Unless dozy ministers wake up, the Last Post will sound for

[TrueBlueTerrier]

Unless dozy ministers wake up, the Last Post will sound for Royal Mail

http://www.telegraph.co.uk/money/main.j ... do0901.xml

There exists no commercial, political or social problem that meddling by the European Union cannot make worse. Those who doubt this assertion might care to look at what's happened to the United Kingdom's mail system and post office network since the EU Directives of 1997 and 2002, which set out to improve the quality of postal services across member countries.

Throughout the Nineties, Royal Mail was blighted by one of the worst industrial relations records of any national enterprise. It had antipathetic management, antediluvian work practices and antiquated sorting equipment.

Weak, vacillating bosses, truculent, strike-prone unions and complacent, ignorant ministers conspired to undermine its operations. Conservative and Labour governments starved the company of investment, while the Treasury helped itself to vast amounts of Royal Mail's cash via "special dividends".

These depredations damaged morale and eroded what little incentive there was for internally-generated efficiencies. In short, Royal Mail was a textbook example of how not to run a business.

So, when the boys from Brussels turned up in 1997, with new and complex proposals for the standardisation of competition in Europe's postal market, many of Royal Mail's critics cheered, believing that "things can only get better". Unfortunately for millions of ordinary customers the subsequent 10 years of turmoil at Royal Mail have brought an unwanted delivery of fewer and more expensive services. Promised benefits have been lost in the post.
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A government-commissioned report concluded this week that EU-inspired reforms, in particular the introduction of competition, have not helped the public or small businesses. Worse still, they threaten the Royal Mail's Universal Service, ie, its obligation to provide a "one-price-goes-anywhere" distribution of letters and parcels to all locations across the UK.

This beggars belief. The genius of a stamp-based system that began with the Penny Black in 1840 and served us well for more than 150 years is in jeopardy. A British institution, which for 36p (first class) helps bind Aberdeen to Aberdovey and Colchester to Coleraine, could be sacrificed on the altar of "modernisation". How did we get here?

Back in the Nineties, Royal Mail was an organisational mess, yet it was also viable. Monopolies, even those in state hands, have a capacity for making profits. From 1990 to 1999, Royal Mail generated a surplus of about £2.5 billion.

In that period, most domestic customers received two deliveries a day (one before breakfast), stamp prices (inflation adjusted) were lower than today's, and there were many more post offices and postal workers.

Profits from business customers helped cover the cost of Royal Mail's social commitments, enabling it to provide isolated communities with similar levels of service to those enjoyed by urban centres.

Now, fast-forward the video and compare and contrast with Royal Mail's latest figures. The Universal Service made its first ever loss, £100 million, and the Government has earmarked 2,500 post offices for closure.

On revenues of £9.4 billion, the company as a whole just about scrambled into profit, but only because it received a Government grant. The press release boasts of service levels being above target but, after the abandonment of a second delivery, anything less than alpha-plus would be criminal.

In fairness, not all Royal Mail's troubles can be blamed on the company's shortcomings or even on changes imposed by the EU. With the stock market 10 per cent lower than it was in December 1999, the pension fund is sucking up about £800 million a year, yet remains nearly £3 billion in deficit.

And the growing popularity of emails and texts is accelerating the demise of conventional letters. Last year, Royal Mail processed about 80 million a day, down by 3.2 per cent. Other traditional income streams are also disappearing, eg, more motorists are renewing their car tax online rather than at a post office.

The company has tried to mitigate losses by selling car insurance and issuing credit cards. Very commendable, but when it comes to the parts of the business that millions of us still value most - the Universal Service and our local post offices - Royal Mail is fighting a losing battle. Only a radical change to the rules of the game can prevent terminal decline.

When Royal Mail's monopoly was broken, it seemed highly likely that newcomers would target the most profitable segments of the business, while steering clear of the company's loss-making operations. This is precisely what happened. Yet Postcomm, the regulator, is sticking to the fiction on its self-congratulatory website that it can protect the Universal Service, while introducing even more customer choice.

If you run a large company in a big city, it's true that liberalisation has brought considerable benefits, including lower prices and higher assurances about the quality of service. That's because corporate work is the most lucrative end of the market and Royal Mail's rivals are keen to pick the cherries. But how many of them are queueing to collect a birthday card in Truro and deliver it to Wick for less than the price of a cup of tea?

And it's not just private correspondence that would suffer if the Universal Service were stopped. Many small businesses in remote areas are wholly reliant on Royal Mail. Don't talk to them about alternative carriers, there aren't any.

For more than three centuries, Royal Mail has been a force for social cohesion, uniting the country in many ways. But the sole shareholder, the Government, no longer seems sure about its validity. And even if it were prepared to pay a price - yes, a subsidy - for providing a valuable social service, EU rules about state aid would prevent it from doing so.

That leaves two options. One, which I'm told is likely to be floated soon in a Postcomm report, is for Royal Mail to cut costs by reducing deliveries from six to five days a week. How that improves customer service is beyond me.

Far better to give Royal Mail greater flexibility in the way it sets prices for big corporate clients. For example, as the rules stand, if Royal Mail agrees with Busybank to reduce margins on business deliveries, it's obliged by Postcomm to offer the same margin reduction to all other postal companies that use Royal Mail's network for fulfilment of their rival services.

