POST Office Minister Alan Johnson today warned that the biggest danger facing the post office network was a lack of people entering the business.

He is concerned that prospective sub-postmasters are shying away from opening a post office because the future appeared "bleak."

Mr Johnson, a former postman, rejected this view and stressed: "The cavalry is coming over the hill."

The Government aims to sign a memorandum of understanding with the banks by the end of the year to set up the Universal Banking Services (UBS).

Ministers are asking the banks to put about £125 million a year into running these accounts for the less-well-off.

They have left the banks in no doubt that it is in their financial interests to participate in this project.

The UBS would give pensioners and benefit claimants access to their payments over the counter at post offices.

The new banking service aims to avert the threat to thousands of sub-post offices, which are under threat from the switch to paying

benefits directly into bank accounts by 2003.

Mr Johnson highlighted that the number of closures of rural sub-post offices had declined, though the opposite had happened in urban areas.

He said: "We can't be at all complacent. There is clear evidence of people not buying into the system and investing into the network. "If there was an increase in the trend of closures because we could not attract new people in, I would be very concerned."

The minister has asked the Post Office to be more flexible with hefty fees which people wanting to start a post office have to pay.