PAUL WILENIUS: Everyone loves receiving
a real letter. It's the Royal Mail that delivers them and the Post Office
that starts them on their journey.
This is the oldest Post
Office building in the country, in the picture postcard village of Painswick
in Gloucestershire. Sue Casey the local postwoman is out on her rounds
delivering a little bit of morning sunshine.
WILENIUS: The Post Office and the
Royal Mail are part of our national heritage. They're also part of Consignia
and both are state owned. But now they're losing money and face a major
threat to their survival. The fate of that much loved British public service
- the Royal Mail - is turning into one of the most intractable problems
for this Labour Government. Indeed, the latest proposals from the independent
regulator Postcomm to fully open the postal market to private competition
over the next few years, has sparked off widespread alarm. So much so that
Ministers are now coming under intense pressure from unions and many Labour
MPs to intervene openly and to either water down or delay those proposals.
BILLY HAYES; It's a great irony that under
a Labour Government you know we might see the destruction of the British
LINDSAY HOPYLE: The danger is that Postcomm
could smash that brand and I think that's the real danger for the future
of the Post Office, will it exist, will it be the love brand that we know
and where does it all end?
WILENIUS: Symbols are important
to the British, no matter where they are in the kingdom. The Royal Mail
is not just a symbol. Over many years a steady stream of profits were handed
over to the government, amounting in total to billions of pounds. But in
recent years profits have disappeared, to be replaced by mounting losses.
JOHN WITTINGDALE: It is extraordinary. This is
a business which only a few years ago was hugely profitable and in a short
space of time its performance has deteriorated, it is now losing huge
amounts of money, one and a half million pounds a day, at the same time
that is has a monopoly and the amount of business that it is doing, the
volume of mail has been increasing. It is extraordinary that any business
can have performed so badly in such a short space of time.
WILENIUS: The Post Office is now
part of Consignia. It accepts that the position is perilous. It's trying
to cut costs urgently. But at the moment the mail service is relying on
handouts from the government, which are worth hundreds of millions of pounds
PETER CARR: The most important thing is
to bring the expenses down. Last year expenses grew at 13%, whereas revenues
only grew at 2.7% and clearly that is formula for loss and it's a formula
WILENIUS: The postal services regulator
now wants thirty per cent of the market in bulk letter deliveries opened
up within months. That's the recommendation of Postcomm Chairman Graham
Corbett. But he also wants sixty per cent opened up in two years and a
hundred per cent within four years, that's by 2006.
This is Allan Leighton
the Chairman of Consignia. He's been brought in from Asda to try to bear
down on soaring costs. Although he's ready to face up to competition from
private companies, he wants it to be at the same pace as the rest of Europe.
He's concerned that the British regulator wants to push ahead with total
liberalisation well before our European competitors.
ALLAN LEIGHTON: The Postcomm pace for us
is very difficult because, I mean it accelerates competition, it's competition
which is faster than the rest of Europe and we just think that's basically
unfair and you know, so we're holding our hands up saying you know, can
we go at the same pace as everybody else, why do we need to go faster.
CARR: What we've got now is an
opportunity to bring in competition, almost immediately and what's most
important, is that we know that by the end of 2006, we will have a fully
liberalised market and that's what this industry needs. It needs certainty,
it needs to know when things are going to happen and in order to do that,
you must have an end date.
WILENIUS: If the market is opened
up it's private companies like DHL, owned by Deutsche Post, which want
a large slice of Consignia's business. But others threatening the Royal
Mail, including TNT and Business Post. But the Opposition feels competition
will make letter delivery more efficient.
WHITTINGDALE: If you look at the record
in other utilities where competition has been introduced, the benefits
to the consumer have been enormous and certainly I think that competition
will act as a driver to improve efficiency and will result in a better
standard of service for the consumer.
WILENIUS: But lifting the Post
Office's letter monopoly could mean the end for parts of Consignia. Already
private companies like Hays, an express delivery expert, are making profits
handling some mail for a hundred large firms. Now they want more access
to some of the highly profitable bulk letter business.
HOYLE: I think the private companies
that want to enter into the market will have the ability to cherry pick
because what we're not seeing is the service being opened up to fair competition,
because I think that's important. People recognise and Europe says that
we ought to have competition, but what we're not seeing is fair competition
within the postal service.
WILENIUS: Without the protection
of the traditional letter monopoly enjoyed by the Royal Mail and the Post
Office, Consignia would inevitably lose parts of its business to private
companies. Indeed this could jeopardise the universal service it now provides.
At the moment often uneconomic and expensive rural services are subsidised
by the more profitable business generated by the big users.
HOYLE: The one thing that people
appreciate is wherever you live, it costs the same price to send a letter
and to receive that letter. We know that the service is equal across the
country and that's important. The moment that you begin to alter that and
it' no use the Postcomm saying well, we have a universal agreement. The
universal agreement is with the Post Office and Royal Mail only and unfortunately
the same rules do not apply to those that will cherry pick the market and
unfortunately, if you're losing money, that service cannot continue and
something has to give.
WILENIUS: It's not just rural services
which could be at risk. This area of Gloucester depends on its local Post
Office for access to services ranging from pensions and benefits to basic
banking. But there are fears these sort of services across the country
could be under threat from Consignia's plans to close 3,000 urban Post
Offices in the near future.
