Prior to this change the industry was already in decline. To remove 40% of its income at a stroke can only accelerate that process. Should it have been done and should it be done now is a pointless question because it is a fait accompli.

Could it have been done better? Of course it could and even now there are many unanswered questions the solutions to which will have a profound effect upon some people’s lives.

Most notable among these is the vexed question of third party collection of cash for those unable, for whatever reason, to venture out to acquire the money they need to live. This is a priority and should have been resolved long before now.

The post office brand is the 2nd strongest in the UK after Coca Cola. It is loved, trusted and its customers are loyal. Yet it is in decline brought about by events like these and a management in the past that has lacked vision and commercial competence. Five years ago the management knew that this day would come yet very little was done to replace the revenue that they knew they would lose.

Government has helped to some extent by providing cash for temporary remedies. £210 million for urban post offices, £180m of which is to close 3000 branches. The intention here is that the 6000 urban branches that will remain will be bigger, better and brighter offices providing a full range of services within 1 mile of 90% of the customers. When the European Commission gets round to it the Government will provide £450m over 3 years by way of subsidy to preserve the rural network.

This is a temporary fix and the money is retained by Post Office Ltd. The sub postmaster does not receive any cash. But what happens at the end of three years?

A further £15m is provided for the urban deprived offices and many millions have been written off the reserves to prop up the balance sheet of Post Office Ltd. These are all helpful gestures but of a limited benefit. It suggests that the Government believes the nation needs a viable network of post offices yet the policies of some departments are not conducive to that outcome. Management has often been interfered with in the operation of its own business. For example, the DWP for many months prevented post offices from advertising the fact that cash will still be available from branches after the introduction of direct credit.

This is intolerable. Of course all of us must do what we can to encourage the regular use of post offices. It is vital for both the short term and long term future of the network. The customers want it and the employees need it.

But the real problem is a much broader issue. Post Offices close when they cease to be commercially viable. This means that revenues are inadequate to meet and exceed costs. This occurs when the product range on offer does not attract enough customers and for those who do use a Post office the transactions do not generate sufficient income for the sub- postmasters to stay in business.

Is this going to change – well the signs are not good.

From October the national minimum wage rises to £4.50 per hour. This is the minimum amount that a sub-postmaster can pay a counter clerk. Under the terms of the Post Office Card Account the sub-postmaster will receive 14p per £100 withdrawn. This means that £3,214 will have to be transacted in 1 hour just to generate the £4.50 to cover the cost of the counter clerk. This excludes any employment overheads such as

National Insurance, holiday and sickness absence, and recruitment and training costs.

Under the same scheme we should look at the payment of Child Benefit. Currently for the first child the state pays £15.75 and £10.75 for each subsequent child. For a single child the sub-postmaster will earn 2.2p per transaction and will have to serve 204 benefit recipients in 1 hour to achieve £4.50. That is 1 transaction every 17.6 seconds. Doing the same sum for a family with 2 children at the rate of 3.7p, 122 transactions per hour are required at an average of 29.5 seconds per transaction.

By way of contrast the sub-postmaster will receive 12.5p per transaction from the independent banks who are members of the scheme – regardless of the amount. Therefore to earn £4.50 only 36 transactions per hour are required at an average of 1 min 40 seconds.

These margins are dangerously thin but given the choice the sub postmaster would elect to dispense cash to bank customers rather than Post Office Card Account customers. Now I realise it doesn’t happen this way but the point I want to make is the sub-postmasters have got to be able to earn in addition to their annual assigned office payment a realistic and fair income as a return on the investment they have made. This will ensure that they stay in business and continue to provide the services to their community that we all want to see. It will also encourage new and younger operators into the industry to provide continuity.

So how do we get there? Well the current product range, apart from a few exceptions, has remained unaltered for 30 years. This is commercial nonsense. With an established footfall of 28 million people per week segmented/categorised demographically and socio economically there are many opportunities to introduce new products and to modernise the business.

Hundreds of millions of pounds have been invested in electronic point of sale equipment which will allow on line communication with a wide range of suppliers in particular of financial services. Most suppliers would die for access to 28 million customers making weekly visits. For example during the last 10 years over 20 million mobile phones have been sold but not one across the counter of a Post Office. You can buy them in Tesco’s, Sainsbury’s, and a whole range of other outlets but not at a post office. Nearly 50% of retail transactions involve plastic cards – this is what people use and want to use but it is not possible at a post office.

The new management under the leadership of David Mills is addressing these matters. Debit cards will be accepted from this month, I believe, which is a step in the right direction, but they are a long way behind and they are always playing catch up. The real danger here is that attention and money will be focussed on the application of sticking plaster to prop up an ailing and out of date business.

What is really needed is to take a blank sheet of paper now and to reinvent the whole of the post office network from scratch. This should begin with a thorough understanding of what customers want from their post offices by way of goods and services. Government must decide how it wants to use post offices to deliver its products and services as well as information – and they must be prepared to pay a realistic price.

It is quite likely that the future post office will look very different, will be more user friendly, accessible to all and with trading hours to suit the customer. But above all it will be a place that customers want to use because it has been developed to satisfy their needs. If they use it then the offices are viable – this will sustain the network as well as the jobs of the employees.

We have new management in charge. David Mills is Chief Executive and Elmar Toime is Executive Deputy Chairman of Royal Mail Holdings. Mr. Toime was previously Chief Executive of the New Zealand post office, which probably has the best postal service worldwide. He and David Mills have the task. What they now need is the encouragement, the freedom, and the money to do the job. They must be supported