2 Proposed changes to the Post Office
network
Introduction
4. Since its inception in 1854—when the Royal
Mail set up its own wholly-owned post offices—the Post Office
has undergone a series of reforms. The Post Office was nationalised
in 1969. In 1986, Royal Mail was split into Royal Mail Letters,
Royal Mail Parcels, and Post Office Counters. In 1987, Post Office
Counters Ltd became a wholly-owned subsidiary of Royal Mail and
then in 2001, Post Office Counters Ltd became a public limited
company and was renamed Post Office Ltd.
5. The Postal Services Act 2011 made provision for
an unrestricted sale of shares in Royal Mail, and for Post Office
Ltd to remain in full public ownership, with the possibility of
a move to a mutual structure in the future.[3]
The Government is the only shareholder of Royal Mail Holdings
plc, and Royal Mail Holdings plc is itself the ultimate parent
company of Royal Mail Group Ltd. Royal Mail Group is made up of
four major operating businesses:
· Royal Mail letters provides the nationwide
delivery service;
· Parcelforce Worldwide is an express parcels
business;
· General Logistics Systems, incorporated
and based in the Netherlands, is Royal Mail's European parcels
business (Parcelforce Worldwide is its UK partner); and
· Post Office Ltd is responsible for the
network of post offices, including sub-post offices, franchise
offices, and the remaining Crown Offices.[4]
6. The Post Office remains an essential service which
is extensively used. A third of the UK population—just under
20 million people—and half of all small businesses visit
one of over 11,500 post offices every week.[5]
The Post Office is one of the country's largest cash handlers,
processing around £70 billion of cash and £636 million
of coinage every year.[6]
Post Office Ltd's written submission and the Government policy
document, Securing the Post Office network in the digital age,
gave the following snapshot of the activity of the Post Office
and its value to communities:
· In 2009 independent research estimated
the social value of the Post Office to be at least £2.3 billion
per year.
· In 2010/11, Post Office Ltd made a profit
of £21 million and in that year there was a Government subsidy
payment of £150 million.
· Of the current 11,500 post office branches,
373 are operated directly by Post Office Ltd; the remaining are
agency branches, run by independent business people or multiple
retailers, often as part of a retail business.[7]
· Of these agency branches, some 4,000 are
run by the four largest supermarket chains.[8]
The National Federation of Subpostmasters (NFSP)
gave the following assessment of the services offered by post
offices:
Post offices offer a uniquely wide range of products
and services under one roof—from postal services, travel,
telephony and bill payments to government services, banking and
financial services. Eight in ten post offices are run alongside
a shop, and post office shops play important roles in providing
local retail [facilities] including stationery, newspapers, food
and household goods.[9]
7. Despite the range of services offered and their
position as the social hub of many villages and towns across the
country, over 8 million customers have stopped using the Post
Office during the past 10 years. Post Office Ltd argued that this
trend was "largely driven by the reduction in government
services and a shrinking consumer mails market in an increasingly
digital world".[10]
This fall in customers has been accompanied by a steady decline
in Post Office branches over the past 30 years. The graph below
shows clearly that decline:
Number of Post Office Branches
Source: BIS, Securing the Post Office network
in the digital age, November 2010, Chart 3
Carole Campbell, a subpostmaster, described this
decline from a personal perspective:
The loss of a rural sub-post office is very damaging
to the community as a whole and I know my customers are very upset
at the prospect of losing theirs.[11]
This decline sets the back-drop for the Government's
proposals and demonstrates the challenge facing it in providing
a secure and sustainable future for the Post Office.
Government proposals for reform
8. Securing the Post Office Network in the Digital
Age sets out the Government's proposals for the future of
the Post Office network. In its foreword, the Secretary of State
for Business, Innovation and Skills, Rt Hon Vince Cable MP, describes
the overall aim of the proposed changes:
We believe in a Post Office with a public mission,
and the Post Office will not be for sale. But we do not think
that the current ownership arrangements, where Government acts
as ultimate 100% shareholder, always serve the best interests
of the Post Office. So we have put forward proposals in the Postal
Services Bill that would, in time, allow the Post Office to be
converted to a mutual. I want to empower those that know the Post
Office best—the subpostmasters, the employees, and even
communities—to have more of a stake in the future of the
services that they value.[12]
9. The key Government commitments are described as
follows:
· the Post Office is more than a commercial
entity and serves a distinct social purpose;
· post offices remain a valuable social
and economic asset for communities and businesses;
· there will be no programme of post office
closure under this Government;
· the Post Office is not for sale;
· there will be a provision of £1.34
billion for the Post Office to modernise the network and safeguard
its future, making it a stronger partner for Royal Mail;
· the Post Office will become a genuine
Front Office for Government at both the national and local level;
· there will be an expansion of accessible
affordable personal financial services available through the Post
Office;
· the Government will support greater involvement
of local authorities in planning and delivering local post office
provision; and
· the opportunity will be created for a
mutually owned Post Office.[13]
Paula Vennells, Chief Executive of Post Office Ltd,
supported the proposals and set out her ambition for the Post
Office:
If I have a vision, it is to have 30,000 post
office outlets, not 11,500. It is to have standalone electronic
drop boxes for mail packets. It is to have ATMs in railway stations.
It is to have identity kits in town halls and libraries, all branded
'Post Office'. But until we transform the current network and
make it more sustainable, that becomes just an ambition.[14]
In particular, she highlighted the financial commitment
given by the Government which she described as "perhaps the
biggest investment the Government has ever made in the post office
network, certainly in living memory and possibly ever".[15]
10. We welcome the Government's drive to put the
Post Office on a long-term sustainable footing and we support
its commitments as set out in Securing the Post Office network
in the digital age. The reform of post office network should
be seen as more than just a consolidation of the existing network;
it has the potential to deliver an expansion of the network's
coverage across the United Kingdom. However, this will happen
only if post offices are given sufficient flexibility to thrive.
In particular, far greater attention needs to be given to the
range of services post offices can offer. Equally, Post Office
Ltd has to provide sufficient support so that post offices can
meet the demands and social needs of the many varied communities
across the country.
3 Explanatory notes: Postal Services Act 2011,
para 16 Back
4
Royal Mail Group, Annual Report 2011 Back
5
Ev 42 Back
6
Securing the Post Office network in the digital age, page
10 Back
7
Ev 42 and Ev 44 Back
8
Securing the Post Office network in the digital age, para
1 Back
9
Ev 37 Back
10
Ev 42 Back
11
Ev 52 Back
12
Securing the Post Office network in the digital age, November
2010, foreword Back
13
Ibid, page 3 Back
14
Q 44 Back
15
Q 44 Back
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