Government Plans for Tax Payers to fund Post Office Closures - Foster

A leaked memo from Consignia has indicated that the Government is anticipating financing the closure of 3000 of the total network of 8500 urban post offices.

A leaked memo from Consignia has indicated that the Government is anticipating financing the closure of 3000 of the total network of 8500 urban post offices.

Don Foster MP says: “The profitability of these closures depends on this perverse sweetener which the Government is offering. The memo actually suggests it makes better sense to Consignia to delay any closure programme for a decade.
“This arbitrary closure programme, combined with Automatic Credit Transfer that has taken crucial business from Post Office outlets, makes long term security a thing of the past for most sub postmasters.
“The memo implies that a reduction of 3,000 outlets will be funded by £180 million of taxpayers’ money, to compensate for the closures.
“Where does that leave the three thousand or so sub post offices that have already been forced to close without compensation?
“We are talking about a senseless one-in-three cut to a very important local service, and not, as this memo glibly puts it, a ‘Neighbourhood Reinvention Programme’.
“These closures will impact most on the elderly, the disabled and those in poverty. Postwatch, the consumer watchdog, true to its name, hasn’t taken any action to back these people up. Each post office closure will, on average, cut an economic resource worth £52,000 to the local communities that are hit.
“Thanks to our efforts campaigning against the closure of rural post offices, rural closures are subject to a vetting procedure to assess the impact to the local community.
“But now I find it incredible that Consignia and the Government aren’t doing the decent thing and guaranteeing public consultation before closing urban post offices. The same logic should apply.”
ENDS.

Notes to Editors follow…
Notes to Editors:

Summary of leaked document:

The document received by the Liberal Democrats implies that the Government is funding the closure of Urban Post Offices:

Figures suggest that the Taxpayer - the people who will suffer from the closure of these post offices - are being asked to foot the bill for these closures - even though the benefit is to Consignia only.

This leaked document from Consignia shows that the profitability of closing these post offices is wholly dependent on the Government picking up the tab, to the tune of £ 180 million. Ref: p5 point 26
Ref: p6 point 31(I)

Post Office Closures - Neighbourhood Reinvention Programme

The proposals cover a review of the 8500 sub-post office outlets in urban areas. This amounts to approx. 45% of the total number of sub-post offices and 75% of the revenue. Ref: p2 point 7.

The document implies that there will be a reduction of 3000 outlets, the closure of which will be funded by the Government’s £180million. (In reality some of the 3,000 outlets have already shut without compensation becoming available).
Ref: p5 point 26

The anticipated cash flow of the project assumed that Government funding of £180m for the compensation package, for the anticipated closures, would be available by January 2002 but clearly this is already late. Ref: p6 point 31 (i)

The cost/benefit analysis within the document can be summarised as follows: -

Cost/Benefit Breakdown £m

Year Costs Benefits Net Benefit
2001/02 -4.2 0.2 -4.0
2002/03 -8.2 8.8 0.6
2003/04 -8.0 17.5 9.5
2004/05 -7.1 24.3 17.2
2005/06 -1.0 26.5 25.5
2006/07 -0.9 26.5 25.6
Ref: p7 point annex A

These figures show that Consignia will be making money out of the closures.

These figures show that Consignia will be making money out of the closures as they have not included the £180million package that will be provided by the government.
The above figures do not include £1.4m of costs that Consignia has already incurred Ref: p7 point annex A

Additional Research

National Federation of Sub Postmasters
https://www.subpostmasters.org.uk/About%20NFSP.htm

“NFSP is the only organisation recognised by Post Office Ltd to negotiate on behalf of subpostmasters nationwide. A team of negotiators works throughout the year to improve the pay and conditions of service for subpostmasters. NFSP negotiates with Post Office Ltd the payment for every item of work that goes over a subpostmaster’s counter.”

Obviously, the National Federation is in place to look after the interests of the sub postmasters. With this in mind, it’s understandable that they are supportive of the closure programme.
However, this must been seen in context. Sub postmasters have not been able to plan ahead and invest in their businesses. Automatic Credit Transfer will take away a large proportion of their turnover. A climate of economic uncertainty is not conducive to keeping sub postmasters in the sector.

Post offices, Customers and Communities (NFSP website)
https://www.subpostmasters.org.uk/research%20briefings%20Post%20Offices,%20Customers,%20Communities.htm

Main findings:
Page 2
• Customers in urban deprived areas use Post Offices as a source of cash, either pensions or benefits.
• 91% of urban residents agreed that “Post Offices have an important role in my local community.”
• NFSP recommends that the future Post Office network and Postwatch need to ensure a systematic examination of the effect of closures on customers.

Postcomm’s proposals for Promoting Effective Competition in UK Postal Services, national Federation of SubPostmasters’ Response (NFSP website)
https://www.subpostmasters.org.uk/research%20briefing%20Postcomm's%20competition%20proposals.htm

Main findings:
Page 5
• The Countryside Agency reports that the closure of a post office, in a typical settlement of 500-1,000 people, is likely to impose an economic resource cut of £52,000 per annum to the local community.

Postwatch site
https://www.postwatch.co.uk/index2.html (Postwatch website)

“We are here to help all customers, both business and individual. We also particularly represent the interests of the disabled or chronically sick, pensioners, people on low incomes and those who live in rural areas.”

So far, no one has undertaken any impact studies to find out how the proposed closure programme of 3,000 post offices out of the total 8,500 will affect urban communities.
Postwatch, the only properly dedicated consumer watchdog body, which should be championing the consumers, have done nothing so far.

This article published: 18/09/2023

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