Post Offices - Securing their Future - Business and Enterprise Committee Contents

4  Conclusion

172. The post office network is valued by the public, and our evidence demonstrates that people's expectations of what it can provide are extremely high — probably higher than their willingness to pay for those services directly would suggest. Moreover, their aspirations for the network do not necessarily reflect the reality: that a wide range of services are provided across a heterogeneous network of premises of different sizes run on many different business models. Conversely, the network has been underused and underappreciated by the Government, which has recognized the role of the post office network in sustaining communities, but has frequently failed to link that to the actions of individual departments.

173. The Government's own access criteria could be met by a network of 7,500;[227] on this basis, the network could in theory be decreased by 4,500 branches. The Government has said that it does not wish the network to decrease from its current size, but there is little clarity about why it wants a network (of 12,000 outlets) so much larger than the access criteria require. We share the Government's view that the network should not be diminished, but remain concerned by the lack of justification for the network's current size. Indeed, to meet the principles we set out below, it may even be necessary to re-establish post offices in communities that have lost them.

174. Postcomm has been asked to carry out a review of the social benefits of the network. The value the public sets on post offices convinces us that there should be no further closure programmes, but it is inevitable that there will be some change in the network as Post Office Ltd's arrangements with individual retail partners change. The more those changes can be guided by knowledge about where post office facilities are most valuable, the better; the possibility of increasing the size of the network should not be excluded.

The Future

175. We acknowledge that the Government has consistently recognized the value of the post office network. However, it has not translated that recognition into action, either through making sure that the policies of individual departments do not undermine the network, or through articulating a clear policy for the network. Post Office Ltd operates as a commercial company, and we do not wish to change that. However, it is a government-owned company, and the Government has a legitimate right to set it other tasks than simply maximising profits (or minimising losses). We believe it is time the Government set out clear principles for the network.

176. Our principles would be as follows:

  • The post office network provides a well-established way of fulfilling existing government responsibilities:
    • for the social and economic well-being of local communities;
    • to ensure that public services are accessible throughout the country; and
    • for the provision, wherever appropriate, of face-to-face access to information and services.
  • Although the Government has a responsibility for general social and economic wellbeing, this depends on the availability of private facilities, as well as public ones; the partnership between Post Office Ltd and private providers is tried, tested and appropriate.
  • Although the post office network is valuable, in the past its management had become complacent and inefficient. It must not be allowed to become so again.
  • Wherever appropriate, government services should be provided through the post office network, and through as wide a range of outlets as possible. The post office network should offer services throughout the country, and balance the needs of customers and partners with the need for efficiency.
  • We believe that although Post Office Ltd should be left to run its own business, the Government has a right and duty to be clearer about articulating the services it should provide, and the standards to which those services should be provided.


177. Those submitting evidence to us wanted to have as many services as possible available at every office in the network. There are difficulties in this. The evolution of the network over the centuries has resulted in a complex array of premises and service providers: a subpostmaster in a small village may have some call for foreign currency on demand, but it may not be economic to supply it, given that it can be arranged at short notice anyway. Sometimes difficulties are caused by new services offered by Post Office Ltd itself. For example, Post Office Essentials and Partner Outreach branches cannot accept cheques. If these service models expand further, it may restrict the extent to which services can be offered throughout the network.

178. There is a huge demand for the universal provision of services throughout the network. However, there are substantial barriers to providing all services everywhere: variation in post office premises; the need for specialist training for some services; and the complex array of service providers in the post office network. Customers may have to accept that uniform service provision may not be possible if services expand. At the same time, the more services that are offered through the network, the more attractive and useful the network becomes. Post Office Ltd should by default provide a service in a branch unless there is a compelling reason against it.


179. It is possible that if the right actions are taken, the post office network will come to be both an important social resource, and a profitable organisation. However, it is also possible that the Network Subsidy Payment, or some successor arrangement, will be needed for the foreseeable future. We recognize that if Post Office Ltd is assured of government support either through being the favoured route for supplying government services, or through direct subsidy, there is a danger the company may become inefficient and unresponsive. Similarly, Post Office Ltd's retail partners may succumb to the vices of incumbency, and become complacent and inefficient.

