ECONOMICS

THE FUTURE OF THE ROYAL MAIL

Richard Smith, Head of Public Relations, South & West Regions, The Post Office, on 31 May 2001

The speaker summarised the many changes made in his organisation this year:

1. The Post Office is now legally CONSIGNIA plc, with one shareholder the Government.

2. The organisation now works under licence from the Regulator, Mr Graham Corbett, (Postcomm), who has a brief to report on how far the service should be liberalised. He will, in time, be able to issue a licence to others, working outside the monopoly area.

3. At present, the Post Office still has a monopoly for handling mail under 350g, but this weight may be reduced. The European Commissioner wants it reduced to 50g across the EU, but this will be resisted by Britain.

4. `Postwatch' is a new consumer group being set up by the Government, with national paid officers. In England, six regions, one of which is London, operate under a national council. Each region has a committee of appointed individuals representing different parts of the region, under a paid appointed Chairman. For the BA postcode, Mr Edgar Evans is the representative. `Postwatch' can ask Postcomm (the regulator) to levy fines or even cancel a licence.

At present, there is still a small growth of business in spite of e-mails and competition from other operators. There is still a commitment to maintain the uniform charge and delivery to all parts of the UK. Commercial mail (`junk mail') was increasingly important as private mail was little more than greeting cards. A high standard, over 90%, was still aimed at for first class, next day delivery.

In the South-West the post and related activity was the fifth most important part of the economy. The largest fleet of vehicles in the country was run by the Post Office and Parcelforce; it also had a very large property portfolio.

Ninety-seven percent of the business was in the hands of private franchise sub-postmasters; only the main post offices were directly run. The income of sub-postmasters was declining, as regularly reported in the press, many post offices were closing. The speaker believed the Government now recognised that this was not just an economic problem but an important social matter for deprived and rural communities. Part of the problem was the Government's attempt to get all Social Security payments credited to normal bank accounts. It had not worked out, and there was now a plan to have a Universal Bank operating through post offices, but with just cash withdrawal facilities. This would mean many cash dispensing machines (ATM) at post offices.

The `Horizon Project' had been a major recent problem. The scheme was the electronic integration of national Post Office Counters. It was proceeding, but had led to a £571 million exceptional charge in the 1999-2000 accounts, leading to the first reported loss for 26 years.

International business was a growing market and the new status of the company would give it a greater freedom of action. For example, the Post Office now owns Citipost of New York USA.

One domestic matter of growing concern was the continuation of a high level of strikes; this had to be addressed otherwise the competition would step in.

The meeting discussed many day-to-day aspects of mail delivery and counter service. But in a changing world some matters never changed; dogs were still a hazard for the postman.

Rodney Tye