Memorandum submitted by the National Federation
The National Federation of Sub-Postmasters represents
nearly 18,000 sub-postmasters throughout the United Kingdom. Sub-post
offices make up 97 per cent of the national network of post offices
and are run by private business people, sub-postmasters, most
of whom run their post office business alongside another retail
1. THE ROLE
The UK-wide network of local post offices is
the largest retail network of its kind in Europe. It reaches into
every urban community and nearly every sizeable rural settlement,
with 94 per cent of people in the UK living within one mile of
a post office. Twenty eight million customers make 45 million
visits to post offices every week. Post offices offer a range
of 170 different services and products including banking services,
cash management for businesses, bill payment, pension and other
benefit payments, insurance services, car tax and TV licences,
mail and distribution, passport renewal applications.
Much recent evidence has highlighted the crucial
social and economic roles local post offices play in their communities.
Not only do post offices provide a wide range of postal, government
and commercial services, but often their very existence helps
keep open retail outlets in rural and deprived urban areas. Commonly
the shop attached to a post office is the last remaining shop
in the village. Post offices, frequently the only local place
to take out cash, make a special contribution to local economies.
People able to access cash often spend it in other local businesses.
Post offices provide access to cash for local businesses themselves.
Sub-postmasters and post offices also play an
invaluable role in many communities by providing support for vulnerable
residents, including older and disabled people. For example, sub-postmasters
frequently interpret official letters, field lost property, take
messages and offer emotional support.
Post offices act as a focal point for communities,
they give people a place to congregate and are used by the police,
local authorities and tourist attractions to display information.
2. REASONS FOR
Despite the vital social and economic role played
by local post offices, over recent years post office closures
have been escalating. Throughout most of the 1990s approximately
200 UK post offices per year have closed. In 1999-00 there were
380 closures. The first nine months alone of 2000-01 saw 434 closures.
Closures in Wales closely mirror the national picture. In March
1999 there were 1,501 Welsh post offices, in March 2000 1,459
and in December 2000 1,409 post offices.
The most common reason for post office closure
is the resignation of the incumbent sub-postmaster and the inability
to find a replacement.
Sub-postmasters resign for a wide range of reasons,
often their age is a key factor. Low or declining financial return
from the whole outlet is also a frequent reason for resignation.
This is in part due to trends in retailing, including the increasing
dominance of supermarkets and the desire by consumers for a wider
range and quality of goods. Increasing levels of car ownership,
levels of commuting and the general decline of local services
are further factors.
Post Office research suggests that the resignations
are most likely to be due to a combination of factors1. These
may also include a lack of support, advice and good training from
the Post Office for sub-postmasters, lack of understanding about
what the role involved before taking on a post office, concerns
about criminal incidents and personal safety. Other issues leading
to dissatisfaction with working conditions include the problems
many sub-postmasters experience in taking adequate holiday and
covering for short term ill health. A small number of sub-postmasters
resign because they feel unable to cope with major changes within
the post office, such as the introduction of the Horizon computer
When a sub-postmaster resigns, the Post Office
looks for a replacement. There is a range of reasons for not being
able to find a replacement. It may be simply that no-one is willing
to take on the role due to uncertain financial prospects. Changing
rural demographics and lifestyles mean that there is a smaller
pool of people prepared to take on small rural sub-post offices.
In some cases there may no longer be any suitable premises availablethe
old premises having been converted to residential use, often a
financially astute move due to high property prices.
3. EFFECT OF
The closure of a local post office clearly results
in making access to post office services more difficult. It may
result in the closure of the last remaining shop in the community,
particularly in rural areas. It is also liable to have a wider
economic impact on the local community.
A recent Countryside Agency report on rural
post offices suggests that if a local post office closed, the
time taken for a customer to travel to the nearest post office
would more than double and monthly travel costs would increase
by an average of £1.35 per user. Moreover, the closure of
a post office in a typical settlement of 500-1,000 people is likely
to impose an economic resource cut of over £52,000 per annum
to the local community. 2
The people liable to be worst affected by the
effects of post office closures are those who are already vulnerable
to social and financial exclusion, including older people, disabled
people and people on low incomes. This is a particular problem
in Wales which has a high proportion of people over state retirement
age (20 per cent), a large number of whom live on the basic state
pension. There is estimated to be nearly half a million people
in Wales with a disability. Wales also has a higher level of unemployment
than the UK as a whole (7.3 per cent, compared with 5.9 per cent
UK-wide, 1999). In addition, low pay is a major problem in Wales
with earnings lower for Welsh people, compared with British workers
in general. 3
The Financial Services Authority reports that
financial exclusion is higher in Wales than in England. 4 One
of the major aspects of financial exclusion relates to geographical
access to services and over the past decade there has been a considerable
reduction in financial retail outlets in poorer communities. Research
suggests the pattern of bank and building society branch closures
has focused on areas populated by people on low income. 5 This
problem has been exacerbated by low levels of car ownership among
people living in poorer communities and the subsequent need to
rely on expensive and often unreliable public transport. It is
also clearly more of a problem for those with mobility problems,
including older and disabled people.
