Postcomm calls for part privatisation of Royal Mail

by Sarah Johnson Marketing Direct 15-May-08, 12:30

LONDON - Royal Mail is in need of a “radical transformation” says Postcomm as it calls for part privatisation of the government owned postal service.

In its second submission to the independent review of the postal market, Postcomm said Royal Mail needs private capital and a stronger set of incentives to enable it to restructure and become more profitable. The report warned that traditional mail is increasingly under pressure from electronic media and said Royal Mail's current business model is unsustainable.

"Part privatisation is the only way Royal Mail can ensure good management and efficiency," said Wanda Goldwag, Postcomm commissioner. "We are suggesting Royal Mail splits into two parts – with the Post Office in government ownership and the delivery and sorting side of the business part -owned by the Government and partly by private capital."

Royal Mail has said it is submitting its own recommendations to the independent review. The panel will then put together a report for the Government in order for Parliament to make its own decisions later in the year.

The Communication Workers Union (CWU) has called this "another bad decision by Postcomm".
Billy Hayes, general secretary of the CWU, said: "Postcomm has again overstepped its remit with this report. It has consistently been obsessed with the drive to develop the competition model and calling for privatisation is another step from an organisation that is ignoring its public service obligation."

The report by Postcomm also calls for action over VAT, from which Royal Mail is exempt but private operators are not, and the pressure from pensions. "VAT should be the same for any postal provider, we are not saying what that should be but we are saying it should be the same," said Goldwag.

"We are also saying the Government has to step up and deal with the pension fund for Royal Mail which is currently a millstone around its neck. A universal postal service is important because it makes for social cohesion. Traditional mail needs to remain a viable service as the way we communicate changes. The only way to do this is to add private capital," she said.