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Orders of the Day — Postal Services Bill

– in the House of Commons at 5:13 pm on 15th February 2000.

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[Relevant documents: The Twelfth Report from the Trade and Industry Committee, Session 1998–99, on the 1999 Post Office White Paper, HC 94, and the Government's response thereto, HC 50 of Session 1999–2000.]

Order for Second Reading read.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Before I call the Secretary of State, I say to the House that Madam Speaker has selected the amendment in the name of the Leader of the Opposition. I remind the House that there is a 10-minute limit on all Back-Bench speeches in the debate.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I thank the hon. Gentleman. That is my usual welcome to the Dispatch Box.

As hon. Members will know, the Government are committed to the modernisation and reform of public services, and the Bill is part of our programme for ensuring that the country has a postal service that is fit for the 21st century. It will establish a modern Post Office that is able to grow as a significant global player and to meet the enormous challenges now arising in the rapidly changing national and international markets. It will provide a firm basis for competition in the postal services market and a better deal for consumers, including the socially disadvantaged.

Photo of Mr David Chidgey Mr David Chidgey Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Foreign and Commonwealth Affairs)

When he mentioned competition, the Secretary of State triggered in my mind a thought that I should like to put to him. He will be aware that the Benefits Agency contract with the Post Office will expire in a number of years and that, after that, the Post Office will have to compete for that contract. He will also be aware that many sub-post offices rely on that contract for their viability: nearly half the sub-post offices in my constituency derive 40 per cent. of their income from it. Will he guarantee that the Horizon project, which is essential to the modernisation of our post offices, will have been implemented and will be operating effectively before the Benefits Agency contract is relinquished?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I am delighted to have been able to trigger a thought in the hon. Gentleman's mind—that is pretty good going. If the Government have not done so, I welcome the opportunity to make it clear that we expect Horizon to be fully operational in all post offices by 2001. I shall give details later in my speech of the measures that we want to introduce in the Post Office network. That is a matter of concern to right hon. and hon. Members on both sides of the House, so it is right that we devote some time to debating the Government's policies to support the network of post offices.

The Bill will ensure that we have a strong Post Office that is better able to serve all its customers in all parts of the country. We believe that our proposal is important, because it shows that we value the Post Office. We have tabled a package of reforms, of which the Bill is only one part, that will maintain and improve postal services in this country and enable the business to become a world player. Under the Bill, the Post Office will enjoy commercial freedom, while remaining in public ownership. That model has operated successfully elsewhere: Sweden and Denmark have shown that it is possible to give a post office commercial freedom, while keeping it in the public sector, increasing competition and guaranteeing a universal service.

The Bill completes the implementation of the package of reforms set out in the Government White Paper on Post Office reform which I published in July last year. The Bill has been widely welcomed, as was the White Paper. The chairman of the Post Office, Neville Bain, said: For the first time we are being given the commercial freedoms which are vital if the Post Office is to achieve its ambition to be one of the world's top distribution companies. It gives us a springboard to meet and beat the growing competition all around us. The postal users watchdog said that the Bill provided consumers with a real avenue of redress for any failure in service", and it welcomed the emphasis on increased competition and choice. The Communication Workers Union hailed the Bill as a victory for common sense.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party, Galloway and Upper Nithsdale

The Minister mentions the watchdog, but can he explain the logic behind the abolition of the Post Office Users Council for Scotland and the creation of a UK-wide consumers council? I accept that the Post Office is a reserved matter, but such an arrangement seems to fly in the face of devolution.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I understand that concern. Within the UK-wide structure, there will be a specific committee to deal with Scotland. I hope that that goes some way to meeting concerns raised about the postal service in Scotland. That committee will be powerful within the overall umbrella of the new UK-wide consumers watchdog. When the hon. Gentleman has had the opportunity to examine our proposals, I hope that he will agree that mechanisms will be in place guaranteeing that consumers in Scotland and in the regions of England and Wales are able to express their views on the quality of postal services provided.

The Bill has four main objectives. It will give the Post Office the scope to modernise and run a fully commercial business in the 21st century. It will achieve that by converting it from a statutory corporation to a public limited company, with ownership remaining with the Crown. That will complement the greater financial flexibility that we intend to give the Post Office.

The measure will promote competition by establishing a regulator, which will reduce the part of the market that is reserved largely as a monopoly for the Post Office. The reserved area will be reduced and opened to competitors to the extent that the universal service obligation will continue to be fulfilled.

The Bill will put consumers first by establishing a new independent regulator and a new consumer council. Both will have strong powers to protect and promote the interests of those who use postal services. The Bill will reinforce the Government's commitment to a modern counters network, which will ensure reasonable access to the counter services offered by the Post Office.

Part I creates a new regulator, which will be known as the Postal Services Commission. The commission's duty will be to ensure a universal postal service and to look after consumers' interests.

Photo of David Drew David Drew Labour/Co-operative, Stroud

Will my right hon. Friend comment on one of the most difficult issues: the potential closure of sub-post offices? It is believed that local communities' ability to oppose such closures is insufficient. Can the new regulator beef up the procedures?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My hon. Friend makes an important point. I shall tackle in detail the new procedures that we want to establish for the network. It is convenient to close sub-post offices because there are no access criteria for judging such a decision. The new access criteria that we intend to establish for the first time are important because they will constitute a benchmark against which such decisions can be measured. They will be established when the performance and innovation unit of the Cabinet Office produces its report sometime after Easter.

In a matter of months, we shall produce access criteria for the first time. The Conservative party did nothing about such criteria in 19 years of office. That is the record of Opposition Members. Most people will be prepared to wait a few months for access criteria.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

No, no, no. I must make progress because there is a 10-minute restriction on Back-Bench speeches and I want to allow Back-Bench Members to contribute to the debate.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

If the hon. Gentleman catches my eye when I specifically deal with the counters network, I shall give way to him. I shall address access criteria later, and I shall be more than willing to give way to him then.

The Postal Services Commission will be responsible for a new licensing regime for postal services in the reserved area. It will regulate prices, enforce high standards and improve choice through greater licensed competition. The Post Office will initially be licensed to operate in what is currently its monopoly area. However, others will be able to apply for licenses to carry out services in that reserved area. That process is described in part II.

As well as being able to promote regulated competition, the Commission will be able to propose reductions in the scope of the reserved market area. By introducing competition in that way, we will stimulate greater innovation and lower prices, and promote better services for customers. When competition does not provide effective protection of consumer interests, the Bill will give the regulator new duties and powers to promote consumer interests, regulate prices and ensure a high standard of service to all users.

Part I makes it the new regulator's duty to ensure provision of the universal service at a uniform tariff. That will provide for the first time in law that the cost of a stamp will be the same anywhere in the United Kingdom, regardless of the distance of delivery.

The Post Office will be required to provide the universal service through a licence condition. The service will include daily delivery to all addresses at an affordable, uniform tariff.

Part III provides further protection for consumers through the replacement of the Post Office Users National Council. We shall create a new Consumer Council for Postal Services. It will be given the same powers as the new consumer councils that are being established in the energy and telecoms markets—including wider access to relevant information from the Post Office—to enable it to do its job effectively. For the first time, there will be a single national body for postal users. In that national framework, the Bill also requires the consumer council to set up separate committees for Wales, for Scotland and for Northern Ireland and allows for regional committees to be established for England. I believe that those measures will give consumers the powerful voice that they have lacked for so many years.

Photo of Oliver Letwin Oliver Letwin Conservative, West Dorset

If that array of new councils and the Secretary of State's access criteria show that a non-viable rural post office should not be closed, will he subsidise it?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

There is a question of definition of viability but, in Committee, the Government will consider very closely the need to include a provision that would enable a subsidy to be provided where it is appropriate to do so. Indeed, there will be a Government amendment to that effect. [Horn. MEMBERS: "Ah!"] Hon. Members should not jump to the conclusion that—

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

May I explain? I shall give way later. We should not jump to the conclusion that we should always look for a subsidy from central Government. Other public organisations such as local authorities may want to invest if they think it appropriate to provide a subsidy but, as we are introducing a Bill that we would like to think will be on the statute book for a good number of years, it is sensible to cover all possibilities. At some time in the future, we may want to consider a subsidy to maintain a post office and the Bill is a suitable vehicle for providing that opportunity. We shall introduce an amendment in Committee to provide for that possibility.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I have a choice between a pro-European and an anti-European. I always prefer to give way to a pro-European.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The anti-Europeans will have their chance. I may describe the hon. Lady as many things, but pro-European is not one of them. I give way to the hon. Member for Banbury (Mr. Baldry).

Photo of Tony Baldry Tony Baldry Conservative, Banbury

I am grateful to the Secretary of State for giving way, although I am sure that my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) would have made the point more elegantly than I. It would be useful for those of us who are keen to sit on the Committee to know how many months we shall have to set aside. His introductory remarks gave the impression that the Bill is a done deal, but now he talks about Government amendments. May we have a sweepstake on how many will be introduced and a prize for every time that more than 100 are agreed to? Will the Committee sit until Easter, Whitsun or the summer recess, and of which year?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

As I know how many Government amendments are likely to be tabled, I would happily enter a sweepstake. I could do with the money. I was addressing the serious question of a subsidy. [Interruption.] I want to address the serious point. If the Opposition are against an amendment that would provide the opportunity to make a subsidy, so be it, but I happen to think that the Bill will be better if we cover that eventuality. I have thought about that since its introduction and the Government are prepared to provide such an opportunity. As it seems likely that we shall receive a report from the performance and innovation unit of the Cabinet Office while we are considering the Bill, we should be able to reflect on its recommendations. After consideration, that is what we intend to do. If the Opposition want to play games, so be it, but it will go down badly if they are seen to oppose an amendment—[Interruption.] We can tell from those comments that Conservative Members do not support an amendment that would allow a subsidy to be introduced. I regret that.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

On a point of order, Mr. Deputy Speaker. The Secretary of State is discussing the reaction of other Members to an amendment that has not been tabled. The convention of the House is that amendments should be tabled. When he tables that Government amendment, will he also table the other amendments and new clauses that are needed because the Government have changed their mind since printing the Bill.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

That is not a point of order. It is more a matter for debate.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The report of this debate will be read by many people who have a real interest in the Post Office network. They will read with interest that when I replied to a specific point about a subsidy hon. Members opposite did not want us to proceed in the way that I described. That is the implication of what they are saying. They are playing games.

I shall bring forward an amendment that secures the possibility of providing a subsidy. If Opposition Members do not agree with that, so be it. They can raise the matter in Committee and deal with it then. We intend to adopt that measure because we believe that it is a suitable course of action to ensure that we can protect the network. In 19 years, the Opposition did not provide such an opportunity, but we intend to do precisely that.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The hon. Gentleman's Front-Bench spokesperson also wishes to intervene and, as both are anti-Europeans, I give way to the hon. Member for Tiverton and Honiton (Mrs. Browning)

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I am grateful to the right hon. Gentleman. My original intervention was totally in accord with that of my hon. Friend the Member for Banbury (Mr. Baldry), who asked exactly what I was going to ask but, in his response to my hon. Friend, the Secretary of State said that he knew how many amendments would be tabled. That is contrary to what the Minister for Energy and Competitiveness in Europe told us. If the right hon. Gentleman knows how many new clauses he will table, will he kindly share that information with the House now?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I do not know what comments my right hon. Friend has made. The hon. Lady might like to tell me when my right hon. Friend said that. We shall table amendments in Committee. There will be a number—[Interruption.] Opposition Members who have been in government know that the Government table amendments at the Committee stage. That will happen, and there will be a number. Some of us will try to have a serious debate about the matter. The Opposition may not want to debate a serious issue, which is about the Post Office network, and instead are trying to pursue this point. I shall continue to give them rope, and they will continue to hang themselves. I give way to the hon. Member for Buckingham (Mr. Bercow).

Photo of John Bercow John Bercow Shadow Minister (Education)

I am grateful to the right hon. Gentleman for giving way. I confirm that I believe in national self-government.

What guarantee can the Secretary of State offer to Bruce and Yaeko Spilker, who run the post office in Station road, Marsh Gibbon, OX6 OHN, in my Buckingham constituency, where over 1,000 people have signed a petition in protest against the Government's plans for compulsory payment of benefits into bank accounts from 2003? In reflecting upon the question of a subsidy, will he confirm that he has no intention of discriminating between post offices, depending on whether they are in Conservative, Labour or Liberal Democrat constituencies?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I can confirm that that will not be a factor. It will be a matter at looking at the viability of individual post offices and deciding accordingly.

When I come on to address issues in relation to the Post Office network, I hope that I shall be able to answer the specific question.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I intend to give way once more, and then I want to make progress because I want Back Benchers to be able to take part fully in the debate.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

Following the Secretary of State's very helpful indication on accepting the principle of subsidies, can he now give an approximate upper limit to the annual amount that will be forthcoming in relation to the £400 million loss of income?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

No, I cannot, but what is crucial is a recognition that local post offices are a vital part of local communities. Over the last decade they have been in decline, as people's life styles and buying habits have changed.

The network of post offices has never been static. However, the Government must acknowledge the important community and social role played by post offices, and should provide new opportunities to individual post offices. That is why, for the first time, under provisions in the Bill the Government will issue access criteria for Post Office Counters to ensure reasonable access to those services, particularly in rural areas and areas of social deprivation.

The regulator and the consumer council will monitor the network closely against those criteria, and will advise the Government on the accessibility of public post offices. Access criteria will also provide a fundamental reinforcement of the public's right to appeal against individual closures. Rather than considering an appeal in a vacuum, the consumer council will be able to consider it against tangible access criteria, and will be able, through the regulator, to take up cases with the Post Office to ensure that those criteria are being met and will continue to be met. This underlines the Government's commitment to a nationwide network of post offices—a commitment that we are also implementing by giving the Post Office more commercial freedom, thus enabling post offices to offer new services and win new customers.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

No. I want to make progress and deal with the important question of automated credit transfer.

Concerns have been expressed about the impact of ACT on the network, but the Government remain committed to its introduction, both because an increasing number of new benefit recipients choose that method of payment and because it is more secure and more cost-effective than existing paper-based systems. The average cost per transaction by ACT is 1p; the cost of an order book counterfoil is 49p, and the cost of a giro cheque is 79p. Moreover, we estimate that we should save about £200 million a year by reducing the amount of fraud and theft associated with order books and giro cheques.

For the avoidance of doubt, however, I can confirm that there will be no change in the existing methods of paying benefits before 2003. Between 2003 and 2005, the Benefits Agency will progressively withdraw the existing paper-based methods of paying benefits. The normal system will then involve payment into a bank account. We recognise that, for some benefit recipients, payment into a conventional bank or building society account may not be appropriate or desirable. We have therefore given a commitment that all recipients who wish to do so can continue to gain access to their benefits in cash at post offices both before and after the change to ACT-based methods.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

Has the Secretary of State any estimate of how much less money will be paid to sub-post offices as a result of the changes?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The hon. Gentleman is confusing two separate contractual arrangements—Benefits Agency payments to the bankers automated clearing system and transactions between the bank and the Post Office. Those contractual relationships will remain in place. If the hon. Gentleman disagrees with that, I shall be happy to allow him to intervene again, but I think he will find that our arrangements will give benefit recipients a genuine choice: if they wish to continue to receive cash, they will be entitled to do so, and that will not change following the transition to ACT.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

Mine was not a trick question, nor was it confused. I merely asked what estimate of the change in sub-post office income was available to the Secretary of State.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

We should consider the hon. Gentleman's question in the round, in the context of the extra facilities that post offices will be able to offer as a result of the measures that we intend to introduce. That is one of the reasons for delaying the move to ACT until 2003. The Post Office network will be in a stronger position to ensure that, if the move results in a loss—and I am not convinced that that will be necessary—it can establish other facilities ensuring that customers continue to go into post offices, either to obtain benefits or to make purchases.

Photo of Jonathan R Shaw Jonathan R Shaw Labour, Chatham and Aylesford

The Secretary of State's assurances about cash payments are welcome, but can he deal with a couple of points made to me by sub-postmasters about recent communications from their organisation? Will holders of bank accounts who choose to have their benefits paid in cash at a post office be able to receive it in that form?

Can my right hon. Friend also assure us that Crown post offices are safe under the Government? Sadly, two splendid buildings in the Medway towns were closed under the previous Government and the replacements are completely unsatisfactory. I should like that reassurance, too.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I can reassure my hon. Friend on Crown post offices. A minimum standard is now provided to protect the Crown post office network. On his important point about an individual who has a bank account, but who chooses to have cash paid at the post office, that person will still be able to do that between now and 2003. He will still be able to do that between then and 2005 as we move towards ACT, and he will still be able to do that after 2005.

The important point is that the individual benefit recipient will have a genuine choice. If he chooses to have his benefit paid in cash at the post office, he will continue to be able to do that. That is the position. He will be able to do that because an arrangement will be put in place between banks and the Post Office to ensure that that facility is available.

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

For absolute clarity, will the Secretary of State confirm that if benefit recipients—people without a bank account—choose after 2003 to have their benefit paid in cash, that will be paid to them, without any cost to them, through a transferral from the bank to the post office? How will they receive the money? At the moment, they have books, which are being discarded, which we fully understand. Can he talk us through the procedure by which those people can exercise the option that he has described?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I know that there are some people—I will not associate the hon. Lady with it—who are trying to misinterpret the Government's position. I say this in direct answer to her question. There are two categories: there are those people who have bank accounts at the moment and those who choose not to have a bank account. We are working on an arrangement with the banks that will cover those who presently are unbanked, so that they will be able to get their benefit at a post office in full, with no deduction. Let us be clear: they will get the full benefit in cash at a post office.

For those people who have bank accounts, there will be an arrangement to ensure that the money is paid into the bank account. There will then be a facility to withdraw that money at a post office in cash, again with no reduction from the benefit payment. That is the situation that we are putting in place. It is simple. That is the position that will apply. There will be arrangements through Horizon to ensure that the individuals on the automated network will be able to secure that position.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I give way to the right hon. Member for South Norfolk (Mr. MacGregor) first. He is a former Chief Secretary to the Treasury, so I must give way.

Photo of Mr John MacGregor Mr John MacGregor Conservative, South Norfolk

I fully recognise that the Secretary of State is talking about 2003 and later, but is he aware that rural sub-post offices currently fear what will happen in 2003? Many have invested lifetime savings or have heavy borrowings. They are therefore taking decisions now and are concerned about what the position will be. They do not think that the options that he is giving will be adequate. Therefore, the crucial issue is what alternative services they can provide, to which he has just referred. Can he say something about the sort of alternative services that he thinks they will be able to provide and which will replace the lost income?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The right hon. Gentleman makes an important point. I want to come on to the alternative services that we might be able to offer through the network. The Post Office network system is a classic example of a public-private partnership. It is something that we should treasure and value. We need to put in place policies that will help to promote that. We have some ideas and I want to reflect on those, but may I address the wider point?

What has concerned me in the whole debate is that there are people who misunderstand the Government's intentions. We have a responsibility to make clear exactly what we intend as a result of going to a system of ACT. I know that there are many worries among people who have invested much of their own money in the post office and are wondering what will happen. We need to do more to explain to them exactly what Government policy is and what our proposals are. If the message is that we need to get that over more clearly, we will need to reflect on that.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I want to come to the right hon. Gentleman's point about alternative services, but before doing so I give way to my hon. Friend.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

Will my right hon. Friend confirm that the Treasury is investing £500 million in bringing ACT to post offices? Does he agree that the Treasury, which is known for its prudence, is hardly likely to do that if it is going to shut down a large number of post offices?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

It is true that around £500 million is being invested by the Government in the Horizon network to automate fully the Post Office network. That is where the investment is being made. That is a tangible demonstration of our commitment towards the Post Office network, but I address again the point about the costs and the different contractual relationships.

There is an issue about the cost to the Government being just 1p when we move to ACT. The reason is because the Benefits Agency pays a fee of around 1p to what is called the BACS system, which is owned jointly by the banks, for the transfer of the payment into the recipient's bank account. There is no contractual relationship as such between the Benefits Agency and the Post Office for such a transaction. Equally, that will be the position after the introduction of ACT.

What concerns many sub-postmasters and mistresses is what will happen to the financial relationship that they have at the moment with many banks for providing a cash withdrawal system. Many of those contractual relationships are already in place. I understand that sub- postmasters and mistresses are paid in many cases in excess of 17p per transaction on a range of transactions carried out by the Post Office on an agency basis for the banks.

Nothing that we are proposing should alter those arrangements. Indeed, there is an argument to say that there will be even more transactions because of the way we intend to develop the system through ACT, so there is no question but that the present contractual relationships between the banks and sub-postmasters and mistresses will remain in place. They will be able to get payment for the transactions that take place, which they carry out on an agency basis for the banks themselves. That will remain in place. Nothing that we are proposing will affect that.

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

Just for clarity, the press release that was issued by the Minister for Competitiveness on 11 February states: Under the new system to be introduced by the Benefits Agency in 2003, sub-post offices can expect to get about the same amount for each over-the-counter cash transaction. What does that mean?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I will say it a bit more slowly this time, so that the hon. Lady can follow. The point that I was trying to make was that the 17p transaction fee that is paid to post offices on an agency basis for the work that they carry out for banks will remain in place. Nothing that we are proposing changes that contractual relationship. Indeed, in some contractual relationships, they receive more than 17p per transaction, so the benefits of receiving that income will still remain. It is different from the BACS system, which involves a relationship between the Benefits Agency and the banks. The 17p per transaction is a commercial relationship between the banks and the Post Office, where the Post Office acts as an agent for the bank and charges the bank accordingly. Nothing that we are proposing affects that commercial relationship.

I regret the fact that some commentators who should know better seem to have confused the two and, indeed, are briefing people that it will suddenly drop to 1p per transaction. The 1p is the sum that the Benefits Agency pays the banks under the BACS system. That does not affect the contractual relationship—a distinct relationship—between the Post Office network and the banks themselves. The agency transaction that applies there will remain in place.

Photo of Russell Brown Russell Brown Labour, Dumfries

Will my right hon. Friend give way?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I will give way once more and then I want to make some progress.

Photo of Russell Brown Russell Brown Labour, Dumfries

Will my right hon. Friend clarify something for me and, I suspect, for others? If someone goes in with a benefit book for a cash transaction, the sub-postmaster or sub-postmistress will receive about I1p or 12p for that transaction. Is my right hon. Friend saying that, in future, if that person opens a bank account and receives cash from that account over a post office counter, that sub-postmaster or sub-postmistress could well receive 17p for the transaction? Is that what he is saying?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

That is a transaction arrangement between the Post Office and the bank and will be dealt with on an agency basis. It will be determined, as it is now, in commercial negotiation between the Post Office and the bank system. On average, the transaction fee is now 17p, if not more, for each transaction that is performed. There is nothing in the Bill or in the ACT arrangements that will change that contractual relationship.

I should like to deal with the point raised by the right hon. Member for South Norfolk on the alternative services that might be provided through the Post Office network.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

No, I should like to make some progress. [HON. MEMBERS: "Give way."] As Conservative Members know, I am generous to a fault in giving way. However, I should like to make some progress, as many Back Benchers would like to speak in the debate.

We are investing half a billion pounds in equipping all post offices with a modern, on-line computer system that will enable them to provide a wider and better range of services. The Horizon platform will enable the Post Office to extend substantially its arrangements with banks and building societies, which should greatly extend the banking facilities available to customers generally, but especially in rural and some urban areas from which the banks themselves have withdrawn. The platform has the potential of reinstating banking services in rural communities.

The Post Office is an under-utilised resource, and its services need to he enhanced and more widely advertised. The provision of 3,000 new cash machines at post offices across the country is an indication of the new opportunities that business is exploiting.

I am sure that Labour Members will have heard the hon. Member for Rutland and Melton (Mr. Duncan), on behalf of Conservative Members, say that his solution is to privatise the Post Office network—[Interruption.] That has gone on the record as being the policy that he wishes to pursue. However, it is interesting to note that when the issue has been debated, the public have rejected the option of privatisation—whether of the Royal Mail or of the Post Office—and the effect that privatisation would have on the rural network.

The reality is that the Post Office network—which is, as I said, a very good example of a public-private partnership depends on having a network that is in public ownership. That is the reality of the situation. Privatisation is the preferred approach of the hon. Member for Rutland and Melton—[Interruption.] I am pleased that he agrees with my statement of his preferred approach. However, neither the Post Office network, nor sub-postmasters and mistresses, support that approach. Nevertheless, it is interesting to know his position on the issue.

We can and will provide 3,000 new cash machines at post offices across the country.

