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News - 26 September 2008

Mail misery continues with soaring costs and more branches closing...

...Unless you are lucky enough to run a business in Brighton.

As Royal Mail customers continue to see their service depleted and their costs increase Brighton businesses are enjoying a new service that costs less and offers more.

Royal Mail’s decison to introduce a flat rate for fewer weekday collections, as part of its shake-up of the postal network, has left small businesses paying more for what many believe to be a reduced service. Until April 2008, business-owners could choose to take advantage of morning collections for an annual fee of £280. Now, there is just one collection per day, which is priced at £450. The price hike comes as businesses are bracing themselves for the impact of a cost-cutting exercise in which a total of 2,500 local Post Office branches are to close.

Businesses in Brighton that sign up to a new service launched by Unique Brighton and the Brighton & Hove Business Forum in conjunction with Bullit Courriers can have their mail collected for free and enjoy a saving of 2p on every letter they send (for more information click here).

Meanwhile business in neighbouring Kent are experiencing a very different situation. Forum of Private Businesses (FPB) member John Foley, of Britsales Business Supplies, Kent, who spends between £11,000 and £12,000 per month on postal costs, in addition to the collection charge, was shocked to receive a letter detailing the price rise, which has increased his annual bill by more than 60%. In addition, businesses requiring post to be collected at a specific time now have to pay a further annual fee of £750 for the privilege.

"The collection service was more convenient than having to send a member of staff to the nearest post office, which was three-quarters of a mile away," said Mr Foley, whose local branch closed several months ago. "The alternative to paying [these elevated prices] is to use the branch that is now nearest to us, which is the best part of two miles away. We only have a few employees, so this is not an option.

He added, "This is an additional cost when I can least afford it – Royal Mail has small businesses over a barrel. We can cope, but I don’t want us to just cope, I want us to be able to grow the business, and these charges, imposed suddenly like this, don’t help."

A spokesperson for the Post Office told the FPB that small businesses were paying more money in exchange for a scaled-down collection service as a direct result of Royal Mail’s ‘network change’ cost-cutting exercise.

"Prices normally go up in April anyway, but this time collections have been impacted most by the network change programme. However, the £280 service was offered subject to availability anyway, and only after a customer had requested it," she said. "We’ve had complaints – people who were on the £280 rate have obviously called in to complain, but, unfortunately, that’s the way it is."

The Post Office is selecting the branches it wants to close using the Government's ‘National Access Criteria', which includes the stipulation that 95% of a postcode district's population is within six miles of a post office. The FPB believes that sticking to an approach based purely on population levels fails to address the needs of local communities – including the services required by small businesses.

Live ‘consultations’ – during which the local branches to close are decided – are currently being held in areas of Bristol, Somerset, Cumbria, Shropshire and Staffordshire.

FPB member Brigid Benson, Director of the Gaia Partnership, a financial services company, has already experienced "severe disruptions" to the postal service in Didsbury, Manchester, where her business is based. Her local branch is closing this week.

Mrs Benson said that errors have become more frequent, and the overall level of service has worsened, with post being delivered to the wrong address and fewer postal workers making deliveries. The closure of the Parswood Road branch will mean a car journey to post a parcel.

"Fortunately, we’ve been around long enough to have contingency plans in place, but for many small businesses – even those in urban areas - the loss of their local post office is going to have a serious impact," said Mrs Benson. "There is another post office we could use. On the face of it, it is not all that far away. However, it will still mean someone taking longer periods of time out of the office than before and nobody’s going to compensate me for that."

A spokesperson for Postwatch, the postal watchdog soon to be replaced by ‘Consumer Focus’, a new regulator dealing with a broader range of consumer issues, said that more closures are inevitable.

"Postwatch recognises that the closure of a post office is never good news for the customers concerned," he said. "However, we recognise the post office network is unsustainable in its current form. Postwatch therefore supports managed change to secure the long-term future of the post office network."

The spokesperson added: "Postwatch works to ensure consultations take full account of customers’ needs. Before public consultation, we scrutinise and give our input to Post Office Ltd’s proposals. Additionally, during public consultation, we check that the right individuals and organisations are being contacted, and encourage customers to give feedback to Post Office Ltd."

A review carried out by the Government earlier this year found that, where large companies have clearly benefitted from postal ‘liberalisation’, smaller businesses have not. The report said that, for example, introducing Pricing in Proportion (PiP) – charges based on the weight and dimensions of packages – had caused problems for many small businesses. A survey carried out by the FPB in 2006, when the closures were first announced, revealed that more than 60% of respondents feared PiP would increase their costs.

"The report appears to substantiate fears that the postal services relied upon by many small businesses, particularly those in rural areas, have been critically eroded," said the FPB’s Chief Executive, Phil Orford. "Following the announcement that so many branches are to close, it is important that these services are restored as quickly as possible, and that suggested measures, such as locating post offices in alternative locations and introducing mobile units, are put into practice as a matter of urgency."

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