BUSINESSES that rely on the post to export goods to the UK are to be hit hard after Royal Mail confirmed it was hiking its charges for delivering Bailiwick post by 40%.
Guernsey Post announced yesterday that it had failed in its attempts to persuade Royal Mail to reconsider the increase for processing and delivering mail, which will come into force during the next two years.
It is feared that the move, which equates to an £8m. rise in charges based on current postal volumes, could have far-reaching implications for the island’s export industry.
About 60% of Guernsey Post’s business comes through bulk mail deliveries for companies such as Healthspan, HMV and Moonpig.
The States-owned utility had been in negotiation with Royal Mail since July.
And Guernsey Post said, despite considerable pressure, Royal Mail had been unwilling to moderate materially its pricing demands and had insisted the increase was needed to reflect the cost of handling mail from the Bailiwick.
As a result, Guernsey Post has asked the Office of Utility Regulation to approve its recommendation to increase the price of sending mail to the UK, with packets and parcels most affected.
‘Royal Mail has left us with no choice but to accept these charges and, as a result, apply to the regulator for an increase in prices,’ said Guernsey Post chief executive Gordon Steele (pictured).
‘We have fought hard in our negotiations. However, Royal Mail has made it clear that not agreeing to this contract would result in potential delays to mail delivery to and from the island and the removal altogether of services such as special delivery.
‘We cannot allow the mail service to the island to be affected, but we cannot absorb an £8m. increase in costs, so we believe we have no option but to pass some of these costs on to our customers.
‘We are continuing to make our business more efficient so that we can absorb costs where possible. However, we cannot absorb a cost increase of this size and have no alternative but to apply to the OUR for a tariff increase.’
A spokesman for HMV said it was ‘digesting this announcement and have no comment to make at this time’.
Healthspan founder Derek Coates said he would comment on the announcement at some point today.‘We cannot allow the mail service to the island to be affected, but we cannot absorb an £8m. increase in costs, so we believe we have no option but to pass some of these costs on to our customers.’
Gordon Steele
Article posted on 21st May, 2009 - 11.30am
12 Article Comments
Brace yourself for the wholesale loss of these operations. Looks ominous.
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Moonpig must be Sickpigs now, as they have just forked out 2 million + for a warehouse in Braye road !!!
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Well I drive by the owner of 7dayshop’s house everyday and all the fast cars (lambourghini’s Porsches Mercs and Ferraris makes me think they can afford the increase,
Why are letters going up? Moonpig is sending huge amounts of letters (my mate who works at Post Office told me) so all that extra business should mean more profit. Sounds like the monopoly Post Office is as greedy as the English MP’s. Oh where does the Post Office boss come from? England. Maybe he’s in league with another Gordon. Gordon Brown is always wanting to destroy Guernsey and its successfull businesses.
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Agreed Jackie.
Looks like the UK Government has found a way to negate our VAT advantage.
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Something smells here. Not sure if it’s the back door tactics of the Royal Mail to quash the mail order busines or the total lack of confidence I have in the Guernsey Post management team. Seems to be full of ex Royal Mail staff on contractors. Gamekeeprs today, poachers on their next contract?
With the mess of the electricity debacle, the strange behaviour of OUR, now this from the Guernsey Post office, we need to loo kvery hard at the success or otherwise of commercialisation.
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Just look at what has happened to postal prices in Guernsey since the ex GPO management were introduced in about 2000.
Some will remember the Christmas post debacle of a few years ago; the unwillingness of local management to allow the preferential rates for small packets to be applied to Guernsey etc.
Seems the double whammy of the ex GPO management and the OUR has led to commercialisation being a costly exercise for the people of Guernsey.
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Those of us that choose not to hang on to legacy technologies have little need for the postal service.
I seem to remember the big postal strikes of the ’80s meant a boom in sales of fax machines, maybe the high cost of postage will drag the flat earth types into the modern world this time around?
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The recent sharp rises in the cost of posting in Guernsey is a direct result of interference by the EU commission. Because of their intervention in the British postal service, the Royal Mail is forced to raise its prices to everybody. This article by Bryan Smalley from the European Journal explains the position much better than I could.
The real story of post office closures is as follows. For decades, prior to the late 1990’s, the Royal Mail was an efficient, profitable monopoly providing the finest postal service in the world as well as being an important element in the structure of British life. A monopoly was important because many parts of Britain are remote. It follows that if we are to charge the same postage rates regardless of that part of the country to which mail is to be delivered, there will be some areas which are serviced at a loss whilst others are served at a profit. If postal rates are set wisely to balance out the differences then Royal Mail will make a profit.
It should be emphasised that Post Office Limited is a subsidiary of Royal Mail.
One of the EU’s key objectives is to impose competition throughout the whole of its territory regardless of whether or not a national monopoly is beneficial to the local community.
