3,000 Post Offices to close over three years

Four urban post offices are set to close every working day over the next three years under plans to revamp the ailing network.

The sweeping programme will start in January, according to David Mills, chief executive of the Post Office network, who has revealed the rate of closures for the first time.

He told the Financial Times that the scheme to close 3,000 urban branches – a third of the urban network – would start next year at a rate of 1,000 closures a year until the end of 2005.

“It is my job to, on average, close four urban post offices every working day over the next three years, subject to consultation with all of the interested parties and agreement with the sub-postmasters. But 95 per cent of the population will remain within one mile of a post office.”

Post Office Ltd, owned by Royal Mail, this year revealed a Pounds 270m government-backed restructuring plan for the struggling urban network, offering compensation to sub-postmasters for closing their branches and funding to refurbish the remaining branches.

The rapid rate of closures, to begin once the funding package has received approval from Brussels and Westminster, underlines the need to get the Post Office network, which last year made pre-exceptional losses of Pounds 163m, back on track.

Consultations will take place with Postwatch, the postal consumer watchdog, over branch closures and mergers. “We will make the choice of which ones we close depending on what is in our customers’ best interests” said Mr Mills.

Colin Baker, general secretary of the National Federation of Subpostmasters, said the closure programme had a positive purpose: “to get a more viable, nicer network for the customers and ensuring that it is done with their agreement”.

There are more than 17,500 post offices, almost all of which are run by independent managers through a franchise agreement with the Post Office. Rural branch numbers will be protected in line with a Cabinet Office report, which said they were a vital part of local communities. But urban branches have suffered as a result of there being too many competing for business.

The network has been hit by two main problems. First has been finding replacements for sub-postmasters leaving the business. Second has been the issue of benefits and pension payments being paid direct to bank accounts from April. Post offices depend on benefits payments for 40 per cent of their revenues.

Under the Post Office’s “urban network reinvention” plan to create sustainable businesses, branches will be open for longer, offer more services and a more attractive environment for customers.