As a result, their costs automatically go down, and they can go back to Busybank with an even better offer to trump Royal Mail's. The upshot is that no matter how lean and mean Royal Mail becomes, it will by default make its competitors even more efficient. Its disadvantage is structural; it cannot win.

Unless dozy ministers wake up to this fact, it won't be long before they are sounding the Last Post over the grave of Royal Mail's Universal Service.

It's not necessary and we must not allow it to happen.

[prowler]

Excellent article that says it all really.
And all overseen by a Labour government, supported by the CWU.

[britwrit]

Yeah - it almost (...almost...) makes you wish for a Tory government.

If Cameron gets a small majority, say 25 or so, at the next election, the Conservatives would be too insecure to risk anything as controversial as taking RM private. After two, three years (during which Brown and neo-con buddies get tossed out), we get another Labour government, but this time, to the left of the current one.

I know that sounds unlikely but really, at this point, things are dire enough to dream about it...

[norbert]

Excellent article that says it all really.
And all overseen by a Labour government, supported by the CWU.

It is , even Hellmail have changed their tune and are scathingly critical of the EEC & New Labour for being too quick to go along with their directives and their meddling and fiddling causing a right mess.

Unite are scathingly critical of RM's Senior Management for taking RM backwards and doing everything by panic driven confrontation .

[k979aaa]

Did you all spot it royalmail is looking to reduce service to FIVE DAYS A WEEK!.

[Broxi51]

Did you all spot it royalmail is looking to reduce service to FIVE DAYS A WEEK!.

I doubt it will happen. The savings RM would make by going to 5 day deliveries would be offset by more companies jumping ship to our rivals & losing us more revenue.

[janitor]

Why would RM going to five days cause more companies to go to our rivals, they don't work six days any way they don't deliver, one day let alone six and most of our business has gone to rivals on price, if it was on speed of delivery they wouldn't have any work, just look how the bank statement dates have slipped since they switched to rival companies, if i had a pound for every customer who asked why there bank statements late, i'd be a millionaire.

[Broxi51]

Why would RM going to five days cause more companies to go to our rivals, they don't work six days any way they don't deliver, one day let alone six and most of our business has gone to rivals on price, if it was on speed of delivery they wouldn't have any work, just look how the bank statement dates have slipped since they switched to rival companies, if i had a pound for every customer who asked why there bank statements late, i'd be a millionaire.

It would give the likes of TNT or DHL the chance to offer a saturday service. This would be enticing to firms who do work saturdays or who want their mail when they first go in on a Monday morning. RM do not want to open the door for their rivals by offering a special saturday service. It would give postcomm more idiotic ideas to work with

[somerset]

Why would RM going to five days cause more companies to go to our rivals, they don't work six days any way they don't deliver, one day let alone six and most of our business has gone to rivals on price, if it was on speed of delivery they wouldn't have any work, just look how the bank statement dates have slipped since they switched to rival companies, if i had a pound for every customer who asked why there bank statements late, i'd be a millionaire.

It would give the likes of TNT or DHL the chance to offer a saturday service. This would be enticing to firms who do work saturdays or who want their mail when they first go in on a Monday morning. RM do not want to open the door for their rivals by offering a special saturday service. It would give postcomm more idiotic ideas to work with

Excuse me! What planet are you on? TNT/DHL to offer a saturday service? They don't even offer a Monday to friday service! They just collect and sort it to us morons, who deliver the final mile for them.

[janitor]

Even the a lot of the parcels they should deliver now come through us because its cheaper to put it through DSA than to send one of their own drivers out to deliver them, seem to be seeing more and more TNT/DHL and business post parcels, so i don't think they they are going to deliver mail on a saturday.

[borders]

all that from a Tory paper aswell, i find myself agreeing with it and it beggars belief how we have got here. have all the other European countries followed our lead in so quickly implementing these European Union Directives , from what i have read- No and also the price of sending mail is more expensive in places like France, Italy , Germany etc.

[Broxi51]

Why would RM going to five days cause more companies to go to our rivals, they don't work six days any way they don't deliver, one day let alone six and most of our business has gone to rivals on price, if it was on speed of delivery they wouldn't have any work, just look how the bank statement dates have slipped since they switched to rival companies, if i had a pound for every customer who asked why there bank statements late, i'd be a millionaire.

It would give the likes of TNT or DHL the chance to offer a saturday service. This would be enticing to firms who do work saturdays or who want their mail when they first go in on a Monday morning. RM do not want to open the door for their rivals by offering a special saturday service. It would give postcomm more idiotic ideas to work with

Excuse me! What planet are you on? TNT/DHL to offer a saturday service? They don't even offer a Monday to friday service! They just collect and sort it to us morons, who deliver the final mile for them.

If a company wanted to challenge RM by offering a final mile, then to me, I would think that they would want an angle that they could use. If RM gave up deliveries on a Saturday then this could prove that angle. A business only delivery in dedicated areas with incentives that if the customers used them for collections then they would get cheaper collections & deliveries. They dont have to play on our level playing field.
Perhaps I am wrong and live on another planet, I really dont know

[k979aaa]

HUTTON is the minister in charge of buisness and enterprise and regulatory reform!. For his head is so far up his ass i thought he was a giraff here is his web page for postal services http://www.berr.gov.uk/sectors/postalse ... index.html

[Night Tonic]

Hutton is the tennis racket used to protect brown from stray balls

[k979aaa]

Hutton is the tennis racket used to protect brown from stray balls

Would that be ed balls or no balls :cfo !.