Royal Mail monopoly could see liberalisation

The Royal Mail's monopoly over UK postal services could be about to come to an end within four years if recommendations made by industry regulator Postcomm are implemented.

Postcomm has described Consignia's hold on the sector as 'no longer justified' and has proposed a three-state plan towards liberalisation - commencing this year - detailing how Royal Mail services are to be opened to competition. As nearly 90 per cent of postal traffic is from businesses and government agencies, this would be the first aspect to be liberalised.

Consignia has reacted strongly against the suggestion, describing the idea as "death by a thousand cuts". The company warned that its losses are already in the region of around £1.5 million per day, and that increased levels of competition would only serve to compound the situation.

However, the chairman of Postcomm, Graham Corbett, said that he believed that Consignia needed to face competition, if its future was to be secured. He added: "The current postal monopoly is clearly not providing its customers with the service they want and is failing to contain its costs."

Consignia is already considering cutbacks aimed at saving around £1 billion a year in operating costs - which could see morning postal deliveries replaced by an afternoon delivery instead. The move would see business post being handled exclusively in the morning while deliveries to homes would be left until later in the day.

Unions and staff, however, have not reacted well to such developments as the proposed cost-cutting programme could see 15 per cent of the workforce made redundant. (CL)