Opinion: A radical idea for the post office network

Isle of Iona Post Office, Scotland - Some rights reserved by Freddie H.A typical Saturday morning in the Thorpe household typically involves me meandering, in my usual untidy fashion, to one of the menagerie of corner shops which cosset Hammersmith high street from the unkempt collection of bookmakers, pawnbrokers and fast food joints which seem to be the fate of most urban centres.

From the shop, I will descend to the most desolate corner of a quiet bar and languidly let the tensions of the week be traduced by the temerity of the Times crossword. A potential constraint on my enjoyment of this rather rustic ritual is the propensity of the corner shop to have extra long queues on Saturdays.

Those of you who know me will be familiar with my typical demeanour, being that of a man who looks like he has been late for an appointment for sometime, but has no idea where he is actually supposed to be.
Tending to be pursued by a thousand ideas a day, my insistence on tracking each one down its individual rabbit hole lends my mood a mania which makes the Saturday morning mooching a rather necessary treat.
That’s why corner shop queues are a problem. Saturdays, which should be as undemanding as a Tory backbencher’s parliamentary question, suddenly become a source of fresh stress.

The queues are of course caused by people buying Lottery tickets for that night’s draw. While listening to the rat-a-tat of people reeling off their particular lottery preferences, the thought occurred to me as to whether the National Lottery is fit for purpose. As someone who once made a living writing horseracing columns, I won’t claim any moral objection to the principals behind the lottery. Its not, as some Liberal Democrats appear to believe, a tax on the poor. Rather it’s a consumer lifestyle choice, no different from me buying a Times and an overpriced premium larger.

My idea instead is to put the by-products of this lifestyle choice to work for the benefits of society.
Camelot , the company which runs the lottery, make large profits, based merely on the fact that they administer the game, they have not invented anything or produced anything new, in short, they add little value to the process and thus are unnecessary in economically liberal terms. Rather than nationalising the lottery, award the franchise to run it to the post office network, newly demerged from the Royal Mail.

This would allow the purely social good which is the Post Office, to be subsidised by the purely economic good which is the Lottery, without the state needing to interfere in the day to day running of either, and only the private company, Camelot, which adds no value to the process, loses out. While there are worthier causes than the Post Office, the post office already has people in place who know how to run a large scale distribution business.

Having the lottery administered by the NHS for example, would mean people who have no experience of this being deployed, instead of allowing them to concentrate on managing patient outcomes.

Camelot has recently announced that it is to double the price of its main ticket. Any company which can double its prices this economic climate without citing significant net increases in input costs is operating from a monopoly or oligopoly position in a distorted market.

Economic liberalism was founded to destroy such market distortions. When its impossible to pursue the traditional economically Liberal solution of flooding a distorted market with ‘thousands of little buyers and sellers’, the next best solution is to control the market and direct its surpluses to providing wider social goods.

Achieving social liberal outcomes through the use of economic liberal solutions is the optimal outcome for Liberal Democrats.

* David Thorpe is a member of the Liberal Democrats in Newham, and works for an economics publication.

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15 Comments

  • Care to turn your economic analysis to betting shops, David? There are rather a lot in your area, fuelled by the Gambling Act limit of 4 highly profitable but addictive “crack-cocaine-of-gambling” FOBTs (fixed odds betting terminals) per shop, which encourages firms to apply for multiple shops. And because very few other businesses want to open a premises next to a betting shop, they don’t have much competition. So we soon find we have nothing but betting shops!

  • I think your idea of giving the National Lottery franchise to the post office is an excellent proposal. I can see only upside and no flaws to the suggestion.

  • The Post Office network used to be cross-subsidised by Royal Mail as an integrated whole. That worked for 150 years, but then the EU said cross-subsidies weren’t allowed.

  • david thorpe 27th Jan '13 - 2:39pm

    thanks for the comments guys-firstly-I probably willw rite somehting on the betting shop issue in future.
    secondly-what I propose here is currently what happens in ireland-so there are no eu restrictions on it.