As the Financial Services Authority points out,
financial exclusion frequently reinforces other aspects of social
exclusion including lack of employment opportunities, lack of
access to services and a poor environment. The continuing closure
of local post offices cannot but worsen this situation, ultimately
resulting in increasing social isolation and all the problems
that brings to individuals, communities and society in general.
It is widely accepted that the post office network
urgently needs to develop, modernise and adapt to the changing
social and economic environment in which it operates.
One of the largest sources of business for post
offices is the payment of social security benefits. The Government
has announced that from 2003, order books and girocheques will
be discontinued and benefits will be paid to claimants by an electronic
system. Alongside issues of technological development, changing
preferences and lifestyles amongst consumers, this change in the
method of benefits payments clearly poses a major challenge to
traditional post office business.
In June 2000, the Government's Performance and
Innovation Unit produced a report, Counter Revolution, which outlined
plans for the future of the post office network. 6 The report
stated that the Post Office needs to maintain a network offering
people in all parts of the country access to post offices. Rural
and urban post offices should modernise and there should be no
further avoidable closures of rural post offices.
The report also proposed new lines of business
for post offices. A Universal Bank, specialising in providing
banking services to people outside the banking mainstream, should
be set up by the Post Office in partnership with high street banks.
The Government stated that the Universal Bank is the best means
to ensure that benefit recipients can continue to access their
entitlements in cash at post offices. Additionally, post offices
should develop a role as Government General Practitioners, providing
information on government issues and helping citizens carry out
routine transactions with government bodies. There is also a role
for post offices to provide Internet learning and access points
for the public.
5.1 Government proposals
The National Federation of Sub-Postmasters (NFSP)
fully supports the Government's proposals as set out in, Counter
Revolution, NFSP regards their implementation as essential to
arresting the erosion of the post office network. Despite these
laudable plans, as the figures show, post office closures are
on the increase. This suggests a degree of urgency over their
implementation; and a need for good communication and clarity
over future plans for their implementation. As the Performance
and Innovation Unit (PIU) points out, closed post offices rarely
re-open, and re-opening becomes less and less feasible as time
5.1.2 Maintaining the network
The PIU report states the Government should
provide financial assistance, if necessary, to protect rural post
offices from 2003 to 2006 (conclusion 5). This money is essential.
However, it is needed now. Without immediate financial assistance,
many more post offices in Wales and throughout the UK will have
closed before 2003. Urban post offices also need to be modernised
(conclusion 7, PIU report). Currently the network of rural post
offices is cross-subsidised by the profit-making urban post offices.
Urban post offices cannot undergo the crucial transformation into
vibrant modern establishments if their resources continue to be
drained by the necessity of supporting the rural network. The
immediate provision of Government financial assistance for rural
offices would greatly alleviate the need for this cross-subsidisation.
The PIU report also states that a fund should
be established to help sustain and improve post offices in deprived
urban areas (conclusion 10). Although closures have tended to
affect rural areas, urban post offices are increasingly under
threat, particularly in deprived urban areas. NFSP holds that
in order to stop the closure of post offices in deprived urban
areas, government money for these offices is also needed immediately.
The Financial Services Authority report on financial exclusion
points out "financial desertification" due to bank and
building society closures, has been spatially uneven and focused
on the deprived urban areas. This suggests the need to retain
post offices in these areas is particularly important.
NFSP is concerned that the Government should
provide a clear message indicating exactly what these funds are,
and will be for. This would help to reassure many thousands of
sub-postmasters who are extremely anxious about their future livelihoods.
It would also assist organisations working in the postal services
sector, including the National Federation of Sub-Postmasters,
with forward planning.
It is important that NFSP is centrally involved
in advising the Government on the best way to channel financial
assistance to post offices (conclusion 6, PIU report). Currently
NFSP works with the Post Office to make decisions on compensation
from the discretionary fund for post office closures. The same
mechanism is used to dispense from the ISIS (improvement in security
in sub-post offices) and Horizon (IT system) modification funds.
NFSP would support using these models as the basis for channelling
these Government funds to individual post offices.
5.1.3 New lines of business for post offices
The Performance and Innovation Unit report,
Counter Revolution, sets out plans for developing new roles and
functions for the national network of post offices. These are
crucial as they will generate income for post offices and ensure
that local post offices provide modern services to meet the needs
of their users.
(i) Universal Bank
Central to the plans is the proposal for Universal
Banking Services. Negotiations between Government and stakeholders
over Universal Banking Services have been long and protracted.
However, Stephen Byers, Secretary of State for Trade and Industry,
has clearly committed to the Universal Bank as "post office
based". NFSP believes that in order to ensure a viable future
for the post office network, it is vital that post offices operate
at the core of the Universal Bank. Universal Banking Services
are envisaged to consist of three tiersfirstly, a "Card"
or "Clear" account that is a direct replacement for
the order book, this enables electronic transfer of benefits/pensions,
but is as simple as an order book to operate. The second tier,
a "social exclusion account" or "basic bank account",
can be opened at a post office and accessed through the post office
or an ATM. The third tier is the use of a customer's existing
bank account, which will be accessible at post offices.
NFSP's view is that the "Card" or
"Clear" account represents the Government's commitment
to a post office based solution. It is important that these accounts
are not capped, numerically or financially. Anyone in receipt
of state benefits or pensions should be eligible. This will meet
the Government assurances that people who wish to continue to
collect their cash in post offices will still be able to do so,
before and after the changes to the methods of benefits payments
in 2003. Research published by the Financial Services Authority
suggests that up to 9 per cent of households to not have a bank
or building society account of any type and up to 20 per cent
of households lack a current account. 7 Many people say that they
prefer a cash budget as they feel it gives them more control over
NFSP is concerned that the second tier of banking
services, the "basic bank accounts" would not, if regarded
as the main replacement to the order book, bring sufficient income
into post offices. Basic bank accounts are not restricted to benefit
recipients and should be available for anyone. However, evidence
suggests basic bank accounts are unlikely to meet the needs of
a large number of people who are in receipt of pensions and benefits.
Basic bank accounts have been set up by the high street banks,
but, as the National Association of Citizens Advice Bureaux points
out, many of the accounts on offer are not very basic and exclude
people with poor credit histories. 8 For instance, many accounts
exclude people with county court judgements. 9 County court judgements
tend to last for six years and in the year 2000 alone, 1.3 million
county court judgements were made in England and Wales. This suggests
it is possible that the total number of people unable to access
many of the basic bank accounts, due to a county court judgement,
could be anything up to five or six million. Other accounts exclude
people with bankruptcy orders. Bankruptcy lasts for three years
and during the three year period 1997-1999, there were over 60,000
(ii) Government General Practitioner role
Proposals for offering information and signposting
around government services, the Government General Practitioner
(GGP) role for sub-postmasters, are a further crucial development
for local post offices. This role will be piloted in post offices
in Leicestershire during 2001. The GGP role dovetails well with
other Government proposals such as the Community Legal Service
whose aim is to provide a network of information, advice and legal
services for local communities. GGPs could work within this network
as quality marked providers of information services.
NFSP is concerned that for this role to be a
success, sub-postmasters must be properly trained, accredited
and remunerated for this function.
5.2 General government support
Local and central government also have a more
general role in giving post offices more business. For instance,
NFSP advocates payments for local government services to be made
through post offices. Central government departments should be
directed to consider post offices first when reviewing the provision
of their services at a local level. Clearly the GGP role gives
a good structure for introducing further government service functions
into the post office.
The extension of mandatory business rates relief
to 100 per cent for all post offices would be an additional assistance.
5.3 Other issues
There is a range of further issues that need
to be addressed in order to provide better support to sub-postmasters
and stop the continued erosion of the post office network.
(i) Greater financial return for sub-postmasters
The most significant problem facing sub-postmasters
in the operation of their businesses is low financial return.
NFSP is concerned that the Post Office does not pass on sufficient
revenue from clients to sub-postmasters and believes that the
Post Office should ensure sub-postmasters receive a greater return
from their transactions. To assist in the assessment of reasonable
rates of return for sub-postmasters, more openness regarding Post
Office/client payments is required.
(ii) Publicity for post office services
It is important that the Post Office carries
out more advertising and publicity work. Responses to the Postal
Services Commission's discussion paper on preserving access to
post offices in rural areas indicate that customers do not know
about all of the 170 services available at post offices. 10
(iii) Training for sub-postmasters and their
Post Office research identifies inadequacies
in the training provided for sub-postmasters as a major concern.
11 The main problem with current training is that sub-postmasters
are merely given written material to read in their own time and
are expected to train staff on the job. NFSP holds that training
is crucial to the provision of a good service. Sub-postmasters
should be trained more actively by the Post Office, and then in
turn should train their staff.
