The commercial battle between the giants of cyber space – Google, Facebook and Amazon – and traditional businesses is already devastating the High Street and having a damaging impact on Britain’s creative industries.
But often forgotten is the enormous impact on the Royal Mail, a once venerated institution, with a remarkable history stretching back 360 years.
Moya Greene, the compact, blonde Canadian charged with saving the Royal Mail and the Post Office from itself, is worried. With traditional ‘snail mail’ declining by an estimated 5pc a year, as the public transfers its communications to email, social networks, iPads and other faster, modern devices, she feels she is in a race against time.
Letter wars: Moya Greene has been nicknamed Darth Vader for her ruthlessness
‘Hardly anyone is captive to the mail anymore,’ Greene laments. ‘We cannot look at this business in a way which might have been appropriate 50 years or 60 years ago. We have to look at this as a delivery business with an obligation which no other delivery business has.’
But the garrulous Greene, who never uses one sentence when several will do, finds the forces of conservatism lined up against her.
Her predecessors Allan Leighton, the Labour choice as chairman of the Mail and his chief executive Adam Crozier (now at ITV), tended to see the challenges to the Royal Mail as over-manning, the power of the Communications Workers Union (CWU) and modernisation.
Certainly, Greene admits size is an issue and acknowledges that eventually a further 40,000 people will have to come out of the Royal Mail workforce of 163,000 if it is to be financially viable.
She blames the regulator PostComm for adding capacity when it should have been taking it away, saying: ‘In a declining core letters business, when the regulator has brought on more and more sortation capacity (a nasty Americanism!), when we are struggling to take sorting capacity out of the Royal Mail, the likelihood is that it will be smaller in five years than today.’
Greene, 57, who was transferred to London directly from Canada Post – where she was branded Darth Vader by the unions for her ruthless approach – believes she must work on a much wider canvas.
She argues that successive governments, in their effort to introduce competition into the delivery market, tied the Royal Mail’s hands behind its back.
The result has been a paralysis while rivals have picked away at the most lucrative parts of the commercial delivery market and the advance of online technology has taken its toll. She blames the just reported loss of £160m on these restrictions.
‘If I had been able to negotiate commercial terms I probably would have broken even in the core mails business even though revenues are structurally declining,’ she asserts.
Greene boldly claims to be putting in place ‘the biggest modernisation and change programme of any company in Britain’.
As the person charged with guiding the Mail towards privatisation and off the government’s books, she needs to see a dramatic change in the way in which it has been regulated.
She believes that the Coalition government is finally getting the message which their Labour predecessors constantly dodged.
‘The ray of light is what Mr Cable (the Business Secretary) and Mr Alexander (Chief Secretary to the Treasury) have noted in the Houses of Parliament.
‘We need a complete rethinking of regulation. Nowhere in the world has such a punitive and restrictive approach been applied,’ she says.
Greene is having to fight on several fronts at the same time.
On the regulatory front, the goal is to unpick the restrictions on its commercial freedoms imposed on it by the old Postcomm regime which is being folded into Ofcom. She believes, perhaps hope beyond hope, that because Ofcom is used to dealing with commercial – rather than state-controlled companies – it will see the sense of sweeping away some of the restrictions which have hampered its commercial viability.
‘It is just not sensible that we should be regulated at all in the parcels business. We are the only participant in the UK that is regulated among 49 national players and hundreds of local delivery companies,’ she says.
But it is not just UK regulators she must grapple with. Greene also finds herself mired in the bureaucracy of Brussels. Royal Mail needs to free itself from the burden of the £8.3bn pension deficit she has inherited and which the government has agreed to take off its hands and add to the public sector. This is regarded by Brussels as a state subsidy. Until this burden (which incidentally has shrunk dramatically to £4bn) has been lifted, she cannot even get to first base on privatisation.
She argues: ‘I didn’t have to contend with this or the regulatory straightjacket at all in my prior life,’ she argues. Until the EU rules and, the balance sheet is corrected and the regulatory environment ‘made sensible and proportionate to the future of the this business you are not going to have investors interested in this company.’
Greene’s view of Britain’s universal postal service looks to be a little more rose tinted than that of much of the public which remembers the grand old days of two deliveries, seven day a week collections and reliable next day delivery.
In the way of so many bosses of large corporations, her description of the postal service is quite different to what many customers – including small and cottage businesses dependent on getting their orders and cheques early in the day – count upon.
‘If you look at the very, very high quality service that we provide, six days a week, very few companies in the world do that,’ she says.
‘It’s greater than the universal service requirement as set down by the European Directive. We go everywhere at the same price and the minimum service requirement is 93pc. So this is a premier service, it is a very high cost service.’
But to make it work economically, Greene clearly believes, although she won’t say it in so many words, that a price rise for the 50 gram letter is required.
As an outsider with a background in banking and public service before becoming Canada’s and then Britain’s chief postie, Greene brings a fresh set of eyes to a longstanding problem – Britain’s last remaining nationalised industry with the exception of the newly state-owned banks.
She wants the Royal Mail to be thought of differently. Less a public service and more a ‘media business, competing against all other media, carrying the messages of UK businesses and citizenry’.
Clearly, at some point she will hit the brick wall of the CWU which in the past has been so resistant to change. But she believes that a totally new strategy which goes beyond ‘the myopic approach’ of the past is necessary. It makes sense but is not going to make this feisty and very well paid Canadian many friends.
........... Walking for her must be a tightrope ......... Reading must be her bank balance 