Tag: Royal Mail

Royal Mail racks up GBP 200m of losses

Royal Mail called today for price controls to be lifted after admitting it is now handling 3m letters a day fewer than it was a year ago and has run up GBP 200m of losses from its regulated letters and parcels business.

The figures underline the financial crisis facing the state-owned postal operator from private sector competition and the migration of post to the internet, coupled with the downward pressure on bonds and other investments in its retirement scheme.

The scale of the problems add urgency to a review of the market after an independent inquiry commissioned by the government warned earlier this week that liberalisation of the wider postal market had provided no benefit to the average customer but put the universal service at risk.

The company delivered 80m letters a day in the 12 months to March 31 2008, compared with 83m in the year before. The GBP 200m deficit incurred by its letters and parcels business regulated by Postcomm compared with a GBP 29m loss before and a GBP 200m profit two years ago.

The universal service, which guarantees the same price and delivery date for letters throughout Britain, was in the red – for the first time – to the tune of GBP 100m while the group’s overall letters division reported a GBP 3m loss.

Royal Mail’s group operating profits before exceptionals fell 30pct to GBP 162m while overall revenues rose 2.3pct to GBP 9.8bn. Crozier said the profit figure had been helped by cost-cutting mainly through a heavy programme of redundancies.

Post Office Ltd, which has closed 600 of its branches in the face of much local opposition, saw its operating loss fall from GBP 108m to GBP 34m as the Royal Mail benefited from a GBP 150m annual subsidy for keeping parts of the network open.

The company’s plan to close a further 2,100 post offices continues as Royal Mail reported that four million fewer people a week were visiting their local branch.

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Leyland postal training firm wins Postcomm licence (UK)

Leyland based training organisation PeoplePost, has joined a select list of just 20 UK companies that hold licences issued by the UK postal regulator, Postcomm at a time of profound change in the GBP 7bn postal industry.

PeoplePost will join existing licence holders Royal Mail, TNT, DHL and UK Mail in the recently liberalised marketplace.

Postal licences are valid for a period of ten years.

PeoplePost’s founder is David McBride, the former Managing Director of Preston company Responsible Mailing.

David recently helped TNT Post to establish its first UK postal delivery operation in Liverpool as part of their plans to establish their own delivery network.

PeoplePost is offering a number of free training places on its summer training workshops for postal staff this summer in Leyland, Hemel Hempstead and Birmingham.

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Concerns over Universal Postal Service

Postwatch is, of course, concerned that the Universal Postal Service (daily deliveries and collections at uniform prices) has moved from profit to loss.

We welcome Adam Crozier confirming that the Universal Service is a huge asset to Royal Mail, part of the social fabric of the UK and vitally important to the economy. Customers will be reassured to read that Royal Mail’s vision for the future includes providing a high quality, efficient and profitable Universal Service.

It is timely that the Government’s Independent Review of the Postal Market is underway and will be reporting within the year on how the Universal Service should be financed in the future.

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Nationwide post service could end as Royal Mail faces finance crisis (UK)

The Royal Mail could become incapable of maintaining its commitment to delivering a UK-wide price structure for its letter and parcel service, says a government-commissioned review.
At the same time, competition in postal services has delivered no benefits for domestic consumers and small businesses, according to the review set up to advise John Hutton, the Business Secretary.
Details of severe financial pressure facing the organisation have emerged just a year after it received a GBP 3.9 billion government rescue package. Royal Mail has a GBP 3.4 billion pension deficit and last year its profits fell by a third to GBP 223 million.
The review, which will make final recommendations later in the year, said that Royal Mail’s finances are so precarious that they could derail its obligation to the universal service, which allows stamped mail to go anywhere in the country for the same price.
The review was led by Richard Hooper, a former deputy chairman of Ofcom, the communications industry regulator. It criticises the Royal Mail for being slow to modernise and also cautions that modernisation in the future will be more difficult because of a decline in the letters market.
Domestic consumers and small businesses have failed to win any of the advantages from the liberalisation of the market that have been enjoyed by big business, the review says. While large businesses have secured better rates and service from Royal Mail and rivals, stamp price rises and fewer services have affected households and small companies.
Postcomm, the regulator, gave warning that the review that “without extensive change, the Royal Mail’s business model will become unsustainable”. If there are no significant changes at the organisation, the regulator envisaged negative cash flow of GBP 400 million a year by 2012.

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Return to vendor

The privatisation of the Post Office was bound to fail. Like New Labour, it was a triumph of free-market dogma over common sense
Is this a red letter day for Royal Mail? The independent report commissioned by business minister John (“let’s celebrate the rich”) Hutton concluded that privatisation threatens services and brings no benefit to customers.
The creeping commercialisation of postal services is an example of free market dogma triumphing over common sense, creating disillusionment in politics and a growing sense of the loss of social fabric in our communities. It is hitting and hurting Labour in elections as the most vulnerable are left more isolated by closures. And what is more, it makes Gordon Brown’s job of establishing a clear sense of Britishness that much harder, when his policies undermine the status and standing of an institutions that goes a long way to deterring what it means to belong to this nation. So what has the last 10 years been all about?
What has happened to the Royal Mail serves as a symbol for all that is wrong with New Labour. Once you decide that economic efficiency is the means by which you deliver social justice, then the market become master of society. Blairism was built on the notion that the private sector is always more efficient than its public counterpart. To thrive in a global economy and reap the rewards required, the walls between what is private and what is public have to be knocked down. And with big business like TNT lobbying like mad to get into the profits, modernisation only meant the market.
The Tories wanted to privatise the Post Office and were stopped in their tracks for the only time by a clever union campaign that chimed with public concern. New Labour has deftly sidestepped a full-on confrontation and has instead bled the Royal Mail dry of funds while salami slicing the public ethos of this important institution.
The Post Office and our communities are now paying the price in under-investment, closures and the break-up of the service. But there is resistance and it’s not just from the good campaigning work of the post office union the CWU. Campaigns are being run across the country to save services with councils getting in on the act to prop them up. And it’s not even as if going into a post office is any fun. My local office is a misery of long queues and shelves of tatty stationery and cheap DVDs that never made it to general release. The management should be taken to task. But still we hanker for it. Because largely it works. Because it is a point of connection in our communities. Because letters and parcels are precious and we know from our experience of the like of the banks and BT that service in the private sector is often infuriatingly terrible.
Social institutions like the post office matter. They are the places in which values reside and can thrive. The Royal Mail is no bastion of socialism. But it is about universalism, equality, access and public ethos.
As such it serves a purpose to bind our society together. In these fractious and anxious times we should be celebrating such an important institution that builds society – unlike the market that weakens it.
Gordon Brown has said he is in listening mode. Perhaps we should all send him a letter calling on him to keep the Post Office public and invest in it – making its sustainability a litmus test of his ability to change.

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