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The Post Office

 

The “Post Office” is one of the best known and trusted brand names in the country. Years ago it had a monopoly on everything to do with communications in the UK. The General Post Office (GPO) included all the telephone lines and exchanges, all the parcel and letter deliveries, many financial services including National Savings, pension and allowance payments, TV, motor vehicle, dog and fishing licences, government stocks and bonds, Premium Bonds and many bill payment services.

Times and governments change. The flavour of the day in the 70s, 80s and 90s was to close or split up and privatise many public services. Increased efficiency and more competitive pricing through greater competition between smaller companies was the idea. British Steel, British Gas, British Rail, the British Coal Board, the Central Electricity Generating Board, the Water Authority and the GPO all faced major reorganisation.

The General Post Office was split into 4 parts. The telephone system was privatised, becoming British Telecoms (BT). Mail delivery was split into Royal Mail (letters and packets) and Parcelforce (larger parcels), and Post Office Counters is the branches (shops). They all compete against each other whilst still relying on each other to provide a service to the public. The government still owned the different bits of what was the GPO until recently, when it has been selling off shares in the Royal Mail group.

Post Office Counters (the shops) have always made a loss and have been subsided by the government for many years. This is offset in part by the profits made by other parts of the Post Office. Government cuts have meant the subsidies to the counters has been reducing year by year forcing the Post Office to undertake a radical reorganisation programme.

The Post Office monopoly on delivery services has been changed, allowing a flood of smaller companies to cherry-pick the profitable parts of mail delivery, leaving the costly deliveries (very rural areas and remote islands) to the Post Office who must by law provide a service to every address every working day. Computers and the internet have had a huge effect on all businesses in recent years. Shopping habits are changing and the financial world is moving online.

This has affected the Post Office in good and bad ways. Online shopping is booming, so the volume of packets is increasing but with fierce competition from rival firms. Financial transactions are falling as people pay for everything online. Pensions and allowances are being paid directly into banks, removing the need for a high street Post Office.

The reorganisation of Post Office Counters has been ongoing for many years. About 10,000 Post Offices have closed, reducing the numbers from over 20,000 thirty years ago to the present 11,500. They are still making a loss so more changes are in the pipeline. A voluntary programme of closure and relocation has changed to a compulsory programme. The aim is to move all Post Offices into shops who will provide free retail space for the PO to operate. The shop will be paid purely on the number of transactions. The increased footfall into the shop should increase the shop’s profits.

What is the effect of all the changes on Crich Post Office?

 

We have been running the Post Office for the last 33 years and have managed to make it a busy and profitable business. Unfortunately we are not exempt from the reorganisation that is taking place. We were approached by the Post Office some years ago to change our working contract to a new style contract which would have meant a £10,000 drop in salary. Understandably we rejected it and remained on our original contract. However, the Post Office imposed the pay cut anyway by changing the way the salary is calculated. As we approach retirement selling the business is not an option, as the new contract offered to potential buyers is so poor the business is not a viable concern. Local businesses have been approached with a view to running the Post Office on their premises, but again the Post Office contract offered means no shops are interested.

Crich Post Office is a busy office. Anybody who queued to post a parcel before Christmas will not be surprised to hear we are in the top 2000 of the 11500 offices for mail volume. We supply in cash around £3 million per year to customers, some of which is spent in local shops. Most local businesses bank with us. People can draw cash at the Post Office from most high street banks without charge. This is becoming more popular as the banks close their own branches.

The loss of the village Post Office would have a big effect on the community. It used to be said “use us or lose us”. This is still true as the viability of the Post Office is directly related to how many transactions it performs. Now, though, the future of the Post Office is very uncertain.

Phil Dolby