'I'll always love the Post Office'

WHAT does the man who could help kill off Consignia - that's the Post Office to you and me - think of the Royal Mail?

A moribund, inefficient bureaucratic monster? A loss-making giant that has lost its way? 'Not at all,' chirps Paul Carvell. 'I have the utmost respect for the Royal Mail. It is perhaps the best postal service in the world.'

Carvell, 47, is the new chief executive of Business Post - the first company seriously to threaten Britain's postal monopoly. If his ambitious plans succeed, he will head one of the few private companies that could inflict death on the Post Office 'by a thousand cuts', as Consignia's chairman Allan Leighton so graphically predicted last month.

Carvell's admiration for the Royal Mail is confined to the valiant postmen and women who deliver mail through all weathers. He believes Consignia has 'too many bosses and they are too slow to respond. The whole thing is too bureaucratic'.

The First World War phrase, 'lions led by donkeys' springs to mind as Carvell extols the virtues of the 140,000 postal workers. 'I really admire and respect their quality and energy,' he says. 'Seeing these guys at 5am sorting out the stuff and delivering the mail in the early hours is amazing.'

Carvell firmly backs The Mail on Sunday's campaign to keep early-morning deliveries. 'The only way a business can survive is to give its customers what they want,' he says. 'Your paper showed that they wanted their mail early.

'The technology is there to satisfy those who want their mail at such times, those who don't mind having it later, or even at their work. We cannot just ignore what people want and are entitled to.'

Business Post and its subsidiary, UK Mail, have been given a licence to provide an indefinite service. The plan is to sign contracts with big businesses to pick up, sort - at Carvell's 63 centres - and deliver clients' mail to a post office nearest the destination address. Delivery within two days is guaranteed and at a price lower than that charged by Consignia.

Final delivery would be carried out by Consignia's postmen and women and it is this final link that is causing problems. Carvell's company will have to pay Consignia for the service and, as yet, no price has been agreed.

'The gap between both sides is narrow,' says Carvell, 'but we don't see why we should help pay for Consignia's infrastructure and expensive TV ads.'

Until the gap is bridged, there will be no private business post. 'I can see from Consignia's point of view it is vital to get it right,' Carvell says, 'but I suspect that in the end the matter will have to go before PostComm, the regulator, which will make an adjudication.'

Firms that want next-day delivery will have to continue using the Royal Mail's first-class service.

But the question most commentators are asking is, if the Royal Mail makes a loss on every letter it sends - it claims it costs 28p to deliver a 27p letter - how on earth can UK Mail make a profit?

In a rare outburst of emotion, Carvell says: 'I am sick of all this talk about how it costs 28p to send a 27p letter.

'The facts are that the Royal Mail is extremely profitable. Most letters go between conurbations and the profits on this service subsidise the cost of sending mail to more out-of-the-way places.

'Consignia includes all its overheads in calculating the cost of sending mail and if you do that, you can argue that you make a loss on sending a letter.'

Carvell is confident that the pricing row with Consignia will be resolved and his company will be in business within a few months. There is a huge market to go for. Business mail generates 86% of Consignia's turnover and there is strong evidence that firms would be happy to pay less to guarantee mail arriving in two days.

Carvell says: 'In five years, we would like to have about two to three% of the market. It may seem a modest target, but it would be worth £150 million to us and would transform our business.' It certainly would. Last year, Business Post made pre-tax profits of £12.7 million on a turnover of £123 million and has a stock market value of £210 million.

It has already made plans for the second stage of the postal delivery revolution - to carry, sort, and deliver domestic mail.

UK Mail intends to put 3,000 to 4,000 Union flag-coloured mail boxes around the country in supermarkets, garages and High Street stores. By 2006 at the latest, Carvell has a vision that people will be able to go to a bank of post boxes and send mail in a variety of ways.

'We even have plans to send firstclass mail, but that is a few years off,' he says.

For now, he is happy just to double the size of his business, albeit at the expense of one he most admires - the Royal Mail.