Written evidence from the Federation of
Small Businesses
INTRODUCTION
The Federation of Small Businesses is Scotland's
largest direct-member business organisation, representing around
20,000 members. The FSB campaigns UK-wide for an economic and
social environment which allows small businesses to grow and prosper.
This response has been submitted by the FSB's Press and Parliamentary
Office in Scotland on behalf of its Scottish members.
The FSB has already provided written evidence on
the Postal Services Bill to the Bill Committee. Some of the information
provided below therefore mirrors our previous submission.
What is the demand for postal services in Scotland
and how might this change in future?
Demand is still high for postal services amongst
the small business community. Below is some feedback from our
members via 2009 and 2010 member surveys about postal services.
Views of Scottish members
¾ 56%
of Scottish FSB members rely on the Royal Mail and post office
services for between 80 and 100% of their business post.
¾ A higher
percentage (33%) of Scottish members rely on Royal Mail for 100%
of their business post compared with the whole of the UK (28.2%)
¾ 16%
of Scottish FSB members have no available alternative carrier
in their area.
¾ Of those
who have access to alternative carriers, around 41% of Scottish
members consider their services to be too expensive.
¾ 61%
of Scottish members said that changes to the postal service could
have a negative impact on their cash flow.
¾ 71%
of Scottish FSB members would be prepared to pay more for stamps
and other postal services in return for improved services from
Royal Mail.
Views of all our members (including Scottish members):
¾ 59%
of FSB members in the UK want to continue to receive mail deliveries
six days a week.
¾ 94%
of our UK members want a UK-wide postal service.
¾ 82%
want to keep the single, UK-wide pricing structure
How could the range of services provided by the
Royal Mail Group be expanded to include Government, local government
and financial services?
Post offices may have a more prominent role in providing
a link to services, particularly online government services, for
those who do not or cannot access the internet. There are many
in remote communities whose access to the internet is at best
limited and at worst non-existent. A significant proportion of
the UK population (around 9.2 million according to the latest
figures from the Office of National Statistics) has still never
accessed the internet. In terms of FSB members, around 11% of
Scottish members indicated that they did not use the internet
at all in 2009. This indicates that there are still a few small
Scottish business owners who appreciate opportunities to access
hard copy forms or obtain assistance in submitting information
electronically.
A dedicated business counter for business transactions
and business post in post offices would be beneficial for our
members, particularly in improving efficiency of service. The
FSB has campaigned for the establishment of a publicly owned Post
Bank, operating through post offices and offering a full range
of banking services, because at least 38% of our members indicated
that they would switch their account to a Post bank tomorrow for
business banking if available. A further 18% would have switched
if its establishment were proved successful. We therefore regret
that the option was rejected at this time and would urge Government
to reconsider its position in the near future.
Post Offices in local communities are uniquely placed
to gather the views of local users. The House of Commons Business
and Enterprise Committee's report in 2009 highlighted the potential
of the postal network in local and central government consultation
and information dissemination. For example business advice and
signposts to resources to support businesses such as Business
Gateway in Scotland and local authority economic development activity
would be useful.
Financial services should continue to be delivered
by post offices and the options expanded. These services are
particularly valued by individuals and small businesses in remote
locations.
Is the number of post offices and availability
of postal services in Scotland in a) urban, b) rural and c) remote
areas right?
Post office closures must be halted. Currently the
majority of business users in Scotland are reasonably content
with access to post office services currently available, although
there is room for improvement in the quality and breadth of services.
The latest round of closures still sought to ensure a distance
from the nearest post offices of no further than 6 miles. Travel
time and cost to and from post offices are deterring factors for
any further closures. The longer and more money and fuel spent
trying to get to and from post offices by more people the higher
their carbon footprint, and the lower their productivity. This
is true in either rural or urban settings. Where rural areas
have limited access to internet, the reliance on the post office
for a wider range of services is also a factor.
Is the number and role of sub post offices and
outreach services effective in providing postal services in Scotland?
There are more than 1,400 post offices providing
postal, financial and other services in Scotland. By and large
this is a satisfactory number and geographical spread according
to the recent Consumer Focus Scotland survey, Consumer Survey
2010.
What are the implications of the Postal Services
Bill for the universal service obligation?
The Bill is not clear about what defines the universal
postal service and there appear to be several clauses which allow
for a withdrawal of what is currently understood to define the
universal service. The FSB is concerned that any step back from
current expectations would further disadvantage small businesses,
especially in rural and remote areas where geographical location,
population and other factors already exert pressures.
