SCOTS Project - www.scottishcorpus.ac.uk

Document : 1263
Title    : Scottish Parliament: Research Briefings: SB 02-33 Scottish
Sub-Post Offices
Author(s): Scottish Parliamentary Corporate Body

Copyright holder(s): Scottish Parliamentary Corporate Body: © Scottish
Parliamentary copyright material is reproduced with the permission of the
Queen's Printer for Scotland on behalf of the Scottish Parliamentary
Corporate Body.

Text

SPICe Briefing 02/33
19 March 2002

SCOTTISH SUB-POST OFFICES (UPDATED)

The Post Office and postal services are matters reserved to Westminster,
although there is a recognised need to work closely with the devolved
administrations to recognise local needs. There are 1933 post offices in
Scotland, 1878 of which are sub-post offices (1). Sub-post offices in
Scotland often provide a vital service to local communities, particularly
in rural or more deprived urban areas. Run as private businesses, sub-post
offices make up 97% of the national post office network. Latest figures
indicate that 18 post offices closed in Scotland between March 2001 and
September 2001. The Scottish Parliament will debate the issue on 20 March
2002. An interactive debate has also been set up on the Scottish Parliament
Live network. 

The motion to be debated by the Scottish Parliament comes from Robert Brown
MSP (Glasgow):

S1M-2844 Scottish Sub-Post Offices - "Your Guide"—That the Parliament
acknowledges the importance of the role that sub-post offices play in
Scottish communities, particularly in rural areas and deprived urban areas;
recognises the potential financial consequences for sub-post offices in
Scotland of the UK-wide Automated Credit Transfer system for the payment of
benefits; notes that "Your Guide" is a comprehensive information service
currently being evaluated for sub-post offices in England and Wales;
further notes that such a service includes Government General Practitioner
and Internet Learning Access Point initiatives, both of which provide
members of the public with the ability to interact with departments of Her
Majesty’s Government and gain government information in an accessible
way; further recognises the potential benefits that such a service could
provide in Scotland, in terms of improving openness and public
participation with government, as well as potentially providing a timely
boost to business levels for sub-post offices at a time when the network is
having difficulty in sustaining such levels, and considers that the
Scottish Executive should pilot such a scheme in Scotland, with a view to
rolling out the service across the country as soon as possible.

THE POSTAL SERVICE - Who is involved?

• Consignia, formerly The Post Office Group, is the holding company which
owns Royal Mail, Parcelforce and post offices - these names will remain
unchanged (note though that most of the post office network is run as
sub-post offices and as such are run by private individuals) (2). Consignia
is a plc, giving it more commercial and operational freedom than was
available as The Post Office. With this freedom, and in an effort to
compete with private operators, Consignia have been considering changing to
one postal delivery per day, and moving some mail to road from rail in an
effort to improve punctuality. 

• The National Federation of SubPostmasters is an independent membership
organisation and trade union, representing 97% of people running post
offices across the UK. 

According to a briefing provided by the National Federation of
SubPostmasters for a debate on postal services at Westminster in January
2002:

Sub post offices are still closing at the disturbing rate of two a day,
depriving whole communities, particularly in already troubled rural
communities, of the broad range of services offered by the local sub post
office:

• 18,000 sub post offices – some 97% of all post offices – are run by
subpostmasters
• they offer a range of 170 different postal, government and commercial
services
• 28 million customers make 45 million visits to post offices every
week.

The urban reinvention programme is essential to ensure that the urban
network remains in a position to successfully deliver a high quality
service to customers. It is also vitally important that financial support
is given to the rural network to stop the rate of closures.

• The Postal Services Commission was established under the UK Postal
Services Act 2000 (3). Postcomm, as they are known, exists to protect and
promote customer interests through licensing of the postal services market.
It aims to achieve this by promoting competition and controlling prices. 

• Also established under the UK Postal Services Act 2000, Postwatch (4)
is the watchdog for postal services. They estimate that 28 million people
visit a post office at least once a week. The Postwatch remit includes
providing advice and information, representing the views of customers,
making proposals for improvements to Postcomm and postal operators,
investigating complaints, and where necessary referring cases to Postcomm
for possible enforcement action (5).

Postwatch has no authority to investigate complaints relating to
financial/banking services or counter services where the Post Office acts
as an agent. The organisation has a Scottish section which can be contacted
at Postwatch Scotland, Queen Margaret University College, Clerwood Terrace,
Edinburgh, EH12 8TS (phone 08456 013265). 

