Memorandum submitted by the Mayor of London
INTRODUCTION
1 The Mayor of London welcomes the opportunity
to respond to the Business and Enterprise Committee's inquiry
into "Post Offices, Securing their Future". The Mayor
has been concerned for some time at the lack of a coherent approach
to the provision of Post Office services across London.
2 He wrote to the Secretary of State in
December 2008 outlining his concerns and offering to work
with the Government to ensure the future of the Post Office network
in London. The Mayor is willing to work with all relevant parties
towards an economic and business strategy that will allow the
Post Office network to become the sustainable network that London
requires.
3 The Mayor believes that the shape of the
network in London has been driven by the need to close a set number
of offices nationally rather than being the product of a considered
and properly resourced business plan. Other than walking distance
to a post office it was difficult to see what other issues were
important in the recent closure programme. This is clearly not
the way to plan and run a business. He has yet to see any proper
business plan for the network in London.
What services should the Post Office network offer?
4 The Mayor believes that the Post Office
is ideally placed to offer a wide range of services to local people.
The recent decision that the Post Office will retain its contract
to pay benefits through the POCA was a very welcome but overdue
decision. The Mayor also notes the earlier House of Commons report
into the Post Office Card Account (POCA) which commented on the
need for a more joined up approach between the social and financial
inclusion role of the post office and the economic imperatives
that seem to have been driving Government policy on the network.
The Mayor is in agreement with this. The possible loss of this
contract threatened the continued existence of a large part of
what remains of the Post Office's network.
5 It was unfortunate that it took the Government
nearly two years to make its mind up about the future of the card
account. This delay illustrates the lack of joined up thinking
by the Government about how it can best develop and support a
viable Post Office network. This has contributed to its problems.
6 The Mayor believes that the Government
should begin by looking at what services it could itself provide
through the post office network. There is clearly scope to build
upon the recent POCA decision, as well as introducing new financial
services.
7 The Mayor is supporting the Post Office
via Transport for London which already has major contracts with
Post Office Counters for the processing of Zip photocard application
forms. Post Offices will also process applications for the new
half price Bus and Tram discount scheme.
How much account should be taken of costs to the
taxpayer and consumer preference for alternative channels?
8 Account should, of course, be taken of
the costs to the tax payer. But against this must be set the benefits
to the communities within which post offices are based.
9 There must be explicit recognition of
the very important role that post offices play as community hubs
as well as providing vital services to communities generally and
to the great many people who would struggle to get these services
from other providers.
10 Clearly a more balanced and relevant
range of services would help to generate more business and help
to maintain the viability of post offices without an undue burden
on the public purse.
11 The GLA has in the past asked for information
on the level of subsidy in London compared to the national picture.
This has been withheld on the grounds of commercial confidentiality.
The Mayor believes that any debate around the level of subsidy
can only take place when the basis on which this subsidy is paid
is transparent.
12 The Mayor is concerned that the recent
round of post office closures, based on distance to a post office
and the need to achieve a national number of closures, has worked
against the interests of London. The network closure programme
was based on distance to a post office rather than any other apparent
measure of need, utility or economic viability. This meant that
London suffered proportionality more closures than the rest of
the country.
13 The Mayor is also concerned that higher
costs in London should be properly taken into account when planning
the national network.
14 Research by the National Consumer Council
showed that London has suffered from a particularly high rate
of closures in recent years with a 25 per cent decline in
network coverage since 2004. The national figure for the same
time frame is seven per cent.
15 We do not know if this was justified
on any other grounds than the need to shut a nationally determined
number of post offices or whether there were sound commercial
reasons for these closures. The concern is that London's interests
have been sacrificed to meet these national figures. The Mayor
would like to see the basis on which post offices are supported
made explicit.
To what extent would a desire for the presence
of a Post Office or Post Office services translate into use of
those services?
16 Post Offices in London are already well
supported and demand for services is already at a high level.
Indeed the way in which local communities rallied round their
post offices when they were threatened with closure demonstrates
the level of support that they enjoy. It is arguable that London
now has too few post offices for its level of demand.
17 The access criteria used to deliver the
closure programme was based on walking distance from a post office
but took no account of population densities. This severely disadvantaged
London which has a level of provision of about 10 post offices
per 100,000 population compared to 18 for the rest of
England, Scotland and Wales combined. This is the lowest figure
in the country.
18 From 2001—2008 there was a
45 per cent reduction in the number of post offices open
in London, while at the same time the number of people living
and working in the capital increased. The Post Office's own figures
highlight the scale and impact of these closures.
19 There is evidence of increased queues
across the network in London as a consequence of the closure programme.
On 30th September 2008 BBC London News carried a story on
waiting times in London post offices. This reported that a survey
by Postwatch, the then consumer watchdog for the Post Office,
had found that people in London are sometimes forced to wait up
to 28 minutes before they are served. Postwatch said the
average waiting time in queues at post offices in the city was
usually up to 15 minutes. This suggests that demand for post
office services in London is high.
What are the impacts of the availability of post
office facilities for business and local residents and in particular
how significant is the network in aiding social and financial
inclusion?
20 The Mayor believes that post offices
are part of the key social infrastructure required to create sustainable
and inclusive communities in London. Access to this infrastructure
is important for many Londoners living in deprived urban areas
and local provision is especially important for members of more
vulnerable communities.
21 It is also vitally important to Londoners
who are not able to access the banking system and cannot have
any benefit payments made to an account, so need to collect them
from post offices.
22 The recent closure programme was based
on the proposal that 99 per cent of the total population
in the top 15 per cent of the most deprived urban areas in
England (just under a fifth of which are in London) were to be
within one mile of their nearest post office outlet, and that
95 per cent of the total urban population across the UK were
to be within one mile of their nearest post office outlet. Eighteen
per cent of London's population come under the deprived urban
category and the remaining population under the urban one. In
the current financial climate post offices are more important
than ever.
23 Many of London's poorest people do not
have access to a current account via a bank and are financially
excluded. Research by the New Economics Foundation suggests 35 per
cent of those living in urban deprived areas lack access to basic
bank accounts. The Government's insistence that benefits payments
must be delivered through bank accounts has further contributed
to the commercial difficulties faced by individual post offices.
The Mayor believes that the Post Office network is ideally placed
to promote financial inclusion and help in the development of
more sustainable and cohesive communities.
24 In addition, research by the New Economics
Foundation has shown that when post offices close, it can lead
to a cycle of economic decline in deprived urban areas. It is
clear that we need to take action to foster and support cohesion
and economic development.
25 In revising the "London Plan"
the Mayor will consider how he uses the Plan to support a range
of shops, both as part of a vibrant retail sector and as an important
element in sustainable, lifetime neighbourhoods. Work will be
done on altering the London Plan to enable use of Section 106 agreements
to require inclusion of affordable small shop units in large retail
development, which may be suitable for post offices.
What level of subsidy would be reasonable in the
long term?
26 The Mayor is unable to offer a figure
for the appropriate level of subsidy but consideration of the
extras costs of running a business in London should be a part
of this.
27 The concern remains that London is subsidising
provision in other parts of the country.
28 The Mayor would like to see a more complete
and transparent picture of how subsidy is distributed across the
network. In particular he would like to know if and to what extent
account is taken of the higher costs of running a business in
London.
29 He would also like to know how levels
of subsidy paid to post offices vary across the country and on
what grounds this is justified.
March 2009
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