Top > Business > 2006 > December > 2006-12-16

Royal Mail says it will close half of its post offices

The British postal service, Royal Mail, plans to shutdown about half of its 14,500 post offices, due to an increase in losses sustained by the company. The British government might propose a compromise by which only 2,500 to 3,000 branches would be shutdown. Royal Mail says that the optimal "commercial" number of post offices would be 4,000 spread across the country.

Royal Mail CEO Adam Crozier said he plans to be considerate of the social implications for the elderly and those living in far away regions. Today, Royal Mail operates 8,000 post offices in rural areas and 6,500 urban post offices. Royal Mail`s operating loss is $3.9 million a week. The British Finance Ministry subsidizes the rural post offices with $300 million annually.

The news of Royal Mail`s decision drew fire from activists and members of parliament. Kate Hoey, a Labour MP, said: ?MPs of all political persuasions will be up in arms if cuts of this scale were to happen. The all-party group has been campaigning to keep the subsidy at at least at the level it is now and what we want is to see the Government do more to encourage their own departments to use post offices. Otherwise the network will be severely affected.? Colin Baker, who is general secretary of the Federation of Sub-Postmasters, said: ?I am very anxious to get some clarity on the size and shape of the network. Twenty-six million people?s lives are touched by post offices every week when they visit them. The Government should be proud to support that. There can?t be a better way to spend taxpayers? money.?