Photo of Gordon Prentice Gordon Prentice Labour, Pendle

Will my right hon. Friend give way?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I should like to make some progress.

People can now buy a lottery ticket from a post office and they can exchange foreign currency there. Over 4,000 post offices have national lottery on-line terminals, 1,500 of which are in rural areas. In the past 20 years, the number of post offices providing vehicle licences has doubled. Mobile telephone pre-payment cards are available from almost 5,000 post offices, and that number will rise to more than 6,500 by April 2000.

We need to build on those types of facilities, and part of the modernising government agenda will ensure that we continue to do so. There is no doubt in my mind that our programme for the Post Office network will guarantee a future for the network, recognising the very important role that it plays in our communities.

The Bill obviously offers much more on the Post Office. It provides a framework for modernisation of the Post Office so that it is able to deliver a world-class service and compete with overseas competitors. The time has come to modernise the Post Office, to enable it to meet the challenges and opportunities of the changing market and of increased competition.

Britain's Post Office has real achievements to its credit, and the Royal Mail is one of the country's most recognised and valued brands. However, to build on those achievements the Post Office will have to meet four major challenges: to respond to the growth of e-mail and other forms of electronic communication; to meet the challenges of the liberalisation of postal markets in Europe and elsewhere; to meet the growing competition for business consumers; and to adapt to the emergence of new business opportunities.

The Post Office shares those challenges in common with Europe's other traditional postal service organisations. Change is occurring throughout Europe, and the pace is likely to accelerate. Already, the Post Office faces competition in the United Kingdom from overseas postal administrations and delivery companies, some of which are ahead of the game. The Bill will provide a framework to enable the Post Office to develop to its full potential, providing the greater commercial and financial freedom that it needs to compete effectively.

The Bill will complete the reform package that we began last summer, giving the Post Office the flexibility it needs to modernise and to run a fully commercial business in the 21st century, but maintaining it within the public sector and delivering our promises on share disposals.

Part IV of the Bill reinforces our manifesto commitments to give commercial freedom to the Post Office within the public sector. It will convert the Post Office into a public limited company that is able to be more responsive to market demands and to customer demands. A regulated, Government-owned plc is what the Bill proposes. The plc model is widely understood and clearly sets out the duties of directors to the company. It helps to establish the clear separation of the functions of ownership and of management. It also enables the Government to receive a proper dividend, rather than requiring the Post Office to build up cash deposits on its balance sheet.

The Bill delivers our promise that there will be no sale of Post Office shares without primary legislation. The Bill prevents the Government from disposing of shares or share rights in the Post Office company unless parliamentary approval has been given under the set procedure which is clearly stated in the Bill. Primary legislation will be required to remove those restrictions, to allow a wider disposal of shares.

The commercial future of the Post Office depends on its being able to compete effectively with other global players. The Post Office must therefore be equipped to develop its business, which may well involve forging alliances and commercial partnership with organisations that have complementary skills. We have to ensure that it has the freedom and commercial flexibility to do that, and the Bill achieves that objective. We have already acted to enable the Post Office to borrow at commercial rates for growth investments up to £75 million annually, without Government approval. Borrowing beyond that sum will still require Government approval. In recent years, an average of 80 per cent. of the Post Office's profits have gone to the Exchequer. The sum will be reduced to 50 per cent. this year, and to 40 per cent. in 2000–01. The Post Office will, therefore, have new finance to invest in the future.

I am confident that the Bill will transform the Post Office into a more commercial organisation. It will enable the Post Office to realise its ambition to become a world-class distribution company. In the new global economy, we need a modern and competitive Post Office that can win new business, expand into new markets and create jobs and wealth in Britain. We also need to ensure standards of service and protection for disadvantaged groups and communities. The Bill does precisely that.

The Bill provides for a Post Office with a modern commercial structure while keeping it within public ownership. It provides for strong consumer protection, wherever possible through competition, and ensures that the benefits of competitive, modern postal services are available to all. It provides the commercial freedoms that will enable our Post Office to become a major global player, while ensuring that we retain the important social obligations—including the counters network—that make the Post Office such an important part of the social fabric of our country.

The Bill is forward looking. It creates a postal service that is fit for the 21st century, and I commend it to the House.

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry 6:09 pm, 15th February 2000

I beg to move, To leave out from 'That' to the end of the Question, and to add instead thereof: this House declines to give a Second Reading to the Postal Services Bill because it introduces an unsatisfactory structure of ownership which falls short of granting full commercial freedom, introduces uncompetitive borrowing criteria and does not include provision for transparent accounting practices, imposes new burdens of regulation on private companies rather than encouraging competition and fails to introduce clear access criteria to protect the network of sub Post Offices. Last July, following the Secretary of State's statement on the Post Office White Paper, we debated many of the issues that have been raised again tonight. It is extraordinary that, seven months later, we should be presented with a Bill to which, we are already informed, there could be as many as 200 Government amendments. A pattern is emerging. A couple of weeks ago we gave a Second Reading to the Utilities Bill, which also came from the Department of Trade and Industry. It is an affront to the democratic process that the Government—particularly the Secretary of State for Trade and Industry—cannot arrange for the Bills announced in the Queen's Speech to be properly and thoroughly drafted before the House has an opportunity to debate and scrutinise them. The Secretary of State has told the House that he knows how many amendments he intends to table. If the right hon. Gentleman will not return to the Dispatch Box, I hope that the Minister for Competitiveness will tell the House the number. We have to judge the Government's proposals not by relying on the Bill that is printed, but by second-guessing errors and omissions that occur as a result of the way in which the Government bring their legislation before the House.

In July, the Secretary of State told us with great pride that the postal privilege was to be reduced from £1 to 50p. Indeed, he laid a statutory instrument to that effect, only to remove it after pressure from the Post Office unions in the run-up to the Labour party conference. The Bill has been surrounded by muddle and confusion from the time when the Government announced at least some of the detail that we might expect to find in it. Perhaps the Minister for Competitiveness was instrumental in that U-turn. Confusion helps no one, particularly the sub-post office network.

We have had three debates on the Post Office since then, focusing particularly on sub-post offices. There has been muddle and confusion in much of what the Government have said. They have produced a hybrid structure of a Government-owned plc with a regulator and a consumer body. Despite all the cant and the language of competition, we know that the Government's proposal is a compromise. I have no doubt that the Secretary of State would have liked to privatise the Post Office, not least because the Government have shown that they are willing to accept the concept of privatisation. We expect the privatisation of the National Air Traffic Services shortly, and I am sure that that will not be the Government's only privatisation. Given that they have accepted the principle, it is extraordinary that, rather than proposing the confused structure that we are considering tonight, they have not grasped the opportunity to release the Post Office—particularly the postal services—to competition and allow it to compete and raise money on the open market.

The Bill is ill prepared and sloppily drafted because the Government want to rush it through. A measure of such importance requires much more attention than that. Let me deal with some of the issues on which I hope the Secretary of State will be able to reassure us that he already has some details.

Photo of Michael Connarty Michael Connarty Labour, Falkirk East

Did I discern a policy among all the muddle? Was the hon. Lady saying that the Conservatives would privatise the postal services?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

We shall look at the mess that we inherit from the Government. We support the principle and the need for the Post Office to compete globally, but we are dealing with a hybrid structure and we have no relevant experience to allow us to judge how it will proceed. Interestingly, the Secretary of State has tried, as ever, to allay Labour Members' fears by saying that the Government are not going to privatise fully because they do not intend to dispose of shares at this stage. He has said that primary legislation would be required to do that, but he has never given a guarantee that the Government have ruled it out. The hon. Member for Falkirk, East (Mr. Connarty) might intervene on the Minister when he winds up to ask whether the Government intend to make it clear tonight that they will never dispose of shares in the new structure. We should be interested in that.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

Some of us have spent the best years of our lives, in and out of government, trying to privatise the Post Office. Will my hon. Friend confirm that it was the policy of my right hon. Friend the Member for Henley (Mr. Heseltine) when he was the President of the Board of Trade—and that it is still the policy of those on the Conservative Front Bench—to privatise the Royal Mail?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

We shall be very enthusiastic to do so, but we shall give the Post Office full freedom while setting minimum standards for universal delivery of letters and support for the sub-post office network. We already have a good track record on privatisation. We have protected services but freed up industries to the marketplace. I am pleased that the Government seek to emulate that, although they are being a little timid. That formula has been advocated and copied around the world.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

If such protection was offered, why did one in five sub-post offices in the network close while the Conservatives were in government?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I do not know how many sub-post offices the hon. Lady has in her constituency. I have about 60. There are many reasons why sub-post offices have closed. Some that were combined with the general store in a village have closed because of competition from supermarkets. If the hon. Lady was aware of what happens in rural communities—a subject on which the Labour party is not knowledgeable—she would know that many factors have affected the viability of post offices, including demographic changes. People tend to go away from villages to work, so they are not always there during post office opening hours. That has also affected post offices that rely for their income on the trade of the general village store or the sale of other goods. There has been a natural decline in post offices as a result of social changes. When the Conservatives left office in 1997, we left in place a system which recognised that post offices would need to be automated with computers to improve their income. Having said that they will produce the computers, the Government are now saying that post offices must depend solely on computers to make up the loss of the £400 million-worth of income that they currently receive from benefits.

Photo of John Bercow John Bercow Shadow Minister (Education)

Does my hon. Friend agree that, to brief herself adequately, the hon. Member for Plymouth, Sutton (Mrs. Gilroy) need do no more than consult her hon. Friend the Member for Forest of Dean (Mrs. Organ) who is sitting next to her, who has eloquently denounced the Government's proposals for compulsory payments into bank accounts? Is it not important that we should hear the hon. Lady's criticisms of the Government during the debate?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

As usual, my hon. Friend is correct. I recall visiting one of the excellent sub-post offices in his constituency in September. The same concerns were voiced there as in the two dozen other sub-post offices around the country that I have visited. Sub-postmasters are concerned because the Government have taken a significant amount of the income that they previously enjoyed and told them that they must not only catch up with the competition from supermarkets and elsewhere but find the means to make up the drop in income. That is why many have told stories similar to that which I heard from the sub-postmistress to whom I spoke in Liverton, in the constituency of my hon. Friend the Member for Teignbridge (Mr. Nicholls) last Friday. Having looked at the projected income for the next three or four years, her bank manager has advised her not to risk borrowing another £15,000 to expand the shop by opening up what was once a store room. That is how fragile sub-post offices are as a result of the Government's policies.

Photo of Charles Wardle Charles Wardle Conservative, Bexhill and Battle

Does my hon. Friend agree that what she has just described is likely to put between 9,000 and 10,000 sub-post offices on the margin financially?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

My hon. Friend has struck on the right amount, because some 50 per cent. of the sub-post offices will be affected—all of them private businesses. Many of them are owned by people who have sunk retirement capital from other jobs into them only to find that—at a time in their lives when they thought they were building up a nest egg for retirement—the bank managers see them as risky business.

Photo of David Borrow David Borrow Labour, South Ribble

If advances in technology mean that the payment of benefits is cheaper and more efficient through the automated credit transfer system, and if that leaves post offices vulnerable, is maintaining an antiquated system the best way to subsidise post offices, or should it be done through a direct clearly accountable subsidy, as my right hon. Friend the Secretary of State suggests?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I refer the hon. Gentleman to the excellent speech made by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) in a debate on this subject in Westminster Hall in January. My right hon. Friend clearly spelled out the Conservative policy when we left office, and explained why we thought it was worth putting £400 million-worth of taxpayers' money into supporting the sub-post office network. We recognised that sub-post offices fulfil an important social function in communities—and the hon. Gentleman may be disappointed to discover that Ministers do not recognise that.

We agreed to introduce computerisation because of the problems of fraud associated with benefit books, which would have led to the use of swipe cards and, ultimately, of smart cards. Computers clearly have benefits in allowing small post offices to provide additional services. However, the difference between new Labour and the Conservative party is that my right hon. Friend, who served both as Secretary of State for Trade and Industry and as Secretary of State for Social Security, looked at both sides of the issue and made a value judgment, which was that we were prepared to spend taxpayers' money to sustain vulnerable communities.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee

In the event of the Post Office being privatised, does the hon. Lady envisage that a privately owned company would subsidise a retail network that it did not own to the tune of £400 million a year?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

Any policy that the Conservative party puts forward will be based on what we inherit, and I cannot second-guess what that will be. I shall certainly not speculate now on what might be in the Conservative manifesto, or a policy of the next Conservative Government. Labour Back Benchers seem to be interested in whether and how we would privatise the Royal Mail. If they are so nervous, they should seek a guarantee from the Secretary of State that the Bill is not a precursor to full privatisation. The Government should guarantee to their worried Back Benchers that they will never dispose of the shares that they will create and own under the Bill.

Several hon. Members:


Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I shall give way to the hon. Member for Plymouth, Sutton (Mrs. Gilroy) once more, because she is from Devon, and I should like to think that the people of Devon can feel that they are represented by somebody who understands the Post Office problem.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

I spent some of my younger years in Ottery St. Mary and I am fully aware of the challenges faced by rural areas, as well as by deprived areas. If we were unfortunate enough to have a Conservative Government in future, would they give the guarantees on access that my right hon. Friend the Secretary of State has given tonight? My right hon. Friend said that there will be robust criteria to protect the post office network in the future. Would the hon. Lady uphold them?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I have explained fully the Conservatives' concern about the Bill, and that we would wish to examine what we inherited from new Labour. However, if the hon. Lady thinks that she has received any guarantees from the Secretary of State about access, she must have better hearing than I have. It is true that the right hon. Gentleman mentioned the subject, but he did not give any guarantees. Perhaps if she catches your eye, Mr. Deputy Speaker, the hon. Lady might like to press the issue, because we would be interested in the actual nature of the access guarantees. As I understand it, they have not yet been worked out and they await a Cabinet Office report.

Photo of Oliver Letwin Oliver Letwin Conservative, West Dorset

Does my hon. Friend agree that, having decided to deprive the rural and other marginal post offices of a large sum of money in an attempt to save money, the Secretary of State has discovered that he is not going to save that money, and—having not saved the money—is going to subsidise them to make up the difference, the result being that those post offices get less money at more expense to him?

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

That was beautifully and succinctly put, as I would expect from my hon. Friend and neighbour. He raises an important point: the smash-and-grab raid by the Treasury to save £400 million from the social security budget seems to be rapidly diminishing because the Government will have to shore up other aspects of the Post Office—on some of which we have not yet heard the details—to save their face. It will be interesting to see the balance sheet when everything is done and dusted. My instinct is that little saving will made overall, although the £400 million will have been redistributed. It will not necessarily go through the accounts of the sub-postmasters, who regard it as an essential part of their income.

Several hon. Members:


Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I have been generous in giving way and I shall now make some progress.

I hope that the Minister will be able to provide the answers to some important points when he winds up. The powers of the Secretary of State, especially in the financing of the Post Office, are important. I note that the Bill mentions loans to the Post Office company or any of its subsidiaries. Why have the Government used the word "any" rather than "relevant"? The Bill also provides for privileged loans, which could distort the market for other private sector companies, and we shall want to examine those provisions—including the interest rate for any such loans—carefully in Committee. The Secretary of State said that such loans would be at commercial rates, and I hope that we may take him at his word, as there could be distortion of the market if preferential loans were made through borrowing facilities made available by the Government which put the Post Office in a more favourable position than other operators.

The Secretary of State will have the powers to extinguish certain liabilities of the Post Office or "any of its subsidiaries". Why does the Secretary of State believe that "any" of the subsidiaries should be eligible, as opposed to the "relevant" subsidiaries outlined elsewhere in the Bill? The limit on the loans that will be available to the Post Office is to be increased from £1.2 billion to £5 billion. That will provide reasonable access to the national loans fund for commercial acquisition. Can the Minister identify how that threshold was reached? Why was the sum of £5 billion chosen?

The Government have allowed the Post Office to spend a sum of money without permission, but when it comes to loans that require the sanction of the Secretary of State, we have the bizarre prospect of a Minister who claims that he wants to take politics out of competition policy authorising loans that could affect the market and give one company a competitive edge over another. How will the Government square that facility with their declared position on competition policy and the Secretary of State's desire not to make political decisions about competitive issues between companies?

The Bill contains provisions for far too much involvement by the Secretary of State, and he has created a confused structure. Why does the definition of "relevant subsidiary" vary throughout the Bill? Should not the definition in clause 52(8) apply throughout? We are concerned about that.

Another disappointment is the Government's failure to identify clear accounting procedures so that transparency is guaranteed. We shall be seeking a lot more information about how public money and public risk are to be analysed in a transparent and accountable way. Perhaps that information will be contained in the 200 or more amendments yet to be tabled. In any event, we shall certainly expect the proposals to be tabled before the Bill is considered in Committee, so that they receive full and proper scrutiny.

European Union countries and others exclude public corporations from their primary measures of public accounts. If the Government insist that the Post Office is not self-financing—which they do, because they have not allowed it the full freedom of the marketplace through privatisation—the accounting procedures and borrowing rules are important. We assume, because of Government ownership, that it will be financed out of public funds. Will the Secretary of State confirm that? Will he also say how those finances are to be presented?

How does the Secretary of State balance the threshold of the borrowing for the Post Office with the possibility that the investment required would not generate the required return? Is the £5 billion ceiling designed to ensure that the return would be guaranteed in any commercial situation? Could the limit prevent investment that was economically justified? If not, the Post Office would have difficulty in meeting the Government's targets.

If the Post Office owes the Government money via the national loans fund, the Government will have to borrow from the private sector to maintain their net borrowing or net debt repayment. In that case, why not let the Post Office borrow from the private sector in the first place through full privatisation? Will future Post Office borrowing be included in the primary measure of public sector borrowing?

We shall want to scrutinise many aspects of the Bill in Committee. I hope that, from what he has heard tonight, the Secretary of State will recognise that the Bill contains much that is confusing. It includes words such as "modernise", "commercialism" and "competitiveness", but it does not really set the Royal Mail free to take its place in a global marketplace, despite what the Secretary of State says.

The area of greatest confusion concerns the sub-post offices, which were discussed at the beginning of my speech. It is no longer acceptable for any Minister, including the Prime Minister, to dash around the country making statements and saying things simply to assuage public concern, particularly among the sub-postmasters. In the summer recess, the Secretary of State rushed into print, saying how the combination of Camelot and the Post Office in the new national lottery bid was going to be the answer for rural post offices. He must know by now—he clearly did not know then—that the procedures for installing a lottery terminal require a considerable number of transactions to be made a week. I believe that the minimum number is 3,000 a week, which is beyond many of the smallest and most vulnerable sub-post offices, which will not therefore benefit from the installation of a lottery terminal. In my, very rural, constituency, I occasionally have to fight to save a terminal in a small outlet where the number of transactions has dropped to between 1,500 and 2,000 a week. National lottery terminals are not the answer, and it is misleading for Ministers to make people think that they are.

Only last week, the west country saw the now rather infamous visit of the Prime Minister, who told people in the rural areas that we had never had it so good. On that visit, the Prime Minister told people in the west country that they would receive 3,000 cash dispensers, and that that would be the answer for post offices. That has nothing to do with the Government—it concerns a commercial transaction between post offices and banks. In some of the most fragile of my rural post offices, and in other areas where they operate from clapboard buildings, I cannot imagine a cash dispenser being installed: it would be the first target for ram-raiders. The Government need to get real.

I hope that we shall be given a commitment tonight that we will have more responsible statements, from the Prime Minister downwards. There is grave concern about the future of the sub-post office network. There is grave concern among vulnerable, frail, elderly people about having access to a post office that will continue to provide the services that they have been used to receiving.

We need to know, before the Division tonight, what else the Bill will contain. Whatever it is, we have been denied the opportunity to debate it this evening.

Photo of Michael Martin Michael Martin Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. I remind the House that a 10-minute rule applies to Back-Bench speeches.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale 6:36 pm, 15th February 2000

I am particularly pleased to have the opportunity to contribute to the debate. Not only do I represent a constituency in which a significant proportion of the population depends heavily on the service provided by post offices, but before being elected to the House in May 1997, I spent the whole of my adult life working in the postal industry. In my capacity as a Member of Parliament representing Morecambe and Lunesdale, and also as a former Post Office employee and trade union representative, I warmly welcome many of the measures in the Bill.

I welcome in particular the conversion of the Post Office from a statutory corporation to a public limited company owned by the Crown. That will provide the stability and commercial freedom that the Post Office needs to expand and compete in the global market place, and it will curtail political interference in its affairs. The measures are long overdue, and will no doubt be warmly welcomed by all who work in the industry.

I pay tribute to all the men and women who work for the Post Office and who, despite the continuous changes, reorganisations and uncertainty over their future, have continued to raise productivity, provide an excellent service to their customers, and play their part in ensuring that the Post Office is a profitable organisation that can compare favourably with any postal business anywhere in the world. The Bill, and the prospect of stability that it brings, is therefore most welcome.

I have however a couple of areas of concern about the Bill. Clause 56 sets out the procedure to be followed to obtain the approval of Parliament to make share issues or disposals that would otherwise be prohibited by clauses 54 and 55. It appears that the main criterion to be met before a motion to dispose of the public's stake in the Post Office is brought before the House is that the Post Office should persuade the Secretary of State that it is in the company's commercial interest for him to do so.

Bearing in mind the importance of the Post Office to the economy of this country and the essential role that it plays in the fabric of our society, I believe that the Secretary of State should have a wider obligation than that of simply considering the company's commercial interest. I am of the opinion that prior to any such motion being brought before the House, the Secretary of State must be convinced that the disposal of shares is in the national interest. I believe too that that should be reflected in the Bill. I hope that my right hon. Friend will consider this point, and I will listen with interest to his response.

Opening up the reserved area to competition is also a matter of concern. The Bill enshrines, for the first time, a universal service obligation and a universal tariff, and I welcome those measures. However, we must be aware that provision of that service will require the Post Office to subsidise high-cost, low-revenue services from the income generated by the most profitable areas. Any operator granted a licence in the reserved area must, therefore, face the same service and price obligations to prevent them from cherry-picking the most profitable areas.

Closures of rural and sub-post offices, and the threat posed by the conversion of benefit payments from order books or giro cheques to automated credit transfer in 2003, are also matters of concern. Closure of post offices is by no means a new phenomenon; about 200—1 per cent. of the network—have closed in each of the past 20 years. There are many reasons for closure, but one of the most common, particularly in rural areas, is that the Post Office cannot find anyone to keep them open because of the low income offered.

The village of Wray in my constituency is in that situation at present. The post office is up for sale, but no buyer can be found. Clearly, positive action is needed or that problem will continue, and ACT conversion will rapidly accelerate it. Rural post offices are not the only ones that will be affected by ACT, as those in the most deprived areas of towns and cities will be hardest hit because those areas host the largest number of benefit claimants. The west end sub-post office in Morecambe is a good example, because benefit payments constitute the vast majority of transactions carried out there. If revenue from that work is lost and not replaced, the office will undoubtedly close.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

I am sorry, but I do not have time.

Even at this early stage, local residents are sufficiently concerned to have started a campaign to save the local post office. I accept that it would be foolish to argue against the ACT conversion programme, because its benefit to the Exchequer and its usefulness in combating fraud are plain for all to see. However, the Government must do all they can to mitigate the system's impact on post offices.

The Horizon project, which will see post offices automated by 2001, will undoubtedly help to attract banking and financial services to post offices. However, I do not believe that that will compensate for the loss of revenue arising from implementation of ACT. The banking industry itself has experienced a sharp decline in demand for similar services.

I do not offer a universal panacea that would overcome all the problems of post office closure, but I believe that many of them could be avoided if we imaginatively combined the different services that post offices provide. The universal letter guarantee ensures some postal activity in all areas, and it is invariably supplemented by parcel deliveries. When added to the Post Office Counters part of post office work, that can produce an economically manageable level of activity.

Before any post office is closed, the Post Office should have a duty to examine the possibility of establishing a combined operation. In addition, the Post Office's findings should be made known through existing consultative arrangements. Will the Minister consider what I have said? I shall be extremely interested in his response.

I firmly believe that the Bill takes a huge step in the right direction. I look forward to its passage through the House. Having worked in the Post Office during the 18 years the Tories were in power, I feel that we have little to learn from them, and I dread to think what the Post Office would be like if they ever returned to power.

Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden 6:45 pm, 15th February 2000

I apologise for being unable to stay for the wind-up speeches, because I had entered into another commitment before the date of this debate was changed. I congratulate my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) on effectively dissecting a badly drafted Bill and on demolishing an even more poorly briefed Secretary of State, who gave one of the most inadequate explanations of a Bill that the House has ever heard.

