Tag: Royal Mail

Royal Mail is to call for a 6p rise in UK first and second class stamp prices under a radical relaxation of regulatory controls the state-owned postal operator will argue is necessary to its survival. Businesses would also lose the legal right to have franked mail delivered to every address in the UK according to the proposals, which Royal Mail will this week put to Postcomm, its regulator. Royal Mail wants this “universal service obligation” (USO) to apply to stamped mail only.

The operator is also calling for an end to all regulatory controls on bulk business mail, such as lucrative junk mailings. The proposals will anger small businesses, which benefit from existing price controls. Royal Mail’s relatively high prices for bulk mailings cross-subsidise other services, such as the 6p loss incurred on each stamped letter. But Adam Crozier, Royal Mail’s chief executive, said the changes were needed to ensure the company’s financial viability and hence its ability to continue to deliver post to far-flung and unprofitable corners of the UK.

Royal Mail argued yesterday that Postcomm should rethink its proposed price controls for 2008 and beyond because the impact of competition in the UK has been “faster and greater” than the regulator expected. The UK is acting as a test bed for the proposed liberalisation of other major European postal markets. Its price controls are allowing competitors from those markets – such as Germany’s Deutsche Post and the Netherlands’ TNT – to cherrypick the best UK business, the UK operator believes.

The Royal Mail, which earlier this month revealed an 86 per cent plunge in profits, is spending hundreds of thousands of pounds installing television screens in every delivery and sorting office in the country.

Management will use the screens to convey information and updates on the company’s performance to staff, including speeches by chief executive Adam Crozier and chairman Allan Leighton – prompting wags inside the state-controlled postal group to dub it “Allan Leighton Direct” and to compare it to George Orwell’s Big Brother.

A Royal Mail spokesman declined to comment on the cost of the new communication system, but insiders believe it will set the business back considerably. The TVs are understood to be 42-inch Fujitsu screens, which retail for around GBP2,000 each.

The Royal Mail will be able to negotiate a discount but it is still buying a considerable amount: at least one will be installed in every site, including 1,400 delivery offices, the 470 post offices the group manages directly, administration centres and other depots.

The move comes at a time when the Royal Mail is being forced to tighten its belt as it confronts a gaping pension black hole and struggles to adapt to increased competition. Earlier this month, the group confirmed that interim operating profits had come in at GBP22m, against GBP159m a year earlier. Much of the decline was blamed on costs associated with the pension deficit, which rose by GBP1bn to GBP6.6bn. But the Royal Mail has also lost a number of corporate clients, including Carphone Warehouse, BT and Centrica.