5 Postal Services
Scottish
Government White Paper
61. The Scottish Government has said that if Scotland
votes for independence, Royal Mail would be "brought back
into public ownership in Scotland" and that the existing
service levels would be maintained, including the Universal Service
Obligation. In addition, it states that greater priority would
be given to "improving geographic coverage, particularly
in remote rural areas". According to the White Paper:
The EU requires postal deliveries and collections
to be made five days per week in a member state. In an independent
Scotland, there will be a service to match, as a minimum, the
level of service provision inherited from the UK on independence,
which is currently a six days per week service for mail.[65]
62. The White Paper also addressed the question of
ownership of Royal Mail. The ambition to retain the Royal Mail
in public hands (the White Paper was written before Royal Mail
was privatised) would be "considered in the light of circumstances
at the point of independence". It went on to state that:
Bringing the Royal Mail into public ownership
will require negotiation with the UK on Scotland's share of the
government stake, and establishing a new publicly-owned postal
service in Scotland. Costs arising from this process will also
require negotiations with Westminster, recognising that it proceeded
with the sale of Royal Mail after the Scottish Government had
made clear our intention to bring the mail service in an independent
Scotland into public ownership.[66]
63. The renationalisation of the Royal Mail may
well be an attractive campaigning tool. However, the Scottish
Government has to set out in detail the costs of renationalisation
and how they would be met. Included in that assessment must be
an assessment of Scotland's proportion of the historic pension
liabilities currently held by the UK Government. Without that
detail, the policy of renationalisation is nothing more than an
uncosted aspiration.
Sustainability of the Universal
Postal Obligation
64. The EU minimum standard for the UPO is for a
5 day week delivery service. Should Scotland retain or regain
membership of the EU it would have to meet that requirement. It
should also be noted that the current service in the UK goes beyond
that requirement.
65. The sustainability of meeting the UPO requirement
was called into question by a number of our witnesses. In particular,
it was noted that the rural nature of Scotland and the associated
cost meant that the UPO would either need to be subsidised or
that post would become substantially more expensive. In its evidence,
Consumer Futures told us the Universal Service Obligation (USO)
required Royal Mail, as the designated Universal Service Provider
(USP), to provide "a mail delivery and collection service
six days a week for letters, and five days a week for parcels,
at a uniform affordable tariff across the UK".[67]
It went on to state that the USO was of particular value in Scotland
due to the high number of rural and remote areas contained within
it:
Almost one million people live in rural Scotland
and 280,000 of those live in remote rural areas. Rural Scotland
accounts for 98% of the land mass of Scotland. Scotland has approximately
96 inhabited Islands with a total population of around 100,000.[68]
66. Consumer Futures also noted that almost half
(45%) of the 3000 addresses exempt from the USO, for health and
safety or difficulty of access reasons, were in Scotland; and
that the three postcode areas in the UK exempt from Royal Mail's
quality of service standards are all in Scotland-HS (Outer Hebrides),
KW (Kirkwall), and ZE (Lerwick).
67. Consumer Futures concluded that in Scotland there
was "substantial evidence" of the difficulties faced
by consumers in Scotland, due to "higher costs of delivery;
no delivery to their location; longer delivery times; lack of
transparency of delivery costs; and a lack of up-front information
about delivery costs".[69]
68. The UK Government noted that:
The current UK postal network created economies
of scale which helped deliver a comprehensive provision of services
which help support Scottish rural or small businesses that use
or rely on the Royal Mail's provision of the universal postal
service. It believed that should Scotland leave the UK "an
independent Scottish state would have a higher proportion of rural
areas than the UK as a whole and maintaining these services could
result in higher costs being passed to consumers".[70]
69. The UK Government also pointed out that it was
committed to a policy of maintaining "a national network
of at least 11,500 Post Office branches" in which 99 per
cent of the UK population were within 3 miles and 90 per cent
within 1 mile of their nearest Post Office outlet. In respect
of the rural population, the requirements were "95 per cent
of the total rural population should be within 3 miles, and 95
per cent of the population in every postcode district should be
within 6 miles of their nearest Post Office outlet". Not
all of these outlets were commercially viable and therefore the
Government provided a subsidy:
This subsidy is paid to POL as a single annual
sum (£210 million in 2012-13; £180 million in 2011-12;
£150 million in 2010-11). There is currently no mechanism
for allocating the subsidy down to individual non-commercial branches.
