Coalition makes Post Office and Royal Mail viable

Liberal Democrat Norman Lamb, Minister in the Department for Business, writes in Liberal Democrat Voice:

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.