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Post Office network transformation report published

17 July 2012

The Business, Innovation and Skills Committee today publishes a report - 'Post Office Network Transformation: a progress report' - outlining its concerns with regards to the Government's proposals for change to the ownership and administration of the Post Office network.

Comment from the Chair

Commenting on the publication of the report, the Chairman of the BIS Committee, Adrian Bailey MP, said:

"Post offices provide vital services to local communities up and down the country, particularly for those in rural or deprived areas.

It has long been clear that the Post Office network needs to undergo significant change in order to place it on a long-term sustainable footing and to increase its geographical coverage.

Any such reform must be more than just a consolidation of the existing network.

The BIS Committee supports the direction of travel set out by the Government.

However, a number of serious concerns remain, not least with regards to the inflexibility of the proposals, the lack of a programme for delivering government services for the Post Office and deficiencies in the training programme for post office staff.

Without urgent and serious consideration, these concerns could undermine the Government's ambitions to create a Post Office network fit for the 21st century."

Key Concerns

Some of the Committee's key concerns include (quotes are from Adrian Bailey MP):

  1. Changes to post office services in the new 'Local' model

  2. By remodelling small post offices into 'Locals', the Government is trying to ensure their long-term viability. However, the reduction in services risks making some branches unsustainable or unsuitable for local users.

    "The pilot scheme for 'Local' post offices must undergo a rigorous assessment to ensure there is sufficient flexibility in the model. Post offices should be responsive to the needs and demands of diverse communities."

    The new 'Locals' model could result in a small number of major retailers running the majority of Post Office outlets.

    "The Government must be alive to the risk that its new model could erode the ethos of many post offices. The 'Locals' model needs to be viable and attractive to a wide range of operators."

    The Post Office Ltd's research was too narrowly focussed on 'Local' pilots where there had previously been no post office whilst the Consumer Focus research failed to take into account the social demographic of post office users.

    "The information available to the Government is inadequate. More must be done to ensure the pilot scheme is subject to proper review, concentrating on the suitability of 'Locals' to a wide range of communities. The government also needs to actively consult all groups who are directly affected to ensure informed decisions are made."

  3. "Front Office for Government"

  4. The new role of post offices as front offices for Government services will be vital to their ongoing financial viability. The Government must set out the services that are to be delivered through this method whilst Post Office Ltd must demonstrate a clear marketing strategy to ensure post offices are promoted as the preferred outlet for such services.

    "The record of Government in delivering services through the post Office is patchy at best. Warm words and aspirations will not suffice.
    Much greater clarity is needed both from the Government and from Post Office Ltd."
  5. Subpostmasters

  6. For subpostmasters who choose to remain on their current contract terms, it needs to be stated clearly that they will continue to receive the "Core Tier Payment".  The new method of remuneration for 'Local' post offices may not be viable for subpostmasters, increasing the likelihood that large supermarkets will take over the Post Office mantle.

    "More details are required about how the Government will manage post offices where subpostmasters take compensation and the criteria by which decisions will be made with regards to the conversion of post offices to the new 'Local' model."

     The default option for new entrants should not be restricted to the 'Local' model.

    "Post offices need to provide targeted services tailored to their local communities. Restricting new entrants to the 'Local' model may remove valuable services from those who need them most.
    The Government must set out how the location or relocation of post offices is going to be supported in areas where the 'Local' model is not appropriate."
  7. Mutualisation

  8. There is little detail on the programme for change with regards to mutualisation and particularly on how any such mutualisation would be affected should the majority of 'Locals' be owned by a small number of major companies. The Committee recommends that the Government outline how such a situation would affect the ability of the Post Office to become a mutual organisation in its response to this report.
    "If the Government is committed to mutualisation, a detailed road-map for change needs to be put in place. Without that, the Government's proposals will not be put into action."
  9. Post Office Subsidy

  10. The Committee supports the long-term objective for post offices to become financially self-sufficient. Indirect financial support, largely in the form of the Front Office Government services will be key to achieving this ambition.

    "Some post offices may never achieve financial independence. These post offices often deliver some of the most vital services to rural or deprived areas.

    They cannot and should not be ignored.
    The Government needs to set out in detail its long-term strategy for financial support - both direct and indirect." 

Further Information

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