Post Offices (Sutton and Cheam)

– in the House of Commons at 10:45 pm on 5th June 2000.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]

Photo of Paul Burstow Paul Burstow Shadow Spokesperson (Health) 11:13 pm, 5th June 2000

I am very pleased to have the opportunity to debate this subject. I sought the debate because sub-postmasters in my constituency have genuine concern and anxiety about their very future. I hope that some of their concerns can be aired through this debate and that the Minister will be able to go some way towards allaying them.

Like many hon. Members, I was greatly impressed by the lobby of Parliament organised by the National Federation of Sub-Postmasters on 12 April. Before the lobby, I undertook a survey of the 16 sub-post offices in my constituency, to test the pulse and see what the views and concerns were. I found a group of hard-headed, realistic business men and women who were struggling to survive and keep their businesses as going concerns. Many of them have seen the value of their assets collapse, and it is getting harder and harder for them to make a decent return on the investment and commitment that they have made to providing a postal service.

Over the past 10 years, my constituency has lost four Crown post offices, in Sutton, Cheam village, North Cheam and Worcester Park, although I concede that they were all lost during the previous Conservative Government's term in office. Fortunately, those post offices were replaced by agency post offices, but those business men and women who took on those agencies now find that the investment and commitment they put in are beginning to turn sour.

What those business men and women need, and what my constituents expect, is the Government to act to protect the sub-post office network. As things stand, the switch from pension book to credit transfer will mean that at least one in three of the 16 sub-post offices in my constituency will be under threat, because more than 40 per cent. of their business comes from work for the Benefits Agency. When the Government tabled their amendment to the Postal Services Bill earlier this year to empower the Secretary of State to introduce a subsidy scheme for the public post offices, that initiative was generally welcomed. The Government have recognised the need for some action.

The Government's acceptance that they had a role to play in securing the future of the network was welcome. I read with great interest the Minister's recent speech to the conference of the National Federation of Sub-Postmasters. It was an under-reported speech and I could find only one article in the national press that did any justice to it. I was not present, but on the subject of closures, the text of the speech read: unless we find a lasting solution that is acceptable across Government; finds favour with the Post Office; and offers your members a secure future—it won't be the last. The Minister was right when he said that and a consensus must be found that secures the network not on the basis of a narrow financial assessment, but on a wider appreciation of the social and economic value of the sub-post office network.

The national federation has described its members as the general practitioners of government. They are a one-stop shop for Government services and much potential exists for the development of that role with the expansion of e-government. However, the network is not just a group of small business men and women struggling to make an honest return; it also plays a vital role in sustaining the vitality and viability of smaller, more marginal shopping parades. The closure of sub-post offices can create a domino effect, with other businesses suffering the knock-on consequences of a loss of trade, following the demise of their local sub-post office.

I have already referred to the uncertainty felt by sub-postmasters in my constituency. It could even be described as a crisis of confidence. Only last week I learned that the sub-post office on the London road in North Cheam is due to close on 7 June. It will close its doors because the temporary sub-postmaster has resigned and nobody has expressed any interest in taking on the agency permanently. That post office provides an important service to residents in the Cheam Park Farm and Brocks estate. Its closure will leave many of my constituents, especially the elderly and disabled, with the prospect of a long walk or bus journey to the next nearest sub-post office at Stonecot Hill or the Queen Vic in the North Cheam district centre.

One of the greatest strengths of the network is its accessibility. In my constituency, the local branch of Age Concern contacted my office in the past day or so to express its concern about the closure. The Post Office retail network manager for the area, Elaine Wright, has told me that the Post Office is trying hard to restore services to the locality as soon as possible. I know that the Government are committed to convenient access to all post offices—as the Minister told the national federation at its conference in Bournemouth—and I hope that the Minister will do all that he can to ensure that the restoration of that particular sub-post office is carried through expeditiously and is seen as a top priority by the Post Office.

The closure of sub-post offices contributes to the growing financial exclusion suffered by pensioners and people in other low-income groups. The decision to press ahead with plans to pay pensions and benefits directly into bank accounts from 2003 makes the search for the lasting solution to which the Minister referred even more urgent.

