Post Office Considers Closing 115 Branches Amid Job Threat

A significant restructuring of the Post Office business could lead to the closure of up to 115 branches and threaten hundreds of positions at its head office. The Post Office is exploring various strategies for its wholly-owned branches, which are currently unprofitable and employ approximately 1,000 individuals. Such strategies might involve establishing alternative franchise agreements, under which a retailer such as WHSmith or another external entity could assume responsibility for these branches. The Communication Workers Union (CWU) characterized the company’s proposal of these plans, while the inquiry into the Horizon IT scandal is ongoing, as “immoral” and “tone deaf.” The Post Office, which is government-owned, operates 11,500 branches throughout the UK, with the majority being franchises, and 115 designated as Crown Post Offices. These specific branches are typically located in urban centers and are staffed directly by Post Office personnel. Nevertheless, a strategic review, spearheaded by Nigel Railton, the Post Office’s recently appointed chairman, aims to fundamentally restructure the organization’s operational methods. The organization confronts numerous difficulties, including intense competition from competing parcel services such as Evri and a decline in letter volumes, which has consequently impacted branch revenues. This restructuring initiative seeks to stabilize the business financially, yet it coincides with the Horizon IT scandal inquiry nearing its conclusion. From 1999 to 2015, hundreds of sub-postmasters faced erroneous prosecutions due to defective computer software that falsely indicated financial discrepancies in their accounts. Mr Railton, previously the head of Camelot, informed sub-postmasters on Wednesday that the Post Office “urgently” required “a fresh start” and a “new deal” that would place them at the “heart of this business.” The Post Office has grown more dependent on government subsidies and its retail operations, reporting pre-tax losses amounting to £81m in the 2022-23 financial year. Currently, almost 50% of its branches either operate at a loss or generate only a modest profit from the Post Office services they provide. Mr Railton conceded that the organization has endured a “tough” period over the past decade, resulting in sub-postmasters’ remuneration having “lagged behind.” He stated that the proposed plans would allocate over £250m annually to postmasters by 2030, contingent upon government funding. The initiative also seeks to enhance the banking services offered to customers at branches and will implement a “lower-risk, better value” IT system for sub-postmasters. On Monday, the European head of Fujitsu, the firm responsible for developing the flawed Horizon system, conceded that he “does not know” whether the software is presently dependable. A survey conducted in September indicated that nearly seven out of ten sub-postmasters have encountered an “unexplained discrepancy” on the Horizon system since January 2020. Dave Ward, the general secretary of the CWU, commented that the Post Office seemed to have “learned no lessons from its chaotic and uncoordinated mistakes from the past.” He further stated, “CWU members are victims of the Horizon scandal – and for them to now fear for their jobs ahead of Christmas is yet another cruel attack.” Earlier this month, Gareth Thomas, the Post Office minister, remarked that the organization was at a critical juncture, and the government had already initiated its own review to determine the future structure of the Post Office. The restructuring also places hundreds of head office positions at risk, with Mr Railton asserting the necessity to “right-size” the organization. Mr Railton indicated that discussions with the government regarding the proposed modifications and necessary funding have been “positive” to date. On Monday, during his appearance before the inquiry, Business Secretary Jonathan Reynolds suggested that Post Office branches might serve to fill a void created on British High Streets by widespread bank closures. However, the increasing prevalence of mobile banking and contactless payment methods raises questions about the long-term viability of such a strategy. Independently, government ministers have been examining proposals to transfer ownership of the Post Office to sub-postmasters. Reynolds informed the inquiry that the Post Office continues to enjoy “tremendous affection” among the UK public and a “desire for it to have a strong future.” A spokesperson for the Department for Business and Trade stated: “The government is in active discussion with Nigel Railton on his plans to put postmasters at the centre of the organisation and strengthen the post office network for its long-term future.” The Post Office branches facing potential closure include: Source: Post Office