Tag: Royal Mail

Royal Mail loses bid to bring in zonal pricing

Posted by | Jul 24, 2007 | |

Royal Mail’s hopes of boosting flagging profits by shaking up its charging structure were dealt a blow yesterday, when the regulator threw out its plans for zonal pricing.

Postcomm said it would reject Royal Mail’s proposal to charge according to the costs of delivering in certain areas because it would be “discriminatory”.

Rivals to the postal group complained that the plan would enable it to price them out of the market because it could lead prices down in lucrative, city centre locations. Consumers also feared that services to rural areas would suffer as Royal Mail charged more for going there.

Only business customers would have been affected by a switch to zonal pricing.

This was the cornerstone of its moves to increase competitiveness as it faces more rivals and a declining postal market. The group has also asked for rises in the price of stamps for domestic mail.

Nigel Stapleton, Postcomm chairman, said: “We are proposing to reject Royal Mail’s application mainly because it has put forward a pricing structure that appears to have a number of discriminatory features and would have been introduced in a way that would lead to unreasonable changes for customers.”

A Royal Mail spokesman said: “We are disappointed at the decision. This was a proposal that only affected large business users.”

Postcomm will next month publish a report setting out its objections to zonal pricing, after which there has to be a two-month consultation. But the rejection will be backed by Royal Mail’s customers so is unlikely to be reversed.

The regulator will also soon adjudicate in a row between Royal Mail and its rivals over the amount the state operator can charge competitors to use its infrastructure for the last mile delivery. Rivals say it is charging too much so they cannot make a sufficient margin, while it says it does not make enough profit on the arrangement.

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UK postal workers fury over pensions stitch up

Posted by | Jul 24, 2007 | |

Unions have accused the Royal Mail of a “stitch up” over leaked proposals to cut workers’ pensions.

The Daily Mirror reports it has seen a 24-page document on plans to tackle a GBP 6 billion shortfall in the pension fund.

Under the shake-up the final salary pension scheme could be closed to new members from next year and the age at which staff can retire with a full pension will be raised from 60 to 65 in 2010.

Union leaders vowed to fight the proposals, which would affect workers at Royal Mail, Post Office and Parcelforce Worldwide.

Dave Ward, deputy general secretary of the Communication Workers Union, told the Mirror the plan was a “stitch up”.

He said: “This is a savage attack on pay and conditions. Our members aren’t going to roll over and accept this.

“It will only galvanise support for strike action. It’s a stitch up. They may say they’re consulting but that’s a charade.

“It’s clear from the work in producing these plans that they’re determined to drive them through.”

The leaked document stresses no formal decision has been made and the proposals are designed to form a consultation basis.

According to the newspaper, the document says: “These changes would gradually reduce the Royal Mail’s overall pension costs and therefore reduce the future risk to our business, jobs and existing pensions.”

Future rises in pensionable pay for the company’s 167,000 workers would be capped at the inflation rate and lump sum payments on retirement would also be hit.

A Royal Mail spokesman said no decision has been made on the future of the pension scheme.

He said: “Royal Mail said very clearly earlier this year that it would be consulting on the future of the pension scheme for both new recruits and existing members but no decisions have yet been taken as we have not even begun the formal consultation.”

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Royal Mail may have to pay GBP 1bn for the redundancies it needs, says consumer chief

Posted by | Jul 24, 2007 | |

The government may need to come up with an extra GBP 1bn to fund a massive redundancy programme to help the Royal Mail out of its crisis, a consumer chief warned before strike action by the Communication Workers Union.

David Bland, a regional chairman of Postwatch, believes the Royal Mail has no alternative to automating its letter systems and slimming down its workforce if it wants to survive private-sector competition. He said no one in the industry would win from industrial action at a time when many users were turning to email and other alternatives to the state postal service.

Without a clear look at the Royal Mail books it was impossible to know how much money was needed, added Mr Bland, but he believed it would be hundreds of millions of pounds if not a billion.

The department of trade and industry – now business, enterprise and regulatory reform (BERR) – has already agreed to allow Royal Mail to borrow GBP 1.2 bn to help it fund modernization of its systems. It has also allowed Royal Mail to put some GBP 800 m in a special account as part of a programme to bolster its pension scheme as it fights off companies such as TNT and UK Mail that are winning more and more of its business customers.

Mr. Bland believes that Royal Mail is giving an over-gloomy picture of its pension requirements, but the company accepts revenues are falling along with an overall 2 pct annual decline in post volumes and it is not in a position to fund a large wave of redundancies.

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UK companies turn away GBP millions a month by not accepting cash

Posted by | Jul 24, 2007 | |

Major UK companies could be losing millions of pounds in revenue every month by failing to offer customers the option to pay in cash, reveals new research from Post Office today.

Almost six million UK households use cash or cheque to pay their bills, either through choice or lack of access to banking services. 2.8 million UK adults (1.9 million households) do not have a bank account and rely on cash payment methods to pay their bills. A further six million people with bank accounts (four million households) choose cash over direct debit to pay their bills.

However, several companies including some major combined broadband internet, telephone and digital TV providers, health and leisure groups and monthly mobile phone operators only offer their services to customers who pay by direct debit.

Businesses that do not offer an over the counter cash/cheque payment options are therefore turning away millions of pounds in revenue every month:

– Tlecoms companies failing to offer cash/cheque payment options turn away GBP 165 million every month
– Health and leisure organizations failing to offer cash/cheque payment options turn away GBP 405 million every month

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Postcomm proposes to reject Royal Mail's zonal pricing application

Posted by | Jul 23, 2007 | |

Postcomm, the independent regulator for postal services, has announced that it is proposing to reject Royal Mail’s application to charge large mailers – using products which are not part of the universal service – different prices depending on where in the UK their mail is delivered (Royal Mail calls this zonal pricing).
Postcomm will issue a consultation document in August that will set out in detail why it is proposing to reject Royal Mail’s application. However, in the interests of reducing market uncertainty, the regulator is making this announcement today.
Royal Mail’s ‘zonal pricing’ application did not include services paid for by stamps or those bulk mail products that are included within the definition of the universal service which must, under the Postal Services Act, remain priced at a uniform rate regardless of delivery zone across the country. It is open to Royal Mail to submit a new application if it can be framed to meet the regulatory tests in Royal Mail’s licence and Postcomm’s statutory duties.
Royal Mail wanted to introduce this new pricing structure to these business mail products:
Mailsort 120 – first, second and third class, OCR and CBC;
Mailsort 700 – first, second and third class
Mailsort 1400 – third class;
Presstream – first and second class; and
Walksort – first and second class.

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