• The Communications Workers’ Union represents workers in the postal
and other services.

Post offices in Scotland
In the UK, as of September 2001, the post office network had 9,000 urban
post offices and 8,700 rural post offices (6). In Scotland there are 1933
post offices, 1878 of these are sub-post offices. Sub-post offices often
have other services attached to them, for instance a shop or petrol
station. These income streams are generally considered crucial to the
viability of the business. 

Sub-post offices in rural areas, and deprived urban areas, are said to play
a "lifeline role" for citizens accessing services such as benefit payment.

The most recent Scottish Parliament Written Answer on post offices came on
15 March 2002:

S1W-23640 - Fergus Ewing (Inverness East, Nairn and Lochaber) (SNP) : To
ask the Scottish Executive, further to the answer to question S1W-10883 by
Ms Wendy Alexander on 16 January 2001, what progress has been made in the
delivery of online public services; whether it supports the delivery of
such services through post offices and sub-post offices; whether the
appropriate equipment will be provided to every sub-post office to enable
them to deliver such services, and what other options are being considered
for the delivery of online public services. 

Answered by Allan Wilson (15 March 2002): Our modernising agenda is about
improving choice in the way services are delivered. The Scottish Executive
is therefore committed to a multi-channel approach for the delivery of
online public services and is continuing to explore a variety of platforms,
including the use of interactive digital television, public kiosks,
Personal Digital Assistants, the internet and WAP phones. 

As part of this, the Scottish Executive is paying close attention to the
development of the Your Guide pilot project in Post Offices in
Leicestershire and Rutland. Arrangements have been made for ministers and
officials from the Scottish Executive to see the project first hand. The
pilot will of course have to be comprehensively evaluated to assess the
case for national roll out. In particular those organisations wishing to
use Your Guide will need to examine carefully how a national service could
fit in with their wider service delivery plans, how far it could help in
achieving greater efficiencies and whether it would provide value for money
compared with alternative direct channels to the public. Until these
evaluations are complete, it would be premature to discuss details such as
responsibility for the provision of equipment. I can assure you, however,
that the Scottish Executive is examining this project and its potential
implications for Scotland with great care and that we are committed to
finding wayys to achieve citizen-centred public service delivery.

As regards progress in the delivery of online public services, the
Electronic Service Delivery Progress Report, published on 16 November 2001,
details the services provided by the Scottish Executive, its agencies and
non-departmental public bodies. That report shows that 66% of services are
now available online, though the majority of these relate to the provision
of information. The second Electronic Service Delivery Progress Report is
currently being prepared and will be published shortly.

The Spar chain of stores, under its "Keep it Local" campaign has recently
opened a 'Combi-store' in Kelvinside, Glasgow, in conjunction with the Post
Office, an agreement which allows for customers to buy groceries and
conduct post office transactions at the same till (7). 

Some reports suggest that Consignia want to see the amount of post offices
in the UK halved (8).

Support for rural sub-post offices
Rural sub-post offices have access to a UK fund, the Sub Post Office Start
up Capital Subsidy Scheme (9). This scheme, for rural branches that have
recently closed, or are likely to close, has a budget of £2million for
which payments not exceeding £20,000 per application are available. Below
is the most recent question asked on this topic at Westminster (10): 

Brian Cotter (Weston-super-Mare): May I again ask the Minister why, 18
months after the introduction of the £2 million interim scheme to help
rural sub-post offices and urban post offices, only five claims have been
made, totalling £27,000? I have asked that question before, and the issue
has been raised on several occasions. There has not been a satisfactory
answer, although we are seeing, week on week, sub-post offices closing
throughout the country. 

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): I
am glad to say that one of the reasons why there has not been as much
demand as there would have been in the equivalent period last year is that
the rate of post office closures is falling, not rising. The significant
figure to which I draw the hon. Gentleman's attention is that, in the
current year, the total number of closures has been far less than the 434
that occurred last year. In fact, real progress has also been made on the
scheme to which he refers. In addition, more than 100 forms have been sent
to organisations across the country. My predecessor ensured that many
parish councils were notified of the scheme's availability. I am confident
that, as the months proceed and where opportunities for community
involvement in post offices exist, the scheme will provide an effective and
efficient means by which to make progress. 

