FEARS have been raised over the future of traditional Post Office services in Scotland after plans to convert some flagship branches into franchises based in shops or other retail businesses were unveiled.

Five of the 25 Crown Post Offices in major towns and cities face being sold as part of a £1.3 billion UK-wide reorganisation that could see staff working from counters within a supermarket or even a coffee shop.

The company's aim is to transform thousands of branches by introducing longer opening hours, while some 70 outlets in Britain have been earmarked for franchise status.

Almost half of post offices are to convert either to a "main-style" branch offering extended opening hours, or a "local-style" branch in shops or garages, which would have a post office service point on their normal retail counter, and will have longer opening hours.

But these local branches would not provide certain services, including motor vehicle licences, passport check and send services, bureau de change and travel insurance on demand.

Crown Post Offices are often located in cities and large towns, but unlike sub-post offices until now have not shared space and overheads with another retail business.

Last night there were warnings customers face a loss of service due to the revamp.

SNP MP Mike Weir, who has campaigned to protect post offices, said: "This is another stage in the dismantling of the Post Office network. They have already put many post offices into the back of shops and ended up with a loss of service to customers.

"This leads to huge difficulties for consumers who very often have to deal with long queues. It is detrimental to both the public and to business. These Crown Post Offices are the last refuge of a traditional service that at one point existed in every town – but they are now disappearing."

The company insists there will be no compulsory redundancies, but there is union condemnation over the lack of information, and the wheels for industrial action are already being set in motion amid a pay dispute.

The Communication Workers Union (CWU) has unanimously approved to move to a ballot for industrial action after negotiators received a series of what they described as "appalling" proposals from Post Office bosses.

According to the CWU, staff in Crown Post Offices have been kept waiting since April 2012 for a pay rise, and last week were presented with an offer of fully taxable but unconsolidated lump-sums over the next three years tied to acceptance of a "transformation plan", which could see one-fifth of the Crown network cut.

Assistant secretary Andy Furey said: "Post Office bosses are basically demanding we sign up, in advance, to their transformation plan without us even knowing all the details of it. For example, they say they want to franchise up to 70 Crown [Post Offices], but they can't even tell us which ones. And they call for a more flexible combination of full and part-time roles, but again they're not being specific.

"At a time when the Post Office has reported higher than expected half-year profits and is forecasting a £90 million whole-year profit figure, it's just plainly unfair to treat hard-working and highly skilled staff in this way – particularly when these are the people who have created this success."

A Post Office spokeswoman said: "We are currently undertaking the biggest business transformation programme in the history of the Post Office. Our investment will maintain the size of the network and modernise branches to meet customer needs.

"Crown branches are a fundamental part of our long-term growth strategy and need to be brought into profit. They are currently operating at a £40m annual loss.

"To maintain our high-street presence we will be looking to find retail partners for 70 of our branches enabling us to stay in these locations. If no retail partner is found we are still committed to having a Crown Post Office within the area."

In 2011, the CWU revealed 21 of 162 post offices closed in 2010 in the UK were in Scotland.