Postal Reform Jeopardises UK Nationwide Service, Warn MPs

03 May 2002

The liberalisation of Britain’s postal service by regulator Postcom could jeopardise the universal service currently offered by state-owned operator Consignia and even threaten the state-owned firm’s future, a House of Commons committee of MPs has warned.

The committee has issued a report accusing Postcom of making decisions “in the dark”, referring to its proposal to end Consignia’s monopoly on letters with postage rates under £1.

It warns that the move could threaten the universal service – whereby the cost is the same irrespective of the posting or delivery point within the UK – and spell doom for Consignia, which is losing around £1.5 million ($2.2m; €2.4m) per day.

“[Postcom has] to increase competition, set the price for stamps and ensure the universal service,” commented Edward Leigh, chairman of the committee of MPs. “This task involves delicate management of a conflict of priorities that may be beyond them and which could even result in Consignia going out of business.”

The problem, according to committee member Geraint Davies, is the pace of reform, which is “much faster than in the rest of Europe”. The current timetable, says Davies, will result in “thousands of job losses”.

Consignia, which also argues that reform should not be rushed, hailed the report as “worthwhile and well researched.” For once, it was in agreement with the Communication Workers Union, whose acting general secretary Tony Kearns warned: “Postcom wants to risk the entire public postal service on an uninformed hunch that competition will improve the service.”

In response, Postcom said its timetable was the result of thorough deliberation, insisting that its first principle is to uphold the universal service.

First class postal standards have declined in recent years. In 2000–01, 89% of letters sent first class arrived the next day, down from 91.5% in 1997/1998 and below the target of 92.5%. However, it is still above the 1996/1997 total of 85.9%.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff