Why you must pay more for your mail

THE Post Office is one of the country's best-loved, best-known and trusted organisations. That is why so many people were stunned when it decided to change its name to Consignia. It's a trust earned by decades of delivering letters to every address in the land, by post offices being the focal point of our communities and by the efforts of dedicated postmen and women. It's no exaggeration to say that the Post Office is one of the strands which helps bind our country together.

So whatever its name, our Post Office has a great deal going for it but it also has problems. Consignia is losing £1.5million a day. It announced 13,500 job losses in Parcelforce alone last month, with more redundancies expected in the Royal Mail. Sub-post offices continue to close. The Post Office has simply failed to adapt to modern life. We send millions more e-mails and text messages than letters. The fax, phone and Internet mean the Post Office can no longer depend on mail increasing, and though the local post office is still important to many people, pensioners and mothers increasingly want their pension or child benefit paid straight into their bank.

Elsewhere in Europe, postal services saw the changes coming and invested in new technology and new services but, in Britain, successive governments plundered Post Office profits and denied it the investment needed. Weak management and bad industrial relations meant problems got worse.

This Government set out to correct past mistakes. We gave the Post Office greater freedom to make commercial decisions. We cut the money the Government took so there is more to reinvest in the business. We installed long-overdue new technology in every sub-post office.

Last month we appointed Allan Leighton – former chairman of Asda and one of Britain's best business leaders – to head the company.

He leads from the front and has been out at 5.30am to sorting offices to see the problems for himself. He's already decided to ditch Consignia and go back to the old name.

But although this is an important signal, the Post Office has too many problems to be sorted out just by reverting to its well-loved name. It will mean painful decisions. Making people redundant is always a miserable business. Allan knows, though, that if these decisions are not taken now, the losses will continue piling up and the result will be even more painful. So the company is working closely with the unions to offer voluntary redundancies wherever possible, and offer many workers jobs elsewhere in the company.

Nevertheless, more changes will be needed, and they will affect consumers and staff.

One of the Post Office unions itself has suggested scrapping the second delivery each day. It accounts for only four per cent of letters delivered but for more than 20 per cent of costs. I think consumers would accept it if the Post Office guaranteed one reliable delivery every day. What is more, because our mail is among the cheapest in Europe, a price rise will almost certainly be necessary – but only to help the Post Office modernise, not to subsidise inefficiency.

Changes will be needed, too, in the post offices themselves. There are many of them – particularly in towns – that are struggling to survive. As one sub-postmaster said recently: "There just aren't enough customers. There are 10 post offices within a mile of here and none of us can make a living."

We have the highest number of post offices per person of any major European country but too often consumers are losing out from patchy service. So we're offering compensation for sub-postmasters and mistresses whose urban offices close, and investment grants to make sure those that remain are more attractive and successful.

With more than 17,000 outlets, the Post Office is by far the biggest retail network in the UK. We are going to help these outlets to modernise. They need to move away from depending on benefit books and Girocheques, which are costly to administer and vulnerable to fraud.

WE are going to help sub-post offices to make a success of banking, to help replace the high street banks which have shut their own branches. We also want them to provide such new financial services as household insurance, which proved a huge success in a pilot project recently.

Our rural postmen and women could follow the lead of their European counterparts and sell stamps, and collect as well as deliver mail. The company could experiment further with mobile post offices which call each week at small villages, or put post offices in pubs or village halls or in training centres or community cafes in inner-city neighbourhoods.

Let's recruit older workers to run them as volunteers, or on a modest part-time salary.

We can't turn the clock back but, with the right management, proper investment, good ideas and the backing of customers and communities, we can turn the Post Office around.