Should pensioners pay back their winter fuel benefits?

For many pensioners, the package of additional benefits that is paid on top of the state pension  provides a vital boost to their tight budgets.

But a row has broken out within the Coalition over the fact that the benefits - worth several hundred pounds - are paid out in equal amounts to the UK's richest and poorest pensioners.

It has prompted work and pensions secretary Iain Duncan Smith to this week call on wealthy retirees to give up or pay back their winter fuel payments, free bus passes and free TV licences if they can afford to do without them.

Pay it back: Iain Duncan Smith has encouraged wealthy pensioners to forego winter fuel payments, free buss passes and free TV licences.

How much are these benefits worth?

Everyone born on or before July 5, 1951 (aged 61 or over), is entitled to a winter fuel payment of £200 to help with heating bills when the cold weather sets in. The amount rises to £300 for those over 80.

Payments are made in November or December and are paid automatically to those claiming the state pension or another benefits. Those of a qualifying age who do not claim such benefits must register to receive the payment from the Department for Work and Pensions.

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The over-75s meanwhile are entitled to a free TV licence worth £145.50 for colour televisions and £49 for black and white sets.

And by law, those over the age of 62 get a free bus pass for off-peak travel from their local authority, with the qualifying age rising to 66 by 2020. How much this is worth depends on how much they are used.

Can't the Government just withdraw these benefits from the wealthy?

That is what the Liberal Democrats want, a means-tested system so that those with the biggest incomes are automatically excluded.

Critics warn that the financial benefit to the state of this would be limited because of the costs of imposing and administering a system of means testing.

The Conservatives are stymied from cutting back of pensioner benefits by an election pledge from David Cameron that promised to protect winter fuel payments, free bus passes and TV licences, and pension credit for the first term in Government.

In February, Mr Cameron re-iterated and extended this pledge, saying the benefits would be protected until a year after the 2015 General Election - if the Conservatives are still in power.

Hence Mr Duncan Smith's suggestion that those in a position to pay back or cancel the benefits do so voluntarily.

The debate has even prompted Tory MP Glyn Davies to suggest well-off pensioners should donate cash equal to their additional benefits to charity, leading to an incredibly inefficient situation in which people pay tax, this cash is handed to pensioners in benefits, who then pass it on to charity.

You're refunded! Lord Alan Sugar said in 2010 he attempted to pay back his £200 winter fuel payment, but was told by civil servants to keep it.

How can you pay back the benefits?

There have been rumblings in the past, not least by Lord Alan Sugar, about the difficulty of paying back the winter fuel payments, but the DWP has  set up a hotline that allows people to ask to pay it back and be removed from the list.

Thus far around 200 people are believed to have asked to be removed from the list.

To do this, you can call the helpline on 0845 915 15 15 and ask for furtue payments to end.

If you want to return money already paid, you can can send the payment back in cheque format by post to the DWP, including a covering letter stating whether they wish to cancel payments for future years as well.

For bus passes, local councils are charged by transport companies based on a formula which calculates how much pensioners use their buses. So if you don't use your pass and instead pay for your journey, then your local council will not be charged for it.

So, in order to opt out of the free bus pass, you can simply not use it.

Free TV licences are paid to qualifying people once they have applied for it. So, if you don't want it, simply don't apply for it.

Those who already have a free licence will have it renewed every three years. Before the renewal date, they will be contacted to see whether they still need it. They can cancel it and request a paid for one in the meantime by calling TV Licensing on 0300 790 6131.

Should wealthy pensioners give up their benefits?

What do you think? Should wealthy retirees take one for the team and give back benefits they arguably don't need - much like higher-paid parents now have to do with child benefit?

Is it the case that it's the Government's fault it will not renege on the Prime Minister's pre-election promise, and it's unfair to use guilt to push people into paying back benefits they are entitled to?

Or, with everyone's circumstances different, is it unfair to discriminate when it comes to pensioners' benefits based on an arbitrary, means-testing system?

Energy comparison site has conducted research which suggests limiting winter fuel payments to wealthier recipients would be a popular move, provided the money saved is passed on to those desperately in need.

But at a time when pension savers are having the goalposts shifted with alarming regularity, should the Government leave our current crop of pensioners well enough alone?

HMRC officials trawl USA and Australian data in super rich tax haven crackdown

Customs officials are trawling computer records from the USA and Australia as part of its crackdown on wealthy tax cheats.

Hundreds of people in the UK are already being investigated for offshore tax evasion by HMRC as its analysts study 400 gigabytes of data provided by America's Internal Revenue Service and the Australian Taxation Office.

Chancellor George Osborne has warned that cheats have nowhere to hide, with early results already unearthing companies and trusts in tax 'havens' like Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands, which are being used to hide the assets of the rich.

Hidden getaway: The rich are using offshore tax havens like the Cayman Islands to hide their assets.

He said: 'The message is simple: if you evade tax, we're coming after you. The Government has invested hundreds of millions of pounds to fund the fight against tax evasion, both at home and abroad.

'This data is another weapon in HMRC's arsenal. The Prime Minister has made it a key priority to drive an international effort to increase transparency and clamp down on tax avoidance and evasion. By working with our international partners in this way, we are again demonstrating our commitment to this work.'

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So far, the data has helped HMRC has identified more than 100 people who are benefiting from these offshore schemes, with a number of these already under investigation for tax evasion.

Meanwhile, more than 200 UK-based accountants, lawyers and other professional advisers who are helping people and firms set up these structures are also under the microscope.

Firms and individuals who are not thought to be paying their fair share of taxes have been thrust into the spotlight in the past year, with the amount lost each year to tax evasion and avoidance estimated to be £32billion.

Evasion measures: Chancellor George Osborne pledged £4.6billion to HMRC to tackle tax evasion and avoidance in March's Budget.

Big multi-nationals such as Google, Amazon and Starbucks have hit the headlines for the small amounts of tax they pay in the UK, leading to growing concerns over the use of strategies which divert profits to lower tax jurisdictions.

While arguably immoral, tax avoidance is not illegal, but the Government is seeking to close tax loopholes to claw some of this back.

In the 2013 Budget, Mr Osborne warned that those who promote tax avoidance schemes would be 'named and shamed' in the future, as he pledged £4.6billion to HMRC to tackle tax avoidance and evasion.

Offshore havens closer to home - the Isle of Man, Jersey and Guernsey - have agreed to provide HMRC with information on HMRC with financial interests on the islands.

Jennie Granger, of HMRC, said: 'There is nothing illegal about an international structure, especially in a globally integrated economy, and these arrangements may be perfectly legitimate and may already have been declared to HMRC.

'However, they may involve tax evasion, avoidance or other serious offences by taxpayers. What has to stop is using offshore structures to illegally hide assets or income.'

ENTERPRISE ZONE: Peter aims to p-p-pep up the tourism trade

It is better known for its gritty industrial heritage, but the Local Enterprise Partnership has plans to make Dudley a tourist destination.

Dudley Zoo and Castle chief executive Peter Suddock is celebrating the attraction’s 75th anniversary today with the launch of Penguin Bay, featuring one of the largest collections of Humboldt penguins.

He says: ‘There is a scheme to link us with the Dudley Museum and Art Gallery and the Dudley Canal Trust to encourage people to come to the town for a day out.’

A common entrance and car park for the three attractions is planned and transport links between the sites are being improved.

The zoo and castle’s turnover has tripled in 10 years to around £3 million.

Suddock says: ‘We support other local firms, such as Teddy Grays confectionery in Dudley,  who have made our sticks of rock since the zoo opened in 1937 – one of only three places in the country making sticks of rock. We source locally wherever we can.’

ENTERPRISE ZONE: 6,400 jobs in the zone, according to Local Enterprise Partnership,

An Enterprise Zone which was approved in August last year will create up to 6,400 new jobs, the Local Enterprise Partnership believes.

The zone is made up of 320 acres of development sites in Darlaston and Wolverhampton North and its status means firms could benefit from incentives such as a 100 per cent business rate discount, relaxed planning laws, superfast broadband and enhanced capital allowances for machinery.

Flying high: Moog will make spacecraft controls in the new regeneration zone

Of the 22 zones chosen by Government, the Black Country’s zone is one of only six with 100 per cent capital allowances.

So far three firms are moving in. Jaguar Land Rover is investing £355 million in an advanced engine manufacturing facility on the site.

Moog will occupy a 200,000 sq ft building to make systems to control space vehicles, medical equipment, missiles, satellites and commercial aircraft.

Meanwhile bio-analytical testing firm Eurofins UK is in the process of completing a new laboratory for this summer.

ENTERPRISE ZONE: Winners in race for Olympic contracts

The Black Country is benefiting from the forthcoming Olympics, with figures showing that nearly 50 businesses have won contracts from the London 2012 Games and associated projects.

