Business & Enterprise Committee

30 May 2008 (PN 40)



A report today (2 June)  from the Business and Enterprise Committee (HC 577) warns that the Independent Review of Mail Services and Postcomm must take full account of the effects of any reform of mail services on the post office network. The report notes the close operational and financial relationship with the universal service provider, Royal Mail, and  the Post Office Network, and warns that “there would be public outcry if changes to mail services resulted in further reduction of the network.” 

The report also calls for more clarity about Post Office Ltd’s finances, noting that £1.7bn of Government money has been allocated to it up to 2011.

“Post Office Ltd is the subsidiary of a company owned by the Government and it receives substantial taxpayer support, yet there is little transparency about its finances. This is simply unacceptable” said Peter Luff, Chairman of the Committee.

The report continues the Committee’s earlier work on the “Network Change Programme”, published this February, which is intended to reduce Post Office Ltd’s losses by closing up to 2,500 sub-post offices. It contains and comments on the Government, Post Office Ltd and Postwatch responses to that report.

The Committee welcomes many things in the responses, but has some reservations. While it welcomes the fact that the Government has made it clear it has no desire to see the network shrink below 11,500 outlets between now and 2011, it is concerned that Post Office Ltd itself has said it does not believe "it is possible or desirable to set a minimum number of fixed outlets."

The report also expresses dissatisfaction that the Chairman of Royal Mail Group is the final arbiter of the network. Post Office Ltd is a company, ultimately owned by the taxpayer. In deciding which offices to shut it has to balance conflicting commercial and social considerations. The Committee notes that in the past it had suggested greater powers for Postwatch.

“It is essential that the Government and Post Office Ltd are singing from the same hymn sheet to eradicate doubts that there will be further closures after 2011, “ said Peter Luff. “The European Commission has authorised significant government funding for the network because it provides vital economic services: it is unsatisfactory that the ultimate decision on Post Office closures is left with the Chairman of Post Office Ltd’s parent company, Royal Mail Group, which may be directly affected by the network’s profitability but is not well placed to consider its role in sustaining individual communities.”

The report welcomes the announcement that Postwatch, the consumer body, and Post Office Ltd will draw up a new Code of Practice about post office closures. However, it is concerned that this work could be derailed by the transfer of Postwatch’s responsibilities to the new NCC, and the Government’s arm’s length approach. Although it understands that the Government may not wish to be involved in local decisions, and that it should not replicate monitoring done by Post Office Ltd, the Committee considers that “ultimately the Government cannot duck responsibility for the shape of the network.”

Peter Luff said, “ We wish to see a draft of the code before the summer recess at the latest. The future shape of the network is a matter of direct political concern and the Government must take ultimate responsibility for ensuring its considerable subsidies are being used to secure a network which meets the public’s needs.

 “We will be coming back to examine progress on managing the future of the post office network. One thing is clear - history has given us a network which remains among the largest in Europe and the Government and the European Commission accept that it provides a valuable service. When post offices close, deprived people and communities suffer most.

Richard Hooper’s review is currently looking at the future of mail services in the UK. He must not overlook the linkage between the mail service and the post office system, on which so many people rely.”

Further Information:

For the Committee’s previous report on the Post Office Closure Programme, the responses to which are included in today’s report, please see:

For the Independent Review of the postal services sector, see:

For Postcomm submissions to the review see:

Committee membership is as follows:
Chairman: Peter Luff MP (Con) (Mid Worcestershire)
Mr Adrian Bailey (Lab) (West Bromwich West)
Roger Berry (Lab) (Kingswood)
Mr Brian Binley (Con) (Northampton South)
Mr Michael Clapham (Lab) (Barnsley West and Pen.)
Mr Lindsay Hoyle (Lab) (Chorley)
Mark Oaten (Lib Dem) (Winchester)
Miss Julie Kirkbride (Con) (Bromsgrove)
Anne Moffat (Lab) (East Lothian)
Mr Mike Weir (SNP) (Angus)
Mr Anthony Wright (Lab) (Great Yarmouth)

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