Post Office network managing director Dave Miller told the National Federation of Sub-Postmasters conference that the decision to proceed with direct payments to bank accounts would take away something like a third of the income of Post Office Counters Ltd., and reduce customer visits by almost a half. Ministers have been at pains to reassure sub-postmasters that claimants would be able to draw cash out of post offices, but post offices—and Post Office Counters Ltd.—are still waiting to hear how that will happen in practice. The Minister's conference speech does not make it clear how the Government intend to proceed.

Clearly, although there is no coercion, there is undoubtedly Government encouragement for the way in which the Benefits Agency offers to pay benefits, which leads people to see automatic credit transfer as the only option available. It is important to make it clear that a choice does remain, and to show how it will be secured in the long run. People need to know that there is a choice about how they can gain access to their pensions and benefits entitlements, but it is also important to make it clear how an exclusive payments system at post offices will mean that people who cannot have or do not want bank accounts can get their money.

Sutton and Cheam is neither rural nor urban, but suburban. Its leafy image of wealth and affluence masks many pockets of deprivation. It also hides the fact that a growing number of elderly people are often asset rich—in that they own a home—but are income poor.

I said that the Minister's speech did not attract much press comment. However, The Guardian of 17 May carried a report by Patrick Wintour. Its introductory paragraph rang alarm bells for me when it stated: Tony Blair is planning to pour cash into inner-city and rural post offices to protect them from the impact of a huge loss of revenue caused by the automation of benefits payments. That might be considered to be a good introduction to an article on this matter, but it mentioned inner-city and rural post offices. The article went on to mention the Minister's speech, which I rude a point of reading in preparation for this debate.

In his speech, the Minister shared with sub-postmasters some of the highlights of the performance and innovation unit's examination of the network. It is clear that rural post offices have a place in the Government's plans, as do offices in deprived urban areas, but what about suburban post offices? Where does that network fit into the Government's plans? It did not feature in the Minister's conference speech and, given the content of the various speeches made in the House on the matter, it is not clear that that question has been addressed.

Do the Government accept that sub-post offices in my constituency, and other suburban post offices, have an important role to play and are an important part of the fabric of the local community? They need a clear and unambiguous guarantee that they will not be left out in the cold.

The Minister has talked in the past of the need for the post office network to achieve a soft landing. The previous Government's desire to privatise the Post Office meant that a better analogy would have been with the landing made by a kamikaze pilot. Under that Government's stewardship, nearly 4,500 post offices closed, but the achievement of a soft landing now will require a comprehensive and fair package that supports the whole network.

The lobby on 12 April demonstrated the strength of feeling on this matter, as the Minister recognised. Many of my constituents signed petitions organised by the sub-postmasters, and I shall be presenting 4,500 additional signatures later this week to the House. Those signatures came from customers of sub-postmasters and also from the Sutton seniors forum in my constituency. I know, from talking to members of that forum, that they feel strongly that the network must be safeguarded.

I hope, for the sake of residents in my constituency, particularly on the Brocks estate, and for many others in Sutton and Cheam, that suburban post offices will continue to feature on the Government's agenda, along with those in deprived urban areas and rural post offices. I hope that the Minister can give us some reassurance on those points.

Photo of Alan Johnson Alan Johnson Parliamentary Under-Secretary (Department of Trade and Industry) 11:25 pm, 5th June 2000

I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on securing the debate tonight. I have listened carefully to his speech, and welcome the opportunity to respond to the issues and the points that he raised. The House has not exactly been bereft of debates on the Post Office network—this is one of many to which I have responded, and I doubt whether anything that I say tonight will be fresh and new. However, it is important to emphasise the Government's position with regard to this important matter.

The concerns voiced by the hon. Gentleman centre on the future of the network and the move to the payment of benefits and pensions by automated credit transfer. He also made an important point about the suburban network, and I hope that I can give him some reassurance about that.

