Executive Summary
The Post Office is an important British institution
The Post Office is one of the most admired institutions in the public sector. In our polling, the Post Office had a higher net favourability than the Bank of England or BBC.
In total, the Post Office creates over £9 billion in consumer surplus a year, the equivalent of £30 per household per month. Our respondents valued the Post Office higher than their local library, corner shop or pub.
The Post Office is an anchor for the High Street
Visits to the Post Office help drive another 400 million visitors to other shops, restaurants and local businesses. 33% of respondents said that on their last trip to the Post Office they had stopped at another shop, cafe, pub or restaurant, driving an estimated £1.1 billion in additional revenue.Two-thirds of Britons (67%) have a Post Office within a ten minute journey - and 38% within a ten minute walk. 84% agreed that it is important that everyone has a Post Office close to them.
The Post Office supports day to day living
On average, 18,000 people a day use the Post Office a day to send a birthday present. Another 13,000 use the Post Office to send a present or card to a sick friend.
The Post Office acts as an important backstop for those that cannot access cash, mail or digital services elsewhere. 87% agree that the Post Office is an essential service for vulnerable or lonely people.
The Post Office is an enabler of small businesses
43% of small businesses say they would not be able to continue functioning without the Post Office. 83% of SMEs agreed that the Post Office had been important to their business during the lockdown period.
Around a quarter of small businesses (28%) say that they use the Post Office at least weekly to withdraw or deposit cash. In total, the Post Office network has more branches than all the banks and building societies combined.
Introduction
The Role of the Post Office
How important is the Post Office to the British public really? When people are becoming increasingly reliant on email and the online delivery of services generally, is there a role for Post Office branches in the villages, towns and cities of the modern United Kingdo? Are people happy to see the Post Office wither away? In this report, we seek to answer these fundamental questions.
In doing so, we have used independent consultancy Public First to measure our economic and social impact on the country. However, we also ask those people who particularly rely on our services throughout the country’s communities for their views on how we help them: the general public, as well as small businesses.
For hundreds of years, the Post Office has helped keep families and businesses in the UK connected. Since our separation from the Royal Mail in 2012, we have focused on our core mission of ensuring that everyone in the country has access to Post Office services. We are proud that the Post Office acts as a key hub for communities in towns and villages, helping ensure that nobody gets left behind from being able to use essential services.
Our extensive network of over 11,500 branches ensures that 93% of the population lives within one mile of their nearest Post Office. The Post Office has the largest retail network of any company or organisation in the UK. The vast majority of these branches are operated by independent postmasters as well as small and large franchise retail partners. Across the UK, you can find Post Office services in thousands of corner shops, newsagents and convenience supermarkets.
Our branches offer over 170 different products and services, including:
- Post services. As we will explore in depth in this report, the ability to easily send a parcel remains important for millions of small businesses.
- Cash withdrawal and deposits. Our Everyday Banking services allow our customers to access their main bank account through the Post Office. In total, our network has more branches than all the banks and building societies combined.
- Government benefits, including Universal Credit and Pensions. The Post Office acts as a crucial backstop for those who cannot easily access their benefits digitally, or who value accessing these services in person.
- And many more services to make everyday life easier. From helping you renew your driving licence or passport, to cheap travel insurance or foreign currency, the Post Office is there to help families across the country out.
While a Government owned company, we operate on a commercial basis. In our last financial year, Public First estimates that we created £370 million in Gross Value Added (GVA) for the UK from our commercial operations. (GVA is the equivalent of Gross Domestic Product (GDP), excluding the impact of product taxes and subsidies.)
Even more important, however, is the much wider value we create for families and businesses across the economy. In total, Public First estimates that we create £9.4 billion in consumer surplus and £3.6 billion in surplus value for small businesses. In other words, the average household would rather pay an additional £30 per month rather than lose access to the Post Office, and the average small business £109 per month.
Post Office Consumer Surplus by Parliamentary Constituency (£ mn)
Methodological note
The economic and opinion research for this report was conducted by Public First. Public First is a member of the British Polling Council and a Company Partner of the Market Research Society, the two organisations that oversee opinion research in the UK.
