UK Government: Hewitt announces GBP300 million package for rural post offices

Trade and Industry Secretary Patricia Hewitt today announced a new Government support package to help rural post offices.

Up to GBP300 million will be made available from 2006 to 2008, extending the current three year financial support package which runs until 2006.

The current three year package – worth GBP450million – was intended as a transitional measure, designed to help rural post offices through the changes in the network's business between 2003 and 2006.

The Government has decided to extend the funding to 2008 to allow sufficient time for lessons to be learned from the pilots' activities testing new ways of delivering services in rural areas.

The lessons that will emerge from these pilots over the next 12-18 months will be crucial in informing longer-term decisions about the future shape of the rural post office network. This will allow well-informed decisions to be taken in good time to ensure that access to post office services for those living in rural communities can be maintained on a more sustainable basis.

There are already examples of communities pulling together to keep post offices services in their villages and innovative ways of delivering services are emerging throughout the country. Post Office Ltd's pilot work will allow us to learn from these and build on them as we move forward to a more responsive and flexible post office network.

The Government's requirement that Post Office Ltd should maintain the rural network and prevent avoidable closures of rural post offices will remain in place at least until 2006. The requirement will be reviewed again once the outcome of pilot activity is clear.

Trade and Industry Secretary Patricia Hewitt MP said:

"We are fully committed to ensuring that those living in rural communities have access to the services they need, including post office services. Today's announcement is good news for rural post offices and the people who use them.

"But the rural post office network continues to face real challenges.

For many individual offices, the number of customers they serve is simply too small to make the business attractive or sustainable.

"As people access services in different ways, new ways to deliver services more efficiently and effectively are clearly needed.

"It is vital that we continue to support the network through these challenges. It is also clear from Postcomm's advice to us that without Government funding, much of the current rural network would face closure.

"This new money will also give Post Office Ltd time to develop and test new ways to meet the changing needs of its customers."

Sub Postmasters will continue to benefit both directly and indirectly from this support. Without it, Post Office Ltd would not be able to afford to continue to make the fixed payments on which sub-postmasters depend, and would not be able to supply them with the backup and support that they require.

The new funding is in addition to GBP450 million already allocated to supporting the rural network from 2003 to 2006. The detail of the package will be subject to discussions with the company and State Aid clearance.

Notes to editors

1. The announcement was made via a written Ministerial statement presented to Parliament this morning.

2. The Government will make available up to a maximum of GBP150 million a year until 2008 to enable Post Office Ltd to continue to meet the cost of maintaining the non-commercial part of the rural post office network and to pilot new ways of delivering services. Pilot activity is a key element of the current funding package

3. Current funding is from the gilts (Government money previously received as "dividends" from the company and made available back to the company for certain specific uses) and it is our intention that the further funding to April 2008 will also come from these gilts.

4. The Performance and Innovation Unit report on modernising the post office network, published in June 2000, recommended that the Government should support the rural network in the first instance to 2006. It also recommended that the Postal Services Commission, Postcomm, should advise the Government on options for the rural network after 2006.

5. The Minister of State for Energy, E-Commerce and Postal Services announced in the House on 2 December 2002 the Government's decision to make GBP450 million available to support the rural post office network through from 2003 to 2006. That three-year package was intended as a transitional measure, designed to help rural post offices through the changes in the network's business between 2003 and 2006.

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