2,500 Post Office branches to close

Around 2,500 post offices will close as part of plans for a major overhaul of the network, the government has announced.

The controversial move was outlined by trade and industry secretary Alistair Darling in the Commons on Thursday.

Darling told MPs the changes would be implemented over an 18-month period starting next summer.

However he also announced up to £1.7bn of funding which will go to post offices until 2011 to ensure a national network.

The secretary of state said changing habits and new technology meant less people were using post office services.

The "big problem," he said, was that "people are simply not using post offices as they once did".

People were increasingly choosing to send email or text messages, pay bills by direct debit and have pensions and benefits paid into their bank accounts, he said.

The post office network is currently running at a loss of £4m per week, up £2m on the figure being lost last year.

The UK has 14,300 post offices but only about 4,000 of the branches are commercially viable.

But Darling stressed that post offices still have a "vital social and economic role".

"That is why we will continue to support a national network of post offices - and we are able to back them with the money they need," he said.

At least 500 new "outreach locations" would be opened using mobile post offices, village halls, shops and community centres to
provide cover to remote areas.

Darling told MPs: "As a result of these changes about 2,500 post office branches will close.

"However, the remaining network of around 12,000 will still have more branches than the entire UK banking network.

"The proposals we make today will put the Post Office network on a stable footing and ensure that there is a national network across the country."

Rural post offices are expected to be most in jeopardy under the re-structuring plans.

The government spends £150m a year supporting the 9,400 rural post offices and the money is due to run out in 2008.

However Darling said this payment would be maintained and extended until at least 2011.

A consultation seeking views on the government's proposals was also opened, with the last date for responses being March 8, 2007.