UK’s Post Office Ltd to roll out 6,000 new-style post offices
The UK’s Post Office Ltd has announced plans to roll out thousands of new-style “main” and “local” post office branches across the country from this summer. The plans are to be funded by part of the previously-announced GBP 1.34bn cash injection from the government, and therefore remain subject to “state aid” approval from Europe.
It will all kick off with an expansion of the current pilot for the new-style main post offices and slimmed-down local post offices. Some 50 new local and main branches will be trialled from now until the summer, in addition to the 117 new post offices already being piloted.
From the summer until 2015, Post Office Ltd then intends to roll out 4,000 main branches and 2,000 local branches among its 11,800-strong network.
Busier post offices will take the form of main branches, with two or more counter positions used constantly throughout the week, with both standalone post office counter service and separate retail counter service available.
Less busy post offices will become local branches, in which post office service will be available to customers at a retail counter, but services like passport and licence applications will not be available. This model will allow postal services to be run by convenience store operators and other retailers.
Both main and local branches will offer extended hours “in many cases”.
Subpostmasters who convert to main post offices will be provided up to GBP 45,000 depending on their post office size, while those converting to local post offices will receive up to GBP 10,000 for their branch.
“Change is needed”
Britain’s new postal affairs minister, Norman Lamb, said today that the government had committed to the investment and that in doing so “there will be no closure programme”.
He said of the new operating model: “Change is needed to secure the long term future of post offices; the pilots are showing the new ‘locals’ and ‘mains’ models are popular with consumers and subpostmasters.”
Post Office Ltd said subject to the state aid clearance, the government’s investment would make its network more self-sustaining, less reliant on subsidy, as well as improving the customer experience and helping avoid further post office closures.
“This is a once-in-a-generation opportunity for the Post Office,” said Post Office Ltd chief executive Paula Vennells. “This major investment will help Post Office Ltd address changing customer needs by revitalising the network, with extended opening hours and a better experience for our customers.”
The Post Office Ltd is currently part of the Royal Mail Group, but is to become independent under government plans to privatise Royal Mail, and could also become a mutualised organisation, with some kind of employee ownership structure set up.
The 5,500 post offices that are not converted into “main” or “local” branches will continue to be supported by subsidies, the company said.
Returning customers
The new strategy for Post Office Ltd aims to bring back some of the 8m customers it has lost over the last decade, improving on the current total of around 20m people using their local post offices.
Early pilots of 16 “main” branches have so far seen a 4% increase in customer visits and 8% increase in turnover over the last year, according to Post Office Ltd. Local branch pilots open for more than a year have seen a 9% rise in customer visits and 25% increase in turnover, with 22% of customers using the branches outside normal opening hours.
Post Office Ltd said at present a “significant” part of its network requires government subsidy to run, but hopes are that new business income and the extension of opening hours will help to reduce this need for state handouts.
In terms of new business, Post Office Ltd is aiming to win a bigger share of municipal services contracts and growing its financial services portfolio.
George Thomson, the general secretary of the National Federation of Subpostmasters, said the planned government investment would bring “significant benefits” to customers and local businesses.
“I believe the significant commitment from the UK government will help secure Post Office branches at the heart of our communities for the long term,” he said.
“Serious flaws”
The new plans did not have the approval of all stakeholders today. The Communication Workers Union said the roll out of “main” and “local” post offices would see “many areas” excluded from post office services.
The union claimed the changes could mean “bankruptcy for postmasters, leading to closures”, reserving its strongest warning about the new local post office model, as posing a “grave danger to the network”.
It criticised the range of services that will be available at the local branches, with Consumer Focus research suggesting 44% of customers considered the range as “poor”. It also suggested that longer opening hours meant more costs and risk for postmasters.
Billy Hayes, the CWU general secretary said Post Office Ltd was taking a “major gamble” with the postal service and the livelihoods of postmasters.
“There are serious flaws with the downgraded ‘locals’ model, which deny services to customers – not even the ability to post parcels in many cases,” he said.
“To access full services people will have to travel to a Crown or main post office. For postmasters it’s even worse. These new models take away their guaranteed pay and downgrade the skills and experience they bring to providing a range of Post Office services.”
Consumer Focus, the national consumer watchdog, remained fairly neutral over whether the new Post Office models were the right direction, but said improvement and investment was needed in a network where “many post offices are economically unsustainable”.
The group demanded that new post offices provide a comprehensive range of services, improved customer service and suitably private areas for customers to carry out personal or confidential business.
Mike O’Connor, the Consumer Focus chief executive, said today: “The scale of the task is considerable, and it is both an enormous opportunity and challenge for Post Office Ltd.
“What will matter to customers is that this programme delivers improvements and provides a sustainable and accessible local network which meets their needs.”
