25 July 2008
Outreach post office services, a major element of the overhaul of the network, might fail due to inadequate funding, MPs have warned.
In a report into Post Office finance, published on July 25, the business and enterprise select committee said the network could be further diminished by inadequate funding for outlets that provide post office services. The MPs called for a National Audit Office investigation into the arrangements.
The committee's report followed evidence sessions with Post Office Ltd and customer organisation Postwatch. The MPs looked at how parent company Royal Mail Group funds post offices for mail services.
They also considered the funding of services outside specialist post offices, in particular 'partner outreach' – where a
sub-postmaster or mistress appoints a local partner such as a shop to provide services.
Committee chair Peter Luff said Post Office Ltd received £358m for providing mail services in 2007/08, but this did not cover the costs of provision. 'It is possible that this is down to inefficiency at Post Office Ltd, but is also possible that it is because Royal Mail Group is inappropriately using Post Office Ltd, which receives some state support, to cross-subsidise its mail services,' he said.
The Network Change Programme includes up to 2,500 branch closures and 500 new outreach services. The report said: 'A significant amount of public funding is provided to sustain the network; we need to be confident the public receives the services this is meant to secure.'
The government will support the post office network with a £1.7bn investment until 2011.