As part of the research for this report, Public First ran two new extensive polls of consumers and small businesses:
- Consumer Poll. An in-depth nationally representative poll of 2,011 adults in Britain, weighted by interlocking age and gender, region and social grade. The fieldwork for this poll was completed between 24th August to 30th August 2020.
- Small Businesses. An in-depth poll of 1,004 businesses with fewer than 250 employees, weighted by business size, sector and region. The fieldwork for this poll was completed between 26th and 28th August 2020.
The full polling tables for this report are available to download from Public First’s website here and here. All the modelling for this report was independently peer reviewed. A more detailed methodology is available at the end of this report.
The Post Office is one of the most trusted public sector institutions in Britain
As part of the polling, we asked our respondents to give their overall opinion of the Post Office in multiple ways.
To start, we asked people to rate a number of public sector organisations, ranging from the Bank of England to HMRC. The Post Office came out top by a clear margin.
What people say about the Post Office1
In your own words, what do you think is most valuable about the Post Office, if anything?
"They are a lifeline for communities around the country. They provide an excellent service and keep people in contact with those they love. I love that you can go to a post office with a letter or parcel, and know you can send it anywhere in the world." Woman, 32, South West
"It is a British institution. Not everyone wants to do everything online. We need them even more now that banks are closing most of their branches. They have the personal and local touch." Woman, 66, Wales
"It's part of Britain!" Woman, 54, London
When we asked directly, our respondents were in agreement that it is important the Post Office exists, that it is close to everyone that needs it, and that it remains relevant for the modern world:
Our research showed that the Post Office’s reputation is high amongst every demographic. Every single age group said they had a favourable view of the Post Office; this was mirrored by men and women; people from every region of the UK; and people from different socio-economic groups.
In your own words, what do you think is most valuable about the Post Office, if anything?
"They always lie at the heart of the community, offering services that elderly and vulnerable people would struggle to access online."
Man, 21, North West
"It lets people communicate with the rest of the world and is a big part of people’s lives."
Man, 44, Northern Ireland
"It is there when I need it. That's huge value from my perspective."
Man, 66, South West
The Post Office is an anchor for the high street
It is hard to overstate the importance of the High Street to people across the UK. In many towns across the country - but particularly less affluent towns outside the prosperous South East of England - it is the glue that holds communities together. Of course, the shops and the goods sold in the shops are important, but collectively they play a broader role: High Streets encourage people to work and socialise together; they give a town its very identity. People’s feelings about the health of their local towns are tied up deeply with their feelings about the health of their local High Street.
The rise of online retail and banking has led to a transformation in the traditional model of the High Street, which in turn looks to have been accelerated by Covid-19. Even before the pandemic, the UK had a growing number of vacant units and falling rents. Between 2013 and 2018, footfall in town centres consistently fell, with chain retailers shutting more shops than they opened.2
In our polling, around a quarter of respondents (26%) thought that the area that they were living in was getting worse or much worse. What is more, there was a clear correlation with income: those with the lowest incomes were significantly more likely to think their area was deteriorating.
Thinking about the area that you live in, would you say it is getting better or worse?
In our research, however, we found that the Post Office remains an important anchor for the High Street. As part of our polling, we gave people a range of services they would want to see on their High Street if they moved to a new town. The Post Office came top - significantly higher than the next most popular option, a supermarket, and much higher than a GP surgery, pub, cafe or restaurant.
In another question, we asked our respondents as a thought exercise how much they would have to be compensated to make up for the closure of their local Post Office. We found that the Post Office was worth more to our respondents than local libraries, corner shops - or even, the pub.
The Post Office is not just important for ordinary families, but creates real spillover value for local businesses too. It is only natural to combine a trip to the Post Office with popping in to other shops or cafes on the High Street while you are out.
In our polling, a third of respondents said that they had stopped at another local business while out on their trip to the Post Office. In total, Public First estimates that that produces an additional 400 million visitors, or £1.1 billion in additional revenue for those businesses.
