03 May 2002
The Commons' Public Accounts Committee has launched a blistering attack on Postcomm, the body set up in 2000 to end the monopoly enjoyed by Consignia, as the Post Office was renamed, and oversee the deregulated market.
Plans for more competition could threaten the existence of a national system at a uniform price because Consignia's profitability could tumble as a result, MPs said, adding that the company is running at a loss of £1.5m a day.
Committee chair Edward Leigh questioned Postcomm's ability to combine the preservation of this service with a brief to generate competition.
'This task involves delicate management of a conflict of priorities that may be beyond them and which could even result in Consignia going out of business,' he said.
'I cannot escape the fear that Postcomm's approach may jeopardise the universal service. It is making critical decisions without the right information and its analysis is suspect. It simply does not know what impact its approach to increasing competition will have.'
The report notes that Postcomm has no staff with direct knowledge of the postal industry and instead relies on consultants. 'These are not a substitute for in-house expertise,' MPs concluded.
They said that if competition were to be introduced quickly, Postcomm, which controls the prices Consignia can charge, would have to give it the freedom to adjust its prices to cover costs and match competitors' prices.
The report found that the regulator had ignored the risk that rivals would concentrate on low-cost mail, leaving Consignia to deal with the most expensive and difficult postal services.
Tony Kearns, acting general secretary of the Communication Workers Union, said: 'Postcomm wants to risk the public postal system on an uninformed hunch that competition will improve the service. This is not regulation, it is gambling with the family silver.'
A Consignia spokeswoman said: 'This report is useful and we're looking forward to hearing Postcomm's response.'
PFmay2002
