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Tuesday, 5 March, 2002, 11:52 GMT
Post watchdog weighs up options
Mailman picking up post from a letter-box
Competition could be delayed, or postal charges hiked
Plans to end Consignia's postal monopoly in the UK could be eased amid fears that mail services may collapse under increased competition.

The former Post Office plans to warn industry regulator Postcomm within the next few days that its losses could spiral out of control if proposals to open up the market from next month are implemented.

But Postcomm told BBC News Online it was leaving its options open until the consultation finishes on 15 March and denied press reports it was ready to back down.

I don't think we are going to stand absolutely rigid... if we are presented with good reasons for changing our minds

Postcomm chairman Graham Corbett

Reports of a possible retreat were sparked by comments made by Postcomm chairman Graham Corbett, who said: "I don't think we are going to stand absolutely rigid... if we are presented with good reasons for changing our minds."

Postcomm would have a number of options for helping Consignia - for example by delaying new competition, or by allowing an increase in the price of residential mail to compensate for losses in business mail.

'Perilous' finances

Consignia's losses have climbed from 1m to 1.5m a day, after the worst January on record.

Postcomm had planned to allow rival companies to deliver bulk business mail from April.

But Consignia has lobbied hard for a delay, and postal unions have said the firm could face "meltdown" with too much competition too soon.

On Monday, two senior directors of Consignia decided not to accept a 10% pay rise because of the company's "perilous" condition.
Timetable to end the monopoly
2002-2004: Competition for bulk mail of more than 4,000 letters
2004-2006: Lower bulk mail limit to 500-1,000 letters
March 2006: Full liberalisation

A Postcomm spokesman told BBC News Online consultation was about being responsive to opinions.

He said: "We are not going to stand firm if we are presented with good reasons to change our mind.

"But there's no way we're going to come up with ideas of what we're going to do yet. It's entirely speculative.

"We're certainly not ready to retreat and we would be daft to make up our minds at the moment when we are in listening mode."

Cost-cutting

He also denied there had been pressure from ministers unhappy with the speed of its proposals.

Consignia is currently facing a national strike by workers, who are fighting for a 5% pay rise rather than the 2.8% on offer.

The firm is also undergoing a cost-cutting programme which is putting up to 30,000 jobs on the line.

Postcomm had planned April's move to be the first in three steps to opening up the postal market, with full liberalisation by 2006.

See also:

04 Mar 02 | Business
Post chiefs turn down pay rise
26 Feb 02 | Business
Second post to be ditched
25 Feb 02 | Business
Consignia warns of shake-up
24 Jan 02 | Business
Finance experts warn on post reforms
12 Dec 01 | Business
Q&A: The Post Office Crisis
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