Areport by the Black Country Consortium shows that at least one company in each of the 13 parliamentary constituencies has been awarded a contract, many of them through the supplier portal

The value of the Black Country Olympic contracts is £415 million. It is estimated that about 7,000 supplier contracts worth £6 billion in total were made available nationwide for the 2012 games.

Alucast in Wednesbury, secured a deal to cast parts for the London 2012 Games torch.

The company, which employs about 100 staff and expects to reach £8 million turnover this year, was chosen by Coventry-based Premier Group to manufacture the caps for the torch.

Dudley-based bathroom products-maker Thomas Dudley & Co and steel mesh manufacturer Hickman and Love also won contracts.

Construction giant Carillion, which is based in Wolverhampton, was selected to deliver the International Broadcast Centre and Main Press Centre in the Olympic Village with the help of Manchester-based regeneration firm Igloo.

ENTERPRISE ZONE: 'Inclusive spirit' brightens Black Country's outlook

Once a world leader as the engine of growth in the industrial revolution, the Black Country has seen more than 1,000 businesses go to the wall in the past year.

And it is now below the national average for the number of start-ups per head of population, according to a State of the Region report by the Black Country Consortium, an organisation promoting regeneration in the area.

Despite this, Stewart Towe, chairman of the Black Country’s Local Enterprise Partnership, one of 39 in England that bring local authorities and private businesses together, is optimistic.

Home cooking: Pargat's Narinder Kaur is hoping to lessen reliance on imports

Towe, who also owns steel frame-maker Hadley Group in Smethwick, says: ‘There’s a new agenda and an inclusive spirit that wasn’t there before. Successes include securing millions of pounds of investment for the Black Country.’

The Partnership covers 31,245 small and medium-sized firms in Wolverhampton, Walsall, West Bromwich and Brierly Hill and Merry Hill. The LEP, which is a successor to the Regional Development Agency Advantage West Midlands, was the first to have its board approved by the Government in January last year.

It is focusing on removing barriers to growth in six areas – planning, access to finance, business advice, education and skills, transport and overseas trade.

Despite some disputes between local authorities over whether the Black Country and Birmingham should be covered by one partnership, Towe says firms just wanted someone to ‘get on with it’.

SCG Solutions in Stourbridge, an integrator for companies supplying the rail industry – including to Bombardier, Alstom and Siemens – is one of about 100 firms to receive advice on access to finance at the Partnership’s Open Access to Finance Forums.

Steve Marsh, boss of SCG, who runs its consortium turning over £20 million a year, says that by attending one of the quarterly events, designed to introduce small and medium-sized accountants, brokers and financial advisers to the local business community, he met Central Finance.

The contact helped him to secure a £50,000 loan through the UK Steel Enterprise Fund to boost exports.

Marsh says that while he feels the now defunct Advantage West Midlands was more engaged with local firms, the LEP does the best that it can.

Pargat Housewares, an aluminium cookware and bakeware maker in West Bromwich, received help from the Partnership to secure funding under the Government’s Regional Growth Fund scheme.

The fund supports projects that can create jobs, are based in areas dependent on the public sector and are supported by private sector investment.

Narinder Kaur, sales director at Pargat, says: ‘The LEP worked with several manufacturers and pooled the projects to meet the minimum investment required. Without its support it would have been impossible to secure the vital funding.’

The company says that it will use the investment to ‘place less reliance on the Far East and bring manufacturing back to the UK’.

Towe admits that the Partnership does not have the funding for everything it wants to do, but is eager to promote initiatives it thinks will benefit the Black Country.

Sterling outlook: What next for the pound?

Is the pound weak or strong or middling? Opinions on the health or otherwise of sterling tend to differ so drastically, it's sometimes hard to believe the same numbers are being watched.

It's a financial benchmark that allows divergent interpretations, and even carries some emotional baggage: some constituencies take pride in a strong sterling, as an indicator of British economic virility, and a harbinger of cheaper Continental holidays.

Financial authorities and Governments take a more pragmatic view and in straitened economic times are generally happy for the pound to weaken, hoping it will give a shot in the arm to exports and rebalance the economy.

Gaining currency: The pound's recent appreciation is a tale of euro weakness

Aside from what is desirable, the pound exchange rate at any one time will be called weak by some and strong by others. There's a camp that decries the current €1.25 that the pound buys, preferring to remember the €1.50 of six years ago rather than the €1.10 of July 2011, or the near-parity of January 2009.

Questions of 'strength' are also muddled by the relative nature of exchange rates: they are de facto also a measure of another currency's value.

Moreover, the pound's rates against the dollar and euro are increasingly determined by the euro-dollar rate rather than domestic economic news.

Where does sterling stand at the moment?

Sterling is towards the upper end of its five-year range versus the euro. The current rate of €1.25 (80p to the euro) is well above the January 2009 low of €1.02 but well off the rates of €1.40-50 last seen in late 2007.

For the first half of 2012, the pound made gains against the single currency as the eurozone debt crisis re-erupted.

At its July peak of more than €1.28 (78.1p to the euro), it was nearly 18 cents or 16 per cent stronger than it had been a year earlier at its 2011 trough.

However, it then retreated and only a 2.5-euro-cent recovery in recent weeks - on the back of strong third-quarter growth data - sees sterling trading where it is.

Both currencies have been devalued by the ongoing economic weaknesses in their host nations and the massive monetary loosening enacted to resolve those weaknesses.

It appears EU efforts to stem the eurozone crisis have restored some faith in the single currency and that is partly behind sterling's gradual retreat since the summer.

However, the eurozone economic outlook is pretty dire and most analysts expect some sort of action from the European Central Bank.

More of the pound's weakness can be explained by the ongoing quantitative easing scheme. Despite the third-quarter growth surprise, suspicions remain the UK economy will stagnate in the coming quarters and require further stimulus.

The pound was prevented from making even greater gains against the single currency over the last 18 months by the Bank of England's loose monetary policy. That the combination of rock-bottom interest rates and QE depreciates sterling is not a stated objective of the Bank but it is a 'bonus' much-welcomed by the Bank, the Government and exporters.

There was also a change in perception among investors this year that rather than being a safe-haven alternative for those exiting the euro, the pound might rather be tainted by its financial proximity and economic dependency on to the single currency bloc.

The dollar meanwhile had - until the summer at least - benefited from safe-haven status in the midst of global financial uncertainty. The pound has traded as low as $1.53 and as high as $1.63 this year, and is currently trading towards the upper end of that range, at $1.60.

That is towards the top end of the range it has traded with for the last two years - from $1.53 to $1.65. (Before the financial crisis struck in 2008 the pound bought nearly $2.10, but months later it was trading at $1.40.)

That sterling is not weaker against the dollar is due largely to the U.S. Fed's pronouncements on QE3 and the uncertainty created by the US election and the lack of direction on the so-called fiscal cliff.

What next for the pound?

The third-quarter growth surprise has given the pound a firm platform going to the year end.

While there is the threat of more QE, this is usually only a short-term driver for sterling and the monetary loosening signals from the U.S. Fed and the ECB are more emphatic than those from the BoE.

David Tinsley at BNP Paribas says a cloud of uncertainty currently hangs over asset and currency markets in the run-up to Christmas, which is favouring the dollar.

As various eurozone and U.S. uncertainties are ironed out, this should favour sterling. 'We also expect UK growth news to be better than the eurozone's and on a par with the U.S.,' added Mr Tinsley.

Philip Shaw at Investec emphasised that sterling's exchange rates are a bit part in the euro-dollar story.

With a pessimistic outlook on the eurozone, he expects sterling to make gains against the euro in the coming months to about €1.30 but to fall against a strong dollar to about $1.53.

'An end to uncertainty on how the U.S. is going to address the fiscal cliff will favour the dollar, particularly in the case of a Republican victory,' he said.

'Meanwhile, eurozone pressure points will flare up again in the New Year.'

In the long-term, many economists believe the days of €1.50 to the pound are gone and that even €1.40 is unrealistic.

They argue that the economic fundamentals have changed so that 'fair value' between the euro and pound is somewhere around €1.30 and $1.60 - maybe slightly higher in each case.

If the pound appreciates significantly above these rates, it will harm the UK economy and be unsustainable in the long and even medium term.

The eurozone crisis, however, is making it increasingly difficult to estimate what fair value is between the euro and other currencies, and has a distorting effect on the pound-dollar rate also.

1 in 3 Post Offices to close due to pay cut


Thousands more post offices could disappear over the next two years, the National Federation of Sub-Postmasters warns today.

Squeezed: Sub-postmaster Bhavna Desai faces a pay cut.

It says a 'totally unacceptable' pay cut being imposed on its members is putting around a third of businesses in danger of collapse.

George Thomson, the federation's general secretary, said a 'double squeeze' of falling income from Post Office Limited, and soaring staff and utility bills meant many post offices were struggling to stay afloat.

