Is Royal Mail fattening itself up for privatisation? 6,500 post box collections slashed in a year

By This Is Money Reporter

Updated: 04:42 EDT, 17 June 2012

Last post: Royal Mail is facing harsh competition in urban areas

Royal Mail stood accused this weekend of boosting profits ahead of privatisation by cutting a massive 6,500 post box collections.

In the 12 months to March 2012 Royal Mail cut 9,689 collections from some post boxes, while adding 3,236 at others - resulting in a net loss of 6,453 collections.

The collection figures were disclosed after a Freedom of Information request by shadow postal affairs minister Ian Murray, who said he believed Royal Mail was cutting costs ahead of privatisation.

'They are trying to fatten up the coffers to make it sellable. Collections are being reduced while prices are increasing.'

It was also revealed the postal service has brought forward final collection times at a net 4,000 post boxes over the year to the beginning of March, meaning customers have to post their letters earlier in the day.

The final collection times for 10,006 mail boxes were brought forward, while the times were extended for 5,719.

Royal Mail spokesman Heulyn Gwyn Davies said: 'This is sensible ongoing business management which simply reflects changing mail volumes in specific locations.'

He said the number of post boxes in the Royal Mail network has increased by 48 over the last three years to 115,271 despite a decrease in mail volume, and added that the postal service makes 270,000 collections a day.

But Mr Murray said he was worried the cuts to collections had not finished. 'Cutting 6,000 collections is a significant chunk,' he said.

'They key questions is if the cuts have now stopped. We have not done analysis yet of where they have added the collections but I suspect it will be in urban areas where they have competition.

'There are only two options for selling - an IPO (initial public offering) to the public or a sale to a venture capitalist company. An IPO is unlikely in this financial climate so my real worry is the only people who could afford it would be a venture capitalist company.

Post haste: Last collection times have also been brought forward at thousands of boxes

'When you have a company that is difficult to sell, there is only one thing you can do which is cut costs.'

The Government is pressing ahead with privatising the Royal Mail in the face of continued opposition from unions representing postal workers while earlier this year the cost of posting letters increased to record levels.

Royal Mail introduced a 14p increase in the cost of first and second-class stamps to 60p and 50p.

The postal operator has defended the cuts to collections, saying that it was adjusting the frequency and times of collections at its post boxes to suit the demand and to save money.

Mr Davies said: 'Royal Mail is committed to maintaining one of the highest quality postal services in Europe. We collect and deliver six days a week, often more than once a day, while the EU Directive only requires us to collect once a day, five days a week.'

The company has to stick to strict final collection times for each post box under an agreement with postal regulator Ofcom, Mr Davies said.

'There are strictly limited windows for final collection times agreed with Ofcom designated for every post box, whether urban, suburban or rural.

'From time to time, as a matter of good business practice, we make adjustments to the final collection times within the allowed windows, or the number of collections per day. We may plan earlier collection times for low volume boxes and later collection times for high volume boxes.

'This process can involve either extending or bringing forward collection times. It can also mean adding or reducing collections.

'We notify both Ofcom and Consumer Focus well in advance of any proposed changes to collection times for individual post boxes. We also want to be as clear as we can with local residents where changes are proposed.

'So, we publish an information notice at least two weeks in advance on each post box concerned, with a contact number for customers to ring if they wish more information and details of the collection times of other post boxes nearby.'

Robert Hammond, director of postal policy at Consumer Focus said: 'Consumers need convenient access to a post box and that is why there are strict Ofcom rules about how many post boxes an area should have, based on population density.

'Against a backdrop of rapidly declining mail volumes the closure of some post boxes is understandable. However, customers must be made aware of these changes and there must be an alternative post box nearby. Post box closures or changing collection times should not result in problems with access or a lower quality of service for customers.

'This is something that we will be discussing with Royal Mail.'