Urban Post Office Reinvention Programme

– in the House of Commons at 6:30 pm on 15 October 2002.

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Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 6:30, 15 October 2002

I beg to move,

That this House
authorises the Secretary of State to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, in respect of the urban post office reinvention programme, a sum exceeding #10 million to Post Office Ltd.

The report of the performance and innovation unit on modernising the post office network was published in June 2000. It was widely welcomed in this House and outside. It included 24 recommendations, all of which the Government accepted.

A key recommendation was that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing financial assistance to the Post Office to ensure that sub-postmasters were adequately compensated for the loss of value of their business. Post Office Ltd. is now planning a three-year urban network reinvention programme. Following discussions between Post Office Ltd. and the National Federation of Sub-Postmasters, the Government announced on 3 January their agreement in principle to fund the compensation package.

In March, the Government applied to the European Commission for its approval of funding for the programme, and approval was announced on 18 September. The House is being asked today to agree the funding for that programme.

The House will want to understand why the urban post office network needsrestructuring and why the income of the post office network has declined. Thereasons date back more than 20 years, and past under-investment has been an important factor. Greater mobility and changes in shopping habits have alsosharply reduced customer numbers. The Post Office is not alone in having had to deal with these changes. Other networks, such as those of the retail banks, have been scaled back too. Post office networks in other countries have been through similar changes. I recently met Monika Wulf-Mathies, a board member of Deutsche Post and a former European Commissioner, who told me that in Germany consistent profitability has been achieved by reducing the number of post office branches from 30,000 to 13,000. Other countries have also embarked on a similar process.

Some factors have had a particularly big impact in the UK.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

There is clearly a rational case for a change in the structure of post offices. The Government have accepted it, as most people do, but the Post Office is pre-empting the process. In my area, five post offices have either been closed, temporarily closed with no signs of reopening, or their future is open to consultation with a view to closure. That is not the rational process that my hon. Friend and other Ministers promised us. It is a culling of inner-city post offices, and it is not fair to people who are less mobile or who have less access to transport, public or private, and who therefore depend on the post office.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am aware, as my hon. Friend says, that there have been closures. Indeed, closures have been happening for years. The case that I want to put is for a properly planned, properly managed process, which will protect access to the post office network in every urban area. I hope that I will be able to persuade him that that is about to commence.

Photo of Linda Gilroy Linda Gilroy Labour/Co-operative, Plymouth, Sutton

Will my hon. Friend assure the House that Postwatch and hon. Members will be properly consulted on what happens to our constituents and post office customers?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am very happy to give my hon. Friend exactly that assurance about the role of Postwatch.

Several factors have had a big impact on the post office network. Post office income has been heavily dependent on benefit payments. More than 42 per cent. of benefit recipients now access their benefit payments via bank accounts, compared with only 26 per cent. in 1996. If we compare the last financial year with five years previously, we see that the number of retirement pensions and widows benefits paid by order books and giros dropped by more than 1 million—from just over 6 million to less than 5 million—even though the total number of pension recipients rose by more than 1 million. The number of child benefits paid through giros dropped from just under 5 million to less than 4 million, and payments at a post office of incapacity benefit fell even more dramatically—from more than 2.5 million to less than 1 million.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I shall finish the point if I may.

The drop in benefit transactions at post offices, however, has not been due only to people switching to bank accounts. The number of people receiving working age benefits has fallen in total. In February 1997, 1.6 million people were claiming jobseeker's allowance. By February this year, the number had fallen to 890,000. Clearly, that is a very welcome development, but it has reduced post office income. Benefit payment has accounted for up to 40 per cent. of post office branch income in some cases.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

I accept the Minister's point that this is a longer progress, and that it goes back to the time when Conservative Governments were pursuing this course. Will he give an explicit assurance, however, that the consultation process will consider the implications not just for post office business but for other businesses alongside, which are often in the same building? If one draws a pension or a benefit at one counter, one is likely to use that money at the other counter. The viability of a great many businesses is therefore at stake, not just that of post offices.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

In a moment, I shall set out exactly how the process will work, and I think that the hon. Gentleman will receive the assurance that he seeks.

Other post office transactions have also declined.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Until I launched my post office petition in Eastbourne, many people were blissfully unaware of the changes in payments that will take place next April. Does the Minister share the concerns of, for instance, the National Federation of Sub-Postmasters, that arrangements for the so-called universal bank simply cannot be in place by April 2003?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

No. Those arrangements will be in place by April 2003. There will, of course, be a process of transition—not everybody will switch in April next year—and it will be properly planned and phased.

In the five years from March 1997 to March this year, Girobank transactions at post offices fell by 37 per cent. and postal order transactions fell by 13 per cent. There have been areas of increase, such as motor vehicle licences, lottery sales and bureau de change services, but they have only modestly offset the reductions. As a consequence, in many urban areas, there is now too little business for the number of post offices. The Post Office has the largest retail network of any organisation in Europe. It has half as many branches again as all the UK banks put together. More than 1,000 of the 9,000 urban sub-post offices have at least 10 other post offices within a mile. The volume of business through the network is simply no longer sufficient to support such a dense network. The restructuring proposed by the Post Office is intended to restore the urban network to commercial viability, restoring the confidence of sub-postmasters and making it possible to attract much-needed new investment into their post offices. The briefing circulated for this debate by the National Federation of Sub-Postmasters states:

XThere is an urgent need for re-structuring . . . Tough decisions must be made in order to ensure a viable network for the future to create bigger, better and brighter post offices."

I agree with it on that point.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

Does my hon. Friend recognise that it is not simply a question of commercial viability, given the need for that number of post offices in urban areas? The Government's social exclusion policy would take a great knock if too many post offices were closed. Will he assure me that it will not just be a few of the usual professionally engaged people who will be consulted in this process? When a local community demands that a post office stay open and other people agree that it should stay open will he assure us that the Government and the scheme will support its staying open?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

My hon. Friend makes an important point. I can assure him that there will be a very thorough process of consultation around every proposed closure and that the Post Office will take seriously the results of that consultation.

The programme that is the subject of the debate relates only to restructuring the urban network—offices located in communities of more than 10,000 inhabitants. Our stated commitment to ending avoidable closures in the rural network remains in place, and it has led to very sharp reductions in the numbers of rural post office closures. However, for each urban area, the Post Office has received indications from sub-postmasters who would like to accept the compensation and close their business. Post Office officials will visit and walk around every area and make a careful study of the configuration of the offices and of local factors, such as public transport, demographics, geography and where the hills are, to decide whether a particular office that a postmaster wishes to close can be allowed to do so. The aim will be to ensure that it is as easy and convenient as possible for customers to use other offices nearby and to maximise the amount of business from a closing office that can be captured by other offices. The programme will start with the smaller urban offices where the sub-postmasters are under the greatest pressure.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Opposition Whip (Commons)

The Minister should know that there are 15 so-called classified urban post offices in my constituency and that I can expect at least five of them to close under the new provisions. What will he say to my constituents in Chesham Bois who have seen the headline, XLast chance to save your post office" in their local newspaper? They are desperate and they have seen no sign that their representations and letters have been taken into consideration at all. What does he say to the elderly and infirm in my constituency who want to go not to a post office one mile down the road but to their local post office? I am sorry, but what he has said so far will not satisfy them.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I hope that the hon. Lady will pass on to her constituents the assurances that I am giving to the House. The programme—it has not started yet and it cannot start until the House has given its approval tonight—will not have the characteristics that she describes.

Where a sub-post office closes under the programme, the Government will meet the compensation costs—up to a total of #180 million over the next three years. An additional #30 million will be provided for modernising and adapting those offices that remain. Everyone recognises that many urban sub-post offices are much too dowdy, but the key to improving standards in them will be the increased volume of business that they can expect. However, the grants of between #5,000 and #10,000 for each office expecting to take on a significant number of additional customers—to be matched by the same sum from the sub-postmaster—will be an important boost, too. With the #30 million, this is the first time ever that a Government have undertaken a programme of investment in urban sub-post offices. It is an additional measure on top of the PIU report recommendations that we have accepted.

