01 September 1999

THE ROYAL MAIL’S monopoly on delivery of mail priced under £1 is to be reduced to 50p, the Govern-ment confirmed in September. The decision ignored opposition from the influential Commons trade and industry select committee, which recommended that the matter be deferred until the appointment of a postal regulator. There is also considerable opposition among Labour backbenchers to dilution of the semi-monopoly.

Alan Johnson, trade and industry under-secretary [and, ironically, a former general secretary of the Communications Workers Union], acknowledged the select committee’s recommendation but insisted the cut would go ahead: 'We have already made the order on the monopoly. The reduction is a crucial part of the package of reforms for the Post Office. Retorted CWU general secretary Derek Hodgson: 'The union and the Post Office have not favoured it; the Labour Party policy forum was not asked; the Labour Party group of MEPs is opposed - and now the select committee has come out against.' The dilution of the monopoly will take effect from April, opening a further 6% of the postal market to competition.

Following an avalanche of protests from all quarters, the Government executed a classic U-turn and reversed its decision to reduce the monopoly barrier to 50p. The reduction, which would have brought approximately 5% of all direct mail into the competitive arena, will be referred to the yet-to-be-appointed postal regulator. The DMA is not happy at thevolte face: 'The process of reform was in place with a time-table; now that has been undone with this apparent change of heart. It sends all the wrong signals to users, small, medium and large', it declared.