20 May 2009 - Sarah Sharpe - © Hellmail Postal News

Richard Hooper, the man behind a comprehensive analysis of the Royal Mail which spawned the Postal Services Bill and the present search for a strategic partner by the government, has hit back at calls to halt the semi-privatisation of Royal Mail.

In the Times newspaper, he wrote:

"Whichever way you crunch the numbers, Royal Mail’s overall financial situation is untenable. The status quo is not an option. Royal Mail needs to modernise more quickly and take a more commercial approach to its problems." he said

As chairman of the Independent Review of the Postal Services Sector, Richard Hooper highlighted an urgent need to completely modernise the service and put it on a far more proactive commercial footing in the face of competition from Europe, difficult industrial relations and falling mail volume.

He emphasised that despite Royal Mail making a profit of £321m, the recommendations of the report still hold firm and that in reality, the Royal Mail Group actually lost £229 million after tax last year and had negative cash flows of £373m. He said that with possible negative cashflows of £400 million annually for the next four years, the need for change was greater than ever.

He warned that with this years fall in mail volume likely to be 10%, worse in fact than predicted in the report, and a doubling of the pension deficit to over £6bn, a strategic partnership to secure investment and commercial expertise was paramount.

Steve Lawson, editor for Hellmail the postal industry new site said:

"At heart, the postal industry is facing an industrial revolution, a result of greater use of digital communications.

Much has been attributed to deregulation of postal services but there is no getting away from the fact that even in countries where competition has yet to materialise, volume falls year on year and we are all very much buying into these faster and more flexible ways to communicate. To further complicate matters, EU regulations forbid government bailouts for state-owned postal services other than to support the Universal Service. Even if bailouts were on offer, they would only serve as temporary measures.

"There are many reasons why, deep down, we would probably all like the Royal Mail to remain as a great British institution. Protection of jobs, pride, even the iconic bright red post boxes are very much part of our affection for the service but it's long-term future, without ending up as a great white elephant, will require a fast-thinking and progressive management structure and a real push towards hybrid and other services more geared up to the needs of modern business. Domestic customers will still need small parcel deliveries but traditional post has been dying for some time now.

"To survive and be profitable once more, the Royal Mail certainly can't continue as it is. No one is entirely comfortable with such fundamental change. The leap here is no less than the move from horse and cart to the automobile. Whether we like it or not, digital media is overtaking traditional postal services year on year, and any solution aimed at securing Royal Mail's future has to take that fully into account.

"It doesn't matter how many oppose the plan, finding a solution is whats needed. Simply throwing money at it will not solve the underlying problems." he said.

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