APPENDIX A DTI Consultation on the Future of the Post Office Network Response from Northumberland County Council Background The post office network in both urban and rural areas of the country has been in decline over many years as a result of de-regulation, increased use of new technology, including on-line services, and the gradual withdrawal of Government business. Opening hours of many smaller rural sub-post offices were cut in the 1990’s and some Crown and larger branch offices have been down-graded and relocated, often within other retail outlets such as supermarkets and department stores. In 1999, the Government announced that benefits would be paid directly into claimants’ bank accounts and this precipitated a vocal response from many organisations concerned about the impact on older people, in particular, and on the viability of individual offices and the national network. The County Council set up a Select Committee on the issue, under the auspices of the former Policy Board and this heard evidence from Post Office Counters Ltd, the Federation of Subpostmasters and a number of community and voluntary sector organisations. The Select Committee’s findings on the potential impact of the Government’s decision were put to the Post Office and Government and the Council proposed a number of measure to help sustain the network, including a better remuneration package for sub-postmasters, a regional pool of staff to fill temporary vacancies, encouraging district councils to offer the full 100% discretionary rate relief available for post offices, and using local offices to deliver council services, including the collection of council tax and rents etc. Around the same time, the Cabinet Office Performance and Innovation Unit was also looking at the future of the post office network and considered many of the same issues raised in evidence to the Council’s Select Committee. Among the PIU recommendations were the creation of a post-office based banking service, to ensure that claimants without access to high street banking would not be disadvantaged; use of the network to deliver a much wider range of Government services and information; and a commitment to sustain the rural network until at least 2006. The Council’s Select Committee welcomed the PIU findings and offered to pilot some of the recommended initiatives, particularly in relation to e-government. However, pilot areas had already been chosen and this offer was not taken up. Since 2000, the Government has implemented some of the PIU recommendations. A £150 million pa subsidy for the rural or ‘social’ network was agreed for the period April 2003 to March 2006 and this was subsequently extended to 2008. At least some of the high street banks were persuaded to make their services available through the network and the Post Office was given an additional grant of £25m to investigate new ways of providing services and improve the business prospects of individual offices. However, despite these measures, both Crown offices and subpost offices have continued to lose business and closures have continued.
Nationally, it is estimated that around 1,000 rural sub-post offices have closed in the past five years and the Post Office has also carried out a ‘network re-invention’ programme which has seen the rationalisation of services in urban areas. In Northumberland, over 20 rural offices were closed in the 5 years to May 2006 and some urban offices were closed or relocated as part of the urban programme. The Consultation In the face of mounting losses, the Government has concluded that the current network of 14,000 offices is unsustainable and, in December 2006, the DTI published proposals for the future of the network. The proposals have been set out in a consultation paper and the County Council has been encouraged by Postwatch, an independent consumer ‘watch-dog’, to respond. This report sets out the key proposals in the consultation paper and suggests a draft response for members to consider. Responses are expected to be submitted to the DTI by 8th March, after which the Government will publish its final recommendations for the national network. Proposals The Government has accepted the important social as well as economic role which post offices play in local communities and the consultation paper makes a commitment to supporting the national network, with financial support made available for modernisation and restructuring and a continuing subsidy to the network of rural offices up to 2011. It further accepts that there will be a need for ongoing support to this ‘social’ network beyond 2011. Restructuring of the network, however, is expected to result in the closure of up to 2,500 offices nationally over an 18 month period from summer 2007. Subpostmasters who leave the service will receive compensation. The paper suggests that vulnerable communities in villages towns and cities will be protected in the restructuring exercise and proposes new access criteria, designed to ensure that all communities have appropriate access to post office services. The proposed access criteria are: Nationally – 99% of the population to be within 3 miles of a post office and 90% within 1 mile. In urban areas – 95% within 1 mile. In deprived urban areas (those within the worst 10% on the IMD scale) – 99% within 1 mile. In rural areas – 95% within 3 miles. In remote rural areas – 95% of the population in postcode districts within 6 miles.
The paper also proposes support to the Post Office to develop outreach services to remoter rural communities, building on trials of hosting services in village halls, pubs etc and of mobile services.
