Environment Audit CommitteeWritten evidence submitted by Consumer Focus

About Consumer Focus

Consumer Focus is the statutory consumer watchdog for the postal and energy markets for England, Wales, Scotland and (for postal consumers) Northern Ireland. We work to secure a fair deal for consumers across the economy.

Consumer Focus has a statutory responsibility to monitor the number and location of and service standards in post offices, as well as any changes to the network. Part of our statutory responsibility is to ensure that consumers have access to services of general social and economic interest through the Post Office network including, but not limited to, mail products and a range of government and financial services such as pension and benefit payments and banking services.

1. Executive Summary

1.1 With its unrivalled reach, convenience and reputation, the Post Office network can play an important role in helping consumers and businesses access a range of government and other key public services in addition to the services of social and general economic interest currently offered in local communities throughout the UK.

1.2 Transport is a crucial factor in determining consumers’ ability to access key public services. With a reduction in funding for local authority supported bus services,1 links to key public services are potentially under threat at a time when consumers face longer journeys to access public services and amenities, particularly in rural communities.2

1.3 While the provision of public transport will remain crucial, the Post Office can help mitigate the adverse impacts of the reduction to funding for local authority supported bus services3 on consumers’ ability to access key services. The Post Office will be a particularly vital face-to-face channel for those consumers without access to the internet as Government’s “digital by default” agenda is rolled-out.

1.4 In 2010, Government announced investment of £1.34 billion in the Post Office network together with plans for restructuring of the network4 which will see 4,000 Post Offices convert into Post Office Mains (PO Mains) and 2,000 into Post Office Locals (PO Locals) by 2015. Government also stated its ambition to increase the range of local and central government and financial services offered through the Post Office network.

1.5 Due to the scale and nature of the proposed changes to the Post Office network, a strategic approach between the Post Office Limited (POL), local authorities and transport service providers will be vital to mitigate any adverse impacts on consumers’ ability to access key services. Our recent research showed that a strategic approach between local authorities and POL during the previous restructuring programme maintained consumers’ access to services through the Post Office network, despite closures.5 Crucially, a planned approach allowed local authorities and POL to consider the availability of public services alongside accessibility via public transport.

2. The Accessibility of Public Services

2.1 The provision of public transport is vital to ensure consumers have reasonable access to key services such as employment, food stores, health (GPs and hospitals) and education (primary, secondary and further education institutions).6 The Department for Transport measures the proportion of users who can access services within set time limits as well as the number of services accessible within set time limits to users in a given area.7 Lower and upper threshold time limits are bespoke to each service.8

2.2 According to the Department for Transport accessibility statistics, apart from food stores, the percentage of consumers with reasonable access to all other services has fallen since 2010.9 These statistics show that consumers face longer average journeys to access key services. Rural consumers in particular are finding it increasingly more difficult to access these services, with a disproportionately longer average journey time of 22 minutes in comparison to 12 minutes for urban consumers. These average journey times equate to a 6% and 3% increase from 2010 for rural and urban consumers respectively.10

2.3 Reductions in funding for bus services have the potential to further adversely affect consumers’ ability to access key services. Net public funding for local bus services in England was reduced by 7.3% in real terms between 2009–10 and 2010–1111 whilst budgetary pressures from the CSR resulted in 70% of local authorities reducing funding for supported bus services.12 From April 2012, the amount each bus company receives per year from the Government through the Bus Service Operators Grant (BSOG) has been reduced by 20%,13 potentially placing supported bus services at further risk of reduction.

2.4 The risk of further reductions to local bus services comes at a time of increased total passenger journeys and bus fares. Bus passenger journeys in England have increased by around 15% since 2004–0514 while bus fares have increased in real terms by 6.8% outside London and 18.4% in London between 2005 and 2011.15 Although the provision of transport links remain vital to allow consumers access to key services, providing additional government and other services through the Post Office network can help to mitigate the adverse impacts of any further reductions to local transport services.

3. Role of the Post Office Network in Aiding Access to Key Services

3.1 The Post Office network has an unrivalled and nationwide reach of over 11,800 branches with nearly 6,500 of those branches situated in rural areas.16 The geographic distribution of those branches throughout the UK is underpinned by five access criteria which specify minimum coverage levels in urban; urban deprived; rural; and deep rural areas.17 The network offers a diverse range of vital services of social and general economic interest.

3.2 Previous research suggested that due to its reach, convenience and ability to offer access to vital services, the Post Office network produced a net saving of £18 million per annum for local authorities as a result of having to provide less free bus travel.18 Providing key services through local and conveniently located Post Offices could help reduce the financial pressure on local authorities for expenditure on concessionary bus services. This is particularly vital as local authorities and bus operators are being confronted with a reduction in funding to provide supported bus services while, proportionally, costs to provide concessionary bus services increase. Expenditure on concessionary bus travel has increased by 78% since 2004–05 and constitutes the largest proportion, 43%, of public funding support provided through the BSOG.19

3.3 Our recent research on the previous Post Office restructure programme, the Network Change Programme (NCP), showed the impact of post office closures in Devon on rural consumers’ ability to access key services.20 Without access to a local post office, consumers were confronted with lengthy journeys to access key services at an alternative location. Consumers who had access to public transport had to plan their journey well in advance due to inadequate public transport with some reporting that there was a bus service only once or twice a week.

