Memorandum submitted by Christopher Swain
THE STATE
OF PLAY
As things stand at present the Royal Mail Group
(RMG) is seen as a loss-making, publicly owned organisation in
need of fundamental changes to its structure and operation. The
focus is on the accounting issues of revenue and costs and a desire
to limit or eliminate public subsidy. The tendency is to think
in terms of splitting off various parts such as Post Office Ltd
(POL), which are treated as the main drain on public finance,
and still further fragmentation in effect into Crown Post Offices,
post offices combined with other retail outlets (such as WH Smith),
a collection of commercially inviable "problem" sub-post
offices and a relatively hopeless category of locations to be
served by various forms of outreach facility. Our village service
in Henham (Uttlesford District) is now of this last named type,
being effectively a part-time branch of a continuing sub-post
office some ten miles distant.
FIRST THINGS
FIRST
Before proceeding further in questioning this
whole approach, which is likely to devise answers to the wrong
questions, the initial assumptions on commercial viability should
be reexamined. RMG is in an anomalous position in that it is generally
considered to be a public service in public ownership yet is allowed
to operate at arms length from government and to clothe itself
with the veil of commercial confidentiality. This means that it
is impossible for the public to question the efficiency and cost
effectiveness of RMG or POL under existing circumstances.
This puts the onus on BERR to monitor and appraise
RMG/POL's performance. It is to be doubted whether the department
does or is able to do this thoroughly. Tales of inefficiency and
waste are anecdotal, but nevertheless legion. So it is premature
to contemplate the involvement of the private sector either as
a source of capital injection or in order to reinvigorate management.
There is a strong case for an independent review of the structure,
management, systems and operational performance of RMG by outside
consultants in the context of current policies and guidelines
of the Shareholder Executive before making definitive judgements.
CURRENT THINKING
The principal lines of action being pursued
at present in order to deal with the RMG "problem",
apart from the purely negative approach of cutting down on so-called
uneconomic activities are to increase the range of services that
post offices could provide and/or to transfer support for the
least viable post offices from central government to local authorities—both
lines premissed on a separation of POL from the rest of RMG.
The Select Committee on Business and Enterprise
is concentrating at present on the first of these lines. The open
forum in Chelmsford on March 12 produced a number of interesting
ideas for the potential expansion of those services. Foremost
is the availability of banking facilities, given the virtual abandonment
of rural areas (and some of the deprived urban areas) by the high-street
banks. Banking is particularly important in the many instances
where the sub-post office is run jointly with the village shop.
Various other services (financial, advisory,
etc) have been mentioned, including those offered by a range of
third-sector organisations, but there are practical limitations,
in terms of space and staff capabilities in most existing premises,
and also complex questions of funding in the case of social support
services.
THE ESSEX
INITIATIVE
Henham has been an early beneficiary of the
Essex County Council initiative to re-open former sub-post offices
as part of its community support programme. The "hosted outreach"
service that the village now has
occupies the same part of the community shop as the
former sub-post office, but the ECC programme can only support
a reduced service of three mornings a week—half the previous
provision. The current support programme lasts only until March
2011.
Welcome as the ECC initiative has been the current
situation is less satisfactory than before in a number of ways
and there are implications to be thought through now that this
approach has generated widespread interest. Some of the negative
aspects have already been alluded to.
Briefly, these new issues that require attention
are:
1. Anything less than a five—or six-day-a-week
service is bound to lead to a loss of business and support, even
when people in the community make an effort to continue to support
"their" post office. It will certainly be less attractive
for business users. [The trade will not automaticly divert to
other post offices,)
2. The inevitable uncertainty about the level
and continuation of future funding is bound to affect the calculations
of risk and viability and level of commitment of an outside commercial
operator.
3. Being a branch of another post office must
affect the level of identification of the community with the project
and could make it more difficult for an operator to find local
people to staff the outlet (an important factor in the operator's
costings).
4. Once there are many local authorities involved
and a proliferation of individualised contract arrangements in
place, the result is likely to be a patchwork of arrangements
and considerable variability in the kind of service available
to the public.