I had hoped to offer some support to the Secretary of State and his Bill. When the White Paper was published, I said that it merited at least one cheer from the Conservatives. I believed that the process initiated by the White Paper would lead inexorably to full privatisation of the Post Office, which would be in the interests of customers, taxpayers, the economy and the employees of the Post Office, who, under a Conservative Government, would be able to become shareholders in their own enterprise.

Having read the Bill, however, I must reduce my applause to, at most, half a cheer. I still believe that it will ultimately lead to privatisation. However, the obstacles that have been erected to pander to the left wing of the Labour party and the trades union movement will slow the process, prolong the agony and uncertainty and mean that the Post Office misses many of the glittering prizes that would be available if it were in the vanguard of enterprise.

The Government said that they aimed to modernise the Post Office. The Bill, however, is a "make us modern, but not yet" measure. It deals with a massive, important and rapidly changing industry. That industry needs the dynamo of competition and enterprise if it is to maximise benefits to this country. However, the industry also impinges on certain social priorities, which must be satisfied.

The Government have acknowledged three main social objectives, which they inherited from the Conservatives. The first is the universal service obligation to deliver to every address at a uniform cost. The second is the universal delivery of benefits, not least to those who cannot afford to travel long distances to pick up their money. The third is the need to maintain a nationwide network of sub-post offices.

The universal service obligation can readily be met by regulation. We can make universal provision a licence condition and prevent exploitation of any partial monopoly by turning on the tap of competition. The regulatory function does not require the continuation of state ownership. Indeed, if the state owns the company that it regulates, there is an inevitable conflict of interest. The Treasury will want higher prices, but the regulator will want them down at more competitive levels. That is inherent in state ownership. Only privatisation can bring about a separation of regulation and ownership, which results in better regulation.

Moreover, state ownership can lead to unfair competition through access to cheap borrowing. Avoiding that will mean restricting the Post Office's rights to borrow and to diversify, but those things are essential if it is to take advantage of the rapidly changing world of e-commerce and e-mail.

Above all, the Bill will inhibit international mergers, takeovers and alliances. Indeed, it is clear from the opposition within the Labour party that Labour's main bogey is the threat of international involvement in our Post Office, or its involvement overseas. No group is more xenophobic than the Labour party. Mr. Haider could take lessons from it. By contrast, the Conservatives believe that free trade and free investment maintain and build links between countries, and those links are both to the social and economic good.

The second and third social obligations—to deliver benefits and to maintain a nationwide network of sub-post offices—have until now been met simultaneously. The Department of Social Security contracts with Post Office Counters Ltd. on condition that the latter maintains a nationwide network of post offices through which benefits can be delivered.

The Government now claim that they can deliver benefits through the banks instead, and save large sums of money. They say that they will save £400 million without hurting anyone, as if that money will come out of thin air. If the Treasury gains £400 million, somebody loses £400 million, and the losers will mainly be the post offices, which will lose a third of their direct income.

When I was Secretary of State for Social Security, I received clear advice that a move to compulsory payment of benefits into bank accounts would destroy the network of sub-post offices as we know it. The only way to avoid such a catastrophe would be to introduce a subsidy, which of course would absorb a large part of the savings that the move was intended to make. The net effect would be minimal savings and maximum inconvenience for pensioners, disabled people, young mothers and those on income support.

When I recently challenged the Secretary of State for Social Security to confirm that he had received similar advice, he refused to answer. He side-stepped the question and went off into auto-rant about my wishing to privatise the sub-post office network—apparently unaware, as was the Secretary of State for Trade and Industry today, that it is already privately run, owned and managed.

I want the Minister or the Secretary of State to confirm today that the Government received advice similar to that which I received—that without subsidy, post office closures will accelerate. Can he explain why there was no provision in the Bill as originally drafted for such a subsidy? Can he confirm that because the Government have met pressure on their own Benches as well as from ours, they will agree to subsidise the network?

Is the Secretary of State aware that even if he paid the post offices a subsidy equal to the money that they will lose as a result of the cancellation of the contract from the DSS, he would not undo all the damage that he will have done to the network? Paying the subsidy direct to post offices will not bring the customers back into those shops. It was those customers coming to claim the benefits who spent some of that money in the shops and gave them a significant proportion of their revenues.

Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden

I am sorry, I cannot give way, but doubtless the hon. Gentleman will confirm that point when he speaks.

Can the Minister confirm that the announcement that has already been made has caused many sub-postmasters and sub-postmistresses to sell up and get out? Can he confirm the estimate of the Post Office National Users Council that the rate of closures has almost trebled since that announcement, and will reach 500 in the year due to finish in a month's time? Can he confirm, too, the figures which show that it is not just rural but urban post offices that are among the most vulnerable?

After today's extraordinary performance, we are left with a confused and confusing response to the key questions about how the new proposals will work. Above all, what will happen to those who do not have bank accounts at present—up to 20 per cent. of the recipients of benefits? Will banks be forced to set up shadow accounts for them, through which the money will be paid in order to get it to the sub-post office and then to them? How much will that cost the taxpayer? Certainly not a penny each—apparently, more like 17 times that sum on the figures given, but one suspects even more than that.

Will people who have to open a new account—for example, mothers who want to have child benefit paid into it—be forced to pay bank charges? Will they receive any compensation for that? Can the Minister guarantee that there will be no withdrawal charges imposed by banks in future for the use of access machines? Where the access criteria show that there is more than a minimal provision of post offices in an area, will the Post Office be free to close those that the access criteria show to be superfluous?

In short, the Bill shows that the Government are determined to exclude private enterprise from the part of the Post Office's operations where it could do most good, and to undermine private enterprise in the area where it already—

Photo of Michael Connarty Michael Connarty Labour, Falkirk East 6:55 pm, 15th February 2000

I am grateful to be called in this important debate. This is a positive day for the Post Office and postal services.

I listened in amazement to some of the contributions from the Opposition. It seems to have passed them by that many of their Front-Bench colleagues in the previous Government were swept out of office and out of this place with the assistance of the Stand By Your Post campaign. They were so blatantly determined to privatise the Post Office that even petitions signed by 10,000, 12,000 or 15,000 people in their own constituencies were ignored, because of the dogma and ideology that drove them on. If they continue with the commitment that they gave from the Front Bench to be the party of privatisation on the terms that they previously put to the British people, they will remain on the Opposition Benches for a long time.

Alongside my hon. Friend the Member for Morecambe and Lunesdale (Miss Smith) and the person who is now the Minister for Competitiveness, my hon. Friend the Member for Hull, West and Hessle (Mr. Johnson), I took part with pride in the Stand By Your Post campaign. People were angered by the Conservatives' attempt to privatise the Post Office, clearly for the profit of some of their friends in the City, and no doubt some of their friends who thought that they would be senior management in the privatised Post Office. The Conservatives ignored the fact that people did not want the Post Office privatised. People still do not want the Post Office privatised, and they will oppose any future moves towards privatisation.

The people stood by their Post. This Government, in opposition and now, have stood by the Post. The Bill underlines the depth of their commitment to an integrated Post Office Counters and Post Office distribution service. The service will be modernised by the Bill, which will give the Post Office a chance to invest its hard-earned profits.

I remind the House that the previous Government took £1 billion over three years from the Post Office through the external financing limit—a way of robbing the Post Office's efforts in order to finance the Government's poor policies, which were costing the country so much.

The Bill will allow the Post Office to compete, but the Post Office would probably be better able to compete if it did not have such a low capital borrowing limit—£75 million. That limit should be reconsidered, as it may not allow the Post Office to compete at the right level. The Post Office will be able to compete externally and within the United Kingdom. I look forward to it becoming a worldwide and world-class distribution company.

The Bill will benefit the consumer. Universal provision is frequently taken for granted, but if the Conservatives had had their way in government, universal provision would have gone. Scotland always invents "west" questions. There was a West Lothian question in connection with devolution, and a Western Isles question in connection with postal services, which was never answered by the Conservatives while they were in government.

It was obvious that, with a privatised postal service, it would never be possible to have the same standard of first-class post delivery to the Western Isles as to West Bromwich or some parts of west London. That is dealt with by the Bill, which states that there will be universal provision in all the glens, valleys, islands and the mainland of this country. That is important.

Another notable aspect of the Bill is clause 30, which guarantees the service for the blind. I remember the trauma experienced by those who provided books for the blind. Being in large print, such books obviously make very large parcels. They used to go free, and still do, through the postal services, but that was threatened by the Conservatives' privatisation policies. Now it is guaranteed that the books will be delivered as a free service to people who are blind or partially sighted.

There will be a consumer council for postal services. I am glad that the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) referred to the provision of a Scottish committee in a universal UK service council, because that underlines what we are doing. This is a British Bill in a British Parliament for everyone in Britain.

The Bill should not be interfered with by people who want to break up the UK and deliver parochial services in Scotland. That would not be good enough—if they ever had the power to do so—because an independent Scotland would not have the finances to provide a proper service for the people of Scotland. Every economist knows that. The only people who are deluded enough not to believe it are members of the Scottish National party, who attend the Chamber sporadically—one a day. [Interruption.] I think that the First Minister is running Scotland—the Opposition in the Scottish Parliament are not.

Photo of Michael Connarty Michael Connarty Labour, Falkirk East

I am sorry, but none of us has time to take interventions.

I look forward to the debates in Committee on licences, penalties and access criteria. I hope that those debates will clearly define access criteria and how they are to be applied. It is important that there are good definitions so that the public know what type of service they will receive. Such definitions were not provided during 19 years of Conservative Government.

We need to discuss the use and scale of the proposed penalties. It is important that people know how they are to be applied. At present, there is no limit on penalties—according to the clauses that I have read—and that is a problem.

The measure offers a real opportunity to put computers into the sub-post office network. I am a member of the Select Committee on Information. I make visits throughout Europe and hear people talking about the information age and its services to democracy. I have an image of Conservative Members walking along like the man with the red flag—a blue one in their case—in front of the first internal combustion vehicle. They are walking in front of the information age waving their flag, saying "We want to take political advantage of this—go as fast as we go." It is about time that they realised that this modern Labour Government are about to run them over.

The post office network will be changed into a modern, technological part of e-commerce. That will make the service viable. If postmasters are not capable of making those changes, they will miss the best opportunity that they will ever be given—£500 million to put computers into post offices. That will give them the chance to move up and move on—to leave behind the old rubber stamp and wooden grille image of the sub-post office. It is time to put that aside.

I welcome the possibility of subsidy for social reasons. In my constituency, we have lost a sub-post office in a village that is so small that little is viable. However, if the post office gets its act together, it can reconnect with the commuter society that has left it behind. People often live in large villages—as I do—and commute to the towns. It is time that sub-post offices showed that they can he of use to that commuter society—those people who live in dormitory villages outside the major conurbations. It is important that post offices develop new services.

What level of computer training will be given? We must make our sub-postmasters competent and capable to enter the information age, in the same way as we are making our children computer literate.

I support the Bill for what it is not—and for what it is and will be. It is not privatisation. If we are to sell shares, it is important to hold debates in the House and to take into account the points made by my hon. Friend the Member for Morecambe and Lunesdale. It is good that the business will be viable, but there is more to the matter than that. We need to consider how it will affect the public interest.

The Bill is good for the postal business; it is good for the consumers, users, distributors and recipients of the service. I support the Bill for what it could be; I hope to discuss that, if I am selected to serve on the Standing Committee. The Bill will be good for the staff—the stakeholders who work in the enterprise. They stood side by side with Labour Members and put the Conservatives out of government. The fact that postal workers realised that their contribution provided the Treasury with £1 billion—through the external financing limit—was a major factor in the loss of many Conservative seats. Their contribution should be respected in the eventual formation of the new company.

I look forward to clarification, and even to amendments, so that we can create an empowered and motivated postal service—from the bottom to the top; from the post worker, to the manager and to the consumer. I look forward to the Bill being passed.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 7:04 pm, 15th February 2000

First, Mr. Deputy Speaker, I must make my excuses as I shall not be in the Chamber for the winding-up speeches. The Government and the Rugby Football Union propose to convert the Twickenham ground into a world-standard athletics stadium. There are hundreds—perhaps—thousands of people in a public hall waiting to hear what I am going to do about that. [HON. MEMBERS: "Stop it."] That is good advice.

The Bill has some positive elements. I subscribe to the idea of greater commercial freedom, on which there are some limited provisions. There is some advance in making more explicit the public service obligation. The strengthening of the consumer protection element—through the consumer council—is positive.

However, there is a large negative aspect. As the debate has progressed, it has become painfully evident that there is a large gap—the doubt surrounding the whole Post Office network. Although the Minister is working hard on the development of ideas about subsidies and alternative forms of payment, most of us are far from satisfied as to how those will work.

I shall concentrate on another aspect of the Bill—what has been called the hybrid system of ownership, and how that will work. In principle, it must be right that the Post Office will be given much greater commercial freedom—in order to face more competition and to cope with e-commerce and technological change. However, I am concerned about the limits.

The borrowing limit of £75 million a year is small when it is set against the challenges facing the Post Office. The managing director said that he wants to raise about £3 billion, over eight years, for acquisitions and major investments. Simple arithmetic suggests that only 20 per cent. of that could come from annual Government borrowing—even if it were fully used.

How is the money to be raised? The Post Office could come back to Parliament, but most of us would find it difficult to imagine being called back during the summer recess to make a quick decision over a major business acquisition. That would not be a suitable means to deal with such a matter.

In practice, the money will have to be raised from the capital markets. In that case, the balance sheet and the cash flow of the Post Office will have to be healthy. I am worried that the underlying financial position of the Post Office is weak. The Government have made a useful concession through the major advance of lifting the Treasury payment and replacing it with a dividend. Assuming that profits continue at their present rates, that would be a gain of about £125 million a year. Of course, the Post Office has to earn the profits, but that measure would provide a positive flow into the organisation and it is to be welcomed.

However, on the other side of the account is the £400 million loss from automated credit transfers—a matter that has been raised many times. Furthermore, if the regulator presses ahead with the imposition of reductions in reserved business—the reduction of the monopoly from £1 to 50p, as the Government proposed some time ago—the loss has been estimated at about £100 million. We could debate the amount, but it will be another loss.

The Post Office will lose the £100 million that it would have received from the Horizon project. There is then the problem of gilts, which are on the assets side of the balance sheet at present. After financial restructuring, the Post Office will lose the £110 million interest income from those gilts. I may have misunderstood that matter; perhaps the gilts can be deployed in other, more profitable ways. However, my understanding is that, with restructuring, that money will be lost to the Post Office. That is a substantial loss of income.

Yesterday, I was told that a large hole had been discovered in the Post Office pension fund; that amounts to a substantial sum—£500 million. That hole will have to be filled over the next 10 years. It is difficult to understand why the pension fund is in that position when equity markets are booming. However, if that information is correct, the Post Office will have to find an additional £50 million a year to plug that hole.

Photo of Oliver Letwin Oliver Letwin Conservative, West Dorset

I am surprised that the hon. Gentleman is surprised. Is he not aware of the Government's £5 billion raid on pension funds through the advance corporation tax dividend tax credit system, and is he not aware that that may be one of the major causes?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

It may be a contributory factor, but I understand that the position is considerably worse than was expected even by the actuaries looking at the impact of advance corporation tax. I should be grateful if the Minister would confirm how serious the problem is and tell us how it will be dealt with. If we add up these various losses of income, we are talking about £600 million or £700 million, which accounts for almost all the profits of the Post Office. If that is true, the benefits of the dividend payment will not be realised, and it is a substantial loss to the Post Office. The Post Office will be in a much weaker position from the point of view both of income and of its balance sheet.

If that happens, what will be the consequences? One of the consequences, which we have been discussing at length, would be the emergence of considerable pressures to cut unprofitable parts of the network. Another consequence, which is already evident, would be that the Post Office would be forced to raise its prices. If it raises its prices, it has the universal service obligation, and inevitably prices will have to rise in the competitive parts of the business. The Post Office will lose business; demand will fall. We are already witnessing a decline in demand for many of the letter services. That will aggravate a vicious spiral within the Post Office commercial operations.

The question that I wish to pose is: how secure is the financial position of the Post Office? The Government are taking what is, in those circumstances, the fairly high-risk strategy of pushing the Post Office into the capital markets with its plc status. There may well be ways of reversing that process, and I may have added to the story elements that are not valid, but I should be grateful for reassurance. It is important that we have that.

It is important that we also have some reassurance that the management team that will meet this challenge is composed of people who can handle what is potentially a very difficult financial position.

It slightly worries me that I have never heard any discussion, on the future of the Post Office, about how to treat its one major asset—its door-to-door delivery service—as an asset rather than an obligation. It is not a parliamentarian's job to tell the Post Office how to do its business, but it seems to me that, in a world of e-commerce, in which there will be an enormous amount of logistic business, with goods being delivered to doors, the Post Office, with its system of storages, its lorries and so on, has a tremendous advantage. However, I have seen no statement of a vision about how the Post Office intends to move into that market. It would be reassuring, especially given the question-marks hanging over Post Office financing, to know how that long-term business future is to be secured.

Photo of Oliver Letwin Oliver Letwin Conservative, West Dorset

The hon. Gentleman is making some serious points. Does he agree that one of the problems with the Government's rather muddled approach is the fact that the Post Office is being sent to the capital markets but not the equity markets, and that the flexibility that the equity markets would offer under privatisation will not be available to it to make up the deficiencies that he is bringing to light?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

That is factually correct and there are two ways of dealing with the hybrid situation. One is to advance towards privatisation; there are genuine problems with that and I am not advocating it. The other is to explore in much more depth the option that has been canvassed within the Government, given the current status of the Post Office—to try to turn the public corporation into a genuinely independent entity with much more of a commercial capacity to operate. It is a hybrid situation; one could go one way or the other. There is the BBC direction—the independent publicly owned corporation—or the privatisation route. Obviously, Conservatives will advocate privatisation, but I should like to hear a proper debate of the other option, which gets us away from the weaknesses of the hybrid solution.

I shall now briefly discuss the network problems, which have been mentioned. The right hon. Member for Hitchin and Harpenden (Mr. Lilley), the former Secretary of State, spoke to that subject very well. When we last debated the Post Office, some of us were accused of scaremongering when we said that a very large number of post office branches might close.

I was struck by a quotation from the managing director of the Post Office in the press on 30 January, to the effect that, unless the branch network could be subsidised, he would expect up to 8,000 branches to have to close. That was not an alarmist politician; that was someone running the system. As the former Secretary of State pointed out, branches are already closing. He quoted the possibility of 500 closures during this financial year. There have already been 329 in the first nine months of this year.

Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

May I draw to the attention of my hon. Friend and the House the position in my constituency, which is one of the most densely populated in the country, with 89,000 electors living in a very small area? There are 22 sub-post offices, of which 15 depend for 50 per cent. of their business on benefit payments in one form or another. All of them are doomed to extinction, with no chance of diversifying because they are already in competition in the high streets in Portsmouth, South.

May I also raise with my hon. Friend -the fact that the right hon. Member—

Photo of Michael Martin Michael Martin Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. The hon. Gentleman's intervention is far too long. It is not an opportunity to make a speech.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

My hon. Friend's intervention helpfully reminds us that the worries about the Post Office network are widely dispersed. They are prevalent in rural areas, especially rural Wales—which is the worst affected—rural Scotland and Cornwall, but they are also prevalent in inner-city areas.

Photo of Alan Johnson Alan Johnson Parliamentary Under-Secretary (Department of Trade and Industry)

As I recognise that the hon. Gentleman will be in a scrum later this evening, may I take up the point about a quote by the managing director? It was a quote, not by the managing director, but by the chief executive of the Post Office. The leader of the Liberal Democrats said at Prime Minister's questions: The chief executive officer of the Post Office predicts that, if the Postal Services Bill is passed, a further 8,000 post offices will close.—[Official Report, 2 February 2000; Vol. 343, c. 1036.] That was absolutely inaccurate and wrong, and I believe that the chief executive of the Post Office will be informing the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) about that. As for the accurate quote from the newspaper, the chief executive has made it clear that he was setting out to the journalists the available options, and saying that there would be a danger to the network if we could not provide new work or provide a subsidy.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I am sure that we are grateful for the clarification and I am sure that The Observer, which printed that quotation, will feel suitably contrite. However, I am glad that the Minister has mentioned that exchange in Prime Minister's Question Time because, when the leader of my party challenged the Prime Minister on that point, he raised the specific issue of a subsidy. I do not have the words with me, but it was something to the effect that subsidies were the kind of silly idea that the Liberal Democrats would come up with. I am glad that, in the past two weeks, the Government have advanced to accepting that subsidy is a necessary element in the picture. Naturally, I would want to press the Secretary of State, but he was unwilling to give way today.

The fundamental issue is whether the subsidy will be a relatively small amount, doled out to a handful of cases that fail to meet the access criteria, or whether we are talking about the £400 million lost income, and whether the bulk of that lost income will now be recycled back into the Post Office. I believe that hon. Members from all parties must persist in asking that key question, which has never been answered.

There are many technical issues in the Bill, but tonight we are dealing with the key issues. I should like to discuss the role of the consumer council. The Bill takes a step forward in giving the consumer council more authority, but there is a considerable oddity in that the consumer council will not be allowed to engage in activities to protect consumers outside the remit of the regulator. Therefore, competitive market activities such as registered mail are not subject to consumer protection in the same way as other activities. Equally, the consumer council would be severely constrained in what it can say critically about operators in the market—commercial as well as the Post Office itself. Therefore, there are big question-marks hanging over how far the commitment to consumer protection is followed through in the legislation.

There are positive elements the Bill; I do not want to be churlish about it. We shall certainly support those elements when they are discussed in Committee. However, big question marks remain over the network, the underlying financial position of the Post Office and the disciplines to which it will now be subjected.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee 7:19 pm, 15th February 2000

I would not say that the speech by the hon. Member for Twickenham (Dr. Cable) was characteristically gloomy, but the glass seemed to be more half empty than half full in his eyes. When he was discussing the various charges, he did not take proper account of what one would expect to be the improvement in the fortunes of the Post Office as a consequence of its foreign acquisitions in the past 12 to 15 months. The Post Office's international aspect will become increasingly important. It will develop through foreign activities and it will retain its markets if it smartens up its act.

I hope that we shall be able to find the money to help the network. Taking £400 million out of it always meant that there would be difficulties. Not all the difficulties relate to the nature of the arrangements. The future of many small post offices, especially in rural areas, has been left hanging by a thread. Other post offices in urban or deprived areas have lost many of the transactions that make up the main element of their revenue because of the fall in unemployment. A consequence of the improvement in the employment situation and the reduction in the number of people receiving benefits has been a change in the fortunes of the postal network. Many of the difficulties are not related to the alleged decline in the economy.

The absence of anything constructive from the Conservatives has been significant. They say that they do not know—

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee

I have listened to speeches for a long time and I well remember that in 1992, when the hon. Gentleman was still somewhat inebriated by his election to Parliament, the Conservatives were elected to end the Post Office's monopoly. There was no talk of privatisation then; they came to power committed to ending the monopoly.

When the hon. Gentleman winds up, perhaps he will tell us whether the Conservative party will end the monopoly. In the Netherlands, the model is one of privatisation, but on the basis of a monopoly. In contrast, in Sweden, the post office is still state owned, but it is state ownership with competition. I believe that competition in postal services is desirable and I want the regulator to consider that. I do not want to rehearse all the arguments on that point, but I wish to make my position clear.

I am happy with the balance of the proposals. Over several years, my colleagues on the Select Committee on Trade and Industry have examined the issues. When the Minister was a trade union officer and came before us, we used to complain about the way in which the Post Office was run, the poor industrial relations and its absence of commercial awareness and sensitivity. In many respects, our criticisms have been met by the unions and by the management. Recent industrial relations agreements have removed many of the concerns that we expressed and we have the prospect of the management introducing substantial changes with the guaranteed co-operation of the unions.

We were not prepared to support Government investment in the Post Office when there was no guarantee that that investment would be realised because of the obduracy at times of certain sections of the work force. I foresee the disappearance of such obduracy and I am pleased that the Post Office will have access to funds.

We would have heard different arguments if the Post Office were to be given even greater access to borrowing facilities. People would have said that the Government were too free with their money. It is only correct that a business of this character must be flexible in its operation while having the opportunity to borrow. However, it should borrow not on the basis of soft loans, but on the basis of realistic market rates. That is the suggestion being made.

