The Big Question: Why does the Government want to close 2,500 post offices?

  • @pvall

Why are we asking this now?

The House of Commons yesterday voted on a plan by the Government to close 2,500 post offices throughout the UK. The proposal has proved highly controversial, with celebrities joining campaigns by local people to fight the closure of individual offices across the country. Critics argue that the Government's six-week public consultation process is utterly inadequate. Yesterday, the Tory leader David Cameron desported himself at a post office in Hammersmith that has been earmarked for closure and the comedienne Victoria Wood threatened to chain herself to a postbox in protest against the closure of a branch in Highgate. From the sublime to the ridiculous, or perhaps the other way round.

How many post offices are there?

At present there are 14,376. This is a big drop from the 25,000 open in the 1960s. The axe began to fall in the 1970s when the Conservative Government closed 3,500. Since it came to power, Labour has closed another 4,000 and now has 2,500 more in its sights. That would reduce the size of the network to about 11,760.

Local campaigners also argue that the number of closures will be greater than the Government has announced. They speak of hundreds of post offices having been shut "by stealth", where branches have been temporarily shut while new sub-postmasters were sought to run them – and then never re-opened.

A number of reasons are routinely given for the closures, but the bottom line is that they are losing more and more money.

Why is their income falling?

TV licences, driving licences, car tax, passports and even stamps can now be bought online or through other retailers. Bills can be paid on the internet. Direct debits, cash machines and telephone and internet banking have all reduced the number of visits made to post offices. Even core postal services are threatened – one in five letters are now sent via a Post Office competitor, as is 40 per cent of bulk mail. Some four million fewer people use their local post office each week than they did just two years ago.

But perhaps the killer blow has been the Government's decision to pay child benefit, pensions and other benefits directly into bank accounts. The Post Office was never going to survive the loss of the benefits system unscathed.

Why is the Government forcing the closures?

Because even though it uses taxpayers' money to subsidise the postal network to the tune of around £3m a week, post offices are currently losing £4m a week – twice as much as in the previous year. The taxpayer has ploughed £2bn into the postal network since 1997 and is already committed to an extra £1.7bn until 2011. Since the Government wants to cut that subsidy, not increase it, closures are its inevitable strategy – along with a drive to modernise, invest in new products and look at innovative ways to deliver services to restore profitability to its remaining offices.

In any case, ministers argue, the 800 smallest post offices are used by an average of just 16 people a week. And even after the closures, 90 per cent of the population should be within a mile of a post office. And in rural areas, 95 per cent of the population will be within three miles and even fairly remote areas will, on average, be within six miles. The Government claims that 99 per cent of people will either see no change to their current post office or will still be within a mile of one by road.

What do the postmasters think?

Surprisingly, many agree. The National Federation of Sub-Postmasters "reluctantly" accepts the closure programme if it means the network will have a secure future. Its general secretary, George Thomson, has said: "This is a necessary evil. There isn't enough work to keep 14,200 post offices open." They have even been critical of moves by the Conservatives to delay the closure programme, saying the delay will result in more pain and uncertainty than simply going ahead as planned and accepting the compensation deal on offer.

The unions disagree. Andy Furey, of the Communication Workers Union, has said that the Government must bring back government services to post offices. Local residents have different concerns.

Don't closures impact on the life of a local community?

Of course. Experience of rural closures over the past decade shows that when the local post office closes that frequently means the last shop in the village goes. But post office closures have a bad effect on deprived urban areas too, particularly areas with high unemployment or large numbers of old people who do not have access to cars. In London, campaigners argue, many post offices earmarked for closure are profitable and well-used, yet the number of post offices has been cut by 45 per cent, even as the number of people in the capital has increased.

Closures have an environmental impact too. In many cases, they mean that anyone who wants to pay their gas bill or buy a lottery ticket will now need to get onto a bus or into a car.

Are there any alternatives?

Yes. There are now private providers offering mail, courier and foreign currency services. Other shops sell lottery tickets. There are even 19,000 PayPoint outlets offering bill payment services for utilities, council tax and other charges. But government rules on compensation to postmasters say they will lose their money – which averages £60,000 – if they keep their shop open and offer any of those "competing" services for a year. It is a rule which may be challenged by the Conservatives on the grounds that it breaches competition rules.

What happens now?

Despite government offers to set up 500 outlets for small, remote communities such as mobile post offices and services based in village halls, community centres and pubs, the protests are likely to continue. Ministers now face legal challenges. The Mayor of London, Ken Livingstone, is seeking a judicial review of the closure of 171 post offices in London because of the impact on local communities. If he is successful, other local authorities across the country may do the same.

As many as a quarter of Labour MPs, including 20 ministers and seven Cabinet ministers, are said to be opposed to the proposal – or, at least, to the closure of particular branches in their own constituencies. The issue could be a tricky one for the Government for some time yet.

Should so many post offices be closed?


* They are losing taxpayers' money at the rate of £4m a week

* Many people today buy their car tax, television licences and even stamps on the internet

* One in five letters are now sent via private competitors


* Many post offices earmarked for closure are profitable and well-used

* Closures hurt local communities, particularly in rural and deprived urban areas

* Forcing more people into cars is bad for the environment and discriminates against people too old, infirm or poor to drive