No promises for postmasters: Rosie Waterhouse looks at the issues affecting the survival of a rural service

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Indy Politics
THE FUTURE of unprofitable, mainly rural, post offices is under threat from three government departments with conflicting interests - the Treasury, the Department of Social Security and the Department of Trade and Industry.

The Treasury is looking to make savings and increase revenue wherever possible; the DSS is under pressure to find savings from its pounds 80bn a year budget on the cost of administering benefits; and the DTI needs post offices to be lean and profitable to make them attractive to potential buyers if Post Office services are privatised, as is expected.

Despite yesterday's assurances from Peter Lilley, Secretary of State for Social Security, that the Government's policy is to maintain a nation-wide network of post offices, there was no promise that none would close.

Fears that the Government had a hidden agenda to close up to 5,000 sub-post offices were heightened when three types of new forms were recently sent to 24,000 pensioners in the north of England, suggesting pensions should be paid direct to banks, using automated credit transfer. The forms suggested alternative methods of payment and one of the forms did not mention the use of post offices.

The mail shot, by the DSS, provoked a barrage of complaints. Fearing the biggest public outcry since the pit-closure announcement last year, the department has been telling journalists this week that it has no intention of speeding the closure of sub-post offices. The main reason the mail shot was sent out, it said, was to test public attitudes, to see if forms suggesting different methods of payment could change behaviour. Officials conceded that the form omitting the post office option was a bad mistake.

The DSS wants to encourage more people to opt for benefits to be paid through their bank because each transaction through the post office costs the taxpayer 44p in stationary and staff costs, whereas each automated credit transfer costs 3p.

But a third of post office income comes from the DSS for administering the many benefit payments. While post offices must be seen to be profitable for flotation or privatisation, and unprofitable smaller post offices would find no takers, removing a key source of income if benefit payments were transferred elsewhere, would be unpopular in the City and with potential buyers.