Consignia, Britain’ newly rebranded Post Office, could lose around thirty per cent of its Royal Mail business to privately-owned rivals within the next two years.

The government’s move to open up the UK postal market to competition was lambasted by Consignia’s acting chairman, the former supermarketeer Allan Leighton, who described it as “death by a thousand cuts”.

The proposals, he warned, could undermine the Royal Mail’s commitment to provide the so-called ‘universal service’ [fixed-cost delivery nationwide]. “Our current financial position is already unsustainable,” claimed Leighton. “We are losing more than £1million a day and need to reduce our cost base by at least £1.2 billion.”

The proposed liberalisation of the postal market – partly at the behest of the European Commission and partly the result of relentless lobbying by the direct marketing industry – goes much further than the EC requirements. It will be conducted under the baton of the newly appointed mail regulator Postcom.

Private distributors may apply for licences to handle bulk mail from business customers from April 1, and Postcom expects full competition in this sphere to be achieved by the end of March 2004. It effectively presents on a silver salver the private sector with around £2 billion annually of the Royal Mail’s most profitable business segment – city centre to city centre deliveries, much of it direct mail.

There were predictable howls from the Communication Workers Union [whose members’ antics are in part responsible for the proposals]: “According to the government, the regulator’s first priority is to protect the universal service. Postcom is blatantly ignoring this instruction. It is ignoring the law of the land in favour of the law of the jungle,” complained the union’s general secretary Billy Hayes.

Postcomm chairman Graham Corbett defended the moves: “This is hardly Armageddon. We don’t assume that all of the market will go in the first phase.” He was supported by Peter Carr, chairman of consumer body Postwatch, who opined: “ Doing nothing was not an option – the regulator has devised a way forward that should safeguard the future of the universal service.”

News source: The Times (London)