Countryside Alliance - love the countryside

The Countryside Alliance has called upon the Government to make a decision over the future of rural post offices. While the Government continues to deliberate over their future -14,000 sub Post Offices face an uncertain time - the post office has already lost important contracts such as the Post Office Account Card and TV licensing. In the last year alone £168millon of Government services have been taken away from post offices.

We are asking you to get behind us and your local post office and make your views known to Jim Fitzpatrick MP – Parliamentary Under Secretary of State for Employment Relations and Postal Services by sending him a letter from your local post office.

In your letter please include the following points: 

• How important your local Post Office is to you.
• What role they play in your local community - Rural Post Offices play a far more significant social role than in towns and cities - rural areas rely on their Post Offices for more than just the services they provide. They are often the centre of their community, and without that focus many communities face disintegration.
• And emphasise that the social value of post offices cannot be simply measured through financial terms.

Please copy in your local MP and the Countryside Alliance and send your letters to

Jim Fitzpatrick
Parliamentary Under Secretary of State
Department of Trade and Industry
1 Victoria Street
London SW1H 0ET

Facts and Figures about your local post office

• There are around 8,000 Post Office branches in rural areas; rural branches are defined as those in areas with a population of less than 10,000 people.
  (Postcomm’s Annual Report 2005 –2006)
• 90% of rural post offices cannot be maintained on a purely commercial basis.
  (The Guardian, Saturday April 10, 2004)
• The rural network serves approximately 11.4 million customer visits a week.
  (Postcomm’s Annual Report 2005 –2006)
• Around 65% of rural communities have a Post Office, whereas only 10% have a bank branch.
  (Postcomm’s Annual Report 2005 –2006)
• Each post office branch has an average of up to 355 customers a week collecting their benefits through their Post Office card account.
  (Taken from Parliamentary Answers January 2006)
• In January 2006, the Department of Work and Pensions announced that it would not be renewing the contract for the Post Office card account beyond 2010.
  (Department of Work and Pensions, January 2006)
• At the end of March 2006 an obligation on Post Office Ltd to “prevent avoidable closures” comes to an end.  Projects run under the auspices of this obligation, such as the use of rural advisers brought into a community facing the loss of their post office, have been shown to slow down the rate of closures.
  (Postcomm’s Fifth Annual Report 2004 –2005)
• The large majority of rural branches are loss making and it costs £3 million a week to sustain the rural network.
  (Rural Pilot Activity, The Post Office, 2006)
• The Department of Trade and Industry received state aid clearance from the EU on 24 February 2006 to continue to use Royal Mail’s reserves to fund the rural network to the end of March 2008 with a £300million package of support. However, the Government needs to decide what the size and shape of the network needs to be, and how much it is going to pay towards maintaining a network to ensure that its objectives of social and financial inclusion are met.
  (Postcomm’s Annual Report 2005 –2006)
• 84% of the rural population live within 1 mile of a post office.
  (Countryside Agency, Rural Services Review, 2002)
• More than two thirds of villages with between 500 and 1,000 inhabitants have a post office.
  (Countryside Agency, Rural Services Review, 2002)
• Some of the 8,000 rural branches are in busy market towns while others may only receive 5 customers a week.
  (Postcomm’s Fifth Annual Report 2004 –2005)
• However, in the financial year 2005–2006 there were 149 rural post office closures a net loss of 1.9%. The highest number of net closures was in Wales (25) and the South East (21). In the previous year there were 144 net closures, of these, 97 were in England, 22 in Scotland, 18 in Wales and 7 in Northern Ireland. (Postcomm’s Annual Report 2005 –2006)
• The announcement that the BBC replaced the Post Office as its supplier for a range of services for TV licensing raised further concerns about the viability of the rural Post Office network. 2.1% of Post Office income was derived from over-the-counter sales of TV licences and over 300 000 rural people are thought to purchase their TV licence over the counter.
  (BBC Press Release 31st March 2006)

Rural Post Office Network and Post Office Account Card

The Post Office Card Account (POCA) is a bank account offered by the Post Office with suppliers EDS and Citibank. It is specifically designed for benefits, pensions and tax credit customers to have their payments paid into an account.  Its customers access their money free over the Post Office counter. The card does not allow customers to become overdrawn and so protects them from debt.  It was specifically designed to make an account accessible to customers who are unable to open standard bank accounts. Around 4.2 million benefit and pensions customers regularly use their accounts to access their benefit payments.

