UK Government

Department for Business, Innovation and Skills (National): New plans to secure the future of the Post Office

Press Release   •   Nov 09, 2010 11:00 GMT

Minister for Postal Affairs Edward Davey said:

“We’re determined to turn the Post Office network around and end the years of decline. The Post Office is a tremendous national asset. It will not be for sale and there will be no programme of closures.

“To underline our commitment we have announced £1.34 billion of funding over the next four years. The money will put the Post Office on a stable financial footing. It will help modernise the network and make it even more appealing to customers.

“New Government and financial services will also attract new customers through the door. I’m particularly pleased to announce an agreement between Post Office Ltd and Royal Bank of Scotland (RBS). This will give RBS and NatWest customers access to their current and business accounts through the Post Office. This will mean that almost 80% of current accounts will be accessible at post offices.

“Our long-term goal is to convert the Post Office into a mutual structure, for example like the Co-operative Group, giving employees, sub postmasters and communities a much greater say in how the company is run. Our programme means the network is on the cusp of an exciting new era.”

Paula Vennells, Managing Director of Post Office Ltd, said:

“We warmly welcome the Government’s significant level of support and commitment, which will allow us to invest in the network and in our service to customers, and help us develop new business.”

Last week the Government announced a £1.34 billion funding package over the next four years to maintain and modernise the Post Office network. This funding will enable:

  • Significant investment in 4,000 of the country’s largest Post Offices to refresh the branches and deliver improved standards of service.
  • The `Post Office Local’ model to be extended to 2,000 smaller branches across the UK. This is a new format for providing post office services in partnership with a local retailer. 94% of customers have been ‘very’ or ‘extremely’ satisfied with the model at pilot stage.
  • The Post Office to improve its online services and introduce a range of IT improvements to make transactions quicker and simpler.
  • Continuing subsidy for those branches that provide a vital social service but which could never be profitable.

The policy statement also outlines a number of new opportunities for the Post Office.

The Government wants to see the Post Office become a genuine Front Office for Government at both the national and local level. A number of pilots have now been agreed and other opportunities are under development. For example: a pilot is being considered that would see Post Offices verifying supporting documents for customers of the Pension Service; a pilot has been agreed that will enable the Post Office to provide print on demand government forms; and the Post Office is exploring whether it can play a role in supporting Jobcentre Plus in the National Insurance Number application process.

The Government is keen for the Post Office to expand further into financial services. This will include offering new products through its relationship with the Bank of Ireland and looking into ways that the Post Office and Credit Unions can work more closely together. The Government also has an ambition that all UK current accounts will be accessible through the network and welcomes the new agreement between RBS and Post Office Ltd to provide access to current and business accounts through post offices.

The Government is keen for banking to be extended at the Post Office, but has decided against one particular proposal. It has concluded that now is not the right time to create a new state-backed Post Office Bank. Setting up and capitalising a new bank would be time consuming and extremely expensive. At a time when the public finances are under huge strain it believes funding is better spent modernising and maintaining the network.

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.

2. The funding for Post Office Ltd 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

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

4. The Post Office Policy statement is available here http://www.bis.gov.uk/Policies/business-sectors/postal-services

5. 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. Seehttp://www.bis.gov.uk/newsroom for more information.