Some particular areas for concern in the Bill are
set out below.
Part 3, Clause 28-29: OFCOM's duty to carry out
their functions in such a way that they consider will meet the
needs of users of the universal postal service.
The wording of the clause leaves the possibility
of OFCOM deciding what consumers should want or need. FSB believes
that OFCOM should be required to consult business customers -
particularly small businesses - to determine what constitutes
reasonable needs of users. The same goes for Clause 32, (2b),
page 18 line 8-9 which states that minimum USO requirements do
not need to be met in such geographical conditions or other circumstances
as OFCOM consider to be exceptional.
Part 3, Clause 28: efficiency and financial sustainability
are named as factors that the service would be subject to.
This suggests that were it less efficient and less
financially viable to provide a service to a particularly remote
area, the service might be suspended, thereby negating its "universality".
Businesses and consumers in remote areas, particularly islands,
are already at a disadvantage relative to their more urban mainland
counterparts. Some carriers refuse to deliver to islands and
others impose a much higher cost on the consumer for delivery
because of the distance and remoteness of the address. Reliance
on the universal service here is therefore far greater.
Similarly, Part 3, Clause 30, sub-section 1(b)
makes a provision for OFCOM to designate identifiable points for
the receipt of postal packets which indicates that a withdrawal
from delivery to every address in the UK 6 days a week might be
possible under proposed legislation.
This clause may relate to collection of parcels when
delivery is not possible due to no-one being home, or delivery
to another designated point at the request of the recipient, but
it could also be otherwise interpreted. The Bill must not be
worded in such a way as to allow for withdrawal of the service
to customers. Should the Bill wish to encourage the designation
of additional points at the behest of customers, this should be
legislated for elsewhere, rather than amending the minimum standards
of service.
Part 3, Clause 30 lines 28, 35 and 39 refer to
affordable prices.
The FSB considers that the term "affordable"
should be determined by the business community whose mail requirements
are the most time critical and cash-flow dependent. The prices
should be affordable, minimal and universal. This too applies
to Clause 35 (4-5), lines 13-22.
Part 3, Clause 33, page 18 refers to a review
of minimum requirements of the universal service which would be
carried out by OFCOM
The FSB believes that this Clause should include
consultation with businesses and others who depend on the postal
network as an integral part of any review.
What benefit might a mutually owned or community
run Post Office have for Scotland?
The FSB is not best placed to take a view on the
benefits or otherwise of various business or governance models
for the post office or its services. Our priority is that the
services, whatever model used, meet the reasonable needs of the
small business customer.
Comments on the work of Parcelforce and the delivery
of parcels to remote areas in Scotland
The FSB seeks a level playing field for all Scottish
businesses regardless of their location and continuation of the
Parcelforce service and standard pricing is key to this aim.
Some other carriers charge far higher tariffs for delivery to
and collection from remote and rural areas, thereby disadvantaging
rural businesses in comparison to their urban counterparts.
Some carriers do not even provide a service to areas beyond the
Scottish mainland, which means that island communities and businesses
rely even more heavily on Parcelforce.
What is the impact of postal services in Scotland
on businesses?
Our statistics above show that small businesses such
as our members still rely heavily on the postal service for receipt
and distribution of payment by cheque to and from both suppliers
and staff. Changes to the postal services, particularly the universal
service obligation cause concern amongst our Scottish members
who are only too aware of the significant impact delays in receipt
or dispatch of payment can have on small businesses with limited
cash-flow. The impact is proportionally more adverse than for
large business and in Scotland where 93% of the private sector
is made up of small businesses with fewer than 10 employees[18],
this should be particularly considered.
The wider economic impact of postal services in
Scotland on rural communities
Businesses in remote areas in many ways represent
the lifeblood of those areas and have a proportionally larger
impact on community and economic resilience than similar businesses
in more urban settings. Improvement in efficiency of the postal
service should facilitate - not present an obstacle to - commerce
in remoter areas. There are opportunities to maximise the positive
effects the postal services can have on small rural businesses
as outlined above, but a further withdrawal and contraction of
the service's reach could contribute to disastrous outcomes for
these same businesses, and could ultimately lead to greater community
dependence on the public purse, thereby negating any efficiencies
gained by the reduction of service.
18 November 2010
18 Scottish Corporate Sector
Statistics 2010 Back
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