses or consumers.

The team warned Royal Mail’s financial stability is at risk and the present arrangement under which it is required to provide a universal service, while its competitors are not, is untenable. It is going on to consider whether there should be a levy on Royal Mail’s competitors to pay for the universal service obligation or whether the solution should be more radical and involve breaking up Royal Mail itself, with a separate body providing a simple delivery service at the expense of all the competing mail companies.

The issue was raised by Orkney and Shetland Liberal Democrat MP Alistair Carmichael, who urged that work on planning a levy to support the universal service should start now “because if we wait for further conclusions it might be too late”.

The Post Office is expected next week to announce the closure of dozens of branches in the north-east and Tayside. It has confirmed decisions to close 16 branches in the Northern and Western Isles on top of 38 in the Highlands and 40 in Argyll and Bute, Falkirk, Stirling and Greater Glasgow.

The UK Government was urged last night to prepare to impose a levy on Royal Mail’s competitors to keep universal letter deliveries going — or risk the collapse of the service.

The warning came after Business Secretary John Hutton renewed the government’s commitment to a universal service — a nationwide delivery service at a single tariff — but insisted he must not pre-empt a study into Royal Mail’s future.

His comments followed publication of a report from a team in his department warning that opening up postal markets to competition has only benefited large companies, not small businesses or consumers.

The team warned Royal Mail’s financial stability is at risk and the present arrangement under which it is required to provide a universal service, while its competitors are not, is untenable. It is going on to consider whether there should be a levy on Royal Mail’s competitors to pay for the universal service obligation or whether the solution should be more radical and involve breaking up Royal Mail itself, with a separate body providing a simple delivery service at the expense of all the competing mail companies.

The issue was raised by Orkney and Shetland Liberal Democrat MP Alistair Carmichael, who urged that work on planning a levy to support the universal service should start now “because if we wait for further conclusions it might be too late”.

The Post Office is expected next week to announce the closure of dozens of branches in the north-east and Tayside. It has confirmed decisions to close 16 branches in the Northern and Western Isles on top of 38 in the Highlands and 40 in Argyll and Bute, Falkirk, Stirling and Greater Glasgow.