Keeping Small Businesses Going During Lockdown
For many small businesses, the Post Office has proved an important lifeline during lockdown. Run by Postmaster Waheeda Akram for the last 18 years, few places have demonstrated this more than Stockbridge Post Office in Edinburgh.
It’s relied on by a huge range of local small businesses to send crucial deliveries, whether it be children's shoes and clothes, or garden furniture imported from Mexico. ‘They called us their lockdown heroes. Because they said if we hadn’t been here to send their parcels, they would have gone out of business,’ said Waheeda.
Equally, one of the most used services Waheeda’s Post Office offers is Drop & Go, a free, same-day service. People using it don't need to queue - they simply drop off their parcel and go, saving valuable time for small businesses. Its use has only increased during the Covid-19 crisis as businesses shift more of their sales to online, and local residents looking to earn a bit of extra money on eBay or Depop. The total number of parcels sent from Waheeda’s Post Office increased by over 80% during the start of lockdown (April to August 2020), compared to the same months in 2019.
For local residents, the Post Office has given them a safe place to send care packages to friends and family during lockdown and offered a convenient place to do their banking. When the bank branch at the end of the street recently shut due to a suspected Covid case, for example, a notice explicitly directed people to head to Waheeda’s post office as the nearest alternative.
Waheeda sums it up by saying: ‘I’ve been on the counter, solid, since the lockdown. But I love my job, and that’s why I’m doing it. I love helping people when they come into the Post Office. Whether they’re young or whether they’re elderly, we’re always here for them.'
The Post Office supports day to day living
Keeping the Post Office running during Covid-19
The lockdown - particularly in its early stages - was a hugely traumatic time for the whole country. As infections and, sadly, deaths rose, the public were nervous about the effects of leaving their house. But, of course, almost everyone had to continue to live parts of their life normally - going to the shops, checking in on family, friends and vulnerable neighbours, running errands and so on.
As an essential service, we worked hard to keep over 90% of the Post Office network open, while ensuring our customers and workers remained safe. In order to help achieve this, in our standalone Post Office locations we reserved the first hour of each day for elderly or vulnerable customers, and those working in NHS or care services.
By keeping the network open, we have been able to continue to support ordinary families:
- 39% of respondents said they had gone to the Post Office since lockdown began - significantly higher than the proportion that gone to work (29%) or their bank (21%).
- 22% of respondents said that they had continued to visit the Post Office regularly, or at least once a month on average.
- Our internal data shows that the total volume of mail and parcel actually has increased during the lockdown period (April to August 2020) as compared to the timer period before.
What people said they valued about the Post Office during lockdown
"The ability to send parcels and gifts to friends or family. This was especially important during lockdown when those moments were banned. We weren't allowed to see one another, and letters, cards and parcels became a way of keeping in touch."
Woman, 24 South East England
"It keeps people in our village connected. Many of them could not travel during lockdown and its services were vital. "
Woman, 53, West Midlands
"Being able to send parcels, as well as buy stamps, envelopes and other postal material, has been a lifeline since the pandemic started. It has been a wonderful way of keeping in touch with friends and family who I couldn't see in person, but wanted to mark special occasions I had missed with a card or a present. "
Woman, 42, London
The importance of convenience and proximity
As part of our agreed Access Criteria with the Government, we have committed to ensuring that 99% of the UK population are within three miles of their nearest Post Office outlet - and that 90% are within one mile. Over the last five years, while other High Street chains have often significantly reduced their numbers, the total number of Post Offices has stayed roughly constant.
In our polling we saw that this investment has paid off:
Having a Post Office that is close by is highly important to people across the UK. 91% of respondents to our poll said that travel convenience was important in choosing a branch, significantly higher than the range of services offered (77%), extended opening hours (57%) or perceived business (68%).
The importance of convenience is one reason why respondents were happy to access Post Office services hosted inside another store. 48% of respondents said that their last trip to a Post Office was to a branch located within another store.
