Small businesses may experience decreased postal service levels from the government’s proposed solution to post office closures, the Forum of Private Business (FPB) has warned.

The warning follows an announcement made by the House of Commons Business and Enterprise Committee, that replacement ‘Outreach’ services are destined to fail unless funding is provided.

The government has suggested replacing the 2,500 UK post office branches due to close with just 500 Outreach services, which would be located in places such as pubs and community centres.

FPB’s policy representative, Matt Goodman, said: “While it would be unsustainable for the existing network to carry on as it is, it is important that adequate investment is ploughed into retaining the level of service that has historically been provided for small firms.”

After gathering evidence the committee’s members said they “remain concerned that the funding provided for Outreach services may be inadequate,” and if this is the case, “outreach services will fail and the network will be diminished”.

The committee recommended that the National Audit Office investigates the financial arrangements provided for Outreach.

Committee member Brian Binley MP, who represents the Northampton South constituency, said: “This whole consultation has been a total sham, and I am fearful that these promises have been made glibly and without adequate consideration of the finances required.”

According to a sub-postmaster, who gave evidence to the Committee each Outreach service would receive between £2,000 and £3,000 per annum – £8 to £12 per day.

The FPB said the Government’s National Access Criteria (NAC), which selects the branches for closure, could also be failing local businesses.

The guidelines require 95 per cent of a postcode district's population to live within six miles of a Post Office, but the FPB believes this fails to address the individual needs of communities and businesses.