Royal Mail loses its monopoly on letters

Postal competition to allow businesses to shop around

Royal Mail’s monopoly on letters is to end next year, promising further competition that could benefit small businesses.

Postal service commission Postcomm revealed today that the UK market will be liberalised from January 1 2006, 15 months earlier than planned, allowing other licensed companies to deliver letters and charge customers for their services.

 

Although the move does not affect packages, it will see more than 350 years of tradition come to an end and give business owners the chance to shop around for an alternative service.

The decision was reached after a three-month industry consultation provided a clear majority in favor of extended competition.

Nigel Stapleton, chairman of Postcomm, said: “Today’s decision gives customers a real choice and increases the pressure on Royal Mail to raise its game and take on the competition.

“However this is only the first step in a process which the commission hopes will eventually see market forces replace regulation as the main driver of an efficient and effective mail industry.”

Postcomm are also concerned that only Royal Mail are exempt from VAT, creating an unfair price advantage over rivals.

Royal Mail has come under fire in recent years for continually failing to hit its performance targets. Last year’s mass strikes, which had a particularly detrimental effect on businesses in London, is just one of the reasons why many bosses will welcome Royal Mail becoming less dominant.

Nick Goulding, chief executive at the Forum of Private Business (FPB), said: “The Royal Mail has been a burden on small businesses for some years. Small businesses cannot just wait around for that all-important check.

“We want to see the new services deliver. They must not follow Royal Mail’s example and deliver the post on time. We wait with baited breath to see if the system will actually improve.

“They will have to pull their finger out and provide value for money.”

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