Royal Mail RIP

[larsson1971]

Royal Mail RIP?
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By Naomi Caine
July 18 2007
The Royal Mail: an essential public service that deserves government support or a doomed business that belongs to a bygone age?
It’s easy to be pessimistic about the future of the Royal Mail. After all, who sends letters any more? Don’t we all communicate electronically, conducting our conversations and paying our bills online?
Even if you do send a letter, there’s no guarantee it will get to its destination on time. Your missive might even get caught up in a postal strike and never be seen again.
Then there’s the post office closures. The government confirmed in May that about 2,500 post offices will be axed over the next 18 months, cutting the total from 14,300 to about 11,800. Post Office bosses will conduct local consultations to decide which branches will go, with the cutbacks spread evenly across urban and rural areas.
Many people believe it is only a matter of time before further cuts are announced. Adam Crozier, the chief executive of Royal Mail, has already suggested that the post office network could be run with only 4,000 offices.
Have your say: does the Post Office have a future?
Post Office hell
Surely the closures are no surprise. When you step into a Post Office branch, you step into a sort of hell.
There are long queues, disillusioned staff and a smell of failure. Is it any wonder they struggle to make money when they simply don’t fit into our shiny world of competitive capitalism?
A recent Postcomm report found that only 1,500 of the 8,000 post offices in rural areas returned a profit, which would seem to confirm the suspicion that the Royal Mail is a relic of a bygone age, a bit like vinyl records and video players.
And why should we mourn its passing? We have moved onto better things - we can send emails, voice messages and texts.
Is the demise of the Post Office inevitable?
But is the decline of Royal Mail really so inevitable? And should we not voice a little more concern over the fate of such a vital service?
Let’s look at some of the figures. Yes, there has been a slight dip in the number of letters we send, but it is only slight, at 1.6% in 2005-6. And we still send a lot of letters – 20.3 billion in total.
The bulk of mail (87%) is sent by businesses, with the largest 500 companies accounting for 50% of all mail volumes. So we haven’t totally abandoned paper and pen. And surely businesses are potentially lucrative customers?
Neither public nor private
Of course no business is easy to run - and the Royal Mail is arguably harder than most - because it is neither a fully fledged private company nor a fully fledged public service. It is a hybrid and so exists in a sort of corporate limbo.
The government opened up the postal market to competition last year. Royal Mail seemed to prepare well, turning £1.1 billion of losses in 2002 into profits of £335 million in 2005.
However, it’s hard to make further progress. Only the profitable parts of the business are open to competition - and Royal Mail has to compete while also dragging sacks of post to remote communities.
No wonder some of its rivals are fleeter of foot: they don’t have the same obligations to the public.
How long will the government subsidies last?
The government is no doubt too scared to go the whole way and totally privatise the firm. So it subsidises the post office network by £150 million a year.
But for how long? The funding seems secure until 2011. Labour has also promised to develop ‘hub and spoke’ post offices, where sub-postmasters and mistresses visit outlying villages once a week to provide services. Post offices are also being set up in pubs and other locations.
Yet at the same time, the post office has lost some of its indirect subsidies. The government no longer pays benefits and pensions with a post office book. The BBC has also decided not to allow customers to buy television licences at a post office.
These indirect subsidies were valuable. Postcomm has calculated that the removal of government services had resulted in the loss of £168 million of revenue.
A lifeline for elderly people
Does it matter? Well, yes. Age Concern England recently undertook some research into post offices and concluded that they offer a lifeline for many older people. It said: “Many pensioners use their post office as a ‘one-stop shop’ to access their pension and benefits, pay their bills, get advice and information, and meet and socialise with others.
“We know that many of the same issues apply for older people in deprived urban areas. We are concerned that closures could leave many older people increasingly financially and socially excluded.â€

[johno47]

Just read this on MSN, some idiots moaning in the reply section, however there was a really good piece by postman Paul, and the next reply after that piece was some bonehead actualy moaning about the price of stamps, unbelievable...
UNITY IS STRENGTH.

[strangler]

Very interesting article.