The UK postal regulator Postcomm, reporting on the progress of its long-term strategy review forthe liberalised UK mail market, said yesterday that government-owned Royal Mail may need “radical
transformation” to improve its efficiency.The group may have to learn from public postal operators in other European countries to makea “step change in efficiency and flexibility” through contracting out or franchising someoperations to third parties.
“Competition in the mail market is benefiting customers but Royal Mail is not respondingeither as effectively or as quickly as we would have expected to the challenge of competition andchanges in the market,” Postcomm said.
“Given Royal Mail’s current levels of efficiency, long term success requires majorinitiatives to reduce its cost base and make it more flexible to changing market conditions. Overtime, more radical transformation may need to be considered.”
“We also want to consider the alternative ownership and governance structures that have beenadopted in some other government-owned and non-privatised regulatory sectors and whether theseoffer useful insights for the mail industry and its regulation,” it added in the document.
The Strategy Review has been looking at whether Postcomm needs to reshape its regulatorypolicies. The regulator said it aimed to move to less detailed regulation if Royal Mail couldimprove its cost transparency and respond better to the changing market, and would scale back theregulatory regime from 2010 onwards.
Royal Mail workers are in the middle of a series of strikes over pay and the transfer of 70High Street post offices to retailer WH Smith. The Communication Workers Union says 40,000 jobscould go if wide-ranging Royal Mail reforms go ahead.
Meanwhile, Postcomm has previously criticised the postal group for excessive labour costsstifling reform.