In the last 5 years Scottish Government funding has been for two
Post Office Diversification Schemes of around £1 million
each.[71]
70. In evidence the Secretary of State confirmed
that the costs to an independent Scotland would be "significantly
costly" and that the result would be either an increase to
the stamp price or a bigger state subsidy.[72]
71. We do not believe that the Scottish Government
has set out a coherent body of evidence to show how it would maintain
and pay for the Universal Postal Service in an independent Scotland.
The risk to Scotland is that provision of the Universal Postal
Service will come at significant additional cost, either to the
taxpayer or to the consumer.
Cross-border
mail
72. A number of witnesses raised concerns about cross-border
mail in the event of Scottish independence and highlighted the
experience of the postal trade between Northern Ireland and the
Republic of Ireland. In particular, any price differential between
post going to and from and independent Scotland would run the
risk of placing further cost pressures on Scotland. Both the CWU
and Consumer Futures highlighted the need to address cross-border
postal services between and independent Scotland and the rest
of the United Kingdom. Consumer Futures stated that a new pricing
mechanism would be necessary and set out the following potential
pricing scenarios:
International rates could be charged. Royal Mail
currently charges consumers EU rates for sending mail between
Northern Ireland and the Republic of Ireland;
A standard rate for post between the current
UK nations, or between some of the nations, could be charged.
An Post, the Republic of Ireland USP, operates an 'all-Ireland'
rate for mail which distinguishes Northern Ireland from the rest
of the UK; or
A preferential rate for mail between Scotland
and the rest of the UK could be negotiated and agreed. Preferential
rates between neighbouring postal operators are commonly found
in Europe.[73]
73. The CWU stated that the Government of an independent
Scotland "may seek to negotiate a position similar to that
of the Isle of Man and the Channel Isles, where postage rates
are the same as to and from UK destinations".[74]
However, it was concerned that there was a risk that "mail
from Scotland to England would be classified as international
post".[75]
74. Consumer Futures was also concerned with varying
service standards between an independent Scotland and the rest
of the United Kingdom. As an example, Consumer Focus set out the
current position between Northern Ireland and the Republic of
Ireland:
Our research found that over a quarter of all
consumers surveyed (which included businesses) had taken post
destined for the Republic of Ireland across the border to use
An Post postal services, mainly because of the lower cost and
perceived faster delivery time. Anecdotal evidence from sub-postmasters
in border communities would suggest that this level has increased
since this research was undertaken in 2009. Postal competitors
are also emerging who are offering competitive tariffs for posting
from Northern Ireland to the Republic of Ireland. Similar behaviours
emerging in the event of Scottish independence could potentially
impact upon the Scottish USP's and/or Royal Mail's mail volumes
and consequently the sustainability of the USO.[76]
75. The Scottish Government has not set out in
any detail how it will mitigate against the financial pressures
of cross border postage in the United Kingdom. Given that this
will place further financial pressures on a Scottish Mail Service,
the provision of this detail is a pressing matter.
65 The Scottish Government: Scotland's Future: Communications and Digital
http://www.snp.org/sites/default/files/document/file/scotlands_future.pdf Back
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The Scottish Government: Scotland's Future: Communications and Digital
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HM Government: Scotland analysis: Business and microeconomic framework Back
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HM Government: Scotland analysis: Business and microeconomic framework Back
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Q188-9 Back
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http://www.postcodes.royalmail.com/personal/help-and-support/I-need-advice-sending-mail-to-the-Channel-Islands-and-Isle-of-Man,Ev54 Back
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