4 The role of Post Office Ltd
100. Modernise or decline
recommended, and the Government accepted, that Post Office Ltd
should remain wholly publicly owned. Recommendation 14 is that:
Given the wider social role of the Post Office network,
Post Office Ltd should remain wholly within public sector ownership.[85]
Later the Report gives more detail for its recommendation:
Given the social obligations of the Post Office,
there is little prospect that the network will be sustained on
a fully commercial basis. We recommend, therefore, that it should
remain wholly within public ownership. To ensure that post offices
continue to provide a point of access to the universal service,
we recommend that there should be a long-term agreement between
Royal Mail and Post Office Ltd. We also believe that the post
office could enhance the service available to recipients by providing
a collection point for parcels and packages.[86]
We note that the review says:
This report is about the postal service: the business
of collecting, sorting,
transporting and delivering mail. It does not comment on the much
wider
retail and financial business of Post Office Ltd.[87]
101. Accordingly Post Office Ltd is to be separated
from Royal Mail Group, although both parts of the business will
be held by Royal Mail Holdings. Postcomm, a vociferous advocate
of this separation has said:
… there is a strong case for demerging POL from
RMG so that each business can focus more attention on its own
divergent problems. It is clear that POL needs to have a dedicated
focus to face the twin challenges of responding to changing customer
needs and establishing a sustainable network. The introduction
of private capital into Royal Mail Letters should be a separate
debate to private capital in POL, for the immediate term it is
likely that POL will remain in public ownership.[88]
In effect, the argument for demerger is that POL
and Royal Mail are different businesses, and will be best served
if their respective managements can concentrate on the need of
the business in question. In addition, it is argued that Post
Office Ltd carries out functions which are best kept in the public
sector.
102. We are currently conducting a major inquiry
into the future of the post office network. We are not in a position
at present to support or oppose separation of the two companies.
However, we are surprised at the lack of detailed analysis of
the case for demerger, and the lack of consideration given to
the ways in which the businesses are currently interdependent.
We note that Modernise or decline says:
We are clear that post offices provide a vital point
of access to the universal service for residential consumers and
small businesses. But the Post Office provides a much wider range
of services. Indeed, it is the country's largest retail and financial
chain. For that reason, the size and shape of the Post Office
network lies well beyond the scope of this report.[89]
103. There are many questions which need to be
thoroughly explored during the passage of the Bill. The
Future of the Universal Postal Service in the UK
says:
A partnership for Royal Mail will not impact its
commercial relationship with the Post Office. The Post Office
will continue to offer Royal Mail's products and services throughout
its network. However, it will provide a new opportunity for Post
Office to focus on its own challenges and create a vibrant future
for the network.[90]
The National Federation of Sub-Postmasters has written
to us, expressing its concern that the Government's proposals
do not take account of the operational inter-dependence between
Post Office Ltd, Royal Mail and individual sub-post masters.[91]
104. Although it offers a wider range of services
than mail services alone, Post Office Ltd provides access points
for Royal Mail Group's letters and parcels business. It is closely
linked to the postal network; 900 post offices are associated
with delivery offices, which provide sub-post masters with significant
income.[92]
Given this,
we believe there should be more information about the practical
consequences of separating the affairs of Post Office Ltd and
Royal Mail Group.
105. Clause 28 of the Postal Services Bill [Lords]
requires Ofcom to secure a universal postal service, and this
duty:
includes a duty to carry out their functions in relation
to postal services in a way that they consider will secure the
provision of sufficient access points to meet the reasonable needs
of users of the universal postal service.
(4) In this Part "access point" means
any box, receptacle or other facility provided for the purpose
of receiving postal packets, or any class of postal packets, for
onwards transmission by post.[93]
This raises a number of questions:
- How will Ofcom make the assessment
of the extent to which the access network meets the needs of users?
- In making its assessment, will Ofcom be required
to take account of the quality of "access points" such
as an unmanned post box that is limited in the size of letters
that can be accepted versus a staffed weighing counter at which
different sized stamps can be purchased?
- Given The Future of the Universal Postal Service
in the UK's assurances that Royal Mail will retain a relationship
with Post Office Ltd, is it correct to assume that post offices
will continue to be access points?
- Postcomm has the power to consider and advise
the Secretary of State on the Post Office network, although it
does not have direct regulatory powers. This is to be removed.
But if the Post Office network provided by Post Office Ltd is
to remain a key part of the universal service, then why is the
regulator's duty to advise in relation to the number and location
of post offices being removed? Surely the regulator will remain
well placed to comment on this issue, particularly as Ofcom will
be required to assess whether Royal Mail is meeting the reasonable
needs of end users under clause 29(2)?[94]
- Clause 34 of the Bill, which regulates access
conditions, gives Ofcom the power to require that the universal
service provider "give access to its postal network to other
postal operators or users of postal services" and specifies
that:
(2) The provider's "postal network"
means the systems and all the resources used by the provider for
the purpose of complying with a designated USP condition (and,
accordingly, includes arrangements made with others for the provision
of any service).
This leads to another question:
- Will Ofcom have the power to
require use of the Post Office network by companies other than
the universal
service operator?
106. The Postal Services Act
2000 says "'post office' includes any house, building, room,
vehicle or place used for the provision of any postal services".
We note that the Postal Services Bill [Lords]
changes this, and defines "post office" as "premises
in the United Kingdom from which postal services, or services
provided under arrangements with a government department, are
provided directly to the public".[95]
This could imply that the link between post offices and postal
services may gradually diminish. The Government should explain
what in this definition will distinguish a post office from another
government office, such as a Job Centre.
107. The material published
so far does not give nearly enough detail about the rationale
for a separation of Post Office Ltd and Royal Mail, or its practical
consequences. We will explore these issues further in our related
inquiry into post offices. We recommend that the practical consequences
of such a separation be explored in scrutiny of the Bill.
85 Cm 7529 p 6 Back
86
Ibid p 14 Back
87
Ibid, p 24 Back
88
Second response to the Independent Review, para 4.20 Back
89
P 8 Back
90
Cm 7560, para 5.10 Back
91
Ev 57 pp Back
92
Ev 58 Back
93
Duty to secure provision of universal postal service Back
94
The universal postal service Back
95
Clause 14, Interpretation of Part 1 Back
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