2,500 post offices to be axed in the UK from next summer

The government yesterday unveiled plans to close 2,500 rural and urban post offices over 18 months – the fastest closure programme in the history of the network.

The cuts, which are expected to start next summer after national and local consultations, will slash the network to about 11,700 branches, fewer than half the peak of 25,000 in the 1960s. They came after widespread opposition, with a petition containing 4 million signatures presented to the prime minister in October. The trade and industry secretary, Alistair Darling, said a GBP1.7bn support package would be provided to fund rationalisation and maintain the GBP150m-a-year payments to the rural network at least until 2011.

He told the Commons that the post office network was losing GBP4m a week and had 4 million fewer customers than two years ago. The "big problem," he said, was that "people are simply not using post offices as they once did … There is widespread recognition that the current size of the network is unsustainable."

The GBP1.7bn support would "preserve the national network and put it on a strong and stable footing. Piecemeal closures are no good for anyone. The Post Office must plan a proper national network."

Mr Darling pledged a replacement for the Post Office card account, through which some 4 million people receive pension and benefit payments and which expires in 2010. However, the new contract would be awarded by tender.

Royal Mail said it welcomed the proposals and would study their impact on its wider funding needs, which include new investment in the letters business, funding for the pension fund deficit and offering shares to employees.

The National Federation of SubPostmasters, which represents around 97% of subpostmasters and mistresses, responded cautiously. Its secretary general, Colin Baker, said it had "most of the ingredients" but it was "light on detail" about what would happen to the network.

Mr Darling outlined a series of criteria which the new network would have to meet: 99% of the population must be within three miles of an office and 90% within one mile. In deprived urban areas 99% of the population must be within one mile while in remote areas at least 95% should be within six miles.

The slimmed-down network will be supported by some 500 new outlets, including pubs, churches and village halls and even mobile offices.

The government will fund compensation packages similar to the 28 months' pay given to those whose post offices went in the last closure programme, which saw 2,500 offices cut between 2002 and 2005. Average payouts then were GBP60,000, but the NFSP warned the average this time was likely to be lower because of the lower earnings at some rural offices.

The Tories denounced the statement as "disappointing and wrong". The trade and industry spokesman Charles Hendry warned: "It will bring fear and anxiety to people, often the most vulnerable, in every part of the country." As Labour MPs protested, he continued: "It will destroy many good businesses because the government does not have a long-term vision for the future of the post office network.

"If the local post office closes, then the last shop closes as well – and a van calling a couple of hours a week is no replacement." Mr Hendry said that around 4,000 post offices had closed already under the present government: "Under 10 years of a Labour government we will have lost over one-third of the network."

Gordon Lishman, director general of Age Concern, said: "At last the government has woken up to the problem. A commitment to continue the annual subsidy is good news and will help to prevent some post office closures.

"By attempting to restructure the network in just 18 months and allowing the Post Office to determine which branches are to close, the views of local people risk being ignored. Post offices provide not only postal services but access to cash and benefits, information and advice, and a social focus for the community."

The National Consumer Council said: "It is … vital that the government joins up its policies on financial and social inclusion and sustainable communities, and sets out its plans."