Closure
of Profitable Branches
17. We suggested greater powers for Postwatch to
intervene when Post Office Ltd proposed closure of a commercially
viable Post Office, and we proposed a presumption against closure
of a post office linked to the last shop in a village. These proposals
were rejected in the Government and Post Office responses. Post
Office Ltd said:
Post Office Ltd works closely with Postwatch in accordance
with the agreed Memorandum of Understanding, when drawing up local
area plan proposals. While Post Office Ltd maintains a focus on
the overall financial viability of its business, a whole range
of considerations are taken into account including financial ones
when Post Office Ltd makes its proposals. However, it should be
noted that all of the branches proposed for closure would enable
Post Office Ltd to make financial savings. This may include branches
which sub-postmasters might consider as profitable. Post Office
Ltd is committed to the sustainability of the network as a whole
and does not believe that any other party (including Postwatch)
should have the right of veto over its commercial decisions.[17]
In its response, Postwatch noted that the assurance
Mr Cook had given us in evidence that all closures would make
a saving did not necessarily mean no profitable branches would
be closed:
We welcome Alan Cook's assurance that closures will
only take place where the result is a material saving to POL.
This, however, is not an assurance that profitable branches to
POL will not close. Postwatch agrees with the Committee that such
proposals would need to be carefully considered—profitable
offices are likely to be heavily used, and closures would therefore
affect many customers.[18]
18. We can see no material difference between the
Post Office Ltd response and that earlier assurance that "there
will be no post office that closes that does not produce a material
saving to Post Office Ltd."[19]
The post
office network is a social as well as a commercial asset; as Postwatch
says "profitable offices are likely to be heavily used, and
closures would therefore affect many customers." We continue
to believe there should be a presumption against their closure.
ALLOCATION OF COSTS
19. In previous Reports the Trade and Industry Committee
commented on the lack of clarity in Post Office financial figures.
The situation is no clearer. The Government had to submit detailed
figures when it applied to the European Commission for state aid
clearance in respect of its funding for the post office network.
Almost all of this was left out from the state aid decision released
in January.[20] The attached
table shows the way in which revenue and costs were broken down
for the Commission: with all the figures removed there is no way
to tell what sums were ascribed to each heading.
Table 1 - Breakdown of POL's Revenue and costs
of operating its non-commercial branches
