Blair says limited funds available for post office subsidy

Rural Post Offices would continue to receive a social subsidy beyond 2008, Tony Blair assured MPs yesterday.

He said the network had a “social purpose” but told the Commons that support would be limited because of the funds available.

“There is a role for public subsidy. Over the past few years we have put about pounds 2 billion into the Post Office network precisely because we recognise that it has a social as well as a commercial purpose. We are looking at how we can sustain that purpose.”

Mr Blair was challenged at Prime Minister’s Questions by Sir Robert Smith, Liberal Democrat MP for West Aberdeenshire and Kincardine, over a critical report earlier this week from trade and industry select committee. It warned that the benefits of the Post Office branch network could be “lost forever”.

Sir Robert urged the Prime Minister to accept the recommendation that the social network subsidy would have to carry on beyond 2008.

While promising that some subsidy would continue, Mr Blair said there was “a limited amount of funds available”.

There should be research into what other services the network could provide to give it a “different and more modern rationale”.

Earlier, John Prescott, who chairs the Cabinet committee overseeing post offices, also came under pressure at Deputy Prime Minister’s Questions. He faced challenges over the decision to phase out the Post Office Card Account and complaints over people no longer being able to renew their car tax and television licence at post offices.

David Drew, the Labour MP for Stroud, urged Mr Prescott to realise that what postmasters and mistresses needed was “an early statement” from the Government to give them the “security and knowledge of what is actually being planned for the network”.