Small businesses need shake-up of postal service

The Federation of Small Businesses (FSB) has called for a sustained approach from regulators to improve the postal service offered to small business customers by Royal Mail and to preserve the existing levels of post offices across the UK.

The survey of more than 3,000 small businesses across the UK found that post offices were vital to the survival of 82 per cent of small businesses. It also found that the introduction of Pricing in Proportion (PiP) by Royal Mail has increased postage costs for 43 per cent of firms and time spent on preparing the mail for 44 per cent of businesses. Forty eight per cent of firms reported that their mail arrives later than it used to before the Single Daily Delivery was introduced. Clive Davenport, FSB Trade and Industry Chairman, said: "It is impossible to overstate how vital the postal system is to small firms and to the UK economy. With small firms employing 58 per cent of the private sector workforce, the Government has to commit to supporting the future of post offices. Greater scrutiny of Royal Mail is also required.

"In terms of paying bills and invoicing customers the postal service remains the only small business choice despite the increasing use of new technology. This is partly explained because of recent closures of high street bank branches.

"The future of post offices cannot be considered in isolation and policy decisions, such as the post office card account, have to be made with the bigger picture in mind. Unintended consequences from such decisions could spell disaster for the UK economy. This can and should be avoided."

Survey

The survey of FSB members found:

• 88 per cent of small firms send mail every day.
  
• 69 per cent send invoices through the post.
  
• 87 per cent of all mail is business mail.
  
• 41 per cent of firms use the postal system to order goods on which the running of their business depends.
  
• Since the Royal Mail merged first and second posts into the Single Daily Delivery (SDD) in 2004, 48 per cent report that their mail arrives later and 31 per cent feel that the service has worsened since SDD was introduced.
  
• 94 per cent of small firms use Royal Mail exclusively. This is mainly because either they were not aware of other choices or that competitors to Royal Mail were not interested in serving small firms.
  
• 43 per cent of firms have seen an increase in their postal costs since Pricing in Proportion (PiP) was introduced in August 2006 and 44 per cent have had to spend more time on dealing with post since PiP was implemented.
  
• 97 per cent say that the post office has a role to play in the local community.
  
• 82% believe that the closure of their local post office would have a significant impact on their business.

The report concluded that all too often, the postal infrastructure has overlooked the needs of small businesses.