Rural communities could suffer postal service loss

THE future of a postal service which is available to everyone wherever they live in the United Kingdom at a standard cost could be at risk if more powers are not given to regulator Ofcom, a Westminster committee has warned.

As more firms enter the delivery market there are fears isolated communities will suffer. Picture: Getty
As more firms enter the delivery market there are fears isolated communities will suffer. Picture: Getty
As more firms enter the delivery market there are fears isolated communities will suffer. Picture: Getty

A report from Westminster’s Business, Innovation and Skills (BIS) Committee said that the “universal service” available across every area of the country is not under immediate threat but warned that in a rapidly changing postal market this could change.

Rural communities, such as those in the Highlands and islands, would be most at risk if a universal service did not continue. Residents of rural areas have long campaigned for fairer postal charges for deliveries. Some communities have been charged up to 500 per cent more than the standard delivery rate by private courier companies.

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Consumer experts warned that Scots living in remote areas, as well as people who rely heavily on the postal service, such as the elderly and disabled, could be cut off from society if the universal service is not continued.

The report said Ofcom needed to protect the Royal Mail in a market which is experiencing a battle for lowest price competition.

New entrants to the market such as Whistl – an arm of the Dutch mail group PostNL, which aims to deliver to 42 per cent of the UK within the next four years – and firms which deliver parcels directly, such as Amazon, are putting pressure on the Royal Mail.

It said the regulator needed to help combat any “race to the bottom” of postal workers’ wages, terms and conditions and recommended that Ofcom investigate the impact of any downward pressure on wages, terms and conditions of postal sector employees.

Adrian Bailey, chairman of the BIS committee, said: “The universal postal service is available to everyone living in every part of the United Kingdom.

“It is an essential service to many people, especially those living in rural areas, to those less able to travel, to older people, and also to blind and partially sighted people. While our evidence indicated the universal service is not under immediate threat, we believe Ofcom needs to outline in more detail how it would respond quickly to changes in postal market conditions which may endanger the USO.”

He added: “Ofcom is required to perform a fine balancing act between ensuring the minimum standards of the Universal Service are maintained while encouraging a competitive market in the postal sector.”

Royal Mail, which was privatised in a stockmarket flotation in October 2013, welcomed the politicians’ recommendations.

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It said: “As Royal Mail set out in its 2014 submission to Ofcom, we share the committee’s concerns that, while the USO is not under immediate threat from cherrypicking competition, this could change quickly, given the ambitions of some direct delivery competitors.”

Citizens Advice Scotland consumer spokeswoman Kate Morrison said: “We support these findings and welcome the emphasis given to protecting our universal postal service. Our own research has shown that consumers still rely on and value the universal service. In particular, people in rural areas, as well as older, disabled or housebound people, are more likely to use postal services and to feel cut off from society if these are threatened.

“Access for vulnerable and rural consumers must therefore be maintained at affordable rates. With this in mind, we want to see Royal Mail focus on efficiency savings and improving their services to meet consumer expectations, particularly in light of recent stamp price increases.”