Lib Dems blame govt for Post Office decline

Thursday, 15 February 2007 12:00 AM

The government claims that the Post Office network's financial losses result from 'people...increasingly choosing to live their lives in different ways'. But Post Office Ltd's problems have been increased by losing government business on passports, TV licences, car tax discs and pensions and benefits, together worth £168 million. The government has clearly had a role in the network's decline, because this lost revenue is greater than the £111 million total operating loss made by Post Office Ltd last year.

Currently £150 million is spent on social network payments propping up post offices, while Royal Mail restrictions prevent them competing for business. Royal Mail's employee pension scheme has a huge deficit, and it needs to invest in new technology to keep pace with its competitors.

Alistair Darling recently announced that £1.7 billion will be spent in order to 'place the restructured network which emerges on a stable footing for the foreseeable future'. Although ministers have refused to say exactly how the money will be spent, it will include maintaining current levels of subsidy, absorbing ongoing losses and paying for the closure of 2,500 post offices. Of the previous £1.7 billion investment, only a third went on actual investment, with the rest going on a botched IT project and the last round of closures.

While the government is content to preside over the decline of the Post Office network, the Conservatives claim to want to support it, but have no policies on how to do it.

The Liberal Democrats would create a legal requirement for future governments to keep local post offices open. We would split Royal Mail and Post Office Ltd, keeping the latter in the public sector. The former would be part-privatised, with government and an employee share ownership retaining 51 per cent of shares. The £2 billion raised from selling the other 49 per cent would be invested in the post offices, which we would free from Royal Mail restrictions so they could become commercially competitive. Royal Mail would be freed from Treasury borrowing controls so it could attract private investment, while the employee share ownership would help plug the pension deficit. We are the only party with a fully-costed plan to ensure a thriving future for the Post Office, not just manage its decline.

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