By Daniel Hunter

The boss of Royal Mail Moya Greene has told MPs that there is a real threat to the delivery firm's "universal service".

Under the Universal Service Obligation (USO), Royal Mail must deliver to every part of the UK, six days a week at the same price.

Moya Greene said the USO costs £7.2bn a year, and suggested that volumes of letters and parcels have dropped by 4-6%.

Royal Mail's competitors are not under the same universal obligation, however. And Moya Green accused them of "cherry picking" areas which allow them optimise their profits.

"If you allow cherry-picking in the urban areas, it syphons off a lot of revenue," Ms Green told MPs on the Business, Innovation and Skills Committee.

"It makes the universal service unfinanceable and uneconomic," she said.

But Royal Mail's competitors denied "cherry picking" certain areas.

Guy Buswell, the chief executive of rival UK Mail, said the 15 million parcels it handles are delivered by Royal Mail. It collects its own mail, but Royal Mail handles its deliveries.

"It all ends up in the postman's sack, so effectively there is no cherry-picking whatsoever," he said.

"We pay Royal Mail a fair and reflective price to cover the rural areas, which takes out any opportunity for cherry-picking," said Nick Wells, the chief executive of Whistl, formerly known as TNT.

Mr Wells also suggested that it was structural decline, rather than competition, that was hurting Royal Mail profits.

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