Mail Fail - Why the Post Office is right to be shuttering offices

It’s been a tough year for the Post Office, with the Horizon scandal still ringing in its executives' ears. Now the boards are going up for 115 Post Office branches. Some commentators on social media have lamented that this is a further ‘betrayal’ of many communities and, especially, for those who care deeply about cash. Petitions have started, calling for these cash-bonfires to have more taxpayer bills used as fuel.

The Post Office is a part of the welfare state, oddly situated in the Department of Business and Trade. Its primary functions, outside of those postal, is as a retail business and a government office. With a subsidy of £190m per year, it does provide a healthy net return of £40m per year, but is this enough to retain the net cost to the state? No. 

With service digitisation for those provided by the Post Office, from passports to Universal Credit to tax returns, the government’s role in owning and running the Post Office now only exists for technological stragglers. 

Postal services are likewise easier to access digitally. Not only did the email transform communication, with total addressed letter volume plummeting from a peak in 2005 of 20 billion units to a record low of 7 billion units in 2022 (and falling if you look at Christmas Card data), but it is now possible to order stamps or arrange returns online. This is not even considering the rapid move to online bill paying and banking, with over 6,000 closed since 2015 as consumers move to digital. The world of post is fast outpacing the physical store - these are now surplus to a digital world.

As a Citizens Advice report highlights, a majority of people only use their Post Offices for the post and to retrieve cash because it is ‘near home’, rather than use it for specialist services (even for the post) or its retail offering. This is unsurprising, as the government imposes a number of criteria, including that 90% of the UK population to be within one mile of their nearest post office outlet, and other such necessities. This is deafeningly similar to the madness of the Universal Service Requirement imposed upon Royal Mail, which ensures that every individual in the UK receives mail six days a week - a highly inefficient and bankruptingly expensive rule.

With increased competition and modernisation in the package delivery and postal space, with delivery companies such as DHL (which own and run Germany’s profitable Post Office equivalent), Evri, and sub-contractors for companies such as Amazon. It is clear that the current analogue model cannot survive.

The Post Office is right to cut costs and drive towards modernisation, and we should all embrace it.