THE PERIL OF PRIVATIZATION
‘Don’t make panicked cuts’: proposed Royal Mail shake-up worries businessesBUILD THE POPULAR FRONT!
Alex Lawson
Sat, 16 March 2024
Royal Mail argues that the sharp fall in letter volumes over the past two decades makes its business model unsustainable.
Photograph: Bjorn Birkhahn/Alamy
David Falkner may spend his days selling pop-up cards of Star Wars stormtrooper helmets and Harry Potter’s Hogwarts, but he’s intent on ensuring his industry is taken seriously. “We punch well above our weight,” said the co-founder of Cardology, of the £1.5bn greetings card industry.
Falkner and a cluster of fellow card retailers gathered in London this week to voice concerns over proposals to cut back Britain’s postal service.
In late January, the communications regulator, Ofcom, set out a series of options for the future of the service, namely creating a slower, more reliable service or cutting the number of days on which Royal Mail delivers letters, from six days a week to five or even three. A costly next-day service would be retained.
The consultation is expected to ultimately lead to a reform of the universal service obligation (USO) – the company’s mandate to deliver to every address in the UK at a fixed price, six days a week.
Royal Mail argues that the sharp fall in letter volumes over the past two decades makes its current business model unsustainable. As part of the process, Ofcom is hosting a series of events for interested parties – from small businesses to direct mail companies – to chew over the potential impact.
“This feels to me a bit like a Beeching cut, it feels panicked,” said Falkner, sitting on stage at Ofcom’s offices overlooking St Paul’s Cathedral. He was referring to the 1963 Beeching report, which led to huge cuts to rail lines and stations nationwide, and has long been lamented as an overzealous cost-cutting exercise that damaged the railways in the long term. Businesses fear the postal cuts could have the same effect.
Much of the focus after Ofcom’s announcement has been on the impact on consumers – including elderly and vulnerable people – but businesses are also worried.
“Of course letters have declined with email, but greetings cards are still very much a paper-based business, it’s a really strong economy,” said Heidi Early, the owner of Early Bird Designs, a greetings card and gift shop in Stoke Newington, north-east London. “It’s growing, my business is thriving and it relies on a reliable and affordable postal service.
“My customers are still sending cards but I’m getting comments every day about how unreliable the postal service is and how expensive it’s become in relation to the cost of a greetings card.”
Woodmansterne Publications makes and sells 40m cards a year, from a site in Hertfordshire once owned by John Dickinson, a pioneer of both cardboard and the gummed envelope, who died in 1869.
The managing director of the business, Seth Woodmansterne, expressed concern over Royal Mail’s delivery problems, and the time it may take to reform the USO – in part because an election may delay parliamentary intervention if it is needed. “Royal Mail is failing on a daily basis currently, every day that it does not deliver is eroding public confidence,” he said. “I would like to see something happen urgently.”
Away from cards, the Professional Publishers Association – representing everything from Farmers Weekly to the Radio Times – argued the magazines’ time-sensitive information will be delivered late. The organisation’s Eilidh Wilson said readers have unsubscribed because of an unreliable service “and that business gets lost”. She said that moving production lines to allow for changes to posting schedules is not practical.
The majority of letters sent are not covered by the USO, instead handled by a combination of bulk mail handlers – including UKMail and Citipost – and Royal Mail. However, the network is the same and another row with the Communication Workers Union could be brewing.
“If the unions cannot be brought on side, then we run a danger that we accept a specification that is lower but still get a worse service, people are disappointed, the volume declines and the costs go up,” said Jon Wilkins, a director of UKMail.
Ofcom’s analysis suggests savings of £100m to £200m for Royal Mail if it reduces to a five-day service, and £400m to £650m to cut to three. The company has yet to publish its own analysis, and its director of corporate affairs, Jenny Hall, said the latter figure was “a bit toppy”.
However, recent history suggests signifiant job cuts would cause a union standoff and, potentially, further strikes. “This is not about a big change to job cuts exercise,” Hall added. “When you’re a fundamentally loss-making business, your ability to invest in some of those things that are ultimately better for customers is quite limited, so this for us is also about a platform for growth and a platform to sustain as many jobs.”
