Examination of Witnesses (Questions 94-99)|
TUESDAY 16 APRIL 2002
94. Mr Carr, can I welcome you to the Committee.
Would you please introduce yourselves?
(Mr Carr) Good afternoon, Chairman. I
have with me Greg McGregor, the chief executive of Postwatch,
and Dr Ian Leigh, the director of policy and research at Postwatch.
95. The last time we saw you was in December
and at that time we were still awaiting the fruits of the labours
of the regulator. We have now had them. You were in favour of
competition then. Do you think that the proposals of Postcomm
are really what is required here?
(Mr Carr) Yes, indeed. I think there is very little
that we should criticise. We have made our formal response to
Postcomm but this we believe is one of the best pieces of work
that has come from the commission and I think it is true to say
that even we were a little bit surprised at the extent of its
pace and also the detail, but very much applauded the methodology
and the approach to release parts of the market through volume
and weight rather than through the European method, which has
already been detected on this side of the House this morningthat
it releases very little by way of volume through the European
route. So we are very much in favour. It is a very good piece
96. Studies by the National Audit Office and
others have indicated that the vast majority of ordinary customers
are quite satisfied with postal services and that the cost of
a stamp is quite low. What benefit would domestic customers get
from liberalisation of competition, or is it all intended for
86 per cent of business?
(Mr Carr) If you follow the economic process, clearly
the domestic consumer carries the cost that businesses carry and
that is because it indirectly affects the price of the services
that they buy as a consequence. So it is an add-on cost to any
organisation and some 85 per cent of each day's mail, 68 million
items, are sent by businesses and, of that, 70 per cent are sent
to residential addresses so they are affected in that way. Price
in itself, at the consumer level as opposed to the business level,
is much less of an issue because on average each citizen sends
only 100 items of mail per annum and, therefore, to increase the
price by 1p means an extra pound a year which is of very little
consequence. It clearly has a lot more impact on the business
community but price is not such a key issue. The important thing
is that competition produces a lot more than benefits to price.
It does improve services; it creates greater efficiencies; and
it acts as the spur for an organisation to drive itself forward,
and benefits its employees and customers. We have seen this in
other industries which have been demonopolised.
97. Looking through the documentation that you
sent us, I stopped counting at ten references to management failures.
Do you see this process forcing management to become more efficient
and address those failures?
(Mr Carr) I think we also make a reference to the
fact that this process of improvement has already begun. We have
seen it beginning with the appointment of Allan Leighton, and
I am surprised there are only ten references in there
98. I stopped counting at ten.
(Mr Carr) I have been coming to this Committee now
for quite some time and not only here but in other places we have
been drawing attention to the failures of the leadership because
this has been the cause of the failures of service to the consumer,
and fortunately that is now being addressed and we are beginning
to see some action. It has certainly been announced anyway and,
if you remember, the savings of £1.2 billion were announced
on October 5. We are only just getting the details some seven
to eight months later, and those savings have to be produced within
a year, whereas originally they had 18 months to do it. So it
is absolutely crucial that these savings are madeand made
99. You said you were happy about the proposals
and you made the point that there is a trickle down effect. Have
you done any work on how effective the trickle down effect has
been in Sweden where there was a 70 per cent increase in the charge
for domestic mail, and a 20 per cent drop in the charge for commercial
mail as a consequence of competition? Have you done any work on,
as it were, the below-the-line situation in Sweden?
(Mr Carr) I think I have to answer that directly by
saying "No", but can I make one point: one of the major
factors in price increase in Sweden was that the Government decided
to charge VAT on postal services