Several hon. Members:


Photo of David Drew David Drew Labour/Co-operative, Stroud

As usual, my hon. Friend has been very generous with his time. May I clarify the position? I know that we are talking about the urban network, but there is some confusion between an urban and a rural sub-post office, and some of the designations have not helped. The problem in my area is that, until we can get the rural subsidy sorted out, the urban programme will appear to run into it. Will he clarify when the money is likely to be forthcoming to ensure that the rural network is properly funded in the short term?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

My hon. Friend will know that we shall fund the commitment that we have given to ending avoidable rural closures. I anticipate that, in just a few weeks, we shall be able to set out exactly what the commitment will entail.

In the process of urban changes that I have described, the Post Office will generally require the receiving offices to improve their facilities and to increase their opening hours.Increasingly, we can expect sub-offices to maintain the same hours as the associated retail business that is alongside, thus greatly improving the service to customers.

Photo of Michael Weir Michael Weir Scottish National Party, Angus

Does the Minister not accept that part of the problem is that the Government have adopted a piecemeal approach? Has he read the briefing from the National Federation of Sub-Postmasters? Does he realise that there is great concern about the salary that sub-postmasters will be paid in the future, the whole mail system and the universal bank? Until those concerns are dealt with all at once, we will not resolve the problem properly. Does this programme not come too soon in the process?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I do not know whether the hon. Gentleman has read the briefing paper from the National Federation of Sub-Postmasters, but one of the points that it stresses is the urgency of getting on with things. I do not agree that there should be longer delay.

The properly managed programme that the Post Office proposes is far preferable to the alternative of unmanaged closures resulting from falling income. At the end of the programme, more than 95 per cent. of people in urban areas will still be within a mile of a post office, and the majority within half a mile. Without the programme to which the House is being asked to agree, more and more urban sub-postmasters would simply shut down, even without any prospect of compensation, causing much greater disruption to customers.

Photo of Louise Ellman Louise Ellman Labour/Co-operative, Liverpool, Riverside

What assurance can my hon. Friend give to the people in severely deprived areas in my constituency who are served by 23 post offices and sub-post offices? Does he consider that the balance of funding in the programme is reasonable between compensating sub-postmasters for closing post offices and supporting post offices to remain open?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

Yes, I do. One of the points that I shall come on to make is that my right hon. Friend the Deputy Prime Minister is developing a separate scheme—we shall announce the details shortly—to support specifically post offices in the most disadvantaged areas, the 10 per cent. most deprived urban wards. I assure my hon. Friend that I shall say more about that in a moment.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I need to make progress.

The programme will follow the code of practice that was agreed last year between Consignia and the consumer watchdog, Postwatch. For every proposed closure, merger or relocation, there will be an independent consultation process lasting at least a calendar month and extended to allow for bank holidays. The consultation will be conducted by Post Office Ltd., closely involving Postwatch, and it will include writing on day one to the local Member of Parliament. To ensure that the needs of all customers have been properly considered—the elderly, disabled people, those on low incomes and others—Post Office Ltd. will, in developing its proposals, take account of factors such as the accessibility and viability of the remaining post offices, transport links, opening hours and numbers of counter positions.

At the start of the programme, all the closures will be in response to requests from postmasters who have said that they wish their businesses to close. However, it is possible that, towards the end of the three-year programme, there may need to be a small number of involuntary, but compensated, closures to finalise the shape of the urban network.

To come to the specific point raised by my hon. Friend Mrs. Ellman, there are more than 1,800 urban sub-post offices in the United Kingdom in the 10 per cent. most disadvantaged wards in the Indices of Deprivation 2000. I want to make it clear that, other than in the most exceptional circumstances, the scope of the programme will not extend to any post offices in urban deprived areas that are more than half a mile from the next post office. Very often, they are the last retail outlet of any kind in the area. The Government intend to improve and support post offices in those areas by means of a separate scheme to provide funding for investment and improvement to post office branches that would otherwise risk closure. My right hon. Friend the Deputy Prime Minister will shortly announce full details of that. The devolved Administrations in Scotland and Wales are developing equivalent schemes. The merits of such a scheme are also being considered in Northern Ireland.

Photo of David Lepper David Lepper Labour/Co-operative, Brighton, Pavilion

Can my hon. Friend confirm whether the scheme that he describes for post offices in the most deprived areas will be funded separately from the package that we are considering? Will it extend to re-establishing post offices in those deprived areas from which they have vanished?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

That scheme will be in addition to the programme that I am describing and its funding will be separate. As I said, my right hon. Friend will set out the details shortly, but I understand that the intention is to focus on existing businesses, especially if a sub-post office has a linked retail business, and to improve the viability of the whole business.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I want to make a little progress.

Let me emphasise that there is no predetermined list of post offices that will close. No arithmetical formula is being applied to determine the number of closures in an area. Closures will be determined by the present density of offices in close proximity to each other, by current and future business volumes, by the preferences of individual proprietors—a critical consideration—and by the public consultation process that will take on every proposal.

In some cases it might be concluded that, although a sub-postmaster has said that he wants to close a post office, that is not the best option given the position and prospects of neighbouring offices. If he still wants to close the business, it will need to be on the basis of a commercial sale of the business. One consequence of the programme should be a revival of the commercial market for sub-post offices, which has declined over the past few years.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

Does that mean that the Government are reneging on their promise positively to support the role of post offices as Government general practitioners?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

No, certainly not. As I said, we accepted all 24 recommendations in the PIU report and I am making an announcement today on the XYour Guide" project. Perhaps that is what the hon. Gentleman has in mind. He may know that the project was piloted in Leicestershire and that an evaluation of it was published at the end of the summer. It concluded that XYour Guide" was popular but did not have a big impact on either increasing the number of customers using sub-post offices or generating additional income for post offices. As the cost of rolling out the initiative across the country did not represent good value for money for the Departments that would use the service, we have decided not to proceed with national implementation of XYour Guide".

The pilot highlighted the potential for Departments to deliver services through post offices in future. There is also significant commercial interest in placing kiosks in post offices. For example, a commercial service based on kiosks in retail outlets, including in some sub-post offices, is expected to be piloted in Cornwall from next year. So we can expect kiosks to appear in sub-post offices.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

The Minister may not know that XYour Guide" was piloted in my constituency among others. The big complaint was that there was no publicity. People went into the post office and there it was, which was great, but there was no publicity elsewhere. People will go to the job centre down the road rather than to XYour Guide" unless they are pointed in that direction.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

It is my impression that the project was well known in the areas of Leicestershire where the pilot was carried out. It was certainly well liked by those who were asked about it. Unfortunately, it did not meet the criteria in terms of increasing the number of people using post offices and providing good value for money for Departments. However, there will be commercial developments in the near future along the lines that I described.

Photo of Betty Williams Betty Williams Labour, Conwy

I recognise the case that my hon. Friend makes, but can he assure me that he will look into the complaints that sub-postmasters in my constituency have made to me about the complicated process and the long time that it takes to open a post office card account?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am aware of concerns about that. Card accounts will be available from the beginning of the new financial year when automated credit transfer is introduced. We have made it clear all along that people will be able to obtain their money in cash at a post office through universal banking services. They will be able to do that either with a basic bank account provided by one of the high street banks, which allows their money to be accessible at a post office, or with the post office card account. There are a number of advantages to the basic accounts operated by the banks. For example, cash can be obtained from an automated teller machine as well as at a post office. In addition, basic bank accounts will support standing orders and direct debits. However, despite the advantages of a basic bank account, those people who have decided that they want a post office card account will be able to obtain one, which I think is what concerns my hon. Friend. There will be no barrier to that. People will simply need to ring the helpline and the process will begin.

I understand sub-postmasters' assertion that the post office card account is a more attractive proposition for them because it ties people into the post office. Many people will wish to be in that position. For others, however, there will be advantages in having a basic bank account as well, and we want people to be aware of those benefits—

Several hon. Members:


Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I think I need to make a little more progress.

The compensation payable will be based on terms agreed between the Post Office and the National Federation of Sub-Postmasters. Outgoing sub-postmasters will receive a payment equivalent to 28 months of their remuneration, based on the best annual remuneration for a financial year since 1999. The scheme is based on longstanding arrangements through the joint discretionary fund. Payments are subject to certain conditions, such as a requirement that sub-postmasters at closing branches offer active support for the migration of customers to surrounding branches that remain open.

