Postcomm issues first licence to Consignia
26 March 2001
Postcomm, the postal services regulator, today published the first licence for Consignia, formerly the Post Office, under the Postal Services Act 2000.
The licence allows the Consignia to continue to provide postal services across the whole of the UK. Its terms ensure that there will continue to be a universal postal service at a uniform tariff, as required by the Act.
Announcing the issue of the licence, Graham Corbett, Postcomm’s chairman, said: “Licensing Consignia is the first step in Postcomm’s task to set a framework for a healthy and competitive postal services sector across the UK which will bring choice, innovation and improved standards of service to all customers.”
Conditions in the licence require Consignia to:
- hold prices in real terms on all its core products for two years;
- deliver improved standards of service; and
- allow potential competitors fair access to parts of the post office network.
Prices
The licence sets an interim price control which limits the prices Consignia can charge for its services where it is the only service supplier or where there is not yet fully effective competition.
For most mail services prices must remain unchanged at today’s prices unless Postcomm consents to an increase. For larger items (essentially those costing £1 or more) and non-core services, prices cannot rise by more than inflation (ie they must remain stable in real terms). In other areas, such as express courier services, where there are already many established players in the market, Postcomm will not intervene.
During the two-year interim price control, Postcomm will continue its detailed studies of the cost of supplying the universal service, the relative efficiency of Consignia and the dynamics of the market. At the end of that period we expect to set a full RPI-X price control regime for those areas of Consignia’s business where it remains a monopoly or dominant supplier.
Standards of service
The licence sets service standards for Consignia, which have been agreed with Postwatch, the new Consumer Council for Postal Services, and are designed to ensure that Consignia improves its performance over the next two years.
For example, Royal Mail has agreed to improve its delivery target to 92.5% of first class letters arriving the day after posting. At present the figure is 89%. Consignia will submit a quarterly report on its performance against all its targets to Postcomm and Postwatch.
Postwatch will have further key responsibilities under the terms of the licence. For example, Consignia’s licence requires it to agree with Postwatch a formal complaints handling procedure, a new compensation scheme and arrangements to provide clearer information to customers.
Access
The terms of Consignia’s licence also ensure that potential future competitors will be able to have effective access to the UK postal services market on terms which are fair both to them and to Consignia. Large users who already have access to the network will continue to do so.
Notes for Editors
The licence is valid for a period of 15 years. However, the key conditions on price control and service standards will be reviewed within two years, to ensure that they remain appropriate as the postal market changes and is progressively opened to competition.
A full decision document on the licence consultation will be issued shortly.
