On Tuesday, a report by the National Consumer Council found the Royal
Mail to be the country’s most highly regarded public service.
Ironically, this news came out on the same day that the government
suspended the Royal Mail’s monopoly on postal services, following the
Communication Workers’ Union call for another 24-hour strike.
People may admire the speed and efficiency with which their letters are
delivered, but service levels have in fact been deteriorating for some
According to the Post Office Users’ National Council, the PO failed to
meet all of its agreed targets for 1995/96 except for long-distance
mail, and in 1996/97 this is the only target it is willing to increase.
The rest have been lowered and the service has stagnated.
There is much to be admired about a universal postal service. Paying 26p
and getting next-day delivery, whether you are sending a letter across
the country or across the street, is to be cherished.
The flipside of universal service is inflexibility. The direct marketing
industry has long complained about this, especially the lack of a
discount for bulk mailers. Considering that direct mail generates pounds
650m in revenue, you would have thought that the Royal Mail would have
devised a separate tariff.
This is where some entrepreneurial spirit wouldn’t go amiss. Opening up
the monopoly to private operators is a great opportunity to shake the
Royal Mail out of its complacency. The trouble is that one month is not
long enough for serious players to get a foothold. But if the dispute is
not settled in four weeks then the suspension could extend for three
months. That may be long enough for fast-movers to give the Royal Mail a
run for its money.
The big danger of a new competitive structure is that it would allow the
most lucrative business mail services to be cherry-picked. As this
subsidises the long-distance domestic market, the consumer would
undoubtedly see postage costs rise. It is also worth remembering that
when there was a postal strike eight years ago, the private sector was
almost bought to its knees trying to cope with the demand.
The most sensible first step may be for the service to be split into a
duopoly. This would prevent the market from fragmenting and therefore
stopping any single player gathering the volume needed to be really
If this one-month suspension achieves nothing more than shaking up the
Royal Mail and making it more competitive, it is no bad thing.