GBP20 million investment programme for directly managed UK post office branches

The Post Office today pledged a £20 million investment programme for its directly managed high street branches and gave a firm assurance that there is no closure programme for these key offices.

David Mills, Chief Executive of Post Office Ltd, strongly denied reports that a review of the 555 branches directly managed and staffed by the company would result in large numbers closing.

He stressed: “This is not a closure programme. It never was. We anticipate that fewer than five directly managed branches will need to close in 2005/06.”

The assurance was given in a letter today to every MP at Westminster.

Mr Mills said the 555 directly managed branches lost more than £70 million last year. “Unfortunately, losses are projected to continue and are already a serious constraint on investment in the business,” he said. That was why the Post Office was working on plans, in consultation with the unions, to bring the 555 directly managed branches to break-even.

“We are still at the planning stage but our aim is to provide main Post Office services to customers on a sustainable basis. We will not compromise customer service – or access to our services – in the process,” said Mr Mills.

Ends
Issued by Post Office Ltd.
148 Old Street
London
EC1V 9HQ
www.postoffice.co.uk

Notes to Editors
1. The 555 directly managed Post Office branches are mostly located in the high streets and main shopping areas in towns and cities. The remaining 97% of branches in the nationwide network are run by agents, subpostmasters and mistresses.
2. The letter from Mr Mills to MPs is attached.
________________
LETTER TO MPs

Dear

THE POST OFFICE DIRECTLY MANAGED NETWORK

Post Office Limited is concerned by recent reports suggesting that large numbers of directly managed offices are to close as a result of the review of its directly managed operations. I would like to take this opportunity to clarify the position.

There are around 15,500 branches in the Post Office® network and the review focuses on the 555 branches, which are directly managed by the company and staffed by Post Office® employees. These branches lost more than £70million last year. Unfortunately, losses are projected to continue and are already a serious constraint on investment in the business.

Post Office Limited is working on plans, in consultation with the unions, which would bring the directly managed branches to break-even. Although plans have not been finalised, I would stress that this is not a closure programme. We anticipate that fewer than five directly managed branches will need to close in 2005/06.

Many directly managed offices operate from old, expensive and unsuitable premises, which are neither customer friendly nor conducive to selling our new products and services. With over 100 leases due for renewal in the next five years, many important property decisions need to be made, with opportunities for local relocation in some cases. In parallel, we plan to invest around £20 million in the next two years to improve directly managed branches for customers.

It is likely that plans will include transferring some branches to be managed by partners, although no target has been set. It is important to note that franchised branches would offer exactly the same range of products and services, the same number of counters and the same or longer opening hours, in the same locality. Over 280 main Post Office® branches are already operated by franchise partners, with customer satisfaction on a par with the rest of the network.

Any changes will be made in line with the Code of Practice, agreed with the consumer organisation Postwatch, and our commitment that nationally 95 per cent of people in urban areas will live within one mile of a Post Office® branch.

I hope that this letter provides some reassurance as to our intentions. We are still at the planning stage, but our aim is to provide main Post Office® services to customers on a sustainable basis. We will not compromise customer service – or access to our services – in the process.

With kind regards

Yours sincerely

D J Mills
Chief Executive

Post Office Ltd
80 Old Street
LONDON
EC1V 9NN