How to save the post office and Royal Mail

by Stephen Tall on September 18, 2005

I’ve been banging on about the poor quality of the local postal service since I started blogging nine months ago. But I’m never very happy complaining – much better to use your energy positively. So I was very pleased to hear trailed in the press in August that Norman Lamb, the Lib Dems’ Shadow Trade & Industry Secretary, would be proposing major reforms of the Post Office; and even happier when I read the details of his motion to be debated at this week’s Lib Dem conference in Blackpool.

The starting point of the proposal is straightforward. The Labour Government has failed to invest properly in Royal Mail because it ranks lower down the priority list than schools and hospitals. But, while starving the postal service of cash, it has also proscribed Royal Mail from raising capital under its own auspices, for instance through borrowing. The result has been predictable. Some 2,700 post offices have closed down across the UK since 2000, a reduction of 12%.

That Labour has presided over the mass closure of such valuable local community resources – vital to the elderly and most vulnerable in society – is a deeply sad state of affairs.

What is needed is a postal service able to borrow-to-invest, fully accountable to its customers, and whose workers have a stake in future service improvements. Mr Lamb’s proposals are a good, and vital, first step in achieving this. See what you think:


Mover: Norman Lamb MP (Liberal Democrat Shadow Secretary of State for Trade and Industry)

Conference notes:
i) The continuing programme of Post Office branch closures and the damaging effect this has on communities.
ii) The ending of the Royal Mail’s monopoly on mail delivery by the opening of the mail delivery market to full competition from January 2006, which was welcomed by Liberal Democrats when it was announced.
iii) The need for Royal Mail to invest over £2 billion in automation and new equipment to keep the company competitive and to maintain the Universal Service Obligation under which mail is guaranteed delivery to any address in the country for the same price.
iv) The tight centralised Treasury constraints on the Royal Mail, which requires the company to compete with schools and hospitals for investment.
Conference believes that these challenges can be met by:
a) Separating Post Office Limited from Royal Mail Group and retaining it in the public sector.
b) Improving the service for customers with mail services through competition.
c) Maintaining and protecting the Universal Service Obligation as a statutory requirement.
d) Appointing a strong regulator to protect the interests of customers and to hold the company to account on behalf of the public interest.
e) Ensuring Royal Mail has full commercial freedom to borrow to invest in new equipment and modernisation, and to develop new services without the interference and constraints of the Treasury.
f) Changing the ownership of Royal Mail by ensuring a substantial holding is given to Royal Mail staff which would be placed in a trust, thereby making them partners in the company, in a similar manner to those working for the John Lewis Partnership.
g) Allowing a substantial minority of shares in Royal Mail to be made available for purchase by small investors which could be bought through Post Office branches as well as other outlets.
h) Allowing a minority of shares to be floated on the Stock Market or sold to another bidder.
i) Ensuring Royal Mail staff have a full opportunity to participate in the running of the company as partners.
j) Preventing any proceeds of the sale being taken by the Treasury by putting the capital raised into a fund for the benefit of the Post Office network.

Conference believes that the Government’s managed decline of the Post Office network is unacceptable and believes that a fund created from the sale of shares in Royal Mail should be used to reverse the decline. In particular, Conference calls for the fund to:
1. Invest in branches so that every Post Office, with the support of the sub-postmaster/mistress, can offer the full range of services currently available only in some branches.
2. Support credit unions and other self help organisations, especially in low income areas, to help provide Post Office services.
3. Invest in opening new branches in communities currently without a Post Office.
4. Support financially the setting up of partnerships between Post Office Ltd, local councils, health authorities, police authorities and other governmental bodies to establish joint Post Office branches and one stop shops for service providers.

Conference calls on Liberal Democrats to campaign against the Government’s continued and gradual demolition of the Post Office network and welcomes the Party’s calls for a revival of the service.


It will be very interesting to see how Labour reacts to the Lib Dems’ proposal. There is some overlap with plans put forward by the chairman of Royal Mail, Allan Leighton – who wants to sell shares in the organisation to its 200,000 workers – which have been smiled on by No. 10 and in the DTI. But the Government will be hampered by the opposition of the Communication Workers Union, who are agin anything to which the word ‘privatisation’ can be attached. The CWU – which in its earliest incarnation as the Postmen’s Federation, was a founder member of Labour – has seats on the party’s National Executive committee and on its National Policy Forum: its voice matters.

This state of affairs sums up why I left the Labour Party. They have been tortuously slow in giving any thought as to how the Post Office can be improved, allowing a vital public service to descend into chaos and despond. And at least part of the reason for this torpor is that they know the only viable solution will antagonise an affiliated trade union whose money they need. If their sole concern was how they could improve the post office – for customers and workers alike – they would have sorted the issue long ago.