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LARGEST EVER GOVERNMENT SUPPORT PACKAGE FOR RURAL POST OFFICES

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A£450m fund to safeguard the future of thousands of rural...
A£450m fund to safeguard the future of thousands of rural

post offices was unveiled by the government today.

A total of£150m will be invested in each of the next three

years.

There will be three elements to the funding:

-£66m a year to maintain subpostmasters' income levels

-£79m in the first year, and£74m 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£25m flexible fund:£5m in the first year, rising

to£10m 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 (eg 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.'

Wales is expected to receive more than£16m a year, from a national total of£150m, for each of the next three years.

Wales Office minister Don Touhig said: 'I am delighted to welcome the largest ever Government support package for rural post offices.

'This funding will help Wales's 950 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 heart of many rural Welsh communities is the post office. 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 funding will help ensure post offices continue to play a vital role across Wales.'

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:

2003/04 (£m) 2004/05 (£m) 2005/06 (£m)

Assigned Office Payment (AOP) 66 66 66

Support costs 79 74 74

Flexible fund 5 10 10

Total Social Network Payment

(SNP) cost 150 150 150

NOTES

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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