Year: 2005

A drop in credit card junk mail has hit Royal Mail’s core business, with volumes for flagship products falling up to 7 per cent in the six months to September, the postal operator has revealed.

Royal Mail’s regulator said the new figures were forcing it to rework the calculations underlying price controls to be finalised this month. Royal Mail attributes the fall in its volumes – the first for 25 years, bar a dip three years ago – to a general economic slowdown and the impact of competition.

High street banks are sending less direct mail than last year, due in part to a switch from blanket to targeted mailshots, according to the Direct Mail Information Service. Such fluctuations in volumes, with banks easing off hard-sell mailshots when personal debt levels are rising, are inevitable, said Royal Mail.

An attempt to launch a buyout of the loss-making post office network will move a step forward today when a postmasters’ group meets potential US investors in London to try to secure up to Pounds 150m of funding.

The buyout, which would have to be approved by the government and parliament, would break up the state-owned Royal Mail, which is understood to be strongly opposed to the proposal. Royal Mail declined to comment yesterday.

The initiative by Postmasternetwork, which says it represents 7,500 postmasters, has thrown a spotlight on the troubles of the post office network. Royal Mail and its sole shareholder, the government, face a conundrum over what to do with the network, which lost Pounds 110m in 2004-05.

The problem is exacerbated by the fact that the government subsidy of Pounds 150m a year for rural post offices is due to end in 2008. Even if the government wanted to renew this subsidy, European competition rules might prevent it.