UK Postal Watchdog raps slow progress on post offices
A report due out today will criticise the government and Royal Mail for not doing more to secure the future of the loss-making post office network.
Smaller post offices, or sub-post offices, are privately owned but in rural areas are supported by a Pounds 150m annual subsidy – the social network payment – from the Department of Trade and Industry. This is designed to limit branch closures in rural areas but is due to end in 2008.
The number of urban sub-post offices will have fallen by up to 3,000 by the end of this year – the Post Office claims there was over-capacity – and the DTI is spending up to Pounds 210m on redundancy payments and the refurbishment of the remaining branches.
The DTI is keen for the whole network, including the 555 crown offices directly owned by the Post Office, to move into profit in coming years to sustain itself without government subsidy.
But after looking into the recent troubled evolution of the network, the National Audit Office has concluded that more needs to be done to find ways for post offices to be self-sufficient.
Its report highlights the “slow rate of progress” made by the Post Office, owned by Royal Mail and ultimately the government, in testing “innovative ways of delivering post office services in rural areas”.
The Post Office has conducted trials of mobile post offices, which are cheaper than maintaining bricks-and-mortar branches, as well as joint ventures between country subpostmasters and local public services, such as the police. But the NAO found that of the Pounds 5m of funding available to the Post Office for trials in the 2003-04 financial year, only Pounds 777,000 was spent on pilot schemes.
Royal Mail said: “Some of these rural schemes take a while to set up. But there will be a significant rise in expenditure in the coming months, with more pilots taking place.”
Post Office executives will present the conclusions of the trials to the DTI by the end of this year.
The NAO also criticises the government for not outlining what it wants from the rural network in terms of the level of service that is worth preserving, and not making clear whether a subsidy would be involved. The DTI has “a pivotal role” in determining the rural network’s future, the NAO says, and should decide “what services it wants the rural network to provide, the size of the network necessary to perform that role, the costs and benefits involved in maintaining it and how much it is willing to spend supporting it”.
In urban branches, the NAO said there should be more advice for subpost- masters on how to improve their businesses.
The Communication Workers’ Union noted that the NAO’s report did not cover the larger crown offices as they did not receive government support. “What we cannot understand is how the government can on the one hand appreciate the vital social role (rural sub post offices) play, and on the other ignore crown offices.”