The future of the post office network is a matter of public concern in all communities, irrespective of whether they are urban or rural. The challenges facing the network are of interest to all of us. That was demonstrated on 12 April, with the presentation of a record-breaking petition to No. 10 Downing street, which contained more than 3 million signatures. In addition, the network has been extensively debated in the House. As the hon. Gentleman said, the focus of this concern is the progressive migration, over a two-year period, of state benefit payments to ACT as the norm.

The hon. Gentleman also made the point that the network has been declining for some years. He said that four Crown post offices were converted in his constituency. This Government, of course, placed a moratorium on Crown post office closures, so that we could have a proper appraisal of the system. I understand that an office that had been converted to sub-post office status in the high street in Sutton has now been re-converted to a branch office. That suggests that the review of the system has been fruitful. Indeed, in last year's White Paper, we said that 15 per cent. of all transactions will go through Crown post offices, so a flagship of Crown post offices will remain.

The harsh reality is that, despite its many strengths and its importance to the community, the network has not modernised sufficiently over the past 20 years to respond to, and keep pace with, social, economic and technological changes. The previous Government had a well-intentioned plan to computerise the network with the benefit payment card. It was a private finance initiative project. The key objectives of the contract were to automate the network and provide the Benefits Agency with a computerised service.

The contract was for only eight 5 years—it was never going to be a permanent solution. Shortly after we came into office, it was clear that the project had run into significant problems. By late 1997, the project was incurring substantial cost over-runs and would have come into service some three years later than planned.

We knew that we could not go on against that background. We concluded that changes had to be made, and took the tough decisions necessary to get that project back on track. Our decision was to get Horizon working as a simple public procurement, and that has been very successful. We are converting 300 offices a week. This huge network will be completely online and computerised by the spring of 2001.

The argument about ACT, as I have mentioned many times in the House, has been a constant problem. I said at the conference that the National Federation of Sub-Postmasters rallied in the early 1980s when the previous Government introduced ACT for the first time, and it rallied in the early 1990s when ACT was extended to cover other benefit payments. If we do not solve that problem, once and for all, in a way that suits the Benefits Agency, the network, the Post Office and sub-postmasters and sub-postmistresses, we will not have a lasting solution. The move to ACT is accelerating; 500,000 more people are voluntarily having benefits paid into ACT every year, and that number will grow as a new generation used to cashless pay reach pensionable age. We have to resolve that problem.

We must also ensure that the solution deals with how people access their cash once it has been transmitted by ACT. It would benefit no one if the Post Office ignored customer preferences, and the NFSP certainly does not believe that it would. The organisation is not comprised of luddites, and it has raised real concerns that we are trying to tackle constructively. The solutions that we have identified must concentrate on allowing people to access their cash in a modernised network that can thrive, rather than simply survive, clinging on by its fingernails, as has been the case for too much of the past. We need to change that for the 21st century.

The emerging vision that I unveiled at the NFSP conference contained three specific opportunities—in financial services, in e-commerce and in Government services. Important initiatives can be taken, and when the policy and innovation unit report is published shortly, I hope that that emerging vision will be one that both sides of the House can sign up to as a way forward for the Post Office.

On financial services, the Post Office has done well at developing new lines of business. Contracts with institutions including the Co-operative bank, Lloyds-TSB and, most recently, Barclays allow people to access their bank accounts through the post office network. I hope that the incentive of the Horizon automation platform, which reduces the cost to the banks of transactions made across post office counters, will encourage banks to extend that situation to cover many more accounts.

Our arrangements with the high street banks do not by any means cover the sizeable group of customers—three and a half million—who have no form of traditional bank account. We welcome the Post Office's work in developing a universal bank. In his Budget speech, my right hon. Friend the Chancellor invited the banks to work with the Post Office to offer not just a substitute distribution network, but a basic banking service to all.

A universal bank in partnership with the banks could help address the problems of financial exclusion. It would greatly reduce the number of people who do not have a bank account. More importantly, it would provide a post office-based solution, allowing a post office card to replace benefit books, allowing people to access bank accounts and pay bills—as many pensioners, particularly the elderly, like to do when they draw their pensions across post office counters. It could meet our clear pledge that, even after the move to ACT, any customer who wants to access benefits or a pension across a post office counter in cash, undiluted by bank charges, should be able to do so. The Post Office is well placed to expand its role in financial services, both in social banking and as a substitute distribution system for the high street banks.

