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Royal Mail: MPs warn of a postal service ‘fatally wounded’ by its rivals

Westminster to launch inquiry into actions of growing alternatives

Mark Leftly
Saturday 13 September 2014 21:00 BST
Royal Mail believes that its rivals have unfair advantages
Royal Mail believes that its rivals have unfair advantages (Getty)

MPs are privately warning that Royal Mail could be “fatally wounded” by increased competition, as they prepare to launch an inquiry into the actions of the postal service’s rivals.

Royal Mail executives and union leaders have pressed the influential Business Select Committee to investigate the business tactics of fast-growing TNT Post.

In what Royal Mail executives claim is a threat to the UK’s universal service, TNT Post has started to deliver letters and parcels directly. TNT has been accused of “cherry picking” densely populated areas where it can make a profit, such as London and Manchester, and avoiding rural locations.

Royal Mail opened itself up to greater competition when it was privatised last year, but had to commit to keeping the universal service until 2021. Chief executive Moya Greene believes this means rivals have unfair advantages as they attempt to grow direct-delivery services, and wants regulator Ofcom to launch an immediate investigation.

A committee source said there would be two hearings later this year, and added: “If we don’t do it until after that, then Royal Mail could be fatally wounded.”

Committee chairman Adrian Bailey said: “We have received a request to hold an inquiry into this and we will look at it sympathetically.”

A Royal Mail spokesman said: “Unfettered direct-delivery competition threatens to undermine the one-price-goes-anywhere, universal postal service. The universal service is sustained by the money we make in urban areas helping to fund the entire national network, including delivery to areas of lower population where our costs are much higher.”

A TNT spokesman said: “We are happy to take any opportunity to explain the benefits of competition in the UK postal sector and its important role in ensuring Royal Mail continues to work towards meeting its productivity targets, which it has so far failed to do.”

Separately, Business minister Jo Swinson has asked Ofcom chief executive Ed Richards to address concerned MPs next month about the problems.

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