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In a report published today, the National Audit Office has found that the Post Office Network Change Programme has largely met its targets and complied with the undertakings given by the Department for Business, Enterprise and Regulatory Reform. However, the implementation of some of the new Outreach services, planned for 500 locations where conventional post offices are to be closed, is behind schedule.

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By March 2009, 2,383 post offices had been closed in the Programme so far, 98 per cent of the final total of 2,435 now planned. The Programme has overseen a planned reduction in the total number of post office outlets to fewer than 12,000, compared with some 14,000 when the Programme began in 2007. At the same time, the Programme has put in place protections for consumers which set out maximum distances that people should have to travel to their nearest Post Office.

The programme is forecast to be under-budget – at March 2009, the projected final costs for the programme were £161 million, down from the original estimate of £176 million. After completion of the programme, Post Office Ltd plans to deliver savings of £45 million a year. The ongoing benefits of the programme will exceed the one-off costs of the programme, notably the cost of compensating sub postmasters, from 2011-12 onwards.

The 42 local public consultations run by Post Office Ltd on the closure plans resulted in the withdrawal of 92 closure proposals, and 48 others were brought forward as substitutes. The NAO found that the handling of some closures suffered from poor communication, causing resentment among some local customers.

The reduction in outlets originally comprised 2,500 closures offset by the installation of 500 new Outreach services such as mobile post offices. The programme of putting these services in place was planned to be complete by late 2008. At March 2009, 433 of the 500 planned services were open. Planned refurbishments to nearly 700 existing post offices expected to take more business as a result of closures have been completed in only 447 post offices.

The post office network is being supported by a subsidy from the taxpayer of £150 million a year, reflecting the role Post Offices play in the local community. The Department evaluated the social and economic value of supporting the reduced network, but does not plan continued monitoring of the social or economic benefits.

The closures are part of a larger plan aimed at returning Post Office Ltd to profitability by 2010-11. The plan also includes action to improve efficiency and Post Office Ltd’s financial performance, and to sustain and increase revenues. It is being supported by funding from the Department of up to £1.7 billion over five years.

“The network change programme has been implemented in a way which has met most of its targets and the closures are nearly complete with 98 per cent already done. But communication around the programme could have been better, and there is still work to do to complete the late running Outreach services, which are designed to provide facilities to communities where conventional post offices have been closed."

1. In May 2007 the Department for Business, Enterprise and Regulatory Reform approved plans to close up to 2,500 post offices run by sub-postmasters, partly offset by at least 500 new Outreach services, leaving a network of around 12,000 outlets. The closures are known as the Network Change Programme, which is part of a larger plan aimed at returning Post Office Ltd to profitability by 2010-11, after allowing for a £150 million annual Government subsidy. This plan also includes action to improve efficiency and Post Office Ltd’s financial performance, and to sustain revenues, in part by developing significant new revenue streams. The plan is being supported by funding of up to £1.7 billion over five years from BERR, including the £150 million annual subsidy payment in recognition of the social and economic role that post offices play.

2. Press notices and reports are available from the date of publication on the NAO website, which is at Hard copies can be obtained from The Stationery Office on 0845 702 3474.

3. The Comptroller and Auditor General is the head of the National Audit Office which employs some 900 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. This report has been made by Tim Burr, who was Comptroller & Auditor General until 31 May 2009. He was succeeded by Amyas Morse on 1 June 2009.

The Comptroller and Auditor General


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