Public-sector delivery

Anyone who doubts the achievements of the present management of the Royal Mail should look again at the condition of the state-owned operator only three years ago. The Royal Mail - then known as Consignia - was in deep trouble. It was haemorrhaging more than £1.5m every day. For a decade it had been missing its first-class letter delivery target. On top of all this, its workforce had the worst strike record in the UK.

Anyone who doubts the achievements of the present management of the Royal Mail should look again at the condition of the state-owned operator only three years ago. The Royal Mail - then known as Consignia - was in deep trouble. It was haemorrhaging more than £1.5m every day. For a decade it had been missing its first-class letter delivery target. On top of all this, its workforce had the worst strike record in the UK.

Contrast that with the situation that the Royal Mail finds itself in today: first-class mail deliveries are at their highest level for 10 years; 92.8 per cent of first-class mail was delivered on time between January and March this year, as was 98.7 per cent of second-class mail. And it has announced annual profits of £537m.

In 2002, when Allan Leighton came in as chairman and Adam Crozier took on the role of chief executive, they knew that the measures required to set the Royal Mail back on track would be painful and, for a while at least, would inconvenience millions of its customers. They were also impeded by the Royal Mail's statutory duty to provide a universal delivery service for a fixed price. But they did what was necessary. They cut 33,000 jobs, closed 2,500 urban post offices, reorganised collection routes and abolished the second post. And the fruits of that rational strategy are now beginning to emerge.

Whether Mr Crozier is worth the £1.85m in bonuses he has been awarded for his work over the past three years is open to debate. But that he has done an excellent job in turning around a failing organisation cannot be in doubt. His remuneration is no reward for failure. What he and Mr Leighton have done is demonstrate that it is possible to run a state-owned organisation with the efficiency of a decent private-sector company and still provide a universal service.

They have also shown that it is possible to provide incentives for staff by including them in a company's bonus scheme. It is not just Mr Leighton and Mr Crozier who have been rewarded for the Royal Mail's success. Some 180,000 postal workers will each receive a bonus of more than £1,000. It is heartening to see the employees of such a large company getting a share of the profits, albeit a much smaller one than the executives. And Mr Leighton's idea of converting the Royal Mail into an employee-owned organisation is one that is certainly worth pursuing.

The Royal Mail still has a long way to go. Half of its letter-delivery targets are still being missed. And its subsidiary, the Post Office, is losing £110m a year. But if the turn-around continues, the company will be in better shape to handle the loss of its monopoly over delivering letters next year. All those who have restored the Royal Mail to health are entitled to their rewards.