Post Office closures

Post Office Closures

Post offices have been a staple of British life for decades, providing a place for people to pay their bills, collect benefits, get their car taxed and buy stamps locally. But the number of branches has dwindled from about 25,000 in the mid 1960s to around 11,500 today.

Post Office Ltd (POL) is a subsidiary of Royal Mail Holdings and is responsible for the management of the Post Office network.  Around 97% of post office branches are operated by franchise partners or subpostmasters, who are independent business people.  Only a small number are managed directly by POL.

Background

The previous Labour government claimed that 6,000 closures took place before 1997, and blamed changes in behaviour for this decline. Many people now have benefits and pensions paid directly into bank accounts rather than collecting them from their local post office and car tax can now be renewed online or by phone.
In addition, where local post offices used to be the only place to buy stamps, there are now many thousands of outlets across England and Wales where this is possible.

The network lost £4 million a week in 2006/07, double its losses in 2005/06, despite an annual £150 million subsidy from the government. About 16,000 branches served less than 30 people a week, and all rural branches were losing money.

Ministers decided this situation could not continue and in December 2006 the Department for Trade and Industry (DTI) published a restructuring plan which it believed would allow the Post Office network to continue providing services whilst making it more financially viable.

One problem was that aside from the 480 post offices owned by the Crown, all branches were privately owned as franchises or agencies of Post Office Ltd. Most had sprung up haphazardly, with no overall assessment of whether they had a chance of survival.

With its proposals the government signalled a new approach, which focused not on the number of branches but on how well the network met new access criteria. These criteria said 99 per cent of the population should be within three miles of a branch, and 90 per cent within one mile.

The plans provided for 2,500 branches to close in the restructuring and this raised serious concerns about the loss of vital community hubs and services in some areas. However, the government pledged to continue the £150 million annual subsidy until at least 2011 and said this would give the remaining branches the best chance of staying open.

The present Coalition government has made it clear that it wishes to see "a strong and sustainable future" for the Post Office network with no further closures. It has also put forward several proposals for change to help secure the future of post offices, such as enabling sub-postmasters, employees and communities in the future to participate in a mutually-owned Post Office.

Controversies

In defence of the closures, Labour ministers argued that the increasing problems faced by the Post Office network were a reflection of changing behaviour in society, and that  their plans were an attempt to safeguard the network in the face of that change. However, opposition parties and campaign groups pointed to specific government decisions to withdraw contracts from the Post Office as a sign that ministers had played a large part in the network's demise.

Rural groups said the closures reflected the government's lack of awareness about issues affecting them while unions were bitterly opposed to the closures, which would inevitably result in job losses.

Political opposition to the government programme continued into 2007 and March 2008 saw the Conservatives bring the issue to the fore with an opposition day on the closures. In particular shadow business secretary Alan Duncan criticised ministers for campaigning against closures in their own constituencies.

The Coalition government elected in May 2010 promised there would be "no programme of closures" under their leadership. However, the new government was concerned about the long-term structure of the Post Office and suggested a debate be held on two alternative ownership structures: – either the Government would hold 100 per cent of the shares in Post Office Ltd., or the Post Office would be reconstituted as a mutual.

The Postal Services Act passed in June 2011 provided for a possible future move to a mutual ownership structure of the Post Office.  A public consultation on a mutual model of ownership was launched at the end of 2011 with a response due to be published in 2012.

A Stakeholder Forum set up by Post Office Ltd will begin the next steps on the path to mutualisation. The Forum will consist of the key interest groups – bodies representing subpostmasters, staff and consumers – identified in the consultation.

The Government also announced that £1.34 billion would be provided over the Spending Review period to March 2015 in order to help maintain and modernise the Post Office and safeguard its future.

Changes proposed under the Network Transformation Programme are intended to help the Post Office adapt to customer and market demands in a highly competitive and rapidly changing retail environment; these include longer opening hours, quicker service and accessible locations.

Further investment will be provided for main Post Office branches in larger towns and cities; and the Post Office Local concept will offer a more flexible operating model with both customer and retailer benefits.

The Government insisted participation in the programme was “wholly voluntary” for subpostmasters and rejected claims that a “one size fits all” approach was being adopted, saying that Post Office Ltd would follow “a customised approach on a branch by branch basis.”

Ministers also criticised the “spoiling tactics” of a campaign around an Early Day Motion which called for a moratorium on the proposed roll-out of the Locals model until a full national consultation had been carried out. The government responded by saying there had been “extensive piloting” of Post Office Local over three years and the pilots were continuing.

 

Statistics

 

The last year has seen the Post Office network at its most stable for over a quarter of a century.
At the end of March 2012 there were 11,818 Post Office branches open and trading – compared with 11,820 for the previous year.

The Post Office continues to meet and exceed Government accessibility criteria with currently 93.1% of people in the UK living within a mile of a Post Office, and 99.7% within three miles.

Just under 20 million people visit a Post Office each week to access a wide range of government, financial, banking, mails and telephony services. The Post Office also provides a vital infrastructure for small businesses with over half visiting a branch each week.

Over the next three years, the Post Office will transform around 6,000 branches. These new style branches will offer customers a brighter retail environment and in many cases much longer opening hours.

Revenue increased during 2011/12, reversing the trend of recent years, and plans are in place to continue to grow revenue over the coming years to make the network more sustainable into the future.

The Post Office is now firmly established in the personal financial services market, with over 2.5 million customers and £15.8 billion deposited in its savings accounts, the UK’s number one travel money provider and the fifth largest telecoms provider.

Source: The Post Office Network Report – 2012

 

Quotes

“I have always held the view that the post office network is quite remarkable – a precious national asset which we have long under-exploited – in the best sense of the word. The network reaches into the most rural locations and the most deprived communities. Our collective challenge is to grasp the potential for the network and to make it a reality.”

 

Postal Affairs minister Norman Lamb – May 2012