Whistl deliveries suspended after equity backer pulls out

Whistl - the company formerly known as TNT - was set up ten years ago to take on Royal Mail.

It has been collecting and sorting letters and parcels on behalf of business customers with some success since 2004.

Three years ago it started to challenge Royal Mail over what's known as the "final mile", delivering direct to homes in West London, Liverpool and Manchester.

The ambition was to expand to every major city in Britain, reaching 42% of all UK addresses by 2019.

But at the end of last month's talks with investors failed and plans have unravelled with some speed.

2000 staff have been told their jobs are at risk. The union that represents them told me between 70-80% of them are on zero-hour contracts. They will be paid until Saturday and have been advised they are "free to seek work elsewhere".

LDC, the private equity arm of Lloyds Banking Group, was going invest £70 million and take a 60% stake in Whistl but evidently changed its mind.

Why isn't clear. Whistl blames the regulator for failing to stand-up to Royal Mail, allowing it to strangle a competitor in its infancy, something OFCOM denies.

Stephen Gibson, a former postal regulator, points out that mail volumes are still falling at a fair old rate - around 5% a year. He believes LDC may have looked at the future of the letters business and decided it wasn't terribly bright after all and that its money would be better invested elsewhere.

All of which is rather interesting because Royal Mail has spent the twelve months warning anyone who would listen that the universal service (its requirement to deliver to every address in Britain, six days a week for a single price) was under threat specifically because of delivery competition from Whistl.

That competition has now gone. Royal Mail is now the only postmen in town. Universal service safe, no?