Norman Lamb writes… Putting two national treasures back on their feet

Royal Mail and the Post Office are two of our most recognisable and most trusted brands. For hundreds of years the post office has been at the heart of our communities – with a value that goes beyond mere economics to the social and the symbolic. Royal Mail, meanwhile, is a service that covers every part of the country and reaches every part of society. The public, quite rightly, is fiercely protective of both institutions.

Sadly previous governments left them both in a mess. Labour opened up the postal market, thereby exposing Royal Mail to the full force of competition. Ludicrously, however, the Regulator tied the company’s hands at the same time, preventing it from competing on an even footing. The widely recognised problem of ‘downstream access’ pricing, which allowed competitors to use Royal Mail for the final (most expensive) mile of delivery at a low charge for the service is a prime example.

It is now the Liberal Democrats in Government who are getting Royal Mail and the Post Office back on their feet and, as minister for postal affairs, I am continuing the work started by Ed Davey.

Royal Mail

Firstly, following the Postal Services Act that Ed took through Parliament last year we have separated Royal Mail from the Post Office to allow a vibrant future for each. The Act made provision for the sale of Royal Mail with a minimum 10% employee ownership, and the injection of capital it desperately needs to safeguard the universal postal service.

Secondly, we have freed the company of a huge deficit by taking on its pensions liabilities. This is good news for postmen and women – as demonstrated by the warm welcome the news received from the Communication Workers Union.

Thirdly, we have provided stronger protections for the universal service obligation which we have now enshrined in law. Ofcom, as the regulator, has a duty to protect that service. The rise in stamp prices from 46p to 60p for first class, and from 36p to 50p for second class (with concessions for vulnerable customers next Christmas), should be seen in this context. Stamp prices in this country have been remarkably low compared to the rest ofEurope; meanwhile, letter volumes have continued to decline as we all use email more and more. Our primary objective is to protect the universal service obligation, but in order to do so we have to allow Royal Mail the means to be commercially viable.

The Post Office

Firstly, we have committed that the Post Office is not for sale, and that there will be no further programme of post office closures. This is a vital vote of confidence for both the network and those who depend upon it.

Secondly, we are investing £1.34billion in modernising the network. This funding was secured at the spending review, and will see significant improvements at around 6,000 branches. The money comes with the critical condition that the Post Office continues to meet current access criteria that see 93% of the population live within a mile of their nearest branch.

Thirdly, we are looking at how government – both local and national – can work with the Post Office to our mutual advantage. By making the Post Office a genuine ‘front office of government’ we can save money for government and local councils, bring more customers into the post office, and make access to government and council services more convenient for people. Councillor Richard Kemp is working with Post Office Ltd to develop these ideas and twenty five councils are developing pilots which could help guide other councils. I encourage Lib Dem councillors and activists to look at whether it could benefit their area.

There is huge potential for the future of Royal Mail and the Post Office. The rise of the internet means the market has changed dramatically. It presents both threats and opportunities – parcel business is rising significantly as people increasingly buy and sell over the internet. A universal postal service and a post office network that stretches the length and breadth of the country will always have a vital role to play. We should be proud that Liberal Democrats in Government are now the ones responsible for securing their future. The steps we are taking will ensure that the Post Office and Royal Mail are still here, still trusted and instantly recognisable in years to come.

* Norman Lamb is MP for North Norfolk and was Liberal Democrat Minister of State at the Department of Health until May 2015. He now chairs the Science and Technology Select Committee

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9 Comments

  • DAVE WARREN 6th May '12 - 2:44pm

    I am sorry to say that in a lot of areas of Post Office policy successive governments have got things badly wrong and this one has compounded that situation with its full privatisation of Royal Mail.

    As someone who worked in the industry for 25 years i just cannot see how selling off the delivery, collection and mail processing parts of the organisation will make things better for the public.

    For around 20 years Royal Mail has been run like a private company in public control and the result was a worse service.

    As a former union activist i meet a lot old work colleagues and the way employees are treated isn’t something this government would want to shout about either.

    Its probably too late to change course now but staff morale is terrible and the service has declined.

    That is the real situation ‘on the ground’.

  • Having recently attended a Post Office presentation on the proposed “network transformation” (sic) I believe the reality is a bit different from the one Norman is presenting.

    In brief, the Post Office are “offering”, on a purely voluntary basis of course, sub postmasters the “opportunity” to :

    a) Become one of 2000 Post Office Main Branches, offering about 96% of the full range of services on a 9 – 5.30 basis

    b) Become one of 4000 Post Office Locals, offering about 95% of the services, but in a Convenience Store format operating whatever the store opening hours are, usually later than 5.30.

    c) Do nothing, and stay exactly as you are

    If a postmaster opts for a) or b), they will benefit from capital improvements from £10 – 45,000, BUT, the current Core Tier Payment (equivalent to 20 – 40% of a postmasters annual income) disappears, as does any element of holiday pay, and income is purely generated by transaction fees.

    In the case of c) current levels of pay are protected up till 2015, but beyond that, nobody knows.

    This investment programme is predicated on Post Office Limited winning back significant lost business and/or gaining new business, an aspiration with a low level of reality given POL previous record. Even more madly, this plan puts investment before contract wins.

