Rural Post Office network `Close to collapse'

The Liberal Democrats today demanded clarification of the Government’s sub-post office strategy amid claims the network was “on the brink of collapse”.

Trade spokesman Vincent Cable said two thirds of a #270 million fund aimed at saving branches had been switched to provide closure compensation.

And he said the title of the Government’s urban renewal strategy was “desperately misleading” _ with a third of branches in towns set to close.

Launching an opposition debate, he said there was less than 10 months until Automated Credit Transfer (ACT) was due to replace payment of benefit and pension in cash via post offices with direct payments into bank accounts.

Unless ways could be found to replace the #400 million income the post office was expected to lose in the changeover, 40% of branches would close.

While the closure rate had slowed from last year’s record levels, that was partly because sub-postmasters and mistresses could not find buyers, he said.

He said 80% of those were in rural areas which, despite Labour pledges, had only received a fraction of a #2 million help fund set up for them.

Mr Cable also suggested that most of a #270 million fund earmarked by the Government to help the post office network had been “siphoned off” to pay for compensating those whose branches closed instead.

He said: “The rural network is teetering on the brink of collapse.

“If the money is there to sustain it then there is some hope. But if we’ve got Enron-type accounting and the money is being shifted somewhere else large numbers will collapse.

“The Government’s urban renewal programme is desperately misleading. Large numbers of branches are simply going to close willy nilly.”

“At the moment there is enormous lack of clarity over quite fundamental things. If the problems are as serious as they seem is the Government giving any though to spreading ACT over a longer period of time?”