GBP 1.7bn investment to keep Post Office network national

Investment, stronger protections for local communities and more outreach services are at the centre of the Government's GBP 1.7 billion proposals to maintain a national Post Office network and put it on a sustainable footing for the e-mail age.

Responding to the wide consultation undertaken since the December 2006 statement, Trade and Industry Secretary Alistair Darling has announced the Government has strengthened further the protections for customers in rural and remote areas and widened the areas that will qualify for special protections for deprived urban communities.

With widespread acceptance that the current size of the network is unsustainable and losses rising to GBP 4 million every week, despite an annual subsidy of GBP 150 million and total investment of GBP 2 billion since 1999, it will be for Post Office Ltd to draw up local area plans within the national framework. That will be done with input from local authorities, MPs, the consumer protection body Postwatch and subpostmasters, for consultation with local people.

Postwatch will also monitor future decisions on the shape and size of the network to ensure Post Office Ltd continues to comply with the national framework.

In the longer term, the Government is working on proposals to devolve greater responsibility for future decisions on post offices to a local level, and will investigate what role local authorities and the devolved administrations could play in decisions on future services and funding.

The strategy announced today does not include decisions on individual post offices. These will be taken by Post Office Ltd after their local area consultations.

The key elements of the strategy include:

* Investment of up to GBP 1.7 billion, subject to state aid clearance, to support the network and keep it national. Building on GBP 2 billion invested since 1999. Continuing annual subsidy of up to GBP 150 million a year up until 2011;

* In light of consultation, the minimum access criteria will now apply to all 2,800 postcode districts without exemptions. Access criteria protecting urban deprived areas will apply to the 15% most deprived urban areas rather than 10%;

* In applying the criteria, Post Office Ltd will be required to consider the availability of public transport and alternative access to key post office services, local demographics and the impact on local economies. The introduction of these additional factors addresses widespread concerns from respondents to the consultation. Post Office Ltd will also take account of local conditions such as rivers, mountains and valleys, motorways and sea crossings to islands;

* Post Office Ltd will set up 500 new 'Outreach' outlets for small remote communities – including mobile post offices and services in village halls, community centres and pubs;

* Support to enable the Post Office to expand financial services for customers including a roll out of up to 4,000 free-to-use ATMs across the network;

* A new account will be introduced to succeed the Post Office Card Account. Available nationally and on the same basis as now. The Government will tender for this service in accordance with EU rules; and,

* Local consultations on an expected 2,500 post office closures, within the access criteria. Local authorities, Postwatch and Subpostmasters to input to area plans drawn up by Post Office Ltd and it is expected these would be implemented over an 18 month period from Summer 2007.

Alistair Darling said:

“Post Offices play an important social and economic role in the communities they serve and the Government is determined to maintain a national post Office network allowing people to have reasonable access across the whole country. Which is why, subject to state aid approval, we will invest a further GBP 1.7bn up to 2011, including an annual subsidy of GBP 150m. With that support the network needs to change to meet the challenges it faces.

“As is widely acknowledged, it will mean some closures in a network of 14,000 offices, over eight times the size of Tesco. But piecemeal closures are no good for anyone and won't put the network back on track. The Post Office must plan a proper national network and innovate. To look more at Post Offices where people are, be it through mobile offices, village halls, community centres or pubs.

“Local people can now play a key part in consultations into the area plans that will be led by the Post Office.

“We are playing our part and will continue to. This balanced package gives the Post Office network the chance to compete.”

