6.1. Delivering huge social value for the United Kingdom
Key takeaways: supporting the most vulnerable and excluded in our society
- The Post Office network as a whole has an annual social value to consumers of nearly £4 billion. It is striking that Post Office’s social value remains so high, even in the midst of an unprecedented cost-of-living crisis, which (due to a reduced ability to pay) is likely to have dampened respondents’ valuations considerably.
- Vulnerable consumers place a particularly high value on Post Office. Not only is usage higher among vulnerable customers, but they are also willing to pay around one and a half times the amount that non-vulnerable consumers would to prevent their nearest Post Office from moving one mile away, despite typically having lower incomes.
- With the decline of high-street banks, Post Office is the mainstay of the United Kingdom’s banking infrastructure for vulnerable and less well-off individuals. In fact, those in lower social grades (C2DE) are willing to pay three times the amount that those in higher grades (ABC1) are willing to pay for these services.
Post Office has a long history of, and reputation for, serving the most vulnerable and excluded in society. As the world becomes more digital, there are many either unable or unwilling to transition online – and Post Office serves as a vital backstop for those groups by providing services in person with face-to-face support.
Post Office serves as a vital backstop for those groups by providing services in person with face-to-face support.
With this in mind, this research sought to capture the social value of Post Office. This is the various aspects of ‘non-market’ value that individuals place on Post Office, over and above any money they spend at a post office directly on the services provided. Social value includes a wide range of intangible benefits that, although they are not directly paid for, make people’s lives easier and improve their satisfaction with Post Office. Examples of these intangible benefits (amongst many others) include the value of knowing that a Post Office is nearby and the associated time savings; the value of providing vital services that would otherwise not be provided; the value to the community; and the value of providing services to the most vulnerable in society. The aim here is to place a monetary value on the combination of these intangible characteristics, to put their importance to society into context.
The annual social value of Post Office as a whole to consumers is as much as £3.8 billion.
The annual social value of Post Office as a whole to consumers is as much as £3.8 billion. In fact, on average, consumers are willing to pay more than £130 for Post Office services per household each year.21 Compared to the government funding of Post Office in 2021-2222 this reflects a societal benefit-to-public cost ratio of the Post Office network of approximately 16.5. In other words, the social value (alone) delivered by Post Office was 16.5 times greater than the government funding that Post Office received in 2021-22.
The social value of Post Office is particularly important for vulnerable consumers, who are willing to spend a greater proportion of their income than the rest of the population on maintaining the Post Office network. While vulnerable consumers are willing to pay slightly less than the rest of the population per household per month in tax (£10.78) in order to maintain the Post Office network, they are more likely to be in low-income households. The vulnerable consumers surveyed are more likely to have a household income of less than £20,000 (two in five vulnerable consumers compared to one in five consumers with no vulnerability characteristic) and less likely to have a household income greater than £40,000 (25% compared to 46%). As such, while their valuation per household is lower, the substantially lower incomes of vulnerable consumers suggest that their valuation of Post Office is higher than for other consumers as a proportion of their income.
Since the research for this report was commissioned in early 2022, the rising cost of living has further tightened household budgets for the most vulnerable, making Post Office’s social value more significant. Post Office has been supporting local communities as the cost of living rises. For example, during the Covid-19 pandemic, Post Office made cash available to customers isolating at home and has made cash available to those eligible to receive energy bill support from the Government through the PayOut product.
Post Office has also extended support through collaborations with Citizens Advice and the British Gas Energy Trust to set up advisory centres offering information on energy bills to vulnerable consumers who may lack internet access. Postmasters across the country have also been issued guidance on how best to support customers who say they are struggling, while having to address their own branch’s rising energy costs. Post offices are also expected to issue around 7.8 million Energy Bill Support Scheme vouchers to 1.3 million pre-pay energy customers between October 2022 and March 2023.
PayOut: Post Office’s voucher-based service helps eligible customers access cash quickly and securely through 11,500 branches
PayOut allows companies and organisations to get cash and support to their customers and clients, quickly and effectively. The service is enabled though sending a one-time use, simple code or barcode, which is sent to a customer via text, email or letter. Customers can then redeem this voucher at a Post Office or Payzone outlet and receive cash immediately over the counter. The service sidesteps the need for digital bank payments or cheques.
When evaluating the Post Office’s social value it is important to place these findings in the context of the state of the United Kingdom’s economy in July 2022, when the consumer survey was conducted. High inflation (10.1% in July 2022 – a 40-year high (Office for National Statistics, 2022b)) and related cost-of-living crisis have resulted in unprecedented reductions in household disposable income (predicted to fall by 2.2% in 202223 (Office for Budget Responsibility, 2022)), regular pay in real terms (fell by 3.0% in the year to June 2022 (Office for National Statistics, 2022a)) and consumer confidence (the Consumer Confidence Index (GfK, 2022) fell to -41 in July 2022). In the consumer survey, 40% of those respondents who were not willing to pay to support the Post Office network answered this way as they could not afford it. As a result, it seems likely that the findings presented throughout this study are underestimates compared to results that would have been identified in more normal economic circumstances.