Where next for Royal Mail?

First of all, if you’re in a hurry, I advise you to skip this blog and go straight to this article on the ever-interesting postal news website Hellmail, for a great no-nonsense analysis of the problem Royal Mail is in. Otherwise, please tarry awhile beside my humble words.

It’s been an interesting couple of weeks in the postal sector. First James Purnell announces that the Post Office can keep its card account and what’s more competitive tendering is off the menu (for now); then regulator Postcomm says the Post Office should be broken off from Royal Mail Group; then I go and tell all this to Lindsay Hoyle, MP and member of the Business and Enterprise Select Committee, who immediately (and without prompting) demands an inquiry into Postcomm for (as he sees it) threatening Royal Mail’s future in this way – as reported in Tribune yesterday.

Meanwhile, down at Westminster my lord Mandelson is making positive noises about Royal Mail developing more financial products, much in the mould of Jon Cruddas’ and Billy Hayes’ demands for a People’s Bank of the Post Office. While up north-west, Hayes’ members are being balloted for strike action over a long-running bone of contention: the closure and reorganistation of mail sorting centres leading to job losses.

Oh, and the Hooper review into competition in the postal sector (translation: Royal Mail’s future) still hasn’t reported yet. There has been speculation as to whether Mandelson, for whose gracious consideration it is submitted, is sitting on it.

Where does this leave Royal Mail? I think an alien flying down on a spaceship and surveying the situation would say “nowhere in particular”. As the Hellmail article points out, Royal Mail is facing some difficult pressure. It has to maintain the universal service obligation, while its commercial rivals don’t. The USO demands goverment subsidy, but tax cuts are the order of the day. Royal Mail is trying to become more lean and mean through streamlining its sorting processes, which angers the unions. And there’s a government-funded regulator, Postcomm, whose very job is ensure Royal Mail faces healthy competition. Competition which Hooper is unlikely to do anything to dampen.

So I think people who think that the Government is about to clasp Royal Mail to its bosom and promise to look after it come hell or high water in a Keynesian sprit of public munificence should hold their breaths. Royal Mail and the Post Office have been going down the road of competitiveness and streamlining for about eight years, and there a no signs of a U-turn on that. But if there were, a Select Committee inquiry into Postcomm (see above) might well be the first step.

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One Response to “Where next for Royal Mail?”

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