This Post Office has an
important role to play in the community, as a social service as well as
a postal service. Consignia says it needs to shed jobs and improve productivity
to cut costs. But there are concerns that cutting the number of branches
will undermine that valued social role.
HAYES: The less outlets there are
for any organisation whatever company, it means it's less of a recognised
brand and so obviously the less postal outlets there are, the less likelihood
is of people using that particular service and let's not forget also, urban
post offices are also where pensioners, where you know disabled and the
like people meet to collect their benefit, it's you know, something called
society and that's what these branch offices are all about.
WILENIUS: But perhaps the biggest
problem of all for the government is Britain's love affair with the Royal
Mail. The idea that the post will get through, even to the most far flung
parts of the country, at the same price for all, is part of our heritage,
part of our society. It's what millions of people have grown up to expect.
WILENIUS: It's the image immortalised
in the 1930s documentary 'Nightmail'. Trade Unions and Labour MPs are now
lining up with groups all over the country to oppose plans to introduce
more competition into the post. There are signs that their campaign is
having an effect on public opinion. A poll conducted by NOP for the Communication
Workers Union officially released today, shows that most people are opposed
to opening up the postal system to competition. When asked "Do you think
the Royal Mail should have to compete with private firms for letter delivery,
or not, seventy-five per cent said 'No' while twenty-five per cent said
'Yes.' And people in Scotland were even more concerned. There, eighty
per cent said 'No' to competition.
HAYES: Our polls show that seventy-five
per cent of the people we polled believe the competition is not the solution
to the problems the Post Office currently face. I think that's a commentary
also on the idea of public services, it shows that people recognise the
Post Office is a public service and competition is not the solution favoured
by the vast majority of the British public.
WILENIUS: But there's also mounting
opposition on the Labour backbenches. More than one-hundred-and-fifty Labour
MPs have signed up to a House of Commons motion calling on the government
to protect postmen and rein back the regulator. An alliance of rural post
users, unions and Labour MPs is mounting powerful opposition to his proposals.
To say that Ministers are in a panic over the future of the Royal Mail
is a bit of an understatement, because no matter what they do they'll have
problems. If the Postcomm's proposals are watered down, they'll be attacked
for buckling under union pressure. But if those plans go ahead unchanged,
they'll stand accused of destroying one of the country's most cherished
public institutions in Britain.
KATE HOEY MP: I think it could be the ending
of a great public service that has done this country proud for many, many,
many years. I'm very worried indeed that the competition is going to be
far too much of it, far too quickly. There is absolutely no reason why
this country should be going ahead of the rest of Europe on competition
and I just cannot understand how the regulator is being allowed to get
away with what seems to me taking much more power than Parliament actually
meant it to have.
WILENIUS|: There could still be
a deal. If so, it looks as though this will involve a delay in implementing
the regulators' proposals and more financial help from the government to
Consignia, as well as a rise in the cost of posting a letter. But any weakening
of the Postcomm proposals would provoke allegations of government interference.
CARR: We can see no argument for
delay and we would be suspicious, that pressure that been applied, unfair
pressure had been applied to the regulator, in making his judgements. He
is an independent regulator and should not be subjected to political persuasion
WHITTINGDALE: Ministers have been interfering
almost on a daily basis and the consequence is that the morale of the people
who work in the Post Office has collapsed almost completely. They feel
that they are being made to carry the can for the failures of ministers
who have prevented them from taking the actions that are necessary.
LEIGHTON: I don't think it's anything
to do with the government Ministers, I mean this is the whole thing, I
mean for us the most important thing is, we've got to do what we believe
is commercially right for this organisation, and my role is to make sure
that that is what happens. Now, I'm sure that we'll have a difference of
opinion with elements of the government, with the regulator, with Postwatch
and with everybody else who are involved here. The whole thing for me,
which is the great thing about democracy, is you put your case and the
people with the best case win the argument.
WILENIUS: Ministers have been reluctant
to go public with their views on the future of Consignia, although the
government is the only shareholder. But senior Labour MPs are now urging
the Trade and Industry Secretary to abandon this policy and put pressure
on the regulator.
HOEY: There's no point Patricia
Hewitt continually passing the buck and saying this is now down to Postcomm.
Ultimately, the government runs the Post Office, controls the Post Office
and I think they have to now tackle this and actually go back to Postcomm
and come back to Parliament if necessary to change the legislation, because
we have gone too far on this and I'm afraid it is going to make us very,
very unpopular, apart from it being actually wrong.
HAYES: If you get it wrong on
the Post Office people won't forget. People will remember the person that
saved the Post Office, they'll never forget the person who destroyed the
Post Office. If they backed the idea of a publicly owned Post Office they'll
be rewarded at the ballot box at the next election. If the idea is that
if it's the private sector alone can solve all the Post Office's problems
then there will be a prize at the ballot box, but it will be a bitter fruit
that they'll be picking up.
WILENIUS: Like many governments
before them, this Labour government wants to bring the Post Office and
the Royal Mail into the frenetic hi-tech modern world. Postcomm's proposals
have generated powerful opposition from unions and Labour MPs. But now
the public has been shown to be against it, that might be decisive in persuading
Ministers to protect the future of the public post.