The DTI insist they are still supportive of the network of rural sub-post
offices. Indeed (11):

"the Government has placed a formal requirement on the Post Office to
maintain the rural network and to prevent any avoidable closures of rural
post offices. Rural in this context applies to communities of up to 10,000
people (the Countryside Agency definition) rather than the previous Post
Office definition of communities of up to 6,300 people. The wider
definition brings about 1,500 more offices into the protected rural
category. An unavoidable closure is one where no one suitable is prepared
to over from the departing subpostmaster or subpostmistress, where no
suitable premises remain available or can be identified, or where an
associated retail business is no longer viable." 

This highlights the important relationship between sub-post offices and the
businesses attached to them. If the attached business is not viable, then
the likelihood is that the sub-post office will close too. It is then
important to note that support is available for other types of business,
such as under the Rural Petrol Stations Scheme. Some types of rural
business can have 50% non-domestic rates relief (100% at local authorities'
discretion). 

The Post Office has in place 6 rural transfer advisers in Scotland to help
ensure the continuity of services in rural areas by finding replacements if
subpostmasters retire/resign or branches close. 

Another important consideration relating especially to rural post offices
is the network of post buses, which operate as vital links for those who do
not have access to a car, and play a role in the tourism industry as well.


Postcomm has produced a useful document on this topic: Serving the
Community I - evidence of the community value of post offices in rural
areas (a similar document was produced for urban post offices - Serving the
Community II - evidence of the community value of post offices in urban
deprived areas). 

Support for urban sub-post offices 

Whilst rural sub-post offices are of great importance to local communities,
urban sub-post offices face their own difficulties. Defined as those being
in communities with more than 10,000 inhabitants it is generally accepted
that there are too many, although there will clearly be variances in
certain areas. 

The National Federation of SubPostmasters accept that all sub-post offices
cannot remain commercially viable and the restructuring of the urban
network will require closures, mergers and relocations of branches. This
could give a larger customer base for some, thus allowing for investment in
improved facilities, additional counter positions and longer opening hours
(12). 

On 3 January 2002 Douglas Alexander, Minister for E-Commerce and
Competitiveness welcomed an agreement between Consignia/Post Office Ltd and
the National Federation of SubPostmasters with regard to the development of
the Urban Reinvention Programme. This programme (13): 

"will be carefully tailored to the circumstances of each locality to ensure
that Post Offices branches meet the high expectations of customers and are
in the right locations for their communities."

The UK Government has made £15 million available with regard to funding
for Post Office Branches in urban deprived areas of England. The Scottish
Executive has been allocated similar pro rata funding by the UK Government,
but this has not been ring fenced for Post Offices (14). 

The Postcomm document Serving the Community II - evidence of the community
value of post offices in urban deprived areas gives further useful
background, including the fact that free community services are used more
in Scotland and Northern Ireland than in England.

POST OFFICE SERVICE DELIVERY
There is an ongoing debate as to how post offices can best provide services
to customers. According to the Department of Trade and Industry (15): 

"The Government remains fully committed to a viable network of post offices
across the country. The sub-post office plays a valuable role in local
communities, particularly for the less mobile, but the Post Office cannot
sustain a network if it is not sufficiently well used, and nor can the
Government."

In June 2000 the Performance and Innovation Unit of the Cabinet Office
published a report (16) containing 24 proposals (17) for modernising the
network of post offices, all of which are being taken forward. The
proposals include:
 
• There is a need for rural post offices to modernise and for the
services they provide to be broadened and improved. The Government should
back this modernisation with financial support;
• The Post Office should embark on a programme of modernisation of the
urban network in partnership with sub- postmasters and other stakeholders;
• If the Post Office does decide that it needs fewer outlets than at
present in some urban areas, then it will need to ensure that sub-
postmasters who are affected are adequately compensated for the loss of the
value of their asset; 
• The aim of Government policy should be to provide a mechanism to ensure
that people in deprived urban areas continue to enjoy convenient access to
a post office. And that where post offices have the potential to anchor
high quality shops, they are able to do so. 
• The Government should positively support the Universal Bank (see below)
viewing it the best means to ensure that benefit recipients can continue to
access their entitlements in cash at post offices; 
• The Post Office should develop a role for the network as internet
learning and access points. The Government should positively support the
development of this role; 
• Government clients of the Post Office network such as the DVLA,
National Savings Executive Agency and the Passport Agency should be free to
develop new channels for delivering their services to citizens. But, in
parallel, there should be a presumption that they continue also to offer
their existing services at post offices – so long as there remains
sufficient customer demand to make it cost effective to do so.

