Privatisation threatens rural post offices, warn opponents

[TrueBlueTerrier]

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Royal Mail privatisation threatens rural post offices, warn opponents

John Denham joins critics of plans to privatise the Royal Mail, saying radical changes could spell disaster for country branches

Thousands of rural and urban post offices will be under threat of closure as a result of government plans to privatise Royal Mail, John Denham, the shadow business secretary, will warn this week.

The Labour MP will say that the Post Office network depends on Royal Mail for 30% of its income, which is currently guaranteed as a result of a £150m public subsidy each year and an agreement known as the Inter Business Arrangement. But Denham will tell MPs that there is no guarantee this will continue once Royal Mail becomes a separate entity.

"The business that Royal Mail brings to the Post Office is vital to the future of local post offices but the privatisation bill does not set out any mechanism for guaranteeing this. And the Inter Business Agreement which brings Royal Mail business to the Post Office could end the moment Royal Mail is sold," he said.

"The Post Office minister, Ed Davey, confirmed in a briefing with MPs on the bill on 20 October that the government would have nothing to do with the IBA and it would be entirely down to relations between the Post Office and Royal Mail.

"A supermarket chain could turn to a privatised Royal Mail and say we could provide 'post offices' to Royal Mail more cheaply than Post Office Ltd by excluding as many loss-making areas as possible. This would be a disaster for rural and non-profitable urban post offices."

Currently the Post Office is wholly owned by Royal Mail, but the two will be separated as a result of the Postal Services Bill.

Gregg McClymont, Labour MP for Cumbernauld, Kilsyth and Kirkintilloch East, attended the meeting with Davey. He said the minister had expressed confidence that Royal Mail would maintain the contract with post offices without government intervention.

"I am surprised at his confidence that the IBA will continue because there are major questions about the relationship between the Post Office and Royal Mail under the new system," McClymont said. "My fear is that they are rushing this through without anyone having the chance to stop and think of the post offices."

The MP said Davey had promised there would be no "programme of closures" but argued that post offices would not survive without the guaranteed business. "The market rules they are creating will lead to the post office closures," he added.

George Thomson, general secretary of the National Federation of SubPostmasters, said he feared that most post offices would be unable to continue without a 10-year IBA. Any less than that would be "catastrophic", with a deal of half that length meaning "falling off a cliff" in five years. "The majority of postmasters would go out of business," he said.

However, others argued that Royal Mail would never break its tie with the Post Office, because of the strength and popularity of the brand.

A Royal Mail source said: "It is unthinkable that there won't always be a very strong relationship between the post offices and Royal Mail – both are of crucial importance to each other."

[subbie]

The Royal Mail Group has been trying for years to by-pass the Counters Network, they have failed every time, Supermarkets are just not interested in playing Post Offices, the CWU need to find another argument, yes an IBA will be required in the short term, but eventually the two companies will have to trade without an IBA, and market forces will take over which will keep the two companies glued together naturally. In the long term I can see RM becoming nothing more than a wholesale trunking network, divested of its first and final mile commitments, with others taking on this role and using the Counters network for access and retailing premium services etc.

Subbie

[andy2007]

You could be right about the first mile. But you're WAY off, for the final mile! Why do you think no-one else has set up their own final mile deliveries yet?
Loyalty to RM?
I think not! The fact is, that no-one else can do it for as little as we do. Let alone, undercut us. And that's with the heavily biased "competition" rules. If the restrictions on us are ever lifted. We'll annihilate the laughably called, competition.

[subbie]

Dream on Andy, the conditions simply have not been right before now, they are now.

Subbie