Rival companies cherry picking business

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One of the services we value here in the North-east is that provided by our hard working posties. The men and women who work for the Royal Mail deliver letters to virtually every address six days a week for the same price no matter how remote. They also collect from a wide network of post boxes.

This service is part of what is known as the Universal Service Obligation which Royal Mail is required to provide. The obligation is overseen by ofcom the regulator of postal services. They are legally obliged to ensure its protection.

Currently the cost of providing the service in difficult areas is covered by the profit made in the easy areas. In the summer I tabled a motion in the Commons highlighting concern at the threat to the universal service posed by competing companies doing deliveries in only the easy areas.

I, also, took part in a debate highlighting the concern. This Tuesday in a follow up to the debate I hosted a meeting for MPs with the regulator Ofcom. We were able to highlight our concern about the effect of rival companies cherry picking the most profitable business.

I particularly repeated a warning I had given the previous regulator Postcom that a failure to allow competition to grow as quickly as possible might delay some efficiencies, but could be corrected. Whereas allowing competition to grow too fast threatened the vital universal service which would be difficult to recover.

Ofcom were able to confirm they were closely monitoring the impact of competition and had a submission from Royal Mail with detailed evidence. They confirmed they could intervene quickly in the light of their enquiry. The meeting was a useful opportunity to reinforce the importance of the universal service. As a metaphor I pointed out that the offices of the old regulator that had introduced competition too quickly were now being demolished.

Another area where Ofcom have responsibility that is relevant is in the regulation of the telephone market and in particular the delivery of new connections by Openreach. I have highlighted a number of examples of very poor service in new housing developments.

It is not the fault of the hard working engineers who we see out in all weathers. It appears to be a organisational failing that has been behind many of the failures.

Ofcom recently tightened the performance standard that Openreach must achieve. I am very keen to hear from those needing a new connection about their experience so that I can ensure improvements are being achieved.