Market opening

As well as initiatives focusing on the post office network, there are
broader proposals to open up the postal service to competition which are
concerning some Members of the Scottish Parliament, as indicated below: 

S1M-2905# Alasdair Morgan: Market Opening of Postal Services in
Scotland—That the Parliament expresses its severe concerns about the
impact which Postcomm’s proposals on market opening will have on the post
office network in Scotland. 

The Postcomm proposals referred to relate mainly to Royal Mail services
rather than directly to the post office network. The proposals to open up
the market will come online in three stages (18): 

1. April 2002 – 31 March 2004: Bulk mail above 4000 items, consolidation
services, certain niche services – around 30% of Consignia’s market by
value

2. April 2004 – 31 March 2006: Opening up approximately a further 30% of
the market by lowering the bulk mail threshold as appropriate – this is
expected to be to between 500 and 1000 items per mailing. Plus a review of
restrictions on consolidation licences with a view to enabling operators to
pass mail for delivery to operators other than Royal Mail.

3. No later than 31 March 2006: All restrictions on market entry abolished.


Post offices will have to be able to provide services to any competitor in
the postal services market if they want to survive. According to the
National Federation of SubPostmasters: 

“Let’s be clear about this – today’s Postcomm announcement is
essentially a Royal Mail issue which will mainly concern postmen and
postwomen, sorting offices and large postal delivery services. 

“It is not about the counters service and the vital contribution our
members make by providing a range of postal services to urban and rural
communities. Neither is it about the plans to re-invent the urban post
office network and deliver more viable and vibrant sub post offices. 

“However, we consider that Consigina will be stifled by over-regulation
and we would urge caution when opening up certain parts of its business to
competition - there’s no point shutting the stable door after the horse
has bolted. 

“This is cherry picking and if it continues businesses will stand to get
their post cheaper, while the general public will end up having to
subsidise less profitable parts of the mail delivery business.

Consignia themselves are equally concerned about market liberalisation. The
company claimed in a press release of 6 March 2002 that they stood to lose
£2b of revenue should the regulator, Postcomm, continue with its
proposals. 

OTHER GOVERNMENT INITIATIVES

"Your Guide" 

"Your Guide" is a Government initiative designed to provide a one stop shop
at the post offices for services across the public, private and voluntary
sectors. Transactions, advice and information will be available through: 

• Counter assistance;
• Leaflets;
• Touch screens;
• Free phone;
• Expert advice sessions from specialists such as the Inland Revenue and
Department of Work and Pensions (in larger post offices).

The Government are of the opinion that the Post Office is ideally placed
for this sort of initiative, given that it is a trusted brand and already
has an extensive network of 18,000 branches. 

"Your Guide" was piloted in Leicester City, Leicestershire and Rutland from
July 2001 until March 2002. Allan Wilson indicated in a recent written
answer (19) that:

"the Scottish Executive is paying close attention to the development of the
Your Guide pilot project in Post Offices in Leicestershire and Rutland.
Arrangements have been made for ministers and officials from the Scottish
Executive to see the project first hand. The pilot will of course have to
be comprehensively evaluated to assess the case for national roll out. In
particular those organisations wishing to use Your Guide will need to
examine carefully how a national service could fit in with their wider
service delivery plans, how far it could help in achieving greater
efficiencies and whether it would provide value for money compared with
alternative direct channels to the public. Until these evaluations are
complete, it would be premature to discuss details such as responsibility
for the provision of equipment. I can assure you, however, that the
Scottish Executive is examining this project and its potential implications
for Scotland with great care and that we are committed to finding ways to
achieve citizen-centred public service delivery."

The most recent question answered at Westminster on the topic was (20):

Mr. David Kidney (Stafford): Will the Leicestershire pilot of "Your Guide"
be extended nation wide later this year? If so, who will pay for it?

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): As
I said in a debate late last year, the pilot will be completed on time, at
the beginning of March. That will allow us not only to evaluate the
effectiveness of the service and the income stream to Post Office Counters
Ltd., but to expedite work across Government in considering the delivery of
electronic services. I can assure my hon. Friend that we are proceeding
apace not only with discussions within Government, but also with the
evaluation of the pilot with Post Office Counters. 

