Press Release - Department of Trade and Industry: Financial
Support for Post Offices
24 February 2005
As a result of DTIs financial support and involvement, through
its role as shareholder, Post Office Limited is now on a sounder
financial footing, Sir John Bourn, head of the NAO, reported today.
But the future of post offices remains uncertain and the DTI will
need to be alert to falling volumes of business that could threaten
the viability of sub-post offices.
The DTI has put in sound arrangements for monitoring the
performance of Post Office Limited. But its analysis would be
better if it had more detailed information from Post Office Limited
on the different segments of the network.
There has been an over-supply of post offices in urban areas
with many operating on low margins, leading to under-investment,
and incurring losses for the company. Post Office Limited is on
course to close around 2,500 urban branches under its Urban
Reinvention Programme. But there is some uncertainty as to whether
the programme, for which the DTI has provided up to 210 million,
will achieve its aim in the long term of producing a network that
represents a viable business for individual sub-postmasters and
Post Office Limited.
A significant number of rural post offices are not viable
businesses and the rural network is heavily loss-making for Post
Office Limited. The government is giving extra funding of up to 150
million a year, until 2007-08, to keep rural post offices open. The
company has made slow progress in piloting alternative methods for
providing post office services in rural areas; in 2003-04 only
777,000 was spent out of a potential budget of 5 million. If the
Department is to have a sound assessment of the outcomes from the
various pilot activities by the end of 2005, when it needs to start
considering the future of the network beyond 2008, it needs to
ensure that Post Office Limited adopts a more robust approach.
Sir John Bourn said today:
"Since 1983 the number of post offices has dropped by
7,000 to around 15,000. The Government faces some difficult
decisions if it is to maintain a viable network of post offices.
Although the rationalisation programme has put the remaining urban
post offices on a firmer footing, their future is not guaranteed
and the DTI must stay alert to this. It must also co-ordinate
Government policy decisions on the future of rural post offices
based on a sound understanding and assessment of the
options."
Notes for Editors:
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 18/05
All enquiries to Mark Strathdene, NAO Press Office: Tel: 020 7798
7335
Tel: 020 7798 7183
Mobile: 07748 181693