As a result of declining profitability, there has been a lack of investment in a large proportion of urban sub-post offices for many years. In parallel with the closures, the standards of facilities and service will need to be improved at many of the remaining post offices. Urban sub-postmasters who expect significantly more customers as a result of closures elsewhere will have the opportunity to apply for a grant on the basis of matched funding provided by the sub-postmaster. So the #30 million grant that the Government are making available should be matched by a broadly equivalent level of private sector investment.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Can my hon. Friend clarify how the post office card will work? Will it be passed across the counter or put into a hole in the wall?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am happy to explain that to my hon. Friend. Personal identification number pads—PIN pads—are appearing at post office counters all over the country. People will place their card in the reader, type in their PIN and have access to their cash.

Grants of up to #10,000 will be available on a matched-funding basis for new counter positions and equipment, to support open-plan or combined post office and retail positions and to provide new fascias, adaptations for disabled customers and other refurbishments to improve the branch.

Photo of Alan Meale Alan Meale Labour, Mansfield

The Minister mentioned earlier a mechanism for consultation. Will he ask Consignia to guarantee that local authorities will be fully consulted before any closure?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

My hon. Friend makes an important point, and I can give him that assurance.

The PIU report concluded that our network of post offices had not kept pace with change or, until now, exploited its highly trusted status as a provider of financial services. It was losing business. Sub-postmasters are business people, and they have found it increasingly difficult to make a living. They have been leaving the network in increasing numbers. If we do nothing, very damaging gaps will open up in the network.

The programme is therefore vital to ensure that the Post Office can maintain an effective network, offer attractive prospects to sub-postmasters and improve the service for customers. We need to take this opportunity to set urban post offices firmly on the path towards sustained viability, which is the key to enabling them to offer improved services for their customers from better, more convenient and more accessible locations.

I commend the order to the House.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

I am very conscious of the time limit on this debate and of the number of Members who hope to catch my eye. May I remind hon. Members that this debate is about urban post offices and the level of compensation available to them?

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry) 7:01, 15 October 2002

May I say how sorry I am that the Secretary of State is not here to support her Minister? This is a very important measure, and many people are concerned about it. The right hon. Lady's absence displays a certain discourtesy to her Minister and to the House. By contrast, the Minister was typically courteous and generous in giving way to so many Members during the debate. I hope that he will not think me unkind because I have some remarks about Government policy on the Post Office that he may not welcome.

The supposed main thrust of the Government's policy and the urban post office reinvention programme is to give the Post Office a sustainable future, as the Minister has just said, and it will be judged on that. Everybody in the House wants the network to survive and prosper. We all know the special place that post offices have in urban and rural communities. In villages throughout the country, in constituencies such as mine in Leicestershire and in deprived urban areas, the post office is often the only centre for meeting people and is valued as much for its community service as for its commercial activities.

Today Age Concern wrote to me and, I suspect, to everybody else, saying that

Xfor many older people the local Post Office is an important lifeline—providing a point of access to pensions and benefits as well as other financial services, a local general store, and a source of information and advice."

Each week there are still more than 15 million benefit transactions in post offices, which account for 40 per cent. of Post Office Ltd.'s income, although in many deprived urban areas the proportion is much greater.

Post Office Ltd., however, is trading at a loss; it is insolvent. The Minister failed to mention that. Consignia lost #1.1 billion last year, which is certainly an unsustainable position.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am sorry to interrupt the hon. Gentleman so early in his speech, but I need to correct the point that he just made. The Post Office is not insolvent. It is losing money, but being insolvent is a quite different matter.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

If the Post Office were a private company it would be insolvent.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I think that it would. We could argue the toss at length.

This is a very real crisis, and if Post Office Ltd. and Consignia were not supported by the Government, they would be in danger of going bankrupt. In the Minister's judgment, is it likely that the Post Office, in part or in whole, would call in the receivers if it were not backed by Government money? Could the Government allow that? What is their attitude to the current situation?

Why have Consignia and the post office network reached a position where we have to authorise the spending of #210 million of taxpayers' money today? The Government used to take a dividend from Post Office activities and the Post Office used to make a profit. Of course there were growing problems, and we sympathise with the Government about that. The previous Conservative Government recognised the problems nearly 10 years ago, but the Post Office still made a profit for the taxpayer.

Some 28 months ago the PIU reported, and we are implementing part of that report today, but why has it taken the Government so long to get their act together? The website of the Office of the Deputy Prime Minister says, under the heading XFund for Deprived Urban Post Offices", that the Government announced in the urban White Paper in November 2000 that they would establish a #5 million a year fund to sustain and improve post offices in deprived urban areas. It continues:

XIt is expected that the fund will become operational in Summer 2002."

Nearly two years on, the Minister tells us that part of the money that we are talking about today is that fund for deprived urban post offices, but when will it become operational? The temperature this morning told us all that summer is long past. Why has there been a delay?

The Minister has pointed out that the Office of the Deputy Prime Minister will have responsibility for introducing the fund. The website says:

XFurther details when available will be posted on this page."

I printed off that quote just over an hour ago. Obviously the Office of the Deputy Prime Minister needs to update its website, especially as I understand that it is meant to be about modernising e-Government. It would be funny if it were not so sad. I suggest that we may judge the likely success of the Deputy Prime Minister's measures by that out-of-date website. Page 5 of the PIU report says:

XNow is the time to modernise", but that was 28 months ago.

Photo of John Redwood John Redwood Conservative, Wokingham

Does my hon. Friend think, as I do, that the decision to expend an awful lot of money on converting the Post Office, a profitable, successful and much-loved public service, into Consignia, with all the costs that that entailed, showed that third way economics do not work? Only third way economics could turn a successful, profitable public service into a loss-making corporation in need of subsidy, and which is about to close many of its main outlets.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I am grateful to my right hon. Friend. We all recognise that Consignia is a totally ludicrous name. Allan Leighton must recognise that because I believe that the name will be changed back to Royal Mail on 4 November. This is one thing for which Labour Members cannot blame us.

The problem is not just endless delay and prevarication. Let us look at the PIU report's proposals for a sustainable future for the post office network. Some #30 million of today's money is being set aside for additional investment, which is only one sixth of the amount being spent on closures. One proposal in the report was for access to e-Government. That is a good idea, applauded by all, and for that reason, a year ago, as the Minister said, XYour Guide" was piloted in Leicestershire and elsewhere. It was welcomed and seemed to be a success, although it was insufficiently publicised. Now, however, the Minister tells us that XYour Guide" has been put in the bin. I understand that other Departments, in a classic example of Labour's joined-up government, refused to sign up to the scheme because they think that it would cost too much. That is a great pity, and I think that postmasters who saw XYour Guide" will agree.

What about the proposal for e-commerce? Has there been any action to encourage post offices to become distribution centres or pick-up points for goods purchased over the internet? The PIU report commented:

XThe Post Office has been slow to react to this new opportunity".

Has there been an improvement?

What about the famed universal bank and, in particular, the card account? That is to be in place by April 2003. The clock is ticking, with six months to go. Everyone I talk to says that the Government are unhappy about allowing post office customers to apply for a card account, yet some 15 per cent. of benefit claimants currently do not have a bank account. The Government's unhappiness is caused by the fact that not enough money will be saved by introducing the account. That fact lies behind the card account customer journey, a copy of which I have here. After stage 1, a customer who has a bank account supplies the details and no further customer action is required. In an effort to browbeat claimants who do not have an account into opening one, there are 20 steps before the journey says:

XCustomer starts to use account—withdrawing money on a regular basis."

Nothing could be much more complicated than that.

Moreover, I understand that the chief executive of the Post Office has been told by the Department for Work and Pensions that postmasters are not allowed to put up posters telling claimants that they can still get benefits in cash from the post office—all because the DWP does not want to pay the small extra cost. For that reason, too, there is a presumed limit of 3 million card accounts. In today's letter, Age Concern told us that

Xmany older people expressed a desire to continue to collect pensions and benefits over Post Office counters."

