Post Office Network

Part of the debate – in the House of Commons at 3:30 pm on 28th June 2000.

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Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry 3:30 pm, 28th June 2000

With permission, Madam Speaker, I wish to make a statement on the post office network. Post offices are a vital part of the fabric of our country. They serve 28 million people every week, performing a vital role in local communities, whether they be rural or urban.

However, the Post Office also faces challenges. Its traditional work needs to respond to the changing requirements of customers, to changes in society and to the opportunities arising from new technology. Last October, my right hon. Friend the Prime Minister asked the performance and innovation unit to draw up a strategy for the future of the post office network. The PIU's report is being published today. Copies are being placed in the Library of the House and will be available from the Vote Office. The Government accept all the report's 24 recommendations. Working with the Post Office and the National Federation of Sub-Postmasters, we will implement the measures proposed in full. We will back them with financial support—we will be setting aside ring-fenced funding as part of the spending review to be announced in July.

The Post Office is the largest retail network in Europe. More than nine out of 10 people live within a mile of a post office. However, for too long the post office network has been a neglected national resource. Now is the time to harness its full potential and to develop it in totally new areas.

The PIU report identifies three such areas where developments should take place, made possible only by the investment by this Government of £500 million in modern online computer systems for every one of the 18,500 post offices throughout the country. The three developments are, first, to establish a universal bank; secondly, to provide internet access and exploit e-commerce; and thirdly, an enhanced role in government services.

First, the Government are aware that our decision to move to a system of automated credit transfer between 2003 and 2005 has caused concern. However, people were already voting with their feet and choosing to have their benefits paid into their bank accounts. Today, I can guarantee that, even after the move to ACT, pensions and benefits can still be paid in cash in full at a post office if that is the choice of the individual pensioner or benefit recipient.

The universal bank outlined in the PIU report would provide the means of achieving that objective. It would ensure that all benefit recipients and pensioners, now and in the future, could continue to use post offices to receive their cash. It would be a post office-based solution, as called for by the National Federation of Sub-Postmasters.

Today in Britain, about 3.5 million adults have no bank account. The universal bank would bring those people into the banking mainstream by providing basic banking services. Customers of the universal bank would be able to get out cash at any post office and use cash machines to take out money. They would be able to set up direct debits to pay bills, enabling them to benefit from discounts on gas, electricity, telephone and other bills. That would be a real bonus to people on low incomes who, at the moment, are the unbanked.

Secondly, we want to provide internet access and to exploit e-commerce through the post office network by installing internet terminals in front of the counter and ensuring that post office staff are trained to provide assistance. Post offices also have an opportunity to market themselves as a convenient local place for people to collect goods that they have ordered over the internet. Thirdly, we want an enhanced role in government services for the post office network. Post offices have traditionally been places where people can do a range of government business, from renewing a car tax disc to getting a fishing licence. That role will be further strengthened with the PIU's recommendation that post offices become one-stop shops—general government practitioners—for advice and information on government services. We shall support pilot projects on this and on internet access.

This vision of the 21st century for the Post Office applies to the entire network. However, the PIU report also identified the particular needs of the network in urban areas and in rural communities. The rural post office network has been slowly contracting over the past 20 years; the Government are committed to ensuring that it is maintained. The importance of rural post offices cannot be underestimated. Often, they are the last remaining local shop, providing a vital service and also acting as a focal point for the local community.

The maintenance of such services is, above all, a tribute to the invaluable role of sub-postmasters and mistresses, who often provide to their communities much more than is required or expected of them. The Government have already made provision through the Postal Services Bill to provide financial assistance to post offices, where necessary. In order to protect rural post offices, the Government will place a formal requirement on the Post Office to maintain the rural network, and also to prevent any avoidable closures of rural post offices. Our commitment is clear: to maintain the rural network and prevent any avoidable closures in that network.

An unavoidable closure would be when no one was prepared to take over from a departing sub-postmaster, or where an associated retail business was no longer commercially viable. Otherwise, the network will be maintained. The PIU report recommended that the requirement to maintain the rural network should apply in the first instance for a period of six years. We accept that recommendation. During this period, the Postal Services Commission, together with the Consumer Council for Postal Services, will monitor the network, and the commission will report annually to me on the rural network.

At present, the Post Office defines a rural post office as one which covers 6,300 inhabitants. Currently, 7,500 post offices are covered by that definition. However, the Countryside Agency defines a rural post office as one serving a settlement of 10,000 or fewer people. Around 10,000 post offices would come within that definition. I am pleased to inform the House that, for the purpose of the policy of protection from avoidable closures, we shall apply the wider definition and thereby cover nearly 10,000 post offices.

It is not just in rural areas that post offices play an important community role. We want to maintain convenient access and improve the quality of post offices in our towns and cities, as well as in the countryside. Under pressure from changes in the pattern of retailing, the quality of many post offices and associated retail business has declined in urban areas over the years. We believe that the best way to address that is for the Post Office, working closely with the National Federation of Sub-Postmasters, to build bigger and more extensive offices, reversing years of underinvestment. As the PIU recommended, we will encourage them to do so.

Post offices in deprived neighbourhoods and estates have a particularly important role, often providing the basis for the only local shop. Our aim is to ensure that people in these areas, where there are few other facilities, continue to have access to high quality post offices, preferably co-located with good shops. To support that, we will set up a new fund to improve the quality of post offices in deprived urban areas, thereby better serving the needs of the local community. Uses of the fund would include installing security measures and modernising premises.

These proposals provide a significant package for guaranteeing access to post offices and enabling them to provide new services which meet the changing needs of customers. By providing financial support for these initiatives, the Government are backing a viable, sustainable future for the post office network. However, the Post Office itself needs to respond to the challenges. The PIU report shows that much more needs to be done: to maximise the commercial potential of the network; to improve efficiency; and to raise the quality of post offices.

The vision set out in the PIU report, which we support, is closely in line with that of the general secretary of the National Federation of Sub-Postmasters, with whom we have been in close dialogue. The package announced today complements the measures in the Postal Services Bill. Post offices and their customers, in all areas, will benefit from the wide range of opportunities offered by a modern online computer system in every post office and proposals to establish the universal bank, internet learning and access points and general government practitioners.

Customers in all urban areas should benefit from bigger and more expensive post offices offering a wider range of services. Those in rural areas will also benefit from the requirement to maintain the rural network. Those in inner cities and estates will benefit from measures to ensure that post offices provide good local shops which serve the community.

This announcement will ensure that people throughout the country—in rural communities and in our cities and towns—have convenient access to a post office providing quality services. It will offer the opportunities that the Post Office needs to face the future with confidence, and to build a network that can thrive rather than just survive in the 21st century. I commend the statement to the House.