Why post office branches are facing the axe

They're the backbone of village life but they're disappearing at the rate of
almost two a day. Something has to be done, says Michael Becket

By MICHAEL BECKET
Section: City

Sub-Section:Business Monitor

MORE UK post offices than bank branches were closed last year. Closures are
currently running at almost two a day and the rate is accelerating. The Post
Office says of the 18,000 post offices currently open, many are not
commercially viable. And that is after 434 closures in the past nine months –
which compares with 377 bank branches closed during the whole of 1999 (the
latest figures available). Colin Baker, of the National Federation of
Sub-postmasters, doubted if all the 18,000 were currently operating – some may
be only nominally open, waiting for a new tenant. The Government's Performance
& Innovation Unit report last year estimated the branch offices lose about
pounds 50m a year. It rapped the Post Office for being "slow to modernise the
network in the face of a rapidly changing business environment". It should
improve efficiency to minimise closures, the report added. The outcry over
closures, however, has been mostly local as small rural communities lost not
just the chance to buy a stamp but a wide range of other services, from
collecting pensions and child benefits to paying utility bills. These are
sub-post offices, and so, when they closed, so did the small businesses
associated with them – newsagent, stationer, grocer, general store. Mr Baker
said the impact went wider. If the post office was not the only shop in the
village, its departure spelled doom for the others. "As people go elsewhere to
collect their pensions or child benefits and so on, they spend their money
there," he said. When they travel to the nearest town for the other services
they tend to do all their shopping and all the local shops are forced out of
business. "Closures are not part of a Post Office programme – it is just that
nobody is prepared to take the job on," Mr Baker added. Sub-postmasters have to
acquire the retail premises and private business and even have to pay for their
own sign. "The biggest retail chain in the country can't afford to put its own
name over the door." Mr Baker also pointed out that the Post Office supplies a
safe to protect the money, but, if the sub-postmaster wants an improved screen
to protect people, he has to pay for it. A typical small rural post office will
get between pounds 8,000 and pounds 12,000 a year for the postal work, from
which must come part of the overheads, such as rent, light, heat and rates.
They are being squeezed by both the Government and the utilities to charge less
for the services, and, from 2003, all pensions and child benefits will bypass
post offices altogether and go direct into bank accounts. The Post Office chief
executive John Roberts forecast a profit of pounds 200m to pounds 300m for his
corporation during the current year, though that has probably been dented by
the rail problems. But it was the Government that put up pounds 2m of taxpayer
money to help create or save rural post offices. It takes only about pounds
10,000 to refurbish most premises sufficiently to make them suitable, so that
fund should provide 200 communities with a branch. That may have been in
response to the report's suggestion that rural post offices provide a necessary
social service and they cannot be subsidised by urban branches for ever. In
addition, the Post Office has stopped taking 25pc of a new sub-postmaster's
first year's income – for "training" and as a franchise fee. That will not be
enough, Mr Baker said. More promotion of financial transactions is needed to
provide revenue, as the Performance & Innovation Unit pointed out last year.
One notion is to provide a home for the Government's "Universal Bank" which
aims to provide a facility for the 15pc of people still unbanked. That would
enable all those people getting pensions paid direct to continue using the
local post office. The Post Office could also reach an accommodation with the
major banks to allow a terminal in its branches through which customers can
access their own accounts and also withdraw cash – something already being
done. The corporation will also have to become a more efficient retailer, Mr
Baker said, and that includes cutting central overheads. On top of that, "I
wish the Post Office had started accepting cards years ago – it's high time we
were doing debit cards", he said. The corporation's marketing and commercial
muscle should help negotiate a decent rate for credit cards as well, and the
sub-post offices could use some cooperative buying as well, Mr Baker added. He
also has great hopes for a scheme being tried in the South West for people
ordering goods on the internet to have them delivered by the Post Office to
their local branch for collection after work. The Government report said the
corporation "has been slow to react to this new opportunity" and could also
provide internet terminals with tuition on how to use them. Even so, groups of
villages may have to share: resigning themselves to having a post office on
Tuesday and Friday, while another has one open on Monday and Wednesday and so
on. Greatest concern is about depriving small rural communities of the only
source of cash and retail operation they still have. In major cities, however,
it is the post office that suffers because there are too many of them, so none
prosper. Some of those have not long to live.