Half of all post offices under threat of closure
UP TO half of Britain’s 17,500 post offices could be closed under plans drawn up by Consignia for one of the biggest shake-ups in the 360-year history of the mail service.
In a strategic plan submitted to ministers, the company has recommended the immediate closure of 1,000 post offices with a further 7,000 phased over the next five years.
The report, prepared by senior Consignia directors with the help of the investment bank UBS Warburg, says radical surgery is needed if the network is to have a commercial future.
The plan may be seen as an attempt by Consignia to force significant state subsidies out of the government, which technically owns the company but allows it to operate independently. It would be politically dangerous to sanction such a large-scale closure programme.
Consignia’s proposal comes on the back of heavy losses — including £281m in the first six months of this financial year. Post offices also face the loss of 16m customers from January next year when benefits and pensions will be paid direct into bank accounts. Only services such as stamps, parcels and vehicle tax will remain.
The plan is likely to provoke a political row and a backlash from the public who have already seen 1,750 post offices close during the past five years. Complaints about the quality of the postal service have risen to a record 2m last year.
John Whittingdale, the shadow trade secretary, said: “These closures must not be allowed to happen. There is a wider community interest in maintaining the post office network, otherwise hundreds of local communities will die. Undoubtedly a large number of post offices are not viable, but the government should be helping sub-postmasters find other ways of keeping in business.” Martin O’Neill, Labour chairman of the Commons trade and industry select committee, said: “The Post Office has become an extremely emotional issue and MPs from all parties are very jealous guardians of these shops which have a big place in the affections of the British public.”
Ministers have already placed a duty on Consignia to avoid the closure of rural post offices except where there is no financial future for a business and the franchise cannot be combined with a local shop.
However, ministers have also said it is up to Consignia to negotiate with the National Federation of Sub-postmasters over the future of urban post offices.
The company is in talks with the federation to work out a formula for closures. In some areas several sub-post offices could be merged; in others, it might mean the closure of the main post office. The aim, according to Consignia, would be to ensure that everybody lives within reasonable distance of a post office.
Consignia is also discussing a compensation package for sub-postmasters forced to shut their business.
To help struggling post offices, ministers are launching a low-cost bank account which can be used at post offices and will receive benefit and pension payments.
The report is also understood to say that if Consignia is to survive, up to one in five of the group’s 220,000 workforce will have to go. Although executives have said that 30,000 jobs will be lost, the figure is now likely to be much higher.
Consignia has also told the government it would like to de-merge the post office network into a separate company in the autumn.
John Roberts, the group’s chief executive, wants to turn Consignia into an independent distribution group that would be a more attractive company to float on the stock market.
