New Royal Mail 10-year deal welcomed

24 January 2012

The future of post offices up and down the country is secure following a new agreement between Royal Mail and the Post Office, the postal affairs minister Edward Davey has claimed.

Sub-postmasters welcomed the news but the Communication Workers Union (CWU) said it was "the end of the Post Office as we know it".

Davey said: "On coming to office, we found a demoralised Post Office, still losing substantial sums despite years of cutbacks and closures. So a year ago I set out a radical plan to transform Post Office's future, with £1.34bn of government support and investment but without any closure programmes. Since then the Post Office has made good progress to become more competitive, building on its strengths."

He went on: "Concerns people had about the Post Office becoming independent from Royal Mail were always misplaced [because] that separation is part of our cure, but the 10-year deal struck between Royal Mail and the Post Office will give subpostmasters and others greater confidence. Coupled with winning new contracts such as those with UKBA and Westminster Borough and the successful pilots of new operating models, the signs are extremely encouraging for the future of the Post Office."

Moya Greene, Royal Mail Group's chief executive, welcomed the deal, saying that it provided a firm foundation for the Post Office's long-term, sustainable future and ensured Royal Mail's customers could continue to get access to postal services in Post Office branches nationwide.

"Royal Mail and the Post Office have reached an agreement that is in the best interests of our customers and both businesses," she said. "The Post Office will continue to benefit from the sale of stamps and other delivery services. For Royal Mail, the business retains the current, unrivalled, UK-wide, retail distribution network for its products and services aimed at consumers and small businesses. We look forward to a new chapter in our continuing, close relationship."

And Paula Vennells, managing director of Post office Ltd, said: "This vital agreement, along with our ambitious plans for growth in government services, our branch investment and modernisation programme, and our development of digital services, will all help to build a long term and sustainable Post Office."
The National Federation of SubPostmasters (NFSP) welcomed the deal, with general secretary George Thomson saying it was essential for the future wellbeing of post offices. "Subpostmasters will welcome the security which this news brings," he said, "which will help provide them with the confidence necessary to invest in their businesses for the future."

But Billy Hayes, CWU's general secretary, said: "This announcement paves the way for the end of the Post Office as we know it. It's the end of an era and an unprecedented step by the government – we're not aware of any other country which has severed the retail post office network away from the main mails, deliveries and logistics part of the business. When people think of the Post Office they think of the whole mail network from post office to postman, sorting and delivery – but not anymore."

Hayes said it was too early to claim success for an initiative which is untested, unprecedented in global postal industries and which has many uncertainties ahead – including mutualisation.

"The future for the Post Office is less than clear," he said. "While some new contracts have been won they don't replace the huge contracts which have been lost. The 'Green Giros' benefit payment contract ends this year and National Saving and Investment products are being pulled out of post offices. These brought benefits to the whole network and their loss is already being felt by postmasters up and down the country."