The future of the rural post office network

Citizens Advice Bureaux (CABx) in rural areas place significant value on the role of the Post Office in local communities in providing access to essential services such as money and bill paying, particularly for local residents who have no transport of their own.  

CABx concerns about post office closures are intensified by bank branch closures which have taken place in rural areas or market towns.  

Citizens Advice believes that:

• Post Offices play a central and important role in the life of rural communities;
• The closure of rural Post Offices has a profound impact on the local community, and hits vulnerable groups such as the elderly, the disabled and those with mobility problems, particularly hard;
• There remains an important role for Post Offices to play in rural areas, but in order to continue to play this vital role, the rural Post Office network must evolve so that it meets the needs of the rural population, and especially certain vulnerable groups, in a cost-effective way; and
• The Post Office’s network provides a unique opportunity for it to make a positive contribution to tackling financial exclusion in rural areas through the provision of access to banking facilities.  We therefore recommend that people should be able to open basic bank accounts in post office branches, and that all current account holders should be able to withdraw cash over the counter at Post Offices.  The income generated from this venture could help to make a significant contribution towards sustaining the network of rural post offices.

Introduction

The Citizens Advice Bureaux (CAB) network is the largest independent network of free advice centres in Europe, providing advice from over 3,200 outlets, ranging from GPs’ surgeries, hospitals, community centres, county courts and magistrates courts, and mobile services both in rural areas and to serve particular dispersed groups.

The service has two equal aims:

• to ensure that individuals do not suffer through lack of knowledge of their rights and responsibilities or of the services available to them, or through an inability to express their needs effectively;
• and equally, to exercise a responsible influence on the development of social policies and services, both locally and nationally.

In 2004/5 the CAB service dealt with 5.2 million new enquiries.  Of these enquiries nearly 1.2 million were debt or finance-related.  Every year, thousands of individuals come to the CAB with ‘rural’ issues, and many of our clients are on low incomes or benefits, or are disadvantaged in some way.

General comments

Citizens Advice Bureaux (CABx) situated in predominantly rural areas place significant value on the role of the Post Office in local communities in providing access to essential services such as access to money and bill paying, particularly for local residents who have no transport of their own.

CABx concerns about post office closures are intensified by bank branch closures which have taken place in rural areas or market towns.  Cost-cutting measures launched by the banks to increase profitability have led to a contraction of the bank branch network, with nearly 6,000 bank branches having closed since 1990.  This has left nearly 1,000 mainly rural communities bankless, with this trend looking set to continue.

The upshot of these bank branch closures is that only four per cent of villages now have a bank or building society.  This compares to 60 per cent of villages that currently have a post office.  To maintain access to a whole range of services, particularly access to cash and payment facilities, Citizens Advice believes that it is vital that steps are taken to preserve some form of post office network in rural areas and to develop the services provided by these post offices.

In locations where the small number of customers means that it no longer makes commercial sense to continue to offer a full range of postal services available on a daily basis, we support the exploration of innovative – and more cost-efficient – ways in which essential services can be maintained.

1.  The role of Post Offices in rural areas

There are 14,609 Post Office branches in the UK (as at end March 2005), with around 8,037 of those situated in rural areas.  The rural post office network serves approximately 12 million customer visits a week, with 84 per cent of people in rural areas living within one mile of a post office.  In addition, over two-thirds of villages with between 500 and 1,000 inhabitants have a post office.  This large branch network enables the Post Office to provide convenient access to a range of services.  This is of particular importance to people in rural areas who are elderly, disabled, or who do not possess their own means of transport, as without it they would find it difficult to carry out a range of essential activities ranging from withdrawing cash and paying bills to applying for official documents and sending and receiving letters and packages.

Not only do post offices provide a wide range of postal, government and commercial services, but often their very presence brings additional benefits to the local community, for example making a positive contribution to local businesses by increasing the number of people passing through a particular location.

Post Offices in rural areas can also provide a range of services which are more difficult to quantify but which are nevertheless very important, for example providing a focal point for communities and assisting those who may require additional assistance in competing official forms.

Recognising the importance of Post Office branches to rural areas, the government invested a three-year £450 million funding package, due to run out in 2006, and imposed a requirement upon Post Office Ltd to support rural post offices and to prevent any avoidable closures.  A further £300 million of government money has also been made available from 2006 until 2008 to pay for the rural Post Office network.

2.  The impact of Post Office branch closures on rural areas

Given the many and varied important roles that the Post Office can play in a rural community, its closure can have a profound impact.

Research commissioned by Postwatch found that “whether affluent or disadvantaged, traditional village or post war estate, the closure of the rural post office appeared to have had far-reaching effects upon both particular individuals and the community in general.  It became apparent that the post office played an extremely important role in the rural community, a role that transcended the provision of post office services or even the goods sold at the store which was often attached.”

