Post Office Network Subsidy Scheme Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Post Office Network Subsidy Scheme Order 2007. The noble Lord said: The Government announced their proposals for the future of the post office network to the House on 14 December and are currently considering responses to the national public consultation which ended on 8 March. Final decisions are expected to be announced later this month. At the end of December there were 14,295 post offices in the UK. Only around 470 are Crown post offices owned and operated by the Post Office. The remaining branches—close to 14,000—are operated by sub-postmasters and sub-postmistresses as private businesses. Historically, branches have been located where the sub-postmaster has chosen to set up business rather than as a result of a strategic decision by the Post Office. The result is that in some places many branches are competing for the same customers and it is becoming increasingly difficult and expensive for Post Office Ltd to provide the service. The big problem is that people simply do not use post offices as they once did. Some 4 million fewer people are using post offices each week compared to just two years ago. The Government recognise that the post office has a vital social and economic role in communities across the country. That is why we will continue to support a national network of post offices, as outlined in our proposals for the network, and why we are looking to continue to subsidise Post Office Ltd to continue to maintain uncommercial offices that it would otherwise close. The Government have invested more than£2 billion since 1999 to support the network. This includes the annual social network payment of up to £150 million that was introduced in 2003 and which we are now looking to extend until at least 2011. We accept that many branches will never make a commercial return for Post Office Ltd but we are committed to maintaining a national network and understand the need to continue to help Post Office Ltd maintain branches in places that it would not consider commercial. When the social network payment was first introduced, government were able to utilise the reserves that had accumulated in Royal Mail for the benefit of the network. We directed Royal Mail, through provisions in the Postal Services Act 2000, to put money into a special reserve specifically to meet the costs of maintaining the rural post office network. We announced an extension of the social network payment in September 2004 which now runs until the end of March 2008. The first year of this extension is almost upon us and payments to date have been made by continuing to utilise the Royal Mail reserves. However, noble Lords will be aware that in an another place my right honourable friend the Secretary of State announced a funding package for Royal Mail in May 2006 that included the release of the remaining reserves to fund an escrow account securing Royal Mail’s pension fund obligations. Funding of the social network payment must now, therefore, come direct from government and the order we are discussing today provides the legislative means by which these payments can continue to be made. Let me provide some detail around the terms of the scheme. The scheme enables the Secretary of Stateto make payments to Post Office Ltd of up to£160 million per annum. This subsidy will assist the company to continue to provide services through a national post office network. In the absence of the subsidy, it is likely that Post Office Ltd will take commercial decisions to close a significant number of post offices in order to achieve profitability. In determining the need for subsidy payments, the Secretary of State shall have regard to continued provision of services through a national network of post offices. The new access criteria proposals outlined in the post office network consultation document have been designed to ensure that nationwide access to post office services is maintained. The proposed access criteria include provisions to protect customers in deprived urban areas and remoter rural areas. The Post Office will also provide services in different and more imaginative ways to better serve its customers’ needs. The way that postal services are provided will also change. Government support will enable the Post Office to open at least500 new outreach locations to provide access to services for smaller and more remote communities using mobile post offices and post offices within other locations such as in shops, village halls, community centres or in travelling mobile vans. In some cases it will be able to deliver services directly to people’s homes. The current subsidy relates solely to the provision of a rural network. The Government believe that the needs of users of post offices in other parts of the network merit similar protection. That is reflected in the broadened scope of the proposed access criteria. Payments of subsidy from April 2008 will take into account the access criteria resulting from the consultation. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Post Office Network Subsidy Scheme Order 2007.—(Lord Evans of Temple Guiting.)