Humbling for Royal Mail boss: Czech Sphinx has failed to deliver after debt-fuelled takeover, says ALEX BRUMMER
One cannot accuse the Czech Sphinx, Daniel Kretinsky, of cowardice in the face of the enemy.
He could have easily cried off an appearance before the Commons Business and Trade Committee on the grounds of commitments elsewhere, such as Moscow.
After all, his EP Corporate Group, owner of the Royal Mail, made most of its billions transporting gas from Russia to Eastern Europe.
It is not often that the Labour-dominated group of MPs manages to capture a billionaire and, under the firm chairmanship of Liam Byrne, made a good fist of holding him to account.
First-class letters, to be priced at £1.80 from next month, are piling up in sorting offices rather than in letter boxes from Cornwall to the Hebrides as required by the Universal Service Obligation (USO).
Kretinsky carefully thanked each MP, before much frantic waving of arms, and failing to answer most of the queries.
Grilling: Royal Mail boss Daniel Kretinsky, whose nickname is the Czech Sphinx, appears before the Commons Business and Trade Committee
Asked to explain if the £3billion of debt used to buy the Royal Mail was hindering investment in services and staff, Kretinsky sought to split hairs.
There was no debt at the Royal Mail, it was all held by the parent company International Distribution Services.
That would be like saying local authorities have no borrowings because it belongs to HM Government.
At other highly indebted utilities, such as Thames Water, the higher the loans, the lower the investment and the less attention there is to regulators.
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Much of the anxiety of MPs stems from local experience where parcels look to be prioritised over post. Kretinsky was certain there is no instruction to this effect.
However, at moments of stress – most of the time – that is what happens. This is particularly true for an organisation plagued by sickness and management keeping an eye on overtime.
Kretinsky and EP, backed by their Slovak investors, would have been expected to do their due diligence before splashing the cash on Britain’s oldest company, with a heritage dating back to the reign of Henry VIII.
The new king of the Royal Mail seemed surprised that in Britain, in contrast to much of Europe, the postal service is subject to private-sector competition. That’s shading the truth too.
In Denmark, a universal postal service has been abandoned precisely because it cannot keep up with email, technology and competition.
It was quite hard to understand where Kretinsky and the top management team he brought with him have been living over the last couple of decades.
Anyone wandering into a Post Office (a separate entity) will know that squeezing through the door can be tricky because of the stacks of returns from Amazon and other online sellers.
Yet one postal official thought MPs might be interested to know that parcels are 60 per cent bigger than they used to be –fancy that.
The Czech Sphinx used his charm last year to persuade then Business Secretary, now Chief Whip, Jonathan Reynolds that he was a legitimate businessman, despite the Moscow link.
Reynolds did take the precaution of taking a golden share, although what Whitehall would be prepared to do with this is unclear.
Kretinsky also persuaded the Communications Workers Union that under EP ownership jobs would be safe and pay deals honoured. Less than a year later the bonhomie has quickly vanished with unions threatening industrial action.
Kretinsky waffled on about digital reforms. The bottom line is that seeking to stitch a 21st-Century parcels service onto a regulated letter delivery service is never going to work without massive reforms.
Anyone who has had the frustrating experience of picking up an undelivered package from their local sorting office could testify to that.
What is needed is modernisation at all levels, otherwise the start-up services, without historic costs and obligations, are going to make mincemeat of the Royal Mail.
A debt-encumbered ownership group, unused to the British way, the power of competition and the household love of the ‘postie’, was never going to fit the bill.
The new owner has been found badly wanting in just a few short months.
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