Rethink urged on how private mail operators pay Royal Mail

[TrueBlueTerrier]

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MPs told business should not have to subsidise competitors to deliver letters

By David Perry

Published: 21/01/2009

The Office of Fair Trading was urged last night to reconsider how private mail companies refund Royal Mail for delivering to people’s homes.

Mr Richard Hooper, who has just concluded a review of Royal Mail’s business, said: “It is undesirable for the Royal, which delivers 99% of letters, to be in some senses subsidising its competitors.”

Mr Hooper, giving evidence to the Commons business and enterprise committee, said he did not know if the current charge of 13p per letter covers the cost of delivering “the last mile” to people’s homes because there was insufficient information about costs.

He was responding to a protest from Chorley Labour MP Lindsay Hoyle that a subsidy from Royal Mail to its competitors would be “absurd”.

Mr Hooper, who has recommended that Postcom should take over as regulator from Postwatch following a series of public disagreements with Royal Mail, said there was not enough information to establish whether the delivery charge for mail from competitors is high enough to cover costs and he believed Ofcom would look closely at what was going on.

But he warned that if Ofcom decided to set the charge it would apply a “squeeze” to make sure Royal Mail becomes a lot more efficient, attacking Royal Mail for still having workers manually sorting post for their round instead of using automated sorting machinery.

He confirmed the role of local post office branches was vital to provide access to the universal service obligation – available to all – making it clear maintaining the universal service is the top priority for regulators.

He suggested there could be a business opportunity for local post offices to receive parcels that cannot be delivered because recipients are out instead of forcing people to collect them from more distant distribution centres.

But he made it clear this would depend on whether there was an exclusive contract between the Post Office and Royal Mail or if other courier companies could use post offices as well.

The committee has launched an inquiry to see what business opportunities can be developed to secure the future viability of local post offices.

SNP business spokesman and Angus MP Mike Weir said Royal Mail’s competitors must pay the full cost of delivery and make a contribution towards the cost of Royal Mail complying with the universal service obligation.

He said the obligation “is essential to all parts of Scotland”.

Mr Hooper earlier claimed the obligation was not wholly a disadvantage to the Royal Mail because it gave it an edge as the only organisation able to deliver material direct to every address.

[Broxi51]

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But he warned that if Ofcom decided to set the charge it would apply a “squeeze” to make sure Royal Mail becomes a lot more efficient, attacking Royal Mail for still having workers manually sorting post for their round instead of using automated sorting machinery.

Can I get one please
Didn't realise they existed but I could leave the machine to prep my walk and I could go take my break.

[TrueBlueTerrier]

yes we should all have one of these to prep and deliver - we just use a joystick to direct him

[DGP1]

yes we should all have one of these to prep and deliver - we just use a joystick to direct him

But do you know where you have to plug your joystick into

[Broxi51]

yes we should all have one of these to prep and deliver - we just use a joystick to direct him

But do you know where you have to plug your joystick into

Can I ask a manager