The Post Office card account, which was due to be withdrawn in 2010, will now continue to be available and the Post Office will be encouraged to expand further into new areas of business, including financial services such as savings and insurance. The Post Office is already rolling out free to use ATMs across the network. Other measures to exploit new market opportunities, such as allowing local offices to become pick-up points for mail-order goods or goods ordered on the internet will also be encouraged. Finally, the proposals include investigation of the role which local authorities might play in influencing how post office services might better be delivered in the future. A County Council Response The consultation paper seeks responses in the form of answers to a set of questions. This section suggests a possible County Council response based on these questions. Question 1: Do you think the Government’s forward strategy for the post office network addresses all the key issues and challenges the network faces? The paper makes a fair attempt to explain the reasons for the decline of the national network and the implications of low levels of usage of many smaller offices. However, it fails to acknowledge or fully quantify the impact of changes in the way benefits are paid, and the withdrawal of other Government business such as payment of TV licences and motor vehicle licensing. The Post Office itself estimates that government transactions will have fallen to 10% of total business by 2010, compared with around 40% in 2002. Postwatch suggests that revenue from Government transactions fell by £168m in 2005/06. Whist the paper includes useful proposals to allow Post Office Ltd to expand business and market opportunities, it is difficult to see how this scale of lost business can be made up from purely commercial activities. Question 2: Are there other significant factors affecting the future of the post office network which appear to have been overlooked in the Government’s proposed approach? The closure of rural post offices is not only down to changes in the way people choose to do business. It also mirrors the decline in rural retailing generally. At one time, post office business was a key element of the profitability and viability of an associated shop. Now it is more likely to be the other way round. It is unlikely therefore that, even allowing for the continuation of the ‘social’ network payment, the Post Office will be able to prevent further closures if a local office is not linked to an associated retail or other outlet in the community.
Question 3: Do you have any comments on the national access criteria proposed? The national criteria seem reasonable enough but are presumably set to be achievable, even with the level of closures expected as part of the proposed restructuring process. The expectation that 95% of the urban population should be within 1 mile of a post office is not particularly onerous and it is likely that on average it can comfortably be achieved. In counties like Northumberland, where towns are relatively small, it would not be unreasonable to expect that all residents should be within 1 mile of a post office outlet. Question 4: Do you have comments on the access criteria proposed for deprived urban and rural areas? As noted above, the proposed level of access to post office services in smaller urban settlements should be close to universal and this should also clearly apply to deprived wards in such settlements. For rural areas, the criteria are again reasonable enough, although fairly arbitrary, but distance should not be the only or even prime consideration. The consultation paper acknowledges the need to take account of topography and local communication infrastructure but access to public transport, particularly for the elderly, should also be built into any agreed criteria. The County Council has been looking at this issue and would be happy to share its findings with Government. Application of the new criteria should result in a network which continues to serve the needs of both deprived and remote rural communities and it would be better to plan provision to meet the criteria rather than to respond to a process whereby, as now, closures are precipitated by retirement of sub-postmasters or sale of a business and there follows a period of uncertainty as the Post Office tries to fill vacancies or organise alternative provision. Question 5: Do you have any suggestions as to how services might be better delivered through the post office network? As the consultation paper points out, the market for post office services has moved on and it has to be accepted that many people will now choose to do business in other ways, including on-line. However, other services such as village shops and rural banks are also in decline and the post office network is uniquely placed to continue offering direct access to banking and other financial services. The County Council therefore strongly supports the proposal to encourage the Post Office to widen the range of products and services it provides to customers, rather than just concentrate on ‘bricks and mortar’..
In 2000, the Council set up a Select Committee to examine the implications for the post office network of the Government’s proposal to change the way benefits were paid. Members of the Committee were interested in the proposals in the Cabinet Office PIU report, which was published around the same time, and offered to help pilot some of the ideas for delivery of public sector services in Northumberland. The offer was not taken up then but the Council remains committed to improving access to its services to local communities and would be interested in exploring further how local authorities might make better use of the post network. Question 6: Do you have any comments on outreach arrangements as a means of maintaining services to small and remote communities? Proposals for outreach services are not new and there have been several successful initiatives in Northumberland involving location of post offices branches in pubs and village halls. Hosting of post office services, however, can be costly, particularly in relation to security, and in some cases initial interest by potential hosts has not been followed up when the full implications have been examined. If this approach is to be successful, there will need to be more support provided in terms of training and help with set-up costs etc. This is not to say that the approach is unwelcome and the Council would be keen to explore the scope for ideas such as ‘clustering’ of services within groups of communities and hosting post office services alongside other provision in public/community buildings such as community centres and libraries. Mobile provision and the proposal for home services are other options worthy of further investigation and the Government and Post Office might also consider the scope for combining the delivery of some services, such as the sale of stamps etc, with delivery of the mail. Question 7: Do you have any comments on the practicality of community ownership of parts of the post office network, which might involve the transfer of assets to community organisations and/or the establishment of local mutual or co-operative organisations to own and run local services? This is a particularly interesting idea as Northumberland has a well-established network of local development trusts and other community partnerships, many of which are interested in developing social enterprises as well as maintaining local services. One local development trust has considered this in response to a possible branch closure and at least one community-owned shop in the county includes a post office franchise. There is clearly scope to examine this approach further.