And he warned that with just 11,500 remaining across Britain, another 3,000 were at risk of closing.

Post Office Limited pays all the country's 9,000 sub-postmasters a fixed income, known as a 'core tier payment'. Although the amount varies according to the size of the business,

all receive a minimum of £10,000 a year. But Mr Thomson said this is set to drop this month by an average of £100 a month, or £1,200 a year.

At the same time, the second tranche of sub-postmasters' income - the commission paid on transactions - is also being cut.

Santander, owner of Alliance & Leicester and Abbey, is due to change its contract with its business customers from September 1 - a move which could cost sub-postmasters more than £2million a year.

Three years ago, if a business went to a post office to get £100 in change, the sub-postmaster would have been paid £1.20. Today that fee is 60p and this will become 40p in September.

At the same time, the transaction fee for depositing a cheque for £500 will fall 19p to 14p. 'Advalorem' payments, which vary according to the size of the cheque or cash deposit, will also fall from 22p per £1,000 to 16p.

In a letter to Royal Mail chairman Donald Brydon, Mr Thomson warned that subpostmasters, who are self-employed, felt 'totally abandoned' by the firm. He revealed more than 50% take home less than £1,000 a month, according to a poll of 755 federation members.

One in seven said they 'took nothing at all' last month, and were instead relying on their savings and pensions to keep going.

Talks over the bitter pay dispute, which started in November, have broken down, and the federation said yesterday that it would 'not sit idly by and allow this to happen'.

It said it was planning to do everything possible to ensure 'the British public and their

elected representatives at all levels are made aware of the unfair treatment of sub-postmasters'.

Mr Thomson also revealed many are furious that they are struggling at a time when Royal Mail is believed to have made record profits and postmen have managed a generous pay rise.

The Communication Workers Union recently negotiated a 7% salary increase for postmen over the next three years, starting with a 2% rise this month.

And Mr Thomson claimed Post Office Limited will shortly reveal record profits of £62m and bonuses of 'at least £10m' for its executives - figures the company claimed are 'speculation'.

A Post Office spokesman said that it had done all it could to ensure the best possible deal for sub-postmasters, whose average pay rose 5% last year.

'We expect many subpostmasters to see their remuneration increase further despite tough trading conditions,' he said.

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'It's like a third woirld sweatshop'

Bhavna Desai has run her post office in Swinton, Manchester, for 20 years - but fears it may not survive for much longer.

The 50-year-old said her income has plunged to such an extent that her business is on the brink of collapse.

In 2008/09, her total gross pay fell 18%, while last year it decreased by a further 6%.

She has been forced to make two of her four staff redundant and said the commission she used to receive for processing utility bills has been slashed from 14p to just 6p. And with her income set to fall again this year, she is worried about the effect on the community and her elderly customers if her post office closed down.

'When a post office shut down a few years ago, it hit the whole parade of shops,' she said. 'It is like a ghost town.

'I used to run a thriving business which had a lot of respect in the local community and it felt very worthwhile. Now I feel like I'm working in a Third World sweatshop.'

Thousands more post offices face closure


If your community still has a local post office, you are lucky. Treasure it - it may not be there for long. In the past decade one in three rural post offices has closed.

Fighting on: Carrington residents took their campaign to Downing Street

That works out at a shameful four closures per week and the loss in total of about 2,400 rural branches.

Towns and suburbs also lost thousands of their branches, though these were often less publicised. Taken together, about 2,500 rural and urban branches have closed in the past two years alone, leaving a network of 12,000, down from 18,000 when Labour came to office in 1997.

Post Office Limited, part of Royal Mail, says it wants to maintain the network as it is. But the reality is that many branches are no longer viable. And the recession - coupled with the move to providing services online that used to be carried out over the counter - has proved to be the final straw.

The National Federation of SubPostmasters, which represents the majority of those who run smaller post offices, reckons that as many as 3,000 are at 'imminent risk' of closure. The NFSP's general secretary, George Thomson, says: 'The recession is being especially hard on postmasters. Most say they are suffering the toughest trading circumstances they have ever experienced. As things stand, 2,000 to 3,000 are on the brink of closure.'

If that happens, Thomson warns, the whole network could be threatened in a 'snowball effect', with customers increasingly finding ways of making do without post offices altogether.

A study last year on post office closures by the University of Chichester warned of a similar 'tipping point'. If too many outlets shut, it warned, the network could 'irreversibly decline'.

Part of the problem is that post offices are conducting fewer Government-related transactions, which in the past were a big part of daily business and generated revenues for branches. This work also brought in customers who might then use other services.

'In previous recessions, post offices were handling 80 per cent of benefit payments,' says Thomson. 'Now they are doing 20 per cent.'

'Digital inclusion' measures - where the Government tried to push more services on to the internet - have hit post offices hard. Thomson fears that as public finances face even greater pressures, this trend will accelerate.

'Post offices are still undertaking 70% of car tax transactions,' he says. 'But what would happen if the Department for Transport decided it could save money by forcing people to apply online or by phone? It's a feasible saving for the DfT, but it would be terrible for post offices.'

He fervently hopes the Government will think through the consequences of any such decisions. 'In its 13 years in power the last Government got everything wrong that it could have in regard to post offices,' he says. 'Now we need to find ways of making post offices work meaningfully for customers and for Government. Subsidising branches is not the answer.'

Defeated: Ex-postmistress Janet Willis, with retrievers Millie and Bridie

The new Government has been quiet on post offices despite flagging an intention to go ahead with some form of privatisation of Royal Mail. But many prominent Conservative and Liberal Democrat figures have been outspoken defenders of threatened branches in the past and their constituents will hold them to account if closures happen (see below).

One positive outcome of countless battles waged by communities to save post offices has been to push the issue up the political agenda. For former postmistress Janet Willis, the loss of her post office was the trigger for the launch of a career in local politics.

In 2008, Janet and husband Lloyd waged what became one of the most high-profile campaigns to save a local post office when their branch in Greenodd, Cumbria, was earmarked for closure. Even their golden retriever Bridie was enlisted to the campaign, featuring on the labels of locally produced beer 'Bridie's Brew'.

William Hague was among MPs to sign the Greenodd petition, but despite enormous public opposition, the closure went ahead in July that year.

Financial Mail, which visited Greenodd to report on the protests in June 2008, contacted Janet last week. She said: 'When I look back at that period, it was a rollercoaster. I could never see the logic of the closure. But I knew early on there was no argument that could win Post Office Limited over. From the first, head office staff were arrogant and rude. I could see they were resistant to any opposition.'

Janet, 48, still runs the village shop - accompanied by a new golden retriever, Millie - while she operates a reduced 'outreach' post office service for several hours on Mondays, Tuesdays and Fridays.

'We're managing,' she says. 'But reduced hours do mean we've lost customers. People are doing their business elsewhere.'

Following all the publicity around Greenodd's closure, Janet was invited to stand as a Liberal Democrat councillor for Low Furness, South Lakeland District, and was elected last year. She is passionate about maintaining post offices. 'A post office in Great Urswick has just been sold,' she says. 'All I hope is that the buyers will continue to run it as a post office.'

Rural post office closures quickly become local news, but urban closures, which are often less reported, can be as devastating.

Desolation: The closed Carrington post office

The post office in Carrington, a suburb to the north of Nottingham, was shut in 2008, despite strong local objections. A residents' group, steered by human resources consultant Colin Barratt, has since campaigned to have it reopened, including travelling to London to petition No 10 - without success.

Last week, Colin, 51, said: 'The community has been hit socially and commercially. Since the closure, out of a parade of 12 neighbouring shops, four have closed. People forget that in urban areas it takes a long time to travel and park. An urban mile can be a long mile, especially for people who can't easily get around.'

Colin's group will continue to lobby for a service to be restored. 'We have a new MP and through him we'll keep up the pressure,' he says.

One notable success in staving off threatened closure involved the post office in Hinton St George, a beautiful Somerset village connected only by narrow lanes to its neighbouring communities.

Yeovil MP David Laws, a Minister in the new Government until his abrupt resignation following revelations over expenses claims for rent paid to a male partner, was instrumental in helping villagers fight to keep their branch. They are fiercely loyal and grateful as a result.

Postmistress Sue Knight, 62, who has run the branch and attached store with her husband, Peter, 63, since 1991, says: 'In June 2008 we had been wrongly led to believe by Post Office Limited that we were not on the list of planned closures.

'But then, to our horror, it was suddenly announced we were to close. The villagers here are enormously appreciative of all the services and they rallied amazingly to fight the closure.'

Their branch was one of the few that survived the 2008 cull and it is now used by as many as 100 people a day. When Financial Mail recently visited Hinton we spoke to customers including visitor Natasha Mcewan who was staying with her mother. 'We've always loved this village and the shop and post office are central to it,' Natasha says.

