Postcomm refutes Daily Telegraph article - only threat to Saturday delivery is inefficient provision of universal service
10 May 2008
Postcomm, the independent regulator for postal services, has today totally refuted the suggestion in today’s “Daily Telegraph” that it is to recommend a reduction in postal deliveries from six days to five and is asking the newspaper to publish a retraction.
Postcomm’s stance is that the only threat to Saturday deliveries, for as long as customers need them, is from Royal Mail failing to be an efficient provider of the universal service.
- The Saturday delivery is enshrined in law, in the Postal Service Act 2000, and so this, in any event, is not an issue over which Postcomm has any powers. Our commitment to secure a universal service valued by customers is just as strong as Royal Mail's and we do not want to see any denigration of the service.
- Although the universal service made a loss for the first time last year (2007/08), the size of that loss has been increased by £30m by a change in cost allocation by Royal Mail that now charges all freehold property at market rents.
- Royal Mail should focus on becoming more efficient in managing the national asset of the universal service.
Postcomm chairman Nigel Stapleton said:
“The story printed in today’s Daily Telegraph has no substance whatsoever.
“The only threat to Saturday deliveries is if Royal Mail fails to take up the challenge of becoming an efficient universal service provider and it remains saddled with having to fund an enormous pensions deficit. The universal service lost £100m last year but instead of taking out costs, Royal Mail allocated a further £30m to it.
“Royal Mail acknowledges that the universal service is a major asset and it is one which Postcomm is determined to secure. We believe that a universal service, providing all that is reasonably required by consumers, can be internally financed by Royal Mail if the issues of efficiency and pensions are vigorously tackled. Last year the negative margin on the universal service was around 3%. But 8% of the universal service costs were on pensions and the difference between Royal Mail's efficiency and that of the "best in class operator", which they aspire to become, would translate into a profit margin of at least 10%.”
Notes for editors
The Government announced a review of the postal services sector on 17 December 2007. The review’s terms of reference are:
1. to assess the impacts to date of liberalisation of the UK postal services market, including on the Royal Mail, alternative carriers and consumers;
2. to explore trends in future market development and the likely impact of these on Royal Mail, alternative carriers and consumers; and
3. to consider how to maintain the universal service obligation in the light of trends and market developments identified.
The regulator’s phase two submission to the independent review panel is due to be submitted by the panel’s deadline of 19 May. Postcomm published their phase one submission on the 27 March.