Importance of different aspects when choosing a Post Office branch
What people say about the convenience of the Post Office
"Just having that ability to send anything at a convenient time and reasonable price."
Man, 35, East Midlands
"The fact that it's always there when you need it. It's reliable and very convenient. You can't go wrong with a Post Office."
Woman, 22, Wales
The importance of the different services the Post Office offers
People use the Post Office for a wide range of services. As you would expect, letters, stamps and parcels dominate. 80% of our poll respondents said that they used the Post Office at least once a year for parcels, and 83% for letters and stamps. Cash is a frequent reason for accessing the Post Office too - with around a third (35%) saying they used the Post Office at least once a year to withdraw or deposit cash.
But even if they are not used as often, other services are important too for when people need them. The Post Office is also used for official documentation like passports and driving licences, for foreign currency and travel insurance, for paying bills and receiving benefits.
When we asked respondents how important it was that the Post Office offered different services, a large majority agreed that it was important that the Post Office continued to offer a wide range of services.
How important do you think it is that the Post Office offers the following services? (% Important)
The different services offered by the Post Office ensure it helps ordinary people with everyday life:
- 44% said they have used the Post Office to pick up official forms
- 54% said they have used the Post Office to return online orders
- 54% said they have used the Post Office to exchange foreign currency
The Post Office and vulnerable communities
Our research shows it is no exaggeration to say the Post Office is for everyone. However, we know that we play a special role in the lives of many of our older and vulnerable customers. These are people for whom a physical presence obviously really matters, and it is important to be able to talk to a “real person”. On the most recent data, there were still over 5 million adults who do not use the internet.3. At the same time, 1.3 million adults in the UK today do not have access to a bank account.4
In your own words, what do you think is most valuable about the Post Office, if anything?
"It is the only place that offers some services particularly for older or disabled with no internet access"
Man, 69, London
"It allows older people to communicate with their family members and send gifts, cards and letters. It is important to provide friendly help for people who don't have access to the internet and can't get to a bank."
Woman, 71, South East England
"All that it offers, and the kindness of the staff who invariably "go the extra mile" to help people. Thank you."
Woman, 69, North West England
The Post Office is an enabler of small businesses
Small businesses rely on the Post Office
For millions of small businesses, the Post Office is a crucial support. 60% of small businesses we spoke to agreed that the Post Office is important to their business, and 72% that the Post Office is particularly important for small businesses.
In our research, we found that the Post Office acted as a crucial bridge between the online and offline economy: supporting businesses who could not rely entirely on online banking, and helping millions of both businesses and individuals bring in additional income. For many communities, particularly those where the High Street has suffered, the Post Office acts a crucial part of the underlying economic infrastructure.
In the post-Covid world, an increasing number of businesses are looking to supplement their physical sales with online delivery or sales. 26% of small businesses told us, that as a result of Covid-19, they had moved to a new online or delivery based sales system. The Post Office is playing a crucial role in helping many businesses make that transition.
Overall, how important is the Post office to your business and your staff?
When we asked small businesses how long they would be able to function without the Post Office, 43% said they would only be able to keep going for a few months at most - and 32% only a few weeks. To put that into context, that is the equivalent to a fifth (22%) of the entire UK economy, or a quarter (26%) of jobs.
In today’s world, an increasing number of small businesses are selling products both in person through their premises, and through the web. Just under half of small businesses (46%) told us that they sold online, with over forty million parcels sent a year through the Post Office for small businesses.
A small proportion of businesses said that their entire revenue depended on parcel delivery, but a significant proportion raised some revenue through parcels. 41% of small businesses we spoke to said that they earned between 11% and 70% of their revenue from parcels.
Since the start of Covid-19, the Post Office has continued to play an important role in helping businesses keep going:
In your own words, what do you think is most valuable about the Post Office to your business, if anything?
"The fact that despite the lockdown their service has been constant."
Construction business, London, 50-59 staff
"Since the outbreak I have been unable to do my weekly banking by going into a branch. The Post Office in my local shop has been invaluable because it has ensured I have regular access to money."
