Axe hangs over 2,000 rural UK post offices in fresh drive to cut costs

THOUSANDS of rural post offices are threatened with closure over the next five years as the Royal Mail transforms the network.

The Government is providing the Royal Mail with Pounds 1.3 billion for a "radical transformation", and Adam Crozier, its chief executive, said that the current situation -where a thousand post offices have fewer than six customers a day – was "not sustainable".

He said: "It's clear that it can't continue the way it is. The status quo is not possible."

More than 6,000 of the 8,000 rural post offices are understood to be losing money.

The whole network, which has 14,500 branches, loses Pounds 2 million a week. Mr Crozier has said that he can meet his legal obligations with a network of just 4,000 offices.

The Conservatives said that the Government must establish a long-term strategy for the Post Office, its role and how it should be supported. Charles Hendry, Tory trade and industry spokesman, said that without such a strategy "there will be catastrophe for the rural post offices". He said that new business opportunities had to be explored, including a wider range of mail deliveries.

Post offices have been severely undermined by the Government's move to pay benefits directly into bank accounts. Ministers have already announced that they are withdrawing support for the Post Office card account, a way of allowing pensioners and other benefits recipients to continue collecting their money from post offices. This will end by 2010, when the Government will account for less than 10 per cent of post office transactions.

Consultation has begun on how many rural post offices there should be, but the National Federation of SubPostmasters fears that thousands will have to close. The network currently depends upon Pounds 150 million a year of support from the Government, which is scheduled to end in March 2008.

The Pounds 1.3 billion package was announced as part of a total Pounds 3 billion government loan package to help to modernise Royal Mail and plug a Pounds 5.6 billion black hole in its pension fund.But ministers were accused of failing to understand the needs of rural communites, where the village post office is often at the heart of local life.

Arthur and Penny Robinson have run a sub-post office and stores in Erwood, Powys for 23 years. The village has a population of about 150 and the post office receives between 10 and 15 customers most days, Mr Robinson, 78, said. "Thursdays are the exception when everyone comes down from the hills to do their shopping and draw their pensions. It gets mad then. We get 20 or 25 people in."

They are open from 9am to 1pm six days a week and cannot imagine closing. "Our customers wouldn't let us. We're the last shop in the area. I'm also the last vestige of civil authority in the area. We haven't had a policeman for years and people depend on the postmaster for traditional tasks like signing shotgun certificates and driving licences."

He added: "People in the village are very aware that if they don't support us there won't be a post office or stores any more."

Rural post office massacre forecast
Aberdeen Press and Journal, default, p 5 05-19-2006
By David Perry
A Massacre of rural post offices was forecast last night after news emerged of the financing arrangement providing Royal Mail with a £3billion Government-backed package.

One of three key provisions in the deal is that "expenditure for Post Office Ltd, including Social Network Payments for the next two years and any funding after 2008, will be met by the Government rather than from Royal Mail reserves". It was made clear that "the level of any support after 2008 will depend on decisions on the future of the post office network".

And Royal Mail chief executive Adam Crozier spoke of the "imperative" need for "a radical transformation" of the network as a result of a collapse of Government work such as benefits and pensions payments from 60% to only 10% of the work that sub-post offices do. He said it was "not sustainable" to have 1,000 offices with fewer than six customers each.

Lib Dem Highland MP Danny Alexander said "radical transformation" was "a pretty thin disguise for 'serious cuts'".

He said: "I have thought for a long time – and this is confirmation – that the Government is trying to pave the way for many thousands of post office closures in rural Britain."

He was aghast at yesterday's disclosure by leading bankers that they have still not been consulted over how pensions and benefits will be paid when the Post Office Card Account (POCA) is scrapped in 2010.

Senior executives from the main high street banks told MPs on the Commons treasury committee yesterday the Department for Work and Pensions had yet to open discussions on what would replace POCA.

Halifax and Bank of Scotland chief executive James Crosby said: "There is going to have to be a very serious conversation with the Government, with the banks, with the Post Office, because at the moment there is no plan." Argyll and Bute Lib Dem MP Alan Reid said: "I agree with the bankers. What is to happen when the card is withdrawn is a shambles."

SNP trade spokesman Mike Weir, MP for Angus, said: "It was always feared that after 2008 there will be a mass cull of rural post offices – and Mr Crozier's statement shows that is what the Post Office has in mind. This Government seems determined to cut the thread by which the network is hanging."