Post Office viability bid slammed by watchdog

by Susanna Gillman, Planning 04-Mar-05, 14:14

The government and the Post Office need to do more to tackle loss-making services and create a viable network, a watchdog has warned.

In a report published last week, the National Audit Office (NAO) says that the future of post offices is uncertain despite efforts to turn performance around. Around 2,500 urban post offices are due to close by the end of this month under a programme to reduce over-supply and alleviate £400 million losses.

The DTI is providing £210 million for the initiative but the NAO maintains that there is still a risk that businesses may decline further in the long term. The rural network is also making heavy losses, according to the report, although the DTI is giving £150 million a year up to 2008 to keep branches open.

The Post Office has made "slow progress" in piloting other ways of delivering services in rural areas, the NAO contends. The company is looking at a range of initiatives such as mobile offices, using community halls or pubs and partnerships with other rural service providers, the report notes.

But the NAO found that of the £5 million available in 2003-04, just £777,000 was spent on trial schemes to boost rural services. A Post Office spokesman said: "It takes time to set up schemes, but over the next few months there will be an increase."

The NAO report criticises the government for failing to clarify the services that it wants rural networks to provide. It urges the DTI to ensure a more robust approach to pilot activities so that it can assess the future of the network beyond 2008. The Post Office is due to report back to the government on the trials at the end of the year.

- Financial Support for Post Offices can be viewed via www.PlanningResource.co.uk.