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.

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 that it said would allow the Post Office network to continue providing services, but make 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, however, put forward several proposals for change which it feels could 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

Labour ministers argued in defence of the closures that the increasing problems faced by the Post Office network were a reflection of changing behaviour in society, and 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 should 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.

Statistics

Over 60% of current accounts, as well as basic bank accounts from all the major high street banks, can be accessed at a local Post Office.
Almost two million people use the Post Office's financial services products. It is, for example, the UK's leading provider of foreign currency, transacting £2.9 billion of foreign exchange each year.
The Department for Work and Pensions announced on 13 November 2008 the award of a new contract for the continuation of the Post Office card account up to March 2015 to Post Office Limited (POL), with the possibility of an extension beyond that.
Customers with current accounts with 13 UK banks and building societies can access their cash free of charge at post office branches. In addition, customers holding basic bank accounts with 17 banks and building societies can also access their cash free of charge at post office branches.
Post Office Limited in conjunction with its financial services partner, the Bank of Ireland, is currently implementing a programme to install up to 4,000 free-to-use cash machines at post offices across the country.
The Post Office currently has around 2,000 free-to-use ATMs, of which some 60% are located outside of branches, thus allowing for access 24 hours a day
97% of post offices are already privately owned businesses, run by Sub-postmasters.

Source: BIS - October 2010

Quotes

"The Post Office is far more than a purely commercial business. It operates in places where other retailers do not, including in deprived urban communities and remote rural areas. They often serve as a meeting place and a focal point for the local community.
"Because of this distinct social purpose, the Post Office is ideally suited to a Co-operative group style structure - where employees, sub-postmasters and communities get a greater say in how the company is run. By contrast, the current model sometimes pits the different stakeholders directly against one another."

Minister for Employment Relations, Consumer and Postal Affairs, Edward Davey - speech November 2010.

".....As for the Post Office, I have already made clear my commitment: it is not for sale and there will be no repeat of the programmes of closures that took place under the previous Government."

Business Secretary Vince Cable - October 2010