Monday, May 28, 2007

Lib Dem Action Plan to Save the Post Office Network

We are the only party to have a costed a credible set of proposals to keep post offices open and, where necessary, to open others. Our opponents have no such policy.

Our plan keeps the Post Office Ltd in the public sector and enables Royal Mail employees to get a share in their company through a radical employee share ownership Trust, similar to the John Lewis Partnership. Royal Mail will take a new ownership model, with the sale of some of its shares providing the investment needed by our post offices.

The Liberal Democrat plan would enable us to –
  • Open new post office branches where they are needed

  • Keep the Post Office in the public sector

  • Make the Royal Mail into a successful company, with new investment freedoms

  • Give Royal Mail staff a guaranteed stake in their company through employee share holding and participation

  • Protect and improve the service to customers that provides a daily delivery at a uniform price across the country

You can find out about the proposals in more details by reading our background paper on the policy.

Why the Lib Dem plan is the right thing for Royal Mail as well as the Post Office

The Royal Mail has been starved of investment by successive governments and needs at least £2 billion to invest in automation to remain competitive. Royal Mail now faces full competition as its centuries old monopoly on the delivery of mail was ended on 1st January 2006. It is facing massive competition from well financed competitors. Doing nothing would see the Royal Mail wither on the vine, putting at risk many services, including the Universal Service Obligation (the guaranteed daily delivery at a uniform price throughout the country) which so many communities rely on.

Our proposals would create a new ownership model for Royal Mail which would allow it to borrow to invest without it having to compete with schools and hospitals as it is no longer wholly owned by the public sector. (This is because publicly owned bodies have to have government permission to borrow.) Our proposals will enable Royal Mail to become a great British company free to improve its own business services, fight off foreign competition and win markets abroad.

The employee shareholding scheme would benefit future Royal Mail employees not just current ones. It would not be a one off hand out to people who happen to be working for Royal Mail at the time of change of ownership. Rather the employees' shares would go into a trust for the benefit of those working for Royal Mail. When an employee leaves the company, that person will no longer be entitled to any dividend. A new employee, however, would become a partner in the company and would be entitled to receive a dividend from the trust. The model is similar to that operated by the John Lewis Partnership. In addition to the trust, we would establish a system of employee participation so that staff are involved in the running of the company. Again, this would be similar to the John Lewis Partnership model.

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