- The Observer,
- Sunday June 24 2001
Consignia, the troubled state postal service, is likely to show a further decline this week, when it publishes its first set of accounts as a public limited company.
Declining revenue is expected to force Consignia, which the Post Office was renamed three months ago, to reapply to raise the prices of first and second class stamps.
The poor financial performance means the regulator would have to consider the new application more favourably than the last one, which was withdrawn last week.
Consignia's key divisions - Post Office Counters and Parcelforce - will both register a decline in revenue. Even Royal Mail, the only prof itable part of the company last year, is expected to report a fall in profits of up to 50 per cent, according to an insider.
The source said Consignia's main problem was an inability to curb costs and persuade staff not to strike.
'Consignia lost 66,000 working days to industrial action last year, compared with 22,000 the year before,' he said. 'Of those, 63,000 were unofficial. The union is not in control of its membership and they have just elected a hardline leader, so it is not going to get any better.'
A spokesman for Consignia refused to confirm that the accounts will be published this week and declined to comment on the company's performance in advance of publication.
As much as half of its income is understood to be provided by only 100 large customers. It is understood to have lost the business of a handful of commercial clients to Hays, the distribution and logistics company which operates an overnight service known as Document Exchange. This is used primarily by banks, building societies and lawyers, and has applied to the regulator for three new licences.
Consignia last week officially withdrew its request for an additional penny on first- and second-class stamps.
The rise would have boosted the company's flagging revenue. A spokesman for the regulator, Postcomm, said its own role was to 'act as surrogate and to make the company focus on efficiency'.
The former Post Office last year made its first loss for 23 years. It totalled £264m.
