Byers promises safeguards for rural post offices

Stephen Byers promised to safeguard the future of rural post offices yesterday as the Government cane under pressure from all sides to prevent their closure.

The Secretary of State for Trade and Industry said he would amend the Postal Services Bill next week in an attempt to provide a mechanism for financial assistance. He said: "This will enable the Secretary of State to set up a financial scheme to ensure that essential services can still be delivered through a nationwide network of local post offices.

"Our key target is that there will be a viable future for the network. It may well be that in the future, because of changes which are being introduced, financial assistance should be offered to the network." Under the subsidy proposal, the Government would be able to give financial help if the economic and social impact of a post office's closure would merit it.

Earlier, the Prime Minister told benefit claimants and pensioners that no one would be prevented from receiving their payments in cash at post offices, despite the switch to electronic transfers in 2003.

Speaking after the presentation in Downing Street of a massive petition against post office closures, Mr Blair said during Question Time that his pledge applied to weekly as well as monthly benefit payments. But the Tory leader William Hague dismissed his comments as "meaningless reassurances" and called on ministers to think again by opting instead for an earlier, Conservative, scheme of benefit swipe cards. He said: "We had a policy to save post offices, you have a policy to close post offices."

Mr Hague said thousands of sub-postmasters had brought the petition to London because the Government was presiding over "a record number of closures and a threat to thousands more post offices".

"Will you now listen to this wholly reasonable campaign for people to be able to receive benefits and pensions in cash at post offices without the compulsory use of bank accounts and introduce a proper swipe card system?" Mr Hague said.

Replying, Mr Blair insisted: "The Conservative government closed 3,000 post offices. They planned to privatise the Post Office and still plan to privatise the Post Office. Of course we all want to see post offices thrive. But we have to make sure that is done against the background of necessary modernisation.

"More people are going to want to draw their pensions, child benefit and other benefits, via their bank accounts. However, let me make one thing absolutely clear. No one will be prevented from still receiving their benefit in cash at the post office if they want to - and not just monthly, but weekly."

The Government adopted plans to spend £500m on providing rural post offices with computer facilities after it emerged that the Horizon scheme proved too inefficient and costly. Mr Blair said: "The last government did not actually introduce this system and let me tell the House why. When we came to office there was probably no greater shambles than that Horizon project.

"It was three years behind schedule. It was going to cost hundreds of millions of pounds more than the system we have got and it is a cruel deception of people in post offices to pretend that provided an answer."

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