Page last updated at 12:31 GMT, Tuesday, 27 October 2009

How the postal strike might change Britain

Different coloured post boxes

Strike action by postal workers is one of the most high profile pieces of industrial strife in recent years. The battle between postal workers and the Royal Mail has seen gloomy predictions about far-reaching consequences.

The Royal Mail and its distinctive red livery, daily postal deliveries, the postman doing his rounds - all of this is embedded in the British way of life. But could that be about to change?

CHRISTMAS CARDS AND THE DECLINE OF THE POST

Perhaps the most headline-grabbing prediction from the strikes has been the idea that the action will put people off sending Christmas cards.

Every year we send millions, with the "last posting day" deadline pitching some into marathon sessions of writing and licking stamps as they endeavour to keep in touch with far-flung friends and family.

Sorting office
Goodbye to all this? Handling Christmas cards at a sorting office

Royal Mail chief executive Adam Crozier set off alarm bells when he admitted that the possibility was a "big worry" at a time when electronic methods of communication were putting pressure on more traditional ways.

"The danger of the strike is that the trend that is there already gets exacerbated by this and that people speed up not just not sending Christmas cards but moving to paying bills on direct debit or standing orders."

The idea of people finding a 21st Century way to express season's greetings, for instance by an e-card, is on a lot of people's minds, says Jo Bryant, manners expert at Debrett's.

"If you think about your grandmother or someone of an older generation they expect to receive a conventional card.

"It is important to make a communication. If e-cards are the only way, it is better to make the gesture."

The big card sellers - including Clinton and Hallmark - are bullish, despite Mr Crozier's comments.

A spokeswoman for Clinton cards said most sales were in the final two weeks before Christmas and most of the company's business was individual cards that would often be handed over in person. Even if cards did have to be sent, major disruption would not stop people posting them and accepting they would be late, she said.

The Greetings Card Association has warned there could be an impact, particularly on charity shops, which raise a large amount of Christmas revenue from multipacks of cards. But both Oxfam, one of the biggest sellers, and the Association of Charity Shops suggest nobody is yet anticipating reduced sales.

Mr Crozier's wider point about the decline of the mail as a method of communication is more difficult to contest. His concern about the amount of business generated by people paying bills by cheque is still significant. British Gas, for instance, suggests that 20% of all bills are still paid by post.

THE RISE OF COMPETITORS

Much has been made of the opportunities for the Royal Mail's competitors like TNT, or delivery firms DHL, Fedex, City Link, Home Delivery Network and so on. Parcelforce - the Royal Mail's premium priority service - is essentially unaffected by the strike, and yet its competitors can still benefit.

TNT post
Making way for the rivals - a TNT Post van outside a Royal Mail centre

"In previous Royal Mail disputes we do see an upturn and more customers coming to us," says David Walker, head of communications at TNT Express, which has a big share of the priority parcels market. "We charge a premium - we are a little bit more expensive. '[They think] it might cost more but you are more reliable.'"

He said the firm had dealt with 16,000 extra items in the first 24 hours of the national strike, against a normal level of 250,000 items. If the strike persists, he suggested business might go up 10%.

But an area of even more concern for the Royal Mail will be the lucrative and growing business of delivering non-priority parcels, with competitors seeking to muscle in on contracts to deliver for online retailers in the run-up to Christmas.

A RIVAL POST SERVICE

The strike has stopped Royal Mail letters getting to their destination, but it has also stopped those of commercial rivals.

STORY SO FAR...
Postal workers, especially in London, have been holding intermittent one-day strikes for months in a row over the way Royal Mail is to be modernised
Earlier this month, postal workers voted three to one in favour of nationwide industrial action (though Royal Mail said 60% of the total number of postal workers in the UK did not vote to strike)
The CWU set dates for the first nationwide postal strikes in two years
Last-gasp talks failed to reach an agreement, and two 24-hour strikes were held on Thursday and Friday of last week
Fresh talks between the two sides are now taking place. At the moment, further UK-wide strikes are planned for Thursday, Friday, and Saturday

TNT Post, which is separate from TNT Express, is one of its major commercial competitors, winning contracts in the business mail market, delivering the likes of bank statements and bills and so forth. This is a lucrative sector. This type of post is big in volume, neatly printed and easily sorted and delivered. It has to be done much cheaper than the normal second class rate, typically for under 20p per item.

A firm like TNT Post takes the mail from a business customer, transfers it to one of its one centres for sorting. But the firm does not have its own force of postmen and women. Instead it sends its sorted mail to the nearest Royal Mail centre and their postmen deliver it.

"As with other competitors in the business mail sector, TNT Post is reliant on Royal Mail to deliver letters over the final mile to consumers' doorsteps," says Nick Wells, chief executive of TNT Post. "There are regulatory barriers in the postal market which prevent TNT Post from providing a full end-to-end delivery of mail. The strikes show it is high time that these barriers are lifted in order for a real alternative service to Royal Mail's to be introduced."

In a nutshell, the difference is VAT. The Royal Mail does not have to levy VAT for the cost of delivery. Commercial competitors do. But the Royal Mail is obliged to deliver this business mail for the "final mile" at a fixed cost for competitors as part of agreements that opened up the industry to competition.

TNT is running an experiment to do this "final mile" delivery on a small scale in Liverpool as a pilot, but they it will not be economical until the rules change. Any businesses could claim back the VAT, but TNT says charities and finance firms cannot, and that they represent 40% of all business.

Rival post boxes New Zealand
Eeny, meeny, miny, moe - customers may have a choice in future

But this is just business mail. When it comes to the question of taking ordinary letters between private customers, most of the Royal Mail's commercial competitors are not likely to be interested. It's the "birthday-card-to-your-granny-in-the-Shetlands" conundrum. The Royal Mail has a duty under its "universal service" obligations to do this at the same fixed price it charges for sending the card to the house next door.

Anybody can get involved in this business, with a licence from Postcomm, the regulator for items under 350g.

The case of the one-man City Centre Couriers in Plymouth has been among those highlighted in the media, but the idea of a firm duplicating the tens of thousands of postboxes run by the Royal Mail, and the associated infrastructure for a rival "universal service", seems unlikely.

LATER DELIVERIES

The Communication Workers Union, which represents the postal workers who are striking, claims that the modernisation and reform programme which has sparked the strike is going to lead to later deliveries of post.

It will already seem to most people that getting your mail in time to read over the breakfast table is a thing of the past. And people are now used to getting a single delivery a day.

But the CWU alleges that the Royal Mail is planning to make deliveries even later, with people in urban areas getting their post as late as 3pm and those in rural areas having to wait until 4pm in some cases.

However, the Royal Mail insists that the introduction of its new "walk sequencing" machines is not causing delays.



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