BusinessBusiness RecoveryRoyal Mail stirs up concern

Royal Mail stirs up concern

It would be premature for insolvency experts to begin preparing the ground to take on the administration of the Royal Mail. Even though the post provider last week floated the idea in the press it would be wise to read those particular leaks as serving a different agenda entirely.

Indeed what appears to be happening is the Royal Mail using the doom-laden scenario of administration as a stick with which to beat the government and a way of stirring up concern among the general public.

Simply put, Royal Mail thinks it is being unfairly treated by the regulator Postcomm, which has a agreed to a rise in the cost of postage stamps but has capped the rise to 2.5% below inflation.

This, claims the Royal Mail, would negate the financial benefits of the price rise. Hence flying the administration kite.

It’s a clever tactic. The government’s experience of administration for a public service provider is filled with horror. Remember the savaging received by Stephen Byers after bringing in administrators to deal with Railtrack.

Insolvency experts are certain that Whitehall really doesn’t want a Railtrack to happen to the post.

Mind you, getting Royal Mail as an administration would be quite a catch for any insolvency expert.

Indeed one specialist says it would be a ‘fantastic job’ to have.

The reason? Because, like Railtrack, all stakeholders have a very real interest in keeping the business running. There’s no one who just wants to walk away.

Having said that it would be tricky. It would involve juggling the restructuring of the business with keeping ministers and politicos happy while also reassuring the public that the postal service it has been able to rely upon for just over three centuries will continue to deliver.

But would the government let it come to administration? Perhaps Royal Mail has already played a winning hand.

  • Gavin Hinks is news editor on Accountancy Age.

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