Universal service ‘uneconomic’

p10866UK-News-9-1

Published: Wednesday 26th November 2014 by The News Editor

Comments (0)

The head of the Royal Mail has issued a stark warning that “cherry picking” from competitors threatens the future of the universal service, under which letters are posted anywhere in the country for the same price.

Chief executive Moya Greene told MPs that the universal service obligation (USO) cost £7.2 billion a year because of the high cost of delivering post to rural and remote areas of the UK.

She told the Business Select Committee that the USO was “essential” for most people, but it had a high fixed cost and needed internal subsidies to make the economics work.

“Low cost, high density areas are needed to cross subsidise suburbs and rural areas which are much higher cost.

“If you allow cherry picking you undermine the economics.”

The decline in letter deliveries is running at 4-6% a year and competitors taking business off the Royal Mail in urban areas was making the USO “uneconomic”, she said.

Officials from competitors Whistl and UK Mail denied they were cherry picking work, or that they threatened the universal service.

Published: Wednesday 26th November 2014 by The News Editor

Comments (0)

Local business search