With responses to Ofcom’s consultation due next month, lots of questions remain over how Britain’s future postal service will eventually compare with the rest of Europe, and whether Rishi Sunak will hold his line in opposing any cuts to delivery days. Answers on a (delayed) postcard.
David Falkner may spend his days selling pop-up cards of Star Wars stormtrooper helmets and Harry Potter’s Hogwarts, but he’s intent on ensuring his industry is taken seriously. “We punch well above our weight,” said the co-founder of Cardology, of the £1.5bn greetings card industry.
Falkner and a cluster of fellow card retailers gathered in London this week to voice concerns over proposals to cut back Britain’s postal service.
In late January, the communications regulator, Ofcom, set out a series of options for the future of the service, namely creating a slower, more reliable service or cutting the number of days on which Royal Mail delivers letters, from six days a week to five or even three. A costly next-day service would be retained.
The consultation is expected to ultimately lead to a reform of the universal service obligation (USO) – the company’s mandate to deliver to every address in the UK at a fixed price, six days a week.
Royal Mail argues that the sharp fall in letter volumes over the past two decades makes its current business model unsustainable. As part of the process, Ofcom is hosting a series of events for interested parties – from small businesses to direct mail companies – to chew over the potential impact.
“This feels to me a bit like a Beeching cut, it feels panicked,” said Falkner, sitting on stage at Ofcom’s offices overlooking St Paul’s Cathedral. He was referring to the 1963 Beeching report, which led to huge cuts to rail lines and stations nationwide, and has long been lamented as an overzealous cost-cutting exercise that damaged the railways in the long term. Businesses fear the postal cuts could have the same effect.
Much of the focus after Ofcom’s announcement has been on the impact on consumers – including elderly and vulnerable people – but businesses are also worried.
“Of course letters have declined with email, but greetings cards are still very much a paper-based business, it’s a really strong economy,” said Heidi Early, the owner of Early Bird Designs, a greetings card and gift shop in Stoke Newington, north-east London. “It’s growing, my business is thriving and it relies on a reliable and affordable postal service.
“My customers are still sending cards but I’m getting comments every day about how unreliable the postal service is and how expensive it’s become in relation to the cost of a greetings card.”
Woodmansterne Publications makes and sells 40m cards a year, from a site in Hertfordshire once owned by John Dickinson, a pioneer of both cardboard and the gummed envelope, who died in 1869.
The managing director of the business, Seth Woodmansterne, expressed concern over Royal Mail’s delivery problems, and the time it may take to reform the USO – in part because an election may delay parliamentary intervention if it is needed. “Royal Mail is failing on a daily basis currently, every day that it does not deliver is eroding public confidence,” he said. “I would like to see something happen urgently.”
Away from cards, the Professional Publishers Association – representing everything from Farmers Weekly to the Radio Times – argued the magazines’ time-sensitive information will be delivered late. The organisation’s Eilidh Wilson said readers have unsubscribed because of an unreliable service “and that business gets lost”. She said that moving production lines to allow for changes to posting schedules is not practical.
The majority of letters sent are not covered by the USO, instead handled by a combination of bulk mail handlers – including UKMail and Citipost – and Royal Mail. However, the network is the same and another row with the Communication Workers Union could be brewing.
“If the unions cannot be brought on side, then we run a danger that we accept a specification that is lower but still get a worse service, people are disappointed, the volume declines and the costs go up,” said Jon Wilkins, a director of UKMail.
Ofcom’s analysis suggests savings of £100m to £200m for Royal Mail if it reduces to a five-day service, and £400m to £650m to cut to three. The company has yet to publish its own analysis, and its director of corporate affairs, Jenny Hall, said the latter figure was “a bit toppy”.
However, recent history suggests signifiant job cuts would cause a union standoff and, potentially, further strikes. “This is not about a big change to job cuts exercise,” Hall added. “When you’re a fundamentally loss-making business, your ability to invest in some of those things that are ultimately better for customers is quite limited, so this for us is also about a platform for growth and a platform to sustain as many jobs.”
With responses to Ofcom’s consultation due next month, lots of questions remain over how Britain’s future postal service will eventually compare with the rest of Europe, and whether Rishi Sunak will hold his line in opposing any cuts to delivery days. Answers on a (delayed) postcard.
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