Postal rates shake-up could hit small businesses

Consignia, formerly known as the Royal Mail, may soon lose its monopoly on delivering letters.


Consignia, formerly known as the Royal Mail, may soon lose its monopoly on delivering letters.

Consignia, formerly known as the Royal Mail, may soon lose its monopoly on delivering letters. At the moment the company handles over 80 million each day. But this change could have unknown consequences for businesses up and down the country.

The Office of Postal Communications (PostComm), set up recently by the Government to regulate UK postal services, is currently considering a proposal to offer FTSE-100 company Hays a licence to deliver mail in certain areas.

If this goes through and such a measure is repeated across the country, then Stuart Sweetman, managing director for strategy at Consignia, reckons that “the only customers to benefit will be large business mailers.” He warns that “most customers will face dearer postage prices”.

Consignia would prefer to see the current universal system retained, but with some changes incorporated. At the moment Consignia has the licence to post all items costing less than £1, or weighing under 350g.

In the companyÂ’s response to PostCommÂ’s consultation paper on competition, Consignia recommends “a gradual and controlled lowering of the price and weight limits”. However, three quarters of postal items delivered weigh less than 20g.

The Federation of Small Businesses (FSB) has yet to deliver its official response to PostCommÂ’s paper. However, the FederationÂ’s David Bishop says the FSB believes in a “universal postal service at a uniform price”, such as the one Consignia currently delivers. This helps smaller businesses conduct day-to-day operations.

However, the FSB is also keen on opening up services to enterprise and competition, as some smaller businesses might benefit.

Direct mail is on the increase as an advertising medium. Last year the market grew by over seven per cent, according to the Direct Mail Information Service. Thus enterprises that regularly use this marketing method might stand to gain from greater liberalisation.

Of interest is what has happened in Sweden since the country completely liberalised its postal services in 1993. Since then, the price of a basic postage stamp has risen 72 per cent. Whilst in the UK, a first class stamp has dropped in price by about 10 per cent in real terms, after stripping out inflation.

Responses to PostCommÂ’s consultation on competition must be lodged by 28 September. For more details visit www.psc.gov.uk .

With thanks to Lloyds TSB Success4Business. For more news and information visit www.success4business.com .

(14/9/01)

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