Post office expenditure questioned

Post office expenditure questioned

Friday, 25, Jul 2008 12:01

There should be further investigation into how the postal services are spending taxpayers' money, an influential group of MPs has said.

Post Office Ltd received £358 million in 2007/08 to cover the costs of providing services to the Royal Mail. "We heard from the managing director of Post Office Ltd that this was not enough cover the cost of those services," said Peter Luff, chairman of the Business and Enterprise Committee.

"It is possible that this is down to inefficiency at Post Office Ltd, but it is also possible that it is because Royal Mail Group is inappropriately using Post Office Ltd, which receives some state support, to cross-subsidise its mail services."

The committee urged further reviews to scrutinise the relationship, and called for clarification of Royal Mail's service expectations from Post Office Ltd. It also requested a breakdown of how the Royal Mail Group determines the cost of services, versus the actual cost of the services as delivered by Post Office Ltd.

In addition, the report called for investigations of the financial arrangements for outreach services - when a retailer or publican is appointed to offer a range of Post Office services - after hearing evidence of insufficient funds.

According to the report, "[i]f this is the case, outreach services will fail, and the network be diminished…A significant amount of public funding is going to sustain the network; we need to be confident the public receives the services this is meant to secure."