Q&A

How are post offices run?

All post offices are owned by Post Office Limited, a Government-backed company. Around 98 per cent of branches are franchises – independent businesses that pay a small fee for the right to use the Post Office’s name and infrastructure.

The remaining branches, known as Crown post offices, are larger and managed directly by the parent company. They are typically found in large towns and cities. Post Office Limited has been profitable since late 2017. It also receives subsidies from the Government to support the 3,200 post offices that are not commercially viable.

Why is the post office network in such trouble?

The businessmen and women who run post offices say they have been hit by cuts to their fees and falling demand for services driven by the rise of the internet.

More than 1,000 branches have already closed. Some are being replaced, others have reopened in a different shop, but many never return. Campaigners are worried that the Post Office will continue to struggle to find people to take over franchises if the closure rate rises.

This would mean that post offices close and never reopen, and customers are forced to travel further to access services.

Doesn’t the Government subsidise rural branches?

Between 2010 and 2016 the Government provided £170million per year on average to keep open rural branches that do not make a profit. But, as the Post Office has become profitable, the amount of taxpayer money spent on the business has been drastically cut. Last year it was reduced to £60million a year and just £50million will be provided by 2020 to 2021. No subsidies have been agreed beyond 2021, putting the future of those 3,200 struggling branches in doubt.

Why can’t small post offices make a profit?

Most post office branches are operated out of shops which also sell groceries, stationery and newspapers. Some are off-licences, and in tourist areas they often sell souvenirs, postcards and foreign currency.

Sub- postmasters receive a commission from Post Office Ltd for the sale of stamps, processing letters and parcels, and checking passport applications. They make 3p per stamp and 17p each time a customer withdraws cash. For a cash deposit they receive up to 50p.

They say their annual earnings are between £12,000 and £25,000. From this they have to pay staff, bills and other expenses. Some make a small profit, others break even and many more operate at a loss.

Do they get paid to provide banking services?

Post Office Limited has a deal in place with banks to allow customers to deposit cash and cheques and withdraw money, as well as check their balance in post office branches.

Sub-postmasters are paid a set commission, but Post Office Ltd takes a cut. They say they are servicing bank customers on the cheap.