Scottish independence would add big costs to universal postal service, say MPs

Members of the UK Parliament have said Scottish postal rates would increase if Scotland was to become independent — or else taxpayers would have to subsidise the universal service. Scots vote this September in a referendum on whether Scotland should leave the United Kingdom after more than three hundred years.

The “yes” campaign is being led by nationalists including those in the Scottish Government, and their plan is to renationalise the Scottish part of Royal Mail and maintain the same kind of postal service currently run in Scotland.

However, the UK Parliament’s business committee issued a report today looking at the implications of Scottish independence on business, stating that a separate Scotland would have to devote considerably expense to propping up the universal postal service.

The MPs said various witnesses in their inquiry called into question the sustainability of Scotland’s universal postal service given the highly rural nature of the country.

About 1m people live in rural Scotland, and 280,000 of these live in remote areas.

The Business, Innovation and Skills Committee said the Scottish Government had not laid out a plan showing how the extra costs would be financed.

The MPs stated in today’s report: “We do not believe that the Scottish Government has set out a coherent body of evidence to show how it would maintain and pay for the Universal Postal Service in an independent Scotland. The risk to Scotland is that provision of the Universal Postal Service will come at significant additional cost, either to the taxpayer or to the consumer.”

Nationalisation

Within the report, the MPs also called into question the Scottish government’s pledge to renationalise Royal Mail’s operations in Scotland following its breakaway from the union, reversing last October’s privatisation process.

The UK lawmakers said renationalisation might be an “attractive campaigning tool” ahead of September’s referendum, but the Scottish Government had not set out in detail how the costs of bringing the Scottish postal system back into public ownership.

“Included in that assessment must be an assessment of Scotland’s proportion of the historic pension liabilities currently held by the UK Government. Without that detail, the policy of renationalisation is nothing more than an uncoated aspiration,” the MPs added, referring to the £29bn of historic pension liabilities taken on by the UK government from Royal Mail ahead of its privatisation.

Cross-border

A further problem identified within the report was how cross-border postal rates would be arranged between Scotland and the rest of the UK.

The situation could become like mail going between Northern Ireland and the Republic of Ireland, where Royal Mail charges EU rates to send items between Northern Ireland and the Republic, but where An Post operates an all-Ireland rate, encouraging Northern Irish consumers to take their mail across the border to mail it to addresses in the Republic.

Scotland could be treated like the Isle of Man or the Channel Islands, where postage rates are lower for sending to and from the UK than Europe.

Or, mail sent between Scotland and the UK could be classified as full international post, the MPs report suggested.

However, the report warned that the Scottish Government had not set out any detail on how it would deal with the financial pressures on cross-border postage in the UK. “Given that this will place further financial pressures on a Scottish Mail Service, the provision of this detail is a pressing matter,” said the Committee.

The Committee’s wider report concluded that remaining in the Union would be in the nest interests of Scotland.

Adrian Bailey, the Committee’s chair, said the rest of the UK is by far the biggest economic partner of Scotland, and there was “deep concern” about the threat to future prosperity in Scotland raised by the prospect of a “yes” vote.

He said it was time for the Scottish Government to lay out the detail of its plans for independence.

“The forthcoming referendum on Scottish Independence has an impact not just on Scottish businesses and citizens but on all UK citizens and businesses. There is no certainty that breaking up the UK single market will bring economic benefits and our Committee believes that remaining in the Union is in the best economic interests of Scotland,” he said.