The Independent View: Where Next for Royal Mail?

Royal Mail delivery trolleyWith privatisation done and dusted it was inevitable that the debate about Britain’s postal service would move beyond the public vs private argument.

Royal Mail is now a private company and is likely to remain so. It, of course, faced many challenges regardless of ownership which were certain to surface once it moved into the private sector. One of these is now coming across loud and clear. Namely the requirement of Royal Mail to deliver a universal delivery service to every UK address six days a week.

In response to falling profits, management and union within the company  launched a call to the regulator to require the competition to be bound by the same Universal Service Obligation as Royal Mail. This call has fallen on deaf ears.

The reality that is facing people at the top of Royal Mail is that they are operating in a competitive market. A market that is rigged in favour of the competiton. Letter volumes are dropping and although the parcel market is growing competition is fierce.

Amazon now use their own drivers rather than send their products via the Royal Mail network. They have also installed click and collect boxes in convenient town centre locations. TNT has workers delivering door to door on the streets of many of our major cities. They are pushing for more and the regulator is likely to accede to their demands.

Change looks inevitable and the aforementioned commitment to a six day letter delivery and collection service, which is virtually unique to the UK, is likely to be examined sooner rather than later.

Vince Cable responded to the joint management union call for extension of the current Universal Service Obligation conditions by repeating that the uniform six day service will stay at least until 2021.

The question is: has the viability of this been fully considered if, as expected, the regulator maintains its current stance? More importantly is it time for a wide ranging debate on the future of Royal Mail prior to the next General Election.

* David is a member of Horsham and Crawley Liberal Democrats

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This entry was posted in The Independent View.
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14 Comments

  • Delivering letters 6 times per week does seem like slightly overkill in the modern age, 90% of the stuff that comes through my door isn’t overly time critical. I’d consider moving to a once-per-week regular postal service using a cheaper second-class stamp for non-critical mail and a more expensive first-class stamp which would essentially act as a courier service.

  • There are two issues – one is daily deliveries (which personally as a residential customer I could live without – more an issue for businesses. The other is the Universal service – ie delivery to every property in the UK at the same price which is a more fundamental need.

    Worth remember that there were something like 10 postal deliveries a day in the times of Holmes and Dickens.

  • Dave Warren 15th Dec '14 - 6:22pm

    Appreciate the constructive suggestions.

    Given the conservatism within Royal Mail I predict that they will look to abandon the Saturday delivery some time in the very near future.

    Hence my call for an honest debate now.

  • I am delighted that LDV is carrying an article from a senior trade unionist. I hope this continues and we get the viewpoint of trade unionists every week.

    When Royal Mail was privatised I feared the worst. The farce of the failure of some private contractors to deliver in the run up to Chrismas 2014 is an example of how the promised “improvements” that would follow privatisation are already not being realised. Work has been taken away from reliable and honest Royal Mail staff and has been handed to dubious strangers in unmarked vans. The service to the public has declined.

    I had personal experience of an aspect of this decline just this weekend.

    On Saturday afternoon a brand new I-phone 6 was delivered to my house by an anonymous white van man. Nobody in my family had ordered this. Half an hour later I received a phone call supposedly from the delivery firm to say this was an error and someone would come to take it back.. At 9 pm on Saturday night I had another phone call to say that the person coming to collecting it would not arrive until after 11pm – “When I would be asleep” – so could I leave it on the doorstep for collection.

    The very helpful police constable who called round on Sunday explained that this is a common scam and is becoming more common, he had already dealt with two others this week in my area.

    The scam is that thieves use stolen credit cards – completely unconnected with the address to which the stole item will be delivered. The stolen credit card is used to order small high value items by post from companies who use delivery firms other than Royal Mail. These stolen items are delivered to the address of an unsuspecting person who has no connection with the stolen credit card and who like me has not ordered the item and has no wish to have anything to do with it. The thieves usually target the homes of elderly or housebound people who are more likely to be at home and more likely to be trusting.

    The constable who visited me ventured a guess that his three cases this week would be the tip of the ice-berg as most members of the public unwittingly leave the item as requested on the doorstep for the bogus delivery man who comes to collect it under cover of darkness.

    With the price of new I-phones being in the hundreds of pounds, the thieves only have to get away with it ten times a night and they are tens thousands of pounds in pocket by the end of the week.

    Whilst I accept that this growing criminal activity is an unintended consequence of privatisation of Royal Mail, it shows what happens when a uniformed, properly run and accountable public service is handed over to anonymous men in unmarked vans whose prime motivation is not public service but private profit.

