Here today

The local Post Office and the red pillar box are both long standing symbols of community life in Britain. The future for both is very uncertain. The coalition government’s plan to sell the majority of shares in Royal Mail has devalued the symbolic power of the red pillar box – replacing a symbol of the public realm with a reminder that everything is for sale in modern Britain.

In time, the red pillar box could be retired completely, at the whim of some corporate rebranding by the company a privately-owned Royal Mail will become.

The privatisation of Royal Mail makes this future possible. The government has repeatedly insisted that the future of the Post Office network is separate from the debate about the privatisation of Royal Mail, but this argument does not stack up.

Royal Mail and Post Office Ltd were once part of the same company. In 2012 they were separated by the Postal Services Act. A 10-year agreement between Royal Mail and Post Office Ltd was signed to ensure that post offices continue issuing stamps as well as handling parcels and letters for Royal Mail. The income from these services provided for Royal Mail makes up a third of Post Office Ltd’s revenue.

The government’s assurance that it is hard to imagine Royal Mail not working closely with the Post Office is little assurance at all. With the agreement between Royal Mail not being publicly available, it is currently not possible to assert convincingly that the relationship will continue to be favourable to the Post Office. Royal Mail might gradually divert business away from the Post Office network to other channels. Over time there would be nothing to stop a privately owned Royal Mail aggressively renegotiating or even ending its relationship with the Post Office network altogether.

The future of Royal Mail has too often been considered in isolation from the Post Office. Richard Hooper, who was asked to undertake independent reviews of the postal services sector by the coalition and the last Labour government, explicitly ‘parked’ the future of the Post Office in his analysis. But as Hooper himself recognises, most people use the terms Post Office and Royal Mail interchangeably.

There is strong evidence demonstrating that the Post Office is a crucial public service for communities all over the country.1 For some it is the only local shop; for others it is the hub of their community, or the point of access to essential services from paying bills to collecting social security payments. The Post Office can be thought of as the glue which binds citizens and the state.

The value of the Post Office network as a public service should be important to all political parties. David Cameron once spoke about the ‘big society’, where communities do more together to live a better life. Ed Miliband’s ‘one nation’ agenda also emphasises the importance of institutions that bring people together, including at a very local level.

But if politicians value the Post Office network they must urgently consider the impact that privatising Royal Mail will have.  

The government’s plans for a viable future Post Office network are dependent on two assumptions: firstly, the income from services provided for Royal Mail increasing; and, secondly, strong growth in Post Office Ltd’s income from government and financial services. If one of these assumptions proves incorrect the network could be in real trouble. If both fail to happen, the network will be in crisis.

This Fabian report demonstrates that the future of the Post Office network is fragile and intimately linked to the future of Royal Mail. To avoid future problems everything has to go according to plan, and the plans are optimistic.

We all hope that a committed Post Office Ltd management team is able to grow all areas of the business. But it is only right that the significant risks involved are subject to public debate, since the taxpayer may have to pick up the bill if the plans do not come off.

Natan Doron is the author of ‘Here Today: The uncertain future of the Post Office network’ which is available here.