Sue says: 'We've now been told we're safe. Everyone's said there are no plans to close any more branches. But it feels like "watch this space".'

Fight for survival at the counter

Using post offices will help them survive, as branches are paid on the basis of transactions undertaken. You can pay water, electricity and gas bills as well as bills for Sky; and you can pay income tax, council tax, car tax and renew your TV licence too.

Current account customers of many major banks (bar RBS, HSBC and NatWest) can pay in and withdraw money. Within the next six weeks these facilities will be available to Halifax customers. You can order holiday currency or transfer larger sums, and postal order and MoneyGram services still exist.

The counters enable you to buy Premium Bonds and other National Savings deals, and a Christmas savings scheme still operates for regular cash saving.

But newer telephony, insurance and savings accounts from the Post Office are not necessarily good value. Savings accounts are provided by Bank of Ireland, which is not covered by the UK's financial safety net, so beware.

How tough talk o nthe campaign trail needs to turn to action

Message: Cameron visits a branch

David Cameron's message when he visited a post office earmarked for closure in Fulham, west London, in March 2008, was clear: 'We want postmasters to do more, to offer more services, to better compete.'

Deputy Prime Minister Nick Clegg has also been outspoken on the subject, campaigning against closures in his Sheffield constituency. Other prominent MPs to have fought closures include Ian Duncan Smith, Kenneth Clarke and William Hague (see main report). Jim Paice, the Minister for Agriculture and Food in the new Government, said in April: 'Labour has stood by and let our post office network decline. Conservatives will stop the closure of any profitable post office and allow rural post offices to offer a wider range of services.'

It may be too early to judge the Coalition Government's resolve. In the Queen's Speech, a Bill was included that could ultimately pave the way for privatising bits of Royal Mail, with speculation that a part sell-off could generate revenues to finance ailing branches, which would remain in State hands.

And in last month's emergency Budget, it was announced that the £180m annual subsidy to the branch network would continue.

Minister for Postal Affairs Edward Davey said: 'The Government has had to make some hard choices, but we value the Post Office and have decided to safeguard the £180 million of funding.

'I will be working night and day to safeguard the future of the network.'

£1.3bn Post Office lifeline


The beleaguered post office network was thrown a £1.3bn lifeline by ministers last night in an effort to prevent a repeat of mass branch closures under Labour.

New deal: Newe cash should protect branches.

Unveiling details of the controversial Royal Mail sell-off yesterday, Business Secretary Vince Cable said he was determined to protect the future of branches, which will not be included in the sale.

Mr Cable added that ministers are looking at plans to turn the network into a John Lewis-style mutual company in which staff, sub-postmasters and communities have a share.

But he revealed the Treasury has also approved a £1.3bn subsidy package to prop up and modernise it over the next four years. He added the package, which effectively doubles the level of subsidy to the network, meant there would be no repeat of the mass closure programmes forced through by the last government.

The Business Department said the money would be used to modernise and improve services, including extending opening hours and reducing queues. But it will not prevent the closure of individual post offices which go out of business.

Mr Cable told the Commons that the cash would 'reverse the years of decline and secure its long term future. There will be no programme of closures under this Government and the Post Office will be able to invest, improve its offer and win revenue streams.'

The universal service provision, which guarantees postal delivery to every home, would also be 'gold-plated' as part of the sell-off.

Mr Cable warned that without private investment, the Royal Mail would continue to lose ground to competitors.

Labour warned privatisation left an 'axe of uncertainty' over the future of thousands of post offices as there was no guarantee that the Royal Mail would continue to use them forever under a new owner.

Labour business spokesman John Denham said the legislation surrounding the sale 'provides no mechanism to ensure that the continued long-term use of the Post Office network is an integral part of any sale of Royal Mail'.

'This would be a disaster for non-profitable post offices in rural and urban areas alike,' he added. But Mr Cable said the Royal Mail and Post Office were 'bound together by an overwhelming commercial imperative'.

A long-term commercial deal between the two organisations will remain in place after the sale.

He also revealed that the Queen will be given a permanent veto over the design of stamps, amid fears the Royal Mail could be 'abused' by a foreign owner.

He said ministers were in talks with Buckingham Palace to ensure 'protections' of historic royal connections. Mr Cable confirmed that the Royal Mail could be sold to a foreign rival. Dutch firm TNT and German postal giant Deutsche Post are expected to bid.

Mr Cable said: 'As far as the Royal Charter is concerned, it is clear that the association with the monarchy is probably the most powerful brand it could possibly have. 'There will be every interest in the new owners continuing to maintain it. We need to be careful they don't abuse the royal association.'

But Tory MP Roger Gale questioned whether the Queen's interests could be safeguarded. 'It is difficult to see how the royal connection, proudly maintained for over a century, can be maintained if the Royal Mail is sold to a Dutch, German or other non-UK buyer,' he added.

Labour, which abandoned plans to sell off the Royal Mail last year following a backbench rebellion, said it would oppose the sale.

Public ownership is the 'ultimate safeguard of the public interest', added Mr Denham. About 8,000 sub-post offices closed under Labour, leaving the network with 11,500 branches.

Promise of new era for post offices


There will be 'no closures on our watch', Business Secretary Vince Cable said last week of Britain's 11,500 remaining post offices.

Saved: Postmasters Peter and Sue Knight are staying for the moment.

'We have heard loud and clear how much the public values a large network.'

The Government also acknowledged widespread public anger over the 5,000 closures under Labour, disclosing that 3.5m people signed protest petitions.

Cable's pledge came as the Government unveiled further details of how Royal Mail would be hived off from the branches.

Eventually it is planned that the Post Office will become a 'mutual' along the lines of the John Lewis Partnership or the Co-op.

In the short term, new money will go towards branch refurbishments and projects aimed at increasing custom and creating profit from the network, which has been losing money since 2000. More Government services will be distributed over post office counters and there will be new services offered via commercial partnerships.

Financial Mail has campaigned for more than a decade against closures, meeting those who fought to keep their branches alive. Some communities are already embracing the concept of mutual ownership.

In the village of Hinton St George, Somerset, for example, where their post office was earmarked for closure in June 2008 and then saved thanks to a vigorous campaign that saw villagers take their protest to Number 10, local people are planning to buy or lease the post office premises for the village.

Postmasters Sue and Peter Knight are in no hurry to retire - and they will not go until a plan has been devised to keep the post office operating - but villagers know there must be a strategy for when they leave.

Two weeks ago, at a meeting in the village hall, the community discussed whether it should buy the premises outright from the Knights or lease it. Money would be raised from within the community with help from trusts and charities - and the property would be owned as a charitable entity.

Part of it could be developed as bed and breakfast accommodation, with income pushed back into the branch and its combined shop, says retired civil servant Derek Esp, one of the leading figures in the campaign to keep the branch going.

'It does feel as though we're through the worst and that there is more support for post offices at a local level,' Derek said last week. 'As a village we've realised how much we value this service.'

Postmasters have generally welcomed the Government 's announcement, although there is an anxiety that by separating the Post Office from Royal Mail, which is to be privatised, the postal revenues earned by post offices could be jeopardised.

Safety for savers

Savers with Post Office savings accounts, which are backed by the Bank of Ireland, are now regulated by the UK authorities and covered by the Financial Services Compensation Scheme.

This gives savings in any Post Office account the same protection as those kept in mainstream British banks. Until the beginning of this month, as Financial Mail previously warned, the protection offered to people with Post Office savings accounts had rested with the financial authorities in Ireland.

The country's economic crisis had worried many savers in Britain.

What's on offer at the counter

Post offices offer services to personal current account holders with Lloyds (now including Halifax and Bank of Scotland), Barclays, Nationwide Building Society, the Co-operative Bank (and its subsidiary Smile) and those Santander accounts originally with Alliance & Leicester.

In most cases these account holders can withdraw money over the counter, request balances and deposit cheques and cash. From early next year, the Post Office says, these services will be extended to include the millions of customers with RBS and NatWest accounts.

At that point, HSBC and the part of Santander which was formerly Abbey will be the only big banks whose customers cannot use Post Office counters.

National Savings & Investments' accounts, such as Premium Bonds, can still be bought at post offices, though they are also available online and via other outlets such as WHSmith stores.

PayPal account holders will, from next summer, be able to top up their accounts.

Post Office to lose £20m contract


The Post Office network is on the verge of losing a crucial contract to process benefit cheques worth £20m a year.

Trusted service: Government is warned vulnerable people won't feel confident using new technology to collect benefits

Ministers are set to hand the work to Paypoint, denying post offices the chance to provide the vital service for the hundreds of thousands who lack a bank account.

The move will mean 331,490 vulnerable people - including pensioners, the disabled and unemployed - would no longer be able to cash benefit cheques at their local post office.

They will instead have to find a shop that takes Paypoint, a system accessed through a swipe card or barcoded bill.

