Tag: Royal Mail

Tucked away at the end of an 83-page report by Postcomm, the regulator which oversees postal services in the UK, is an annexe that contains some very important figures: the profit and loss account for the Royal Mail’s operation of its Postcode Address File.

PAF, as it is known, contains the details for 27m addresses in the UK. It is a very valuable file, for as it underpins a huge part of the economy: not just the delivery of more than 80m postal items per day (which underpins Royal Mail’s annual GBP 9bn revenue), but also third-party businesses that rely on postcodes. Direct marketing is one, but there is a burgeoning market too for postcodes in vehicle satellite navigation systems, location-aware devices and a panoply of distance and search sites.

So how much does it cost Royal Mail to run and update PAF, and how profitable is it? The figures acquired by Postcomm show that for 2005-06, the PAF unit within Royal Mail had an income of GBP 18.4m and costs of GBP 16.8m, more than half of the latter coming from maintaining it. The result: a profit of GBP 1.6m, or 8.6% of revenues. That, Postcomm says, is about the right level for PAF profitability, which it suggests should be between 8% and 10% of revenues.

The Free Our Data campaign has a solution: make PAF free online and remove the copyright restrictions on reselling it. The revenue impact on Royal Mail would be minimal; yet as well as engendering a lot of goodwill inside the public sector, doing so could encourage new private sector businesses presently put off by the cost. It’s government-owned data; we should all get its benefit.

Union leaders raised the threat of industrial action among tens of thousands of postal workers in a row over pay.

Talks will be held over the next two days between the Royal Mail and the Communication Workers Union in a bid to avert a dispute.

According to the union, Royal Mail is proposing a freeze on basic pay and officials warned that unless there was a “dramatic change” in the Royal Mail’s attitude there was no prospect of a deal being made.

In a letter to its members, the union warned that a “major dispute” was inevitable unless a better offer was made in the next few days.

According to the union, Royal Mail has offered lump sums ranging between GBP 250 and GBP 550 but conditional on the union agreeing new working practices and GBP 350m worth of cuts.

Engineering administration workers are being offered nothing on basic pay or in lump sums according to the union.

The union accused Royal Mail of “abandoning” an agreed approach on growing the business and accused the organisation of being panicked into a “cost cutting frenzy” in every workplace.

A spokesman for the Royal Mail said: “We are continuing to talk privately to the unions about how to achieve a sensible, fair and affordable deal for our people at a time when we need to pay GBP 730m into our pension fund every year and when our rivals are already handling one mail item in every eight.

Adam Crozier spoke to Jeff Randall on BBC 5 Live on Sunday night about the changes at Royal Mail in more recent years.

He said that Royal Mail had suffered from lack of investment by previous governments and that meant they were technically lagging behind as well as not being as efficient as they need to be.

However he said there was no point in dwelling on what should or should not have been done and they needed to get on with the job of modernisation and providing an efficient service. He said that Royal Mail is bringing in new products to widen the scope of the services they provide and to help Post Offices but 14,000 are private businesses and far too many are creating massive losses for Royal Mail.

On High Street closures he said that many of them have very high rents and are unsustainable. Money saved by transferring service to WH Smith can be spent on other crown post offices.

Crozier said automation was really the key to efficiency as many posties are presently spending 40% of their time sorting.

On pay, he said postal workers are currently paid 25%-30% more than competition. All Royal Mail directors are also having a pay freeze this year.

He believes that business is likely to benefit from deregulation but domestic customers are unlikely to benefit and in the longer term prices would have to rise to meet the cost of the service. However, they are achieving most targets set and Special Deliveries achieve a 99% next day delivery figure.

Postcomm said that they think regulation has been fair and that Royal Mail has made huge strides.

Howard Webber (Postwatch) said they would be concerned if the cost of stamps rose any more and that reliability and security was the most important factor to customers. He said the quality of service has improved significantly over the last three or four years.

Nick Wells of TNT Post said he did not see the present market situation as ‘cherry picking’ Royal Mail business and instead referred to VAT which he said was a stumbling block. Currently Royal Mail is exempt from charging it but TNT have to charge VAT to their customers.