    If a similar scam happens to you phone 101 the non-emergency police number.

    If you have a local police officer as efficient as the one that came to see me it will be sorted for you within a couple of hours.
    If police services are privatised and outsourced then goodness knows what will happen next.

  • David Evans 15th Dec '14 - 7:52pm

    Simon Shaw – but surely you of all people understand the importance of equality 🙂

  • The elephant in the room that never receives a mention is the EU.

    We are now in the EU single postal market. The requirements of that market are as follows: (a) Remove all state involvement by privatisation. (b) Create a level playing field by removing all subsidies. (c) Open up the market to the 27 other states.

    In the case of Royal Mail, they had to give up the lucrative business to business market. This generally involves collecting pre-franked mail from the business by the sack load, sorting it and getting RM to deliver it at a fixed rate per item.

    Royal Mail has the letter post (postage stamp) business which caters for individuals and is declining due to increasing use of texting and email. It is a bit more complicated than that but that is the deal.

    RM is obliged to service the most remote properties in the land while the competitors can cherry pick the most profitable parts.

    We are seeing all of this again with the single rail market. Subsidies are disappearing and the rest of the EU will look for a profitable slice of the business. Services to remote places with few passengers will disappear.

    We are now entering the Singly Sky market. In case you didn’t realise, Transport is an EU competency which means the EU is fully in charge. Shipping and road transport including driving regulations are all fairly well advanced.

    All of this is in the name of EU integration. You won’t hear government or the BBC admit it. The extent of EU control especially when it has drawbacks is always held back from the public. The BBC, which receives tens of millions in grants from the EU, can be relied upon to be fairly discreet when it comes to reporting some news items.

  • Ian

    Yes I see what you are saying about different delivery companies. However, in my case the person who delivered the stolen property to my house came in an unmarked van, the delivery note had no contact details for the delivery firm, even the police could not identify from either the package or the note who it was that delivered it. Even Vodafone the company who initially despatched the phone could not tell us which delivery outfit was involved. Actually repeated telephone calls to Vodaphone were a complete waste of time because their automated phone system is geared entirely to customers – which neither the police nor I are. We abandonned the attempt to return the stolen phone to Vodaphone and it is now at the local police station.

    Had it come via Parcel Force it would I am told have taken a single phone call to establish where it had come from. I would have had confidence in a Royal Mail employee because I recognise the regulars who deliver in my road. I am usually at home so I take in packages for those neighbours who are out at work.
    The cowboy delivery firms never use the same person twice, their staff have no uniform or identification. According to the police the delivery firm is often genuine but because they do not conform to the same standards of service as Royal Mail it makes the job of the police that much more difficult and it puts the victims of this sort of crime at greater risk.

  • “The reality that is facing people at the top of Royal Mail is that they are operating in a competitive market. A market that is rigged in favour of the competition.”

    Well said. And how hypocritical it is of the Tories! A government that trumpets its belief in virtues of competition and “free markets” sets up a rigged market where the unflavoured player is bound to fail. That’s crony capitalism or worse and we should call it out as such.

    Here’s an alternative plan for a future government:
    1. Allow the privatised Royal Mail to carry on declining under this rigged market until the directors are begging for a rescue nationalisation for a nominal amount – perhaps one pound.
    2. Then – strictly to be fair of course – make a new regulation that all competing carriers must comply with the universal service obligation but don’t limit what Royal Mail can charge for handling its rivals’ deliveries to remote rural locations.
    3. Watch the rival carriers fade away.

    Seriously though, it is impossible to devise rules that create a genuinely ‘free market’; they will always lean one way or another to a greater or lesser extent. The Tories (or at least their backers) know this but equally know that the ‘free market’ nonsense is brilliant spin that has defeated the combined intellects of left-leaning sorts for many years.

    Creating market rules that tend towards socially-desirable outcomes (e.g. including reducing inequality) is what we should certainly do. After all, the Tories have been doing it to favour their backers for years.

  • Dave Warren 16th Dec '14 - 5:26pm

    Really enjoying reading the ideas.

    It would be particularly good to hear the thoughts of Vince Cable on the future of Royal Mail.

  • Leekliberal 16th Dec '14 - 8:28pm

    When the Post Office was privatised the shares soared despite the ‘universal obligation’ imposed on it and Vince Cable was roundly criticised for selling it too cheaply. So let’s hear no bleating on this subject until the shares fall below the offer price!

  • I don’t think anyone here is bleating.

    The aim of my article is to have a full debate about the future of Royal Mail.

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