Royal Mail loses public contract

[Barry Trotter]

Royal Mail loses public contract

TNT has won an £8m contract to deliver second-class mail
The Royal Mail has been delivered a fresh blow after the Scottish government awarded a multi-million pound contract to a private firm.

The £8m deal will see carrier TNT deliver mail for dozens of public bodies.

A £17m first-class mail contract was awarded to Royal Mail but the second-class service was won by TNT.

The Scottish government defended the move, saying the deal would save the public purse £2.95m a year.

The government spokesman said that in a standard competition process which began in March, the government's procurement arm Procurement Scotland awarded the two contracts for mail services covering 89 public bodies.

However, a Liberal Democrat MP held it up as an example of the "haemorrhaging" of business from Royal Mail.

What I want is a Royal Mail that is fit to win in that market rather than a Royal Mail that simply wishes competition to go away

Pat McFadden
Business Minister
Alistair Carmichael, MP for Orkney and Shetland, raised the issue in the Commons.

He told Business Minister Pat McFadden: "Even without the impact of strike action we have the very alarming news in Scotland, that one of the major public sector contracts, the Procurement Scotland public sector contract which deals with the mail to NHS Scotland, colleges and most councils in Scotland is going to be given to a private sector operator.

"What can he do to ensure that the haemorrhaging of business that we've seen from private business to which he has referred does not now spread to the public sector?"

Mr McFadden told him: "Competition exists and it won't go away."

He added: "What I want is a Royal Mail that is fit to win in that market rather than a Royal Mail that simply wishes competition to go away."

The minister added: "The most fundamental challenge to Royal Mail is not competition from other mail companies - it's competition from other communication technologies and that must lie at the heart of the response to this dispute."

'Breathtaking complacency'

But Mr Carmichael later called this "a breathtaking level of complacency".

A Royal Mail spokesman said: "Royal Mail submitted as competitive a bid as possible for the contracts being tendered.

"We are fighting hard to retain every letter we possibly can but we operate in a commercial market in which we are facing increasingly fierce competition.

"That is why we urgently need to modernise our operations so we can compete and win business such as this."

He said the Royal Mail's ability to compete was being damaged by the threat of "unnecessary" industrial action by the Communication Workers Union.

The CWU is planning two UK-wide strikes on Thursday and Friday in a row over pay, conditions and modernisation plans.

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[kingtubby]

TNT has won an £8m contract to deliver second-class mail

Do I even need to comment on that fiction?

[westlondonpostie]

Will they acctualy deliver it? or is it Down stream access?

[kingtubby]

Will they acctualy deliver it? or is it Down stream access?

deliver it? - surely not, unless it's confined to the big cities

[concerneduk]

Will they acctualy deliver it? or is it Down stream access?

It would be nice to think they would deliver it but surely thats just wishful thining, all it means is RM margins squeeze further and pressure put more on us if still delivering it.

[DGP1]

The Scottish government defended the move, saying the deal would save the public purse £2.95m a year.

I think this part says everything

[concerneduk]

The Scottish government defended the move, saying the deal would save the public purse £2.95m a year.

I think this part says everything

Blame Gordon Brown for that as well then! as he has slashed the Scottish Parliament Budget

[westlondonpostie]

The Scottish government defended the move, saying the deal would save the public purse £2.95m a year.

I think this part says everything

All courtesy of Mr Adam Crozier and his excellent business sense in the original negotiations in setting the price for Down Stream Access.

[mailmonkey]

Exeter City Council trialled TNT for 3 months, cause of the cost savings...

They have decided to return to RM after TNT have been really delaying stuff and generally making a ballsup...not a cost issue for Exeter Council, a quality issue.

MM

[steven100]

Great next year when i return to university in scotland i may get extra money to spend.
We are very lucky we don't have to pay uni tuition fees.