Royal Mail warns nationwide postal service ‘in danger’
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Version 0 of 1. Britain’s cherished universal postal service is uneconomic and under genuine threat if swift action is not taken, the head of Royal Mail, Moya Greene, and postal unions told MPs at separate hearings yesterday of the Business Innovations & Skills Committee. Ms Greene said Royal Mail was facing an annual decline in letter volumes of 4 to 6 per cent “for the foreseeable future”. She also attacked rivals for “cherry picking” profitable customers in urban areas, saying this put the future of the universal service obligation (USO) at risk. The USO, which Ms Greene said cost £7.2bn a year to finance, requires that Royal Mail delivers to every part of the UK for the same price from Monday to Saturday. “If you allow cherry-picking in the urban areas, it syphons off a lot of revenue,” she warned. “It makes the universal service unfinanceable and uneconomic.” The hearing follows Royal Mail’s half-year results when the recently privatised company admitted that rival service Whistl is hitting it as a beefed up Amazon eats into its parcels business. It also emerged that the company has hired the influential lobbyist Open Road to spearhead a campaign on the future of the USO. However, MPs heard a similar message from Dave Ward, the deputy general secretary of the Communication Workers Union, who said: “The sustainability of USO faces its greatest threat at the moment.” He attacked what he described as “unfettered cherry picking” from rival postal services. “The USO relies on cross-subsidies. There’s no other way to do it,” he said. Ms Greene demanded what she called “a level playing field” in terms of service obligations and employment requirements. Both she and Mr Ward called on the regulator to bring forward a review, which is not due to start for another year. Mr Ward said: “We struggle to understand why the regulator is drifting on the issue of bringing the review forward. We don’t believe this is helpful to anyone.” Rivals, however, strongly denied they were cherry picking, pointing out that they pay Royal Mail to deliver their post to rural areas. Nick Wells, the chief executive of Whistl, said: “The continuing reference to cherry picking – it’s emotional rhetoric. It’s a smokescreen. “We pay Royal Mail a fair and reflective price to cover the rural areas which takes out any opportunity for cherry picking.” The Government has guaranteed the USO until 2021. |