UK Royal Mail 'needs Pounds 150m' to keep 10,000 post offices open

ROYAL MAIL is pressing the Government to decide whether it will renew its Pounds 150 million subsidy for rural sub-post offices.

The push comes after it emerged yesterday that Adam Crozier, its chief executive, had told a group of MPs that more than 10,000 post offices across Britain could close within the next four years if the three-year support package, which ends in 2008, was not renewed.

Mr Crozier said that Royal Mail needed a rump of only 4,000 post offices to fulfil its licence obligations for delivering mail. The remaining 10,500, of which 8,000 are loss-making rural offices, needed to gain extra government subsidies or become profitable to survive.

If the post office network shrunk to 4,000, it would mean a contraction of more than 80 per cent since its peak in 1964, when there were 25,056 post offices. It is thought that Royal Mail wants a decision urgently so that it can deal with contracts related to the network and manage closures, if necessary.

The company has denied that there is a closure programme and it is believed that executives want to maintain the size of the network rather than let the businesses, which are franchises, wither gradually. This could mean that too many post offices disappear in certain areas and Royal Mail is unable to fulfil its licence obligation of allowing everyone reasonable access to an office to post a parcel.

Last year Royal Mail lost Pounds 110 million on its post office network. The organisation is under tough financial pressure because of its Pounds 4.5 billion pension deficit and a need to invest about Pounds 2 billion in equipment to catch up with its rivals.

Colin Baker, of the National Federation of SubPostmasters, said: “It doesn’t matter whether there is a planned closure programme or not; closures will happen if there are not supports.”