I would like to ask my hon. Friend the Minister about the arrangements for the sale of shares. An interpretation of clauses 54 to 56 suggests that the meaning of the term relevant subsidiaries is vague. Does it refer to the core United Kingdom business or does it include other businesses and services? Does it mean that the sale of businesses, such as German Parcel and other foreign acquisitions, of services, such as catering, or of equities in Post Office Counters would be subject to the discipline of a parliamentary debate? That point is critical. I know that it may be explored in Committee, but it would help to have the matter resolved now. The vagueness and inadequacy of the definitions in clauses 54 to 56 suggest that certain share deals could be transacted without proper parliamentary scrutiny.

It is important that we afford the Post Office the opportunity, if appropriate, to sell off parts of its business. However, that must be subject to proper scrutiny. That would also help us to work through the financial difficulties that the hon. Member for Twickenham explained so lucidly. To carry with them everyone who supports the deal, the Government should make the position clear beyond peradventure at the earliest possible opportunity. We do not want people to be unduly suspicious about the disposal of assets.

I am also somewhat concerned about the Crown Post Office network. It is not clear whether it would be subsidised by anything other than the Post Office. There are a number of towns in which the Crown post office is central to the commercial life of the town. For example, I know what problems would result if the post office in Alloa, the main town in my constituency, were in danger. A large proportion of its work is the paying of benefits. There are 600 Crown post offices, so we need clarity on this issue, too. If one retail outlet can be the flagship for the postal network, it is the Crown Post Office. It has access to funds and the deals that might be struck. I hope that those funds can then percolate through the system to smaller rural post offices.

I have repeatedly said in the House in debates on the Post Office that one of the most exciting developments is to bring the retail services of the Post Office on-line as soon as possible. In particular, it should take advantage of the opportunities afforded by e-commerce in all its forms. We hear much pious talk about having on-line computer facilities available in libraries. Frankly, many of the people who are excluded from the e-commerce revolution never go into libraries, but they go into the post office or the shop at the end of the street. They have just as much right to have access to e-commerce even if they do not have computers or interactive television. Even if it is only a question of putting on a bet, they should be entitled to do that if the appropriate facilities are there.

This is a substantial Bill. It needs fine tuning, but it is ridiculous for the Tories to rant on about the need for amendments. I give the Bill unqualified support. It has been the subject of years of consultation and discussion and I am pleased that my hon. Friend the Minister will reply to the debate, because so much of the Bill is due to his authorship and support.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion 7:29 pm, 15th February 2000

I am delighted to have the opportunity to speak on the Bill, which is of great interest to my constituents. During the Ceredigion by-election that sent me to the House, the future of rural post offices weighed heavily on the minds of the voters and it was one of the issues that was raised most often on the doorsteps. As I visited nearly all the sub-post offices in my constituency, I was approached several times to sign the petition to save our post offices. I can assure the Minister, who may receive the petition, that I signed it only once.

As this is my first address to the House, I should like to take a few moments to explain why the Bill is so vital to us in Ceredigion. Hon. Members will know that the constituency is rural; indeed, only three towns have a population of more than 2,000. Given that Ceredigion's total population is more than 70,000, hon. Members will appreciate not only the rural nature of the constituency, but the extreme sparsity of the population.

Ceredigion is, however, one of the most dynamic, changing areas in Wales. We have the fastest growing population of any Welsh county and are second only to Cardiff in gross, rather than percentage, population growth. That growth is realised, on the whole, by net in-migration. As many as 1,200 people move into our county each year. They bring energy, fresh ideas and often a vision of how they want to live their lives. I claim to know that because I am one of them. One in three of the electorate were born outside Ceredigion, which is notable for a rural area.

That leaves us with a rather unbalanced population. It is older than average for Wales, due to the number of people who retire into the area and the number of young people who leave in search of more productive pastures. Although the large number of in-migrants invigorates many small rural communities, it has affected the position of the Welsh language. Even so, 60 per cent. of my constituents are Welsh speaking and the language can be heard on every high street and in every school, mart and workplace.

The small family farm remains the cornerstone of the economic and social bulwark of Welsh culture in Ceredigion. I hope that the House is already familiar with and sympathetic to the current farming crisis. If not, the by-election results should serve as a reminder. I emphasise only that low farming incomes have fallen three years in succession to as little as £4,500 a year, which must support two or three generations on one farm. The strong pound means that farming and tourism in Ceredigion are under siege. That economic context has given us objective 1 status.

That situation is a real threat to our future because traditional farmers and the increasing number of organic farmers are the main guardians of our environment, which is tremendously captivating and beautiful and gives the county a huge advantage, albeit yet not fully realised, in tourism. Much of our coastline is a heritage coast and we have numerous sites of special scientific interest, particularly wetlands, as one might expect in Wales. Perhaps the most singular environment is Cardigan bay itself, much of which is now designated a special area of conservation and is home to Britain's only resident population of the bottle-nosed porpoise. I know that hon. Members will be interested in that, given that we have been discussing jet skis.

The final part of the Ceredigion jigsaw is the public sector, which consists of local government, our two universities and an excellent general hospital at Bronglais, which we are all determined to retain and enhance. In an economy that is more dependent than the UK average on the public sector, the current policy of keeping public spending below 40 per cent. of gross domestic product has a disproportionate effect. It leads to frustration in our schools, hospitals and universities. Despite that, I am pleased to say that our local education authority achieved the best GCSE and A-level results in Wales last year.

Such a diverse and dynamic mix of people demanded a very special Member. I am delighted to take this opportunity to pay tribute to my predecessor, Cynog Dafis. Hon. Members may recall that Mr. Dafis was elected with the biggest swing in the 1992 election as a joint Plaid Cymru-Green MP. Until last year, he was the only Member elected on a Green ticket to a UK legislative body.

Cynog Dafis quickly became respected in the House for his work on green and rural issues. He held office in Praseg—the all-party group on renewable and sustainable energy—and Globe UK. He was awarded the title of greenest MP, and I like to think that having been here for one week, I too hold that title, albeit in a different sense. Cynog Dafis also promoted three important Bills: the Home Energy Conservation Act 1997, the Road Traffic Reduction Act 1997 and the Road Traffic Reduction (United Kingdom Targets) Act 1998—targets still to be met, of course.

In Ceredigion, Cynog Dafis was seen as having helped to create a vision of a sustainable future which a wide spectrum of opinion could share. I am sure that hon. Members will want to join me in wishing Cynog "lwc dda" in our National Assembly. His greatest accolade must be the affection and respect in which he was and still is held in Ceredigion. His leadership and personal qualities endeared not only himself but Plaid Cymru, the party that he represented, to the people of Ceredigion. If I cannot fill his shoes, I can at least try to walk in his footsteps.

It is that context that makes the Bill important to my constituency. Eighteen years of free market economic policies has done little for rural services. Shops, surgeries, buses, pubs, dentists and banks have gone. It is unfortunate that policies have not substantially changed. The Bill, and attendant policies such as automated credit transfer, could undermine our last strong rural service: the post office. Nevertheless, I congratulate the Secretary of State and the Minister on trying to find a way forward for the Post Office that will allow it to remain in public ownership and to compete internationally. The drawback is that this brave new world of commercial freedom seems to have few safeguards for the rural post office.

The introduction of ACT is of particular concern. Some 44 of the 73 post offices in my constituency derive over 40 per cent. of their direct income from benefit payments, so that does not account for the income that they derive from people coming into the shop. A Government-driven move to impose ACT would be highly injurious to those post offices and would have a huge knock-on effect on the services that they provide.

I am concerned that the Government want the majority of benefit payments to be made by ACT after 2003. I therefore urge the Minister to read the performance and innovation unit's forthcoming study on the future of the network and consider how post offices could contribute to the Government's laudable aims of combating social exclusion and achieving joined-up government. It may well transpire that rural post offices can demonstrate the need for cross-subsidisation in recognition of the other services that they perform. The only warning that I would sound is that local government should not be expected to pick up the tab and savings from ACT should be utilised. I welcome the Secretary of State' s earlier remarks on that.

These days a west Wales post office is like a corn store in the wild west. It sells everything and performs vital tasks such as delivering coal, gas and prescriptions to older people. It often sells many locally produced goods, and my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd) is looking particularly well on the honey that he has consumed as part of the campaign. That pattern of social support builds local communities, helps to reduce reliance on private cars and keeps resources in the local economy. I ask the House to consider whether the Bill and ACT will help or hinder the performance of that valuable service.

I ask the Minister to look again at certain elements of the Bill. Will he give the House an assurance that the £1 monopoly will remain? Will he make it crystal clear that the Government are not seeking to privatise the service by the back door? I suggest that the way to do so is to reconsider clause 56 and to set a limit for share disposal. The Bill should make provision for the National Assembly of Wales to appoint a representative to the Postal Services Commission, because there would then be a far better balance on the commission. The Bill should make similar provision for the so-called regional committee of the Consumer Council for Postal Services to have devolved responsibilities in Wales and to report to the National Assembly on Welsh matters. The hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) made a similar point in an intervention.

Those are some of the safeguards that could at least ensure that rural interests are represented in the new-look postal services, and I ask the House to support my suggestions to show that it does consider rural and Welsh interests.

Photo of Sam Galbraith Sam Galbraith Labour, Strathkelvin and Bearsden 7:38 pm, 15th February 2000

I very much enjoyed the maiden speech by the hon. Member for Ceredigion (Mr. Thomas), which was splendid in content and extremely well delivered. I was particularly attracted by his description of his constituency. I have travelled extensively in Wales, and as a youngster I spent many a day there climbing. It is a country to which I have always returned with affection. The hon. Gentleman is fortunate to represent such a fine part of the British isles.

I was also pleased by the hon. Gentleman's remarks about his predecessor. I worked with Cynog Dafis in Committees in the House. We did not take similar views, but his were always respected and given with honesty and decency. I know that the hon. Gentleman will continue with that tradition, and I am sure that he will become as much of an asset to the House as his predecessor was.

I also enjoyed the speech of the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I could see the pain of a man who has been a Minister and gone through many agonising considerations during the daily grind of decision making. The only problem is that he got the decisions wrong, especially in respect of ACT, which appears to be the focus of the debate.

The right hon. Gentleman also got wrong the compliments he paid to the hon. Member for Tiverton and Honiton (Mrs. Browning). It is not that she made a bad speech—she made her usual sparky start, but her speech deteriorated into one more suited to Committee than to Second Reading. The especially bad part of her speech was the beginning, when she railed, ranted and raved about the Government having to make amendments to the Bill, which she appears to believe is disgraceful. The hon. Lady is trying to rewrite history. She and other Conservative Members will remember Bills introduced by the Conservative Government to which not several amendments, but page after page of amendments had to be made, not only in Committee but in the other place and on Report. We would end up with a Bill that was completely different from the one with which we had started. Let us have no more hypocrisy on that subject.

The hon. Lady also criticised the Bill for being, in her words, a hybrid Bill. I happen to think that one of the Bill's strengths is that it enshrines the value of partnership, whereby the efficiency and effectiveness of the private sector is merged with the true values and relationships of the public sector. If we create a true public-private partnership, we and all our constituents will get a much better system and much better provision of service.

Like my hon. Friend the Member for Falkirk, East (Mr. Connarty), I pay tribute to those who have worked in the various branches of this nation's postal service, especially those who look after me locally—not merely through the service they provide to my house and my constituency, but through the consideration and the time that they have given to me. I want those people and their values, and the service that they provide to me and many others, to be maintained. The Bill is the way to achieve that.

The position of the people I have described would be threatened by a decision to maintain the status quo—that cannot be the way forward. Like all of us, they know that the world is changing and that we cannot pretend that progress does not exist. Such an attitude would pose a threat both to postal workers and to sub-post offices—a subject I shall come to shortly. We are witnessing many changese—commerce, e-mail, globalisation and interaction between sectors—even in small matters: for example, I notice how many things that once came to me via the Post Office are now brought by other service providers. The notion that the Post Office cannot compete in such services threatens the whole ethos of the Post Office.

We should not be afraid of change, and we must not pretend that we can hold it back. My right hon. Friend the Prime Minister said that he bore the scars of trying to make changes in the public sector; I bear a few of those myself. Resistance is always dressed up in some sort of pretence, always false—for example, that profits will be put before patients, or that safety standards will be compromised. We should not stand against the tide that is approaching the Post Office, otherwise we shall again be proved wrong.

We must embrace change and modernise. We must stop talking about the producer, the system and the structure and start to talk about the service provided and the outputs produced by those who are involved in the work. That is what service is all about, and the great advantage of the Bill is that, by marrying the values of the public sector with the efficiency and effectiveness of the private sector, we can deliver a much better service.

I understand the reason why many of us are concerned about sub-post offices. Sub-post offices fall into two categories: urban, like those familiar to my hon. Friend the Member for Motherwell and Wishaw (Mr. Roy) and many others, and rural.

Photo of Nigel Evans Nigel Evans Vice-Chair, Conservative Party

Oh, "And rural"! That means a Tory gain.

Photo of Sam Galbraith Sam Galbraith Labour, Strathkelvin and Bearsden

The two sorts are different, they have different problems and may require different solutions.

Photo of Frank Roy Frank Roy Labour, Motherwell and Wishaw

There are certainly two basic types of sub-post offices. In my constituency, 88 per cent. of post offices rely on the Benefits Agency for almost 50 per cent. of their business—a huge proportion of any business. Does my hon. Friend accept the guarantees that we have heard Ministers give repeatedly, namely, that all claimants will still be able to claim and collect their money from the post office in future? Does he agree that that is the way forward: to change, but to guarantee a future for the post offices and benefits claimants?

Photo of Sam Galbraith Sam Galbraith Labour, Strathkelvin and Bearsden

I wholeheartedly agree with my hon. Friend. The way not to guarantee that future would be to stop the advance of ACT; to do that would be detrimental and would lead to the destruction of many more post offices. We cannot have a system that has to be propped up and that will probably change any way because the world is changing. More and more people will want to take advantage of ACT, so if we try to build a system that is protected from ACT, we shall not only do a disservice to those who want ACT and all the benefits it carries, but threaten the very sub-post offices we are trying to protect. If post offices do not change, they will come to be seen as bulwarks against progress—blasts from the past maintaining an out-of-date system in dingy offices, using inkwells and quills to process transactions. We must find ways to bring post offices into the new century.

The same applies to rural post offices. I object to the hon. Member for Ribble Valley (Mr. Evans) implying that Labour Members do not know anything about rural areas. My constituency contains rural areas—not comfortable ones, either. In the Western Isles, there is a problem with service provision because of the vast distances that have to be covered before deliveries can be made. In such areas, we must consider the services that are already provided and look for ways to enhance them. I have travelled extensively in such areas and I know that, sometimes, it is not a post office that is wanted, but a bank. Perhaps we should look for ways in which banking and other services can be provided. In some villages, the post office and the shop are separate. Is it not time we considered how to integrate such services?

I am grateful to you, Mr. Deputy Speaker, for calling me to speak. I welcome the Bill, which represents a major advance for the Post Office and those who work in it. More important, it will improve the service provided, not only to those of us who live in urban areas, but to those who live in rural areas throughout the country.

Photo of Tony Baldry Tony Baldry Conservative, Banbury 7:48 pm, 15th February 2000

I am sure that all Conservative Members welcome the maiden speech of the hon. Member for Ceredigion (Mr. Thomas). His was an interesting and enjoyable contribution, and we look forward to hearing him speak on many occasions in future.

Two fundamental concerns arise from the Government's proposals as set out in the Bill. The first is that they represent the second-best solution for the Post Office. I am a member of the Select Committee on Trade and Industry, which is chaired by the hon. Member for Ochil (Mr. O'Neill). In the past three years, it has held innumerable sittings during which we have considered the subject of the Post Office. It has produced three extensive reports, covering every aspect of the issue. In each report, its members have been unanimous in stressing that the solution for the Post Office is to make it an independent publicly owned company. How can a company that is 100 per cent. state owned be remotely independent?

I welcome the Post Office being granted plc status and being freer to compete in a highly competitive marketplace. However, I do not welcome 100 per cent. retention of public ownership. The Post Office will still be subject to Treasury control, which is unfair. How can the Post Office compete effectively in the marketplace without being fully privatised? How can it compete on a level playing field with the rest of Europe, especially with Dutch and German post offices, without selling at least 51 per cent. of shares? The Bill simply will not give the Post Office the full freedom to manoeuvre that it needs to tackle such obstacles.

Indeed, it is absurd that the Government do not allow meaningful competition or recognise that there is an alternative to state control. Privatisation works: it has been one of the striking success stories of the past 20 years. It brought about dramatic improvements in the former public sector utilities by removing the dead hand of state control, and subjecting companies to the fresh wind of competition and the discipline of the markets. Privatisation has created a substantial improvement in customer services and a substantial reduction in prices.

It is clear that the Government have not fully privatised the Post Office simply because of pressure from the Post Office unions. The general secretary of the Communication Workers Union has already said that he is unhappy because possible share swaps might mean that some of the Post Office ends up out of Government hands. It is no wonder that no shares were sold.

Even if the Post Office issued shares to acquire other companies under the Government's proposals, it might be able to do so only after Parliament had voted on the issue. The Secretary of State for Trade and Industry told the House last year that the Government would not seek to dispose of Post Office shares without further primary legislation. I appreciate that we are considering a sensitive issue, but the Post Office has been put in a crazy position.

The Select Committee on Trade and Industry has examined the problems of the Bill and the potential hampering of the Post Office's competitiveness. It is again patently obvious that by not being fully privatised, the Post Office will be precluded from effectively competing. That is yet another obstacle to effective competitiveness with our fellow European countries.

The Bill constitutes an example of competitive constraint. It would help if the Government did not blur the lines on when primary legislation was required. The possibility of seeking a resolution of both Houses is confined to cases when the Post Office, the Department of Trade and Industry and the Treasury agree that that is a good idea. However, the Bill places no restriction on limited sale.

The Government did not give the Trade and Industry Committee an adequate explanation when questioned on the issue. Is there any limit to how much can be sold as long as it is part of a joint venture? If not, how does that fulfil the Secretary of State's undertaking for only limited sales without primary legislation? Nothing in the Bill would prevent a sale of majority holdings.

We have also already witnessed the adverse effects of union interference on customer service. Despite reducing the postal privilege for letters and packages from £1 to 50p last year, the Government reversed their policy under pressure from the Post Office unions in the run-up to the 1999 Labour party conference.

The Government state that the new regulator will determine the rate at which postal privilege is set. That worried many witnesses who appeared before the Trade and Industry Committee, which recommended that the Bill sorted out postal privileges. However, it remains unclear which privileges, if any, have been dropped. It would be helpful if the Government could inform us of the various privileges enjoyed by the Post Office that have been abolished, and if any have been added. Doubtless we shall learn more about that when we consider the 300 or more amendments that we shall table as the Bill proceeds.

There are also anxieties among the Periodical Publishers Association. It represents the magazine publishing industry, which is worth around £250 million each year to the Post Office. The PPA estimates that the Post Office costs approximately 30 per cent. more than the best-of-class comparisons. Its members are naturally worried about how fairly the Post Office will treat the industry and about the Post Office's commitment. The PPA believes that the new commission should introduce transparent benchmarking against best-of-class comparisons to provide a more competitive service. That benchmarking might be better all round if the Post Office faced the full winds of competition.

The Post Office will be allowed to borrow only a derisory £75 million. As The Daily Telegraph pointed out last year, that figure will not increase. The Trade and Industry Committee found that worrying. Our report on the Government's White Paper stated that it is questionable how far either new borrowing facilities at commercial rates or the Treasury foregoing the excessive level of dividend previously taken can be fairly represented as 'providing' vast sums of extra money for the Post Office. The requirement for ministerial approval is also wholly inadequate for a company with a turnover of £7 billion.

The half measures in the Bill simply do not fully enhance the competitiveness of the Post Office. To compete internationally, it is imperative that the Post Office be able to make deals, alliances and acquisitions across the world, such as those that the German and Dutch post offices make. Again, I stress that the 100 per cent. state control that the measure proposes will make it impossible for the Post Office to act with the necessary vigour and decisiveness. Surely it is better for consumers to let the Post Office take full advantage of the fresh winds of competition. The Government have fundamentally failed to do that through the measure. They are failing the Post Office and consumers.

My second anxiety is the uncertainty about the future of sub-post offices and village post offices after the sudden and somewhat reckless abandonment of the Horizon project. I represent a large rural constituency and there is considerable concern among my constituents that they may lose their local post offices. It is foolish of the Government not to incorporate the network in the Bill. Conservative Members recognised the real need and genuine concerns of many people and the potentially harmful consequences that would occur without Horizon. As the Trade and Industry Committee stated in its report on the system: this was recognised to be the only way to ensure the future survival and prosperity of the post office network. The Government's decision not to provide for the scheme in the Bill will threaten the future of the 19,000 sub-post offices, which rely for 40 per cent. of their income on administering benefits. The omission amounts to yet another Government attack on the fabric of rural Britain and on the livelihoods of people there.

It is no good the Government using soothing words of reassurance to those who rely on the Post Office network that they will not suffer and that postmasters and mistresses will be able to compensate for their loss of income. Many people are simply not prepared for or do not want a new system forced on them.

The Government also mislead by presenting an image of great floods of people opting for ACT. According to Department of Social Security figures, only 34 per cent. choose to have benefits paid by ACT. In our report on the Horizon project last year, the Trade and Industry Committee found that few pensioners opt for ACT; fewer than one in 10 income support recipients choose ACT; and fewer than one in three new benefit recipients opt for ACT. Indeed, the report states that the fact remains that, for a variety of reasons, most new benefit recipients still opt for cash in hand from a post office … this choice must be respected in action as well as paper. However, that will not happen simply because the Government have decided not to progress with Horizon and have not included similar provisions for the Post Office network in the Bill. It is a shabby piece of work by the Treasury, which has put pressure on the Department of Trade and Industry, in the belief that a massive saving can be made. That does the Government no credit. It is a double blow to many people in rural areas. A recent survey in the Financial Times revealed that only 5 per cent. of parishes have bank or building society branches.

The Bill is a bad measure. It is a hashed compromise to placate the trade unions and a genuine threat to sub-post offices and village post offices throughout the United Kingdom.

Photo of Dr George Turner Dr George Turner Labour, North West Norfolk 7:58 pm, 15th February 2000

My constituency, like that of the hon. Member for Banbury (Mr. Baldry), is large and rural. Approximately half my constituents live in the market town of King's Lynn, and the others are divided between some 64 parishes. Much of my constituency is sparsely populated, and in many villages my constituents depend on access to the village post office.

I have a long-standing interest in village post offices. My grandmother ran a rural post office in a village of a few hundred people. As well as bringing up her nine children, she worked hard in the post office. I also appreciated from an early age the benefits that the rural post office can bring to a village community. In those days, a village of a few hundred people had two or three shops, two pubs and a post office. Today, such villages have no shops, no post office and no pubs.

In my 30 years in Norfolk, I have seen an undramatic but steady decline in the rural post office network's ability to deliver. Despite the public regularly expressing their support for post offices and regularly protesting when one closes, no Government in recent decades have taken the actions necessary to halt that decline. I believe that the Bill offers that very opportunity, which is why it has my strong support.

My local newspaper, the Lynn News and Citizen, is proud of its campaigning on behalf of its readers and has chosen today to launch its campaign to save our post offices. I hope that all its readers will not only sign the petition to show their support for the post offices in north-west Norfolk but will do more than that—use their local post offices. It is not enough for people to wear their hearts on their sleeves and say that they support post offices if they drive past them in their cars and do not take advantage of the services that they provide. I hope and understand from the assurances that have been given from the Front Bench that pensioners will feel reassured that they will be able to continue to congregate in post offices to collect their money in cash and experience the social intercourse that post offices provide in many villages.

My fear is that if those who seek to protect post offices frighten the public, they will take other action even though there is no need to do so. People should not be frightened into opening bank accounts if they do not want to. In the absence of Government action, however, about 50 per cent. of new pensioners and those who receive child benefit are taking that option. We simply cannot sit there like Canute and try to hold back the tide of progress. The Bill's strength is that it seeks to protect by modernising and looking ahead rather than by turning back the clock.

If we are to make progress, we must recognise not only the strength of public support for post offices, but the post offices' weaknesses. My grandmother has been dead for 35 years, but if she was able to go into many of the rural post offices in my constituency, she would feel at home almost immediately. She would probably recognise the paperwork—and certainly its style—and that very fact speaks volumes about lack of investment, which is one of the major problems of today's Post Office Counters. Governments of all colours are to blame for that, but we must recognise in particular that, although the previous Government talked about investment, which was needed desperately, they never delivered. I welcome the present Government's clear intention to ensure that substantial sums are invested in every post office in my constituency and throughout the United Kingdom so that they have the base not only to deliver the services that they currently deliver but to move into providing Government services and to take over the provision of services from which the commercial sector has run away.

