Royal Mail pleads for rivals to be hobbled

 

Deputy Business Editor

Royal Mail has lodged an official claim that allowing free competition on its routes was unfair and threatened its future ability to finance the universal post service.

Universal postage – six days a week to every address in the country – is enshrined in Royal Mail’s constitution. But the company, which was privatised by the Government at what critics said was a knock-down price, has long said it cannot afford to compete with new rivals on some routes.

The likes of TNT Post, it argues, can undercut Royal Mail by “cherry picking” the routes where it is cheapest and easiest to deliver.

TNT has already launched in parts of London, Manchester and Liverpool.

In its submission to Ofcom, Royal Mail said a lack of intervention from the regulator would jeopardise its ability to make a 5 to 10 per cent operating profit margin in the future. It claimed TNT Post’s plans would cut its sales by more than £200m in 2017-18 and demanded Ofcom launch an immediate review to safeguard universal postage’s viability.

TNT Post responded: “Competition is the best news in years for the postal sector – we are creating jobs for thousands of people.” It added that it delivers less than 1 per cent of the mail in the UK.

Ofcom is expected to launch a review by the end of 2015 and said it would consider Royal Mail’s report carefully.

Viscount Younger, parliamentary under-secretary for business, assured peers earlier in the week that while the Government supported competition, the universal service would always take precedence. “While competition can bring benefits to consumers, it should not undermine the provision of the universal postal service.”

But Chuka Umunna, the shadow Business Secretary, said: “The Tory-led Government’s fire sale of Royal Mail has put postal services at risk. David Cameron’s Government short-changed taxpayers to the tune of hundreds of millions of pounds while the City made a killing at the public’s expense. Now, according to Royal Mail itself, the postal services and daily deliveries which consumers and businesses rely on are under threat.” He added that  a Labour government would retain the universal post.

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