The Post office is not a good advert for nationalisation

Visiting local Post Offices before Christmas reminded me just what a mess this government has made of one of the few remaining nationalised industries. If anyone still thinks nationalisation is the answer, they would be well advised to study the Post office as an object lesson in how not to run a business. It is bad for the staff, for the customers and for taxpayers.

At a time when government worries about human carbon output, they switched the Post office from sending many of its letters and parcels by train to sending them by road. They were,apparently, unable to negotiate a contract that made sense for such a large users of the railways, with the railways where the track has recently been taken back into a form of public ownership!

Claiming to understand the importance of the large inherited network of small post offices, the government took away their main source of livelihood, the substantial counter business they used to transact for various government departments. Apparently, it is more efficient to transact these items through the for profit private banking sector, than through the nationalised postal counter network.

Their management style and the government business loss combined to create huge losses for the Post office. These were then reduced by a triple whammy for taxpayers customers and staff ?? a subsidy, big increases in the monopoly charges to carry a letter, and staff cuts with closures.

The atmosphere in the business is not good. Many of the staff resent the way they are expected to find the cost reductions the management say are necessary. The lower paid staff have to deal with customers, explaining to them the big increase in charges and the decline in service.

Customers resent the surging price of posting a letter, the move to single deliveries each day, and the likelihood that your delivery does not arrive before you leave for work. Middle ranking managers lack authority and responsibility to drive the business. They do not control their property and other assets, and they have little ability to try to increase the volume of business or try out new services.

If you take the case of my local main Post Office in Wokingham, you see a typical example of how local people are prevented from transforming the business. The Wokingham Crown Office and the sorting office are combined on the same premises in Broad Street, one of the principal streets in the town. The sorting accommodation is cramped and out of date, with some employees having to work in sheds beyond the main complex. The sorting office site is a very valuable site which could probably be redeveloped for office accommodation, freeing Post office capital to acquire a better located sorting site where vehicle access could be much easier and where there was enough decent accommodation for all staff.

The front of the building is a good looking early twentieth century structure, with room to add more counters which are much needed to deal with the growing numbers forced to use the main Post Office by the closure of smaller offices elsewhere. 2 more are scheduled in the latest cull which the Post office is currently consulting about. The users of these offices are very unhappy about the proposals. It is difficult to see how the main Office can deal with them at peak times without a major overhaul and expansion.

Unfortunately local management is not empowered to sort out the property mess and release the property potential. Capital spending permission comes from the centre, and that means it rarely if ever comes. Local management are not encouraged to try out new services that might work well in Post Offices in their area, and are not rewarded generously for increasing the revenue of the business.

If you think the only ways to raise profits are closures, higher prices, and cuts in staff numbers you end up with a very demotivated business. If you tell the staff that if they are more efficient getting around their delivery area they have to come back to base to do some other work, you do not motivate your postal workers readily or well.

You have a very old fashioned nationalised business. The irony is that it is government which is knocking the stuffing out of it. The double blow of the loss of government business and the introduction of competition means the Post Office is no longer capable of sustaining its traditional volume and range of services. The New Year will bring more closures, more price hikes, and more staff cuts.

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2 Comments

  1. Alan Douglas
    Posted December 28, 2007 at 11:51 pm | Permalink

    John,

    I think that the break-up of the monopoly on government payments was a “EU” requirement ?

    This would put a whole new view on the PO’s difficulties. Is it not the case that 80 % of our laws are now EU-derived ?

    I do think that if any of these matters that you raise are ultimately sourced from the EU, you should spell this out.

    Alan Douglas

    Reply: I do not always know what is an EU requirement, as the government often does not tell us, and always refuses to show us the legal advice they are using.
    I agree we should be told. I believe around 80% of the laws affecting business now come from the EU – it is difficult providing an accurate figure as “laws” are not a single unit of account. You have to make some assumptions – numbers of pages of lawcode? Some allowance for seriousness of issues/penalties?

  2. Bazman
    Posted December 30, 2007 at 10:51 pm | Permalink

    In my town, the local main post office. Very traditional, was closed and relocated to a high street shop. The local website and newspapers where outraged. I have paid a few bills, car tax etc. Things have got a bit faster I can tell you! The ‘village’ part is still within walking distance, again in a local shop.
    How hard is it to deliver letters? Easy life!

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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