I recently complained in the House about the closure of the last bank in Heacham, which has 5,000 inhabitants and is the largest village in my constituency. Why did it close? There was a clear failure of the commercial marketplace. None of the banks had enough customers, they argued, to justify their presence, but hon. Members should remember that 5,000 people live in Heacham and that pensioners want access to cash and counter facilities. That represents a clear opportunity for a rejuvenated post office in Heacham to take custom and provide a service. I was sad that the local post office was not proactive in advertising its services when the banks in Heacham were closing, but I understand that Ministers are seeking such opportunities through the policy unit and hope that they will be delivered in the months ahead.

Post offices are crying out for investment, and I hope that it is delivered. Having used them most of my life, I know that the model of my childhood—which involved a friendly face, a helping hand with the paperwork if necessary and guidance from those who ran the post office—is not always what we find in the public sector. Over the years, I found that an element of the Post Office, mainly on the Royal Mail side, sometimes displayed the worst aspects of the public service. The attitude was, "We're doing you a great favour by being here. You should take what service we deliver and be grateful for it," but that encourages those who see "privatise, privatise, privatise" as a solution.

Unless we face up to the problem, we shall strengthen that voice so it is important to address the ills of the monopoly. That is why I welcome the clear commitment to put into law a standard of access to postal services and access to post office counters. If we set up a regulatory system that looks not only to the maintenance of services but to their improvement—both are included in the Bill—we shall be doing more than merely paying lip service to making such improvements, and my constituents will be truly grateful for what the Bill delivers.

Delivery is important. In my one of my villages, for example, Mr. Pitcher, who runs a small transport operation in Walpole St. Andrew, employs 16 people, but does not receive his one delivery until the afternoon. Next door to him, Mr. Atkin employs nine people in a business of the size that hon. Members would expect to find in a small village. He has 80 customers to serve, but the times of his deliveries vary from 10.30 am and 2.40 pm. When we talked about the Post Office, he said to me, "If I ran my business like they do I would be out of business within a week."

Those issues need to be addressed and I hope that my hon. Friend the Minister will assure me that the standard of service that my rural constituents can expect will certainly not deteriorate and that they will have a substantial opportunity to see them improved. That improvement will be achieved by the Bill.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire 8:08 pm, 15th February 2000

I have a degree of sympathy for the poor Minister for Competitiveness, who has to sum up tonight and deal with the Bill in Committee. I say that because this is a sad and miserable little Bill. It is badly drafted, as has already been admitted, and will be subject to thousands of amendments. [Interruption.] Hon. Members may think I am joking, but I am prepared to bet that we get into four figures before the Committee stage is out.

The Minister has an unenviable job, as he has to face two ways at once. He snaps his head to the left, turns to the neanderthals of old Labour and says, "Don't worry comrades." They still like to be called comrades. They are nodding their heads in agreement; that is what I like to see. The hon. Gentleman says, "The Post Office will still be under state control; we'll own 100 per cent; don't worry—the lunchtime directive is alive and well and living in government."

Then, quick as a flash, he will turn to the right and say "Don't worry. This is a golden opportunity to set the Post Office free to get out into those markets and to succeed in world competition. Look at the borrowing abilities that we are pushing into the Post Office."

The reality is that it is a poor and staggering, faltering step, instead of a bold stride towards commercial freedom.

I have noticed in this debate an enthusiasm by Government supporters to try to rewrite history. When we were in government we wanted to do a BT on the Post Office. I remember all the comments that were made when we set BT free—about the telephone boxes that would be closed, about the cherry picking that would happen. We were told that prices would go up. What was the truth? The telephone boxes are more accessible and more operative than ever before. Prices have come down and a welter of new services has become available.

We wanted to do that for the Post Office, but when we suggested it the Labour party did not say, "We should like to see some form of liberalisation": instead, it went into a flat spin and opposed everything that we suggested.

This is why I have only partial sympathy for the Under-Secretary: a very clever campaign was run; a public relations company put forward a number of messages and persuaded 12 to 15 alleged Government supporters, most of whom have now lost their seats, to say that the proposals would ruin the rural post offices.

It was only later that I discovered from a television documentary that the union itself was the funder behind the campaign, though it kept a very low profile. It was very well done. I congratulate the Under-Secretary. He did it brilliantly. He undoubtedly had an involvement in his previous life. If he wishes to deny it, I should be only too delighted to hear him do it at the Dispatch Box.

One thing that must be said from the Conservative Benches is that it is marvellous that the Government are taking the first step towards privatisation with the establishment of a plc. As someone who has moved an organisation from the public sector into the private sector, I regard this as one of the main hurdles to overcome. Therefore, I must say thank you to the Government for it.

The neanderthals may look at the proposals with alarm, and in the debate so far one or two have put down markers about the possible sale or swapping of shares. That is only to be expected.

My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) made a very powerful speech in the 10 minutes available. He rightly called the Secretary of State's speech a poor performance. It was policy being made on the hoof—so typical of this Government. It comes under the heading of, "It seemed a good idea at the time".

What is wrong is to lay huge worries and concerns on the whole of our sub-post office network by talking about ACT without looking at the other side of the equation. Now the Secretary of State is scrambling around trying to fill the financial black hole created for the sub-postmasters and sub-postmistresses, when that work should have been done first. I hope that the Under-Secretary will say that the Government are undertaking an in-depth study to see just how the new equipment can be used to generate revenue for the sub-postmasters and sub-postmistresses. The quicker that is done, the better.

There must be more than lovely words. The proposals must be costed. It must be possible to tell the sub-postmasters and sub-postmistresses, "It will mean a revenue of X to compensate for what you will lose." As a number of hon. Members have commented—and not only from the Conservative Benches—that worry is being created in the minds of the sub-postmasters and sub-postmistresses, whose livelihoods are at stake. Not everybody grasps the fact that the sub-post offices are privately owned, and as they are privately owned they could go down.

The Government are destroying the value of the sub-post offices. Who wants to buy a sub-post office when he or she can see perhaps 40 per cent. of its revenue disappearing out of the window? The quicker the Under-Secretary, who understands these matters, says, "We have calculated that there will be an increase to every sub-postmaster through using this new equipment," the better.

Most of these matters will be raised in Committee, and that is only right. But I must express slight concern about the amount of money that the Post Office is allowed to borrow in its own right. We have only to see the sums of money that it has been necessary for post offices throughout the world to expend in order to consolidate their networks to see what the real world is about. It is not a matter of £75 million or even hundreds of millions: I think that we are into the billions.

When TNT was bought by the Dutch post office the cost was 2 billion Australian dollars. That was quite a few years ago, and I wonder what the figure would be if it were inflation-counted.

What did Deutsche Post pay for a quarter of DHL? It did not get that for £75 million. As we know, although it is terribly secret, and we must not say anything about it, the Post Office was given permission to expend some £300 million to buy German Parcel. The proof of the pudding will be in the eating, when we see how much money is made available by this Government in order for our Post Office to stand a chance against huge and savage competition.

I should have liked to move into the whole area of possible subsidies for sub-post offices, where the Secretary of State seemed again to be making policy on the hoof. I can only say that the Committee stage should be interesting. It will be a very long slog. As all Oppositions should, we look to clean up the Government's act and ultimately to produce a viable Bill for the future of the Post Office.

Photo of Mr Tony Colman Mr Tony Colman Labour, Putney 8:17 pm, 15th February 2000

I welcome the Bill, which gives us for the first time a framework for postal services in the United Kingdom.

I should like to start by praising the staff who look after all the sub-post offices in Putney. I would particularly draw attention to the Danebury avenue sub-post office in Roehampton, and congratulate the work of Mrs. Valerie Cooper and Mrs. Linda Doran there. It is in a shopping centre which 10 years ago had five banks. Three years ago it had none. One of the reasons why I welcome the proposals for payment of benefits through bank accounts and the introduction of banking services through post offices is that areas like Roehampton, which has some 12,000 people living in it, will at last regain access to mainstream banking.

It is important to recognise the great advantages to many who are socially excluded because they cannot have contact with banks. There are great benefits if they have bank accounts: they can enjoy discounts for direct debits and can negotiate cheaper loans and overdrafts than would be available through other sources. There are many positive elements.

It is very important to pick up what my right hon. Friend the Secretary of State said in opening, which is that we must ensure that where sub-post offices are undermined by the movement to payment of benefits through bank accounts, a subsidy should be available to them. The problem is not simply in rural post offices. It applies in all areas where the banks have moved out.

Having praised the sub-post offices, I move on to talk about the bane of my life, which is the postal delivery service in Putney. There are three key issues in Putney. One is the local health economy. The second is aircraft noise. But the one that produces by far the greatest postbag relates to the postal service, which over the last two and a half years has got worse. I first raised the matter in the House on 7 December 1998, when my right hon. Friend the Member for Hartlepool (Mr. Mandelson), then Secretary of State for Trade and Industry, announced his proposals for opening up the possibilities for the Post Office to move into the wider remit afforded by the Bill. However, the various assurances that I have had following various meetings have come to naught.

Before the debate, I asked the Clerks whether I could spend the remaining seven minutes of my speech reading out letters of complaint about postal services in Putney. I was told that that would not be possible; but I must make it clear that I could fill one hundred times ten minutes with such complaints, which have become more and more vociferous. In Putney, Christmas cards have been delivered only in the past two weeks. The situation is beyond a joke, and has been so for quite a long time.

Giros sent by the Department of Social Security on 10 December arrived on 5 January. Bills from credit and charge companies arrive late, and customers incur late-payment penalties. Local vicars receive written confirmation of funerals the day after they have been conducted. Apparently, until November most complaints in one area concerned the fact that there was only one delivery—and that arrived at 11 am or later. This month, there had been a further deterioration. In many streets, there was no delivery at all on one or two days of the week.

This information comes from Judith Chegwidden, of the Putney Society, who adds that the pattern in her own street this week is a common experience for many other residents. She says that on Thursday the post arrived after 3 pm, and that that was the only delivery of the day. Most of the mail had taken at least 48 hours to be delivered. There was no delivery on Friday, and on the Saturday morning, at about 8.30 am, a man who was clearly a stranger to the area, with no uniform, was seen struggling along with an overflowing trolley.

Mrs. Chegwidden further informs me that a delivery was received, followed by a period during which residents redelivered items that had not reached their correct target. I do not agree with the comment that followed, but it is important to establish the strength of feeling in Putney. That comment was: This sort of chaotic service is just not acceptable. The Royal Mail faces competition from electronic mail and from companies such as TNT, and the Royal Mail will rapidly lose customers". Businesses in Putney are suffering too. KWP Media says: We are getting to a situation where no deliveries were made during the middle of January. Apparently, a neighbour knocked on the door two weeks ago and reported a huge delivery of between 5 and 7 kg, which included all the papers we were missing as a business"— cheques, statements, invoices, and a reminder from the Inland Revenue sent in the middle of December to mind the deadline for a partnership tax declaration; worst of all, there was a VAT demand posted by Customs and Excise around 10 December, with a deadline of 31 January, which arrived in February.

That is not acceptable. It is clear that the management of the Putney postal sorting office is appalling. I have had apologies from John Roberts, chief executive of the Post Office, who has said that he is dealing with it. Indeed, I have had three such apologies, and I want to ensure that the matter is brought to the attention of the House. I have asked the Post Office to ensure that compensation is available to those who have suffered as a result of the present ludicrous state of affairs. That is currently being dealt with by the chief executive, and I look forward to hearing from him.

During their 18 years in office, the Tories did nothing to ensure that there was a universal service obligation, or any basis for compensation; and there was no accountability. The Bill provides for an independent regulator with a postal services commission. That establishes a basis for the setting of quality standards, for investigation and for the imposing of mandatory penalties for breach of licence conditions. I am disappointed to note that there is no mention in the Bill of compensation to consumers for the concerns of my constituents in Putney. I hope that the Minister will explain how individual consumers and businesses will be able to secure compensation if the universal service obligation is broken, as it has been so flagrantly in Putney over the past two years.

POUNC will now have beefed-up responsibilities under its new name of the Consumer Council for Postal Services. I look forward to the establishment of a committee for London with teeth, which will be able to "get in amongst" the management of the Putney sorting office to ensure that the matter is dealt with. Let me also say in passing that I support the POUNC proposal to refer to the Secretary of State the increases of up to 10 per cent. in Royal Mail charges that have been introduced this week.

I am not pleased to draw to the House's attention the lamentable performance of the postal services in Putney. I am extremely worried about the fact that the management seem continually to blame the trade unions. This has gone on far too long. The Bill gives power to the Secretary of State, the regulator and the users' council, at last, to take action.

Photo of Nigel Evans Nigel Evans Vice-Chair, Conservative Party 8:26 pm, 15th February 2000

My credentials for a contribution to a debate on the Post Office are good. About four years ago, there was an Adjournment debate on the future of the Post Office. It was one of those debates that take place when the business of the House finishes early: rather than continuing for the usual half an hour, it continued for some time, and I spoke in it.

The major difference between four years ago and now is that those who sit on the Government Benches now were sitting on our Benches then, and accusing us of doing exactly what they are trying to do in regard to part of the Bill today. We were accused of ensuring that people's benefits were paid through their bank accounts, and it was said that that would be the death knell for post offices throughout the country. I remember the debate as clearly as though it was yesterday; it seems that a lot can happen in four years.

I represent a rural constituency, containing 30 or so villages. It is very similar to the constituency of the hon. Member for Ceredigion (Mr. Thomas), whom I congratulate on his maiden speech. He said he felt that he was one of the greenest Members in the House. He is not sitting on his Bench, so I think he has learned a lot in a short space of time. Anyway, I think I, in my rural constituency, face problems similar to those that he faces in his.

The Secretary of State said that he wanted a world-class Post Office. We all want a world-class Post Office, but we will not have one if many of the branches that we enjoy in villages and small towns are closed. The "world-class" Post Office will be available to a much smaller group of people.

The Post Office is vital. Like many of my right hon. and hon. Friends, I have visited many post offices, particularly as I knew that the Second Reading debate was coming up. I have spoken to many postmasters and postmistresses. I have also spoken to customers of those post offices.

I run a small retail business in Swansea. I know how tight some of the margins on which we operate are. A number of small businesses have gone under, irrespective of the fact they do not have post offices in the shop; so there is a lot of pressure on small businesses generally anyway, with whole businesses going under.

If we visit post offices—the small rural businesses—and look at some of the other items that they sell, we realise that the service that they offer is vital; that is particularly true of small rural villages. It struck me that, if those businesses close, or if a major proportion of the local post office disappears, there will be problems. One postmaster told me that, if he lost much of the business from the post office, it would not be worth his while being there.

Many such people open their premises early in the morning and close late at night. The post office is important to them because it acts as a magnet for customers coming in and buying other items. If a big chunk of their business disappears, they will think that it is not worth their while being there in the first place. It will not be profitable for them. It will not be profitable for them to sell the other items because, on their own, they will not make enough money. Those places will close.

One postmaster told me about another aspect: what will happen if the footfall factor decreases. When customers walk into a post office, present their giro or benefit book and receive the cash there and then, they spend some of that money immediately in the post office. They could spend some of it to pay their electricity bill, gas bill or bill for another utility. The post office receives some money as a commission on that service.

Those people may also spend some of their money—they have cash in their hand and happen to be there—on some of the other items that the post office sells. It could be greetings cards, detergents, or a number of other items. Some post offices in our constituencies are small businesses. As my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said, they are privately owned businesses. They are there to make a profit. Their customers will buy one or two other items.

If the money is paid direct into people's bank accounts and it is no longer necessary for them to go into the post office once a week, we will find—it is the fear of the postmaster—that they will pay their electricity bill through the post. They will look for other ways to pay their other utility bills. The footfall in the post office will disappear, in other words.

That will threaten not only the post office. Some villages contain two or three shops: a butcher's that is already under pressure, and perhaps one other small shop—a grocer or newsagent. Because the footfall has disappeared from the post office, it will disappear from other small shops in the village. All of a sudden, not just the post office, but a number of other smaller enterprises and shops in the village are threatened. That is why I ask the Government to think again about these proposals.

We are told by the Secretary of State not to worry—3,000 post offices will have cash machines. Can the Minister for Competitiveness guarantee that post offices in West Bradford, Chatbum, Chipping, Boltonby-Bowland, Slaidburn and Downham—all relatively small villages—will get cash machines? I doubt it. Only 3,000 post offices out of 18,700 will get the cash machines. It will all be done, I assure the Minister, on a commercial basis.

Since the Government came to power, 486 post offices have already disappeared. With the threat of what is ill thought out legislation—its ramifications have not been properly thought through—other post offices will close, too.

This does not mean that I do not believe in, as the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) called it, taking the Post Office into the 21st century and having to commercialise. That is absolutely right. [Interruption.] I hope that we shall consider various ways of ensuring that post offices are able to survive.

What other banking facilities are post offices able to provide? In my short time as the Member for Ribble Valley, I—like the hon. Member for Putney (Mr. Colman)—have seen banks close in my villages. Perhaps the closures are one avenue that post offices might explore in seeking extra business. The national lottery provides another possibility for more business, although smaller rural post offices may not be able commercially to sustain a lottery machine. Nevertheless—my goodness me—the lottery is supposed to be about good causes, and the survival of post offices in rural villages is a very good cause. I should hope that we will consider that possibility to support our post offices.

E-commerce and e-mail are another possibility. In some smaller villages, an internet cafe would not be sustainable, and small rural post offices could perhaps provide internet services. I ask Ministers to consider that possibility too.

Ministers should also take on board the fact that the Bill's provisions could threaten the viability of selling post offices. [Interruption.] Many small, privately owned post offices were bought by people who had other careers, took early retirement and invested in a post office, as a nest egg for when they retire for good—[Interruption.] The Government, in their ill thought through legislation, are putting at risk the nest egg of many people who have put money aside, but will not be able to sell their post office.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. Before I call the next hon. Member, I should tell the House that I have heard an awful lot of sedentary comment, some from people who are still hoping to catch my eye. They may fail.

Photo of David Borrow David Borrow Labour, South Ribble 8:36 pm, 15th February 2000

I am pleased to speak in support of the Bill, particularly after the hon. Member for Ribble Valley (Mr. Evans) who, four years ago—when I was leader of the council in Preston—represented part of my council ward. How things change in four years!

I welcome the fact that the Bill will give greater commercial freedom to the Post Office. However, we all have to recognise that the Post Office is not a single entity, and that its success depends on a public-private partnership to provide not only a UK-wide delivery service, but a UK-wide network of post offices from which postal services can be purchased. I should like to concentrate my remarks on that postal network.

Since 1970, 6,000 United Kingdom post offices have closed. We now have slightly fewer than 18,000 post offices. One of the primary arguments in today's debate has been about the importance to sub-post offices of income from benefits transactions. Probably 8,000 sub-post offices rely on benefits transactions for more than 40 per cent. of their income. Some 34 per cent. of benefits payments are made through the automated credit transfer system, but, among new recipients of pensions and child benefit, the percentage is 50 per cent. and rising. Moreover, as my hon. Friend the Member for Ochil (Mr. O'Neill) said, the reducing number of unemployed people is causing a reduction in the number of benefits claimants.

If we project the percentages into the years ahead, it becomes clear that we cannot sustain a Post Office network comprising 18,000 post offices that rely for their survival largely on benefits transactions. The Government will have to take the crucial decision on the network size that they will be able to maintain and on the mechanism by which the network can be maintained. The status quo is not an option. We cannot continue to allow the steady reduction in the number of post offices, the closure of which is determined solely by the mechanisms of market forces and of a steady increase in the number of benefits recipients receiving payment by ACT, with consequently reduced payments particularly to sub-post offices.

We also have to get away from the myth that only sub-post offices are at risk from the changes. One of the most interesting statistics provided by the Library reveals that, of the constituencies with a large number of post offices at risk, most are located in the most deprived urban areas. I think that all the sub-post offices in the Liverpool, Walton constituency depend on benefit payments for more than 40 per cent. of their income.

We need to ask what sort of post office network we want and work out what we have to do to achieve that. Last Friday, I held a constituency surgery in the small village of Rufford. After spending three hours dealing with individual cases, I walked out of the surgery room to find a crowd of 20 people in the village hall waiting to speak to me about the future of the post office. Three quarters of an hour later, a number of clear messages had come out of the meeting.

First, those who relied on the post office wanted to continue to be able to receive their benefits in cash there. The method—a receipt book or some other means—was not important to them. What mattered was that they should be able to get cash at the post office. Secondly, if they received cash through a bank machine or similar system, they did not want to have to pay bank charges. Thirdly, a significant number of recipients of benefits do not have bank accounts or are unbankable. The Government need to ensure that everybody who receives benefit has an account through which the money can be paid and that it can be received through the post office system. Fourthly, any system that is totally dependent on ACT needs to cater for the many pensions and other benefits that are not claimed in person, but are paid through the post office by somebody else on behalf of the recipient.

The final concern is that Rufford is a small village with no bank and the nearest alternative post office is several miles away. If a computer-driven system crashes or there is no money in the cash machine, what happens to the pensioners or people on benefit? We all know the problems caused by a giro not arriving. In some ways, the ACT system can be better for claimants, because it is safer than relying on a giro, which can be mislaid or misdelivered or, for many people in houses in multiple occupation, can go astray completely. There are distinct advantages to the ACT system.

How do we build a system that delivers what recipients want? That is where sub-postmasters and sub-postmistresses come in. We have to ensure that their businesses are viable. The Government must specify the size of network that is required in their advice to the regulator. They must ensure that the Post Office is proactive in delivering that network. Alternative sources of income must also be available to replace the money from the benefit system. We should not subsidise private businesses through the benefit system when there is a cheaper and more fraud-resistant system. If we are to subsidise the sub-post office network, it must be done through a direct subsidy so that our purpose is clear.

There are other sources of income for sub-post offices. We need to consider the idea of a Government gateway. Lancashire county council has worked with BT to develop a number of computer terminals in rural areas that give access to information. I see a lot of scope for a gateway in sub-post offices that gives access to information such as public transport timetables and details of neighbourhood watch schemes, and allows people to purchase tickets, pay fines and perform other interactive functions. Some 28 million people a week use the post office network, which potentially means business worth £8 billion.

We must ensure that the benefit system is run efficiently and is as free from fraud as possible. In the next few months, by the time that the Bill goes to the other place, the Government need to be clear about what they have to do to ensure that the sub-post office network continues to deliver the services that our constituents need and deserve.

Photo of Stephen O'Brien Stephen O'Brien Conservative, Eddisbury 8:46 pm, 15th February 2000

From the outset, one of the Government's prime stated intentions in bringing forward the Bill is repeatedly proclaimed to be to give the Post Office more commercial freedom and the ability to compete. It is the genuineness of that intent that I wish to examine.

In all walks of life, but above all in business, true competition can exist only if it is on equal terms. If that is so, consumers will get the service that they want at a value that they are prepared to pay. It is the leaders of those businesses who take the strategic, financial, human resource and day-to-day operational executive and management decisions that make a business an effective and successful competitor. In making those decisions, the board of a company—especially a public limited company, where the directors' functions are executive and their accountability is measured by performance judged by a broadly spread ownership—has daily to evaluate risk and decide courses of action in the best interests of the business as a whole.

If the Post Office is to compete on equal terms with its international competitors, which it must, its board of directors need the full scope and authority of real commercial freedom to evaluate the risks and opportunities. That is all basic common sense to anyone with any experience of having responsibility for an independent international business, especially one with plc status. It is therefore a mystery to me why the Government have stopped woefully short of granting the Post Office that full commercial freedom, despite the stealthy cloak of plc status.

I am bound to ask, in trying to understand the Government's intent, while retaining 100 per cent. ownership instead of selling at least 51 per cent. of the shares: what are the Government afraid of? Are they concerned that we do not, after all, have the most efficient postal service in the world, ready to take on all comers? Or are the Government, in their habitual style-over-substance way, sending a message to the Post Office's customers, competitors and the financial markets that they do not have the confidence in the senior management on the back of whose commercial judgment the Government are proposing to lend money to the new plc, potentially at below average commercial rates?

