Sub-post Offices

Part of Opposition Day – in the House of Commons at 5:56 pm on 12th April 2000.

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Photo of David Borrow David Borrow Labour, South Ribble 5:56 pm, 12th April 2000

I shall keep my remarks brief, given the significant number of Members who wish to contribute to the debate which will soon come to an end.

I recognise that the problems of the sub-post office network are part and parcel of a pattern of difficulties that small businesses have had in communities both urban and rural over the past 30 years, whether they be butchers, greengrocers, ordinary grocers or small independent petrol filling stations. Many of these small businesses that operate to serve local communities have been hit by changes in shopping and retail patterns over the past 30 years.

The decline in the sub-post office network has taken place because in many areas people now shop and spend their money in a different way. That has led to a decline in small retail outlets in small communities, whether in urban or rural areas. That is part of the long-term pattern.

In the context of sub-post offices, we are facing the problem of the introduction of automated credit transfer. We know that ACT exists and that it has had an effect on sub-post offices over the past few years by eating away at their business of providing cash benefits across the counter. As the years pass and if we do nothing, more and more people will transfer to having benefits—pensions, child benefit or whatever—paid through ACT. The 40 per cent. of income that sub-post offices now receive through the operation of the benefits system will decline naturally as people transfer to ACT, irrespective of what the Government do.

The Government's problem was: "What do we do, if we leave the system as it is, to ensure that people continue to have benefits paid through the existing old-fashioned paper system. Do we try to stop people moving to ACT? Do we try to sustain the sub-post office network in that way? Do we recognise the change that is taking place and seek to build on it, and signal"—this is what the Government have done—"that during the two years from 2003–05 there will be a move across the board to ACT, while preserving the right for people to receive cash across the counter in sub-post offices? Can we use that as a trigger for discussions with sub-post offices on alternative revenue sources that can be introduced?" I very much welcome my right hon. Friend the Secretary of State's promise of subsidies where necessary to enable the businesses to be sustained into the future.

Sub-post offices are small private businesses, often run from their homes by married couples. The fact that the business plan beyond 2003–05 is not known creates uncertainty and undermines the resale value of those businesses. The Government have encountered a dilemma in attempting to move forward. Did they wait until every nut and bolt of the new system was in place, and until every question about new revenue sources could be answered, before they made an announcement about the transfer to ACT? If so, that could have looked like a fait accompli.

Alternatively, did the Government signal that, some time in the future, most benefit payments would be transferred gradually to ACT? In the interim, some payments would continue to be paid in cash through an automated system at post offices, but the majority would be paid into bank accounts through ACT. That interim period could provide an opportunity for discussion and consultation between the post office network and Government Departments on the development of alternative sources of income. I believe that the second option is the right way to proceed.