Sole Trader, South West
"It is essential, especially as the banks have closed and there is nowhere else to go to deal with daily transactions."
2-4 employees, Yorkshire and the Humber
"It is the familiarity and convenience. Many other courier services are tacked onto other businesses or are in out of town locations, making it difficult or impossible to get to them."
Sole Trader, East Midlands
When we asked small businesses why they used the Post Office, it was clear that the most important drivers were convenience and trust. 59% of small businesses agreed that it was important to have a Post Office physically close to their main premises.
Which of the following best explains why you use the Post Office's services?
Which of the following words do you think best describes the Post Office?
What businesses say about the convenience the Post Office provides
In your own words, what do you think is most valuable about the Post Office to your business, if anything?
"It provides a convenient, value for money, essential service to our business and the wider community. We couldn't operate without it."
Accommodation & food services, 5-9 staff, Scotland
"The convenience. It's great having them near."
Transportation company, 25-49 staff, South East England
"It's a combination - access is convenient, secure and the services are reliable."
Human health and social work business, 25-49 staff, North West England
As with consumers, we asked small businesses a series of questions to quantify just how much the Post Office was worth to their business. Our headline estimate is that the Post Office creates an overall £3.6 billion in surplus value a year for small businesses, or £109 per small business per month.
The Post Office as a replacement for the local bank
One of the most important reasons that the Post Office continues to be an essential service for small businesses is that it offers a convenient and trusted location to deposit cash. Around a quarter of small businesses (28%) say that they use the Post Office at least weekly to withdraw or deposit cash.
Since 2015, over 3,500 bank and building society branches have been shut down.5 While for many consumer banking activities, the bank’s website or app is an adequate replacement, this is less true for a small business having to handle significant amounts of physical cash. In total, the Post Office network has more branches than all UK banks and building societies combined.
% of bank network lost by Parliamentary Constituency since January 2015
In your own words, what do you think is most valuable about the Post Office to your business, if anything?
"As more and more high street banks close and the costs for internet banking increase, the Post Office offers a personal service with easy access. "
Sole Trader, Scotland
"The fact that it's open 6 days a week. You can go in person to the counter to deal with an item - you are not waiting for a courier to turn up. They have a good delivery network, and it’s reliable."
100-249 employees, South West
"The convenience of being able to withdraw petty and other cash, deposit cash and cheque receipts, as well as buy stamps and post letters and parcels"
5-9 employees, South East
"It provides me the best service, delivering every one of my parcels safely."
100-249 employees, Greater London
Serving People and Businesses in Birmingham
Small communities depend on their Post Offices. For Sunil Ghai, who has run Moseley Post Office for the last 20 years, excellent and personal customer service is at the heart of this: ‘We know all the customers by face here ... It’s nice for business - we know our customers and they know us,’ he says. ‘If they’re running late, they can give us a call to let know.’
The team put this attitude into each part of their business. Moseley was one of the first branches to take advantage of extended opening hours, and the team takes pride in making sure that goods all get sent out by 5:30 every day. From dentists to travel agents, local businesses rely on Mosely to ensure their goods get sent on time. As Sunil puts it: ‘If they need things to get there the next day, they can rely on us. There's never been a day when we haven't got their mail out.’
Since lockdown began, Moseley has seen a surge in mail passing through its office, with the number of parcels more than doubling over the year before. Sunil explains that there has been a noticeable increase in the number of people using the Post Office to send parcels for online marketplaces, or to send care packages to friends and family across the country. Many of these items were precious or perishable, and his team worked hard to ensure they arrived as quickly as possible.
Sunil doesn’t deny there have been real challenges over the last 20 years, and there will be more as Moseley recovers from the Covid crisis, but in his view: ‘If you give the customer a personal service, and try and bend over backwards, you find that leads to four or five more coming into the office.’
Methodology
Consumer Surplus
Public First utilised a variety of methods in order to estimate the impact that the Post Office creates for UK consumers, including an open-ended response, conjoint analysis, and a single discrete binary choice question.
