Year: 2005

Royal Mail revealed yesterday that the overall volume of mail is declining for the first time in 25 years, and claimed it was evidence of economic downturn in Britain. Chairman Allan Leighton said yesterday that the organisation was “a barometer of the economy”, adding that Royal Mail was “very much dependent on GDP”. Overall mail volumes handled by the provider are down 1pc in the current year, with nearly all the loss in the profitable business mailings sector.
A spokesman said there had been a particularly noticeable downturn in letters inviting people to apply for credit cards. Mr Leighton disclosed that the fall for the first time at a Trade & Industry Select Committee where he also warned that the Royal Mail’s ”one price goes anywhere” service would be under threat unless it was allowed to charge 39p for a first class stamp by 2009-10.

Royal Mail is “optimistic” it will win government approval for its plan to give a fifth of its shares to staff, while insisting this is not a back-door route to full privatisation. Allan Leighton, chairman of Royal Mail, told MPs yesterday it would be “very straightforward” to set up a share ownership scheme for employees of the state-owned postal services operator. “We think it should start with 20 per cent,” he told the trade and industry select committee. Shares, distributed equally to employees, could be traded via a trust, he said. “It’s very easy to do, not at all complicated (and) our people would understand it.” Speaking after the hearing into Royal Mail’s future, Mr Leighton said the government had discussed but not yet agreed the employee share proposal. The scheme, which would require parliamentary approval, is likely to run into strong opposition from unions and Labour backbenchers.

The Royal Mail is using obsolete equipment to sort letters and needs to spend GBP2 billion to remain commercially viable when the postal market is opened to competition in the New Year, its chief executive warned today. Adam Crozier told MPs that rival firms, including TNT and German-owned Deutsche Post, had modernised their businesses 15-20 years ago. There had been “chronic” under-investment in Royal Mail’s network, so that it only sorted 50% of its letters mechanically, compared with 90% for competitors, the Trade and Industry Select Committee was told. The Royal Mail said in a report to the MPs: “Much of the network depends on obsolete equipment and the business has significant distance to close to achieve best practices and processes. “Royal Mail requires significant investment and substantial operational change if it is to remain not only competitive but also commercially viable in a fully liberalised marketplace.”