MPs debate post office closures
MPs are to debate the proposed closure of up to 3,000 urban post offices.
The government plans to make £210m available to compensate subpostmasters for the cost of closures, and to improve the remaining post offices.
The investment has been cleared under European state aid rules but still requires the approval of Parliament.
The plans mean that about one in three urban post offices will be closed – with rural post offices remaining untouched.
Ministers have argued that even after the closures, 95% of the population will live within a mile of a post office.
The consumer group Postwatch said it accepted there were too many urban post offices competing for customers.
But it said there should be full consultation with communities on individual closure decisions.
A government plan to support rural post offices to the tune of £150m per year is expected to be unveiled within weeks.
Strike threat
The closures are designed to help Consignia – which is currently losing £1.2m a day – cut its huge debts.
The debate came a day after a ballot began of 3,000 postal workers, on strike action over plans to privatise their jobs.
The cash handlers – who distribute money and stamps to post offices – are angry at plans by Consignia to sell the service to Securicor.
The Communications Workers Union said voting would begin at the end of the month, and workers could go on strike in the run-up to Christmas.
Backbench unease at plan to close third of urban post offices
By Jean Eaglesham and Marianne Brun-Rovet
Financial Times; Oct 16, 2002
Ministers faced unease from Labour backbenchers, as well as sharp criticism from the Tories, as MPs yesterday debated the proposed £210m taxpayer subsidy to close a third of urban post offices.
Stephen Timms, the trade and industry minister, said the planned "urban network reinvention programme" was needed to avoid ad hoc closures. "If we do nothing, then deeply damaging gaps in the network will open up," he told MPs.
The state subsidy of £180m to compensate for the closure of up to 3,000 urban branches, and £30m to modernise the remaining 6,000, was needed because the network had "not kept pace with change", Mr Timms said.
The increasing tendency to pay benefits payments through bank accounts, allied to factors such as greater mobility and changed shopping habits, meant there was "in many urban areas too little business for the number of post offices". He said the closures would still leave more than 95 per cent of people within a mile of a post office.
But Tim Yeo, shadow trade and industry secretary, said the government's "mismanagement" was the cause of much of the network's financial woes. While the Tories recognised that some urban branches had to be closed, Mr Yeo said the decision to end the payment of cash benefits at post offices from next April would undermine many of them.
"Labour's promised solution will not make these businesses viable . . . it will, however, spend £210m of public money in an attempt to cover up the consequences of government mistakes," Mr Yeo said.
Consignia was yesterday unable to specify how much it would save from the planned three-year closure programme, but said it would be "tens of millions".
David Mills, chief executive of Post Office Ltd, a subsidiary of Consignia, said the Post Office – which lost £163m last year – had to adapt to survive. "Although we don't want post office branches to close, the harsh reality is that many are struggling to survive."
The government's decision to fund the urban closures – which has already been approved under European Commission state aid rules – contrasts with its proposed bail-out of rural post offices. A £450m grant is expected to be announced shortly. "The government's commitment to ending avoidable closures in the rural network remains in place," Mr Timms told MPs yesterday.
The National Federation of Subpostmasters appeared resigned to the urban closures yesterday. "If we have a modern network at the end of the process, it will be worth it," said Colin Baker, the federation's general secretary.