Detailed rules, which affected the British postal services, appeared in December, 1997 in an EU press dossier ‘Notice from the Commission on the application of the competition rules to the postal sector and on the assessment of certain state measures relating to postal services’.
EU Directive 97/67 /EC issued on 15 December 1997 ‘Privatisation of Postal Services’ began the introduction of an EU-wide postal service and immediately reduced the Royal Mail’s monopoly to mail weighing less than 350 grams.
British Government’s funding of national postal services provider Royal Mail, totalling more than 2.5 billion euro. The investigation followed complaints from Royal Mail’s competitors (particularly TNT and DHL – Deutsche Post) made between August and October 2006. It should be noted that only the UK, Sweden and Finland have fully liberalised postal markets. It is therefore ironic that the Netherlands and Germany are benefiting from our liberalised service whilst not adopting it in their own country.
On 9 March 2007, the EU Competition Commissioner’s newsletter Nr. 10/07 reported that she (Neelie Kroes) had given permission for the UK to provide 460 million euros to Post Office Limited (approx. £345 million at the time). It reads: The European Commission has authorised, under the EC Treaty’s rules on state aid, proposed funding by the UK Government to allow Post Office Limited to continue to provide public services through the network of post offices in the financial year beginning 1 April 2001′. The approval was separate from the investigation referred to in the previous paragraph and concerns only the aid granted to Post Office Limited.
A letter from Brussels to David Miliband, Secretary of State for Foreign and Commonwealth Affairs [Ref. N388/2007], dated 28 November 2007, discusses the relationship between our Postal Services and the EU It leaves no doubt that the EU is in control. It discusses the ‘transformation programme’. Paragraph 11 states: ‘The transformation programme will involve POL [post Office Limited] reducing the size of its post office network by around 2,500 branches.’
On 29 November 2007, the EU announced that it had granted the British Government permission to subsidise the Post Office.
It becomes very obvious that the EU was prepared to allow us to subsidise our Post Offices to the tune of 460 million euros in exchange for us closing down 2,500 Post Offices.
An extract from Hansard dated 07 February 2008 reads:
‘Mr. Gordon Prentice: To ask the Secretary of State for Business, Enterprise and Regulatory Reform what obligations arising from (a) the UK’s membership of the European Union and ( b) the UK’s participation in single market legislation govern the provision of subsidy
To the network of Post Office branches; and if he will make a statement.
Mr. McFadden: All state support for undertakings, whether privately or publicly owned, are subject to the rules laid down in Article 87(1) of the EC treaty. Funding of the Post Office network is therefore subject to the state aid rules and can only be given in compliance with these rules.
In November 2007 the Commission approved Government plans for support for Post Office Limited.’
Instead of using the EU term of ‘transformation programme’, the demolition of the Post Office network is being managed under the title ‘Network Change Programme’ which, on its website, explains that the closures are necessary because ‘The Government has recognised that fewer people are using Post Office branches [and] … that the shape and size of the overall network of Post Office branches needs to change’. It fails to state that fewer people are using the post offices because the Government has been slowly and deliberately withdrawing services which the Post Office traditional provided. There is also no mention at all on the web site or in any material issued by the Network Change Programme of the involvement of the EU and the real reason why our Post Offices are to close.
The above is a brief expose of the situation. I have left out some details but have included sufficient to prove the EU’s involvement. It follows that anyone who denies this is totally incompetent. Recipients of this information can judge for themselves.
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zwark
When did you last try to send a box of flowers down a telophone line ?
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So Zwarq
Are you suggesting we fax flowers to the UK now??
Silly me, clearly you meant email.
“Yes can you send me 300 capsules of cod liver oil?”
“No problem sir, we’ll email them to you right now”
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My oh my. I haven’t hosted a ladies luncheon party for quite some time but golly gosh what an exciting one we had this weekend.
Such a shame that Lady Ashworthington looks like being stuck here for the foreseeable future though…………anyway I digress.
Postal service? Well it’s a bit archaic isn’t it? Who wants flowers sent by post anyway? When my husband is away I always call Rupert around to do my flower arranging and what a great job he makes of it too.
My friend Aggi introduced me to Twittery this weekend, another reason not to write anymore. Every message on there is one less letter in the postal service.
Tweet, Tweet daharlings.
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What’s the problem?
Why should UK deliver all this stuff at a “loss”, while the remitters are dodging VAT?
Maybe, to keep things cheap, Guernsey P.O. could send a couple of strappers with bikes to do their deliveries, and cut UK P.O. out of the picture. A van, at a push. As the market has been liberalised, there’s nothing to stop us.
Of course we could use the Dutch or the Germans, who apparently are benefitting from the EC directives…
That’d teach ‘em (Royal Mail, that is), eh?
“It follows that anyone who denies this is totally incompetent. ” To take DJ wholly out of context.
Historically, all still very keenly priced.
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