5. It is a moot point whether there is likely
to be any net saving to the public purse from such diffuse arrangements
after taking into account the administrative as well as financial
costs of maintaining such a complex network compared with the
integrated organisation to which everyone is used.
SOCIO-ECONOMIC
CONSIDERATIONS
The case for maintaining the network of post
offices in rural areas rests on their importance for businesses
in those areas, as well as their function as a key service and
focus for those communities. There is a synergy between sub-post
office and village shop, especially as they are often run by the
same proprietor-cum-postmaster, in addition to the mutual benefit
of banking shop takings whilst reducing the cash-handling aspect
of the post office.
The existence of the post office often goes
hand in hand with survival of the shop as a commercial entity,
so that loss of the post office, or even its continuation with
a lower level of service, could imperil the shop. These are vital
outlets for many small and/or local producers and suppliers who
would not get a look-in with the larger stores and supermarkets.
Access to post office services is important
to the growing number of small businesses located in rural areas,
including those that have sprung up in the drive to diversify
farming businesses, to utilise redundant farm buildings and in
the move towards home-based businesses.
The increasing importance of localism and reduction
in carbon usage are as much factors in economic and regeneration
policies as in any policy of support for communities. In fact
there is clearly a strong link between the two ideas. It is also
becoming increasingly apparent that governments cannot (and do
not) rely on market forces to achieve these ends. Therefore it
is reasonable to argue that government should support, through
some mechanism or other, those facilities and services that sustain
local economic activity and community life.
There are three necessary components for living,
thriving communities and their health can be assessed according
to the extent to which they are present. They are: interaction
of people in their day-to-day activities—one important activity
being work-related; voluntary input to activities, whether of
a social or quasi-economic kind; and external support from government,
either through specific measures or through the slant of general
policies on development, transport and access to services and
facilities. Government attitudes and policies are often been inimical
rather than positive. Conventional commercial viability cannot
be the sole tenet of economic policy.
A FRESH VISION
It was stated at the outset that current lines
of thinking are concentrating on commercial viability, but it
should be recognised that this carries an implicit notion (however
limited or negative) of the role of RMG. Unfortunately this unstated
and unarticulated "role" treats the organisation as
just another player in the retailing and distribution markets
and overlooks those features that make Royal Mail and post offices
special.
A system for receipt and delivery of mail in
the form of a comprehensive network of post offices and the universal
doorstep delivery service is an essential element of infrastructure,
both social and economic, and as such it is a responsibility of
government to ensure that this system functions properly as one
of the vital communications systems in an advanced and civilised
society.
A major underlying reason for RMG's predicament
is that its operating environment has changed significantly, yet
its purpose and role ostensibly has not. It is therefore essential
to provide a forward-looking role before making drastic changes
to the organisation and activities of RMG. An unfortunate side-effect
of this conventional thinking has been to set up a misleading
and largely articificial distinction between social, economic
and commercial aspects.
This new vision of RMG should focus on the service
required by the community rather than on the existing organisation
and its set of assets. That focal activity is the receipt/collection
and delivery system for letters and packets sent to or from individual
customers and businesses.
This New Royal Mail would cease to be preoccupied
with head-on competition with the major private enterprise businesses
that have become established in handling larger items, which by
their nature involve occasional delivery to specific addresses,
though there is no reason why it should not contract them to collect
and deliver in the same way that any individual may.
Furthermore. bulk mailings (including therefore
bulk direct mail-shots) should also be handled only under special
arrangements that recognise that they represent an extra burden
on a system for which it is not designed. This implies a premium
rather than a discount for bulk mail. At present businesses obtain
something of a free ride .
To recognise the foregoing arguments is to highlight
the lack of vision in much current thinking, with the distinct
possibility that the sum of the individual positive actions that
have been advocated to the Select Committee might not make a great
deal of difference in themselves to the problem of commercial
viability, even if all the problems alluded to above are overcome.
It goes without saying that there are numerous
facets of this vision that require research and analysis and various
ramifications to be examined, but, given the level of public anxiety
over post office closures and the turmoil over the future of RMG,
it surely is important to take this opportunity to consider any
fresh approach that holds the promise of breaking the deadlock
and of providing a more positive vision of the postal system for
the future.
March 2009
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