  • Aidan Fortune 27th Jan '13 - 3:19pm

    Interesting column. I deal with both Camelot and the Post Office as part of my day job so am intrigued by your idea. To be honest I’ve never heard a subpostmaster or anyone in the National Federation of Subpostmasters call for this, even though it would be a unique point of difference for them. The Post Office is undergoing some changes at the moment, introducing ‘Local’ models that enable retailers to sell POL products from behind the main till, so if anything, you might find it the other way around with Post Offices in more shops that have National Lottery, further adding to queues! This change to the Local model might also mean you see less National Lottery terminals in said stores.
    Both companies are fighting battles at the moment (Camelot fighting the threat from the Health Lottery, Post Office from private providers who are putting more tenders in for government contracts such as the DVLA).
    I do struggle to see what is in it for Camelot though. They do, as you say, have a monopoly but that’s one that’s enforced by law (The Health Lottery is technically 30-odd society lotteries) and they get to pick what stores hold their terminals. Some Post Office’s may not be fit for purpose and with so many branches closed down in the past decade that would mean less terminals in some areas resulting in even longer queues at the store with the Post Office and possibly less money for Good Causes. There is online playing of course but then both the stores and the Post Office lose out.
    The Post Office is set on becoming ‘the front office’ for Government and I believe that is the best route for them to take. As for avoiding the National Lottery queues, I would suggest remembering which shop sells it, and avoiding that one ;)

  • Richard Dean 27th Jan '13 - 3:44pm

    Can the PO not bid for the lottery, in the same way as others bid for it? At least then the PO would have the benefit of requiring the same kind of hard-headed disciplined business planning that others have to achieve, and without which a venture can easily fall into abject disaster.

    The idea of subsidizing the PO so that it can provide a social service to some communities seems a peculiar one, raising at least two sets of questions.

    One is, if the service is needed, perhaps because the people who need it are disadvantaged in some way, then why not pay for it directly? That way, one avoids wasting money. What is a “purely social good”, and in what way is the Post Office and example? And if the PO is a worthy cause, why can’t the Lottery just give it money?

    Another issue seems to be that people’s willingness to pay for something is an indicator of the strength of their desire for I. So, if people who are able to pay don’t, that’s an indication that the service is not really wanted, and so should be allowed to find the level that is appropriate for that demand.

  • Richard Dean 27th Jan '13 - 3:46pm

    I. -> it.
    Wouldn’t it be nice of people could edit their comments, within a reasonable time of course?

  • Daniel Henry 27th Jan '13 - 4:38pm

    Top idea.
    How would we go about doing it? Is the lottery contract a government decision?

  • Malcolm Todd 27th Jan '13 - 10:50pm

    Well, for the first time I can recall I both agree with a proposal by David Thorpe — which, incidentally sounds like an excellent, distinctive and achievable policy to go in a manifesto, if Lib Dems still think manifestos matter — and I got a genuine gurgle of pleasure from his writing: “my typical demeanour, being that of a man who looks like he has been late for an appointment for some time, but has no idea where he is actually supposed to be” — I am in no position to judge whether this is an accurate self-portrait, but what a marvellous image!

  • Great original idea Dave. I am a great fan of killing two birds with one stone.

  • david thorpe 28th Jan '13 - 3:04pm

    thanks for the comments guys.
    Aidan, good to ehar from you-and interesting points-In Ireland the Post Office run the Lottery, and also do ‘front of hosue for the government’ stuff’- wonder have you any experience of that.
    @ Daniel
    Yes CAMELOT won a tender which is awarded by a government body.
    @ Richard Dean
    A purely social good is soemhting which benefits society but not directly uincreases economic output.
    The Post office in rural areas provides a social outlet, but isnt economically viable.

  • david thorpe 28th Jan '13 - 3:05pm

    @ peter

    thanks for the kind comments

  • Richard Dean 28th Jan '13 - 10:24pm

    Investopedia defines a social good as “A good or service that benefits the largest number of people in the largest possible way. Some classic examples of social goods are clean air, clean water and literacy; in addition, many economic proponents include access to services such as healthcare in their definition of the social or “common good”.

    A postal service and associated savings facilities (do they still exist?) would seem to me to be a normal economic good, not really consistent with Investopedia’s examples. If I am in a town and post a letter, why would that not be a social good, while it would be if I was in a country village, say?

    Or do you mean a place where people can socialize? a place that makes people feel they are part of something? Villages with post offices do tend to feel a bit isolated, don’t they?

    http://www.investopedia.com/terms/s/social_good.asp#axzz2JJLtdlWO

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