Royal Mail bosses under pressure for closing profitable branches (UK)

MPs warn in a new report that post offices in pubs and shops could be at risk because of inadequate funding and call for more transparency in the way Royal Mail treats its public subsidy.
Ministers have told Royal Mail to close 2,500 out of 14,000 branches in a bid to cut the network’s annual subsidy by GBP 40million to GBP 150million a year and stem losses running at GBP 4million a week.
However, Paula Vennells, Post Office Limited’s branch network director, told MPs on the Business and Enterprise committee that some of the condemned branches were making money.
She disclosed that 10 profitable branches will be closed during the 18 month-long Network Change Programme – or just over one every six weeks.
The committee’s chairman Peter Luff, who is publishing the report into the financial viability of the post office network, said it “made no sense” to allow profitable post offices to close.
The committee calls on the National Audit Office to investigate the financial arrangements for so-called ‘outreach’ services which Royal Mail is setting up when it has to close branches.
They call for close examination of the relationship between Post Office and its parent company Royal Mail Group after finding that money provided by Royal Mail was not enough for the Post Office to run its services.
The MPs also said Royal Mail should provide “clear information” on what services Royal Mail expects to be provided, how it works out what to pay for them, and how much they actually cost to deliver.
They questioned whether Royal Mail was using the Post Office to “cross-subsidise” some of its mail services. Last year the network received GBP 358 million for providing mail services to Royal Mail.

MPs warn in a new report that post offices in pubs and shops could be at risk because of inadequate funding and call for more transparency in the way Royal Mail treats its public subsidy.

Ministers have told Royal Mail to close 2,500 out of 14,000 branches in a bid to cut the network’s annual subsidy by GBP 40million to GBP 150million a year and stem losses running at GBP 4million a week.

However, Paula Vennells, Post Office Limited’s branch network director, told MPs on the Business and Enterprise committee that some of the condemned branches were making money.

She disclosed that 10 profitable branches will be closed during the 18 month-long Network Change Programme – or just over one every six weeks.

She told MPs: “The consultation is not about the actual financial viability of the branch or not.”

The committee’s chairman Peter Luff, who is publishing the report into the financial viability of the post office network, said it “made no sense” to allow profitable post offices to close.

The committee calls on the National Audit Office to investigate the financial arrangements for so-called ‘outreach’ services which Royal Mail is setting up when it has to close branches.

They call for close examination of the relationship between Post Office and its parent company Royal Mail Group after finding that money provided by Royal Mail was not enough for the Post Office to run its services.

The MPs also said Royal Mail should provide “clear information” on what services Royal Mail expects to be provided, how it works out what to pay for them, and how much they actually cost to deliver.

They questioned whether Royal Mail was using the Post Office to “cross-subsidise” some of its mail services. Last year the network received GBP 358 million for providing mail services to Royal Mail.

A spokesman for the Post Office said that nearly all of the profitable branches were in urban areas, and near to branches that were making even more money.

He added: “The Government has laid down very strict guidelines on how we should implement their closure programme and we are doing so as best and sensitively as we can – and within that, less than 0.5 per cent of branches closing will be profitable.”

The programme – the fastest in the Post Office’s history – has proved to be deeply unpopular with tens of thousands of readers backing a Telegraph campaign against the closures.