    A few points are worth raising:

    1. This does not tackle the elephant in the room, the 370ish remaining Crown POs that collectively lose a staggering £60 million per annum, almost equivalent to the total Core Tier Payment paid to the 11,500 sub post offices.
    However, tackling this would mean taking on the CWU, which makes picking off non-unionised, self employed and vulnerable sub-post offices a much easier job.

    2. Norman and POL trumpet the £1.2bn plus investment the Government are making, but even if every single one of the 6000 new style sub post office got the 45,000 investment (which they won’t) this comes to less than £300m, leaving a cool £900m sticking to the fingers within POL. How much of that will go on modernizing sorting offices, and how much on maintaining the bloated POL management structures is anybodies guess.

    This siphoning effect is common – however much POL gets paid for any transaction; car tax discs, passports, benefit payments, only a small percentage goes to the poor sub postmaster actually doing the work, the remainder sticking at POL. It is therefore unsurprising that POL is constantly losing contracts to more realistically priced competitors.

    3. There are many people who have little sympathy for the plight of post offices; horseshoe manufacturers in a motorized world, but the key difference is that, as POL lose more and more contracts, sub post offices are forbidden by the POL contract from dealing with the companies that DID win

    Anybody unlucky enough to own a Post Office will find it very difficult to sell, as nobody sane (and certainly no bank) is going to take on a mortgage for a business with a shrinking range of products and no ability to generate extra business or even guarantee income levels.

    These changes, like all the deteriorations in Post Office contracts, have been “negotiated” by the Federation of Sub Postmasters, which from its name you would expect to be representative of all sub postmasters. In reality, most of its members own very large or multiple post offices, and therefore have no real interest in protecting the smaller community offices .

    It’s not much of a stretch to imagine, post 2015, that the 5,500 untransformed branches will face wholesale closure leaving the transformed branches as a (much cheaper) network moving forward.

    But of course, any and all of these changes are “purely voluntary”, so the Coalition can do a Pontius Pilate when sub postmasters get starved out of business and close.

    Sobbing Post Master

  • Andreas Christodoulou 6th May '12 - 3:37pm

    National treasure? What are you on?

    It takes pieces of paper from one place and puts them in another place and to be quite frank, could pretty easily be replaced by emails and telephone calls by business if it was privatised and inevitably became more expensive.

    Yeah, inevitably people would trump out arguments about little Ethel Whittlebottom who’s been writing letters to her sister Silvia who’s lived up a tall mountain for nine years and that’s her only method of communication and the fact that the cost of her letter will go up from 45p to a pound or two will mean the end of life as we know it, but the sad fact remains that we send very few letters as a country now, and if there was no Post Office the world would get by and we’d save ourselves hundreds of millions of pounds a year.

    For the love of god, just let other companies send post and be done with it. It’ll get a bit more expensive, we’ll probably send more emails and the country won’t be chucking cash down the toilet.

  • @Andreas Christodoulou

    What really amuses me about comments like yours is that on the odd occasion when irregular users have to buy a stamp, they all say “HOW MUCH!”, particularly at Christmas which is the only time many people use it.

    What you fail to recognise is that, rightly or wrongly, we are funding a network of 11,000+ post offices and yet we are not using them to their full capacity. We have various government agencies/councils contracting with private letter carriers for bulk mail, ostensibly to save money. This entirely overlooks that the expensive and loss making part of the operation is still carried out by the Post Office, so any “gain” being made is merely a hidden subsidy from one government pocket to another with a private profit being taken in the middle.

    If you are unemployed, why travel 20+ miles to your job centre for routine signing on when you could do it at any Post Office – it’s also fairly self evident that those in work claiming benefits are far less likely to sign on in their local village than they are at some distant Job Centre.

  • A certain irony that an article on safeguarding the PO is topped with a courier company advertisement!!

  • Personally I would be willing to lose daily deliveries to have lower postage costs. Locking us into 6 daily deliveries a week seems a very expensive and unnecessary thing to do.

    People I talk to in the industry think that the changes to the Post Office will be effective at reducing closures dramatically, however, and Ed Davey (responsible minister until recently) and co deserve a lot of praise on that one.

  • Tim

    Fully agree and in rural areas (as any Focus deliverer knows ) the time and cost associated with driving up to every farmhouse at the end of a half mile lane is immense.

    I can see no sound reason why such residents should not either pay a business premium for letterbox delivery or have their post delivered to a secure box adjacent to the nearest road – happens on the Continent, not sure why not here

  • DAVE WARREN 7th May '12 - 8:27am

    The Saturday delivery is at risk.

    For any new private operator looking to cut costs its the obvious target.

    They are currently proposing this in the States.

    If it was considered here i don’t think there were would be much opposition from businesses most of whom are closed on Saturdays and it would be popular with Royal Mail delivery workers.

  • Ian Paterson 8th May '12 - 8:16am

    My understanding is that Norman Lamb’s portfolio makes him Minister for Postal Services, not “Minister for Royal Mail and the Post Office”.
    It would therefore be sensible and appropriate if he took the time to do his job and speak to some of the companies providing postal services other than Royal Mail.
    Making crass statements such as “The widely recognised problem of ‘downstream access’ pricing, which allowed competitors to use Royal Mail for the final (most expensive) mile of delivery at a low charge for the service” does little more than display his lack of knowledge.

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