DM sector cautiously optimistic on postal part-privatisation Bill

In the plans published last week, Mandelson confirmed his commitment to keep Royal Mail publicly owned, but reiterated that a strategic partner was needed to maintain the six-days-a-week, fixed-price universal postal service.

Reacting to the Bill, Gurdev Singh, managing director of direct mail company Howitt, said: "Partial privatisation is a start, but I believe that they should be given full rein to go and compete in the market.

"There is no point changing the tyres if the engine is still knackered otherwise it will run for a little bit then fall over again."

Jude Whitford, operations director at direct mail house Pepper Communications, said the shackles need to be taken off the Royal Mail so it can compete effectively.

"There are concerns over whether any outside investor would maintain the universal cover for all addresses. There needs to be that level of reassurance, so there is a guarded optimism," he added.

The Bill would allow the government to take on the Royal Mail’s ballooning pension deficit and comes at a time when, according to Mandelson, the operator has been severely affected by dipping mail volumes due mostly to a rise in emails.

He said: "Our policy will keep Royal Mail in the public sector and this legislation makes this clear. The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed."

CDMS head of marketing Richard Higginbotham said that anything that leads to greater investment and innovation can only be a good thing for the direct mail industry. He added: "My hesitation is whether the privatisation plan will lead to this level of investment. There is a need for innovation in print in order for it to compete with the digital channels."

Any move towards privatisation though could trigger a backlash from the unions. The Communication Workers Union has so far opposed the Bill with Billy Hayes, the union’s general secretary, having said there is still no convincing argument for privatisation.

However, in a recent printweek.com poll asking if Royal Mail privatisation would benefit print, an overwhelming 66% voted against the bill, 32% of which expect part-privatisation will lead to a profit above all approach suggesting that support may be confined to the direct mail industry.

PART-PRIVATISATION DETAILS

• 30% sell off of Royal Mail proposed
• Government takes on pension deficit
• Outside investment said to help maintain service
• Concerns over: level of investment, committment to service coverage, job losses at Royal Mail