2 December 2002

GOVERNMENT DELIVERS £450 MILLION TO RURAL POST OFFICE NETWORK

Largest ever Government support package for rural post offices.

A £450 million fund to safeguard the future of thousands of rural post offices was unveiled by the Government today (Monday 2 Dec).

A total of £150 million will be invested in each of the next three years.

There will be three elements to the funding:

- £66 million a year to maintain subpostmasters' income levels;

- £79 million in the first year, and £74 million in years two and three, to fund the front line services that allow post offices to operate, including IT systems, cash delivery and delivery of forms and direct marketing material;

- a £25 million flexible fund: £5 million in the first year, rising to £10 million in the second and third years, to develop innovative, modern methods of delivering services. The National Federation of Subpostmasters (NFSP) and other key stakeholders will advise on the use of these funds.

This funding will help Britain's eight and a half thousand rural post offices to continue to provide access to services in rural areas.

It will also give Post Office Ltd the financial freedom to pilot new and innovative ways to provide postal services in rural areas.

The funding will be administered by Post Office Ltd (POL) under contract to the Government. In return for the funding Post Office Ltd will be required to maintain the rural network, and prevent all avoidable closures. They will provide access for citizens to "over the counter" services in rural areas, including:

- access to payment of the state pensions, tax credits and benefits;

- access to cash through banking services;

- Dispatch points for letters and parcels;

- Postage stamp sales;

- Renewal of licences (e.g. television);

- Bill payments to utilities;

- Government information and services specified in service contracts between POL and individual Government departments.

The funding will ensure that customers have access to services in rural areas where they would not otherwise be provided on a commercial basis.

Patricia Hewitt said:
"Post offices play a vital role in many rural communities. They are much more than simply providers of mail services. In many places the post office is also the village shop, the local community centre, the business exchange and the bank."

"This multi-million pound package shows our commitment to the rural post office network. The money announced today will help to ensure that the village post office remains firmly at the heart of the community."

This flexible fund will support innovative new practice pilots, offering financial support direct to subpostmasters to modernise the post office network. Examples might include mobile and satellite post offices, the co-location of post offices in existing business premises from pubs to hairdressers, and the modernisation of existing premises.

Total funding for next three years will break down as follows:

Notes to Editors:

1. A rural post office is defined as a post office serving a community of less than 10,000.

2. Today's announcement was made in answer to a written Parliamentary Question, tabled by Andrew Robathan. 

3. As announced on 13 June by Patricia Hewitt, the Government agreed that the gilts (past dividends and cash generated by the business) could be used to support the renewal programme - for both Royal Mail Group and the Post Office network. The £450m rural support package will be funded from these reserves.

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