Post offices will also come under threat of closure, having already lost out as payments and renewals of many licences and services switch to the internet.

Consumer Focus, a watchdog group, wrote to pensions minister Steve Webb yesterday telling him that post offices are the most trusted institution for those on pensions or benefits.

It also warned that the most vulnerable in society did not feel confident when asked to use new technologies.

Spokesman Andy Burrows said: 'Losing this £20m-a-year contract would be another significant blow for the post office network.

'It makes most sense for the post office to keep the contract for paying benefits cheques so benefit recipients get a service they have come to know and trust.

'Post offices often provide the heartbeat for a community and people want to see them thrive. The Government should be looking to offer more services through post offices, not fewer.'

George Thomson, of the National Federation of SubPostmasters, said it would be extraordinary for the government to fail to even maintain existing contracts, when it had promised to find new ones.

A Post Office spokesman said: 'We want to continue to do this work. We have a good proposition and have been successfully serving the needs of these customers for many years.' The Department for Work and Pensions said that no decision had yet been reached on the contract.

In the past three years, around 2,500 post offices have been closed.

  This Is Money blog: Does the Post Office even know what to do with customers? 

Post Office to lose £20m contract


The Post Office network is on the verge of losing a crucial contract to process benefit cheques worth £20m a year.

Trusted service: Government is warned vulnerable people won't feel confident using new technology to collect benefits

Ministers are set to hand the work to Paypoint, denying post offices the chance to provide the vital service for the hundreds of thousands who lack a bank account.

The move will mean 331,490 vulnerable people - including pensioners, the disabled and unemployed - would no longer be able to cash benefit cheques at their local post office.

They will instead have to find a shop that takes Paypoint, a system accessed through a swipe card or barcoded bill.

Post offices will also come under threat of closure, having already lost out as payments and renewals of many licences and services switch to the internet.

Consumer Focus, a watchdog group, wrote to pensions minister Steve Webb yesterday telling him that post offices are the most trusted institution for those on pensions or benefits.

It also warned that the most vulnerable in society did not feel confident when asked to use new technologies.

Spokesman Andy Burrows said: 'Losing this £20m-a-year contract would be another significant blow for the post office network.

'It makes most sense for the post office to keep the contract for paying benefits cheques so benefit recipients get a service they have come to know and trust.

'Post offices often provide the heartbeat for a community and people want to see them thrive. The Government should be looking to offer more services through post offices, not fewer.'

George Thomson, of the National Federation of SubPostmasters, said it would be extraordinary for the government to fail to even maintain existing contracts, when it had promised to find new ones.

A Post Office spokesman said: 'We want to continue to do this work. We have a good proposition and have been successfully serving the needs of these customers for many years.' The Department for Work and Pensions said that no decision had yet been reached on the contract.

In the past three years, around 2,500 post offices have been closed.

  This Is Money blog: Does the Post Office even know what to do with customers? 

One in three post offices may shut after sell-off


More than one in three post offices could be closed under Government privatisation plans for the Royal Mail, it is feared.

Trouble in the post: The country may be left with only a skeleton post office network.

The official customer body, Consumer Focus, believes that the country may be left with only a skeleton post office network.

It says safeguards are needed to ensure key parts of the Post Office role, such as the collection of parcels, are not hived off to supermarkets or other retailers.

The branch network has been savaged since 1980, with the number of post offices reduced from 22,000 to 11,900. This was partly due to the Government ceasing to use post offices for payment of most pensions and benefits, which are now automatically put into bank accounts.

Consumer Focus believes the total number of post offices may be cut by a further 37% - 4,400 - to the legal minimum of 7,500, unless safeguards are put in place.

Currently, the Royal Mail pays Post Offices Ltd £343m a year for providing mail services. Once Royal Mail is privatised, this agreement will remain in place for five years, after which time it could shift its business away.

Andy Burrows, postal services expert at Consumer Focus, said: 'It's entirely conceivable, though it seems an odd thing to suggest, that several years down the line you could have a post office network where you cannot undertake mail transactions.'

Customers could drop off their parcels at a supermarket for collection. Letters would still be collected from post boxes.

Mr Burrows added: 'We need stronger safeguards of the postal contract and subsidy of the post office network in the long-term.'

The National Federation of Sub-Postmasters believes Royal Mail should be locked into a partnership with post office branches for at least 10 years after privatisation.

Any closures would be directly at odds with the Coalition Government, which says it plans to breathe new life into the network. In October Business Secretary Vince Cable announced a four-year Government support package worth £1.34bn.

Postal Affairs Minister Ed Davey said: 'Our plans for the Post Office will make it an even more convenient and stronger retail partner for Royal Mail.'

Post Office 'lites' face heavy fire


Trials by Post Office bosses to cut costs with a network of 'lite' branches with only limited services have been sharply criticised by a Government watchdog.

Headache: Hilery Bond couldn't use her mobility scooter

In November, the Government pledged a £1.34 billion survival package to keep the 11,500-strong network of post offices alive until 2015.

But a scheme to replace many subpost offices with cut-price 'post office local' alternatives, to be run by corner shops, garages and other outlets is being carried out.

About 60 'locals' - sometimes branded 'essentials' - have been operating for months and their performance was the subject of a report published last week by the Consumer Focus watchdog.

The report, called Local but Limited, found that more than half of all users were not impressed with the moneysaving idea.

It highlighted the fact that 'locals' don't offer popular services such as basic banking, certain bill payments or some parcel handling.

More than half of customers had to go to a bigger post office to get what they wanted, the report said. And two in five complained about lack of privacy because they were served at the same till as other shoppers.

One advantage, though, was that 'locals' offered longer opening hours. A post office 'essentials' opened in January last year inside Lloyds pharmacy in Cambourne, a village with a population of 10,000, nine miles west of Cambridge, as one of the first pilots. Outside it advertises a core of basic postal services along with Post Office card account and electronic bill payment facilities.

When Financial Mail visited last week, multiple sclerosis sufferer Hilery Bond, 68, was picking up a prescription and posting letters. The post office area is beside the checkout on the same open counter next to a headache tablet stand.

Hilery says: 'Having a post office facility here is a godsend, but it would be better if it was a larger, dedicated branch.

'I have a specially adapted mobility scooter, but I cannot use it to get into this pharmacy, so I must use crutches. Unfortunately this outlet does not offer basic banking facilities.

I must visit another post office for that.' The nearest traditional subpost office is in Bourne, three miles to the south.

Convenient: Rachel Stone and Suzanne Adams

Midwife Suzanne Adams, 30, was out and about in Cambourne with her eight-week-old daughter, Amelia, and her friend Rachael Stone, 29, who has a 15-week-old baby, Charlotte.

Suzanne says: 'The traditional post office is a great meeting place. This new outlet in a pharmacy is not a social hub and I have to travel to Cambridge for such things as passports and car tax discs. However, as a compromise, it certainly beats no post office at all.' Marta Pombo, 39, a telecoms manager, believes the 'local' offers convenience she cannot always find in bigger post offices.

'The parking is great here and for basic postal needs this outlet is an ideal solution,' she says. 'I can pick up my pharmacy needs at the same time. The staff are friendly and provide the help required.' Andrew Burrows, of Consumer Focus, says: 'Locals will replace many traditional sub-post offices, but more must be done before that happens.

Greater convenience is welcome, but this must not be at the expense of service.' The Post Office says: 'The local lets people use the same counter for all their needs - posting a parcel at the same time as buying baked beans.

'It cuts overheads while offering 95 per cent of services. There is no simultaneous closure programme and the network will be the same size.'

THE DECLINE How branches were axed

2000: At the start of the millennium there are 19,000 post offices. 2003: Post Office management launches 'urban reinvention programme', closing 3,000 branches in towns and cities. Benefits books are scrapped - these generated 40% of branch revenue and were used by 14m people.

2006: Post Office loses right to sell TV licences to private firm PayPoint. Postage-paid stamps can be bought and printed online.

2007: Another closure programme of 2,500 branches begins. Most shut within two years after a sixweek 'consultation'.

2010: Post Office pledges £1.34 billion for survival of 11,500 branches in November 2010. MARCH 2011: US banking giant Citibank wins bid to handle benefits cheques.

Sell-off 'could shut 9,000 post offices'


Up to 9,300 post offices could close as a result of the Government's sell-off of the Royal Mail, research reveals.

Blow: The deal with Royal Mail is now indoubt.

The dire prediction will worry millions of people living in villages. In many cases, their post office is the only shop and provides a vital service, particularly for those without cars.

The network is already a shadow of its former self, having collapsed in size from 19,000 when Labour came to power in 1997 to just 11,500. But it could shrink even further, according to the research commissioned by the Communication Workers' Union.

It comes as Labour today calls for the plans to sell off Royal Mail to be scrapped, and for the company to remain publicly owned.