Staff training should be given at a specific
time and the sub-postmaster should be paid for this. To assist
the sub-postmaster with his own training duties, some help with
training skills needs to be provided. Since sub-postmasters are
private business people it is especially important that, if they
have to leave their offices to attend training sessions, they
are paid directly or receive accreditation for their training
that results in greater remuneration.
(iv) Support for the retail side of the
Sub-postmasters need business advice and support.
Years of lack of investment in post offices have used up the takings
on the private side of the businesses, resulting in an urgent
need to regenerate both sides of the business.
Support is needed over the sourcing of retail
products. This is something that NFSP is currently working on
by developing an affinity group wherein NFSP sources goods which
can be bought at a discounted rate by sub-postmasters.
NFSP is also looking at developing a symbol
groupbranded core products, such as stationery, for sub-postmasters
A further need is for independent business advice
specifically geared towards sub-postmasters. This could cover
a whole range of issues from finance and accounting to staff management
and marketing. Such a service could be set up and run by NFSP
in partnership with funders and parties with shop business expertise.
The government needs to take a greater interest
in the private side of the sub-postmaster's business if we are
to have the viable and vibrant post office network. Competition
from supermarkets is intense and if local independent shops are
to survive, government support is essential.
(v) Provision of relief sub-postmasters
Businesses running with tight margins that are
forced to close due to short term problemssuch as short
term ill health or other personal reasonsare likely to
run into major financial difficulties. A solution to this problem
for sub-post offices is to set up an efficient system of relief
sub-postmasters. This is a practice used by many other trades
and professionsfor instance the pub trade, general practitioners,
the teaching profession.
A relief pool of sub-postmasters would also
help with the problem of holiday arrangements. Many sub-postmasters
cannot currently take adequate holiday since they have to organise
getting their own substitute and yet there is no centralised system
of providing locum sub-postmasters. Moreover, although the Post
Office currently provides a holiday substitution allowance to
pay for reliefs, the payments do not cover the actual cost of
employing the relief.
(vi) Security for sub-postmasters
The Post Office needs to work further on making
sub-postmasters feel more physically secure and also to protect
them from criminal incidents. NFSP suggests that sub-postmasters
should be provided with training on how to deal with people who
are behaving aggressively or violently.
To increase current levels of physical security,
telecash dispensers could be installed in post offices, these
are thought to be more secure than safes. Research should also
be undertaken regarding alternative alarm systems. The current
arrangement of audible (rather than central station monitored)
alarms puts the onus on sub-postmasters, rather than the police,
to attend if the alarm sounds out of hours. This is an unsatisfactory
arrangement as it puts sub-postmasters at physical risk and is
clearly a great source of anxiety.
There is also evidence that sub-postmasters
who have suffered from crime feel very unsupported. NFSP suggests
that there should be research into establishing a formal scheme
offering support to sub-postmasters in this situation.
Post office closures hit socially excluded members
of society most, and in Wales there are high proportions of older
people, people who are unemployed or on low incomes and disabled
people. Not only is it older and poorer people who tend to use
post offices more than others, but it is these groups who will
find it most difficult to travel further afield to access the
postal, financial and retail services that a closed post office
The implementation of Government proposals,
as set out in the PIU report Counter Revolution, is crucial
to the survival of the post office network. A post office based
Universal Bank must be introduced to replace the order book for
payments of pensions and benefits. The GGP role for sub-postmasters
must be properly developed and funded. Government money specifically
for supporting rural and urban deprived post offices needs to
be adequate, well-distributed and forthcoming now.
Other measures ensuring better working conditions
and a greater financial return for sub-postmasters also need to
be implemented in order to ensure that running a sub-post office
is a viable and financially adequate career choice.
Without these essential developments, post offices
will continue to close and the most vulnerable people in our society
will be subject to even further social exclusion.
1. Post Office, April 2000, MSS Marketing
Research Project MR3806.
2. Countryside Agency, July 2000, The
Economic Significance of Post Offices in Rural Areas.
3. Welsh Affairs Committee, November 2000,
Social Exclusion in Wales.
4. Financial Services Authority, July 2000,
In or Out?Financial Exclusion: a literature and research
5. Financial Services Authority, July 2000,
In or Out?Financial Exclusion: a literature and research
6. Performance and Innovation Unit, June
2000, Counter RevolutionModernising the Post Office
7. Financial Services Authority, July 2000,
In or Out?Financial Exclusion: a literature and research
8. National Association of Citizens Advice
Bureaux, January 2001, Access to Basic Bank Accounts.
9. The British Bankers Association website,
www.bba.org.uk, gives details of basic bank accounts provided
by their members.
10. Postal Services Commission, December
2000, Preserving Access to Rural Post Offices.
11. Post Office, April 2000, MSS Marketing
Research Project MR3806.
National Federation of Sub-Postmasters