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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

That was a very helpful intervention. I shall come a little later to what is now rather euphemistically called the urban renewal process—the urban closure process would be a more accurate description—and my hon. Friend's comments are highly germane to that.

Let us stick for the moment to the problem of banks. If large numbers of people at the bottom of the income scale move into the banking system with varying degrees of coercion, or voluntary acceptance, a lot of problems will confront them. We know from the work of the FSA and others that there are all kinds of hidden charges—for example, when people are late with direct debits. Vulnerable members of the community can confront all sorts of practical problems if they use banks, but not if they use the Post Office.

Let me take an example from my constituency experience. Two or three years ago, I dealt with a very elderly lady—she was 93 and blind—who was used to using the Post Office for most of her transactions, but who had an account with the Halifax. She sent her carer to a branch of the Halifax to collect some money for an irregular and unusual transaction. The bank staff said, "Sorry. We will only dispense money to people in person. If you are a carer, that is not satisfactory. If you produce a letter from a lawyer, we will release the money to you. Under no circumstance will we release it on any other basis."

Those letters cost £75. I fought the case with the company. I eventually dragged the Halifax through the Daily Mail and, with some reluctance and ill-grace, the chief executive gave up. There is no tradition in the banking system of helping vulnerable customers, carers and people who genuinely need help. Very large numbers of people who have been pushed—I think that the phrase is "actively managed"—into the banking system will encounter that problem over and again.

Pulling the threads together, we have been largely considering the affects on the customers, but we have to go back to the fundamental issue: income. How much income will post offices derive from the universal bank and from "your guide"? I have never heard a figure cited for how much money will come in. It could be as little as £50 million, which is the fee paid for the post office card account, but it may be more. Will the Minister tell us, at the end of the negotiations that we have had for 18 months, how much of the £400 million income will be replaced?

If the income is not replaced, or even if it is replaced in part, there will be substantial post office closures. So we now need to consider what is happening in terms of those closures. The fact is that closures have been taking place. In 2000–01, there was a record number of closures—547. The figure fell substantially last year, and the Government drew a lot of encouragement from that, although the sub-postmasters to whom I talk say, "Yeah, sure, we are not selling." They are not selling because they are expecting compensation and because they cannot find buyers. None the less, the Government may well feel justified in the short run in drawing some consolation from the promise of the PIU programme.

What is happening in terms of closures? First, the Government have given an undertaking that they will prevent rural closures, beyond those described as unavoidable. The Labour party manifesto says:

"the Post Office is now obliged to prevent closure of rural post offices except in unavoidable circumstances, with £270 million to help achieve this and recruit sub-postmasters."

The problem is that closures are still happening. Despite the Government's assurance, in the last two years, 80 per cent. of all closures have been in rural areas. There is a programme providing £2 million of help to rural post offices, and several of my colleagues have asked parliamentary questions about that. At the last count, only seven projects had been approved—perhaps the Minister will update us on that—which accounts for a tiny fraction of the £2 million sum.