Post Office (Postal Business) (Hansard, 24 July 1985)

§ Mr. Pattie

Over the last several months the Post Office has moved to greater separation of the mails and counter businesses operationally, managerially and financially. I have therefore decided that this is the right time to discontinue the setting of postal business targets and to move, from 1985–86, to setting targets separately for each of royal mail and counters. National Girobank is already targeted separately.

The postal business was set the performance aim in February 1982 of reducing its real unit costs by 5 per cent. in the three years to 1984–85 taking 1981–82 as a base, 566W with a provision for a reduction of 2 per cent. in 1982–83. I congratulate the management and work force of the Post Office for having bettered that target.

I have decided that the royal mails business should be set the target of further reducing its real unit costs by 2.2 per cent. in 1985–86 compared with 1984–85 and that the counters business should be targeted for a reduction of 1.5 per cent. compared with 1984–85.

The Government have no doubt that it is vital to the future of both businesses and to the future of jobs in both businesses that the Post Office should strive to make further significant improvements in efficiency in order to retain its existing customers and to attract new work. I believe that these targets are demanding but I am confident that the Post Office is capable of reaching them.

The move to separate targets raises certain problems in attempting to set financial objectives. It will be a little time yet before sufficiently robust figures are available on which separate profit targets for the two businesses could be determined.

I have therefore decided to review the financial objectives for mails and counters and to delay setting medium-term financial objectives until later this year. As an interim measure, therefore. I have decided that each of royal mails and counters businesses should be required to secure a 4.5 per cent. return on turnover, on the current cost accounting convention, before tax but after interest, for the financial year 1985–86.