Post offices' death by a thousand cuts

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Post offices that survived the recent cull of 2,500 branches face 'death by a thousand cuts' as a result of a severe dip in their income.

Despite repeated Government claims that the now just 12,000-strong network is safe, cost-cutting measures introduced by the Post Office are threatening the future of hundreds of remaining branches, especially those in rural areas.

In recent weeks, several sub-postmasters have contacted Financial Mail, painting a bleak picture of their future.

They say that their income has been blighted as a result of the loss of some key business, such as TV licence renewal.

They also point to a reduction in the payments made by the Post Office for carrying out certain transactions and the organisation's relentless push to get customers to use the internet rather than branches.

In some instances, they are earning 30% less than they were two years ago.

Although they have been given a number of new financial products to sell, many rural postmasters say demand for these is low because many of their customers are elderly.

As one postmaster told Financial Mail: 'Many older customers have little interest in changing their savings accounts, which they have had for many years, and do not thank you for constantly going on about a myriad of available product that they do not understand or desire.'

Recent concerns over the Post Office's link with the troubled Bank of Ireland, which provides its saving accounts, have also dented business.

Relentless drive to go online leaves us high and dry

Subpostmistress Tessa Noble fears for the future of her branch deep in the heart of rural Kent. Tessa, 45, runs Benenden Post Office while daughter Stacey, 28, looks after the village shop in which the branch is situated.

The branch survived last year's closure programme that resulted in the axeing of the Cranbrook branch two miles away, but Benenden's survival is now in doubt.

'It is death by a thousand cuts,' she says. 'It began with the scrapping of benefits books, then they took away the TV licence and now they have even started to promote the buying of vehicle tax discs on the internet.

'Where is it going to end? Maybe closure. We survive on a knife edge.' Peter Davies, 63, a retired economist and a local district councillor, is a regular user of the post office.

He believes Post Office management should be more imaginative in getting people to use branches. 'The Post Office is quick to cut back, but it fails to discover new ways for postmasters to make money,' he says. 'Ideas such as enabling branches to accept completed tax returns should be considered.'

Some postmasters believe that they are deliberately being driven out of business. Since the turn of the millennium about 8,000 branches have shut after Government-backed cost-cutting measures.

Subpostmasters earning just £12,000 a year

Under current 'access criteria', 99% of people should live within three miles of a post office. This allows the Post Office to lose a further 4,500 branches without the criteria being compromised. One postmaster in the North West says that by forcing people like him out of business the Post Office also saves on compensation payments.

'If the Post Office closes a branch, it has to pay compensation to a postmaster,' he says. 'But if it allows branches to fold by deliberately and slowly cutting payments, and reducing business outside the postmaster's control, they will not have to pay compensation.

'Politically, it is easier to blame the postmaster for letting the business die than to publicly consult about closures and save thousands of pounds per closure into the bargain.'

Tim Farron, Liberal Democrat MP for Westmorland and Lonsdale in Cumbria, has 40 post offices in his constituency and is concerned many will be forced to close as postmasters are no longer able to make ends meet.

'The drop in core payments that postmasters receive for carrying out traditional transactions busi-nesis equivalent to salary cuts over the past two years of 30%,' he says. 'It's not surprising that many postmasters are knocking on my door, saying they are considering quitting.'

Farron believes the Post Office should do far more to persuade people to use branches, a view shared by George Thomson, general secretary of the National Federation of SubPostmasters. 'We have real concerns for the survival of post offices,' he says.

'A recent survey among our members showed the average postmaster was surviving on an income of just £12,000, with two thirds saying their income had fallen or remained the same over the past year. The branch network could be a thriving and profitable operation, but this can only be achieved if work is channelled across post office counters.'