No, it is none of those. I fear that the only possible conclusion is that the Government have been got at by the unions. And is it any surprise that the Government have no understanding of how commercial risk is judged and the conditions for success achieved in the boardrooms of UK plc? As I scan the Government Benches, I wonder how many Labour Members have ever served in a boardroom, let alone in the boardroom of a fully independent UK public company. If they had, they would know that one cannot evaluate risk and take commercial decisions in the best interests of the company when at the same time one has to look over one's shoulder at the crushing hand of Government.

The Bill, an unholy compromise, a halfway house and half-hearted measure, will be like the difference between what we should have—a skilled, competitive risk-judging high diver prepared to take the plunge—and what we are presented with in this Bill—the instant thrill-seeking, headline-grabbing bungee jumper, secure in the knowledge that he can always bounce back into the arms of Government. So much for the Government's genuine intent to release the Post Office from their clutches into the real, competitive, commercial, international world of the future.

The Government's strategy on postal reform can be summarised in two words—compromise and uncertainty. It is a compromise between old Labour unionism and new Labour spin. It contains nothing to placate the fear and uncertainty over the future of the Post Office network, but plenty to serve the interests of the unions.

As I study the Bill, I simply cannot find the logic—the glue that binds the whole policy together. I cannot see a clear-cut business strategy that will take our Post Office forward so that it can adapt, compete and continue to be great in the future. Instead, we have the Secretary of State's spin. He has promised modernisation but, in fact, his trumpeted plan of modernisation is based on a failed idea from the previous century—that of the state owning all the shares in a key industry. I dare say that many Labour Members must be thinking, "If only this were the sort of modernisation that the Secretary of State would talk of in the context of the utilities."

The Government have, I admit, recognised the need for the Post Office to be competitive. Last July, during the statement on the White Paper, the Secretary of State said that the proposals for Post Office reform were good news for the Post Office's millions of customers, who will benefit from improved services from a new, modernised Post Office and from greater competition for postal services."—[Official Report, 8 July 1999; Vol.334; c.1175] If the Secretary of State recognises that millions of consumers will benefit from greater competition, why not maximise that competition instead of limiting it, thereby limiting the benefit to the consumer? For if the plc structure proposed for the Post Office stands for anything under this Government it is, I suggest, "politically limited competitiveness".

Certainly, the limitations on competitiveness are clear to see. In addition to the fundamental flaw that I have already mentioned regarding the socialist approach to share ownership, borrowing will be underwritten by the taxpayer, the long-standing privileges enjoyed by the Post Office will remain, there is no evidence that cross-subsidies will be avoided through greater transparency, and the £1 limit on the reserved area remains.

So we are forced back to consideration of the Bill's genuine intent. The shape of the Bill has been driven by a compromise with the unions. The Government have guaranteed that actual privatisation would require new primary legislation. When the Secretary of State gave his assurance of primary legislation for any wholesale public share offering, the Communication Workers Union stated: We attach great significance to these public assurances which guarantee that, of itself, plc status does not take the Post Office any nearer privatisation and any share disposal would require a full-scale Act of Parliament with comprehensive political debate during which we would obviously lobby and put our case. That is a statement of union backing for a union-driven fudge, if ever there was one. It is also clear evidence that, under new Labour, appeasing the unions comes before pleasing the consumer. It is the consumers who would benefit most from the Post Office enjoying full competitiveness and commercial freedom, as a truly independent public limited company, untied from the nanny state. They are not getting that under this Government.

As I said, the Bill is about compromise and uncertainty. It does nothing to address the uncertainty hanging over the future of the Post Office network. Post offices, small, medium and large—such as the ones in Tilston, Tarporley, Winsford, Audlem and Sandiway in my constituency, and especially the small, rural and suburban community sub-post offices—fear for their future. It is not just in my constituency—it is the same all across the country. There is great uncertainty. The only certainty is that the Government's decision to scrap the Horizon swipe card plan poses the biggest threat.

The National Federation of Sub-postmasters has estimated that 40,000 sub-post office staff will lose their jobs. Against all the Government's words stating their commitment to social inclusion, the overall result of this measure will be a massive increase in social exclusion. And the Secretary of State's answer to the uncertainty over the future of the networks is posters. There is little chance that those posters will tell the truth. If they did, they would say, "Your post office is not safe in Labour's hands, and we have no intention of rethinking our scrapping of the policy that could have preserved the network."

Overall, the Government's strategy for the Post Office is a combination of political fudge and economic uncertainty. The Secretary of State has consistently stated his support for greater competition in the wider economy to improve services and drive the best bargain for the consumer. Yet he is introducing a Bill in which competition is kept to a minimum to keep the unions happy. The Bill does not address any of the major questions hanging over the future of the Post Office.

We shall have to work hard in Committee on the many new clauses and amendments that the Secretary of State has told us about. He knows what they are, but we are not allowed to know because that would go against his spin. My recent experience on the Standing Committee that considered the Freedom of Information Bill tells me that we shall argue a lot with the Government, who will put up a lot of straight bats. We may even receive some courteous rebuffs for our improving amendments. Ministers will read out hastily scribbled rebuttals handed to them by officials. They are never minded to let the benefits of a hard-won democratic procedure improve a Bill for fear that that would be interpreted as meaning that their original thinking was wrong, or even not 100 per cent. perfect.

The Government should listen. There is little political benefit for the Opposition in improving Government Bills in Committee, far from the public gaze. Yet, in good faith, again and again, we shall try to do so, because we are determined to pass good law, even if, as Opposition Members, we disagree with the underlying policy. Many battles await us in Committee.

Photo of Mrs Diana Organ Mrs Diana Organ Labour, Forest of Dean 8:56 pm, 15th February 2000

The Bill has been long awaited. For years, the Post Office had to put up with Tory dither, delay and indecision coupled with continual threats to break it up and privatise it. That remains Tory policy. The Post Office was not allowed to prepare for the challenges ahead. Labour, on the other hand, is keeping its manifesto commitment to modernise the Post Office by giving it commercial freedom within a public sector framework.

The Post Office has welcomed our wide-ranging Bill, as have the Communication Workers Union, the Country Landowners Association and Action with Communities in Rural England. There is much in the Bill that will be welcomed by the 29 million people who use the Post Office every week. For the first time, service provision by a nationwide network and a universal service obligation are being enshrined in law. To ensure that that happens, we are introducing a new regulator and the Postal Services Commission to promote consumer interests.

People in rural areas who are concerned by sub-post office closures will be able to call on the regulator to consider the full impact on customers when there is any future closure proposal. The Postal Services Commission will have to have regard for the interests of the disabled, the chronically sick, pensioners, those on low incomes and those who live in rural areas. The Bill gives the Secretary of State the power to direct the Postal Services Commission to impose a licence condition requiring the provision of free postal services to the blind, thus ensuring the continuity of free articles for the blind. All that is to be welcomed.

For the first time, there will be a right to access, with the Government issuing criteria to ensure that everyone may have reasonable access to Post Office Counters services. Individuals will be able to appeal to the regulator on the provision of postal services in their rural areas.

Together with the 250,000 people who have signed petitions highlighting concern about the future of local rural post offices, I hope that the Bill will deliver a framework to ensure the maintenance of a strong post office network. However, I seek some strengthening of that framework. We need to arrest the continuing decline in the number of rural post offices. We must specify what an acceptable network means, and we must safeguard vulnerable post offices that give much to the local community. We need to fund the network, and, as my right hon. Friend the Secretary of State said, that may mean subsidy.

At present, 43 per cent. of rural parishes have no rural post office. The network in rural areas has reduced from 9,700 in 1994 to 8,900 at present. The Tories let the continual fall in the network go on year in and year out. The Labour Government are addressing decline. We need to build up the network. When, as often happens, a post office is linked to a village shop, it is an essential facility offering access to a vast range of services.

Such post offices are fragile. As the 12th report of the Select Committee on Trade and Industry noted: Given the fragility of the network … it is time for the Government to consider whether it should continue to rely on income generated from a range of postal and other services to maintain a national network which it regards as necessary for broader social and economic objectives; or whether it should accept that the network is a national asset—as recently demonstrated by its role in providing more or less instant passport renewal services—which may require an appropriate level of national financial support. Services such as those suggested in the Select Committee report would greatly strengthen the framework outlined in the Bill. I welcome the comments of my right hon. Friend the Secretary of State suggesting that a possible subsidy may be considered in Committee.

We can overcome the vulnerability of post offices through diversity. In Suffolk, one rural post office is situated in a local pub. In Herefordshire and Worcester, 20 sub-post offices are located in village halls. The range of services could be extended. We should allow rural sub-post offices to become the centre for a wide range of services, financial and otherwise.

Why should not rural sub-post offices offer insurance, in addition to the holiday insurance that they are now allowed to offer customers? They could issue smart payment cards and Quantum cards for electricity, gas and water, and mobile phone prepayment cards. They could issue passport forms, vehicle licence forms, motor tax forms and other local services required in rural areas.

I am glad that we will ensure that people can pick up their benefit in cash across a post office counter. The hon. Member for Buckingham (Mr. Bercow) commented on my earlier concerns, but I am now aware of the Government's commitment to that.

We can allow post offices to become future banking centres for rural areas. There are already agency arrangements with the three major banks. That is important, as 91 per cent. of villages have no banking facility.

The report to the British Bankers Association by Elaine Kempson of the university of Bristol showed that 15 per cent. of rural businesses are more than four miles away from a local branch. That creates particular difficulties for small retailers and the self-employed. Furthermore, 15 per cent. of the rural population have no local branch. That is especially difficult for people who are over 80 or disabled, and for women with young children. The report found that agency arrangements with post offices would be acceptable to those groups. That extra business would bring more footfall into rural post offices, giving them greater strength.

The Horizon project to computerise 18,000 post offices by 2001 will give them modern, on-line IT systems and give the network the capacity to re-introduce banking facilities in the rural areas from which banks have withdrawn them.

With my hon. Friend the Member for Stroud (Mr. Drew), I have written to our hon. Friend the Minister, inviting him to Gloucestershire to meet postmasters and discuss the possibility of running a pilot of the Horizon project, to monitor and evaluate the services that it can deliver and see whether it can effectively provide electronic government.

The Bill will allow the Post Office to borrow up to £75 million at commercial rates in each of the next five years. That will give it a vast amount of investment, which is necessary to allow it to compete on a global and national scale. There will be major new business opportunities as e-commerce expands. More and more consumer purchases are made on the internet.

As we move into the realms of mass food retailing through the internet, with Tesco rolling out a nationwide service, there will be huge opportunities for large-scale nationwide distributors. Only Parcelforce can meet that requirement. It is the only carrier with complete coverage across the UK, but it needs the provisions of the Bill to enable it to enter the future market competitively.

The Bill will provide a framework for modernisation, allow the Post Office to be competitive and remain a world-class service, and give a better deal to consumers in rural areas.

Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South 9:04 pm, 15th February 2000

First, I offer good wishes and congratulations to the hon. Member for Ceredigion (Mr. Thomas) on his excellent maiden speech. I also pay a generous tribute to his predecessor in that constituency.

I am sorry that I cannot do the same for our colleague, the hon. Member for Putney (Mr. Colman). He painted a depressing picture of the postal service in Putney. The only glimmer of hope was that the 29 million other people who use the service every week have a much better service than the inhabitants of Putney.

However, Putney may be where ministerial mail goes. When it leaves Ministers' offices, it hovers for several months over Putney and then descends on the House of Commons. I hope Ministers will not grab that as yet another excuse for the long delays in replying to letters from hon. Members, although I am sure that some of them will enthusiastically grasp at that excuse to defend the indefensible.

My hon. Friend the Member for Twickenham (Dr. Cable) spelt out his strong reservations as to the financial consequences of the measure. The hon. Member for Forest of Dean (Mrs. Organ) mentioned that the £75 million available for borrowing would permit great scope for modernisation and development. Nothing could be further from the truth. One has only to visit one's main sorting office—if one is lucky enough to have one—to find out that the cost of the technology to speed up sorting runs is more than £1 million. It would cost that amount to get new technology into sorting offices—let alone the development and business opportunities outside.

There are several flaws in the Bill. However, all that we have heard from the Conservative Opposition is that they have not learned any lessons. The only alternative that they offer is privatisation. That is where they were going during the previous Parliament, but they backed off. My predecessor as Member of Parliament for Portsmouth, South resigned from the Conservative Government in disgust at the fact that they had backed away from privatisation, but it did not save him his seat.

It has been pointed out that many Tory Members lost their seats at the last election because they stuck rigidly to the line that the Post Office needed to be privatised and they wanted to carry that out. Today, Conservative Members are harking back to what was seen, even at that time, to be a lost cause. The Conservatives backed off then because the public do not want privatisation.

Consumers have not said that they want the wholesale sell-off of the Post Office. The overwhelming majority of people believe that the Post Office offers an excellent service where it is needed. Deliveries are usually on time, although obviously there are occasions when things go wrong. However, as the representative of a large constituency of 89,000 voters, I receive few complaints about the service. I have nothing but high regard for the job done by postal workers in sometimes difficult circumstances. I am proud to be close to the organisation in my city.

Much has been said about the plight of rural post offices. I draw the attention of hon. Members, once again, to the plight of the urban post office. The distance between the sea and the northern boundary of my constituency is a little more than two miles; from east to west, the distance is probably less than three miles. More than 100,000 people live in that area—89,000 voters. There are 22 sub-post offices, 15 of which would have an even greater cloud looming over them if the changes in the payment system go ahead, and people take them up as the Government will, I am sure, encourage them to do. Why make changes, if they do not actively encourage people to make use of them?

The problem faced by 15 of those 22 sub-post offices is that 50 per cent. of their trade comes from benefit claims. Many have no alternative; they cannot diversify. They have tried to do so, but some businesses have already gone down the tube because supermarkets have expanded.

Banking was offered to post offices—the installation of cash dispensers. A postmaster came to see me last week with a letter about the 3,000 machines that would be available. He and his family have run a post office in the heart of the area for more than 30 years. He applied for that service, but there was no indication of how the choices would be made. Will there be any weighting in favour of the installation of those machines in sub-post offices? Or will it be as predicted by the sub-postmasters, who all believe that the machines will go to the highest bidder, or the one with the greatest number of customers passing through the door—the local supermarket? It would be very difficult for local post offices to compete with the supermarkets.

The closure of any one of those sub-post offices will pose serious problems for many people whose only active meeting of other people, except for the occasional person who knocks at their door, takes place on the journey to that sub-post office. It does not matter that they are not too far from neighbours, and probably relatives. For many people, that journey to the post office is their trip to the outside world. On the way they may visit the library or pay other bills, but the post office is the main reason that many of them still make a journey out of the home.

It is easy to ignore the situation in an urban population and say that that is not an issue because if the Government close 10 sub-post offices, 12 will remain in that very small area; but people will have to make difficult journeys, sometimes without public transport, across very major roads, in densely populated streets full of cars, which are double parked in most instances. It is a real nightmare. That is why thousands and thousands of people have already signed petitions to save post offices in my constituency and many other urban constituencies.

Tonight we need to hear from the Minister some clarification about the possibility of subsidies. We need to hear who will choose from the 22 post offices in Portsmouth, South those that are seen to be viable and eligible for a subsidy, and we need to know what will happen to those who do not pass the harm test satisfactorily and consequently are not chosen.

The right hon. Member for Hitchin and Harpenden (Mr. Lilley) did not mention the fact that he served in the Government who closed down the Crown offices. I remember that, when I was previously a Member of Parliament, they closed thousands of them throughout the country. In Portsmouth, at least half a dozen were closed. We were all told, "Do not worry; jobs will be saved and we shall find alternative locations, or other people will take on those offices." Five of the six are now housing. All six no longer serve as post offices. There was nothing but crocodile tears. We were told, "It will not be a problem. Do not worry. You are over-hyping the argument."

Now the boot is on the other foot. A Labour Government are in power, and they are saying that they intend to do something that appears to threaten the viability of the sub-post office network, whether rural or urban. Answers are expected and needed—not 18 months from now, not when the Bill has passed through the House and the other place, but tonight or very soon after tonight. The livelihood of thousands of people throughout the country is on the line, and so are the understanding and commitment of the people who use those post offices. They want to hear a clear message from the Government tonight.

I do not envy the Minister's task in piloting this very complex Bill through its stages. Some Members have said that the Bill is a step in the right direction. My only fear is that it is a step in the direction in which the Conservatives wanted to take us, and that, if ever they were back, it would open the door to allow them to do what they did more easily the next time than they did it the last time.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley 9:13 pm, 15th February 2000

Obviously, the debate is very important and many hon. Members on both sides of the House have taken part. There seems to be an interesting discrepancy between the views of the various members of the Opposition Front-Bench team. The hon. Member for Tiverton and Honiton (Mrs. Browning) said that she did not want to commit herself to privatisation, and that we must wait and see what the Conservatives would be saying at the next general election; but the hon. Member for Rutland and Melton (Mr. Duncan) was bouncing up and down saying, "Privatise, privatise, privatise." It is always very interesting to note the variation in the messages that are communicated by the Opposition.

We should be talking about the future of the Post Office, which is very important. I welcome what we are achieving, or hope to achieve—a greater and better universal Post Office. I hope that we can take on the rest of the world and that we can continue to be proud of the Post Office. The Post Office has a proud history and we want it to expand and to have the freedom to allow that to take place.

People shout that we should fully privatise the Post Office, but they then ask about sub-postmasters and postmistresses. They want the best of both worlds, but they are not facing up to reality. For 18 years, 40 sub-post offices closed every week. No matter what they say, the previous Government did not bat an eyelid. We take the future of rural post offices seriously, so much so that we believe that there must be an alternative approach. We cannot allow them to wither on the vine as previously happened.

We should recognise that we now live in a plastic society. There are no two ways about that. New pensioners will use a post office less, because their pensions will be paid directly into their bank accounts. We must grasp the nettle and ensure that the Post Office can provide alternative services. We must give it a viable future and that must be done through new technology. That is the new gateway for its benefit and its future.

I am in contact with the owners of rural and urban post offices in my constituency. They are important and they recognise that they need a future. The future is not to do nothing, but to give them an alternative, and that alternative will come from new technology. We need new rural and urban banking facilities, and we want post offices to be able to offer a full range of services. They will be offered because we are willing to take up the challenge of new technology to provide a future for a Post Office of which we all can be proud.

We shall stop what the previous Government allowed to happen—post offices withered away and not one Conservative Member who supported the previous Government for 18 years was even bothered. They might shed crocodile tears now, but that is all that they can do. In reality, they do not care. They say, "Privatise, privatise", but they do not say what would happen if they privatised the Post Office. That is a worry.

Perhaps the hon. Member for Rutland and Melton will be willing to tell us how privatisation would help sub-postmasters and mistresses. We all know that it would not help them in the slightest—far from it. It would make their futures totally uncertain, but would do nothing about their problems. We recognise that the problems exist and that they must be addressed. However, talking about them will not help. We want a Bill that will help the Post Office in general—the new universal Post Office—and that will give a viable future to the rural and urban post offices that would have closed, as they did under the previous Government.

I want the Bill to enable the Post Office to provide new enhanced services. What is wrong with small urban villages of 8,000 to 10,000 people having a second delivery? That does not take place at present, but I hope that not only will we maintain the service that we have now, but that it will be improved by a double delivery. People should expect that. We should not say that deliveries should be made before 2.30 pm. Instead, we should say that people will have a first delivery before 10 am and a second delivery before 5 pm. We should be pushing the service forward and enhancing it.

I hope that my hon. Friend the Minister will take my points on board and that he will say that the Bill will lead to an enhanced service that we will all welcome. I know that the Government take seriously the future of the Post Office, and urban and rural post offices in particular. They have been allowed to close, but that should not have happened. We do not want it to happen again; we want a Post Office of which we can be proud.

I am constantly in touch with the post offices in my constituency. I want to ensure that they have a viable future, and the Government will ensure that through the use of new technology and alternative services.

Photo of Oliver Letwin Oliver Letwin Conservative, West Dorset 9:19 pm, 15th February 2000

A good deal of concern has been expressed in this debate, as in three previous debates in this Session, about rural post offices and small post offices in general. We are dealing primarily not with a party political issue, but with a Government who are over-dominated by their Chancellor of the Exchequer. We all understand the problem.

The Chancellor and his officials communicated to the Department of Social Security the great apercu that they had come across 15 or 20 years earlier and of which they have been repeatedly notifying the Secretary of State for Social Security for all that time, which is that the Government could save an enormous amount of money if only they would pay benefits through the banks.

In previous years, we have had, without an announcement, the introduction of something that I believe is now popularly called joined-up government. Under this present joined-up Government there is, alas, no joined-up government, and the Department of Social Security said yes to the Chancellor's proposal without checking what the effects would be, and reported to the poor old Minister's Department of Trade and Industry, saying "Jolly D. The Chancellor has said this and what the Chancellor says rules in this Government. Let it happen."

The poor old Minister and his Secretary of State got to work and started to make all the discoveries that people had made many years earlier, but which the Government had not been told about by the Treasury officials who now run things. They discovered, of course, that the massive saving had a few disadvantages. First, it was admitted in an earlier debate that the Government would have to subsidise the banks to get them to open accounts for people who should not have a bank account because the banks do not want them and the people themselves do not want a bank account.

It was then discovered that the people for whom the Government thought it would be nice if they could collect their cash through the post offices unfortunately would not have that option because there would be no post offices. They then came up with the whiz-bang solution, which is, as we now discover, to subsidise rural post offices and outlying post offices in towns and cities. Two of the net advantages of the idea were therefore to be a huge extra subsidy to the banks and a huge extra subsidy to post offices, but the Government discovered that that would not do because we still could not be sure that people would be able to get their cash, because the post offices would not be there.

The Prime Minister went on a tour to the south-west and said that he would put cash tills outside all the post offices. He happened not to notice that when there is a cash till outside a post office, people do not go into the post office, so they do not use the post office, so they will not have payments made into the post office, so the post office will not remain open. Now the Prime Minister will put 3,000 cash tills in other places in rural areas—we know not where and he knows not where—and of course we have no idea whatsoever how people will use the cash tills because they will not be bank account holders so they will not have any reason to use a cash till.

I could go on. I fear that what I am trying to describe is a right muddle. It is a muddle not because Ministers are evil or ill-intentioned or even because they are Labour Ministers, but because they have made a right mess of things by coming up with a policy that a certain set of officials has been promulgating for a long while but which has never worked and will not work now and will have to be got rid of sooner or later.

It will have to be got rid of sooner rather than later because there is a huge movement against the proposals in the countryside and increasingly in towns and cities. Hundreds of thousands of people are signing petitions. There is a cross-party group, of which I am proud to be a member, which takes in Members from all three parties represented in England. The fact is that the Government will give way.

Once the Government have given way, we need to know what we need. I regret to say that the Secretary of State gave a lamentable performance earlier, and he revealed that he has not the slightest idea of what we need. It is simple and clear: we need a mechanism by which small post offices will be able to compete with the banks and deliver, sensibly and rationally, at low cost, benefits to the people who need them without their having to hold a bank account, without having to subsidise the rural post offices and without the collapse of village society that is otherwise entailed. That is within our grasp.

We need an intermission. The arrangements will not be introduced by 2003; they could well be in place by 2005 and 2006. Technological problems have been encountered, but it is perfectly understood in principle how the task can be done. We must provide the average small post office with the electronic means to deliver benefits in the way that the Secretary of State for Social Security wants them to be delivered, and this poor old Minister would like them delivered, to keep open the network of post offices. That is perfectly doable if it is done slightly later.

What is the remedy? The Secretaries of State for Trade and Industry and for Social Security must summon up their courage and remind themselves that they are not wholly in the hands of the almighty Chancellor of the Exchequer. They must go, if necessary on bended knee, up the stairs of the Treasury and say to the Chancellor, "Oh Chancellor, you are three years too early. Just give us a little intermission to install the technology in the post offices and there will be a miracle. You will not have to subsidise the banks. You will not have to subsidise the rural post offices. It is true that you will not save £400 million; you will save much more." I think that the Chancellor of the Exchequer, terrifying though he is—like my colleagues on the Treasury Opposition Front Bench team, I know just how awesome the right hon. Gentleman is at the Dispatch Box, and I have no doubt the same is true of him in his office—will turn out to be rational.

The Government will thus find a way to get off the awful hook. From the point of view of my colleagues and me, that is politically highly regrettable, as we stand to gain seat after seat in rural areas from the Government's awful mess. If we were cynical, we would desist from speaking a word about it and our friends on the Liberal Democrats Benches would be equally silent, because we all know that one of the best ways to encourage people to vote for us is to allow Ministers to pursue a lunatic policy. Nevertheless, I hope that Ministers will take the opportunity to go to the Chancellor, that they will win the debate and that they will not pursue the policy.

