Government must decide quickly the future of a Post Office Network that is 'at the crossroads'

Postcomm, the independent regulator for postal services, today urged the Government to make the tough and overdue decisions needed to plan the future of the Post Office network. The Government must take into account the wider social role played by Post Offices in local communities as well as the imperative of establishing a sustainable, stable business.

Postcomm does not regulate Post Offices but it does monitor and research developments in the network of over 14,000 offices and provides independent advice to the Government in the form of an annual report which is published today, entitled “Post Offices at the crossroads”.

Research for Postcomm has provided clear evidence on why Post Offices urgently need a direction from the Government to secure their future. Postcomm believes that keeping things as they are is not an option, because:

The Post Office Network lost GBP111 million last year even after Government’s yearly subsidy to Rural offices of GBP150 million – this subsidy is due to be withdrawn in 2008;
Government departments such as the DWP and DVLA are withdrawing services from Post Offices – revenue from transactions carried out by Post Office Ltd on behalf of Government has fallen by GBP168 million since last year;
New products such as investment bonds, personal loans and credit cards continue to deliver only very low business and income levels – less than 1% of total weighted sales in urban areas – and are not filling the gap left by the withdrawal of government business; and
Post Office Limited has made some progress in developing alternative delivery models, such as mobile Post Offices, which offer a good opportunity for continuing the valuable services that Post Offices provide in local communities, but more needs to be done.
The rural Post Office network faces particular financial difficulties due to changes in customer use. Only 1,500 of the 8,000 rural Post Offices are making money for Post Office Ltd, with the remaining 6,500 branches costing more to run than they provide in income.

Postcomm has seen a distinct change for the worse over the past year in the mood and expectations of those involved in the Post Office network, reflecting a recognition that without clear direction from Government the problems will escalate. Despite a rise in gross pay, the number of sub-Postmasters who are not confident about the future has increased to 72% from 60% last year.

Nigel Stapleton, chairman of Postcomm, said:

“The Government must decide what it wants from the Post Office network and plan for its long-term sustainability. The network needs a clear vision and consultation is needed at national and local level taking into account the plans for regions as a whole.

“A key objective of our report is to help to inform the Government’s decisions on the so-called ‘social network’ of rural and urban deprived offices and on the network more generally. Despite the apparent success of reinvention programmes, the end of the Post Office Card Account and loss of future contracts point to an uncertain future for these branches. Sub-Postmasters need support, training and guidance in order to plan for the future of their businesses.”

Postcomm wants a flexible but planned approach to addressing the issues affecting the network and is concerned that Post Offices might miss out on the business opportunities from other postal operators coming into the market. Customers and Post Offices could benefit from other operators offering their services through Post Office branches. Royal Mail could also do more to use Post Offices as their shop window, and possibly bring in more business for both parties.

Notes for editors

“Post Offices at the crossroads” (pdf, 3MB), is published today.

Postcomm’s statutory role requires it to monitor developments in the Post Office network and provide advice to the Secretary of State for Trade and Industry, but it is not involved in making any decisions on the future of either the network as a whole, or of any individual Post Office. Postcomm aims to make sure that:

the government has clear advice about developments in the Post Office network, its role, and how to fund it;
attention is focused not just on Post Office numbers, but on making sure customers have sufficient access to Post Office services to meet their current and future needs;
the provision of Post Office services takes account of the needs of vulnerable groups and those living in isolated and deprived areas; and
Royal Mail provides access to postal services.
More information on Postcomm's work in relation to the Post Office network.