The UK’s state-owned Post Office could be turned into a “mutual” business, under proposalspublished yesterday by the UK government, giving ownership and control to staff, sub-postmasters
and local communities.The announcement was made as the government presented its Postal Services Bill beforeParliament, incorporating its plans to privatise Royal Mail.
Although the government has insisted that the UK’s postal branch office network operated by PostOffice Ltd is not up for sale, the bill proposes powers to transfer ownership to a “mutual” orco-operative structure.
Business secretary Vince Cable said the proposal would give those who know the Post Office best– sub-postmasters, staff and the communities they serve – a say in how the Post Office is run. Healso insisted that it included protections to ensure that the network would always be run for thepublic benefit, and that there would be no repeat of the previous government’s closureprogrammes.
“Post Offices continue to play a vital social role in the heart of local communities and remainan incredibly important resource. But I’m concerned that the current structure of the company isholding the network back,” he said. “The interests of the central holding company and locally ownedbranches are not always aligned. It seems to me that the Post Office is ideally suited to a JohnLewis or Co-operative Group style structure, where employees, sub postmasters and communities get agreater say in how the company is run.”
Post Office Limited currently directly manages around 370 of the largest Post Office branches inthe UK, with the remaining 11,000 branches managed on an agency basis, either by sub-postmasters orfranchise partners. Individual retail entrepreneurs run the greatest number of branches, althoughit is estimated that around 1,000 individual Post Offices are run by either a mutual body or amember of a mutual body.
The Postal Services Bill also formally introduces proposals to allow private capital into thecountry’s postal delivery arm, Royal Mail – by selling up to 90% of the firm to investors, and atleast 10% to staff – and to set up a new regulatory structure for postal services in the UK.
Cable said he did not know the mechanism by which Royal Mail would be sold or the timescale,which would not be before next summer. “We are not defining that; it could be an IPO or it could bea trade sale; it could be another financial structure,” he told the Financial Times.
The Postal Services Bill will be scrutinised and debated by the House of Commons in the comingmonths, before being considered by the House of Lords.
The bill proposes the maintenance of the universal postal service – collection and delivery ofpost six days a week at uniform, affordable prices – and that Royal Mail will be able to benefitfrom an injection of private capital – ending the dependence on funding from the taxpayer andbringing new commercial disciplines into the business.
Alongside private sector investment, the bill proposes that at least 10% of the shares in RoyalMail will go to its employees in the future, and Royal Mail will be relieved by the government ofits £10 billion historic pension deficit.
As part of a general reform of the regulatory regime for mail, the existing regulator, Postcomm,will be replaced by Ofcom, the communications regulator, with the bill providing for the transferof Postcomm’s regulatory responsibility and its staff to Ofcom.
Trova Consulting, a corporate advisory firm, has valued Royal Mail at between £700 million and£5.7 billion, excluding £2 billion of debt owed mainly to the government. The upper figure assumesa slower decline of letter volumes, while the lower figure assumes a breakdown in labour relations,according to the Financial Times.
Unions criticised the proposals as short-sighted. Billy Hayes, CWU general secretary, said: “Thegovernment has wasted no time in flogging off the country’s state assets without exploring otheroptions. This obsession with privatisation is deeply worrying. Handing postal services over to theCity spivs and gamblers that Vince Cable recently denounced will be bad news for everyone.”
He insisted that Royal Mail could remain profitable in the public sector under an alternativemodel.
“If the company has the freedom to borrow money from sources other than government and theissues of regulation are resolved, then privatisation becomes an unnecessary ideologicaldistraction,” he said. “Universal services will be reduced by a privatised company interested inthe bottom line.”
He said the separation of Royal Mail from the post office counters was also a fatal step. “Thecommercial imperative will be for a privatised Royal Mail to use retail services other than thePost Office,” he said. “A seven-year guarantee is a seven-year death sentence for local branches.”& amp; amp; amp; amp; amp; amp; amp; amp; lt; /p>
Sub-postmasters this week also warned that the Post Office network is in danger of beingdestroyed under government plans to privatise Royal Mail. Without an adequate agreement inplace to guarantee that a privatised Royal Mail will continue to use the network of 11,500branches, there would be “far reaching consequences” for the Post Office, George Thomson, generalsecretary of the National Federation of SubPostmasters (NFSP) told the Guardian.
The NFSP is concerned that the Post Office will not survive as a standalone business and haswritten to its members this week explaining the possible consequences of Royal Mail’sprivatisation. Thomson wants the government to require the new owners of Royal Mail to continue tosell its products and services in post offices, rather than use other retail outlets, such assupermarkets, to post parcels.
He said: “We remain to be convinced that removing the Post Office from Royal Mail is a sensiblething to do. The consequences would be to make a bad situation worse.”
