MPs condemn Royal Mail’s lack of vision over post offices

MPs condemned Royal Mail yesterday for lacking imagination and entrepreneurial flair in the way in which it manages its loss-making post office network.

The Trade and Industry Select Committee criticised the Government for not taking more responsibility for looking after the network rather than leaving it to Royal Mail.

It said that the postal group had “failed to show sufficient imagination or entrepreneurial flair in developing services so far, or properly to understand the realities of managing a network of often very small businesses”.

The criticism comes as 2,500 more post offices are about to close because the network is unprofitable. The programme of closures was agreed by the Department of Trade and Industry ahead of a GBP 3.9 billion rescue package for the postal group.

Although the all-party group of MPs said that new management at Royal Mail’s post office division “seems to be awakening from its lethargy”, they added: “We think that the Government, as sole shareholder and representative of the taxpayer, has a responsibility to ensure that Royal Mail Group as a whole gives proper attention to increasing the competitiveness of the network rather than just managing its decline.”

The committee said that there could be more closures “sooner rather than later” unless the Government gave proper attention to maintaining the network after its restructuring.

Adam Crozier, Royal Mail’s chief executive, caused controversy last year when he said that the group could get by with a network of just 4,000 post offices, less than a third of the 14,000 total.

The MPs also criticised the short consultation period which accompanies planned closures. The process lasts six weeks rather than the Government’s more usual consultation period of three months. They said that the six-week time frame was not sufficient for customers and local councils to consider all the implications of a post office closure. The DTI has said that extending the period would add to the uncertainty facing sub-postmasters. The committee rejected this argument and has asked the DTI “to give us more substantive answers on these matters than it has done so far”.

A spokesman for Royal Mail denied that the group lacked a commercial vision for the network. He said: “We have launched an extensive range of new financial services and other products over the last two years. We have just celebrated our millionth customer in financial services and that demonstrates the commercial approach we are taking.” The criticism comes as Royal Mail faces the prospect of the first national strike for 11 years. A walkout by the Communication Workers Union will hit all aspects of the operation except parcels. The two sides are clashing over pay and Royal Mail’s plans for the business. Unless Royal Mail makes a substantial increase to its 2.5 per cent pay offer in the next few days the union will meet on Wednesday to set strike dates.

Lost in the post

—Alistair Darling, the Trade Secretary, has said that only 4,000 of Britain’s 14,300 post offices are viable. Since 1999, 4,100 have closed

—About 2,500 post offices will close by the end of 2008. Subsidies of GBP 750 million will be spent on unprofitable offices