180. This is not an academic fear. Post Office Ltd has, in the past, been a remarkably inefficient organisation. We have already noted that the network's computerisation was completed only this decade. One of the reasons why some bill payment services were lost to the network was that Post Office Ltd could not compete. For example, the contract for the TV licence service was lost in 2006. Mr Cook assured us that changes had been made and Post Office Ltd is now in a much better position to secure such contracts:

    We have lost very, very few tenders over the last three years. We are pricing much more competitively, so we are not making as much money on those contracts but we are forcing our way into most of those bill payment contracts now….. As I say, I think we have got a robust story on costs, we have an okay story on revenue and now that we have done a lot of the tough stuff it is time to up the ante on winning more revenue.

181. We welcome the improvements in Post Office Ltd's efficiency, but there is a danger that if the company comes to consider that the extensiveness of its network gives it a right to supply all services, these improvements will not be sustained. We would like to see the widest possible range of bill payment services offered at post offices, but the network has to earn them. For that reason, we welcome the presence of PayPoint in the market.

182. The Government should support the post office network, but it has a right to expect that the network will be as efficient as possible. Under current regulatory arrangements, while Postcomm reports and advises on the post office network, it has no direct responsibility for it. Broadly speaking, this will continue if regulatory responsibility passes to Ofcom. Whatever happens to the Postal Services Bill, the Government is, and will remain, Post Office Ltd's only shareholder. It cannot duck responsibility for the efficiency of the network. In a situation where there is no competition and there are sound reasons for making government services available through post offices, the Government may have to be more involved than a shareholder might traditionally be.


183. Just as the Government has the right to expect that Post Office Ltd will be efficient, so it has a right to expect that individual offices will provide excellent service. It is also clear from our evidence that although the network is trusted and valued, many people consider services poor, and the length of the queues is a real issue. Postwatch research has suggested that, in many respects, franchises offered better service than Crown offices. Sub­post offices are also likely to have smaller queues than Crown offices. Post Office Ltd is taking steps to refurbish Crown post offices to ensure that they offer a modern, welcoming retail environment.

184. Postcomm's Eighth Annual Report on the Network of Post Offices suggested that Post Office Ltd must ensure that businesses which gained custom as the result of closure of another post office had the staff resources needed to ensure that quality of service does not suffer.[228] That may require additional funds.

185. Post Office Ltd must ensure that all post offices offer good customer service. This may require more financial support. It may require setting service standards, and monitoring to make sure they are achieved. Otherwise, post offices will attract only those who have no alternative but to use them, and the network's role in promoting social inclusion will be diminished.

186. As services expand, there is likely to be a need for more investment in staff training, particularly if post offices become a source of advice services. Post Office Ltd trains subpostmasters for two weeks on site when they are appointed. Thereafter, the subpostmasters are responsible for training their assistants. The expansion of the range of services offered through the Post Office is likely to lead to a need for more training of subpostmasters, and possibly a need for Post Office Ltd to provide some training directly to staff in sub-post offices or franchises.


187. As this report shows, the Government takes the post office network seriously; indeed it provides £150 million each year to support it. Some local authorities are also taking commendable steps to support their post office network directly. But financial support is not enough. Post offices have to provide the services their communities need; whether these are central or local government services, or fundamentally private services, such as banking, or even access to retail, much more attention needs to be paid to the potential of the post office in helping the Government deliver its aims. The post office network depends on very many private providers; their needs must also be considered. It is a difficult balancing act, but it is one that has been performed for nearly 400 years. Having looked in depth at the issues confronting the post office network we are convinced that, given sufficient political will from both central and local government and a real determination to sustain and develop a priceless national asset, there is no reason why the network cannot flourish again, serving the whole nation in a uniquely valuable way. The passions the Network Change programme provoked showed that communities value their post offices — now it is time for politicians to step up to the mark and give post offices their wholehearted practical support. We conclude that post offices can flourish again — and must be allowed to do so. Our report shows what needs to be done.

227   National Audit Office, Department for Business, Enterprise and Regulatory Reform: Oversight of the Post Office Network Change Programme, Report by the Comptroller and Auditor General, HC 558 Session 2008-2009, 5 June 2009, p 7 Back

228   Mail revenues include retail and lottery. Source: Postcomm, Annual Report on the Network of post offices 2007/08, 2008, p 59 Back

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