Select Committee on Business and Enterprise Sixth Report


Conclusions and recommendations


Timeliness

1.  The relative slowness of the Government and Post Office Ltd replies would have been easier to understand if they had been final statements of the position. In fact, there have been further developments since then. We regret that the Government and Post Office Ltd responses were neither speedy nor definitive. (Paragraph 4)

Local Authority and MP involvement

2.  Since the Government and Post Office Ltd responded to our report on 3 April, Post Office Ltd has announced that in future it will engage with MPs "10 days before the start of the public consultation in their constituencies in relation to the current Network Change Programme, rather than a few days before the consultation begins as at present". While this is welcome, we do not understand why it did not form part of the response to our report, and consider it disappointing that the Post Office took no steps to inform us, or seek to revise its response. (Paragraph 7)

3.  We note that successful dialogue requires both parties to engage properly, and urge local authorities and Post Office Ltd to work together as the programme continues. (Paragraph 8)

Sustaining the Network

4.  We accept that the Government has no desire to see the network shrink below 11,500 outlets between now and 2011. Indeed, it is investing £1.7 billion to safeguard the network. However, there is no guarantee that there will not be further closures after the Network Change Programme as a result of individual postmasters' and postmistresses' decisions. We note that Post Office Ltd itself does not believe "it is possible or desirable to set a minimum number of fixed outlets." We expect Post Office Ltd to share the Government's commitment to maintenance of the network. (Paragraph 10)

Access Criteria

5.  The Government has asked Post Office Ltd to work with Postwatch to "develop a new code of practice covering 'business as usual' network changes to reflect the current policy and lessons learned from the Network Change Programme," and Post Office Ltd told us that it looks forward to working with Postwatch and its successor body, the National Consumer Council, to draw up such a code. In successive Reports we have expressed our concern about the transfer of responsibility from Postwatch to the NCC at such a critical time in the Network Change Programme. We recognise that Postwatch is currently heavily burdened by the need to monitor the Network Change Programme itself. However, we think it is important that the Code of Practice is drawn up speedily, and that the transfer of responsibility does not cause delay. We urge Postwatch and Post Office Ltd to start work immediately.
(Paragraph 12)

6.  The future shape of the network is a matter of direct political concern and will be determined by the Code of Practice. We wish to see a draft of the code before the summer recess. Ultimately, Government, as sole owner of Royal Mail Group, cannot duck responsibility for the shape of the network. While we do not expect it to replicate other parties' monitoring, we expect it to use those monitoring returns to ensure its considerable subsidies are being used to secure a network which meets the public's needs. (Paragraph 13)

Outreach

7.  Although Post Office Ltd has told Postwatch they believe relatively few customers will be affected by the inability of some outreach services to handle packets weighing more than 2kg, it will mean considerable inconvenience for those who need to send large packages, and could have an impact on local businesses. We note that the universal service obligation extends to packages of up to 20 kg. We consider that all Outreach services should be able to handle packages of up to 20 kg. (Paragraph 16)

Closure of profitable branches

8.  The post office network is a social as well as a commercial asset; as Postwatch says "profitable offices are likely to be heavily used, and closures would therefore affect many customers". We continue to believe there should be a presumption against their closure. (Paragraph 18)

9.  Post Office Ltd's own figures leave significant uncertainty as to where £57 million of savings will come from. It is not surprising there are fears that as offices are closed, overheads per office will increase, and decline will continue. (Paragraph 21)

10.  Given the lack of transparency about Post Office Ltd's finances, and the reported deficiencies in Royal Mail Group's financial systems, it is impossible to be sure that the allocation of costs to individual post offices is rigorous. Post Office Ltd is a publicly owned monopoly, which provides many of its services on behalf of the Government and receives substantial taxpayer support; there should be far more clarity about such matters. (Paragraph 23)

Closure Decisions

11.  We understand why the Government is reluctant to become directly involved in decisions on the closure of particular offices. Closure proposals rest on a great deal of detailed local and commercial knowledge, which central Government cannot replicate. Nonetheless, it is not satisfactory that Royal Mail Group is left to be the sole arbiter of the network. (Paragraph 28)

The statutory framework

12.  We would be concerned if regulators and consumer bodies were not using their powers to the full. We are likely to return to this in the autumn. (Paragraph 35)

Wider responsibility

13.  There appears to be little or no co-ordination between regulators, between regulators and Government, or between government departments about the social effects of withdrawing payment services from the post office network. Given the grounds on which state aid was granted, and the current tender for the new Post Office Card Account, the loss of which could devastate the network, we believe this needs further consideration. (Paragraph 36)

The reviews

14.  We do not think it is reasonable or prudent to conduct reviews of mail services without looking at the relationship between Royal Mail Group and Post Office Ltd. Given the lack of clarity about the finances of the network, and the apparent disjunction between the Government's desire for a network of 11,500 offices, and Post Office Ltd's much more nuanced response, we recommend that Postcomm and the Postal Services Review include a thorough examination of Post Office Ltd as part of their work. There should be as much clarity as possible about the operational and financial relationship between the post office network and the universal service provider, and about the potential effects of changes in postal services on the post office network. We intend to examine output from those reviews in the autumn. One thing is clear—history has given us a network which remains among the largest in Europe. The Government and the European Commission accept the network provides a valuable service: all Government departments should bear that in mind when they consider how to provide their services. (Paragraph 39)


 
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Prepared 2 June 2008