Memorandum submitted by BERR
When I gave oral evidence to the Committee on
5 February, I promised to write to you with clarification on two
points relating to the Outreach element of Post Office Ltd's network
change programme.
One point related to how much of the Government's
funding support of up to £1.7 billion for the network to
2011 relates to Outreach. The funding package includes provision
for the set up costs of 500 new Outreach sites and compensation
to sub-postmasters whose offices close and are replaced by an
Outreach service. Post Office Ltd estimates that the new Outreach
set up costs will be around £3.5 million and the related
compensation payments will be in the order of £12 million.
In addition, the net annual costs of operating the new Outreach
services are estimated as around £3 million and these costs
will be met from the Network Subsidy Payment of up to £150
million a year.
The other point related to how long these Outreach
arrangements would remain in place. As I said at the hearing on
5 February, Government has committed funding support for the non-commercial
network of post offices, including Outreach services, up to 2011
through the Network Subsidy Payment. Outreach attached to a core
sub-post office becomes an integral part of that business, and
as such it is not covered by a separate contract, but by an addendum
to the existing sub-postmasters contract. Thus a core sub-postmaster,
as is the case for all sub-postmasters, will be on an on open-ended
contract. To allow time for Outreach services to become established
and stable within the community, Post Office Ltd requires that
all new Outreaches be run for a minimum of 12 months. In the event
that a core sub-postmaster thereafter wishes to retire, or otherwise
sell on the business it will have to be on the basis of the new
owner continuing the core and outreach operation. In the event
that no commercial buyer car be found, Post Office Ltd will endeavour
to make alternative arrangements for continued service provision
which includes finding another sub-postmaster willing to act as
the core. Post Office Ltd and Postwatch will shortly be revisiting
the Code of Practice on Changes to the Post Office Network in
the light of experience from the network change programme.
28 March 2008
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