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Friday, 9 August, 2002, 10:12 GMT 11:12 UK
Q&A: Early post fee 'flops'
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Consignia is in the headlines again. The firm has admitted that attempts to charge customers for early delivery of mail have received a cool welcome.

BBC News Online looks at the latest setback to the UK's cash-strapped post operator.

Why is Consignia trying out these charges?

For the simple reason that it needs the money.

Consignia is struggling financially and is looking for new ways to raise extra cash and cut back on costs.

The firm made an operating loss of �318m for the year to 31 March, and has said it needs to make savings of �1.2bn.

The introduction of charges, together with other changes to deliveries, is seen as one way of helping Consignia reach a sounder financial footing.

So how do the charges work

Under the current trials, people or businesses who get less than 20 letters a day have to pay a fee to get a delivery before 9am.

Three charges of �5, �10, and �14 a week for the service are being tested in 14 trial areas around the UK.

If you don't pay a fee, your delivery will arrive between 9am and midday.

And you will only get one delivery - as Consignia has already said it is scrapping the second post.

The second delivery delivers only 4% of mail items, yet takes up 30% of a postman's time and accounts for 20% of Consignia's costs.

The postal company reckons making just one delivery a day will save it �350m a year.

A bill of �14 a week for an early delivery? That's a bit steep.

That's exactly what small business leaders thought when they heard about the plans last month.

There were warnings that the financial livelihood of companies could be put at risk, as vital cheques could be delayed if firms couldn't afford to pay for an early delivery.

Even Consignia chairman Allan Leighton ordered a rethink of the scheme when he heard the details himself for the first time on a news programme.

Originally a flat charge of �14 was planned, but this was then changed to the three price bands described above.

But it still hasn't proved to be a runaway success, has it.

The early signs don't appear promising.

The consumer watchdog Postwatch described the take-up so far as "appallingly low", saying it believed only one customer - in the Plymouth area - had signed up so far.

But Consignia, while admitting take-up has been low, says it is too early to dismiss the scheme.

It says the trials are still in their early stages, and in some areas have not yet started properly.

See also:

10 Jul 02 | Business
13 Jun 02 | Business
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