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As the hon. Gentleman's Front-Bench colleague was generous enough to recognise, we took specific steps that were consistent with the PIU report to advance the sustainability of the rural network. That is why rural transfer advisers are working throughout the country where there is a threat to such a post office. It is also exactly why we have established the £2 million fund that I shall happily talk about later and strengthened the management as necessary to provide exactly the retailing opportunities that we need. I give greater credence to the further remarks of Colin Baker, who said:
"Talk of mass closures is scaremongering and wide of the mark".
He went on to say:
"It is wrong to criticize the industry for being out of date and in decline and then create panic when we are doing something about it".
I fear that that is exactly the sort of panic that the Liberals seek to stimulate. There may be mergers or relocations of branches as a result of the progress that is being made—that will allow sub-postmasters to invest in exactly the kind of improved services for urban areas that I mentioned—but only in urban and suburban areas that are densely populated with post offices and are experiencing duplication of services. In fact, as a serious contribution to the debate, the PIU strategy identified particular needs of the network in both rural and urban areas.
The rural post office network had been slowly contracting for the previous 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 acting as a focal point for the local community, as I said in response to the remarks made by Simon Hughes. To protect rural post offices, the Government placed a formal requirement on the Post Office to maintain the rural network and to prevent any avoidable closures of rural post offices. However, despite their best endeavours—it is important to be clear about this with the House—neither the Government nor the Post Office can guarantee that no post offices will ever close. Even the Liberal Democrats would think twice before making such a commitment. It very much depends on the local community that is using the facility and the willingness of a sub-postmaster to continue to run the business or to achieve its sale on the basis of its being a going concern.
The hon. Member for Twickenham asked about the £2 million fund to support volunteer or community initiatives, and I am happy to give him the information he seeks. I have to say that the thinking behind that scheme gave me concern, on the basis of the point raised by the hon. Member for Southwark, North and Bermondsey. The fund was established to maintain or reopen rural post office facilities. Let me give the latest figures. At the end of April this year, 88 applications had been submitted. Of those, 46 grants to a total value of £390,000 have been approved. The fund is expected to provide the impetus for maintaining or reopening up to 200 offices nationwide over a two-year period.
I point out to hon. Members that, in direct contrast to the uniformly bleak picture painted by the Liberal Democrats, over the last financial year from March 2001–02 there has been a significant and welcome reduction in the number of closures. In the year to the end of March 2002, there were 262 net closures, compared with 547 in the previous year.
The Government recognise that it is not just in rural areas that post offices play an important community role. We want to maintain convenient access and to improve the quality of post offices in our towns and cities, as well as in the countryside. Under pressure from the changes in the pattern of retailing that I described, the quality of many post offices and associated retail businesses has declined in urban areas over recent years. I am sure that that point will be well taken by many hon. Members in relation to their experience in their constituencies. We believe that the best way to address that is for the Post Office to work closely with the National Federation of Sub-Postmasters to reverse the years of underinvestment, as the PIU recommended.
The hon. Member for Twickenham asked about the urban reinvention programme. The purpose of that programme is to ensure that there are post offices equipped to offer the quality of services that customers need in the right locations to serve urban communities, where at present some two thirds of the population live within half a mile of two or more post offices. Indeed, in some areas there can be up to eight to 10 post offices within a single square mile, some located within a few hundred yards of each other.
I first inform the hon. Gentleman that the programme has not yet started. Decisions on individual offices will be based on detailed, local studies, the preferences of the sub-postmasters concerned and the outcome of consultation with Postwatch and those sub-postmasters. I should add that the programme will be carefully tailored to the circumstances of each locality to ensure that post offices meet the high expectations of customers and that they are in the right locations for their communities. Special provision to sustain and improve vulnerable offices in deprived urban areas is being made under a separate fund operated by the Department for Transport, Local Government and the Regions. Funding for the programme is subject to approval under European state aid rules and scrutiny by Parliament. Indeed, before the programme starts there will be the opportunity for Parliament to debate it.