Our Post Office can still deliver

An article by Gavin Strang in the Edinburgh Evening News

THE postal service in Britain is one of the most essential public services in the country. It has provided the British public with more than 300 years of mail delivery services. We all use it, and I for one must admit that I can occasionally take it for granted.

Postal services play a key role in modern economic and social life, providing communications between individuals, business and government.

It is a service which the public values, has a proud tradition of high standards of service, and is a testament to the staff who provide it.

The recent announcement of job cuts, post office closures and restructuring is a mere symptom of the severe difficulties facing our postal services.

The only positive news recently was that Consignia will return to its former brand names of the Royal Mail and the Post Office – a debacle which has already cost the service more than £2 million.

In 2000, the Postal Services Act was passed. It was designed by the Government, at the behest of consumer representatives, the unions and the Royal Mail itself, to allow the Post Office greater commercial freedom in order to compete in a communications sector which was developing rapidly.

The Act also provided for the creation of an independent regulator, Postcomm, which, in 2001, became responsible for the independent regulation of the postal services market in the UK.

Postcomm’s primary statutory duty is to exercise its functions in a manner best calculated to ensure the provision of a universal postal service at an affordable and geographically uniform price.

Postcomm’s secondary duty is to exercise its functions in a manner that is best calculated to further the interests of postal users, wherever appropriate, by promoting effective competition.

The recent proposals released by Postcomm are threatening the end of the universal service throughout the country for a uniform price, and this would result in a failure in both its primary and secondary statutory duties.

THE Post Office, or Consignia, as it is now known, is in dire straits. It is losing more than £1m a day and examining drastic cost-cutting measures. It is failing to meet its delivery targets, and although generally public confidence in the service remains high, it is crucial that these problems are addressed.

For years, the Post Office was making a profit and only in the last two years has the service operated at a loss. During the 18 years of Conservative government, 90 per cent of the profits generated by the service were siphoned off into the Treasury, leaving a trail of under-investment behind. As electronic mail, the internet and private couriers entered the communications arena, the Post Office was ill-prepared to widen its range of services.

The crisis in our rail services has left Consignia’s fleet of mail trains in disarray, affecting reliability of service, and leaving the company short of its targets for first-class, next-day, mail delivery.

The current economic slowdown has led to a reduction in the volume of mail traffic. At the present time, it costs Consignia 28p to send a first class piece of mail, yet it only receives 27p.

The obvious answer is that to sustain a viable universal service, it should raise the price of a stamp by a penny, to cover the cost of delivering it. Consignia did apply to Postcomm to do this, yet the regulator in its wisdom said that this was unacceptable, and that Consignia must find other ways to reduce its costs.

So thousands of jobs are now at risk in Scotland as, bound by the regulator, and in difficult circumstances, Consignia struggles to maintain a public service that is crucial to the development and future of this country. More than 480 post offices have closed in the past year, and services are already suffering.

Consignia now proposes to close one in three urban post offices to stem its losses, and between 30 and 35 are expected to shut in Edinburgh alone.

If things were not bad enough, it is in this climate that Postcomm has proposed the introduction of competition into the postal services market.

In a three-phase process, the most lucrative areas of Consignia’s monopoly are to be opened to private competition within months.

Consignia cross-subsidises its monopoly so that profits made in lucrative areas are able to help sustain rural services to our most remote communities.

The Conservatives rejected the idea of a competition-driven postal market, as proposed by Michael Heseltine, due to their concern about public opinion and rural services. The National Audit Office, in its report Opening the Post (the risks and opportunities), highlighted the problems which would accompany any decision to open the postal service monopoly to competition in the current climate. It admitted that the introduction of competition could result in ‘a breakdown in the delivery of a universal service at a uniform price’.

AT European level, the union Network International, which represents more than three million workers in the postal sector worldwide, is urging a re-think on liberalisation of European postal services, as it is not only in the UK that the universal service provision is at risk.

Is there any good news, you may ask? The announcement on March 15 that the consultation period for the Postcomm proposals would be extended was welcome news. This followed an early day motion and a debate in Westminster , when MPs on all sides raised concerns about the future of our postal network and appealed to Postcomm to give the public more time to respond to the document.

A further six weeks has been provided so that the public, individually and collectively, can raise their concerns with Postcomm.

The service provided by the Post Office is central to a stable economy and to consumers. The people of Edinburgh are well aware of the effect that the introduction of competition can have on our public services – we need look no further than the recent bus wars. Disruption to services, public confusion and dissatisfaction – we cannot allow the Post Office to become the next Railtrack or service levels to fall to those of the city’s bus service.

The provision of a morning delivery to every address in the country must be maintained and at a uniform price throughout the country.