Photo of Mark Francois Mark Francois Opposition Whip (Commons)

May I amplify my hon. Friend's remarks by reporting that quite a few senior citizens in my constituency have made representations to me, both in writing and during my surgeries, saying that they are very anxious about the new arrangements, which they feel have not been properly explained? They are not at all keen to have to use them—they want to be able to collect their pension as they always have, and they bitterly resent the Government's preventing them from doing so.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I agree entirely. That is an example of Government bullying: they are forcing people to do something they do not want to do in a typically nanny state way. At the heart of the issue of the card account is the conflict between the DWP, backed by the Treasury, and the DTI. Sadly for the post office network, the DTI is proving to be much the weaker Department.

Plenty of postmasters want to get out of the network, as the Minister said. Some 3,000 postmasters want to take the compensation package under the urban reinvention programme, which says something about morale. Last May, Allan Leighton said:

XPeople want to know, they want to know if they are in or they are out—what is my future".

There are plenty of takers, but the appalling uncertainty and prevarication surrounding the issue needs to be ended as soon as possible. Postwatch's annual report said:

XThe slow progress is very disappointing. The sub-postmasters this year have become increasingly desperate as rumour fed rumour".

At last, we have today's debate, but it was on 3 January that a DTI announcement said:

XPost Office Ltd. will be embarking on a restructuring programme in the new year and where appropriate compensation will be made available for the sub-postmasters affected".

However, that referred to the new year past—not to the coming new year. How far has the restructuring programme gone? We heard no details from the Minister.

Photo of Peter Viggers Peter Viggers Conservative, Gosport

Does my hon. Friend recall the Prime Minister's welcome for the PIU report in June 2000:

XI welcome this report which the Government fully accepts."?

Does my hon. Friend share my anger about the fact that only during this debate, in response to a question, have we learned that the Government have reneged on one of the commitments in that report? Does he agree that the best way for the Government to proceed now would be to restate what they intend to do as a result of the PIU report, and to announce a timetable?

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I agree entirely. I do not remember the Prime Minister saying that, but it does not surprise me at all, given that he says so many things on which he reneges the following month—but we will not go into such matters.

Postwatch does not know how far the restructuring programme has gone and it is extremely concerned that, far from a sensible restructuring, it, customers and everyone else will be presented with a fait accompli—earlier, the hon. Members for Manchester, Central (Mr. Lloyd) and for Ilford, North (Linda Perham) expressed their concern about that. Postwatch will be told that a post office is to close and that it can comment, but it suspects that the Post Office will not listen to its comments, which are made on behalf of the public.

Postcomm's annual report is more concerned about lack of investment to achieve

Xbigger, brighter, better offices on the scale envisaged by the PIU report".

Remaining sub-postmasters in the urban network believe that they will need to improve earnings by between 25 and 33 per cent. a year; otherwise, they will not be able to stay and make that matching investment in their businesses that the Minister talked about.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

Yes, but the Minister spoke for half an hour and I want others to have a chance to participate in the debate.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

There is a problem for the remaining sub-postmasters in urban areas who want to invest a large amount of capital. Is my hon. Friend as concerned as I am that the Government have yet to tell us their intentions regarding the Crown office network, which is centrally funded? When the Labour Government first entered office, their declared policy was to increase the number of Crown offices. Given that they are starting to close private businesses, is it not about time that they put the Crown offices into the private sector as well?

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

My hon. Friend reveals the lack of coherence in the Government's approach towards the Post Office.

Postwatch has also highlighted the fear that urban reinvention will benefit only the multiples and that it will serve to squeeze out small business men. If so, what guarantee can the Government give that multiples, such as supermarkets, will not then reorganise and close the post office branch in the multiple—as happened in the Ripon Co-op in March? Last week, the National Federation of Sub-Postmasters conference passed a motion stating:

XThis conference demands Her Majesty's Government take immediate action to avert the collapse of the nationwide network of post offices".

Is the federation scaremongering, or is a collapse likely?

I recall how, as a Parliamentary Private Secretary, one could sit in on meetings and know what Ministers' genuine thoughts were, even if one's own contributions were not always listened to. It was therefore with some concern that I learned that on 4 September, at a meeting of Cheddleton parish council, Charlotte Atkins, who was until recently a PPS at the DTI, said that

XThe decision as to any individual post office staying open or closing was purely a commercial decision by the owner of the business", and that

XGovernment money would not be used to support uneconomic offices".

If true, that tends to undermine everything the Government are saying about post offices in urban deprived areas—and, indeed, the rural network. Furthermore, it seriously undermines any lingering faith that people involved in the Post Office might have in anything connected with Government policy.

Photo of Mr Roy Beggs Mr Roy Beggs UUP, East Antrim

Does the hon. Gentleman accept that the National Federation of Sub-Postmasters in Northern Ireland is extremely concerned about what they regard as unfair competition being created by Government agencies promoting high street bank accounts? Does he agree that the time has come for a review of the way in which Government agencies and Departments in Northern Ireland and elsewhere have promoted universal banking to benefit claimants?

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

I agree entirely. That illustrates the lack of a coherent approach and an absence of understanding of what—in so-called joined-up government—all Departments could do to help the Post Office, if they wanted to.

Postcomm, the regulator, Postwatch, the protector of consumers and customers of the Post Office, the Post Office and Consignia themselves, the National Federation of Sub-Postmasters and the British public are all deeply concerned about Government policy for the Post Office. The order is about shrinking the urban network, but the crisis will remain because of the lack of a serious and coherent Government policy that would make the network sustainable. There is a crisis in the Post Office which deepens with each day that passes. Allan Leighton understands that, and it strikes me that he might be the best chance for the future of the Post Office, but if the crisis becomes a disaster, there is no doubt where the fault lies—at the feet of the Government.

We condemn the Government's delay and dithering for the past five years. It has led to uncertainty, confusion and distress among employees and sub-postmasters. The DTI has not persuaded other parts of the Government of the merits of its plans. The inadequate package before the House today does not include the measures necessary to give the Post Office a sustainable future, and for that reason we will oppose the motion.

Photo of David Lepper David Lepper Labour/Co-operative, Brighton, Pavilion 7:18, 15 October 2002

Unlike Mr. Robathan I shall support the package before us this evening, even though I have some concerns about it.

Everyone present in the Chamber tonight values the sub-post offices. They are, as the Post Office's slogan says,

XAn Essential Part of Everyday Life".

They are a service as well as a business. I recently spent a morning in one of my local sub-post offices. The experience convinced me of the extent to which the success of those businesses is based on sub-postmasters' knowledge of their customers, which they build up over the years. Sub-post offices are a focal point of community life, especially after the wholesale closure of so many branch banks in urban areas. I think that we would all endorse the description given by Commissioner Monti in his letter to the Government about the package. He writes:

XBesides being more physically accessible by those living in deprived and remote areas, Post Office Limited—unlike most banks—is widely trusted by those un-banked benefit recipients targeted by" the universal banking system.

The network of sub-post offices is a national asset, and we should value it properly. But it has been dogged, for months and years, even before 1997, by rumour and uncertainty, which affects sub-postmasters—our constituents—and their customers, who are also our constituents. The questions have come thick and fast. XWill I still be able to get cash over the counter?" We have dealt with that issue at last, quite rightly, by guaranteeing that people will get cash over the counter, but I have some questions about the method by which that will be done. Sub-postmasters are asking about the way in which the Post Office has approached consultation with them in the past few months. I am not sure how helpful the Post Office's approach has been. For instance, sub-postmasters have been asked to accept compensation and go or, if they prefer, invest in their businesses or consider taking over a business that may be closing. However, sub-postmasters in my constituency have recently asked me, for instance, how the compensation package will operate in relation to tax. There has been no clarity on that question whatever.

Will the sums available to invest take local factors into account, as #10,000 will probably go a lot further in some parts of the country than in Brighton and Hove, part of which I represent? Many of those sub-post offices are in small buildings, which are constrained because they are of Victorian or Edwardian design and are in the city centre—modernisation may need a lot more investment than #10,000, even when matched by the sub-postmaster. What will happen if someone transfers from one sub-post office to another? Will they be able, for instance, to take their lottery point with them if they move from one premises to another? There is a lack of clarity about many basic business questions that the sub-postmasters must consider when responding to the Post Office consultation that began in April.