The research found most sub-postmasters, who run post offices, typically as part of a small shop, are desperately worried about their future. Their anxiety surrounds the Government's refusal to sign an 'inter-business agreement' between Royal Mail and Post Office Limited.

At present, the two are owned by the same company - and the Post Office relies on business from the Royal Mail.

But the Postal Services Bill does not contain a clause setting in stone the crucial 'interbusiness agreement'.

Within months, Royal Mail could be sold off to the highest bidder, possibly a foreign firm, cutting the historic ties.

John Denham, shadow business secretary, said the Government's postal services policy was 'in utter disarray'.

But Edward Davey, postal affairs minister, said the Government was doing everything it could to save post offices with a £1.34bn funding deal.

Post Office delivers a trail of betrayals and closures

Whitstable is famous for its oysters, but the picturesque Kent resort may soon lose one of its pearls – its Crown post office. It has been earmarked for closure along with one in five of the flagship branches throughout Britain.

The Post Office plans to cull 70 of the 373 Crown branches – the major high street outlets run directly by the Post Office.

This follows the closure of 8,000 sub-post offices in towns and villages over the past decade. Ten years ago there were about 19,000, now barely 11,500 survive.

Target: Whitstable's Crown post office may soon close, to the fury of locals such as Anita Rule

The Crown closures are the latest of half a dozen such ‘initiatives’ in recent years – though the word  closure is never used by the Post Office – that have left a trail of broken promises.

The Post Office claims the latest closures are part of a ‘transformation’ in which no branch will be forced to shut but will instead operate from a shop.

But many of the 30,000 residents of Whitstable are not impressed. Anita Rule, 52, of Wheelers Oyster Bar, a cafe that has served the town since 1865, says: ‘Where will they fit this new branch? It certainly won’t squeeze into our bar – or anywhere else around here that I can imagine. Why don’t they stop hiding behind all these weasel words and just admit they want to come here and shut the post office.’

Walking though the narrow lanes lined with boutique shops it is hard to find where there might be another taker for a branch that currently has six counters. The Post Office has started a six-week ‘consultation’ that began last week, but no one here has even heard of the latest closure plans let alone been invited to talks.

  More... Follow the campaign against Post Office closures

In a previous closure programme six years ago, 85 Crown outlets were culled nationwide, with 76 of them put inside WH Smith stores. Many customers complained that the post office was often crammed into the back of overcrowded shops or upstairs so disabled customers found it difficult. At the time, Post Office managing director Alan Cook claimed the changes were necessary to promise a ‘long-term commitment to safeguard flagship Post Offices’ and a pledge to ‘continue to run, and invest in, a total of 373 Crown post offices’.

Six years later the closure of Crown branches is back on the agenda – while Cook retired with a £1 million bonus.

In Whitstable, accountant Lucie Morris, 28, says: ‘I can understand why they might put the branch into a shop to save money, but why can’t they be straight about how services will suffer if they are forcing them into a smaller space? The existing branch is really convenient and offers excellent access to those with mobility difficulties.’

The Post Office claims it is being forced to sell to stem £40 million a year losses among Crown branches, but claims it will not axe branches where alternative partners cannot be found. It hopes to attract shopowners who are willing to pay for the chance of having a post office inside their building in the hope of attracting more business.

Fisherman James Green, 44, who owns the Whitstable Oyster Company, fears this business model benefits only the Post Office, not customers. ‘Our branch always has long queues – surely it must be making money,’ he says.

Lost lifeline: Fisherman James Green fears a vital service will disappear

‘The only reason to sell seems to be to boost profits as much as it can – squeezing every last drop out of us by selling a prime site and franchising the business at the expense of a vital community service.’ James points out that Whitstable sorting office is already earmarked to be moved to a nearby Canterbury branch this year to save costs.

The Post Office admits it will close, but it has not confirmed a date. ‘This will mean a  14-mile round trip to collect undelivered mail,’ he says. ‘This is not only inconvenient, but it is going to be a nightmare for those without their own car.’

The latest ‘transformation’ comes just two years after Business Secretary Vince Cable promised a £1.34 billion lifeline to ensure the future of the  network.

A key part of this lifeline  initiative included turning 2,000 sub-post offices into ‘local’ shops that offered more basic services than traditional branches. ‘Locals’ get £10,000 to take this option. A further 4,000 sub-post office branches have been offered as much as £45,000 to be turned into ‘main’ post offices. They get more money to spruce up premises as they must offer a separate counter.

The remaining branches are simply being left to survive as best they can. The Crown post offices have not been included in this lifeline initiative.

The Communication Workers Union has hit out at ‘destructive’ schemes and fears they damage the long-term future of the network.

Spokeswoman Sian Jones says: ‘There are no plans to help post offices after 2015.’ The union plans to ballot members on possible strike action later this month to fight the Crown closures.

Jones says: ‘People have been fed lies and broken promises for too long. The Post Office can’t even admit to closing branches – it never dares use the word.’

A Post Office spokesman told Financial Mail: ‘We are undertaking the biggest business transformation programme in the history of the Post Office.

‘Our overall investment will maintain the size of the network and modernise branches to meet customer needs. If no retail partner is found, we are committed to maintaining a Crown post office in the area.’

'Reinvention' plan? It’s been more like a decade of disguised decline

2000 At the start of the Millennium there were 19,000 post offices. The network has suffered a gradual decline since its peak of 25,000 due to a lack of investment in the branches and infrastructure.   2003 The Post Office launches the ‘urban reinvention programme’ – a euphemism for axeing 3,000 branches in towns and cities. At the same time it is made harder for post offices to survive with the scrapping of benefits books in favour of direct payments using Post Office card accounts. Benefits books generated an average 40 per cent of branch revenue. 2006 Post offices lose the right to sell TV licences. Postage stamps are also made available to be bought and printed out online. Post offices already struggling to survive are shut down. 2007 A fresh closure drive  is launched with 2,500 branches targeted. This time the cuts go under the title of ‘Network Change Programme’. Most branches are forced to shut after  a six-week ‘consultation’ in which the wishes of the community and most sub-postmasters are ignored. The network of 458 Crown post offices is slashed to 373 in an ‘investment programme’ to ensure no other Crown branches need  ever close. Most end up sharing premises with WH Smith stores. 2010 The Government promises £1.34 billion to keep the network going until 2015. This does not stop branches closing due to tough economic conditions. At least 2,000 branches are put into shops and offer only basic services. 2013 The Post Office announces plans to shut one in five Crown post offices – to be sold off and put inside shops.  At least 70 of the 373 flagship  high street branches are set to go.  It points to a continued decline  of the surviving network of  11,500 branches.



Whether you're reading the newspaper, listening to the radio, or watching the TV you can almost guarantee that the topic of health and wellness will come up. It's not surprising considering that GPs are reporting huge increases in obesity, diabetes and mental illness diagnoses.

According to the Government's Foresight Think Tank, by 2050, 60% of men, 50% of women and 25% of children in Britain will be clinically obese, with related health problems costing more than £45 billion a year.

The nation's healthcare professionals are predicting that a time bomb is ticking for the UK's health and the strain on the NHS, let alone on industry and therefore the UK economy, will be immense.

These stark warnings are certainly prompting change. In her report – Working for a Healthier Tomorrow - Dame Carol Black, the National Director for Health and Work, proposed a radical overhaul of the system that will see the demise of the sick-note and the rise of the 'fit-note', which will spell out what employees can do rather than what they can't. The report follows the Government's wider Health Work and Wellbeing strategy launched in 2005.

For businesses, the move is towards “wellness management” and how it can play a key role in controlling the cost of employee absence and the impact of lost productivity on the bottom line. For us as an individuals, the definition of 'wellbeing' is often linked to personal happiness – if we look good and feel good about ourselves, this gives us a sense of wellbeing.

Whilst the definition of wellness may differ, what is clear is that it is an increasingly important focus for Government and GP's alike and for the individual now is the time to be thinking about taking steps to protect your own health – private healthcare may well be the solution.

Whilst traditional private medical insurance products were designed to provide benefit for acute medical conditions once they had arisen, nowadays many providers are offering products that include new and more immediate benefits. Services such as medical and stress counselling helplines, online health management portals and gym membership are now typically offered within a health insurance policy and suggest that health insurance can play a key role in wellness management.

No two medical insurance plans are the same which is why it is vital to spend time researching the market and getting good advice before you buy. You should consider the following:

- How much can you afford each month?

- What size excess can you afford?

- Who do you want to cover? Just yourself or your spouse and other family members?

- How do you want the plan underwritten – full underwritten or on a moratorium basis?

- How will you pay your premiums? - Find out what the insurer's premiums will be as you get older.

- How much flexibility is there? Can you switch plans within the insurer's range?

- Do you want a policy that rewards you if you don't claim?

