Don't Sound the Last Post

Written by Edward Davey MP, Liberal Democrat Shadow Secretary of State for Trade and Industry and published in Western Daily Press on Tue 12th Sep 2006

As support grows for the Western Daily Press Don't Sound The Last Post campaign, ED DAVEY, the Liberal Democrat Shadow Trade and Industry Minister, explains why the Post Office network is too crucial to be allowed to wither and die

Once more, our Post Office network is in crisis - threatening lifeline services for the elderly, and hitting what is a focal point for many communities. What are the facts? Already, over the last two decades, about 7,500 branches have been closed by successive governments. Now, most of the 14,500 branches left are under threat. Some have warned that as many as 10,000 more may close. Small rural and suburban post offices will be first in the firing line.

As the excellent campaign of the Western Daily Press has shown, the latest threats come from various angles.

The BBC's decision to take the TV licence contract away from post offices. The ending by the Government of the £150million-a- year Social Network Payment in two years' time. The uncertainty over the future of the Post Office Card Account, which generates £1billion revenue. The decision by ministers to open 70 specialist passport offices, cutting off yet another income source.

Yet there's an added problem too often overlooked. The future of Royal Mail itself.

For the network of sub-post offices, run largely by private individuals to contracts stipulated by the Post Office, is part of a business group whose largest element by far is Royal Mail - the letter delivery arm. With Royal Mail under severe pressure, the knock-on effects for the whole group are serious.

What's Royal Mail's problem? First, postal services have this year been opened up to full competition. That's bad news for the Royal Mail only because it's been starved of investment for more than 20 years - and needs at least £2billion to invest in automation to hold off new rivals.

Second, there's a pension fund deficit of more than £4billion. Third, Royal Mail can't find the cash for investment or pensions itself - it's dependent both on the regulator, Postcomm, for stamp price rises, and the Government, due to the Treasury's finance rules restricting the ability of Royal Mail to borrow for investment like its rivals.

So, if we are going to save our post office network, we not only need sensible ideas as proposed by the Western Daily Press - like keeping the Post Office Card Account or providing a better alternative - we must also address the underlying problem in the Post Office Group, including Royal Mail.

Liberal Democrats are the only party to have faced up to the difficult problems facing both the Post Office network and the Royal Mail.

We believe the "no change" approach proposed by others will see more sub-post offices closing and serious damage to Royal Mail itself. So how would Liberal Democrats solve this double problem? First, we would separate Post Office Ltd - which oversees the sub-post offices - from Royal Mail. We would keep Post Office Ltd fully in the public sector, helping retain key Government contracts.

By separating them from Royal Mail, local post offices would be free from current restrictions on developing new business with other mail companies, and could, for example, exploit growing internet shopping.

Second, we would free Royal Mail to borrow on the capital markets, just like its competitors. Rather than the taxpayer having to shell out for new machines for Royal Mail, as ministers are proposing, we think that investment should be done on commercial lines.

TO free Royal Mail from Treasury rules so it can invest, we would establish a new share ownership structure for Royal Mail. The Government and a John Lewis-style employee trust would together own 51 per cent of the shares.

That means the employees would, for the first time, be given a share in the business they work so hard for. Then, half of the remaining shares would be offered for sale to small investors and individual employees with the rest being offered for sale to the market.

Third, we would make a huge investment in the Post Office network itself. Using the money raised from the sale of 49 per cent of Royal Mail shares we could invest an estimated £2billion - without asking the taxpayer for a penny.

For the first time for decades, local sub-post offices would have a future.

This Liberal Democrat investment fund would focus on helping sub-postmasters and mistresses build long-term viable businesses. It would offer start-up and investment capital, business training, IT development and marketing support. For the first time for decades, we could see the number of sub-post offices increasing, with new sub-post offices opening.

Why don't the others adopt this common-sense approach?

It seems Labour ministers remain afraid of their Left-wing backbenchers, who don't like the idea of allowing Royal Mail employees to own shares. As for the Conservatives, we can only hope they will soon follow this Liberal Democrat lead.

I certainly hope all MPs, of whichever party, will at least feel able to back the Western Daily Press campaign. When ministers talk of "social inclusion" and "community" in one breath, while allowing thousands of sub-post offices to close, it's vital we show up such hypocrisy.

With the crucial roles post offices play in our society, I for one wholeheartedly support the Don't Sound The Last Post campaign and I urge as many people as possible to sign the petition.