Examination of Witnesses (Questions 120-125)|
TUESDAY 16 APRIL 2002
120. I do not mean to interrupt but it actually
might be reasonable for there to be a 20p charge for network access
under certain circumstances. If there is for the Royal Mail, as
a whole, in practice a substantial cross-subsidy between some
areas, namely the urban areas and rural areas in terms of delivery
costs, then in order to have access to the network, in order to
deliver for that part of bulk mail which is to be delivered in
the lighter density of rural areas, it might be perfectly reasonable
for that cost of the access also to reflect what is part of the
cost structure of the Royal Mail's uniform price?
(Mr McGregor) Yes, and indeed I can see that. Obviously
as you recognise yourself there are a lot of big ifs in there.
Until we have actually got the real costs from data that we can
rely upon from Consignia I think the jury has to be out on that.
121. How confident do you feelmy personal
view would be reach competition at the earliest possible moment
but reaching competition in the absence of good information is
a very difficult thing to doabout supporting Postcomm in
the early introduction of competition in the way they propose
given the lack of information we have got?
(Mr McGregor) That is why we place such importance
on the safeguards that are built into the system. You have a staged
approach with the ability to have three reviews so that you can
both keep under constant review the quality of the data that is
being driven, you can keep under review whether there are any
adverse effects on the universal service. Clearly as a consumer
organisation we want to make sure that all consumers benefit from
the introduction of competition. The alternative, which I think
will give Consignia a perverse incentive, would be to say to them
"Get your information systems right first and then introduce
competition" but that way you could guarantee that their
information systems would remain chaotic for the next decade.
122. Just one further question on access charges.
Given what you have just said, is a universal access charge for
the last mile really a sensible proposition? If 20 pence is the
average cost to Consignia of providing that last mile service,
taking rural development, is not a single universal access charge
to competitors simply going to invite competitors to use Consignia
in the rural areas and provide their own services in the urban
areas? Is that not an unsustainable solution in anything but the
very short term?
(Mr McGregor) Yes, you are quite right, that might
well be the result. That would not be a sensible result. What
we would want to see is carefully differentiated access charging,
particularly for the last mile part of the service. Again, it
is down to the sophistication of the data that would underpin
that degree of differentiation.
123. Can I just ask you about one other area.
We obviously all recognise that Consignia needs to reduce its
costs but looking at the areas where Consignia has already identified
cuts or cost savings, what assessment have you made of those cuts
on individual residential customers and business customers? How
serious do you think they are likely to be?
(Mr Carr) Actually we have not had the details of
124. We have heard this morning
(Mr Carr) We have heard the headline figures and what
we heard this morning we were hearing for the first time. The
impact of the redundancies has not been quantified within the
divisions or at the operational levels, so we are not in a position
to make any assessment at this stage of what impact that would
have on individual consumers.
125. So from what you have had so far you have
not been able to make any assessment of the relative burden of
what is being proposed between business customers and residential
(Mr McGregor) No, we have not. As was noted by Consignia
in their evidence this morning, a major contribution to the £1.2
billion cuts will be the proposed abolition of the second delivery.
We do have a very careful programme agreed with Consignia to monitor
consumers' reactions both before, during and after the pilots
that are about to start. Again, we have carefully constructed
the assessment that is to be made to include large businesses
and small businesses as well as social users of the post, so we
hope to have a very good cross-section of all customers. Until
those pilots are under way we will not have the data to do the
(Mr Carr) The delivery structure is expected to produce
£500 million of the £1.2 billion savings.
Chairman: On that note, gentlemen, can we thank
you as ever for your evidence today and also the very helpful
checklist of useful Consignia facts that you sent us. If there
any other points we will come back to you. For anyone who is interested,
the Committee will be reconvening at 3.30 when we will have Hays
DX, then at four o'clock Postcomm and at five o'clock the unions.
We still have some more business to do but thank you for your
contribution this morning.