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Last Updated: Tuesday, 20 December 2005, 12:04 GMT
MPs fear UK postal service cuts
Post Office worker
Universal deliveries are 'threatened' by competition
Opening Britain's postal system to private competition could leave some homes without a delivery service, MPs have warned.

Under new rules, private firms will compete on equal terms with the Royal Mail from January 1.

If they are particularly successful, the Royal Mail may not be able to afford a universal service, the Commons trade and industry committee said.

Postcomm, the industry regulator, said it believed the market was ready.

The Royal Mail is legally required to provide a "universal service" but MPs said they were concerned over how that would be defined.

The committee is really anxious to protect a universal service similar to the one we have at present
Peter Luff
Committee chairman

"We emphasise that a universal service is not worthy of the name if it allows for any geographic exemptions," the report said.

It added: "The regulator must remain vigilant to ensure that greater competition in the postal services market does not come at the cost of the universal service."

Service threat

Tory committee chairman Peter Luff said: "If competition is more intense than people are expecting that service could be threatened in all kinds of ways, particularly as private sector operators cream off more profitable parts of the market."

A "safety net" fund requiring private competitors to help pay for Royal Mail deliveries would "almost inevitably come too late", the MPs further warned.

Mr Luff said: "The government, regulator and the Royal Mail will have to move quickly if the universal service is in jeopardy.

"The committee is really anxious to protect a universal service similar to the one we have at present."

Market is ready

Richard Moriarty, of Postcomm, said: "We believe the market is ready - that's not just our words.

"The Royal Mail itself has said it's ready for competition, it has issued press notices to that effect.

"But also customers up and down the country, and particularly large customers, want a more competitive market and for the Royal Mail to raise its game."

He added: "Our first priority is to ensure the one-price-goes-anywhere stamp remains and that everyone up and down the country receives a daily collection and daily delivery."

A book of first class stamps
Stamp prices are rising as Royal Mail battles pension deficit

Meanwhile, the committee said Royal Mail customers should not foot the 4bn pensions deficit alone.

Earlier this month, it was revealed that stamp prices would rise in April, with first class stamps going up 2p to 32p and second class stamps going up by 1p to 22p.

The possibility of them rising to 36p and 25p respectively by 2010 was also raised.

The Royal Mail had wanted to push stamps up to 39p and 27p to help pay for modernisation and to plug the hole in its pension fund.




SEE ALSO:
Parcels boost Royal Mail profits
17 Nov 05 |  Business
Letter size to affect post cost
18 Aug 05 |  Business
Royal Mail opposes new price caps
01 Jun 05 |  Business
Royal Mail delivers record profit
17 May 05 |  Business


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