The reason why that is the right course of action is that it is in the interests of no party in the House to allow the widespread destruction of village communities that will ensue from the Government's proposals being implemented. It is in no one's interests if the hundreds of thousands of people who are benefit recipients find themselves in increasing social difficulty. We have a common interest as politicians in telling the officials at the Treasury to get back into the box.

Photo of Alan Duncan Alan Duncan Shadow Spokesperson (Trade and Industry) 9:26 pm, 15th February 2000

We have had a lively debate. Such is the enthusiasm of hon. Members on both sides of the House that the number who wanted to speak reduced us to a 10-minute rule.

Having studied the Bill in detail, the best we can say is that it is better than nothing but not as good as it could have been. At its worst, it is a timid and potentially deceitful Bill—deceitful in respect of the structure chosen and the consequences that Ministers claim will arise from it.

The fact is that the proposed structure is not a full public limited company. As my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) said, it is a hybrid structure that is full of conflicts and contradictions. It enjoys the pretence of commercial freedom, but the relationship that the Post Office will be compelled to have with the Government will continue to be more akin to that of a nationalised industry than to that of a freely owned company operating in the open market; it will always look to the Government for permission to act.

The financial disciplines applying to the company will be contradictory. It will operate in an artificial climate of financial discipline: there will be no openly quoted share price, which would otherwise govern its financial strictures; nor will it borrow in quite the same way as other plcs in the open market. At its worst, the result could be a sort of mini-National Enterprise Board, like that of the 1970s.

Let us imagine that, in a great venture, having been seized with the sort of vision for which every hon. Member who has spoken today has asked, the Post Office decides to enter into a share swap with another communications company, perhaps an overseas company. Some shares from the 100 per cent. Government-owned company are given to that overseas company and some shares from that company are given in return. The end result, lo and behold, is the British Government publicly owning shares in a foreign communications company.

Such a bizarre structure cannot endure. It would be absurd if one Minister in one office at the DTI had to decide whether or not the Post Office could borrow money, while another Minister in the office next door—behind the Chinese wall—decided whether or not to refer some merger to the Competition Commission. The structure is untenable—a crazy pretence.

The Bill is designed to deceive. I do not believe that the Government are intent on keeping the structure in the same form as it is created. Either old Labour will build it up until it resembles the National Enterprise Board that I described, or new Labour will do what it always does—go a long way against the wishes of Labour Members and take a dramatic step towards privatisation. I believe that the latter is more likely. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) lampooned that duplicity well in his contribution.

There is massive suspicion about the future of the Post Office network. Although Labour Members have done their best to disguise it, many of them share our anxiety. The root of our concern is the future of the Post Office network in rural and urban communities after the introduction of automated credit transfer. The Secretary of State said that there would be no deductions from those who subsequently draw money in cash after the introduction of ACT. I welcome that statement as far as it went; however, it does not tackle our anxieties.

Last year, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) asked the Secretary of State for Trade and Industry what fee will be paid by the Department of Social Security to sub post offices for administering cash benefit payments under the arrangements applicable from 2003". He received the following reply: The contractual arrangements between the Benefits Agency and Post Office Counters Ltd. are commercially confidential, as are the contractual arrangements between Post Office Counters Ltd. and certain retail banks under which customers of those banks can access their accounts at post offices.—[Official Report, 26 July 1999; Vol. 336, c. 93W.] That directly contradicts the Secretary of State's comments today.

The right hon. Gentleman did not fully answer a question that initially received no answer. He let a tiny patch of daylight into the magic and trickery without giving a full answer. As my hon. Friend the Member for Worthing, West (Mr. Bottomley) rightly said, what matters is the future of the income of the network of post offices, which rely so much on the payment of benefits. To that question, answer came there none. If there is no adequate post office income, from where can people get their cash? The Secretary of State's guarantee that there will be no deductions from money that is paid in cash is not a guarantee to protect the Post Office network

Photo of Michael Connarty Michael Connarty Labour, Falkirk East

Earlier, Conservative Members gave a clear commitment that they would privatise the Post Office. What guarantee would a privatised scheme give to sub-post offices? A commercial free market gives no guarantees to any enterprise.

Photo of Alan Duncan Alan Duncan Shadow Spokesperson (Trade and Industry)

The hon. Gentleman shows that he does not understand the kernel of the issue. My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) dealt with that point in his speech. If the hon. Member for Falkirk, East (Mr. Connarty) was not prepared to listen to my right hon. Friend, I pity him.

There is much suspicion about the alleged savings that introducing ACT will make on fraud. Community post offices know who their customers are. Fraud tends to be caused by the mistaken issue of a book, not by the transfer of cash to the book holder.

I shall dwell briefly on the speech that my right hon. Friend the Member for Hitchin and Harpenden, the former Secretary of State for Social Security, made. When in government, he had an impeccable track record of designing a system that would have protected the rural network. He openly described the way in which it would have worked. He made a devastating critique of the Bill's structure and said that its philosophy was, "make us modern, but not yet." He also said that the universal service obligation can be fulfilled through regulation; it does not require state ownership. That is the answer to the question of the hon. Member for Falkirk, East.

My right hon. Friend explained the conflict between commercial and Treasury priorities, which will permanently bedevil the structure for which the Bill provides. He was open when he said that as Secretary of State for Social Security, he was advised that the introduction of ACT would destroy community post offices and lead to minimum savings and maximum disruption.

On the back of that and his experience in government, my right hon. Friend asked the Minister whether he had received similar advice or any guidance that might in any way match what he was told. I hope that the Minister replies, as the answer is bound to be yes; but that is part of the deceit of the Bill and of Government policy, which are designed to destroy the Post Office network without admitting what will happen. Government policy is already destroying many post offices: the value of their business is plummeting because of the doubt and the danger that they face. My right hon. Friend undertook a forensic dissection of the likely new payment arrangements and the Minister will have to answer many questions in Committee.

The hon. Member for Falkirk, East recalled the Stand By Your Post campaign in his constituency and stood by it, but he should reconsider his view as he supports a Government who are ratting on that campaign and causing untold damage to our network. The hon. Member for Ochil (Mr. O'Neill) wants the Post Office to be able to have an international vision. I agree, but it will be able to have such a vision and act on it only if it has genuine commercial freedom, not the fake commercial freedom in the Bill.

May I divert for a moment to pay my compliments to the hon. Member for Ceredigion (Mr. Thomas)? Like hon. Members on both sides of the House, I congratulate him on the quality and the generosity of his maiden speech, which was confident, amusing and took us on a vivid tour of his constituency, with all its rural quality. He and I can find common ground in that we represent constituencies of fields, not concrete. Perhaps we can find further common ground in taking pleasure in new Labour coming fourth in his by-election.

I listened closely to the contributions of the hon. Members for Strathkelvin and Bearsden (Mr. Galbraith), for North-West Norfolk (Dr. Turner), for Putney (Mr. Colman), for South Ribble (Mr. Borrow) and for Forest of Dean (Mrs. Organ), who hopes that her constituency can be part of a trial of much of what a future Post Office might do. However, she was offered a trial in Gloucestershire before—the pathfinder trial—only for it to be cancelled by the Labour Government as soon as it was announced.

Conservative Members brought a lot of experience to the debate. My hon. Friend the Member for Banbury (Mr. Baldry) put a clear case for the benefits of privatisation and my hon. Friend the Member for South-West Hertfordshire added his experience from his days as a Minister. If we are fortunate, he might be selected to serve on the Committee so that he can bring that experience more greatly to bear.

My hon. Friend the Member for Ribble Valley (Mr. Evans)—the first phase of a Ribble double this evening—went to the heart of the debate to explain the value of small post offices to local communities, which we all want to protect, and the possible consequences of the Bill. My hon. Friend the Member for Eddisbury (Mr. O'Brien) said that the Post Office needs genuine commercial freedom if it is to thrive and that the existing plc stands for "politically limited competitiveness". I agree with him. My hon. Friend the Member for West Dorset (Mr. Letwin) was cogent and convincing as always, but his remarks were difficult to take in on this occasion as he was rather quick.

The House is aware of a depressing aspect of the Bill: we are debating its principles on Second Reading and considering a detailed text of 93 clauses even though we know that a massive number of amendments will be tabled. That has already happened with the Utilities Bill and it is fast becoming a pattern. In his opening remarks, the Secretary of State said, "I know the number of amendments we plan to table", but he has not made them available to the House. A massive raft of amendments that will make dramatic changes are already in the pipeline, but they are not before us to help us to decide whether we agree with the Bill's principles.

Whereas we all accept that a number of amendments are bound to be put down in Committee—after all, that is what the process is for—to have them ready now, before Second Reading, and for the right hon. Gentleman not to come absolutely clean about them is disrespectful of the process in which we are all engaged.

We on this side of the House want proper commercial freedom for the Post Office. We want it to be able to thrive in a world of increasing competition and global corporate competition. We want to see it free to enter into those sorts of relationships into which genuine plcs are free to enter.

The structure before us is a mess. It is a pretence of a structure. It will not give the managers the freedom and initiative to do what they really want to do, to build up their businesses.

We also want to defend rural post offices, which undoubtedly are under threat. We value them. If the Government really were honest about this, they would have accelerated the process of designing the access criteria so that at this stage we could see what is planned to protect the rural network that the Government say they wish to defend. In the absence of those access criteria, the suspicion that we have in so many areas will grow.

There are many things that we could debate further about whether the Post Office should become a bank. However, at this stage, on Second Reading, we see before us a Bill which is a hotchpotch hybrid. It does not give the commercial freedom to the Post Office that the Government pretend. Our reasoned amendment gives all the reasons for our wishing to criticise what is in the Bill. I hope that, if the Bill goes as far as Committee, we shall manage to improve it.

Photo of Alan Johnson Alan Johnson Parliamentary Under-Secretary (Department of Trade and Industry) 9:42 pm, 15th February 2000

All the self-preening pontification of Opposition Members cannot disguise their total lack of credibility on this issue. If I was being kind about their stewardship of the Post Office—[[Interruption.] There are members of the previous regime sitting on the Conservative Benches. We do not want to upset them unduly. If I was being kind, I would call their stewardship maladroit. If I was being unkind, I would say that Postman Pat's black and white cat would have provided better stewardship of the Post Office over the term of the previous Government.

Let me take hon. Members opposite through this issue—it will not take long. This is a "Hitchhiker's Guide" to the previous Government's policy on the Post Office. First, in July 1992 they announced that they would split away Parcelforce and sell it off. Then they announced, two weeks later, that they were going to review the rest of the business. Then they announced that they could not split Parcelforce away from Royal Mail, because that would be detrimental, so they would bring it back again. Then they announced that they would split Post Office Counters away from the Post Office business and keep Royal Mail and Parcelforce together as a privatised part of the Post Office—so there would be that small public sector minnow called "Counters" split away from all the synergies, all the cross-fertilisation in terms of work and finance, that it received from the rest of the business.

The Government spent £1,613,002.28—I am grateful to Hansard for telling me this—of taxpayers' money on consultancy fees to go out to consultation on a Green Paper that said they would privatise Royal Mail and Parcelforce and keep Post Office Counters in the public sector. I am told that receiving 200 replies to a Green Paper is doing well. They had 15,400 responses, only 60 of which were in favour of their proposals.

I have not ended the "Hitchhiker's Guide" yet. Then the Conservative Government said that they would reduce the external financing limits to half the Post Office's forecast post-tax profits in the autumn, something that we are doing in the Bill: 50 per cent. this year, reduced to 40 per cent. next year. They said they would make progress on that in the autumn. That autumn they hiked the EFL to 300 per cent. of that year's Post Office profits. The reason why a first-class stamp costs 26p is that the Post Office was forced to respond by increasing the tariff four years ago.

After all that, the Conservatives ended their term of office with a miserable little paragraph in their 1997 manifesto saying that, if elected, they would sell off Parcelforce and review the status of the rest of the business—right back to where they were in July 1992.

The pity of all that is that the solution was there all along. The solution was staring them in the face. The hon. Member for Tiverton and Honiton (Mrs. Browning) said that the Conservatives were enthusiastic about privatising the Post Office; well, we are enthusiastic about the Conservatives standing at the next election on that basis.

The right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that the Post Office network was already in the private sector. I have heard that myth before, and it is ludicrous. The Post Office network—Post Office Counters Ltd.—is driven and financed from the centre, from a publicly owned Post Office network. The private business is a public-private partnership, but private businessmen come into the business on the basis of a network 10,000 of whose constituents make a loss, and have to be cross-subsidised to the tune of £30 million a year from the rest of the network. They can do nothing about that because the system is socially necessary, although not always commercially viable.

The right hon. Member for Hitchin and Harpenden said—I thought this a bit rich—that the Post Office had missed the glittering prizes that would have belonged to it if it had been in the vanguard and not in the rear. After all the Conservatives' maladroit handling of the Post Office, the answer was staring them in the face all along. It was the Select Committee on Trade and Industry in 1995, under a Conservative majority, that rejected the argument that the only way to commercial freedom was through privatisation; there was a public sector solution. The Committee said: We recommend that the Government introduce legislation to convert the Post Office … into a 100 per cent. government-owned plc … in the knowledge that the future sale of any of the Government's shares in Post Office plc would be subject to parliamentary approval. An earlier speaker suggested that there was no enthusiasm among Labour Members, or among the Post Office work force, for anything other than the status quo. That is not true. We always argued that the Post Office needed commercial and financial freedom, but we rejected the dogmatic approach of the then Government and argued that our approach would provide a solution.

Arrangements were introduced in 1995. The Post Office has been under permanent review for the past eight years, and has suffered as a consequence. All our rivals in Europe have gained ground; we could have been much further forward. Conservative Members are talking out of the back of their collective lorries. Their record demonstrates that we need no lectures from them.

The other great myth that has featured in the debate—the other issue that I believe needs to be addressed—is the argument that we are debating the future of the Post Office network in relation to problems experienced in the transfer to ACT, and the fears raised in that regard. Let us be clear—the Bill has been welcomed by everyone, including the National Federation of Sub-Postmasters, the Mail Users Association, POUNC and others. They see it as a way of underpinning the viability of the Post Office Counters network.

The problem for the last Government, and the problem that the Opposition have now, is that they never found a solution to privatisation of the Post Office that did not involve breaking it up—and breaking it up, and making a split with counters, provides no viable solution, even under the measures that they have proposed.

The Bill is good news for the whole Post Office, including the counters network. The introduction of access criteria is a positive advantage for the network. However, we need to deal again with the issues that were raised in the debate about whether or not the network is condemned to decline. I thought that the hon. Member for West Dorset (Mr. Letwin)—perhaps I can ruin his career as well—made a good speech, which should have been a speech from the Front Bench. If the argument is just about timing, all the scare stories that are going around will be removed.

On the position in relation to the Post Office Counters network, Conservative Members cannot continue to say that they have found a solution through the benefit payments card. By the time we came to office, that solution was already curling at the edges. They had to reconfigure it themselves before we even came to office. We found a private finance initiative where the financier was the same as the developer. The project had overrun by three years and was vastly overspent. As the Select Committee on Trade and Industry has rightly said, it was blighted from the start.

We had a choice. One was to continue to watch decline turn to crisis and crisis turn to collapse, leaving it as someone's else problem down the road. The network has shrunk by 20 per cent. in 20 years. Under the previous Government between 1990 and 1997, 10 per cent. of the rural network closed. It was gradually seeping away.

There is no question that any responsible Government would fail to recognise, first, that people were going to move to ACT as a safe, secure system of paying people's benefits; and secondly, that it needed to be planned on the back of an automated Post Office network, which is what the Horizon platform is all about.

I understand the concerns that have been expressed by sub-postmasters, sub-postmistresses and their communities. We understand that fully. We ask: where is the winning post? If it is a Government commitment to a national Post Office network, we have given it. If it is a Government commitment to modernise that network, we have given it. If it is a Government commitment on choice—the general secretary of the National Federation of Sub-Postmasters, a very astute trade union leader, said: All we are asking for is choice"— the choice is there. We will ensure that anyone who wishes to draw their payments in cash across the post office counter will continue to be able to do so. We will not force people to open bank accounts. We will not dilute their benefits through bank charges and so on.

We have given those assurances, but the argument sometimes creeps in, particularly from those who are whipping up the furore that will undermine the Post Office network, in favour of the status quo—that we should force people to queue up for benefits and should not give them the option of having them paid into their bank account

Therefore, we have given all the assurances in terms of the Post Office network. We admit that, at this stage, not every answer is in place. That is why the migration will not be completed until 2005. That is why we have said that we will approach the issue through a performance and innovation unit study that was commissioned last year, which will look at the whole network and its contribution to the Government's aims and objectives.

Photo of Alan Johnson Alan Johnson Parliamentary Under-Secretary (Department of Trade and Industry)

No, I do not have time to give way.

By having the debate and by putting a spotlight on the Post Office network, we have demonstrated for probably the first time that the Post Office network is under-utilised and not properly promoted. There are enormous opportunities in the network. A trial is being operated in Cornwall, where 270 rural post offices provide banking services for Barclays. We are putting bank machines into rural post offices, an initiative which has been greatly welcomed by the local communities. Yes, people do draw from their accounts and then go into the post office and spend their money.

Photo of Angela Browning Angela Browning Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

Will the Minister clarify what he means by "we" when he says, "We are putting bank machines into post offices"? We have a clear written answer that says it is not "we"—the Government; it is a commercial transaction between banks and post offices.

Photo of Alan Johnson Alan Johnson Parliamentary Under-Secretary (Department of Trade and Industry)

The fact that I spent 30 years in the Post Office makes me talk about it in that sense, but the Government are encouraging the Post Office. We sit with the National Federation of Sub-Postmasters and with the Post Office on the Horizon working group to find ways, in partnership, of utilising that invaluable, crucial network.

Many other opportunities are available. We have the opportunity, in modernising government, to make the Post Office network the gateway for on-line services by 2008. We also have the opportunity to reintroduce banking into rural areas that lost their banks many years ago. As I said, the Post Office network will not be well served by opposing Second Reading. It is crucial that the Bill should be passed to underpin the Post Office network.

I should like to reply to a couple of the speeches that have been made in the debate. The hon. Member for Tiverton and Honiton asked about the Post Office's ability to borrow—which she described as a hidden subsidy—from the national loans fund. It is not a subsidy. As the White Paper made clear, the Post Office will be charged commercial rates by the national loans fund. Moreover, if we had allowed the Post Office to borrow commercially on the open market, lenders might have expected the Government to act as lender of last resort or as the guarantor of loans. We are therefore ensuring a level playing field in borrowing.

The hon. Lady also mentioned the £5 billion indebtedness limit. The British Telecommunications Act 1981 introduced a £1.7 billion indebtedness limit. We have merely brought up to date that figure and included it in legislation that is meant to last for many years.

I do not have time to reply to the many effective and eloquent speeches made by Labour Members or to the speeches made by Opposition Members, but I should like to mention the maiden speech of the hon. Member for Ceredigion (Mr. Thomas). The other week, we had a mouse in the Chamber. Today, thanks to his speech, the House was treated to a description of a bottle-nosed porpoise. He also painted a very vivid picture of his constituency.

As it was the hon. Gentleman's maiden speech, I shall respond very quickly to the three issues that he raised. He asked whether the £1 monopoly would be safe. The £ 1 monopoly will be there as long as it protects universal service at a uniform tariff, which we believe should be low enough to protect competition while protecting that very important principle.

The hon. Gentleman asked whether we are trying to privatise by the back door. The answer is no. He asked whether there should be a Welsh council, separate from the consumer council, for postal services. There is a national postal service and we need one consumers representative with regional and country committees spread around the United Kingdom. The hon. Gentleman made a very important contribution to the debate and an eloquent maiden speech.

I should also reply to the very important point made by my hon. Friend the Member for Ochil (Mr. O'Neill), who is the Chairman of the Trade and Industry Select Committee, on the sale of shares in relevant subsidiaries. The Bill will protect the universal service part of the Post Office—Parcelforce, Royal Mail and Post Office Counters—from any future share sales without the matter requiring primary legislation. We do not think that such provision is necessary for Post Office subsidiaries—such as German Parcel, which the Post Office only recently purchased. We are therefore saying that there is a clear difference between the main, universal Post Office services and the Post Office's subsidiaries, such as German Parcel.

This has been a good debate. We are modernising the Post Office. It was a Labour Government who, in 1969, took the Post Office out of the civil service and made it a public corporation. We are now modernising it so that it is able to face the new challenges of the 21st century.

We can be proud of the United Kingdom Post Office. We have provided the blueprint for postal services around the world. The Bill will preserve those cherished services while ensuring that a publicly owned Post Office is able to compete effectively in the communications market of the 21st century.

Question put, That the amendment be made:—

The House divided: Ayes 115, Noes 374.