There is public uncertainty as well. People want to know the future of their own sub-post office. Tonight's package will at least move us out of that uncertainty because we now have agreement on the funding that is needed. I am glad that the decisions to be made when consultation is completed will take into account issues such as the social make-up of the area, its age profile, geography, the availability of public transport and so on. However, I wonder whether the proposed one-month period of consultation will be long enough, and I am seeking guarantees about the way in which it will be publicised in the locality. It is not enough just to know who will be written to formally—we need to know about publicity on consultation as well.

A vital part of the Post Office's role will be the universal banking system. There is genuine concern about the failure to realise the full potential of the post office card scheme, which is a way of ensuring that cash can be provided over the counter and, as Age Concern says, could be a great budgeting aid, as people will not need to draw out all their pension or benefit in one go. Why, however, are many obstacles being placed in the way of sub-postmasters? Yes, it is good business for them, if they can attract customers, but why are obstacles preventing them from publicising and encouraging the take-up of the post card scheme? They have been told in the document issued by the Post Office that they must not advise their customers on what method of banking to use. There is also a complicated system in which customers must phone a helpline for a telephone consultation, then receive a personal introduction document or whatever before they can open an account. We are talking about many elderly customers who may be hard of hearing or may not be good at detailed telephone conservations of that type. Why cannot sub-postmasters undertake the business of signing people up to an account over the counter?

Most sub-postmasters are franchisees. At the weekend, one of my sub-postmasters asked me to imagine McDonald's, a franchised business, launching a new range, then forbidding people in their franchises to publicise it. There is some justice in that description of the way in which the Post Office is tying the hands of sub-postmasters, preventing them from fully realising a system which, as I have said, could be of real benefit to many customers in deprived parts of the country who, for whatever reason, do not have bank accounts. It will help them in their budgeting and, indeed, ensure the security of their money.

The PIU report argued that the Post Office should develop a role for post offices as Government general practitioners. We have heard tonight that the XYour Guide" scheme is not to be pursued in its piloted form, but I believe that the Minister said that the Government still pay allegiance to the notion of the Post Office as their general practitioner. I am pleased about that and look forward to hearing more about the way in which that role will develop; by developing that role we will continue to ensure that the Post Office remains an essential part of our everyday life.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 7:26, 15 October 2002

The Minister got off to a good start by opening with the issue on which there is broad consensus—the PIU report, which includes the urban reinvention programme and the restructuring to which we have all, in different ways, signed up. He then rather recklessly called in aid the National Federation of Sub-Postmasters, citing the paper that it distributed to us all for this evening's debate. At the risk of detaining the House, I remind him that the NFSP said in its introductory sentences that over the past two years

Xsub post offices have continued to close at an alarming rate, morale throughout the network is at an all-time low and pay negotiations have been suspended over a serious dispute with the proposed new contract from Post Office Limited."

It says specifically of the Government's role:

XOf the 24 recommendations made by the . . . PIU, very few have been implemented: funding has not been delivered despite being promised; the timescales for implementation of recommendations have slipped further; the development of new roles for subpostmasters has ground to a halt; and there is widespread stagnation and inactivity across a wide range of the recommendations."

This afternoon's written answer, which the Minister confirmed, showed that the NFSP was being rather optimistic, as we have now lost the rollout of XYour Guide", which was an essential part of the process recommended by the PIU. Mr. Lepper held out some hope that the GP concept has survived, but it is difficult to see how it can do so, as XYour Guide" was at its heart.

The Government said that XYour Guide" is not cost-effective or delivering services, but I do not know whether the Minister knows that the Post Office itself has produced a pamphlet which says on the front,

XYour Guide: Something for everyone . . . it's brilliant".

It goes on to say that it is Xa life saver" which

Xopens up a whole new world", and says —

XYou don't know what you're missing" in

Xa chest of hidden treasures".

Clearly, that is a promotional document, but the chairman of the Post Office, no less, claimed that the success of the project

Xis vital to the future of the network of Post Office branches".

He went on to describe how, in relation to Government services, the pilot project was producing new jobs—people were finding jobs and receiving benefit entitlements. I appreciate that a former Treasury Minister may not regard helping people to get benefit entitlements as an achievement but, none the less, the Post Office's evidence suggests that the scheme was highly successful on its own terms. Someone's head should therefore roll; the Minister responsible has gone off to the Cabinet Office. The Secretary of State, who was so committed to the project that the pilot took place in her own constituency, has not turned up, and the Minister for E-Commerce and Competitiveness is being asked to take the rap. It is a fiasco.

I come specifically to the sums of money on which we have been asked to vote. Let us remind ourselves that, of the #210 million specifically for urban reinvention, #180 million is specifically for compensation and redundancy. Only #30 million is for new investment, and there is a maximum of #10,000 per post office. If one wants to go further, there is no funding to do so. More importantly—the Minister carefully avoided mentioning this—the sub-postmaster must come up with match funding. How will any sub-postmaster raise a loan against a falling revenue stream in order to match the fund's #10,000 commitment? That simply will not happen. This urban reinvention will not take place. Will the Minister tell us in his reply what has already happened to the—I think—#30 million that has been pledged to inner-city deprived areas? As I understand it, very little of that money—if any—has yet been spent. That is the track record of urban reinvention in inner-city areas.

In many ways, the problem is even worse because the assumption on which the calculations are made is that a third of urban post offices will close. I have a letter from a sub-postmaster who speaks on behalf of Manchester sub-postmasters telling me that 60 per cent. of Manchester sub-post offices are planning to close. We are therefore facing a third closing with the Government's compensation package, a third continuing without compensation but not making money, and a third carrying the weight of the business.

Photo of Michael Connarty Michael Connarty Labour, Falkirk East

I share the hon. Gentleman's general concern about people being able to reinvest, but I know of an enterprising sub-postmaster who has linked up with one of the minor supermarket chains and reinvented his store. It has now become a major focus for the community in which I live. He has either found the money from the bank, with the backing of the chain, or has found it directly from the chain with which he is partnered.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

The hon. Gentleman describes an interesting trend, which I have seen. He is talking about post offices housed in Londis seven-11 stores. It is an interesting idea and if it works I shall be delighted for the people concerned, but he may not be aware that the National Association of Convenience Stores has said that the arrangement is very unsatisfactory. Many such stores are trying out the idea, but they have no commitment to the customers as postmasters did, and there have already been several examples in both convenience stores and supermarkets of post offices closing with little consultation. The idea is interesting, but the evidence so far is that it is not a solution to the problem.

The reason that that is not a solution to the problem—this goes to the heart of the business and answers the question that we have been asking ever since the Government announced automated credit transfer—is that we do not know where the #400 million income that post offices will lose as a result of ACT will come from. We now know that it will not be from XYour Guide". It was hoped that they would at least get something from the universal banking provisions and particularly the post office card accounts.

The Conservative spokesman correctly touched on the mounting evidence that Departments other than the Department of Trade and Industry, especially the Department for Work and Pensions, are, with Treasury backing, actively discouraging applicants from using the post office card accounts. They are actively sabotaging the work of the Minister's Department. This is a very serious matter.

I have here a pack that is being issued to people who want tax credits. It is very complicated; I honestly do not know how people who have problems of financial exclusion can cope with this plastic pack which contains many documents. On the page on which it deals with payments, it says that if somebody wants their credit to be paid into a bank, they must simply supply their sort code and account number. However, if they want a Post Office payment, they are advised to go to page 36 of the explanatory notes. I eventually found the explanatory notes and page 36 where it next instructed claimants to ring the helpline. We tried to do so but could not get an answer. That is the kind of maze of bureaucratic instruction that people are beginning to encounter if they try to use a post office card account.

If one wants a bank account, one just fills in a form. If one wants a post office card account, one has to be interviewed.

Photo of Mr Matthew Green Mr Matthew Green Liberal Democrat, Ludlow

Have my hon. Friend's constituents raised similar concerns to those raised with me about how during such interviews they feel pressurised not to take up the card account?