There's a wealth of information available, including Aviva's health website:

Dr Douglas Wright, Aviva

Financial guide to Beat the downturn


Steering a steady course in these stormy times

Find out more about the Financial Mail and Lloyds TSB guide Beat the downturn.

Downturn or depression. Slump or slowdown. Whatever you call it, our world has changed dramatically over the past 12 months.

This guide, produced by The Mail on Sunday in association with Lloyds TSB, is designed to help you come through the downturn with your finances in the best possible shape.

It is easy to feel powerless in the face of current economic turbulence. But even in a downturn there are strategies for success: ways that you can help yourself to prosper through difficult times.

Written by Stephen Womack, one of Financial Mail's leading personal finance correspondents, there is a fact-packed section of tips to help you stretch your spending further and to increase your income. Take control of your spending, with our detailed guide to budgeting.

Downsize your debts and get on top of problem payments. Become a savvy saver, learn how you can turn your home and your skills into an extra income, look out for essential checklists on saving, budgeting and managing debt.

For some, a downturn may even open new doors: a redundancy can become the springboard to a new career, while those who are looking to extend or improve their home may find this is the time to bag a bargain.

- Click here to download the guide

There are uncharted waters ahead. But use this guide to help face the financial realities of life in a downturn and you will in better shape to win on through.

For more guidance, visit

In association with:

Inside the guide

• Crunch Tips: 30 cracking ideas to stretch your income, slim your spending and budget wisely in a downturn. • Your financial priorities change with age: How financial challenges and opportunities evolve through different phases of our life • Managing Your Money: Taking control of your budget and knowing where your money goes is an essential first step to success. • Dump the expensive habit: Quitting smoking can save you more than your health • Ditching Your Debts: Get on top of problem debts and free up extra income with this step-by-step strategy. • Debt planning essentials • Staying in control • Dealing with problem debts • Boosting Your Income: How to earn a little extra from your talents and maybe even your home. • Making money from your home • Managing Your Mortgage: Take advantage of lower interest rates to trim your mortgage down to size. • Savvy Savings: Increase your financial safety net and get your savings working hard for you • Savings essentials • Strolling to tax-free savings • Seeking out a decent income • Doors Opening in a Downturn: Can you take advantage of bargain deals to gain from the downturn? • Rebuilding after redundancy • Homing in on a good deal • Competition: 1,000 children's books to give away. Enter the giveaway to win a copy of A Crocodile for Billy, produced with Ladybird Books. •The Crunch: Your questions answered

Lloyds TSB explains the changes on Isa over-50 limits


More than 21 million savers who are 50 years old and over will soon be eligible to benefit from an increased tax free ISA allowance. Research from Lloyds TSB, however, reveals that nearly two thirds (61%) of over 50s surveyed do not understand the approaching ISA changes.

As part of this year's budget, the Chancellor announced that the total ISA limit would increase from £7,200 to £10,200, £5,100 of which can be saved in cash. For those born on or before 5 April 1960 the new limits come into effect on October 6th 2009, whilst younger customers will need to wait until the start of the 2010/2011 tax year next April.

How will the changes affect me?

Lloyds TSB have teamed up with This is Money to explain the changes to the ISA allowance.

Click here to download a guide , written by This is Money's savings expert, Alan O'Sullivan.

How will Lloyds TSB customers benefit from the change?

Lloyds TSB customers can take full advantage of the increased limits, as the Group has confirmed that all of its ISA products will accept top ups when the new rules come into effect on 6th October.

Colin Walsh, Managing Director of Savings and Investment, Lloyds Banking Group commented: 'As the UK's largest ISA provider, we want our customers to be able to reap the benefits of the new rules and make use of their entitlement. This historic low rate environment has meant a challenging time for savers, especially for those who rely on returns to supplement their monthly income, so maximising your full tax free allowance has never been more important.'

Savers who haven't used their full annual allowance will be able to top up their existing balance for both cash and investment ISAs before the end of the tax year. Customers who are aged 50 or over can take advantage of the new entitlement and open one of the competitive products offered by Lloyds TSB.

Other improvements that Lloyds TSB customers can look forward to include electronic transfers for the cash ISA market, allowing customers to invest in their cash ISA quickly and efficiently.

Restaurant discounts | 2 for 1 dining | Reader offer from This is Money


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Inheritance tax on retirement flats: Families left a home face huge bills

Thousands of families are being left with huge bills after inheriting retirement homes.

Money Mail can reveal how beneficiaries of retirement flats are finding themselves with a property they cannot sell, rent out or even move into.

Instead, many are left forking out thousands of pounds a year for service charges and face sky-high fees if they do sell the property.

Home curse: Janice Gill and Margaret Morris have been unable to sell their mum's flat for 3 and half years on the market (case study below)

Around 200,000 pensioners own retirement homes. They are marketed as a hassle-free way for people to spend their final years. The flats often come with a warden and communal areas such as a garden and restaurant. But when a relative dies and passes on their home it can cause a financial headache.

Richard Townsend-Rose, of CarlEX, a campaign group set up to help leaseholders, says: ‘Many older people move into retirement flats because they think it will offer them a carefree lifestyle. But the reality can be very different, with service charges increasing every year and the worry of how their children will pay the charges when they pass away.’

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Retirement flats are normally bought on a leasehold. The owner must pay an annual service charge to a managing agent, who runs the flats on behalf of the freeholder, known as the landlord. But many owners fail to read the terms and conditions of their lease properly and remain unaware of the exit fees, which can vary among landlords.

Retirement Villages, which owns 1,000 properties in developments that typically contain a restaurant, bar, library and gym, does not allow a property to be sublet and charges a hefty sum — between 5 per cent and 12.5 per cent of its price — when it is sold.

Elsewhere, Fairhold, which owns 18,500 retirement properties, typically charges 1 per cent of the property’s value if the owner sells or rents it out.

Hanover, which owns almost 4,500 retirement properties, charges up to £25 a year if the property is rented out. If the flat is sold, owners may have to pay between 0.25 per cent and 1 per cent of the property value.

The landlords say these charges are vital to pay for the upkeep of communal areas. The reputation of some retirement homes has also been hit in recent years, making properties difficult to sell and forcing them down in price.

Laura Sandys, the MP for South Thanet in Kent, has been campaigning for fairer treatment of pensioners in retirement homes. She says residents face difficulties such as increasing service charges, expensive and sometimes unnecessary renovations, a lack of consultation for residents, and attempts to block the creation of residents’ associations.

The Office for Fair Trading is investigating a number of firms to see if exit fees — charged when someone sells a home — are fair. It expects to make an announcement in the next few months.

Both residents and beneficiaries can challenge unfair or excessive charges at a Leasehold Valuation Tribunal (LVT).

Case study

Janice Gill and Margaret Morris inherited their mother’s retirement flat in 2008. They have been unable to sell it and have paid more than £15,000 in service charges to managing agent Peverel.

‘The flat is crippling us financially,’ says Janice. ‘We’ve reduced the asking price to almost half what our mother paid.’

Their mother, Edna Johnstone, bought the one-bedroom flat in 2006 for £208,950. Now it is for sale for just £125,000. The sisters will be charged 1 per cent of the flat’s market value — £1,250 — if they sell or rent it out.

Peverel Retirement says: ‘We are obliged to collect transfer fees on behalf of the landlord [Fairhold], and we pass this fee directly to the landlord.’

A spokesman for Fairhold says: ‘Transfer fees are a legally binding element of the contract which Mrs Gill and Mrs Morris’s mother entered into when buying the lease. On inheriting the flat, the sisters also became liable to fulfil the obligations contained in the lease.’

Can I get an early inheritance to buy my first home?


We are struggling to find the money for a deposit on a house. If I asked for a part of my inheritance now what would be the implications for them? AR, Suffolk

Property ladder: Most would be first-time buyers find it very tough to clamber on

Linda Mckay, of This is Money, replies: The rising cost of living means that many of those aged under 40 are asking for part, or all, of their legacy ahead of time. Grown up children, such as yourself, may be in desperate need of cash to pay off debts, for a property deposit, to get through a period of unemployment, for university fees for their own children or even to pay for a wedding.

Many taxes are unavoidable but inheritance tax is a very simple tax and one that can be limited with planning. It seems you have a virtuous circle where you need funds now and possibly your parents don't. It is potentially a win-win situation, the only loser is the taxman.

According to HMRC the annual gift allowance is £3,000, although your parents could add the previous tax year's allowance if unused, which would then total £6,000.  There are other gift allowances, such as gifts that may be given on marriage, your parents could each gift £5,000 but exemptions can not be combined to increase the amounts given away to the same person. For further details visit HMRC

I asked one of our experts for further advice:

Daniel Howard of Skipton Financial Services replies: The implications for your parents would be that the gift would be deemed as a potentially exempt transfer for inheritance tax (IHT) purposes and if they died within seven years of making the gift then the value of this gift would be included within their estate on death.

