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.
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 2 Mother of newborn Baby No 59 trapped in sewer pipe told Chinese police she 'heard crying' when she raised alarm
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 This crazy skiing video will leave you feeling queasy
Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
AirAsia QZ8501: Black box reveals warning alarms 'screamed' before crash, as more bodies recovered from near fuselage of jet
Rob Lowe hits out at White House decision not to meet Israeli leader
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...