Tag: Royal Mail

New figures from Royal Mail show that the company has been unable to make much progress in rebalancing postage prices to reflect the real cost of collecting, sorting and delivering 84 million items of mail to the UK’s 27 million addresses every working day. Without the rebalancing, Royal Mail will not be able to compete fairly when the market is opened up to full competition on 1 January 2006. This imbalance arises because stamp prices are currently subsidised by business prices and pricing is currently driven by weight, whilst cost is driven mainly by size – so heavier items continue to subsidise lighter items.

The proportion of first/second class and mailsort by volume and revenue in the UK.
Estimates from Geoff Lambert

Amid the melee of Thursday’s attempted bomb attack on London, an announcement slipped out almost unnoticed from Alan Johnson, the Secretary of State for Trade and Industry, concerning Royal Mail. Mr Johnson, himself a former postie, told the Commons that he had appointed Professor Sir George Bain ‘to support me in working on Royal Mail issues’. This is a long way short of the full-blown inquiry into the future of Royal Mail, chaired by an independent business figure, that we had been led to expect. There was no formal statement from the department about Sir George’s appointment and no information about how precisely he would support Mr Johnson, much less anything resembling his terms of reference.

The postal carrier is making great strides under Adam Crozier but much remains to be done if it is to prosper once more efficient European competitors have entered the UK market, write Jonathan Moules and Jean Eaglesham.

Ministers have signalled they could allow Royal Mail to transfer shares to its employees, following a government review into the future of the state-owned postal services operator announced yesterday. The government has decided against setting up the widely expected independent review of Royal Mail’s future once the postal services market is opened up to full competition on January 1. Alan Johnson, the trade and industry secretary, told MPs yesterday he had decided instead to appoint Sir George Bain, the former head of the London Business School, to work with him in examining these issues. This internal review could give the green light to Royal Mail’s proposal to transfer a significant ownership stake to its staff, Mr Johnson suggested. He told MPs he was “not ruling out” an employee share trust.