By Max Clarke

In advance of the final stages of the Postal Services Bill in the House of Commons tomorrow, Minister for Postal Affairs Edward Davey has today set out the urgency of the Government’s plans.

Mr. Davey said:

“Two cornerstones of British life — the Royal Mail and the Post Office — are at a crossroads. Our policy is to break away from the years of decline and push ahead with plans which promise them both a brighter future.

“We won’t repeat the previous Government’s post office closure programmes. The Post Office is not for sale. Instead we are providing £1.34 billion of new funding and developing new reasons for customers to keep coming through the door.

“Royal Mail has a multi-billion pound pension deficit; is faced with rapidly declining letter volumes; needs much greater efficiency and has an urgent need for capital at a time when there are huge constraints on the public purse.

“A visit to a sorting centre just before Christmas brought home to me once again the huge task that faces Royal Mail. Staff were working incredibly hard to ensure that endless rows of presents and parcels bought online were ready for delivery.

“The digital age is presenting the company with a different set of challenges — and only with fresh ideas, modernisation and more investment can Royal Mail really adapt and thrive in this new market.

“The Post Office also has to rise to these challenges and make the network even more attractive and convenient for shoppers - expanding new services for customers and small businesses using their local post office to drop off and collect parcels.

“I know how much people up and down the country value these great institutions and the vital services they provide - the Government is determined to secure the future of both.”

Moya Greene, Royal Mail Group’s Chief Executive Officer, stressed the importance of the relationship between Royal Mail and the Post Office. She said: "There is already a very strong and enduring commercial relationship between the Post Office and Royal Mail. It is clearly in the interests of us all that this strong relationship is maintained in the future. We are committed to securing as long an agreement with the Post Office as we are legally able to.”

The Government’s Postal Services Bill will have its final stages in the House of Commons on Wednesday 12 January, before being considered by the House of Lords.

Royal Mail has to go further and faster to innovate, modernise and adapt better to the digital age — that requires substantial investment. The Government believes this investment needs to be delivered by the private sector, to bring with it the commercial disciplines Royal Mail needs to become a world-class postal operator and to free it from the spectre of Government intervention in management decisions.


The Bill includes the following proposals:

ROYAL MAIL

* The requirements of the universal postal service — collection and delivery of post six days a week at uniform, affordable prices are written into the Bill. The Government has no intention of downgrading them.
* Royal Mail will be able to benefit from an injection of private capital - ending the dependence on funding from the taxpayer and bringing new commercial disciplines into the business.
* Alongside private sector investment:
o At least 10% of the shares in Royal Mail will go to its employees in the future. This will be the largest employee share scheme of any privatisation, larger than British Telecom, British Gas or British Airways.
o Royal Mail will be relieved of its enormous historic pension deficit by the Government.
* As part of a general reform of the regulatory regime for mail, the existing regulator, Postcomm, will be replaced by Ofcom, the communications regulator, with the Bill providing for the transfer of Postcomm's regulatory responsibility and its staff to Ofcom.


POST OFFICE

* The network of around 11,500 Post Office branches is not for sale and there will be no programme of closures under this Government. Instead there is £1.34 billion of new investment.
* Under the proposals contained in the Bill, the Post Office could be converted into a mutual structure as part of innovative new plans to hand over its ownership and running to employees, sub postmasters and local communities.