Thousands of post offices set for axe

Trade and industry secretary Alistair Darling signalled a huge round of closures by saying that the loss-making industry cannot remain as it is.

MPs of all parties rounded on his comments yesterday, accusing Labour of playing a 'central part in the massacre of the Post Office network.' The widespread closures will be a major blow for millions of people in rural villages who rely on their post office - which is often their only local shop.

A £150 million subsidy from the Government which keeps alive the loss-making network of 14,326 outlets is due to run out in March 2008.

Minsters have hinted that the subsidy will remain at £150 million - but this is not enough to keep open the entire network.

Thousands more closures will add to those that have already taken place in a network that was once 22,000-strong.

The scale of financial losses in the Post Office has escalated dramatically, largely due to the haemorrhaging of key Government contracts such as paying pensions.

The network is also facing a crisis because a lot of other Government business, such as renewing a car tax disc, has been moved onto the internet.

The latest blow is the decision by Royal Mail to sell stamps over the internet, giving people even less reason to go into a Post Office.

The network's losses have doubled to £4 million a week over the last year.

Royal Mail wants to close many of the estimated 10,000 loss-making post offices in the national network.

Mr Darling has signalled that they will not all be closed, but he insisted that the Post Office has got to be put 'on a long-term stable footing'.

In an interview with the Financial Times, he said he was determined to 'make sure that we maintain a national network, because there are always going to be people who depend on the Post Offices, and don't have bank accounts.

'We've got to make sure that they are looked after.'

A Department of Trade and Industry insisted that no decision has been made about the exact number of closures, and that an announcement will be made before Christmas.

But the respected FT interpreted his comments as signalling thousands of closures - a view shared throughout Westminster and the post industry.

Edward Davey, Liberal Democrat Shadow Trade and Industry Secretary, said: 'Thousands of Post Offices have closed or will close because of the deliberate decision by Labour ministers to remove government business.

'It now seems that the Government's solution to 'stabilise' the Post Office will involve thousands more branch closures, bringing hardship and financial exclusion to millions.

'Ministers attempts to falsely blame technology verge on the fraudulent given increasing letter volumes and their own central part in the massacre of the Post Office network.'

If the closures go ahead, it will be the latest deeply unpopular change to be introduced into Britain's postal system over the last few years.

First class post does not arrive before lunch for millions of people; second post has been scrapped; and final collection is as early as 6.15am.

On Wednesday, a major rally will be held in London by up to 3,000 sub-postmasters who are angry at the threat to their businesses.

The organisers, National Federation of Sub-Postmasters, will hand a petition to Tony Blair with four million signatures worried and angered by the crisis.

Colin Baker, general secretary, said it is the largest domestic petition ever given to a Prime Minister since the war.

He said: 'We have got thousands of sub-postmasters who are keeping Post Offices open by spending their savings or by their wives going out to work.

'Despite the subsidy, the network is ailing and on its knees. The situation is getting worse, not better.'

Around 800 of the smallest rural Post Offices have an average of just 16 people visiting every week, and each visit costs the taxpayer about £17.

The network may be losing money and poorly visited in some parts of the country, but it fulfils a vital role for thousands of villagers, particularly the elderly.

Sub-postmasters, who run Post Office counters usually within a larger shop, regularly talk of helping the elderly carry their shopping, fill in forms and spare time for a chat.

But the problem is not just confined to rural areas - with people in towns and cities finding their nearest post office is not as 'local' as it used to be.

Mervyn Kohler, head of public affairs at the charity Help the Aged, said: 'We certainly need a network of about 14,000 Post Offices.

'With many bank branches closing down, we have got all our eggs in one basket but we are watching it disintegrate.'

Last week, a hard-hitting report from the postal regulator Postcomm issued a stark ultimatum to the Government - to make a decision or watch the network collapse.

Chairman Nigel Stapleton urged the Government to consider the 'wider social role' of the Post Offices in its long-awaited decision about the subsidy.

A DTI spokesman said: 'We want to provide certainty in the long-term and we also recognise the important social role that some Post Offices play which can never be commercially viable and need funding.'