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Wednesday, 1 May, 2002, 10:55 GMT 11:55 UK
Regulator 'risks ruining postal service'
Mailman picking up post from a letter-box
Postcomm wants increased competition
Postal reforms threaten one of the bedrock principles of the UK mail service, and may even prompt Consignia's collapse, a report has said.

A probe by MPs has concluded that post regulator Postcomm, which has proposed ending Consignia's key mail monopoly, was making decisions "in the dark".

Edward Leigh, chairman, Commons' Public Accounts Committee
Edward Leigh: Reform warning
Postcomm's move threatened the future of the universal service, which prevents Consignia from charging more for delivering letters to outlying addresses.

"I cannot escape the fear that Postcomm's approach may well jeopardise the universal service," said Edward Leigh, chairman of the House of Commons' committee, which produced Wednesday's report.

He added that postal market liberalisation could even mean the end of Consignia, which is losing 1.5m a day.

"Postcomm have a very difficult task to perform," said Mr Leigh, a Conservative MP.

"They have to increase competition, set the price for stamps and ensure the universal service.

"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."

Postcomm is proposing to end Consignia's monopoly over letters less than 1 to post.

Jobs threat

Geraint Davies, a committee member, said that the key problem lay in Postcomm's 2006 deadline for the reform.

Timetable to end the monopoly
2002-04: Competition for bulk mail of more than 4,000 letters
2004-06: Lower bulk mail limit to 500-1,000 letters
March 2006: Full liberalisation

"[Postcomm] is proposing that the pace... of change is much faster than in the rest of Europe," Mr Davies told BBC Radio 4's Today programme.

This would allow European competitors to unfairly cherry-pick parts of the UK's postal service, he argued.

The liberalisation timetable proposed by Postcomm could lead to "thousands of job losses", Mr Davies added, calling for a slower rate of reform.

"What we want is a situation of managed chance, which enables services to be protected, and post offices."

Consignia is already proposing to axe 30,000 staff, raise postage charges and cut up to 3,000 urban post offices in a bid to save costs.

'Utterly irresponsible'

Wednesday's report, by the Commons' public accounts committee, was welcomed as "worthwhile and well researched" by Consignia.

First class stamp - first class service?
1996-97: 85.9% of first class post delivered next day
1997-98: 91.5%
1998-99: 91.1%
1999-00: 91.0%
2000-01: 89.0%

Target: 92.5%

Source: Postcomm

And the Communication Workers Union (CWU) said the report reflected its own concerns over Postcomm's analysis.

"This is not regulation," said CWU acting general secretary Tony Kearns,

"It is gambling with the family silver and is utterly irresponsible.

"Postcomm wants to risk the entire public postal service on an uninformed hunch that competition will improve the service."

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

Broad consultation

But Postcomm said it had set its regulation timetable only after two years analysis of the market.

"We have studied international experience and taken the advice of established experts in the field," the regulator said.

Postcomm also said its "first priority" was to protect the universal service.

"This is required by Act of Parliament, by a European Union directive and by conditions in Consignia's licence. It will not be allowed to disappear."

Postcomm said it would "in due course" send the committee a detailed response to Wednesday's report.

See also:

24 Apr 02 | Business
Postal workers warn of strike
16 Apr 02 | Business
Consignia 'fighting for survival'
12 Apr 02 | Business
Consignia calls for penny on stamps
10 Apr 02 | Business
Urban post offices face the axe
05 Mar 02 | Business
Post watchdog weighs up options
12 Dec 01 | Business
Q&A: The Post Office Crisis
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