Post Offices

Written by Malcolm Bruce MP on Tue 23rd Nov 2004

Ask a person on the street whether they use their post office regularly and they may say no. Ask them whether they would fight to keep their local post office open and I am confident they will say yes, even if they find it hard to explain why.

And therein lies the crux of the problem. Although the British public trust and value the Post Office, they're not using it. Post Offices now attract fewer customers and the result is many are no longer viable businesses. Before the Government introduced a restructuring programme for urban areas and a subsidy to protect the rural network closures had reached record levels and the post office network was crumbling.

So has the Government saved the post office network? Despite the rhetoric and the £2bn they have poured into it, no they haven't.

The Government has overseen a package of policies which have done nothing to address the root causes of the network's decline. Indeed, their badly thought-out policy of Direct Payment exacerbated the network's problems and played a greater role in undermining its business model than any other single factor. Their unscrupulous promotion of the payment of benefits straight into bank accounts instead of encouraging take-up of the Post Office Card Account - which costs more to the Government but brings more benefit to the Post Office - exemplifies the Government's true commitment to the Network.

The shift to Direct Payment may cost sub-post offices as much as 40% of their income. The Government has conspicuously failed to develop alternative income streams to replace the lost revenue. The Government's actions left SubPostmasters demoralised and desperate to resign and no one prepared to take-on loss making businesses with little sign of recovery on the horizon.

The Government, through Post Office Ltd, is currently having to pay SubPostmasters salaries to keep their rural branches open, so feeble has been their attempt at developing new income streams. As the National Federation of SubPostmasters note, the Government's subsidy to the rural network does nothing to make rural post offices more viable and merely props up the ailing rural network.

The greatest threat to the rural network would be the application of a 'reinvention programme' along the lines of the urban network restructuring. Characterised by ineptitude, a lack of strategic planning or foresight and a bottom-up approach to closure proposals, the Urban Reinvention Programme has been a farce.

The Liberal Democrats agree with Postcomm that access to Post Offices for all, especially the vulnerable, is what is important, not the actual number of Post Office branches. The Urban Reinvention Programme however depended heavily on which SubPostmaster wanted to close their business and take the compensation offered and not strategic assessment of securing fair access.

There is no even guarantee that once the Urban Reinvention Programme ends in March 2005 we will not see an immediate return to the haphazard, non-strategic closures which prompted the restructuring. Communities which believe their local branch to be secure having survived the Reinvention Programme could lose it within months.

The Liberal Democrats want far more resources devoted to the development of new post office products. We want to see post offices become front-line providers of both public and private services.

The development of private services has proved successful. The improvement in sales reported by Post Office Ltd in 2004 was largely driven by increased banking revenue, growth in the Bureau de Change business and new products such as e-top-ups. SubPostmasters should be trained and accredited for that training; Post Office Ltd report a 17% increase in sales of key products in branches where training has taken place.

Most importantly we hold it as vital that all High Street banks allow access to their basic bank accounts over post office counters and will continue to campaign for this.

Commercial opportunities for the post office network should be exploited but its core business has traditionally been as a public service and the Liberal Democrats want to maintain that. The concept of post offices as General Government Practitioners, for which they should be paid, allowing people to make national and local Government transactions over the counter should be rolled out across the country.

There is a great deal which can be done to return the majority of post offices to profit. There will always be branches however which cost more to run than they bring in in revenue. This is particularly true in rural areas but also for post offices in deprived urban areas, which have parity with the rural environment. A return to overall profit by Post Office Limited should enable these branches to be subsidised to remain open.

It is in these areas which post offices play their most important role; providing a significant level of care and access to important income for the most vulnerable members of society - the over 65's, disabled people, unemployed people, and the financially excluded.

For the Liberal Democrats, the services the post office network provides such groups makes the most compelling case for the campaign to save our national network.