Call For Royal Mail To Get Private Cash

11:48am UK, Thursday May 15, 2008

The postal watchdog is urging a part sell-off of Royal Mail to head of a potential slide in the standard of its services.

Firm has been losing money

Postcomm says a big injection of private cash is needed as part of a "radical transformation" of the company.

However, this raises the spectre of privatisation, which would be hugely unpopular with the unions and Labour MPs.

The regulator said partnerships with the private sector similar to those in other European countries could help prove efficiency and help the universal service, which guarantees that letters are delivered anywhere in the UK for the same price.

Postcomm's comments have been made in a submission by Postcom to a government review of the postal market, which has already warned that opening the industry to competition has not benefited consumers.

Royal Mail's 350-year monopoly ended at the start of 2006, when other licensed operators were given the right to collect and deliver mail.

It made a loss of £279m in the year to the end of March.

Postcomm chairman Nigel Stapleton said: "The company needs access to private capital to fund and incentivise a radical transformation of the business."

But a spokesman for the Communication Workers' Union said: "This is just Postcomm's submission to the Government. If this was to be endorsed, it would be a political football.

"This is just another example of Postcomm overstepping its remit."

A spokesman for the Department for Business, Enterprise and Regulatory Reform said: "The review is independent of government.

"Ministers look forward to receiving the panel's recommendations later in the year.