Growth or Clutter
Presentation at the Mail Show 05 Colin Keywood The Front Door
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Improving Customer Service
Presentation at The Mail Show 05 by Christine Andrews DQM Group
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Read MoreGlobal Innovations
Presentation at the Mail Show 05 by Alec McAndrew PA consulting
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Read MoreRegulator tells UK Royal Mail to cut costs
Royal Mail should cut more costs rather than rely on a government bail-out to address its Pounds 4bn pensions deficit, the industry regulator has signalled.
The tough stance adopted by Postcomm, less than a month before finalising crucial four-year price controls, suggests the state-owned postal operator is heading for a showdown with the regulator.
In an interview with the Financial Times, Nigel Stapleton, the chairman of Postcomm, said the sheer scale of Royal Mail’s pensions deficit, which has made the company technically insolvent, presented a “unique problem” for the regulator.
“It’s such a big problem – they have Pounds 21bn of liabilities and Pounds 2.2bn of net tangible assets . . . It’s a pension fund with a mail business attached rather than the other way round,” Mr Stapleton said.
He suggested Royal Mail should agree to greater efficiency savings to help fund the deficit, as a quid pro quo for the regulator’s agreement to modify its initial price control proposals to allow an element of future increases in the size of the deficit to be passed on to customers through higher prices.
Read MoreThe Mail Show 2005: Top executives debate key UK regulatory issues
The first day of this year’s Mail Show brought all the leading mail executives together to debate the future of the domestic mail market. An audience of over 400 senior industry figures heard Postcomm Chairman Nigel Stapleton call for Royal Mail to concentrate on “efficiency gains” rather than hoping for a government handout to alleviate its GBP4bn pensions deficit. Speaking to the Financial Times, he described RM as “a pension fund with a mail business attached rather than the other way round”. Royal Mail’s Adam Crozier responded that it would descend into a “spiral of decline” if forced to cut costs to the level required by Postcomm. Competitiveness Minister Barry Gardiner said that he would wait until price controls were finalised before intervening and that, if the price settlement is correct, RM should be able to meet its obligations. In another session, Triangle presented the results of Monday’s Customer Forum of the UK’s top mail users. Among their conclusions was that there had been little change in the product alternatives available from the operators in 2005, and that Royal Mail is fighting back using weapons such as Pricing in Proportion to muddy the waters.
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