3,000 urban post offices face closure

Post Office managers will today receive details of a government-backed restructuring plan which is expected to result in the closure of up to 3,000 urban branches.

The cuts, equivalent to one third of the urban network, will be accompanied by a Pounds 200m rescue package from the Treasury designed to compensate the owners of sub-post offices and limit the impact on rural areas.

There are more than 18,000 sub-post offices run by independent managers through a franchise arrangement with Consignia, the renamed Royal Mail group.

But the network is losing an estimated Pounds 100m a year on sales of Pounds 1.2bn and has seen a steady trickle of closures as individual branches complain of insufficient support from Consignia.

As part of restructuring plans to solve Consignia’s wider financial crisis, the state-owned group has been in negotiations with the National Federation of Subpostmasters over how to manage the decline in profitability. Details of the proposed support package are understood to have been broadly agreed and will be communicated to individual branch managers today.

Both sides are likely to stress that there is no specific target for the number of branches that will close, since this will depend on the reaction of independent managers to the terms on offer.

However, those involved estimate that between 2,000 and 3,000 urban branches will decide to accept the terms and shut down. Rural branch numbers will be protected in line with a Cabinet Office report which said they were a vital part of local communities.

Urban post offices in deprived inner city areas are also expected to receive some special protection, but the plans are likely to be opposed by poverty charities which argue that closures hit the under-privileged hardest.

Consignia believes sub-postmasters should be encouraged to modernise and diversify to compensate for a fall in the number of claimants collecting benefit payments in cash.

Many urban post offices have been starved of investment, and Consignia is keen to encourage better-run branches that are able to modernise.

News of the restructuring plan follows the announcement of 15,000 redundancies in Consignia’s Parcelforce and distribution divisions last month. A further 15,000 are expected in other parts of the Royal Mail with another 10,000 through natural turnover, bringing the total fall in Consignia’s workforce to 40,000 over three years