Post in Post Office Closures - who is to blame?

Post Office Closures - who is to blame? From: Julia Gasper Date: Apr 09 12:02 UTC Short link

For decades, prior to the late 1990's, the Royal Mail was an efficient,
profitable monopoly providing the finest postal service in the world as well as
being an important element in the structure of British life. A monopoly was
important because many parts of Britain are remote. It follows that if we are
to charge the same postage rates regardless of that part of the country to
which mail is to be delivered, there will be some areas which are serviced at a
loss whilst others are served at a profit. If postal rates are set wisely to
balance out the differences then Royal Mail will make a profit.



It should be emphasised that Post Office Limited is a subsidiary of Royal Mail.



One of the EU's key objectives is to impose competition throughout the whole of
its territory regardless of whether or not a national monopoly is beneficial to
the local community.



Detailed rules, which affected the British postal services, appeared in
December, 1997 in an EU press dossier 'Notice from the Commission on the
application of the competition rules to the postal sector and on the assessment
of certain state measures relating to postal services*'.



EU Directive 97/67/EC issued on 15 December 1997 'Privatisation of Postal
Services*'  began the introduction of an EU-wide postal service and immediately
reduced the Royal Mail's monopoly to mail weighing less than 350 grams.  The
delivery of mail over that weight was privatised which meant that public sector
companies, mainly the Dutch 'TNT' and the German 'Deutsche Post' (trading as
DHL), were able to cherry pick the profitable areas of mail services in this
country, leaving the unprofitable areas to the Royal Mail.



In addition, the private companies can require the Royal Mail to accept mail
which they do not wish to deliver at a cost to them of up to 9 pence a package
cheaper than 2nd class postal charges. Because of this arrangement in 2006/2007
the Royal Mail's operating profits fell by 86% to just 22 million. (22 Feb.
2007- Royal Mail Calls For Radical Review of Postal Market Regulation*).  It
follows that this state of affairs created by the EU forces the Government to
subsidise our postal services.



A second Postal Services Directive 2002/39/EC* issued on 10th June 2002 further
reduced the Royal Mail monopoly to 50 grams. An extract from Article 14 of the
Directive reads: 'An appropriate period of time is needed to enable Member
States to adapt their regulatory systems to a more open environment. It is
therefore appropriate to provide for a step-by-step approach to further
market-opening, . .   In 2009 the dwindling Royal Mail monopoly will cease
altogether as Article 14 goes on to disclose that '.a review and proposal
confirming, if appropriate, the date of 2009 for the full accomplishment of the
internal market for postal services'.



It is obvious that there has been a great deal of negotiating behind closed
doors between the British Government and the EU, particularly because few
countries are making any serious attempt to 'liberalise' their postal services.



At the end of February 2007, the European Commission announced that it had
launched an in-depth inquiry into the British Government's funding of national
postal services provider Royal Mail, totalling more than 2.5 billion euro. The
investigation followed complaints from Royal Mail's competitors (particularly
TNT and DHL - Deutsche Post) made between August and October 2006.

It should be noted that only the UK, Sweden and Finland have fully liberalised
postal markets. It is therefore ironic that the Netherlands and Germany are
benefiting from our liberalised service whilst not adopting it in their own
country.



On 9th March 2007 the EU Competition Commissioner's newsletter Nr. 10/07*
reported that she (Neelie Kroes) had given permission for the UK to provide 460
million euros to Post Office Limited (approx. 345 million at the time). It
reads: The European Commission has authorised, under the EC Treaty's rules on
state aid, proposed funding by the UK Government to allow Post Office Limited
to continue to provide public services through the network of post offices in
the financial year beginning 1 April 2007'.  The approval was separate from the
investigation referred to in the previous paragraph and concerns only the aid
granted to Post Office Limited.



A letter from Brussels to David Miliband, Secretary of State for Foreign and
Commonwealth Affairs - Ref.. N388/2007 - dated 28 November 2007*  discusses the
relationship between our Postal Services and the EU. It leaves no doubt that
the EU is in control. It discusses the 'transformation programme'.  Para 11
states: 'The transformation programme will involve POL [Post Office Limited]
reducing the size of its post office network by around 2,500 branches'



On 29 November 2007 the EU announced that it had granted the British Government
permission to subsidise the Post Office.



It becomes very obvious that the EU was prepared to allow us to subsidise our
Post Offices to the tune of 460 million euros in exchange for us closing down
2,500 Post Offices.



An extract from Hansard dated 07 February 2008* reads:



'Mr. Gordon Prentice: To ask the Secretary of State for Business, Enterprise
and Regulatory Reform what obligations arising from (a) the UK's membership of
the European Union and ( b) the UK's participation in single market legislation
govern the provision of subsidy to the network of Post Office branches; and if
he will make a statement.



Mr. McFadden: All state support for undertakings, whether privately or publicly
owned, are subject to the rules laid down in Article 87(1) of the EC treaty.
Funding of the Post Office network is therefore subject to the state aid rules
and can only be given in compliance with these rules.

In November 2007 the Commission approved Government plans for support for Post
Office Limited.'



Instead of using the EU term of 'transformation programme', the demolition of
the Post Office network is being managed under the title 'Network Change
Programme' which, on its website, explains that the closures are necessary
because 'The Government has recognised that fewer people are using Post Office
branches [and] . that the shape and size of the overall network of Post Office
branches needs to change'. It fails to state that fewer people are using the
post offices because the Government has been slowly and deliberately
withdrawing services which the Post Office traditional provided. There is also
no mention at all on the website or in any material issued by the Network
Change Programme of the involvement of the EU and the real reason why our Post
Offices are to close.