3.4 While consumers with access to private transport were able to adapt quicker to the loss of their local Post Office, they were confronted with additional petrol costs due to the distance needed to travel to an alternative Post Office or retail outlet.21 Extra costs associated with parking fees, as a result of accessing a Post Office or retail outlet in a town centre, were often incurred too.22

4. Impact of the “Digital by Default” Agenda

4.1 The Government’s “digital by default” agenda (the ambition to make products and services available online) can potentially help to reduce demand on public transport services to access key public services. However, online access to local and central government and financial services will remain a challenge for particular groups of consumers. Some consumers will still require a local, face-to-face channel, such as the Post Office, to access key services or the provision of transport services to enable them to access key services at other physical outlets.

4.2 According to recent statistics, 20% of UK households do not have home internet access, fixed or mobile, with older and low-income consumers less likely to have or to take up internet access.23 Rural consumers will face a particular challenge in accessing government and other services online. Rural areas experience poorer broadband speed and coverage in comparison to urban areas with 3.5 Mbps being the average speed for rural areas and 10.5 Mbps the average speed for urban areas.24 Consequently, rural consumers, particularly older consumers and those on a low-income, are likely to be more dependent on a convenient, face-to-face channel to access government and other public services.

4.3 Ultimately, for consumers without internet access or those who do not want to conduct transactions online, a face-to-face channel to access services, such as the Post Office, will be vital.

5. Strengthening Access to Key Services through the Post Office Network

5.1 In December 2010, the Government assigned £1.34 billion to undertake a significant restructuring of the Post Office network.25 Between now and 2015, more than half of the network will convert into new operating formats; 2,000 Post Offices will convert into Post Office Locals (PO Locals) and 4,000 into Post Office Mains (PO Mains). Both operating models will facilitate extended opening hours however, PO Locals will offer a more restricted range of services in a variety of retail outlets which could include convenience stores or petrol stations.26

5.2 Government has also stated its ambition to increase the range of local and central government and financial services offered through the network with the Post Office becoming the “front office” for government.27 Services range from identity verification and driving licence renewals to council tax payments, travel permits and bus passes. There is also scope for the Post Office to play a critical role in assisting in the delivery of Universal Credit.

5.3 A forthcoming report from Consumer Focus sets out the potential for the Post Office to perform an expanded role as the “front office” for local and central government services. Emerging findings show that older and low-income consumers are disproportionately more likely, than any other age or socio-economic groups, to visit the Post Office on a regular basis. 42% of elderly and 28% of low-income consumers report visiting the Post Office once a week.28

5.4 Our research also highlights the considerable appetite among consumers in general to access a range of local and central government services through the Post Office. The Post Office was also identified as the most preferred channel, among other face-to-face channels or online, for accessing a range of government services. When asked how they apply for or renew their passport, 79% of consumers cited the Post Office as opposed to 10% online; 60% reported using the Post Office to apply for or renew their car tax with 32% reporting doing so online; and 19% purchased or renewed their local travel pass or concession scheme at the Post Office as opposed to 18% at the local council office.29

5.5 The reach, convenience and trusted brand of the Post Office network, together with the range of services currently and capable of being offered, means the Post Office is ideally positioned to help to mitigate the potentially adverse impacts of cuts to funding for supported bus services30 on consumers’ ability to access key public services. This will be particularly vital for older and low-income consumers who are less likely to have or to take up internet access and for rural consumers who are likely to experience poorer broadband speed and coverage.

6. A Strategic Approach to the Network Transformation Programme to Ensure Access to Key Services

6.1 With over half the Post Office network being converted to new operating models by 2015, it is essential to ensure that consumers’ access to a range of vital public services will be maintained or improved. A strategic approach between the Government, POL, local authorities and transport service providers will be crucial to mitigate any adverse impacts on consumers’ ability to access key services. This will be particularly vital for areas where transport services such as concessionary and supported bus services are under pressure due to budgetary constraints.

6.2 Our recent research on the effects of the NCP in Devon demonstrated the importance of POL working with the local authority and other stakeholders to ensure minimal disruption to consumers’ ability to access key services through the Post Office network.31 Through the establishment of a local taskforce, Devon County Council and other stakeholders were able to develop a strategic plan to mitigate the difficulties that the closure of local Post Offices would present. Whether through ensuring full-time post office services were available when the local Post Office outlet closed or working with the Community Transport sector to ensure local bus, ring and ride and fare car schemes were available,32 the task force enabled access to key services with much less inconvenience and cost than would otherwise have been the case.

24 September 2012