MPs have criticised proposals to relocate Post Offices into other shops offering a reduced range of services.

By remodelling small post offices into 'Locals', the government was trying to ensure their long-term viability, acknowledged the Business, Innovation and Skills Committee.

But the reduction in services risked making some branches unsustainable or unsuitable for local users, it warned in a report.

The document, Post Office Network Transformation: a progress report, was published by the select committee on Tuesday (17 July).

It outlines concerns with regards to the government's proposals for change to the ownership and administration of the Post Office network.

Plans for Post Office Locals are potentially of major significance for rural communities.

"The pilot scheme for 'Local' post offices must undergo a rigorous assessment to ensure there is sufficient flexibility in the model," said committee chairman Adrian Bailey MP.

"Post offices should be responsive to the needs and demands of diverse communities."

The new 'Locals' model could result in a small number of major retailers running the majority of Post Office outlets, the report warns.

"The Government must be alive to the risk that its new model could erode the ethos of many post offices, said Mr Bailey.

"The 'Locals' model needs to be viable and attractive to a wide range of operators."

The committee criticises Post Office Ltd's research as being too narrowly focused on 'Local' pilots where there had previously been no post office.

Meanwhile, it says that Consumer Focus research failed to take into account the social demographic of post office users.

"The information available to the government is inadequate," said Mr Bailey.

"More must be done to ensure the pilot scheme is subject to proper review, concentrating on the suitability of 'Locals' to a wide range of communities.

"The government also needs to actively consult all groups who are directly affected to ensure informed decisions are made."

Mike O'Connor, chief executive of Consumer Focus, said the Local model offered some benefits for consumers, including much longer opening hours than a traditional sub-post office.

But greater accessibility will only fully benefit consumers if the services needed were available.

"Getting the correct balance between what consumers need and what might be attractive to potential operators of the new model is not straightforward."

More needed to be done on the range of products available, staff training, advice given to consumers, privacy and availability of cash if the chance of success was to be maximised.

The Communication Workers Union said the Local model would not put the post office on a sustainable footing or act in the interests of all communities.

CWU general secretary Billy Hayes also voiced concern that customers could lose services.

"If this programme marches ahead, post offices close and then services fail it will either be costly to re-open a post office or will leave communities without these services.

"There are too many risks and unanswered questions and too little consultation and collaboration with postmasters and communities for this programme to go ahead unaltered."