Business condemns post office carnage

Thursday 14 December 2006

The Federation of Small Businesses reacted angrily today to the Secretary of State for Trade and Industry’s decision to close 2,500 post offices across the UK.

Alistair Darling’s announcement, made to the House of Commons today, will see some post offices closing as early as summer 2007.

The FSB’s survey of small firms and their attitudes to the postal service, published on 6 December 2006, demonstrated the huge impact that these closures will have on local businesses. A massive 82% of small firms reported that the closure of their local post office would adversely affect them. Small businesses employ twelve million people and the potential for this decision to have a negative knock-on effect on the economy is considerable.

The FSB believes that the Government is making a mistake by considering the Post Office’s potential £200m loss for this year in isolation. After several services have been taken from post offices by the Government in the last few years this situation was bound to arise. But the wider social contribution and added value to the local economy made by post offices is not taken into account by this crude financial calculation. Mobile post offices and other arrangements will only take the edge off the blow. The closures will still hit many small firms hard.

Clive Davenport, FSB Trade and Industry Chairman, said:

“Small businesses pay their taxes to fund services such as the post office network on which they depend. Removing this service while taxes remain the same is simply not on.

“This carnage on high streets across the UK is completely unacceptable and very short-sighted. Whatever money the Government saves from these closures will be lost in tax revenue due to decreased small business productivity. Small firms employ fifty eight per cent of the private sector workforce. We have to ask if it is sensible to put a large proportion of those twelve million jobs at risk to save what is, in Government spending terms, a small amount of money.

“With the Government wanting to reduce congestion, pollution and road journeys, how can forcing business owners to travel further to deposit cash and access the mail system fit in with this policy? This announcement does not demonstrate joined-up thinking from the Government. It should be reversed while there is still time.”

The survey of FSB members found:

88% of small firms send mail every day.
69% send invoices through the post.
87% of all mail is business mail.
41% of firms use the postal system to order goods on which the running of their business depends.
94% of small firms use Royal Mail exclusively. This is mainly because either they were not aware of other choices or that competitors to Royal Mail were not interested in serving small firms.
97% say that the post office has a role to play in the local community.
82% believe that the closure of their local post office would have a significant impact on their business.

The report concludes:

Small businesses are loyal users of the post office. The uncertainty surrounding the future of the post office network is detrimental to the small business community, including sub-postmasters. There seems to be political discord on this issue and the Government urgently needs to take a strategic decision to give assurance to both post office users and sub-postmasters.
Small businesses are a growing, dynamic business sector. Their demands of the postal market will not wane.

The report recommends:

Banking facilities that are available at the post office (all current accounts and Nationwide building society accounts can be accessed) need to be publicised. Many customers do not know that they can access cash and pay bills at the post office.
The FSB accepts that many sub-post offices are loss-making, but this loss needs to be addressed and the social element of the network needs to be taken into account, possibly as a separate entity from the profit-making arm of the business.
In the open postal market, sub-postmasters should be able to handle post from all licensed operators. At the moment, they can only handle post from Royal Mail plc. This disparity must be addressed by allowing post office counters to handle all mail.

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