More specifically, the closure of a rural Post Office can result in problems for disadvantaged residents trying to access cash and basic groceries when these were previously provided by the post office.  For example:

A rural CAB in East Sussex reported that the closure of a local post office branch meant that their client - an 86 year old widower who looked after her semi-housebound sister, aged 91 - would have to travel over one mile to her nearest post office or banking facilities.  The difficulties in accessing basic services was causing the client great inconvenience, worry and stress.

Since the post office acts as an access point to a whole range of services, its removal can have the effect of cutting the most disadvantaged people off from mainstream society, exacerbating their financial and social exclusion.  For example, the elderly, disabled and those with restricted mobility (such as mothers with young children) may not possess their own means of transport or be able to access services via the internet, and so can struggle to carry out a series of transactions which they rely on.  These include:

• withdrawal of cash or pension;
• payment of fuel bills, council tax, rent or TV licences;
• purchase of credit for fuel pre-payment meters or mobile telephone top-up cards; and
• collection and despatch of items of mail.

And since public transport in rural areas is often poor and costly, travelling to the nearest post office that remains open can be difficult and involve considerable expense.  Research from the Countryside Agency and Citizens Advice showed that poor public transport makes it difficult for some people to reach jobs or shops, and that loss of local services means people have to make long round trips.  Another report on rural post offices sought to quantify the costs imposed, and suggested that if a local post office closed, the time taken for a customer to travel to the nearest post office would more than double and monthly travel costs would increase significantly.  Moreover, the closure of a post office in a typical settlement of 500-1,000 people is likely to impose an economic resource cut of over £52,000 per annum to the local community.

The closure of a post office in a rural area can also have damaging repercussions for local shops and businesses.

A CAB in Mid-Wales’ client found that following the closure of the village post office there was a severe downturn in passing trade at her discount store, so she had to close the business.  As a result of this, the client had to go bankrupt and is now unemployed and in receipt of incapacity benefit.

3.  The way forward for rural post offices

We have outlined the key services provided by a post office located in a rural area, and the distressing impact that the closure of a rural post office can have, especially on those deemed to be most vulnerable or who have restricted mobility.

However, we recognise that maintenance of the rural post office network in its current form is not commercially sustainable over the longer term, and that as society changes so must our rural post offices.

We therefore welcome the pilot projects and alternatives to traditional post offices that are being trialled by Post Office Ltd, and the Rural Strategy Team in particular.  Pilots include:

• the ‘core and outreach’ scheme which involves a subpostmaster from a larger village operating for a few hours a week in a location in a smaller village, and offering the residents the full range of services offererd at the core branch;
• the ‘mobile branch’ which consists of a van which travels to remote communities to offer post office services to isolated communities; and
• the trialling of interactive Digital TV to order goods and services from the Post Office which will then be delivered to the customer’s house.

As well as investigating new ways of delivering services to customers, Post Office Ltd is also looking to expand the range of services offered.  In particular, the Post Office is keen to move into provision of financial services to provide alternative income streams to replace the income lost by cashing benefit order books and girocheques.  Their large network of branches provides a unique opportunity to make a positive contribution to tackling financial exclusion in both urban and rural areas through the provision of access to banking facilities.

However, it is not possible to open a basic bank account in a post office, so people in rural areas have to travel to the nearest town in order to open one or to have a choice of banks.  In addition, although all basic bank account holders can access their money over the counters at post office branches, only current account holders with certain banks are able to do so.

Enabling all bank customers to withdraw their money from the post office would not only provide greater convenience for bank customers but would potentially throw a lifeline to rural post office branches that have seen a major reduction in their business following the introduction of direct payment.  And those that are offered this facility place great value on it: in research carried out for PostComm by Hall & Partners Europe Ltd., partner bank customers were asked whether they believed that the cash withdrawal service at the Post Office was a good thing, and “89 per cent were positive about the service; 48 per cent said the Post Office was more convenient than using a bank branch; 38 per cent said it was more convenient as they were using the Post Office for other reasons anyway; 36 per cent said that the Post Office is closer.”

Citizens Advice recommends that people should be able to open basic bank accounts in post office branches, and that all current account holders should be able to withdraw cash over the counter at Post Offices. If individual banks are unwilling to reach an agreement with Post Office Ltd to allow their customers to withdraw cash from the post office network, then Post Office Ltd should become a member of the LINK network to enable this to happen.  The income generated from this venture could help to make a significant contribution towards sustaining the network of rural post offices which are a valuable community resource.

Social Policy contact: Tony Herbert tony.herbert@citizensadvice.org.uk

Parliamentary contact: David Tinline david.tinline@citizensadvice.org.uk