Post Office given £1.3bn funding pledge

The UK government has pledged to splash £1.3bn to protect the Post Office network. The fund – which doubles the current subsidy package – will aid modernisation and improve services, the Business Department said.

It will also help to prevent a repeat of mass branch closures that sparked outrage during the previous Labour government’s tenure.

Business secretary Vince Cable – whilst unveiling details of the Postal Services Bill in the House of Commons yesterday (27 October) – reaffirmed the government’s desire to transform Post Office Ltd into a mutual body – giving power to staff, subpostmasters and communities.

The model would be similar in style to the successful John Lewis Partnership.

The business secretary said the Treasury had confirmed that a £1.3bn subsidy package would be made available to help aid transformation.

Furthermore, he said there would be no new closure programmes, stating that the package “will reverse the years of decline and secure its long term future,” as well as allowing the Post Office “to invest, improve its offer and win new revenue streams”.

Cable said: “The package averages out at over £330m a year – more than double the subsidy paid to the Post Office for the past two years. A large proportion of the last government’s funding was spent on closing post offices. Our strategy is completely different – it addresses the underlying economics of the network, while maintaining its size and reach.”

Commenting on the news, Dave Smith, executive director at Post Office Ltd, said: “I am absolutely delighted that we have reached an agreement with the Government that allows us to modernise the Post Office ensuring we can continue to meet the changing needs of our customers and continue our commitment to communities across the UK.”

The Business Department states that whilst declining numbers of customers are using the network, the new funding package will enable the Post Office to put its network on a more sustainable footing. This will include the extending opening hours and reducing queues.

The news was described as “encouraging” for the e-commerce market. Mark Lewis, CEO of Collect+, told Post&Parcel: “It is encouraging to see that the government is investing in the part of the postal network that consumers engage with most often.

“For all the talk of “community commitment”, the main complaint we hear from customers is that the opening hours of Post Offices just do not fit with busy, working lives.

“If Britain is to succeed as a nation of “digital shopkeepers” we need a more ambitious approach to providing a local out of hours parcel collection and drop off service”

What is your initial reaction? Is the new funding sufficient? Please comment below…