Tag: UK Mail

The Department for Work and Pensions (DWP) was irresponsible and short- sighted for dropping a GBP12m Royal Mail contract hampering efforts to tackle the firm’s gaping GBP5.6bn pension deficit, a Liberal Democrat MP said.

The DWP, Whitehall’s biggest department, awarded private firm UK Mail with a GBP12m postal contract at a time when the Department for Trade and Industry (DTI) is desperately trying to plug the GBP22bn Royal Mail pension scheme’s deficit.

The government-owned former monopoly has struggled to retain business after postal services were fully opened to competition last year. Since then it’s lost more than 10% of the mail-handling market to private firms.

Alistair Carmichael, MP for the Northern Isles and part of the Liberal Democrat Home Affairs team, said he had huge problems with public money paying private firms to undermine public services such as Royal Mail.

“It seems irresponsible from the DWP to set this example. Here’s the government department responsible for sorting the pensions crisis and it’s pulling the rug from under a company with a major pensions deficit,” he added.

The Royal Mail pension scheme is the sixth largest in the UK, with 170,000 active members and 279,000 retired or deferred members.

A spokesman for the DWP refused to comment on Carmichael’s accusations, but said: “Royal Mail continues to be a major supplier for the DWP and it’s only a small contract that has been lost.

“Anything to do with its pension scheme is a matter for Royal Mail. It’s about getting better value for money for the taxpayer and our actions have done this.”

The Communication Workers Union (UK) yesterday attacked the decision by the Department for Work and Pensions to award a GBP12m contract for post services to UK Mail, a leading rival to Royal Mail.
The union said it was disappointed that, at a time when the Department of Trade and Industry was finalising plans for investment in Royal Mail’s postal services business, other departments were giving work traditionally done by the state-owned former monopoly to private sector rivals.
The union’s general secretary, Billy Hayes, said: “This is a prime example of how disjointed departments in government are. Instead of using private postal services it is essential that the government understand they have a moral and social responsibility to the network and by not using the service themselves it does not exude confidence to the British public in a government-controlled institution.”
At a time when the DTI was conducting a review of the postal service, it was vital other departments did not make rash decisions which could affect its future, the union said.
A DWP spokesman said it had been urged by the government’s spending watchdog, the National Audit Office, to look at the way it bought postal services to see if it could achieve efficiency savings. The decision to award the contract to UK Mail, a subsidiary of Business Post, followed that review and would save the department about GBP2m over the 13-month life of the agreement.