However, if your parents survived seven years then no inheritance tax would be payable on this gift.  Alternatively if they leave the money in cash savings earning little or no interest then this will always be included within their estate for inheritance tax purposes.   

Another consideration is that after making an outright gift your parents would no longer be able to access these funds in future should a requirement for capital or income arise.  You say that your parents are ‘reasonably well off’. 

If your parents have no access to the funds they gift to you then it could become a problem if the value of the savings and investments they plan to live off in retirement are depleted or if they exceed their estimated life expectancy.

Inheritance tax is a complex issue and I would always suggest discussing the individual circumstances of each case with an inheritance tax specialist. From the information you have provided it is not possible to give specific inheritance tax advice therefore the information provided is generic.

For further information please visit

Linda Mckay adds: Your mother and father should most certainly consult an independent financial advisor to check their personal situation as those relying on the interest of their investments may struggle with no earnings and the continuing rise in inflation.

They should ensure they are covered by their savings for pension needs, any health emergencies (including care home fees) or housing problems and possible retirement plans so that a decision can be reached that is not purely based on emotion of parent/child care.

Top tax tricks: How to avoid a tax raid on your inheritance

Little-known tax tricks could help thousands of families avoid a raid on their inheritance by HM Revenue & Customs, or at least cap the impact.

Inheritance tax (IHT) receipts increased to more than £2.7billion in the year to April 2011 — an annual rise of 14 per cent. Sizeable estates will inevitably invite a tax bill, but middle-class families can eliminate or limit IHT with some preparation and professional advice.

Tax laws also allow wealth to be portioned, or drip-fed, to families each year, so make full use of the benefits.

For you: Inheriting an estate above £325,000 for an individual or £650,000 for a couple will be subject to a 40 per cent charge


If your estate — which includes everything from property and possessions to and savings — is below £325,000 for an individual (or £650,000 for a couple), there is no inheritance tax to pay.

But anything your beneficiaries inherit above this exemption will be subject to a 40 per cent charge.

This can be quite onerous. For example, an estate worth £800,000 would see a tax bill of £60,000.

However, if you live for seven years after giving away money or assets, or give them to a spouse or civil partner, these gifts will avoid inheritance tax.

  More... Are you due a family fortune? Can I offset mum's care home fees against income tax? How much can I gift my grandchildren without inheritance tax implications?


People are living longer, so it makes sense to use some of the funds instead of giving it all away, according to John Whiting, of the Chartered Institute of Taxation. ‘A good tip is to spend some of it,’ he says. ‘But don’t leave yourself destitute.’

Unlimited regular payments can be made from after-tax income, but you must maintain your normal lifestyle. This income could include part-time work, a pension, or interest from savings.

However, you cannot make exempt regular payments if you make them from your capital. You can also give as much as £3,000 as a lump sum every year tax-free.

So if you give away only £2,000, then you can hand over the unused £1,000 allowance in the following year (so a total of £4,000). But you can do this only once in consecutive years. Small sums up to £250 can be made to any number of people within one tax year.


It’s not very romantic, but tax is a compelling reason for marriage.


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‘Transfers to a spouse or civil partner fall outside of the inheritance tax net,’ says Mr Whiting.

If you leave assets to your spouse or civil partner, this means they can bequeath up to £650,000 (their allowance of £325,000, plus yours) free of inheritance tax.

You can give tax-free gifts to a couple getting married: up to £5,000 from parents and £2,500 from grandparents.

However, technically, this has to be at least promised before the ceremony, even if the payment is made many months later.


High value transfers of money, investments or even antiques bequeathed before you die are known as ‘potentially exempt transfers’.

They are exempt from IHT only if you live for seven years. But if you die within this period, these gifts will be taxed at their current value, not their value when you gave them away.


In theory, you can give away property and dodge inheritance tax if you meet the seven-year rule.

But if you stay living there rent-free, the gift is classed as a ‘gift with reservation of benefit’ and is subject to IHT.

Seek legal advice when gifting property because it can be a costly mistake. For example, if given to a relative as their second home, the property may be liable for capital gains tax when sold in the future.

This will be based on the difference between the price at the date the ownership was transferred and the value when it was sold.

Equity release — where homeowners withdraw some of the capital in their property in the form of a home loan — can help to reduce the tax liability on property.

The debt, or the share of the property given up, will be deducted from the final value of the estate.


Cash gifts can result in a ‘double whammy’ of tax benefits if the recipient uses it as a pension contribution.

This is because pension contributions incur tax relief at the saver’s highest rate of income tax.

So if you paid £10,000 into your child’s pension, this would effectively be worth £16,666 if they were a higher-rate 40 per cent tax payer. And the gift itself is free of inheritance tax if the benefactor survives for another seven years.

Jason Witcombe, independent adviser at Evolve Financial Planning, says: ‘Cash gifts can be used to mop up pension tax relief, part at source and part via a tax return. It’s inter-generational planning.’

Royal Bank of Scotland in £1.4bn bump on road to recovery

Royal Bank of Scotland blamed an accounting quirk after slumping to a £1.4bn loss for the first three months of the year, but hailed great progress in its long road to recovery.

The state-backed bank preferred to focus on operating profits, which swelled to £1.2bn from a £144m loss a year ago.

But its figures were tarnished by a charge on its own debts of £2.46bn, which resulted from it being deemed more able to pay back investors.

Step in the right direction: Stephen Hester says RBS making ‘excellent progress’

The bank confirmed it was about to complete an important step in its rehabilitation by paying off the final slice of the £163bn in UK and US taxpayer-backed emergency loans borrowed at the height of the crisis.

But RBS played down the prospect of an imminent sell-off of the taxpayer’s 82 per cent stake, worth less than half the £45.5bn paid for it

Boss Stephen Hester also glossed over speculation about talks to sell a stake to Middle East investors, saying: ‘As far as I’m aware there is no desire to sell at the current share price.’

The chief executive said the bank had ‘another 18 months of heavy lifting’ as it continues to use profits to pay for the clean-up cost of dealing with its toxic assets and loans.

  More... RBS : Check the latest price here RBS to repay last slice of crisis loans but taxpayers still facing huge share hit as bank reports £1.4bn loss

Asked to put a timeframe on RBS being sold back to the private sector at a profit for taxpayers, he said: ‘I have learnt to my pain that sometimes ones hopes and fears do not come out as one wants.’

Hester said ‘excellent progress continues in removing mistakes of the past’, with the bank wiping a further £100bn off its balance sheet – referred to as the ‘biggest timebomb in corporate history’ by the RBS boss.

Bad loans fell by almost a third since last year and over a fifth since the final three months of last year to £1.31bn. But the bank (up 2.77 per cent to 25.23p) said the rate customers were repaying debts – often used as a gauge of confidence – had slowed sharply since the end of last year.

Operating profits at the retail bank dipped almost 8 per cent from last year to £477m, which the bank blamed on flagging demand from consumers.

Once again, Hester jumped to the defence of the bank’s lending record. RBS was slammed for being the only bank to miss  lending targets for small and medium-sized businesses, under the Government’s Project Merlin.

He said: ‘We’d like to find more people to lend to and we’ve got the money to do it.’

The bank also confirmed it had added £125m to the pot set aside to pay compensation to customers mis-sold payment protection insurance.

Blow for holiday homeowners as ruling making them exempt from inheritance tax is quashed

Thousands of UK holiday home owners who let their properties could now be hit with big inheritance tax bills after a landmark ruling allowing them relief was quashed by a tribunal.

Those hoping to leave behind a substantial nest-egg for their children will be hit by a ruling by the Upper Tribunal that means they will no longer be able to claim business property relief on their furnished holiday lets.

There are currently around 65,000 owners of such properties, and claiming the relief would exempt them from up to 100 per cent inheritance tax.

Home woe-ner: Furnished holiday lets will no longer be exempt from inheritance tax after a landmark ruling was quashed on Thursday.

But yesterday's ruling means that holiday homes will be treated the same as other assets and will count towards a person's estate on death. Inheritance tax of 40 per cent is due on assets exceeding £325,000, a threshold that should stay the same until at least April 2015.

The latest decision reverses a tribunal ruling from last year which favoured holiday home owners. The case of HMRC v Pawson - judges found that holiday lets should be considered investments for tax purposes in the same way as other investment or rental properties.

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Instead they would be treated in the same way as a business, making them eligible for business property relief on inheritance tax.

The Financial Times said this was expected to open the door to a flood of claimants, but that Thursday's decision has reversed this.

The tribunal found that there was no clear evidence that the holiday home owner in question, Nicolette Pawson, had 'substantial involvement' in managing the property in Fairhaven, Sussex, for holiday makers.

Now, only those who are considered to be providing a substantial amount of services to holiday makers will be eligible for the business property relief on their holiday lets.