Post Office Network Subsidy Scheme (Amendment) Order 2010

My Lords, I remember, as other noble Lords certainly will, a time when what we now call Royal Mail was known as the Post Office, and then, briefly, Consignia. So perhaps I may start by being absolutely clear about what we mean by the Post Office and what we are here to discuss. The Post Office is an unrivalled network of around 11,500 shops where you can post your parcel or collect your pension. Royal Mail is responsible for collecting and delivering our letters. It provides the universal postal service that connects any post box to every address in the country. The Government are committed to a strong and sustainable Post Office network. That is why on 27 October we announced funding of £1.34 billion for the Post Office network over the spending review period, subject to state aid approval from the European Commission. On 9 November, we published the policy statement, Securing the Post Office Network in the Digital Age, setting out our plans and commitments for the network. On 13 October, we published the Postal Services Bill, which is currently being debated in Committee in the other place. I shall expand on our plans for the Post Office network shortly, but perhaps I may first address the substance of the instrument currently before the Committee—which is all we are really seeking to discuss today. The previous Administration introduced the Post Office Network Subsidy Scheme Order 2007 under provisions in Section 103 of the Postal Services Act 2000. The Act allows the Secretary of State to make an order permitting payments for the purpose of assisting in the provision of public post offices or assisting in the provision of services to be provided from public post offices. Under the terms of the subsidy scheme order, the Government can provide funding to keep post offices open or to enable the establishment of post offices in areas of the country where, without funding, it is unlikely that they would be provided. The current scheme allows the Secretary of State to make payments of up to £160 million in any 12-month period beginning on 1 April. As we want to provide more funding than at present, we are seeking to amend the current order to increase the limit to £500 million. For the next four years, the largest tranche of funding that we have committed in any one year is £415 million. Increasing the cap on the level of payments made under the subsidy scheme order to £500 million allows for some flexibility and contingency; for example, in case of changes to the tax treatment of the funding. We know that this is a large increase but I am sure that noble Lords will agree that the Post Office is a valuable national asset. It is much more than a commercial entity and serves a distinct social purpose. That is why the Postal Services Bill ensures that the Post Office will not be for sale. The previous Government provided funding for the closure of 5,000 post offices; our approach is different. We will address the real economic challenges that the network faces. Our funding will enable the Post Office to do more than simply maintain the status quo. As well as receiving funding for loss-making branches, the Post Office will be able to invest in the network and introduce new technologies so that branches can be brought up to date. As the previous Government did not fully compensate Post Office Ltd in association with its maintenance of the Post Office network, our funding will give it the opportunity to invest its own resources in developing new revenue streams. There will be no programme of post office closures on our watch. This funding will ensure that there continues to be a network of around 11,500 post office branches in the UK that continues to meet the post office access criteria. They ensure that 99 per cent of the UK population is within three miles of the nearest post office outlet, while 90 per cent is within one mile. They also contain specific protections for people in rural and deprived urban areas. Furthermore, the proposed modernisation of the network which we set out in the policy statement will allow for longer opening hours and a faster service. This will make the Post Office more convenient for customers. It will also make it a stronger retail partner for Royal Mail. However, the number of letters that we send is projected to continue declining over the coming years. Although the growth of online shopping and parcels offers opportunities for the Post Office, it will also need to develop revenues from other sources. These can be divided into two main areas: government services and financial services. We want the Post Office to become a genuine front office for government at both national and local levels. We are exploring the scope for greater local authority involvement in the planning, delivery and level of post office service provision. In terms of financial services, the Royal Bank of Scotland and the Post Office reached agreement last month to allow their customers, including those of NatWest, to access their accounts at post offices. This means that almost 80 per cent of current account customers will be able to withdraw cash free of charge at a Post Office branch. However, we—and especially me, as I am getting rather over-excited by all this—must remember that today we are here to discuss the Post Office Network Subsidy Scheme (Amendment) Order 2010. New funding will help to ensure that the Post Office network has a secure and sustainable future. I hope that noble Lords will agree that the Post Office network should continue to play an important role throughout this country and will therefore approve the order.