The decision to open up the postal market to full competition next month is 'untimely' and could threaten Royal Mail's ability to deliver to every UK address, an influential group of MPs said today.
In a report on the possible impact on Royal Mail of market liberalisation which begins on 1 January, the trade and industry committee said the company has been asked to deal with competition at 'a time of great uncertainty'.
Royal Mail currently faces a large pensions deficit as well as investment challenges, the MPs warned, and intense competition in the market will make it harder for the firm to adhere to its 'universal service' commitment.
The report claimed if new competitors do better than expected when the Royal Mail’s 350-year monopoly ends, it may not be able to afford to deliver to every UK address.
Under the universal service pledge, Royal Mail agrees to deliver post to all addresses for the same price.
Although the committee admitted that competition poses no immediate threat to the universal service, it urged the industry regulator PostComm to 'remain vigilant' to ensure the service is not undermined
Committee chairman Peter Luff said: "The committee is really anxious to protect a universal service similar to the one we have at present.
"If competition is more intense than people are expecting, that service could be threatened in all kinds of ways, particularly as private sector operators cream off more profitable parts of the market."
Last month, in a compromise deal with Royal Mail, PostComm agreed to allow the prices of first and second class stamps to rise to 32p and 22p respectively from next April.
The committee welcomed these changes as a way of funding the business' pensions deficit and new capital investment but warned that the customer alone 'should not foot the bill'.
Shareholders and the government also have a role to play, it said.
