United Kingdom

Post offices bosses say 3,000 rural branches face 'armageddon' without extension of annual subsidy

More than 3,000 rural post offices face ‘armageddon’ if the Government does not plug a £50m black hole this week.

Chancellor Rishi Sunak was urged to guarantee the special subsidy, which will end in April 2021 unless he intervenes to avoid ‘cutting the heart’ out of villages up and down Britain.

Many post offices shops are given a special status as the rural communities they serve are not big enough to enable them to make a profit.

The 3,100 village post offices, protected as the ‘last shop in the village’, have also now seen their finances ripped apart by the pandemic.

Hundreds of physical branches have already been lost forever, replaced by part-time post offices set up in churches, pubs and vans.

In total there are now 1,633 of these ‘outreach’ services in the UK - or one in seven of all post offices - up from 803 in 2009.

The £50m subsidy, which has already fallen from £170m since 2016, will be decided as part of the Government’s one-year spending review. The announcement is expected on Wednesday.

More than 3,000 rural post offices face 'armageddon' without a £50million bailout, campaigners warned yesterday (file image)

Marion Fellows MP, chair of the all-party parliamentary group for post offices, said: ‘During the Covid-19 pandemic, sub-postmasters across the UK have proven just how essential they are to communities - the Government cannot sit by and allow the valued service be run into the ground.’

Andy Furey, of the Communications Workers’ Unions, which represents some postmasters, said: ‘Cutting the subsidy will rip the heart out of thousands of villages up and down the country. We’re already at a tipping point - if we don’t get the subsidy it’s armageddon.’

Tory peer Baroness Altmann said: ‘I would urge ministers to make the commitment on the subsidy. Post offices are a vital lifeline, especially for older people who have been on their own, managing without help from others, and can’t get money anywhere else because banks have shut.’

Peter Hall, of the National Federation for Sub-Postmasters, said: ‘We’re not scaremongering when we say that there would be many closures if it were removed.’ 

Post offices sit at the heart of rural life and have performed a vital role in lockdown providing a friendly face and basic provisions to vulnerable customers unable to travel on public transport.

They have become many people’s main touchpoint with their savings as hundreds of bank branches and cash machines have closed. Campaigners have long argued that older customers are often unable to use internet banking, or that poor internet connections in remote areas make surfing the net near impossible.

The post office has undergone a major transformation in recent years as it adapts to falling revenues in an online world. It has seen income from Government services, such as driving licences and passports, fall from £576 million in 2004-05 to less than £100m.

The Government has also used ‘bullying’ tactics to force pensioners to give up their much-loved Post Office Card Accounts, which provides a simple bank account without the worry of banking and overdraft fees.

Branches are calling on Rishi Sunak to extend the annual subsidy after April next year which keeps afloat 3,100 branches that are too small to make a profit (file image)

The Daily Mail launched a campaign last year to Save Our Post Offices, demanding that customers are not forced to go online when they don’t want to, and forcing banks to pay their way.

Following the campaign the Post Office gave postmasters an extra £37million this year - equivalent to 10 per cent pay rise.

But despite this many branches are closing, often because the sub-postmaster can no longer make a living or retires without a replacement.

The number of post offices directly run by the central Post Office company, known as crown offices, has also fallen from 373 to 191 in the last ten years.

The closure of these larger branches, often in city centres, has caused outrage amongst local communities as they have been replaced with a small counter in a local retailer such as WH Smith.

The Post Office said: ‘We are a critical infrastructure asset to the UK Government and await any announcement about future funding with interest.’

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