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I have indeed; I have spoken to some people about the pressure that is being exerted. Hon. Members should prepare themselves to encounter this in their constituency surgeries. People are being told that if they go for a post office card account, the cash will arrive a month late. They lose a month's liquidity. I have discussed the matter with young women who have been split from their partners—this is even more disreputable—when talking to them about arrangements for the working families tax credit. They have been told that they are best to go through a bank otherwise the tax credit will be paid to their partners—losing all the benefits of the enfranchisement of women that the tax credits were supposed to create. Those are the kind of tricks that Department for Work and Pensions officials are getting up to—bullying people into giving up their opportunities to use the Post Office.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

Has my hon. Friend heard the complaints from sub-postmasters that I have heard in my constituency that it is staggering that even at this stage no information is being made available in accessible form either by the Government or the Post Office about how the card account will work? That reinforces the pressures that he is discussing.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

Indeed; there is no proper explanation. The people who are promoting the migration are well informed of the benefits of using banks because they set them out. Draft material from the Department for Work and Pensions sets out in argued form why people should enjoy advantages by using a bank, but does not explain—the Minister did not either—that people on low incomes are subject to extremely high charges if, for example, they fall foul of standing order provisions. The presentation is entirely one-sided. All that the postmasters have been asking for is even-handed treatment. They are not asking for preference or protection. All they are saying is that the relative merits of a post office account and a bank account should be dealt with even-handedly and that people should be given an equal opportunity to use one or the other.

On top of that—the Minister knows about this although he did not refer to it—there are serious problems concerning both groups of sub-post offices. First, there are the modified sub-post offices—larger units that are often staffed by ex-Post Office employees. Many are in an appalling financial position as a result of the type of contracts under which they operate, which often do not even cover their staff. I met a group of people representing modified sub-post offices in Yorkshire a couple of months ago. Their position is parlous. As the smaller units close with urban reinvention, such post offices are expected to carry the burden, but they are not in a position to do so.

The other group of sub-post offices, as the Minister should have acknowledged, is currently in the middle of a serious dispute over the terms of their contracts. The federation representing them has said that the entire reinvention programme is Xhanging by a thread" owing to the lack of certainty over their contractual future. The position is very serious.

My final point concerns the mechanism used when post office closures occur. Several Labour Members have asked with an open mind for assurances. They have said that they accept that closures must occur but that they want to be assured that there is a proper appeal procedure and that local councillors and Members of Parliament will be consulted. That is fine, but let us look at the evidence put forward by the consumer protection body Postwatch. It has been clear from the beginning that it did not see a justification for 3,000 closures and that that was way in excess of what was required. It has however said that it will help with individual cases, judging the viability of particular post offices. It can only deal with three or four such cases at any time, not 3,000. It will be overwhelmed by the sheer volume of closures.

When such matters are dealt with properly and carefully, sensible decisions can be made. In the past few weeks, the Post Office has gone back on a closure at Child's Hill in London as a result of Postwatch intervention. If a closure programme is carried out gradually, carefully and slowly, it can be managed, and restructuring can take place, but the Government's scheme will bring about a disorderly collapse and cause a great deal of harm.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

May I tell the hon. Gentleman how much I agree that the present Post Office management is highly unlikely to be able to handle efficiently the 3,000 closures envisaged? In the largest town in North-West Leicestershire, the largest post office, which was part of a superstore, collapsed about nine months ago, and has still not been reopened, despite its importance to the largest town in the constituency. I do not know how the Post Office will be able to handle 3,000 closures, and I very much doubt that that will happen.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

That is a helpful intervention. Within six to nine months, every hon. Member will have such anecdotes.

Photo of Rudi Vis Rudi Vis Labour, Finchley and Golders Green

The hon. Gentleman referred to the sub-post office in Child's Hill, which is to be reopened, mainly because 1,000 letters were sent by residents to Postwatch, and Postwatch has been extremely helpful. However, 12 post offices in London are under threat, and they are all run by temporary sub-postmasters, none of whom will get a penny in compensation.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

The hon. Gentleman has exposed a new type of problem, which I had not anticipated. Large numbers of post offices—those that fall outside the 3,000—will not be compensated, and many of them are in financial distress already.

To summarise, the Minister's initial commitment to the performance and innovation unit report was right, but what is happening is disastrously far from it. The central weakness in the Government's approach is their inability to give the postmasters any hope of finding alternative income streams. What is so utterly disreputable about it is that postmasters are in the middle of a battle between two Government Departments, one of which is simply concerned with saving money in the short term, without any regard to the wider financial or social implications, and the other, the hapless Department of Trade and Industry, which is carrying the can for it.

Photo of Rachel Squire Rachel Squire Labour, Dunfermline West 7:42, 15 October 2002

I shall keep my remarks brief, as this is such a short debate and so many hon. Members want to come in. Many good points have been made so far, particularly by my hon. Friends.

Like many, I welcome additional money for local post offices, and efforts to improve the services available and increase the customer base, but I have two concerns. First, I have 25 local post offices in the hilly town of Dunfermline and my overall constituency of west Fife. Nine have been classified as urban; one of those nine is a main branch in the town centre, and of the remaining eight, a number are within a mile of that main branch office, yet they are vital centres in their communities—for instance, the branches in Abbeyview and Brucefield.

On the point made by my hon. Friend Mr. Lepper, will the Minister give a commitment that we will be able to have longer than a month for consultation, if that is desired and necessary to involve all members of the community, and that full consultation will take place, the level of local deprivation will be taken into account, and the community role of the local post office branch will be carefully considered, along with the circumstances of each locality?

The second issue, which I raise in connection with urban post offices, although it also affects rural ones, is the decline in counter payments. There are various reasons. One which particularly angers me is that those who seek to pay their bills promptly and in cash at their local post office often pay more than they would if they paid through direct debit. I have raised with the Secretary of State the fact that private utility companies and others give discounts to those who pay by direct debit, but charge more to those who decide to keep paying in cash. I recently found out that Girobank has failed to reach an agreement with Fife council in respect of council tax payments, so people who pay their council tax at local post offices end up paying #1.15 more than the figure on their council tax bill.

Such charges, combined with the Government's drive to persuade people to open bank accounts, hits local post offices hard. Many of my constituents have managed on a budget all their lives by having cash in one hand, paying their bills straight away and seeing in the other hand what they have left to spend. Will the Minister take action to tackle the disadvantages experienced by those who still prefer to pay their bills in cash? Will he think again about replacing order books with complex procedures, unfamiliar smart cards and PIN numbers, which are not welcomed by many of my older constituents, who have never had and never wanted a bank account or a smart card?

Like many, I look forward to having detailed discussions with my local sub-postmasters and postmistresses in the months ahead. I take this opportunity to pay tribute to them for the vital service that they provide to our communities.

Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden 7:46, 15 October 2002

As time for the debate is disgracefully short, I shall try to make just three points about this strangely named and very costly measure.

First, when the Government announced that it would be compulsory for pensioners and other vulnerable people to have their pensions and benefits paid into the bank rather than through the Post Office, they pretended that they could save taxpayers' money and still maintain a comprehensive network of sub-post offices. The measure demonstrates that they were wrong. They should have known that they would be wrong. As Secretary of State, I was advised that if we moved in the direction of making compulsory payments through the banks, that would lead to the collapse of the sub-post office network, unless we decided to subsidise it, in which case the subsidies would absorb most, if not all, of the savings that we hoped to make.

Although I have given them the opportunity, the Government have never denied that they received similar advice from their officials. They should have realised that they were faced with that dilemma, because post offices benefit in two ways from their contract to deliver benefits from the Department for Work and Pensions. They receive #400 million as payment, and they receive many millions of pounds of extra trade from people who enter their post offices and spend their benefits in them. The Government can therefore make good the loss of revenue from cancelling the contract only by paying out more than they are saving by withdrawing the #400 million.

My second point is that if the Government are reluctant to do that, as they clearly are, they are faced with the collapse of the sub-post office network. They are trying to conceal that collapse not by reinventing the network, but by reinventing the English language. They have replaced the word Xclosure" with Xreinvention". They propose to reinvent 3,000 post offices as fast food chains or estate agents' offices or by returning them to residential use. They intend to reinvent 3,000 sub-postmasters and sub-postmistresses into early retirement by paying them to give up their franchises. They are going to reinvent many thousands of people who work in those post offices by taking away their jobs and reinventing them into unemployment. That is what the Government's strange wording means, and we should have no truck with it.

