Privatisation will force thousands of post offices to shut

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Mail privatisation will force thousands of post offices to shut

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Consumer group warns that the network is at risk, as unions stage protest against sell-off

By Martin Hickman, Consumer Affairs Correspondent
Sunday, 9 January

Privatisation of the Royal Mail could result in 4,400 post offices – more than a third of the national network – closing, according to an independent watchdog.

Consumer Focus told The Independent on Sunday the potential ending of the annual subsidy worth hundreds of millions of pounds by a fully commercialised Royal Mail could devastate the fast-disappearing network.

The warning from the publicly funded consumer group comes despite promises by the coalition to halt post office closures, a highly contentious political issue, particularly among rural voters.

A protest against the privatisation is being staged by trade unions in David Cameron's Witney constituency today, a few days before the Postal Services Bill receives its third reading in the Commons on Wednesday. Billy Hayes, general secretary of the Communication Workers Union, will condemn the plan as an "unnecessary ideological move which will damage postal services for ever". A 6ft coffin bearing the message "Here Lies the Remains of Royal Mail" will be held aloft at the protest.

The number of post office has almost halved from 22,000 in 1980, with more than 6,000 closing during Labour's 13 years in power. Post Office Ltd (POL) has admitted that around 8,000 of the existing 11,900 offices are currently not "commercially viable". Demand for letters and over-the-counter benefits payments has fallen: some 160 post offices closed and 900 were put up for sale last year.

The coalition hopes to revitalise the postal system through a private sale or stock market flotation and by bolstering POL through extra government subsidy and new income from running bank current accounts.

However the Secretary of State for Business, Vince Cable, has ruled out the idea of creating a Post Office Bank, and stayed silent on the fate of the inter-business agreement, which requires Royal Mail to pay POL £343m a year for providing mail services.

According to Consumer Focus, officials in the Department for Business, Innovation and Skills has indicated Royal Mail will be required to keep the contract for only five years, after which it could sever the link.

Andy Burrows, a postal services expert at Consumer Focus, said: "There are few safeguards to keep that contract for the long term. It's entirely conceivable that several years down the line you could have a post office network where you cannot undertake mail transactions." In a few years, the number of post offices could fall from its current level of 11,900 to the legal minimum of 7,500, he warned.

The coalition dismissed the claims as "scaremongering", quoting a comment by Royal Mail's chief executive, Moya Greene, that it was "unthinkable" it would not always have a strong relationship with the Post Office.

As part of its strategy, the Government is moving small post offices into shops to create a network of 2,000 "Locals" and has persuaded all the main banks except Santander and HSBC to allow POL to offer current account services.

In October, Mr Cable announced a four-year support package worth £1.34bn. While this is more than double the annual support of £150m during the past two years, the overall package is £10m a year less than Labour's £1.7bn five-year deal in 2006.

The postal affairs minister, Ed Davey, said: "I simply don't agree with scaremongers who claim our plans to get private capital into Royal Mail will damage the Post Office."

While staying "neutral" over privatisation, Consumer Focus said it was concerned that services would deteriorate further, particularly for the elderly and mentally ill.

Ian Park, a sub-postmaster in Paignton, Devon, said: "People come into the shop every day. I see them chatting in the queue. For some, these may be the only people they talk to. The nearest alternative is more than a mile away."

Labour's Gregg McClymont MP said the idea that a privatised Royal Mail would continue to support 8,000 post offices was "laughable".