Royal Mail and the post offices need more than gestures

Peter Hain was unequivocal on "Question Time" last night. He will vote against any privatisation of Royal Mail. However, he did not offer a solution to two major problems facing the postal system: where is the money coming from to update the Royal Mail's technology, and what is to be done about the post office network?

A purely public service answer is feasible. The government could put back some of the money previous administrations have skimmed off, money which should have gone into continuous technological improvements, and replenish the pension fund, which it has forced to take contribution "holidays". (Both Conservatives and Labour have been guilty of treating the Post Office as a cash cow, though credit should be given to Tony Benn in the 1960s for giving a kick-start to modernisation.) The Post Office, both collectively and individually, should be allowed to advertise its facilities. Its ability to accept and receive payments should be increased, not discouraged.

But there was no promise of extra money last night. So there will have to be external investment, or not only the post offices but also the Royal Mail will wither away.

Liberal Democrat policy, which Mr Hain misrepresented last night in line with Labour spin-machine directives, in spite of vigorous correction by Kirsty Williams, is laid out in the background notes to our petition of last year protesting against post office closures. (An excerpt is at the end of this posting.) The government has yielded on the post office card account, and gone a little way on the universal service obligation; now let it go all the way.

Lib Dem proposals - your questions answered

"Is this a privatisation of the Post Office?"

No. This is not a privatisation of the Post Office. That is a misrepresentation of our policy spread by some of our opponents which relies on creating confusion between the Royal Mail and the Post Office. Under our plans the Post Office franchising company – Post Office Ltd - will be separated from the Royal Mail and retained in the public sector. Our proposals will lead to extra investment in existing branches, the opening of new ones and will give the network new markets.

"Could a part-privatised Royal Mail decide not to deliver in rural or remote areas?"

No. Royal Mail will continue to deliver to every address – it will be required to do so under its licence.

"Will the daily delivery of mail continue?"

Yes. We will protect the Universal Service Obligation (USO) and therefore the network will be required to be able to deliver to each property 6 days a week.

"Will customers have to pay more to post a letter to a rural area?"

No. The USO will require the Royal Mail to deliver to every address at a uniform price.

"Will stamp prices go up?"

Big rises in the price of stamps will be less likely under our proposals. The only source of cash for investment if the Royal Mail is in the public sector and not allowed to borrow is the income from stamps and charges to business customers. To make the investment needed without borrowing, these costs will rise considerably. We do not wish to see the price of stamps rise in this way. Borrowing to pay for investment will be repaid through the company being more competitive and efficient.