David Prosser: It's not the Post Office's ownership that matters most but its funding
Thursday 14 October 2010
Outlook Having spent the previous 24 hours publicly eating his words on tuition fees, Vince Cable must have been relieved to get on to a fluffier topic yesterday. The Business Secretary's announcement that the future of the Post Office might lie in a mutual ownership model was the sort of heart-warming stuff he used to specialise in during his humble days as an opposition spokesman on Treasury matters.
It all felt delightfully post-capitalist – so much more Liberal Democrat, you might say. Who could fail to be moved by the idea of communities across the country coming together with their sub-postmasters to decide how the nation's post offices might be run?
Just one hitch. What about the money? The organisations Mr Cable name-checked yesterday, the John Lewis Partnership and the Co-operative Group, are poster boys for mutuality because as well as having ownership models that people admire, both consistently turn in exceptionally strong commercial performances.
If only one could say the same of Post Office Limited. It made a £64m loss last year on sharply declining revenues. The organisation relied on a £150m subsidy from taxpayers which is due to rise to £180m next year.
The explanation for these numbers is relatively straightforward. This is a business that is not run purely with the bottom line in mind. If it were, many hundreds more post offices would already have been closed. Post OfficeLimited is also overexposed to Government policy – the decision to switch to electronic benefits payment, for example, starved post offices of many of their customers. Royal Mail privatisation might repeat that trick, since Post Office Limited relies on the operator for around a third of its business and there is no guarantee it will keep these revenues once it has to deal with a private sector organisation.
Changing the ownership structure of Post Office Limited will not address any of these issues, even if it leaves all those concerned with a warm glow. It does, however, allow the Government to neatly sidestep the more fundamental question – how much taxpayers' cash should be handed over to the organisation in the years ahead in order to subsidise small businesses that are socially valuable but not commercially viable?
This is not to say there is anything wrong with these subsidies. If, as a matter of public policy, we decide unprofitable post offices are worth maintaining in the name of social cohesion, so be it. But let's not pretend mutualising the Post Office is somehow going to solve its funding issues.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
- 1 Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
- 2 Scottish independence: What you shouldn't tweet about if you want to avoid jail today
- 3 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 4 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 5 Archbishop of Canterbury admits doubts about existence of God
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...