GOVERNMENT proposals have caused an exodus of post office customers, threatening the future of small offices, according to unions and staff.

The Association of Chartered Accountants (Acca) has warned that the livelihoods of people running smaller post offices are being put at risk by reforms that include plans for benefits to be paid into bank accounts rather than over the post office counter.

The benefits agency has sent letters out telling people that from next year, they must have a bank account to receive benefits and pensions.

But postmasters claim the letters are misleading and are causing panic.

Kate Everett, from the Victoria Road post office in Darlington, has produced flyers of her own to reassure customers they can still get their money via the post office.

She said: "The post office will be connected to the banks, so although people will have to open bank accounts they will still be able get their money from us.

"These letters are making people think they will have to go to a bank. I am losing business every week over this, and it must be worse for people living in rural areas."

A spokesman for the Benefits Agency said payments would be made directly to a bank or into a card account at the post office.

But Andrew Harding, executive director of Acca UK said many post offices would be affected and there could be a knock-on effect.

He said: "If these proposals result in the closure of small post offices, small business people will be forced to travel much further, sometimes at great inconvenience in order to deposit or withdraw money and to post important packages."

"While this will affect everyone, the greatest impact will inevitability be on the most vulnerable people - the elderly and disabled."