Division No. 74][9.59 pm
Ainsworth, Peter (E Surrey)Howard, Rt Hon Michael
Amess, DavidHunter, Andrew
Ancram, Rt Hon MichaelJack, Rt Hon Michael
Arbuthnot, Rt Hon JamesJackson, Robert (Wantage)
Atkinson, David (Bour'mth E)Jenkin, Bernard
Baldry, TonyJohnson Smith, Rt Hon Sir Geoffrey
Beggs, Roy
Bercow, JohnKey, Robert
Beresford, Sir PaulKing, Rt Hon Tom (Bridgwater)
Blunt, CrispinKirkbride, Miss Julie
Body, Sir RichardLaing, Mrs Eleanor
Bottomley, Peter (Worthing W)Lait, Mrs Jacqui
Brady, GrahamLansley, Andrew
Brazier, JulianLetwin, Oliver
Brooke, Rt Hon PeterLidington, David
Browning, Mrs AngelaLilley, Rt Hon Peter
Burns, SimonLloyd, Rt Hon Sir Peter (Fareham)
Butterfill, JohnLoughton, Tim
Cash, WilliamLuff, Peter
Chope, ChristopherMacGregor, Rt Hon John
Clappison, JamesMcIntosh, Miss Anne
Clark, Dr Michael (Rayleigh)MacKay, Rt Hon Andrew
Clarke, Rt Hon Kenneth (Rushcliffe)McLoughlin, Patrick
Maples, John
Clifton—Brown, GeoffreyMaude, Rt Hon Francis
Collins, TimMawhinney, Rt Hon Sir Brian
Colvin, MichaelMay, Mrs Theresa
Cran, JamesMoss, Malcolm
Curry, Rt Hon DavidNorman, Archie
Davies, Quentin (Grantham)O'Brien, Stephen (Eddisbury)
Davis, Rt Hon David (Haltemprice)Page, Richard
Dorrell, Rt Hon StephenPaice, James
Duncan, AlanPaterson, Owen
Evans, NigelPortillo, Rt Hon Michael
Fallon, MichaelRandall, John
Forth, Rt Hon EricRedwood, Rt Hon John
Fox, Dr LiamRobertson, Laurence
Fraser, ChristopherRoe, Mrs Marion (Broxbourne)
Gale, RogerRuffley, David
Garnier, EdwardSt Aubyn, Nick
Gibb, NickSayeed, Jonathan
Gill, ChristopherShephard, Rt Hon Mrs Gillian
Gillan, Mrs CherylShepherd, Richard
Gray, JamesSimpson, Keith (Mid-Norfolk)
Greenway, JohnSoames, Nicholas
Hamilton, Rt Hon Sir ArchieSpicer, Sir Michael
Hammond, PhilipSpring, Richard
Hawkins, NickSteen, Anthony
Heald, OliverStreeter, Gary
Heathcoat—Amory, Rt Hon DavidSwayne, Desmond
Hogg, Rt Hon DouglasSyms, Robert
Horam, JohnTaylor, Ian (Esher & Walton)
Taylor, Sir TeddyWiddecombe, Rt Hon Miss Ann
Townend, JohnWilkinson, John
Tredinnick, DavidWilshire, David
Tyrie, AndrewYeo, Tim
Viggers, PeterYoung, Rt Hon Sir George
Wardle, CharlesTellers for the Ayes:
Waterson, NigelMr. Peter Atkinson and
Whitney, Sir RaymondMr. Stephen Day.
Abbott, Ms DianeClark, Rt Hon Dr David (S Shields)
Ainger, NickClark, Dr Lynda (Edinburgh Pentlands)
Ainsworth, Robert (Covtry NE)
Alexander, DouglasClark, Paul (Gillingham)
Allan, RichardClarke, Rt Hon Tom (Coatbridge)
Allen, GrahamClarke, Tony (Northampton S)
Anderson, Donald (Swansea E)Clelland, David
Armstrong, Rt Hon Ms HilaryCoaker, Vernon
Ashdown, Rt Hon PaddyCoffey, Ms Ann
Ashton, JoeCohen, Harry
Atherton, Ms CandyColeman, Iain
Atkins, CharlotteColman, Tony
Austin, JohnConnarty, Michael
Baker, NormanCook, Frank (Stockton N)
Ballard, JackieCook, Rt Hon Robin (Livingston)
Banks, TonyCorbett, Robin
Barnes, HarryCotter, Brian
Barron, KevinCousins, Jim
Battle, JohnCox, Tom
Bayley, HughCranston, Ross
Beard, NigelCrausby, David
Beckett, Rt Hon Mrs MargaretCryer, Mrs Ann (Keighley)
Berth, Rt Hon A JCryer, John (Hornchurch)
Bell, Martin (Tatton)Cummings, John
Benn, Hilary (Leeds C)Cunningham, Rt Hon Dr Jack (Copeland)
Benn, Rt Hon Tony (Chesterfield)
Bennett, Andrew FCunningham, Jim (Cov"try S)
Benton, JoeCurtis-Thomas, Mrs Claire
Bermingham, GeraldDalyell, Tam
Berry, RogerDarvill, Keith
Best, HaroldDavey, Edward (Kingston)
Blackman, LizDavey, Valerie (Bristol W)
Blears, Ms HazelDavidson, Ian
Blizzard, BobDavies, Rt Hon Denzil (Llanelli)
Boateng, Rt Hon PaulDavies, Geraint (Croydon C)
Borrow, DavidDavis, Rt Hon Terry (B'ham Hodge H)
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)Dawson, Hilton
Bradshaw, BenDenham, John
Brake, TomDismore, Andrew
Brand, Dr PeterDobbin, Jim
Breed, ColinDonohoe, Brian H
Brinton, Mrs HelenDoran, Frank
Brown, Russell (Dumfries)Dowd, Jim
Browne, DesmondDrew, David
Bruce, Malcolm (Gordon)Dunwoody, Mrs Gwyneth
Buck, Ms KarenEagle, Angela (Wallasey)
Burden, RichardEagle, Maria (L'pool Garston)
Burgon, ColinEdwards, Huw
Burnett, JohnEfford, Clive
Burstow, PaulEllman, Mrs Louise
Butler, Mrs ChristineEnnis, Jeff
Byers, Rt Hon StephenEtherington, Bill
Campbell, Alan (Tynemouth)Fearn, Ronnie
Campbell, Mrs Anne (C'bridge)Field, Rt Hon Frank
Campbell, Ronnie (Blyth V)Fisher, Mark
Campbell—Savours, DaleFitzpatrick, Jim
Cann, JamieFitzsimons, Lorna
Caplin, IvorFlint, Caroline
Casale, RogerFlynn, Paul
Caton, MartinFoster, Don (Bath)
Cawsey, IanFoster, Michael J (Worcester)
Chapman, Ben (Wirral S)Foulkes, George
Chidgey, DavidFyfe, Maria
Clapham, MichaelGalbraith, Sam
Galloway, GeorgeLepper, David
Gapes, MikeLeslie, Christopher
Gardiner, BarryLevitt, Tom
George, Andrew (St Ives)Lewis, Ivan (Bury S)
Gibson, Dr IanLewis, Terry (Worsley)
Gilroy, Mrs LindaLiddell, Rt Hon Mrs Helen
Godman, Dr Norman ALivsey, Richard
Goggins, PaulLlwyd, Elfyn
Golding, Mrs LlinLove, Andrew
Gordon, Mrs EileenMcAvoy, Thomas
Griffiths, Jane (Reading E)McCartney, Rt Hon Ian (Makerfield)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)McDonagh, Siobhain
Grocott, BruceMacdonald, Calum
Grogan, JohnMcDonnell, John
Gunnell, JohnMcFall, John
Hall, Mike (Weaver Vale)McGuire, Mrs Anne
Hall, Patrick (Bedford)McIsaac, Shona
Hamilton, Fabian (Leeds NE)McKenna, Mrs Rosemary
Hancock, MikeMackinlay, Andrew
Hanson, DavidMaclennan, Rt Hon Robert
Harman, Rt Hon Ms HarrietMcNamara, Kevin
Harris, Dr EvanMcNulty, Tony
Harvey, NickMacShane, Denis
Healey, JohnMactaggart, Fiona
Heath, David (Somerton & Frome)McWalter, Tony
Henderson, Doug (Newcastle N)McWilliam, John
Hepburn, StephenMahon, Mrs Alice
Heppell, JohnMallaber, Judy
Hesford, StephenMarsden, Gordon (Blackpool S)
Hewitt, Ms PatriciaMarsden, Paul (Shrewsbury)
Hill, KeithMarshall, David (Shettleston)
Hinchliffe, DavidMarshall, Jim (Leicester S)
Hoey, KateMarshall—Andrews, Robert
Hood, JimmyMartlew, Eric
Hope, PhilMaxton, John
Hopkins, KelvinMeacher, Rt Hon Michael
Howarth, George (Knowsley N)Merron, Gillian
Howells, Dr KimMichie, Bill (Shef"ld Heeley)
Hoyle, LindsayMichie, Mrs Ray (Argyll & Bute)
Hughes, Ms Beverley (Stretford)Milburn, Rt Hon Alan
Hughes, Kevin (Doncaster N)Miller, Andrew
Hughes, Simon (Southwark N)Mitchell, Austin
Humble, Mrs JoanMoffatt, Laura
Hurst, AlanMoonie, Dr Lewis
Hutton, JohnMoore, Michael
Iddon, Dr BrianMoran, Ms Margaret
Illsley, EricMorgan, Alasdair (Galloway)
Jackson, Helen (Hillsborough)Morgan, Ms Julie (Cardiff N)
Jamieson, DavidMorley, Elliot
Jenkins, BrianMorris, Rt Hon Ms Estelle (B'ham Yardley)
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie (Welwyn Hatfield)Morris, Rt Hon Sir John (Aberavon)
Jones, Rt Hon Barry (Alyn)Mountford, Kali
Jones, Mrs Fiona (Newark)Mudie, George
Jones, Helen (Warrington N)Mullin, Chris
Jones, Ms Jenny (Wolverh'ton SW)Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Jones, Jon Owen (Cardiff C)Naysmith, Dr Doug
Jones, Dr Lynne (Selly Oak)Oaten, Mark
Jones, Martyn (Clwyd S)O'Brien, Bill (Normanton)
Jowell, Rt Hon Ms TessaO'Brien, Mike (N Warks)
Keeble, Ms SallyO'Hara, Eddie
Keen, Alan (Feltham & Heston)O'Neill, Martin
Kemp, FraserÖpik, Lembit
Kennedy, Rt Hon Charles (Ross Skye & Inverness W)Organ, Mrs Diana
Pearson, Ian
Kennedy, Jane (Wavertree)Pendry, Tom
Kidney, DavidPerham, Ms Linda
Kilfoyle, PeterPickthall, Colin
King, Andy (Rugby & Kenilworth)Pike, Peter L
Kirkwood, ArchyPlaskitt, James
Kumar, Dr AshokPollard, Kerry
Ladyman, Dr StephenPond, Chris
Laxton, BobPope, Greg
Pound, StephenStewart, Ian (Eccles)
Powell, Sir RaymondStinchcombe, Paul
Prentice, Ms Bridget (Lewisham E)Stoate, Dr Howard
Prentice, Gordon (Pendle)Stunell, Andrew
Primarolo, DawnSutcliffe, Gerry
Prosser, GwynTaylor, Rt Hon Mrs Ann (Dewsbury)
Purchase, Ken
Quin, Rt Hon Ms JoyceTaylor, Ms Dari (Stockton S)
Quinn, LawrieTaylor, David (NW Leics)
Radice, Rt Hon GilesTaylor, Matthew (Truro)
Rammell, BillTemple—Morris, Peter
Rapson, SydThomas, Gareth (Clwyd W)
Raynsford, NickThomas, Gareth R (Harrow W)
Reed, Andrew (Loughborough)Thomas, Simon (Ceredigion)
Reid, Rt Hon Dr John (Hamilton N)Timms, Stephen
Rendel, DavidTipping, Paddy
Robinson, Geoffrey (Cov"try NW)Todd, Mark
Roche, Mrs BarbaraTonge, Dr Jenny
Rogers, AllanTrickett, Jon
Rooker, Rt Hon JeffTruswell, Paul
Rooney, TerryTurner, Dennis (Wolverh'ton SE)
Ross, Ernie (Dundee W)Turner, Dr Desmond (Kemptown)
Rowlands, TedTurner, Dr George (NW Norfolk)
Roy, FrankTurner, Neil (Wigan)
Ruane, ChrisTwigg, Derek (Halton)
Ruddock, JoanTwigg, Stephen (Enfield)
Russell, Bob (Colchester)Tyler, Paul
Russell, Ms Christine (Chester)Tynan, Bill
Sanders, AdrianVis, Dr Rudi
Sarwar, MohammadWalley, Ms Joan
Savidge, MalcolmWard, Ms Claire
Sawford, PhilWatts, David
Sedgemore, BrianWebb, Steve
Shaw, JonathanWelsh, Andrew
Sheerman, BarryWhitehead, Dr Alan
Sheldon, Rt Hon RobertWicks, Malcolm
Shipley, Ms DebraWigley, Rt Hon Dafydd
Simpson, Alan (Nottingham S)Williams, Rt Hon Alan (Swansea W)
Singh, Marsha
Skinner, DennisWilliams, Alan W (E Carmarthen)
Smith, Rt Hon Andrew (Oxford E)Williams, Mrs Betty (Conwy)
Smith, Angela (Basildon)Willis, Phil
Smith, Miss Geraldine (Morecambe & Lunesdale)Wills, Michael
Winnick, David
Smith, Jacqui (Redditch)Winterton, Ms Rosie (Doncaster C)
Smith, John (Glamorgan)Wise, Audrey
Smith, Sir Robert (W Ab'd"ns)Woodward, Shaun
Snape, PeterWoolas, Phil
Southworth, Ms HelenWright, Anthony D (Gt Yarmouth)
Squire, Ms RachelWright, Dr Tony (Cannock)
Starkey, Dr Phyllis
Steinberg, GerryTellers for the Noes:
Stevenson, GeorgeMr. Don Touhig and
Stewart, David (Inverness E)Mr. Clive Betts.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading):—

The House divided: Ayes 331, Noes 155.

Division No. 75][10.15 pm
Abbott, Ms DianeAustin, John
Ainger, NickBanks, Tony
Ainsworth, Robert (Cov'try NE)Barnes, Harry
Alexander, DouglasBarron, Kevin
Allen, GrahamBattle, John
Anderson, Donald (Swansea E)Bayley, Hugh
Anderson, Janet (Rossendale)Beard, Nigel
Armstrong, Rt Hon Ms HilaryBeckett, Rt Hon Mrs Margaret
Ashton, JoeBenn, Hilary (Leeds C)
Atherton, Ms CandyBenn, Rt Hon Tony (Chesterfield)
Atkins, CharlotteBennett, Andrew F
Benton, JoeEagle, Angela (Wallasey)
Bermingham, GeraldEagle, Maria (L'pool Garston)
Berry, RogerEdwards, Huw
Best, HaroldEfford, Clive
Blackman, LizEllman, Mrs Louise
Blears, Ms HazelEnnis, Jeff
Blizzard, BobEtherington, Bill
Boateng, Rt Hon PaulField, Rt Hon Frank
Borrow, DavidFisher, Mark
Bradley, Keith (Withington)Fitzpatrick, Jim
Bradley, Peter (The Wrekin)Fitzsimons, Lorna
Bradshaw, BenFlint, Caroline
Brinton, Mrs HelenFlynn, Paul
Brown, Russell (Dumfries)Foster, Michael J (Worcester)
Browne, DesmondFoulkes, George
Buck, Ms KarenFyfe, Maria
Burden, RichardGalbraith, Sam
Burgon, ColinGalloway, George
Butler, Mrs ChristineGapes, Mike
Byers, Rt Hon StephenGardiner, Barry
Campbell, Alan (Tynemouth)Gibson, Dr Ian
Campbell, Mrs Anne (C'bridge)Gilroy, Mrs Linda
Campbell, Ronnie (Blyth V)Godman, Dr Norman A
Campbell—Savours, DaleGoggins, Paul
Cann, JamieGolding, Mrs Llin
Caplin, IvorGordon, Mrs Eileen
Casale, RogerGriffiths, Jane (Reading E)
Caton, MartinGriffiths, Nigel (Edinburgh S)
Cawsey, IanGriffiths, Win (Bridend)
Chapman, Ben (Wirral S)Grocott, Bruce
Clapham, MichaelGrogan, John
Clark, Rt Hon Dr David (S Shields)Gunnell, John
Clark, Dr Lynda (Edinburgh Pentlands)Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Clark, Paul (Gillingham)Hamilton, Fabian (Leeds NE)
Clarke, Charles (Norwich S)Hanson, David
Clarke, Rt Hon Tom (Coatbridge)Harman, Rt Hon Ms Harriet
Clarke, Tony (Northampton S)Healey, John
Clelland, DavidHenderson, Doug (Newcastle N)
Coaker, VernonHepburn, Stephen
Coffey, Ms AnnHeppell, John
Cohen, HarryHesford, Stephen
Coleman, IainHewitt, Ms Patricia
Colman, TonyHill, Keith
Connarty, MichaelHinchliffe, David
Cook, Frank (Stockton N)Hoey, Kate
Cook, Rt Hon Robin (Livingston)Hood, Jimmy
Corbett, RobinHope, Phil
Cousins, JimHopkins, Kelvin
Cox, TomHowarth, George (Knowsley N)
Cranston, RossHowells, Dr Kim
Crausby, DavidHoyle, Lindsay
Cryer, Mrs Ann (Keighley)Hughes, Ms Beverley (Stretford)
Cryer, John (Hornchurch)Hughes, Kevin (Doncaster N)
Cummings, JohnHumble, Mrs Joan
Cunningham, Rt Hon Dr Jack (Copeland)Hurst, Alan
Hutton, John
Cunningham, Jim (Cov"try S)Iddon, Dr Brian
Curtis—Thomas, Mrs ClaireIllsley, Eric
Dalyell, TamJackson, Helen (Hillsborough)
Darvill, KeithJamieson, David
Davey, Valerie (Bristol W)Jenkins, Brian
Davidson, IanJohnson, Alan (Hull W & Hessle)
Davies, Rt Hon Denzil (Llanelli)Johnson, Miss Melanie (Welwyn Hatfield)
Davies, Geraint (Croydon C)
Davis, Rt Hon Terry (B'ham Hodge H)Jones, Rt Hon Barry (Alyn)
Jones, Mrs Fiona (Newark)
Dawson, HiltonJones, Helen (Warrington N)
Denham, JohnJones, Ms Jenny (Wolverh'ton SW)
Dismore, Andrew
Dobbin, JimJones, Jon Owen (Cardiff C)
Donohoe, Brian HJones, Dr Lynne (Selly Oak)
Doran, FrankJones, Martyn (Clwyd S)
Dowd, JimJowell, Rt Hon Ms Tessa
Drew, DavidKeeble, Ms Sally
Dunwoody, Mrs GwynethKeen, Alan (Feltham & Heston)
Kemp, FraserPound, Stephen
Kennedy, Jane (Wavertree)Powell, Sir Raymond
Kidney, DavidPrentice, Ms Bridget (Lewisham E)
Kilfoyle, PeterPrentice, Gordon (Pendle)
King, Andy (Rugby & Kenilworth)Primarolo, Dawn
Kumar, Dr AshokProsser, Gwyn
Ladyman, Dr StephenPurchase, Ken
Laxton, BobQuin, Rt Hon Ms Joyce
Lepper, DavidQuinn, Lawrie
Leslie, ChristopherRadice, Rt Hon Giles
Levitt, TomRammell, Bill
Lewis, Ivan (Bury S)Rapson, Syd
Lewis, Terry (Worsley)Raynsford, Nick
Liddell, Rt Hon Mrs HelenReed, Andrew (Loughborough)
Love, AndrewReid, Rt Hon Dr John (Hamilton N)
McAvoy, ThomasRobinson, Geoffrey (Cov'try NW)
McCartney, Rt Hon Ian (Makerfield)Roche, Mrs Barbara
Rogers, Allan
McDonagh, SiobhainRooker, Rt Hon Jeff
Macdonald, CalumRooney, Terry
McDonnell, JohnRoss, Ernie (Dundee W)
McFall, JohnRowlands, Ted
McGuire, Mrs AnneRoy, Frank
McIsaac, ShonaRuane, Chris
McKenna, Mrs RosemaryRuddock, Joan
Mackinlay, AndrewRussell, Ms Christine (Chester)
McNamara, KevinSalter, Martin
McNulty, TonySarwar, Mohammad
MacShane, DenisSavidge, Malcolm
Mactaggart, FionaSawford, Phil
McWalter, TonySedgemore, Brian
McWilliam, JohnShaw, Jonathan
Mahon, Mrs AliceSheerman, Barry
Mallaber, JudySheldon, Rt Hon Robert
Marsden, Gordon (Blackpool S)Shipley, Ms Debra
Marsden, Paul (Shrewsbury)Simpson, Alan (Nottingham S)
Marshall, David (Shettleston)Singh, Marsha
Marshall, Jim (Leicester S)Skinner, Dennis
Marshall—Andrews, RobertSmith, Rt Hon Andrew (Oxford E)
Martlew, EricSmith, Angela (Basildon)
Maxton, JohnSmith, Miss Geraldine (Morecambe & Lunesdale)
Meacher, Rt Hon Michael
Merron, GillianSmith, Jacqui (Redditch)
Michie, Bill (Shef"ld Heeley)Smith, John (Glamorgan)
Milburn, Rt Hon AlanSnape, Peter
Miller, AndrewSouthworth, Ms Helen
Mitchell, AustinSquire, Ms Rachel
Moffatt, LauraStarkey, Dr Phyllis
Moonie, Dr LewisSteinberg, Gerry
Moran, Ms MargaretStevenson, George
Morgan, Ms Julie (Cardiff N)Stewart, David (Inverness E)
Morley, ElliotStewart, Ian (Eccles)
Morris, Rt Hon Ms Estelte (B'ham Yardley)Stinchcombe, Paul
Stoate, Dr Howard
Morris, Rt Hon Sir John (Aberavon)Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann (Dewsbury)
Mountford, Kali
Mudie, GeorgeTaylor, Ms Dari (Stockton S)
Mullin, ChrisTaylor, David (NW Leics)
Murphy, Denis (Wansbeck)Temple—Morris, Peter
Murphy, Jim (Eastwood)Thomas, Gareth (Clwyd W)
Naysmith, Dr DougThomas, Gareth R (Harrow W)
O'Brien, Bill (Normanton)Timms, Stephen
O'Brien, Mike (N Warks)Tipping, Paddy
O'Hara, EddieTodd, Mark
O'Neill, MartinTrickett, Jon
Organ, Mrs DianaTruswell, Paul
Pearson, IanTurner, Dennis (Wolverh'ton SE)
Pendry, TomTurner, Dr Desmond (Kemptown)
Perham, Ms LindaTurner, Dr George (NW Norfolk)
Pickthall, ColinTurner, Neil (Wigan)
Pike, Peter LTwigg, Derek (Halton)
Plaskitt, JamesTwigg, Stephen (Enfield)
Pollard, KerryTynan, Bill
Pond, ChrisVis, Dr Rudi
Pope, GregWalley, Ms Joan
Ward, Ms ClaireWinterton, Ms Rosie (Doncaster C)
Watts, DavidWise, Audrey
Whitehead, Dr AlanWoodward, Shaun
Wicks, MalcolmWoolas, Phil
Williams, Rt Hon Alan (Swansea W)Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Williams, Alan W (E Carmarthen)
Williams, Mrs Betty (Conwy)Tellers for the Ayes:
Wills, MichaelMr. Clive Belts and
Winnick, DavidMr. Don Touhig.
Allan, RichardGray, James
Amess, DavidGreenway, John
Ancram, Rt Hon MichaelHamilton, Rt Hon Sir Archie
Arbuthnot, Rt Hon JamesHammond, Philip
Ashdown, Rt Hon PaddyHancock, Mike
Baker, NormanHarris, Dr Evan
Baldly, TonyHarvey, Nick
Ballard, JackieHawkins, Nick
Beggs, RoyHeald, Oliver
Beith, Rt Hon A JHeath, David (Somerton & Frome)
Bell, Martin (Tatton)Hogg, Rt Hon Douglas
Bercow, JohnHoram, John
Beresford, Sir PaulHoward, Rt Hon Michael
Blunt, CrispinHughes, Simon (Southwark N)
Body, Sir RichardHunter, Andrew
Bottomley, Peter (Worthing W)Jack, Rt Hon Michael
Brady, GrahamJackson, Robert (Wantage)
Brake, TomJenkin, Bernard
Brand, Dr PeterJohnson Smith, Rt Hon Sir Geoffrey
Brazier, Julian
Breed, ColinKennedy, Rt Hon Charles (Ross Skye & Inverness W)
Brooke, Rt Hon Peter
Browning, Mrs AngelaKey, Robert
Bruce, Malcolm (Gordon)King, Rt Hon Tom (Bridgwater)
Burnett, JohnKirkbride, Miss Julie
Burns, SimonKirkwood, Archy
Burstow, PaulLaing, Mrs Eleanor
Butterfill, JohnLait, Mrs Jacqui
Cash, WilliamLansley, Andrew
Chidgey, DavidLetwin, Oliver
Chope, ChristopherLidington, David
Clappison, JamesLivsey, Richard
Clark, Dr Michael (Rayleigh)Lloyd, Rt Hon Sir Peter (Fareham)
Clarke, Rt Hon Kenneth (Rushcliffe)Llwyd, Elfyn
Loughton, Tim
Clifton—Brown, GeoffreyLuff, Peter
Collins, TimMacGregor, Rt Hon John
Colvin, MichaelMcIntosh, Miss Anne
Cotter, BrianMacKay, Rt Hon Andrew
Cran, JamesMaclennan, Rt Hon Robert
Curry, Rt Hon DavidMcLoughlin, Patrick
Davey, Edward (Kingston)Maples, John
Davies, Quentin (Grantham)Maude, Rt Hon Francis
Davis, Rt Hon David (Haltemprice)Mawhinney, Rt Hon Sir Brian
Dorrell, Rt Hon StephenMay, Mrs Theresa
Duncan, AlanMichie, Mrs Ray (Argyll & Bute)
Evans, NigelMoore, Michael
Fallon, MichaelMorgan, Alasdair (Galloway)
Fearn, RonnieMoss, Malcolm
Forth, Rt Hon EricNorman, Archie
Foster, Don (Bath)Oaten, Mark
Fox, Dr LiamO'Brien, Stephen (Eddisbury)
Fraser, ChristopherÖpik, Lembit
Garnier, EdwardPaice, James
George, Andrew (St Ives)Paterson, Owen
Gibb, NickPortillo, Rt Hon Michael
Gill, ChristopherRandall, John
Gillan, Mrs CherylRedwood, Rt Hon John
Rendel, DavidTaylor, Matthew (Truro)
Robertson, LaurenceThomas, Simon (Ceredigion)
Roe, Mrs Marion (Broxbourne)Tonge, Dr Jenny
Ross, William (E Lond'y)Townend, John
Ruffley, DavidTredinnick, David
Russell, Bob (Colchester)Tyler, Paul
St Aubyn, NickTyrie, Andrew
Sanders, AdrianWardle, Charles
Sayeed, JonathanWaterson, Nigel
Shephard, Rt Hon Mrs GillianWebb, Steve
Shepherd, RichardWelsh, Andrew
Simpson, Keith (Mid-Norfolk)Whitney, Sir Raymond
Smith, Sir Robert (W Ab'd'ns)Widdecombe, Rt Hon Miss Ann
Soames, NicholasWigley, Rt Hon Dafydd
Spicer, Sir MichaelWilkinson, John
Spring, RichardWillis, Phil
Steen, AnthonyWilshire, David
Streeter, GaryYeo, Tim
Stunell, AndrewYoung, Rt Hon Sir George
Swayne, Desmond
Syms, RobertTellers for the Noes:
Taylor, Ian (Esher & Walton)Mr. Stephen Day and
Taylor, Rt Hon John D (Strangford)Mr. Peter Atkinson.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).