Policy & Campaigns News

Fabian Society report on the post office network

04 November 2013

The Fabian Society has published new research on the future of the UK's post offices – Here Today - The uncertain future of the post office network

The report warns that government action is urgently needed to prevent the future collapse of the post office network.

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The report from the UK's oldest think tank examines nine potential funding scenarios, and concludes the future of the network only looks safe if:

  • Royal Mail does not renegotiate the agreement with the Post Office or divert postal business to other channels
  • The Post Office sees very high growth in financial services
  • Government services revenue grows strongly

But the Fabian Society believes this positive outcome is unlikely. The report cautions that a privately-owned Royal Mail could gradually divert business away to other channels, or threaten to end the relationship altogether as a bargaining position to push prices down. Strong growth in financial services is not likely as the Post Office is operating in a very crowded market and it is not clear how its financial products will be differentiated from others available. Similarly, a significant increase in income from government services seems improbable; revenue from this source has been shrinking and the few new services are yielding little for the Post Office.

The Fabian Society recommends that in order to safeguard the network’s future, the government must prioritise using the Post Office to provide services. In the long-run the government could set up a state-backed Postbank offering a unique set of financial services. The government could also increase the network subsidy, if as expected, revenue from government and financial services does not rise considerably. Critically, the report also warns of the importance of the government keeping a significant stake in Royal Mail, enabling it to exert real influence over decisions that affect the Post Office.