Association releases hard hitting response to Royal Mail consultation and proposed USO cuts
Knowing how crucial the postal service is to the greetings sector as well as society at large, the GCA has not held back in its hard-hitting official response to Ofcom as well as issuing a press release to all consumer media outlining GCA members’ concerns, arguing the regulator may be in breach of its legal duties to businesses and consumers.
Straight after its latest talks with Ofcom, the GCA published its formal response to the regulator’s consultation over Royal Mail and the future of the universal service obligation – with a warning that the process may be in breach of the law.
With Royal Mail about to be taken over by Czech billionaire Daniel Křetínský, as the deal is set to conclude at the end of the month, the GCA is ramping up the dialogue over Ofcom’s proposals to accede to RM’s pressure to reduce second-class deliveries to two or three days per week, and relax legal delivery targets to make it easier for the company to achieve them.
GCA CEO Amanda Fergusson and association council members Mark Callaby, MD of Ohh Deer, and David Falkner, co-owner at Cardology, represented the industry at high level talks on Wednesday, 9 April, ensuring Ofcom heard directly from those at the heart of the industry about how the proposed changes could impact small businesses, creatives, and the millions of people who rely on greeting cards to stay connected, with the consultation closing the next day.
And yesterday, 14 April, the GCA released its full response – which can be read here – where it has argued the regulator may be in breach of its legal duties to businesses and consumers as the 2011 Postal Services Act requires an affordable postal service to be available six days per week – under the plans only unregulated first-class post, which has just risen for the sixth time in three years to an eye-watering and unregulated £1.70, will still be delivered every day except Sundays.
The consultation response says Ofcom has failed to adequately assess the wider economic impact of proposed changes; the proposals will not maintain an affordable postal service six days a week as mandated by legislation; it has not ascertained whether Royal Mail’s costs have been adequately assessed before recommending changes to the USO; and is failing to protect more than one million consumers in 37 locations across the UK forced into a pilot scheme of reduced delivery schedules with no consumer notification that stamp buyers may be getting a worse service than the one they paid for.
In its submission the GCA raises significant flaws in Ofcom’s data and modelling assumptions and concludes that, if the regulator continues to back the changes, it risks triggering a sharper-than-necessary decline in letter volumes, increasing the likelihood the taxpayer could be called upon to bail out Royal Mail in future.
It also highlights the extraordinary position where the regulator tasked with maintaining affordable postal services is acknowledging its proposals are likely to push first-class stamp prices even higher, with its own data showing 62% of consumers are sending fewer letters precisely because of rising prices.
Over 16,700 UK voters have now joined the GCA’s call for proper parliamentary scrutiny of any proposed change by signing the association’s petition asking for parliamentary scrutiny of any plans to change the USO and for MPs to regulate the price of first-class mail as well as mandate that Royal Mail meets existing delivery targets.
Having crossed the 10,000-signature threshold, the government must now respond to the GCA’s petition and the strength of feeling among business and consumers is also reflected in the industry association’s own data with 80% of consumers believing rising stamp prices and reduced delivery days will negatively impact small businesses and the UK economy, while three-quarters say these actions act against consumer expectations and are a step backwards.
Amanda said: “Greeting cards are the beating heart of personal post in the UK and, not only is this deeply valued tradition under threat, changes to the USO threaten to impact all of us who rely on Royal Mail to receive important communications, from cards to hospital appointments.
“Our detailed review of Ofcom’s proposals has demonstrated we now need proper answers from Ofcom and Royal Mail about their proposals. Our members are clear – a reduced service that’s already being piloted for thousands without proper parliamentary scrutiny will have a serious impact on their businesses.
“And consumers too are deeply concerned. The public response to our petition shows decisions about the postal service they treasure are too important to be left to Ofcom and Royal Mail alone. It’s time for MPs to get involved in proposals that, as they stand, will make the postal service less national, less affordable and less reliable.”
Interestingly, despite refusing all calls for special cheaper Christmas card stamps or a greeting card service, the health secretary Wes Streeting has just announced a dedicated postage class for the NHS to prevent patients from missing appointments due to delayed mail.
A letter to Ofcom, co-signed by both NHS and RM leaders and seen by the Telegraph newspaper, states the two organisations had “mutually agreed to the introduction of a new Royal Mail NHS-specific barcode” and outlined how this barcode will separate medical or appointment letters and prioritise them to be dispatched quickly.
Meanwhile, as the deal for Daniel Křetínský’s EP Group to take over Royal Mail’s parent company International Distribution Services nears its conclusion, the BBC has released a lengthy article by business editor Simon Jack examining “The curious case of why a billionaire wants to buy Royal Mail”.
Earlier this month, IDS said the takeover could be completed by the end of April as the deal cleared the final regulatory hurdles, with the journalist naming the billionaire as the new king of the 509-year-old service founded by Henry VIII, which still carries the royal cipher and is part of the fabric of British life.
