Tag: Royal Mail

The postal regulator admitted last night it was considering forcing private postal operators to pay to keep Royal Mail deliveries alive in remote areas such as the Highlands and Islands. The bombshell was delivered in written evidence to the Commons trade and industry committee by senior Postcomm executives, who claimed that universal delivery was their top priority. But this failed to reassure critics, with Angus SNP MP Mike Weir, a member of the committee, warning that country dwellers may be forced to travel to central collection points in towns and villages to pick up their post if the Royal Mail suffered heavy losses when the mail was opened up to competition on January 1.
Postcomm’s evidence said: “As a last resort, there is also the possibility (requiring primary legislation) of a universal service compensation fund. This would require other operators to contribute to the costs of providing a universal service, if it were in jeopardy.”

Royal Mail must not expect taxpayers or customers to help bail out its pounds 4.5bn pension deficit, the industry’s regulator Postcomm told MPs last night.
Giving evidence before the Commons Trade and Industry Select Committee, the Postcomm chairman Nigel Stapleton warned that if Royal Mail was allowed to raise prices to tackle the deficit, it would drive customers away. He said the best safeguard of Royal Mail’s future and a one-price-goes- anywhere letter delivery service was for the state-owned company to improve its efficiency. The regulator has proposed that the price of a first class stamp should increase only from 30p now to 34p over the next five years. Royal Mail wants the price to increase to 39p to help close the huge hole in its pension fund. But Mr Stapleton said: ‘There comes a point where you push too much on price and people go elsewhere. Our biggest concern is that people will move to e-mail or texting while direct mailers will move to business magazines and we will get into a horrible vicious circle.’

Royal Mail’s controversial switch from twice-daily to once-a-day deliveries last year, which the postal operator predicted would save more than Pounds 100m a year, has actually increased net annual costs by Pounds 105m, its regulator has told MPs. Nigel Stapleton, chairman of Postcomm, yesterday cited the figures to explain why the regulator believed the state-owned postal operator could make double the 1.5 per cent a year efficiency savings it has proposed for the four years to 2010. Postcomm and Royal Mail still appear at daggers drawn over the potential for efficiency savings, a core component of bitterly contested price controls the regulator is due to finalise this month.

Postcomm has admitted there are still huge barriers to competition in the postal market – including poor consumer awareness, the risk of anti- competitive behaviour, and Royal Mail’s VAT exemptions – claiming it will be years before Royal Mail’s dominance is threatened. Speaking at London’s UK Mail Show this week, Postcomm chairman Nigel Stapleton said: “The development of a fully competitive market is at a very early stage – Royal Mail will still have nearly 90 per cent of the market in 2010.” His comments were reinforced by Postcomm’s recently published annual Competitive Market Review, which shows Royal Mail still holds 97.2 per cent of the letters market, some 30 months after the market was first opened up. Private operators have only taken a 1.6 per cent share – of which 0.5 per cent operate an end-to-end service – while direct customer access is shaving off 1.2 per cent.