Meanwhile, as well as closing 3,000 of the 8,000 urban post offices, according to the Postcomm survey, over the past 12 months rural post offices have been closing at three times the rate of urban post offices, and 74 per cent. of post offices which have closed over the past 12 months have been rural post offices.

The third point is that the Government are still a long, long way from closing the financial gap that they have opened up in the viability of the post office network. The Consignia document that was sent to us a year or so ago states that the gap is #500million. Consignia said that it could make good #100 million of that money by closing stores and reducing operating costs. Presumably, the Government's way of helping Consignia to achieve that #100 million saving is the paying out of up to #210 million in the early years. I do not understand their arithmetic; they talk about a figure of #10,000 for each post office, but the closure of 3,000 stores at a cost of #210 million is a cost of #70,000 each. If the amount is spread evenly among all 8,000 post offices, the total is #26,000 each. Will the Minister explain the bizarre arithmetic of the proposal? Anyway, at the end of the day, there is an ongoing saving of #100 million.

The Post Office said that the Government gateway, which has since been rechristened several times in Blairite fashion, was going to raise #80 million a year. We are now told that it does not raise anything and costs more than it saves or generates in income, and it has disappeared. We were told in press releases that the universal bank would cost the banks #180 million, so we hoped that the money would go into the sub-post office network. On closer inspection, it turns out that there is a five-year period and that the amount is #36 million a year. As the National Consumer Council points out, that is effectively a cost to bank users and a form of taxation without legislation. Anyway, #36 million a year is a small amount. The only other sum that the Post Office quantifies relates to its conversion into a total distribution system, whatever that means. That will generate all of #6 million a year in extra revenue.

Whence will the extra money come to fill the #500 million gap? Newspaper reports over the weekend or yesterday said that the Government were going to put #450 million into rural post offices. We are not discussing that issue today, but if the Minister has leaked the information to the press, we would at least expect him to tell the House whether there is any truth in the assertions and whether, as the newspapers reported, #150 million a year for three years is to come from the Government in taxpayers' money. Perhaps he no longer holds himself accountable to the House and we are to be informed of such issues only through nods and winks to the newspapers.

The truth is that the Government have foolishly entered into a policy that is not compatible with the objectives that they have set themselves. There will be either minimal savings or maximal closures, and certainly great distress and inconvenience to pensioners and vulnerable people in all our constituencies. That is why many thousands of people in my constituency have signed petitions urging the Government to reconsider this daft and damaging policy.

Photo of Louise Ellman Louise Ellman Labour/Co-operative, Liverpool, Riverside 7:52, 15 October 2002

I want to express a number of concerns about the programme and to seek some reassurances from the Minister.

We are being asked to support a package that appears to involve spending about #210 million on what is, in effect, a closure programme. I am extremely concerned that the whole programme appears to be led by the aim of compensating those running sub-post offices for loss of business rather than that of supporting the business of the sub-post offices in continuing to meet the needs of mainly excluded communities.

In my constituency, a large number of sub-post offices—some 23 of them—are at risk. I was reassured by the Minister's answer to my earlier question, in which he stated that an additional #15 million would be available to support those post offices. Before voting in support of the motion, however, I should like to have more information about that #15 million and about the #30 million that has already been mentioned.

I accept that something must be done and that the situation that we face has not arisen in the past few years but is the product of years of neglect by those who were in control in the past. Nevertheless, those of us who represent deprived communities are acutely aware of the impact that the closure of post offices and sub-post offices would have on our already suffering populations. Post offices in deprived urban areas are as important as those in rural areas. They are often a lifeline to the poor and excluded, and provide services not only in terms of essential benefits, but by assisting people in paying bills, getting information, obtaining important forms, securing licences, conducting money transfers and many other important activities. The importance of post offices in deprived urban areas goes beyond that and often relates to the businesses alongside them. Such businesses will not necessarily be located in the same building. The livelihood of essential retail businesses that are situated near post offices often depends on people going to post offices and spending their money nearby.

I hope that the Government will ensure that the future of our sub-post offices is seen in the context of dealing with social exclusion. Will the Minister again give me a clear assurance that the future of our post offices and sub-post offices will be seen in terms of providing essential services and important issues of social exclusion?

I am also concerned about the consultation process and the role of Postwatch, which covers extremely wide areas. I was extremely concerned to discover that Postwatch's northern sector includes areas as diverse as Carlisle, Newcastle, Sheffield, Lincoln, Preston, Liverpool and Manchester. Many millions of consumers are represented in that area, and I should like an assurance that Postwatch will be able to conduct itself so as to take heed of the views of people in those areas. I should also like an assurance that, when the future of individual post offices and sub-post offices is considered, the Government will ensure that a proper consultation is carried out and that no given number of offices will be set down for closure irrespective of circumstances.

In short, I recognise that the Government face a very difficult problem and that something has to be done, but I want assurances that the issue of deprived communities such as mine in central Liverpool will be given full attention and that the programme will be led not by compensating people who wish to leave the business, but by the need to ensure continuation of services for those who are in need.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire 7:56, 15 October 2002

In this world of Labour spin, it will surprise neither the House nor the Minister to find that the current Department of Trade and Industry website makes the remarkable claim that the Government aim to ensure that the

Xnationwide network of post office counters can continue to flourish".

Why is that network not flourishing and why are record closures occurring? The answer is the Government's staggeringly inept performance in introducing automated credit transfers without a parallel programme to provide revenue and support to our sub-post offices. After the consequences have finally sunk in for the Government and the Department, they have been running around like headless chickens trying to find means to prop up the sub-post office network. The answer is there in the shape of the universal bank, but it is still not up and running and I grave doubts about whether it will be in time, before the guillotine of the ACT falls.

The Government calculated that there would be 3 million post office card accounts, but 16 million people go into post offices every week. That implies that there will be a reduction of 13 million people, but what will happen as a result? The revenue of sub-post offices will fall and they will pack up. No wonder half of them want to get out of the business—and it is this Government's fault.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 7:58, 15 October 2002

With the leave of the House, Madam Deputy Speaker. We have had an interesting debate. I am grateful to Mr. Robathan for his kind words at the beginning of his speech and for his apology about disagreeing with some of the points that I made. I was puzzled by his conclusion, however, as he said that he regretted that there had been delay and he wanted uncertainty to end, but he also told us that he would lead Opposition Members in voting against the measure that will ensure precisely the certainty for which he called. If he reconsiders the briefing of the National Federation of Sub-Postmasters, he will see that the last thing it wants is the blocking of the compensation that he urged his hon. Friends to support.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

Given the short time available, I should like to continue.

The hon. Gentleman complained about inadequate publicity for XYour Guide". I am grateful to Dr. Cable for drawing hon. Members' attention to the good publicity for XYour Guide" that the Post Office used. The post office in Leicestershire used in-store marketing, articles in the local press and leafleting. The matter was also well covered on local radio. However, the conclusions were those that I set out.

The hon. Member for Blaby made a point that it is important to correct. He suggested that there would be a limit of 3 million post office card accounts. That is not the case; I assure him that there is no such limit. However, I share his confidence in Allan Leighton as chairman of the Post Office and in the vigour with which the organisation is pursuing its bid to return to profitability.

My hon. Friend Mr. Lepper made some important points. I want to stress that I agree with him and with my hon. Friend Mrs. Ellman about the important social role of urban sub-post offices. That is why we are supporting a careful, planned programme of change.

My hon. Friend the Member for Brighton, Pavilion, however, asked why it could not be left to sub-postmasters to persuade people to take up post office card accounts. Many people who do not currently have bank accounts, for the reasons that my hon. Friend Rachel Squire outlined, would be better off if they did, so that, for example, they could pay bills by direct debit. That may not be the sub-postmaster's calculation. It is therefore important that people have access to advice about their options—

It being one and a half hours after the commencement of proceedings on the motion, Madam Deputy Speaker put the Question, pursuant to Standing Order No. 16.

The House divided: Ayes 271, Noes 170.

Division number 320 Urban Post Office Reinvention Programme

Aye: 271 MPs

No: 170 MPs

Aye: A-Z by last name


No: A-Z by last name


Question accordingly agreed to.