Our headline measure is based on the latter method. Public First asked our respondents:
“Suppose that in order to maintain the entire Post Office network as it currently is, the tax from your household that is used to support the Post Offices would be £X per month. Or, all Post Offices would close and none of your household’s taxes would be used to support the Post Offices. Would your household be willing to pay this level of tax in order to maintain the current network of Post Offices?”
The tax offered was randomised between £1.25, £2.50, £5, £10, £20, £50 and £100.
Public First then used a probit and logit regression to derive a demand curve, and the total consumer surplus per user, averaging the results of the two models. This was then scaled up to a national level by the ONS’ estimate of the number of households.
In addition to the ongoing estimate, Public First also sought to measure the relative lifetime valuation of the Post Office, public libraries, local corner shops and local pubs through a second question:
“Suppose that the Government planned to close the Post Office network, but in compensation offered you a one off payment. Would you rather the current network of Post Offices close and you receive £X, or keep the network of Post Offices as it is?”
In this case, the amount offered was randomised between £12.50, £25, £50, £100, £250, £500 and £1,000.
Supporting Local Shops
In order to estimate the additional revenue the Post Office creates for local shops, Public First combined data on:
- The average number of yearly trips to the Post Office for the whole population
- The average number of other local businesses visited per trip
- The average spend per shop visited
- The proportion of people who said that this spend was additional, and that they wouldn’t have otherwise spent this money if they had not needed to go to the Post Office.
- ONS’ estimates of the UK population
Similarly, to estimate the revenue impact from hosting Post office services, Public First combined:
- The average number of yearly trips to the post office for the whole population
- The average number of post office trips which are in a host shop
- The average spend in the host shop
- The proportion of people who said that this spend was additional, and that they wouldn’t have otherwise spent this money if they had not needed to go to the Post Office.
- ONS’ estimates of the UK population
Business Surplus from Post Office
Similar to our Consumer Valuation, we estimate businesses’ WTP by utilising a discrete binary choice question:
“Suppose that in order to maintain the entire Post Office network as it currently is, the tax from your business that is used to support the Post Offices would be £X per month. Or, all Post Offices would close and none of your business’s taxes would be used to support the Post Offices. Would your business be willing to pay this level of tax in order to maintain the current network of Post Offices?”
Where the tax is randomised between £1.25, £2.50, £5, £10, £25, £50, £100.
The results are regressed using linear and log models to get the average monthly surplus of the Post Office for businesses. We take the average of these models and scale it by the ONS’ estimates of the UK Business Count to give the national total business surplus.
GVA
Following standard practice, Public First calculated the direct GVA impact of the Post Office as the sum of employee compensation, interest and other finance costs, depreciation, taxes of production minus subsidies and gross surplus. This data was taken from the Post Office’s last published annual report, for 2018-19.
In addition to this direct impact, we also include the indirect and induced impact of Post Office, using a type 2 multiplier derived from the ONS’ most recent input-output tables for the retail and postal and courier sector.
Estimating the Impact by Constituency
In order to apportion the total UK consumer surplus by constituency, Public First averaged two models:
- Multiplying the average household consumer surplus by the number of households in the constituency
- Apportioning the total consumer surplus by the share of UK mail and UK postal services volume for each constituency, taken from Post Office data
Public First then further adjusted this data to match their regional estimates of consumer surplus, which is based on regional variation in the polling data
To estimate annual business surplus Public First uses a similar methodology, combining:
- The average business surplus for different sizes of business, multiplied by the number of each size of business in that constituency
- Apportioning the total surplus by the share of UK mail and UK postal services volume for each constituency, taken from Post Office data
The average of these models is then adjusted to match Public First’s regional estimates of business surplus.
- All quotes are taken from open response questions in Public First’s consumer and small business poll. Some quotes have been edited for spelling and grammar, but are otherwise unchanged.
- The Grimsey Review 2
- Exploring the UK’s digital divide
- The financial lives of consumers across the UK
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