Current trends in Post Offices, as relating to small shops

 

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Loss of Post Offices

   1) Post Offices, developments affecting access to cash, and Benefits        payments

   2) Post Offices; impact of closures on local retailing

   3) Numbers of Post Offices in the UK

   3.1) Legal minimum number of Post Offices in the UK

   4) Possible ways to keep Post Offices open

 

 Loss of Post offices

 

1. Post Offices, developments affecting access to cash, and Benefits payments

 

Post Offices are important as venues to access cash for shopping by the poor and elderly, many of whom do not have conventional bank accounts with the major banks. The UK government is attempting to save money by persuading recipients of Benefits such as Pensions and Income Support to have their payments made via automatic cash transfer (ACT) to bank accounts, because this costs less to process than payment via the Post Office. The Guardian, 29/1/2000 reported that it cost the UK government 79p to process a Giro Benefit payment but only 1p to process an Automatic Cash transaction via a bank. It is therefore much cheaper for the Government if such Benefits are paid directly to a bank or building society account.  However many Post Offices derive up to 40% of their income through such Benefit payments.

 

In early 2006 the UK Government’s Department for Work and Pensions (DWP) announced it would not extend the £1 billion contract for the Post Office Account card, used by 4 million people to access pensions and other benefits at the Post Office (Guardian 19/1/06, p.25).  The DWP estimated that the 23% of Benefit payments made via the Post Office accounts accounted for 80% of its administration costs.

 

The spread of online services has also hit the range of extra services the Post had taken on to increase its income. For example, passport applications and car tax renewal could, by 2005, be done online, bypassing the need to visit a Post Office at all.

 

Even where the local post office does not close, pensioners may suffer because they will be standing in longer queues to draw their pensions.

 

2. Post Offices; impact of closures on local retailing

 

In rural areas, the Post Office is often also the village general store, and if this closes the village loses its only shop. In 1997, 20% of rural Post Offices were also the last shop in the village (Guardian, 16 December 2002, p.7, ‘Ghost town Britain looms’). The Daily Mail (31 January 2000, p.22) reported that even for a village of just 1,000 people, the costs of closing the Post office amount to £50,000 a year in extra travel costs and lost trade. A grocery shop next door to a Post office that closes loses 15% of its trade; if the shop is in the same premises of the Post Office the trade fall is 25%.

 

The Times, 4 December 2006, p.29, reported on a study in Manchester which suggested that the presence of a Post office in a local community saved the businesses there on average a total of £270,000 a year.  This represented money saved by the local businesspersons in travel to a more distant Post Office and in longer times spent queuing there when they arrived.  The study calculated that for every 310 of income to the Post office itself, a further £16.20 worth of benefits were enjoyed by businesses in its local area.

 

3. Numbers of Post Offices in the UK

 

NOTE, due to rounding, definitions of ‘urban’ and ‘rural’ and variable periods to the year, totals may not match exactly.

 

1635 Origins of the Post Office, when King Charles I allowed the public to use his Royal Mail

year

Total POs

Total closures

Urban POs

Urban closures

Rural POs

Rural closures

1900

21,940

 

6,125

 

15,815

 

1981

22,000

 

 

 

 

 

1993

20,000

 

 

 

 

 

1996

20,000

 

 

 

 

 

1998

 

233

 

 

9,000

 

1999

19,100

383

 

 

 

 

2000

18,393

574

 

 

 

 

2001

17,846

362

 

 

 

 

2002

17,484

245

 

 

 

 

2003

17,392

1,278

 

 

 

 

2004

15,981

1,352

 

 

 

 

2005

14,609

233

 

 

 

 

2006

14,376

 

6,000

 

8,000

 

2007

14,300

 

 

 

 

 

2010

11,900

 

 

 

 

 

Sources; Guardian, 16/12/02, p.7 ‘Ghost town Britain looms’; Guardian, 18/12/04, p.11, ‘Pleas ignored as 600 town post offices go’.

 

The Guardian (10/4/04, p.2) reported that in 2006 some 1,600 rural Post Offices, a fifth of the total number of rural Post Offices as existing in 2004, may close. 3,000 urban Post Offices had already closed by 4/04. A £150 million subsidy was introduced in 2003 to keep smaller rural Post Offices open, but this subsidy was to run out in 2006 – it was extended by the UK government, in September 2004, to run till 2008. The Post Office Chief Executive, David Mills, warned that without this subsidy, known as the Social Network payment, up to 80% of rural Post Offices, or around 6,000 of them, could close. Already, the Post Office is (2004) finding it hard in some areas to find new tenants when sub-postmasters retire.

 

90% of rural Post Offices make a loss, and the smallest 10% only receive 20 customers a week, making a loss of £18 per customer visit (Daily Telegraph, 16/9/04, p.10).  The UK government says a Post Office needs 2,000 customers a week to make a profit. This statistic was virtually repeated in 2006; in a Commons statement Jim Fitzpatrick, Employment Relations Minister, stated that ‘fewer than 16 people a week use the 800 smallest rural Post offices, at a loss to the PO of £17 a visit’. (Daily Telegraph, 23/7/06, p.12).

 

The Times (9 December 2006, p.1) reported that the Royal Mail had told the UK government that it wanted to close over half of the country’s 14,400 Post Offices. This would leave the UK with approximately 4,000 rural and 2,500 urban Post Offices.  The Government was reported to be ready to agree to closures of some 2,500 to 3,000 Post offices, in urban and rural areas.  Rural areas with subsidised Post offices would be worst hit but even some 100 of the 480 central ‘Crown’ High Street Post Offices would also close.  In 2006 the government was spending £150 million a year supporting rural Post Offices but this funding was due to expire in 2008.

 

3.1. Legal minimum number of Post Offices in the UK

 

UK Government  Regulations (2008) state a minimum level of Post Office access in Britain.  According to these regulations,

99% of the UK population must be within 3 miles of a Post Office;

90%of the UK population must be within 1 mile;

95% in urban areas must be within 1 mile;

99% of the population of the 15% most deprived urban areas must be within 1 mile; 95%of the UK rural population must be within 3 miles, and

95% of the UK population must have a Post Office within 6 miles of their Postcode District.

 

This gives a legal minimum number of Post Offices of around 7,500, according to the UK population distribution in 2010.  If the Post Office were to be privatised, such regulations would remain in place for five years after privatisation.

 

4. Possible ways to keep Post Offices open

 

The Post Office may be accommodated in a pub or even a church. The former solution has been tried in the Republic of Ireland, where Post Office hours, including those of the attached grocery business, lengthened to those of the pub, 11am to 11pm. The Yorkshire Post spoke of the latter solution as part of a return by the church to its old mediaeval role as a community centre, although there might be architectural and ecclesiastical objections to this. Another possibility is having a mobile Post office in a van. So several villages can share one over the week. However some villagers have objected to having mobile vans in their village, housing a peripatetic grocery shop. The Independent Retail News of 30/5/03 reported that in Scotland a sub-Post Office was doubling as the local Police station. Combining the Post Office with other services may be the best way of preserving them in isolated rural areas.  Other Post offices have been relocated in convenience stores, or branches of W H Smiths.

 

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