2,500 post offices set to be closed

A fresh wave of post office closures was announced by the Government today, with the number of branches expected to be reduced by 2,500.

The cutback was blamed on mounting losses and fewer people using the network of 14,263 offices.

Trade and Industry Secretary Alistair Darling said there had to be a reduction in the size of the network to reflect the dip in business and losses of £4 million a week, up from £2 million a year ago.

The Post Office will now develop its restructuring plans involving local consultations on the expected closures, he said.

Mr Darling also announced an investment package worth up to £1.7 billion, designed to preserve the national network of urban and rural branches.

The annual £150 million subsidy to help rural offices stay open will be extended beyond 2008 until at least 2011, with an expectation that continuing financial help will be needed.

The Government also unveiled plans to set up 500 "innovative" outlets for small, remote communities, including mobile post offices and services offered in village halls, community centres and pubs.

Mr Darling said: "The Post Office provides an important social and economic role, particularly for our rural communities and deprived urban areas. That is why we have invested £2 billion into the Post Office network since 1999, and that is why I have announced a further £1.7 billion investment package today, to preserve the national network and put it on a strong and stable footing.

"Piecemeal closures are no good for anyone. The Post Office must plan a proper national network.

"Post offices face a long-term challenge. Internet, email and text-messaging have meant that people, young and old alike, increasingly use the phone or internet banking, cashpoint machines or direct debits to pay their bills.

"People are increasingly choosing to access services in different ways, resulting in some four million fewer people using their post office each week than two years ago.

"Our strategy aims to protect the national network, equipping it to meet the challenge of today."

The minister added: "There is widespread recognition that the current size of the network is unsustainable. That is why it is important to build on innovation. It is about the right post office for the right place."

A consultation seeking views on the Government's proposals opens today, with the last date for responses being March 8, 2007.

The £1.7 billion aid, which is subject to European approval, will be spread over five years.

Mr Darling said the Post Office would be in a strong position to bid for a new account when the current Post Office Card Account ends in 2010.

The Government also published new access criteria for post offices, stating that 90% of the population should be within a mile of a branch.

In rural areas, 95% of the population should be within three miles, doubling to six miles in remote areas.

The Department of Trade and Industry said 800 of the smallest rural post offices served just 16 people a week at a cost to the taxpayer of £17 per visit.

More than eight million pensioners now had their pensions paid into a bank account, while an increasing number of people renewed their tax disc online.

Andy Furey, national officer of the Communication Workers Union, said: " The British public fully understands and appreciates the critical social role post offices play in our communities. It is crucial that the Government also fully appreciate this role and ensure long-term viability of this national asset.

"To provide that financial viability, the Government must bring back Government services to post offices. Without these, the viability of the service is damaged.

"In addition, the consultation exercise must be used to find a genuine and effective replacement for the Post Office Card Account.

"The Government has an obligation to provide banking services for those people financially excluded either by High Street banks or by location.

"The Post Office is the logical vehicle for this and providing banking services would fulfil both a political commitment and an important and sustainable future for the Post Office network."

The union criticised further post office closures and blamed the actions of Government departments in removing contracts.

"If the Government is committed to this national public asset they must start by committing to a strategy that ensures the Post Office is the gateway for Government services," added Mr Furey.

Postcomm chairman Nigel Stapleton said: "We welcome today's decision as a good first step towards addressing the serious problems facing the post office network, which Postcomm, along with many others, has been highlighting over the last two years.

"It is vitally important for the Government to ensure that its actions result in a network that is genuinely sustainable and that there is enough business and revenue to secure it, particularly for vulnerable people, and those who live in deprived or isolated areas.

"Postcomm hopes that the Government's consultation becomes a key part of the work to ensure that customers have access to vital services such as government, financial and postal services through a network of post offices, mobile post offices and local partnerships.

"The development of access criteria for post offices will need to ensure continued access to post office services for the more vulnerable members of society and those who may not have any other alternative."