Outlook: Post Office can't have it both ways

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The Independent Online
THE POST OFFICE expects the best of both worlds. It wants to keep its monopoly but it also wants the commercial freedom to trash what private sector opposition does exist. Unfortunately for the Post Office, commercial freedom rarely comes without commercial risk.

One of the nice little monopoly earners that the Post Office has enjoyed since 1922 is the right to collect television licence fees for the BBC. The Post Office earns about pounds 70m a year from this contract. Some months ago the BBC put the contract out to commercial tender, the first time it has done this.

Any day now it is due to announce whether the Post Office has hung on to the business for the next seven years or whether it will go to the private sector. The front runner is a consortium led by US computer giant EDS.

Plainly, the decision is a hot potato for both the BBC board and its political master, the Secretary of State for Culture, Media and Sport, Chris Smith. Do they keep the business in the public sector, remembering of course, that it is partly the licence fee contract that enables the Post Office to pay the Exchequer such a walloping dividend each year. Or do they opt for what is likely to be a cheaper private sector bid and allow the BBC to use the money it saves to improve the quality of programming?

There is no doubt that the Post Office provides a gold-plated service. The contract keeps close on 2,000 Post Office employees in a job at Bristol and a fleet of gleaming detector vans on the road.

The Post Office would counter that the BBC gets good value for money. Evasion rates have dropped to their lowest levels in years - about 7 per cent - and more money is being raised through the licence than ever. The private sector might do the job more cheaply but could it guarantee deterring as many licence dodgers?

The semaphore signals from Broadcasting House suggest the outcome is too close to call. If the Post Office does lose out, it would be a timely reminder that, in the cold world of commercial freedom, not everything is a one-way bet.