Universal Bank

The Government is keen to take the 10% of adults who do not have a bank
account out of financial exclusion. One of the drivers for this is a desire
that all benefits should be paid electronically. This would be under the
UK-wide Automated Credit Transfer system referred to in Robert Brown's
motion. The Government has signed up to the development of Universal
Banking Services. The key behind this is the availability of bank accounts
at post offices using the existing large network of outlets (21).

On 8 May 2001, the three main Scottish banks had joined the scheme, as
outlined by Secretary of State for Scotland, Helen Liddell. Key to the
scheme is that the banks themselves will meet some of the cost of
developing the system. The scheme should begin in 2003 and be complete by
2005. Under it, account holders will be issued with a bank card to allow
them to withdraw money at post offices and ATM machines.


SPICe Briefings are compiled for the benefit of Members of the Scottish
Parliament and their personal staff. Authors are available to discuss the
contents of these papers with Members and their staff but cannot advise
members of the general public. 


1 Source: Consignia
2 Post Offices are those directly owned by The Post Office as Crown
Offices. Sub Post Offices are run by agents under contract to Post Office
Ltd.
3 House of Commons Library Research Paper on the Bill as introduced
available at
http://www.parliament.uk/commons/lib/research/rp2000/rp00-018.pdf.
Explanatory notes to the Bill available at
http://www.legislation.hmso.gov.uk/acts/en/2000en26.htm 
4 Postwatch is the brand name of The Consumer Council for Postal Services
(CCPS), established under the UK Postal Services Act 2000. CCPS replaced
the former Post Office Users’ National Council (POUNC) and the Country
Councils in Scotland, Wales and Northern Ireland. 
5 Memorandum of Understanding - Joint Postcomm/POUNC document. Available in
SPICe.
6
http://www.subpostmasters.org.uk/research%20briefing%20Opposition%20Debate%20Briefing.htm
7 Sunday Herald - Spar combines with Post Office, 10 March 2002
8 Scotland on Sunday - Plan to close half of all Post Offices, 20 January
2002
9 More information available from Email: rural.fund@postoffice.co.uk
10 Westminster Oral Questions 14/02/2002, reference 380 c306 -
http://www.publications.parliament.uk/pa/cm200102/cmhansrd/cm020214/debtext/20214-04.htm#20214-04_spnew2
11 http://www.dti.gov.uk/por/postoffice_network.htm
12
http://www.subpostmasters.org.uk/research%20briefing%20Opposition%20Debate%20Briefing.htm
13 DTI press release 3 January 2002
14 Postwatch quoting Consignia
15 http://www.dti.gov.uk/por/postoffice_network.htm
16 Interesting elements include international case studies of France and
New Zealand in Annex 4 of the report.
17 Available in summary on page 96 of the report 
18
http://www.postcomm.gov.uk/documents/Media/Competition%20proposals%20013102.doc
19 S1W-23640
20 Westminster Oral Questions 14/02/2002, reference 380 c306 -
http://www.publications.parliament.uk/pa/cm200102/cmhansrd/cm020214/debtext/20214-
04.htm#20214-04_spnew2
21 This is as part of a wider strategy, some of the key elements of which
were outlined in a speech in July 2001 by Ruth Kelly MP, Economic Secretary
to the Treasury


This work is protected by copyright. All rights reserved.

The SCOTS Project and the University of Glasgow do not necessarily endorse,
support or recommend the views expressed in this document.

Document source:
http://www.scottish.parliament.uk/business/research/pdf_res_brief/sb02-33.pdf

Information about document and author:

Text
Text audience
General public: Audience size: 1000+

Text details
Method of composition: Wordprocessed
Year of composition: 2002
Word count: 4045
General description: Research Briefing. See http://www.scottish.parliament.uk/business/research/index.htm

Text medium
Web (webpages, discussion boards, newsgroups, chat rooms): 
Text publication details
Published: Publisher: Scottish Parliamentary Corporate Body
Publication year: 2002
Place of publication: www.scottish.parliament.uk

Text setting
Government/politics: 
Text type
Prose: nonfiction: 

Author
Author details
Author id: 908
Surname: Scottish Parliamentary Corporate Body