Did the Royal Mail put prices up so they didn't have to save money?
As you'll know, the Royal Mail have put the prices of stamps up again. However, did they do that instead of saving money on the way they do their business?
That's what some MPs are saying, and that the Royal Mail's customers are being fleeced in a bid to get money back into their ailing parcel revenues.
A committee of MPs think that the Royal Mail need to invest in new technology and look at how efficiently they're working if they want to boost profits, rather than just put their prices up. Adrian Bailey, chairman of the Business Select Committee, stated that he was "not very pleased" to hear they had taken what he deems to be the "easy option" in all this.
As well as MPs, the Citizens Advice Bureau have also said that Royal Mail need to "focus on making efficiency savings rather than relying upon raising prices" and showed concern that people were being placed over a barrel because they "have no choice but to pay the increased prices".
Meanwhile, Royal Mail are still pointing at their competition and complaining that they have to abide to universal service, while competitors can cherry pick cities as they wish. While Royal Mail have the obligation which could soon become "financially unsustainable" if Ofcom doesn't intervene, their rivals don't have to worry about such things.
The Business Committee aren't phased, saying that there's no "immediate risk" to the service and, furthermore, it is far from being a "burden" because it brings "revenue and status" to Royal Mail.
The new report says: "Royal Mail should not increase postal and packaging prices simply in an attempt either to increase its own profit levels or to protect the Universal Service Obligation, without increasing the efficiency of its operations. While we accept that Royal Mail has done much to improve efficiency, it still has to match the technical innovations introduced by many competitors — innovations that more clearly match the expectations of consumers."
The report adds: "We were concerned to note that Royal Mail were unable to provide a regional breakdown of the cost of the Universal Service Obligation. We also surprised to learn that there is no consensus between Royal Mail and Ofcom over what constitutes to cost, revenues and profits of the universal service."
Bailey adds: "The universal postal service is available to everyone living in every part of the United Kingdom. It is an essential service to many people, especially those living in rural areas, to those less able to travel, to older people, and also to blind and partially-sighted people. While our evidence indicated the universal service is not under immediate threat, we believe Ofcom needs to outline in more detail how it would respond quickly to changes in postal market conditions which may endanger the universal service."
A Royal Mail spokesperson said: "Ofcom may not be able to respond fast enough to avoid a failure in the Universal Service, even in the short term."
"We recognise and accept the Committee’s finding that Royal Mail has done much to improve efficiency, but there is still more for us to do to match the most efficient postal operators. We are continuing to invest in our business transformation programme and are becoming even more efficient."