Tackling poor performance
16. This Committee last examined the role of Postcomm
in Spring 2002 and reported that Royal Mail's quality of service
level was poor.[22] Recent
figures indicate that performance has improved since 2002. Postcomm,
who design the performance regime and implement the financial
incentives, has played some part in that achievement.
17. Nevertheless, Royal
Mail has consistently failed to meet several of its targets. The
main failures concern targets measuring postcode area performance.
Royal Mail should deliver by the next day 91.5% of all first class
mail between postcode areas and 92.5% of first class mail within
postcode areas. Royal Mail has missed this target every year since
the quality of service regime was introduced.[23]
18. There are certain postcode areas within the UK
which have consistently received lower levels of service than
the rest of the country. Even while experiencing absolute improvements,
some mail centres for the same postcode areas have appeared in
the bottom 20 performing mail centres year on year. Parts of London,
in particular, have suffered relatively poor service in recent
years. [24]
19. In April 2006, Postcomm published the results
of its investigation into poor performance by Royal Mail in seven
postcode areas. Postcomm concluded that in three areas of London
- East, South East and West Central - Royal Mail had not used
"all reasonable endeavours" to prevent more than 2 million
letters arriving late and imposed a fine of £271,000. Although
Postcomm investigated individual incidents of absolute failures
of performance by Royal Mail, it has not examined why certain
postcode areas consistently receive lower levels of service relative
to other postcode areas.
20. For Postcomm to set appropriate targets it needs
to know what consumers are willing to pay for a higher level of
service and the costs to Royal Mail of making changes to service
levels.[25] This analysis
was not available to Postcomm at the time it designed the new
performance regime. So when setting targets, it had to rely on
Royal Mail's assessment of what it could achieve.[26]
21. The National Audit Office survey showed that
some groups of consumers such as those living in rural or suburban
areas believed the value for money offered by Royal Mail to be
lower than for other groups such as those living in urban areas.[27]
Postcomm has no information on whether certain groups actually
experience worse value for money for services than others or why
perceptions or experiences of value for money may be different
for different groups of consumers.[28]
To fulfil its duty of protecting consumers, including vulnerable
consumers, Postcomm needs access to more detailed information
on the quality of service provided by Royal Mail to different
sub-groups of consumers so that it can ensure inequalities of
service are being addressed.
Better Regulation
22. A regulatory regime should be consistent, proportionate
and transparent. There are elements of Postcomm's investigations
into Royal Mail's performance and subsequent fines which are burdensome,
both for Royal Mail and for Postcomm itself.
23. Postcomm has a process for its investigations
and imposition of financial penalties, including timeframes in
which decisions must be made in order for a penalty to be valid.[29]
The investigation must assess whether Royal Mail has made "all
reasonable endeavours" to meet its targets—a difficult
test. Postcomm's investigations can therefore be both administratively
burdensome and lengthy.[30]
Its investigation into Royal Mail's failure to meet any of its
targets in 2003-04 took over a year to complete, which was more
than the legal limit, and Postcomm could not have imposed a fine
even if it felt that was justified.[31]
24. Postcomm has not yet developed clear, transparent
criteria to guide its investigations —for example, when
it should launch an investigation. At present there is no link
between the array of financial incentives on Royal Mail and investigations[32]
making it difficult for Postcomm to balance the need to provide
incentives with minimising the burden it imposes.
25. Postcomm's imposition of fines has lacked clarity
and consistency. For example, the penalty on Royal Mail for lost
mail in 2005-06 was £9.62 million.[33]
This level of fine is arrived at through a series of complex calculations
which are not accessible to the vast majority of consumers.[34]
Postcomm needs to ensure it achieves the correct balance between
financial incentives and penalties which are proportionate and
meaningful.
22 Q 128 Back
23
C&AG's Report, Figure 2 Back
24
C&AG's Report, Figure 18 Back
25
Q 147 Back
26
Q 174 Back
27
C&AG's Report, Appendix 2 Back
28
Qq 6-7 Back
29
C&AG's Report, Figure 15 Back
30
Q 15 Back
31
C&AG's Report, para 2.27 Back
32
Q 153 Back
33
Reduced from an initial fine of £11.38 million (Postcomm
press release: Postcomm confirms penalty on Royal Mail for
failing to protect mail, Postcomm website) Back
34
Q17 Back