Notes to Editors

1. Post Office Ltd will be required to apply the following national access criteria:
* Nationally, 99% of the population to be within 3 miles of a Post Office outlet and 90% of the population within 1 mile;
* 99% of the population in deprived urban areas to be within 1 mile;
* 95% of the total urban population to be within 1 mile; and,
* 95% of the total rural population within 3 miles;

In addition, the following criterion will apply at the level of every individual

postcode district, establishing a minimum level of coverage at a very local level:
* 95% of the population of the postcode district to be within 6 miles of a post office outlet

In applying the criteria, Post Office Ltd will be required to consider the availability of public transport and alternative access to key post office services, local demographics and the impact on local economies. The introduction of these additional factors addresses widespread concerns from respondents to the consultation. Post Office Ltd will also take account of local conditions such as rivers, mountains and valleys, motorways and sea crossings to islands;

2. The Government provided GBP 25 million to enable Post Office Ltd to pilot Outreach post offices. For more information on these Outreach post offices including case studies please contact the DTI press office;

3. Public consultation on the Government's proposed strategy for the Post Office network ran for 12 weeks, from 14 December 2006 until 8 March 2007. It generated some 2,500 responses from individuals and organisations and representative bodies at both local and national levels

In March the Trade and Industry Committee published a report on Restructuring the Post Office Network, to which the Government has responded today. Ministers and officials have also had extensive contact with interested parties, including Postwatch, Postcomm, the Commission for Rural Communities and National Federation of Subpostmasters. In addition, many Members of Parliament have contributed to parliamentary debates on Post Office network issues.

All of these contributions have been considered and have helped to inform and shape the Government's final decisions.

Key facts:
* Since 1999, the Government has made an investment in the Post Office network of some GBP 2 billion to help it adapt to the changing needs of customers and to the marketplace in which it operates. This included GBP 500 million investment in the Horizon project to bring modern computer systems into every post office in the country for the first time – enabling Post Office Ltd to launch a range of new products and to open its counters to potentially over 20 million bank customers. It also includes the funding of GBP 150 million a year, GBP 750 million in total, to support the rural network for five years from 2003 to 2008
* Currently we have over 14,000 post offices – 8 x the number of Tesco stores, and more than all the banks put together
* On average the 800 smallest rural post offices served just 16 people a week at a cost to the taxpayer of GBP 17 per visit – even if this was just to buy a stamp. A total of 1,600 branches served fewer than 20 customers a day – losing GBP 8 for every transaction

* Post Office Ltd lost GBP 2m every week in 2005/06, rising to around GBP 4m a week last year
* 8.5 million out of a total of 10.8 million pensioners now get their pensions paid into a bank account
* An increasing number of people are choosing to renew their tax disc online. Last year over 3 million people renewed their tax disc online
* Some 4 million fewer people are using the post office each week than two years ago
* The Post Office is continuing to develop their financial services products, building on the success of being the number one independent retailer for foreign currency

What has the Government announced?

A strategy to preserve a national Post Office network accessible to all communities. The existing network of over 14,000 offices is not sustainable as people choose to access services in different ways. Some 1,600 branches serve fewer than 20 customers a day – losing GBP 8 for every transaction. The network loses GBP 4 million a week. Some offices will have to close, but new 'access criteria' will preserve the national network while protecting the vital social and economic role of post offices in local communities. Post Office Ltd will set up 500 innovative new 'Outreach' outlets for small remote communities – including mobile post offices and services in village halls, community centres and pubs;

What does this mean for my local Post Office?

No decisions have been made on individual Post Offices, and there are no local quotas for closures. Post Office Ltd will now draw up area plans within the national framework, with input from local authorities, MPs, Postwatch, the consumer protection body, and from subpostmasters, and will then consult local communities on those plans.

What is the timetable for change?

Post Office Ltd will now hold a series of local consultations on 50-60 area plans. Each local area consultation will run for six weeks once the area plan has been drawn up, and the Government expects that Post Office Ltd will implement these plans over 18 months from summer 2007. Post Office Ltd will shortly announce a timetable for individual local area consultations.

How can I make my views heard?

Local people will be invited to give their views to Post Office Ltd as it consults on each area plan. Consumer interests will also be represented throughout the process by Postwatch.

How can I be sure local needs will continue to be met in future?

Postwatch, and then the new National Consumer Council, will monitor future decisions to ensure Post Office Ltd continues to comply with the access criteria. In the longer term, the Government is working on proposals to devolve greater responsibility for future decisions on post offices to local communities, and will investigate what role local authorities and the devolved administrations could play in decisions on future services and funding.