Post Office accused over falling margins

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A senior subpostmaster has criticised the Post Office for “trying to drive retailers out of business”, and urged independent retailers considering taking on a post office to examine their contracts very carefully before signing up.

Hemandra Hindocha, who runs a post office in Leicester and is the national executive officer for the Midlands region at the National Federation of SubPostmasters, has spoken out to C-Store that a business climate of falling sales, increased overheads and reduced margins is putting many postmasters’ businesses in peril.

“Sales are falling through no fault of the postmasters themselves,” Hemandra said. “We were told that the closure programme would make post offices more viable and profitable and that there would be more money coming our way, but it hasn’t happened. Instead we see Post Office Ltd dealing with large accounts direct and selling foreign currency over the internet at a better rate than we can offer.

“The Post Office is trying to get the organisation into profit without caring about the cost to subpostmasters. We are being squeezed in order to get them to their targets.”

Hemandra maintains that Post Office Ltd has gone back on an agreement to offer postmasters a minimum payment of £25 per transaction for Growth Bonds, instead giving retailers just £5 for every £5,000 worth sold.

Suspended for borrowing money

And with postmasters struggling with cash flow, increasing numbers are being suspended for borrowing money from the post office takings – a practice that is strictly forbidden by the Post Office – with the result of a massive growth in business for agencies that specialise in the running of offices on an interim basis.

Hemandra concluded with a stark warning: “Postmasters collectively have made an investment of £2bn in the Post Office through premises, and our overheads like staffing, lighting and heating have all gone up. There are a growing number of postmasters in financial difficulty and without more support and new services like a Post Office Bank there will be a lot more post office closures through people giving their keys back.”

A Post Office spokesman responded: "Following the network change programme the average agent's pay increased. Subpostmasters, like all retailers, operate in a challenging environment and Post Office Ltd is working hard and is absolutely committed to
supporting its sub Post Office and franchised branches to help them ensure
the network as a whole can remain on a commercially sustainable footing.

"Post Office Ltd is constantly seeking to identify new products and services
to offer through the Network, including a developing range of financial
services, travel and telephony products which have proved very successful
to date."