TISC PN16 0607



Telephone: 020 7219 5777/5779

PN 16 of Session 2006-07




Not to be published in full, or in part, in any form before

00.01 am on Tuesday 6 March 2007



Today at 00.01am the Committee published its Third Report of Session 2006-07, Stamp of Approval? The future of the Post Office network (HC 276).

The Government believes that the current 14,263-strong Post Office network is unsustainable and that without action the network will shrink and become patchy as sub-postmasters retire or resign. It is consulting until 8 March on proposals to restructure the network by imposing new access criteria, based on proportions of people living a given distance from a post office. It proposes to provide compensation to a maximum of 2,500 sub-postmasters to leave the network in order to facilitate the restructuring.

The Chairman of the Committee, Mr Peter Luff, said

"We believe that post offices are more than commercial enterprises, playing a vital role in communities for both individuals and businesses, especially in rural and deprived urban areas. So we support the Government's aim of sustaining the network. The proposals also mark the beginning of the end of a period of considerable uncertainty for sub postmasters.

"We have been told that to be worthy of the name the network needs about 12,000 post offices, but it is not clear how the Government arrived at this figure. We are concerned to ensure that the right decisions are taken in relation to individual post offices, and that those left after the restructuring continue to exist and, where possible, become commercially viable. We need more detail from the Government and Post Office Limited before we can be sure that the restructured network can be sustained. And we are particularly keen that sub-postmasters should not be constrained from developing new products to strengthen their business."

The Committee expresses reservations about aspects of the Government's proposals and calls for a number of changes to the Government's approach. It notes that:

"It is not clear whether the suspiciously round figure of 2,500 closures was derived from a proper analysis of what was needed to provide a national network, or simply represents the maximum number that could be funded from the resources provided by HM Treasury. However, it is clear that the network of "about 12,000" post offices referred to by the Secretary of State takes into account only compensated closures: the Government's proposals set no numerical limit on uncompensated ones."

In the report's main conclusions, the Committee:

Emphasises the importance of a sustainable network after the proposed restructuring, and is therefore concerned about the potential for the network to be undermined by uncompensated closures. It calls for clearly defined policies on the opening of new post offices and maintaining key post offices where sub-postmasters wish to leave the network in future;

Seeks clarification of the balance of closures between urban and rural post offices and of how the criteria for access in both urban and rural areas were determined;

Welcomes the £1.7 billion support package that has been proposed for 2007-2011, but seeks greater clarification about what this package will cover;

Welcomes the extension of the Government's £150 million a year subsidy until 2011 as the Committee has previously recommended, but is concerned that unlike in previous years this could be shared between rural and urban post offices;

Welcomes the additional accessibility criteria for rural, urban and deprived urban areas under the national benchmark, and the additional safeguards for 'remote areas', while noting that the proposed coverage levels are omewhat below the current situation;

Believes that these criteria should not be inflexibly applied, with additional natural and social barriers - such as steep hills - and practical travel or walking distances and public transport options taken into account, rather than a simple 'as the crow flies' measure;

Seeks clarification of how the network will be maintained in the future as sub post masters retire and new housing developments change patterns of demand;

Calls for specific measures for the 38 postcode districts that are excluded from the criteria to ensure that service levels are maintained in them if unplanned closures happen;

Expresses concern that the overall 18 month programme for the restructuring is too demanding to ensure the process is well managed, engenders public confidence and takes account of wider community views;

Calls for a in increase from 6 to 12 weeks in the consultation period on local areas plans, with full involvement of local councils and maximum transparency and visibility of these proposals;

Regrets that the proposed reconfiguration of consumer bodies including Postwatch is likely to take place at the height of the network restructuring, and calls for the timetable to be re-examined;

Welcomes the commitment to a new Post Office Card Account, 'POCA2', but seeks early clarification of its features and notes the danger that the Post Office could, potentially, fail to gain the tender for POCA2 with potentially disastrous results for the network's viability;

Expresses concern that increased devolution of issues relating to the network could simply be a device for transferring financial responsibility form the Exchequer to council taxpayers and the devolved administrations; and

Calls on the Government to ensure sub-postmasters have the maximum possible freedom to develop their service offerings, including a fresh look at post offices as one-stop government 'shop windows', more free cash machines in branches and other services, and that appropriate remuneration is ensured for sub-postmasters for providing foreign exchange and lottery sales;

The Committee also broadly welcomes the Government's decision on the financing of Royal Mail Group, but notes continuing uncertainty following the European Commission's decision to investigate past support. It also notes that some aspects€”such as the proposed closure of the final salary scheme to new employees€”are proving controversial, and awaits the outcome of consultations on those matters with interest.

Notes to Editors:

The report will be published at 00.01 am on Tuesday 6 March 2007 and available in electronic format only to accredited members of the press under embargo at midday on Monday 5 March. Hard copies may be purchased at a later date from the Stationery Office (inquiries: 0870 600 5522). The report will also be available on the committee's website at the address below soon after publication.

The Chairman, Peter Luff, is available to discuss the report on 07921 039870.

5 March 2007