MPs call for Ofcom powers to improve postal standards

MPs criticised Royal Mail rival Whistl for a “disproportionate” use of controversial zero-hours contracts

The CWU postal union’s strong membership within Royal Mail has secured better terms for workers (Getty Images)

The regulator Ofcom should be given new powers to prevent a “race to the bottom” in pay and conditions among postal workers, a committee of MPs said today.

Politicians on the Business, Innovation and Skills Select Committee criticised rivals to newly privatised Royal Mail – highlighting Whistl for a “disproportionate” use of controversial zero-hours contracts among employees – in a report on competition in the sector.

The CWU postal union’s strong membership within Royal Mail has secured better terms for workers, although 48 per cent of Whistl’s staff are on zero-hours contracts, the report said. That has put Royal Mail at a competitive disadvantage to many other rivals in a cut-throat market, which saw City Link collapse last Christmas with the loss of 5,000 jobs among staff and contractors.

Ofcom currently has no mandate to comment on pay or conditions in the postal market, but MPs want the watchdog’s remit extended. The BIS committee chairman Adrian Bailey said: “We need to ensure greater competition in the postal sector does not lead to a race to the bottom in terms of the pay, terms, and conditions of postal employees. We also call on Ofcom to investigate the impact on customers, and the service provided to customers of any downward pressure on wages, terms and conditions of postal sector staff.

“To help guard against any downward pressure on the wages and conditions of postal staff, we recommend that Ofcom is given greater powers to comment on labour conditions and standards in the postal market.” The trade union Unite welcomed the move and also called for the outlawing of zero-hours contracts.

The committee said the universal service obligation, under which letters are delivered for the same price anywhere in the UK, was not under “immediate” threat. But it warned that market conditions were changing “rapidly” as rivals cherry-pick more profitable business. MPs want the regulator to provide regular quarterly updates on the viability of the universal service, and be prepared to act at short notice with new obligations on postal operators should it be at risk of failure.

Royal Mail said it shared the “committee’s concerns that Ofcom may not be able to respond fast enough to avoid a failure in the universal service, even in the short term” and welcomed the report.