Announcement

£1.3 billion funding deal for the Post Office

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Business Secretary Vince Cable said: “The Post Office network is a cornerstone of British life. Our £1.3 billion funding package will reverse…

Business Secretary Vince Cable said:

“The Post Office network is a cornerstone of British life. Our £1.3 billion funding package will reverse the years of decline and secure its long term future. It will ensure that there is no new closure programme - but it will also allow the Post Office to invest, improve its offer and win new revenue streams. It will put the network on a stronger and more sustainable footing.

“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.”

Dave Smith, Executive Director, 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.”

Today’s announcement follows last week’s Spending Review, and was made during the first debate in the House of Commons of the Government’s Postal Services Bill. The Bill is designed to protect two cornerstones of British life - the Royal Mail and the Post Office.

Under the Government’s proposals Royal Mail will be able to benefit from an injection of private capital, but the network of 11,500 Post Office branches is not for sale and there will be no further programme of closures. In time the network could be converted into a mutual structure as part of innovative new plans to hand the ownership and running of the Post Office to employees, sub postmasters and local communities.

Declining numbers of customers are using the network, but this new funding package will enable the Post Office to invest and put its network on a more sustainable footing. It will be able to improve customer services - extending opening hours and reducing queues. This will help it to win the new revenue streams and new business it needs.

The Government will shortly publish a policy statement giving further detail on how it plans to secure the Post Office’s long term future - including plans for the network to provide more Government services.


Notes to editors

  1. The Government’s Postal Services Bill makes the following proposals:

Royal Mail

  • The requirements of the universal postal service - collection and delivery of post six days a week at uniform, affordable prices are written into the Bill. The Government has no intention of downgrading them.
  • Royal Mail will be able to benefit from an injection of private capital - ending the dependence on funding from the taxpayer and bringing new commercial disciplines into the business.
  • Alongside private sector investment:
    • At least 10% of the shares in Royal Mail will go to its employees in the future. This will be the largest employee share scheme of any privatisation for 25 years.
    • Royal Mail will be relieved of its enormous historic pension deficit by the Government.
  • As part of a general reform of the regulatory regime for mail, the existing regulator, Postcomm, will be replaced by Ofcom, the communications regulator, with the Bill providing for the transfer of Postcomm’s regulatory responsibility and its staff to Ofcom.

Post Office

  • The network of 11,500 Post Office branches is not for sale and there will be no further programme of closures.
  • Could be converted into a mutual structure as part of innovative new plans to hand the ownership and running of the Post Office to employees, sub postmasters and local communities.
  1. The funding is broken down as follows:

Financial year 2011/12 - £180m

Financial year 2012/13 - £410m

Financial year 2013/14 - £415m

Financial year 2014/15 - £330m

  1. The funding is subject to state aid approval by the European Commission.

  2. BIS’ online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.

Notes to Editors

Contact Information

Name BIS Press Office Job Title

Division COI Phone

Fax

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Email NDS.BIS@coi.gsi.gov.uk

Name Henry Tanner Job Title

Division Department for Business, Innovation and Skills Phone 020 7215 5947 Fax

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Email henry.tanner@bis.gsi.gov.uk