Everything you need to know about any current Government involvement in the Private Sector is summed up beautifully with the current mess that is Royal Mail (doesn’t it feel nice not to have to pick on the banking sector for once?).
The Background Bit……
Royal Mail have a Government licence to provide a postal service 6 days a week at a uniform price regardless of whether the letter is travelling 6 miles or 600 miles.
The Issue……
From 30 April 2012, a first-class stamp will rise in price from 46p to 60p (30%) and a second-class stamp will go up from 36p to 50p (39%) as the regulator has lifted price controls.
The Blame……
Now I’ve got a real issue with this, which is compounded by the fact that I don’t know who to blame. I could really do with some help to understand who to blame so that my ‘melt down’ is directed appropriately.
Option 1: Is it Moya Greene, the Royal Mail Chief Executive who has run the company so badly that there needs to be a 30 – 39% increase in the cost of its service?
Option 2: Is it the Government (always my favourite) for creating such a ludicrous licencing system that creates a significant barrier to other companies joining the postal market (and driving down costs as a consequence)?
Option 3: Is it the Monopolies & Mergers Commission for not doing their job to create a fair and freer market?
Option 4: Is it the regulator, Ofcom, for permitting the increase in stamps without due diligence on whether operation costs could be reduced rather than simply continuing in the same inefficient manner and increasing income to pay for it?
Option 5: Is it ‘us’ as we simply just accept it without any fuss?
The maths……
Royal Mail’s letters business made a loss of £120 million last year in delivering 16 billion letters. If the price of stamps went up by just 1p, then that would create an additional £160 million. Correct me if I’m wrong, but I believe that turns a £120 million loss into a £40 million profit.
I’m in complete bemusement.
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