Despite the recent boom and almost immediate gloom in the dot.com sector, there is a wide consensus that e-commerce will be a major growth area over the next few years. The Post Office must think creatively about how to take advantage of the opportunities that that offers. Many people will order goods across the internet, but will not be at home to receive them. Post offices could become places where many customers can order and pay for goods over the internet, and where they can collect the products.

On Government services, the reach of the post offices, which are ubiquitous, makes the network a major national asset. Millions of people already see post offices as places in which to do Government business. There is potential to build on. We are also looking at the role post offices may be able to play in the Government's crusade to bring internet access to all by 2005.

The Government, the Post Office and sub-postmasters will need to work with the private sector, especially the high street banks, to turn that vision into a reality. We want Post Office management to forge a strong future in diversified lines of business. Some of that has started, but there is much still to do. We want rapid movement on that matter.

The contribution of sub-postmasters, which is recognised as one of the greatest strengths of the network, could be utilised more, so that sub-postmasters continue to provide the crucial service of running shops and post offices in many areas that have few or no other facilities. The dedication of sub-postmasters will be essential if we are to unlock and build on the potential of the network.

However, we in Government also have to play our part. We are already investing £500 million to computerise the network. The issues raised in the debate highlight the range of problems of managing and maintaining a retail network of more than 18,000 post offices.

The hon. Gentleman referred to North Cheam sub-post office, which unfortunately had to close on Wednesday because the temporary sub-postmaster had resigned. I am not sure why, but I am aware that sub-postmasters and mistresses resign for a range of reasons. Sometimes they want to retire and the post office is in their private home. Many sub-postmasters and sub-postmistresses—especially the elderly ones—are resigning as computerisation comes on line. However, whatever the reason, the Post Office goes to enormous lengths to keep a service running.

I assure the hon. Gentleman that I will ensure that every effort is made in that case. I am informed by the Post Office that it is intended to restore the service in north Cheam as soon as possible. I shall certainly keep an eye on the matter.

Although the Post Office network management might not get everything right all the time, they remain strongly committed to maintaining post office counter service provision wherever possible—often with considerable ingenuity; we should not allow ourselves to forget that.

I do not know where The Guardian reporter found the information in his first paragraph about lots of cash being put into inner-city and rural post offices. We included a subsidy clause in the Postal Services Bill, because, in a measure that will remain on the statute book for a generation, it would be remiss of us not to include at least a safety net, in case subsidy was necessary. As the hon. Gentleman was kind enough to mention, that is a clear demonstration of our determination to support the network.

No one wants subsidy to be the answer; we want transactions. We want the Post Office network to be a going commercial concern. We need to ensure that business flows across the counters in order to meet that objective.

However, we are committed to protecting and modernising the rural network. The reason for the emphasis on that network and the need for post offices in socially deprived areas is that, at present, those offices are cross subsidised within the network—more heavily used offices subsidise those that are used less frequently. That has been true for many years.

The focus on rural and deprived urban areas does not mean that we are not equally committed to the rest of the network. Indeed, we believe that there could be bigger and brighter post offices in suburban areas. The NFSP accepts that many post offices are not pleasant places to visit. We could improve the accommodation; this review offers us an important focal point.

We are looking to work with the NFSP and with the Post Office to reinvent and modernise the network. We are committed to ensuring convenient access to all post offices. We are prepared to define what we mean by a nationwide network of post offices—unlike the previous Government, who talked about achieving that while closing half the network. We are looking to define what is meant by such a network through access criteria.

I set out the Government's emerging vision for the network at the conference of the National Federation of Sub-Postmasters on 16 May and the performance and innovation unit report will be published shortly. It will provide the platform for us to take the vision forward, so that we have a network equipped for the 21st century and that is able to provide a secure future for sub-post offices and the communities that rely so heavily upon them. That includes post offices in Sutton and Cheam. They provide a valuable service and are part of the social fabric of this country. This Government are pledged to protect them.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Twelve midnight.