Post Office deal with Royal Mail opens door to independence

The UK’s Post Office Ltd took another big step towards independence from postal service Royal Mail Group today, signing a 10-year contract to continue Royal Mail services through UK post offices. The deal was one of the key milestones on the way to the retail network of Post Office Ltd separating from the Royal Mail Group later this year, prior to the planned privatisation of the Group. UK postal minister Ed Davey confirmed to Parliament today that the contract had been signed this month, giving “certainty” to the nation’s subpostmasters that the full range of Royal Mail products and services would be available via post office counters. Davey said the deal would give greater confidence to those concerned about Post Office Ltd finances. “Coupled with winning new contracts such as those with the UK Border Agency and Westminster Borough, and the successful pilots of new operating models, the signs are extremely encouraging for the future of the Post Office,” said the minister. The latest step on the way to separation of Post Office Ltd from Royal Mail follows last July’s appointment of a separate board for the retail network operator, chaired by British Airports Authority non-executive director Alice Perkins. The government has been working towards the separation since its November 2010 policy statement laying out plans for the 11,500-strong post office network, which looks likely to be turned into a mutual organisation, with some kind of employee share ownership structure put in place, while Royal Mail itself is privatised. Over the past year, efforts to shore up the Post Office Ltd finances have included the extension of financial services and a modernisation programme backed by ?1.34bn in government support. Davey today dismissed concerns about the financial situation at Post Office Ltd and the split from Royal Mail, insisting that his government had been making “good progress” in building on the company’s strengths and making it more competitive. “While it will take several years to turn round the Post Office’s finances,” he said, “it’s increasingly clear the reforms are beginning to work. Concerns people had about the Post Office becoming independent from Royal Mail were always misplaced as that separation is part of our cure.”

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