The Department of Work and Pension’s decision not to renew the Post Office account contract beyond 2010 will have a devastating effect on rural post offices. Since its introduction, the Post Office Account Card has provided rural communities with local access to their benefits. By withdrawing the contract, the Government have undermined the long-term viability of post offices in rural communities. The Post Office account card system is estimated to be worth £1 billion in revenue to Post Office Limited, and is therefore an important part of the business.

The reduction in the number of people going to post offices to collect their benefits and pensions has had a knock-on effect on many rural post offices.  The Government needs to understand that the real value of a post office cannot be measured simply by turnover, and must recognise that the benefit to the community goes far beyond the ‘doorstep’ of the post office.

Rural services are the “glue” which holds local rural communities together. In this respect they play a far more significant social role than in towns and cities. For some years, rural public services have been in much faster comparative decline than that of equivalent services in conurbations, a decline exacerbated by comparative inequity in funding. Rural areas receive a significantly lower level of per capita public investment than urban areas even before the additional disadvantage of rural population sparsity is factored in.

The Government have committed up to £750 million, subject to state aid clearance, until March 2008 to maintain the rural post office network.  However, whilst the Government's annual support of £150 million helps Post Office Limited to maintain non-commercial post offices in rural locations, no decisions concerning the future of the rural post office network beyond March 2008 have been taken.

This may stabilise the situation for the rural network until March 2008, but not beyond.  The Government needs to have a clear view of what it wants from the rural network and what measures need to be put in place to prepare for 2008.

Without a clear Government policy, sub-postmasters and Post Office Ltd cannot plan for the future or ensure that rural services are maintained after March 2008. The infrastructure for the rural network needs to be as flexible as possible to respond to customer needs in order to provide a viable living for the sub-postmaster and a cost effective solution for Post Office Ltd.  This will need planning, and mapping of requirements, and could mean the closure of some offices where a service is offered by one of the new methods e.g. a travelling post office.
A comprehensive review is needed into the social and economic role played by rural post offices. This will then lead to the optimum development of a viable rural network.

The Government should now urgently consider more radical measures and ideas for co-location of services and for expanding and diversifying the range of products, services, and functions of rural post offices, as key focal points of village community life.

Countryside Alliance Recommendations

• The Government and Department of Work and Pensions should review and reinstate the contract for the Post Office Account Card.
• Research into the social and economic role that Post Offices play in the community.
• Rate relief should be extended to a wider catchment of small shops, post offices and pubs in rural areas designated by local councils as having amenity shortages.
• Any new trading regulations should be ‘rural-proofed’ to ensure that no new burdens, especially superfluous red tape, are placed on rural businesses.
• Further research should be undertaken as a follow up to the Post Office  “Rural Pilot Activity” report published in 2006.
• Government should mandate the distribution of lottery machines, which should not be in the gift of the commercial lottery operator. Small traders should not be discriminated against in licensing decisions for lottery ticket machines - lottery tickets have proved to be an important factor in determining where people shop.
• The Government fund established to help with the costs of relocating and refurbishing rural post offices should be allocated increased funding, and new grants should be made available to promote the re-opening of rural post offices where the community deems a need.
• Adequate training must be provided to post office counter staff and others administering the new universal banking system.
• Income to post offices from the new system must, at the very least, replace the £400 million per annum accounted for by benefit payments over-the-counter under the existing system.
• Incentives should be developed to encourage younger people to take over post offices from those retiring. Too often rural post offices are closing because no one is willing to take on the commitment, which is seen more as a liability than an opportunity. Allowing post offices to take on and offer other functions or services will help them become more viable, attractive business propositions.