Government must support Post Office

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Billy Hayes of the Communication Workers Union raises concerns about the Postal Services Bill, in response to a Westminster Hall debate on the implications of Royal Mail privatisation.

Labour MP Katy Clark today led a debate in Westminster Hall on the implications of Royal Mail privatisation for the post office network. Katy's concerns for the future of the Post Office are valid as the coalition government's plans to privatise Royal Mail and break the historic link with the Post Office put the future of the post office network in jeopardy.

The majority of the Post Office's income comes from two sources: selling Royal Mail services – such as stamps and parcels – and acting as the government's face with the community – such as issuing pension payments and handling passport applications.

Both of these sources of income are under threat from the Postal Services Bill, currently in the House of Lords.

The Post Office is dependent on Royal Mail's business for its survival, yet the bill does not safeguard the 'Inter-Business Agreement' (IBA) through which Royal Mail guarantees use of the Post Office as its retail arm.

With over one third of its revenue (£343m) and one third of subpostmasters' pay (£240m) generated from selling Royal Mail products and services, separating a privatised Royal Mail and the Post Office will seriously risk this vital revenue stream – threatening the future of the post office network.

Without an extended IBA there is no guarantee Royal Mail will continue to use the Post Office. Post offices cannot survive without a guarantee of the business that they get from Royal Mail.

To make matters worse, the coalition will not guarantee post offices future government work – not even the contract for the Department for Work and Pensions payments.

Despite assurances of channelling government services through the Post Office, there is nothing to prevent government work being systematically stripped away from the Post Office as services are put out to commercial tender with no regard for the impact on the network. The Post Office's contract to award 400,000 'green giros' a week, worth £15m a year, is currently under threat.

As a result, the bill fails to prevent further post office closures. Despite assurances from the government that there will be no further programme of post office closures, branches are still closing every week.

Over 150 post offices closed on a 'long-term temporary' basis last year alone.

There is no guarantee that these will reopen; many are likely to stay closed indefinitely. Nine hundred more are currently up for sale – "an unusually high number", according to George Thomson of the National Federation of Subpostmasters – and these businesses are hard to sell, overshadowed as they are by the uncertainty of this bill.

Illustrating the scale of ongoing closures, Consumer Focus has stated that the number of post offices could fall by 37 per cent from its current level of 11,900 to 7,500.

The Postal Services Bill will seriously jeopardise the Post Office's most important revenue streams and will threaten the future of the post office network.

Katy Clark MP is right to raise this issue in Westminster Hall today – the post office remains the heart of many communities and I believe government should be looking to support and grow the post office network – not take steps that will lead to yet more closures.