£450M boost for rural Post Offices in UK

Rural sub post offices are to get a pounds 450m injection to keep them afloat for the next three years in one of the biggest gestures to the countryside lobby so far.

The trade and industry secretary, Patricia Hewitt, will announce the grant on Monday to cushion the loss of cash payments of benefits and pensions which will be phased out of post offices from April.

The move comes as a bill to end hunting is likely to come next week. Although it will not propose an outright ban it will be bitterly opposed by many rural voters. The government, anxious to undermine the claim that it does not listen to the countryside, has launched a series of initiatives in the past three years which have brought extra cash for schools, bus services and healthcare.

The pounds 450m will be paid between 2003 and 2006. It will be used to shore up postmasters’ incomes, to pay for post offices’ IT, help with marketing, and to introduce innovation.

Nearly 900 country post offices have shut over the past two years, and it is feared more will close after next April when they face losing up to 40% of their income benefits and pensions are paid through banks.

Post offices often include the last village shop, and closure leaves vulnerable elderly and poorer families without easy access to cash or services.

The Post Office’s annual survey found that the rate of closure was slowing but post offices in areas of high property values and low financial viability were vulnerable.

Colin Baker, the general secretary of the Federation of Sub Postmasters, warned that the new cash would not make small post offices more viable. “It won’t stop closures where the existing postmaster retires because it won’t make the business any more attractive.”

To try to slow the closures, the government has already announced a post office bank account to appeal to the 3.5 million – often elderly and poor – who do not have bank accounts.