That this House authorises the Secretary of State to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982 in respect of the urban post office reinvention programme, a sum exceeding #10 million to Post Office Limited.

Photo of Patrick Cormack Patrick Cormack Conservative, South Staffordshire

On a point of order, Mr. Deputy Speaker. I wonder whether you are in a position to advise, guide or help us. We have had an extraordinary day, in which we have, quite rightly, had three important statements from the Government, which took a great deal of time. Mr. Speaker and your colleagues were correct to allow Members to take part in the questioning until 6 o'clock or thereafter. We have had subsequent business, and we are about to discuss a relatively uncontroversial but important measure and to give it its Third Reading. Then, we shall come to what we all supposed to be the main business of the day. It is quite clear that, because Mr. Speaker has imposed a 10-minute limit on all speeches in all debates, a great many Members want to take part in that debate. The matter affects all our constituencies in the greater part of the United Kingdom and rumour has it that about 60 Members have applied to Mr. Speaker to be called to speak. It does not take a mathematician of genius to work out that 10 minutes multiplied by 60 will be significantly longer than the hour or so that Back Benchers will have to speak in that debate. As this is such a crucial issue, affecting so many Members in all parts of England, and as it could equally well be debated on another day, would you, Sir, be in a position to invite the Leader of the House or his deputy to make a business statement so that we can defer consideration of the local government finance formula grant distribution until another day?

Photo of Peter Viggers Peter Viggers Conservative, Gosport

Further to that point of order, Mr. Deputy Speaker. A number of hon. Members on the Government side seem to find some cause for amusement in the point that my hon. Friend has raised. Many people outside the House will not understand our procedures, but it is right that they should understand them and their implications. The Order Paper reads:

XPublic Trustee (Liability and Fees) Bill [Lords]: As amended in the Standing Committee, to be considered. Third Reading may also be taken. Debate may continue until 10.00 p.m."

It goes on to describe the Adjournment debate:

XLocal Government Finance Formula Grant Distribution. Debate may continue until 10.00 p.m."

Those outside the House may not realise that the Report stage is the only opportunity that the House will have to consider the matters in the Public Trustee (Liability and Fees) Bill that were considered in Committee, apart from the Third Reading, which is also scheduled for today's Sitting. Those matters may well, therefore, take us until about 10 o'clock, and the very important Adjournment debate on local government finance could get no time at all. This is a serious matter, and I strongly urge you, Mr. Deputy Speaker, to support the point put to you by my hon. Friend.

Hon. Members:

Hear, hear!

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. Let me try to answer the points that have been raised. I should point out that a ruling has already been given from the Chair earlier this afternoon in the light of these same considerations. The Chair has absolutely no power to require any Minister to come to the House; nor has it any power or control over the business that is put down for consideration this day. The Chair is aware of the difficulties that have arisen because a number of important matters came up earlier in the day. It is, however, a matter for the Government or the usual channels if there is to be any reconsideration of the order of business for the day.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

Further to that point of order, Mr. Deputy Speaker. You have a unique position in the House in your capacity as Chairman of Ways and Means, and you therefore have a unique influence on matters financial. You will, therefore, be aware that we are now in a doubly paradoxical position. Not only was it originally intended that this important matter of local government finance be dealt with on a debate for the Adjournment, which might have been bad enough, but we now see the prospect of that debate shrinking by the minute before our very eyes and, as my hon. Friend Mr. Viggers suggested, there is a danger that it might disappear altogether.

My appeal to you, Mr. Deputy Speaker is this. Bearing in mind what you have just said, would you be prepared, together with Mr. Speaker, to give serious consideration to having discussions with the Leader of the House to see whether you can reassure the House that you will protect us from this diminution of the ability of the House properly to discharge its responsibilities in the important matter of local government finance? Otherwise, where do we turn? Are we now completely at the mercy of the Government, who are manipulating the business so that this important matter cannot properly be considered? We appeal to you for your protection, Mr. Deputy Speaker.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

There is nothing that the Chair can do immediately about the situation with which we are faced as a result of the amount of business that is down for consideration by the House this day. Mr. Speaker is, of course, the protector of Back-Bench interests, and he will have observed what has happened today. Obviously, I cannot speak directly for him, but I imagine that, with his traditional concern for these matters, this issue might form part of the routine discussions in which he is frequently involved.

Photo of Robin Cook Robin Cook Lord Privy Seal

Further to that point of order, Mr. Deputy Speaker. It may be for the convenience of the House if I say that we fully understand the importance that many hon. Members attach to the business that is to be taken later tonight. I also understand entirely that many Members from both sides of the House wish to contribute to the debate. It was necessary for the House to hear the statements that we heard this afternoon, and I do not think that any reasonable Member would object to those statements, which, necessarily, have taken time. We will look for another opportunity to extend the debate that will start tonight so that more Members may contribute to it. [Hon. Members: XIn the Chamber?"] Whether it will be in the Chamber or in Westminster Hall is a matter that we will have to consider.

Photo of Robin Cook Robin Cook Lord Privy Seal

It is interesting that the right hon. Gentleman objects to that. Half of all the next 10 days are Opposition days. If the Opposition wish to substitute the debate for one of those days, I will consider that request sympathetically.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

Further to that point of order, Mr. Deputy Speaker. I am not sure whether that was a point of order or a business statement. It sounded very like the latter to me, in which case it is subject to the usual procedures of the House.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I must make it plain that I took the Leader of the House's comments as being further to the point of order that is being considered.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst

I do genuinely appreciate what the Leader of the House has said and his sensitive appreciation of the difficulties that we face, but it would be helpful to Mr. Speaker and to you, Mr. Deputy Speaker—and you have generously indicated that you will take a lively interest in the issue—and to all of us if we could tease out of the Leader of the House whether he is prepared to consider proper time for a proper debate on this important financial matter on the Floor of the House and not to set a precedent by shoving the matter off to Westminster Hall where, with the best will in the world, it cannot be properly considered and given the weight that it would be given in the Chamber. I hope that the Leader of the House will not start using—I might even say abusing—Westminster Hall as some sort of cheap overflow for important business that has been squeezed by the Government.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

The continuing discussion of the matter is, of course, taking away from the time that will be available. There may still be an opportunity for the usual channels to have some communication while the House proceeds with the next item of business. The Chair is not able to do anything other than proceed with the business that is set down for discussion. I suggest that it would be as well to move on to that.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

Further to that point of order, Mr. Deputy Speaker. I do not want to prolong this discussion, but when you consider this matter—as you have kindly said that you will—you might remember that in all the time that I was the Secretary of State dealing with these matters we always had a full day's debate on what was the annual discussion of them, not the fundamental change that we have before us tonight. I hope that you will not underestimate the importance of this debate.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I cannot continue the discussion by means of points of order, especially as they are getting slightly wide of the issue. I understand the right hon. Gentleman's concern. Indeed, I understand the concern of the House, but I cannot unilaterally alter the business of the House in any way. I am a servant of the House and ensure simply that the business is conducted. Those points having been made—I am sure that Mr. Speaker has taken note of them—it would be best to proceed with the day's business.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

On a point of order, Mr. Deputy Speaker. It is a different point of order, although it is linked to the previous one. Can you help me and, I hope, the House? If the next item of business runs until 10 o'clock, the debate on local government finance will have no time at all. Does that mean that the House will have no opportunity to debate a matter of considerable importance to almost every hon. Member? I say that in the presence of the Leader of the House, for whom I have the utmost respect. He has sought to make the procedures of the House more relevant and transparent.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

I hope that I would always go out of my way to assist the hon. Gentleman, but I cannot comment on a hypothesis.

Photo of Adrian Sanders Adrian Sanders Liberal Democrat, Torbay

Further to that point of order, Mr. Deputy Speaker. I wished to thank the Leader of the House on behalf of the Liberal Democrats for his comments. We have this debate every time that local government expenditure is discussed on the Floor of the House. We never have enough time to debate it. It comprises a quarter of all Government expenditure, so I hope that the Leader of the House will accept that this debate needs more time than it is given, as does the local government settlement every year.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

The hon. Gentleman has made his point, but it is not one on which I can rule.

Orders of the Day