Post divisions should split

CONSIGNIA, the revamped Post Office which becomes a plc next week, should be
split up and the Royal Mail and Parcelforce businesses allowed to compete
internationally.
Proposals for radical change are set out in a paper published today by the
industrialist Stuart Lyons. The Post Office, he says, faces a choice of
becoming a global competitor or remaining a national player in a shrinking market “while the Germans and the Dutch pick up the cream”.
Lyons, former chief executive of Royal Doulton group, and the Monopolies
Commission member, argues that the distribution businesses – the Royal Mail
and Parcelforce – should be split from the Post Office counters network and
privatised quickly. Post Office Counters, consisting mainly of 18,400 Post
Office nationwide branches with £1.2 billion of sales, needs to be freed
from government interference and muddle and made more efficient.
Today the Post Office’s businesses generate annual sales of £7.5 billion and
employ more than 200,000 at a cost of £4 billion a year. The bulk of sales
revenue comes from mails and distribution (86 per cent) with counter
services contributing £1.2 billion or 15 per cent. All but three per cent of the UK’s post offices are franchises run by sub-postmasters.
The paper, published by the Centre for Policy Studies, says the business is
poorly positioned to take advantage of the expected surge in the global
postal and distribution market, from £20 billion to £57 billion over the next
decade.
It proposes a new Royal Mail group comprising the distribution businesses,
valued at £3.25 billion or more. To ensure best value for the taxpayer,
Lyons recommends that a government could follow the German precedent of
privatising 50 per cent of the group initially, with further tranches being placed on the market over a five year period.
THE SCOTSMAN, 19th March 2001