Royal Mail Want A Get Out Clause To Its Universal Service Obligation, Should They Be Able To Do This?

[barney15c]

Before privatisation it was given that RM would have to meet its obligation to the universal service commitment. They were fully aware of increased competition which would increase. Despite making huge profits RM are now bleating that the service may be cut back from its 6 days a week delivery service. Which is strange as they announced a sunday service for parcels was being piloted in selected areas. I have found that as well as closures the service has got increasingly worse with deliveries getting later and later. Should RM put up and shut up and start competing or will they have to scale back services to keep up.

[DaisyNonna]

A birthday, exciting! No. Royal Mail delivery not expected until the afternoon. Card from Daughter and son-in-law. Lovely. No card from grandchildren, sad. Phone call, both cards posted together in same post box. Upset grandchildren, upset parents, upset grandmother. How much was the postage? Enough to expect 1st class to be so.

[Noe-schitt]

And no one saw this coming

[ToraToraTora]

Market forces dear boy, plenty of competition out there.

[New Judge]

The problem with this particular issue, 3Ts, is that, left to market forces, large chunks of the country would receive no mail deliveries at all. None of the private delivery companies (including Royal Mail if the Universal Obligation is removed) are going to send a van to the middle of Scotland to deliver a birthday card to a crofters' cottage five miles from the nearest town. Large numbers of small villages and hamlets will have no postal delivery service at all.

For once I believe that market forces are not going to provide everybody with a decent postal service and I believe that such a service is the mark of a civilised, developed country. The Royal Mail knew full well of its obligation when they went private (in the same way that BT had its obligations upon their privatisation in 1984). Nothing has changed in the few months since their share launch and their bleating now is unwarranted.

[DaisyNonna]

What about us poor peasants who only want to stay in touch through the mail. Not everyone has a computer or mobile phone. Children (and grannies) like to have cards they can keep. People (including children) appreciate a handwritten letter. So few these days.

[youngmafbog]

Totally agree judge and I suspect alot of speculation that has driven the price up is on the backthat it will remove this obligation,

[Wharton]

Scotland intends to nationalise (Royal) Mail after independence and promises to deliver.

[Gromit]

// Reforms introduced in 2011 and 2012 ensure that Royal Mail is the designated provider of the Universal Service until at least 2021 (10 years from the passing of the Postal Services Act 2011). //

When Royal Mail went private they were aware of this obligation.

There are 3 scenarios that will play out...

1) It would take Parliament to release them from it. There is very little time left before the General Election to draft the legislation and get it passed through Parliament before then. Even if the Conservatives have already written an amendment, there would be plenty of rebels, Conservative MPs in the Shires are not going to vote to deprive their constituents of a full postal service so near to the time they will be wanting votes. So Royal Mail will have to lump it.

2) Royal Mail will deliberately not fulful its obligation to provide a full service, hoping the fines will be less than the cost of deliving to remote areas.

3) The Government will pay a huge subsidy from the taxpayer to Royal Mail to provide a Universal Service.

What is your betting it will be option 3?

[Old_Geezer]

Maybe all delivery companies in the UK should be subject to the same obligations. The initial decision to allow private companies to cherry pick the profitable parts of the service only was rather questionable.

[Gromit]

// Maybe all delivery companies in the UK should be subject to the same obligations. The initial decision to allow private companies to cherry pick the profitable parts of the service only was rather questionable. //

They had a monopoly which is never good for consumers. Opening up parts of the mail service to competition was to bring prices down and has worked.

The final mile, the doorstep deliver is the expensive part of the universal postage system. Royal Mail could be allowed to contract out this final bit to local companies such as couriers or cargo bike deliverers.
Http://www.wagl.com

[Gromit]

Should have been...

http://www.wagl.co.uk

[barney15c]

Gromit
3) The Government will pay a huge subsidy from the taxpayer to Royal Mail to provide a Universal Service.
What will also be taken into consideration is that the price paid to the government for RM will be eroded away in subsidies. Also it will be questioned if the government did indeed sell off the RM too cheaply and we will actually be making a huge loss once the selling price is eaten up by what is paid out in subsidies.
Once again the taxpayers will be screwed over by an incompetent CONLIB government.

[Old_Geezer]

Worked up to a point. Private companies now provide service but the RM is truly screwed by its obligations, when they used to be able to cross subsidise the profit making part to the loss making part. This change is highly questionable.