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Post Office Closures

Part of the debate – in the House of Commons at 3:38 pm on 15th May 2002.

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Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 3:38 pm, 15th May 2002

I beg to move,

That this House
is deeply concerned that, with 10 months left for the transition to automatic credit transfer for the Post Office's 16 million benefit and pension customers, there is great uncertainty and confusion hanging over the network;
believes that, in the absence of new sources of income to replace the lost £400 million, many post offices will close, including a third of all urban post offices;
is alarmed by reports that new initiatives promised under the PIU Report are failing, in particular that the Your Guide programme is being downgraded and that planning of the Post Office Card Account is well behind schedule;
has little confidence that the commercial banks have the ability or motivation to meet the financial needs of many of those Post Office customers expected to migrate to the use of bank accounts;
notes that the network's problems coincide with growing losses in Consignia and the threat to its mail services and to the universal service obligation;
and calls on the Government to set out a clear policy and timetable for heading off a potentially disastrous collapse of the rural and urban network.

There have been several debates and statements in the House in the past few months on the state of the Post Office, Consignia's losses, job losses, the impact on the universal service obligation, and competition. However, I want today's debate to focus on something that, arguably, is as important, or more so: the future of the network, which comprises 18,000 sub-post offices and their 28 million customers, 16 million of whom depend on the benefit system that operates through sub-post offices.

A big national project is looming—in 10 months, there will be a changeover to the automated credit system. I do not want to be melodramatic, but the project is very big. The technical and commercial challenge is probably on the scale of metrication, or of the millennium bug. It is appropriate for the House to take stock of where the Government have got to with their planning, and of what the consequences will be.

In my business career I was taught never to predict the future but to think in terms of scenarios. I do not know whether the project will be a success or not. It could be a brilliant success, but we need to think of alternatives.

The optimistic view was set out in the performance and innovation unit report at the end of 2000. I supported it, as did most other hon. Members. It was ambitious and forward looking, and dedicated to finding alternative sources of income to make up for the £400 million that will be lost to the network as a result of the introduction of ACT. If the PIU report is implemented in full, or something approaching that, the changeover will have a relatively positive outcome.

According to a different scenario, however, that £400 million in income to the network will not be replaced. Hon. Members who are new to the House might be interested to learn that the consequences of that were set out most graphically in a parliamentary answer three years ago to the former hon. Member for Birmingham, Erdington, now Lord Corbett. He achieved what no one else, before or after, has been able to achieve: he secured a constituency breakdown of the number of post office branches, and got the Post Office—and the Government, I guess—to analyse the implications of a loss of income from the post office network of £400 million.

The overall conclusion was that there would be 40 per cent. fewer branches, but results were very skewed. Constituencies such as mine would lose very few branches, but rural constituencies—especially in Wales, Scotland, Devon and Cornwall—would lose a great many. The biggest casualties would be the urban post offices in areas predominantly represented by Labour Members. In some cases, such areas would lose between 70 and 80 per cent. of their post offices.

That was the bleak, doomsday scenario, but a lot has happened since. The PIU report has been published, and we need to take stock of where we have reached.

A problem with the PIU report, and its follow-up, is that it is rather unclear about what is happening. When the Select Committee on Trade and Industry evaluated the PIU report, it gave the rather pithy summary that "much remains unclear". Almost everything that the Select Committee found unclear—the amount of income that the Post Office will get, the way in which the Post Office card account system will be phased in, and the nature of the contract and of the technology—remains unclear and uncertain today. I shall take the Ministers present today through the various steps indicated by the PIU report, and I hope to be able to ask them questions about the matter.

The first point concerns the most interesting, ambitious and forward-looking idea—the "your guide" scheme. Under the scheme, postmasters and postmistresses would become general practitioners dispensing advice and help to customers. They would have the advantage of advanced technology. They would be properly trained and have access to a computer system that would give them local and national data, and they would help people with their transactions.

The system was tested, quite properly, by means of a pilot scheme centred on the constituency of the Secretary of State for Trade and Industry, among others. The feedback has been rather positive, and shows that some 130,000 people have used the system over the six months during which the pilot has been in operation.

In the past few days, however, I have heard a report that the "your guide" scheme is being ditched because the Treasury has pulled the plug on it. I am anxious to hear the Government's reaction to that.