Rural Post Offices

Oral Answers to Questions — Trade and Industry – in the House of Commons at 11:30 am on 20th March 2003.

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Photo of Mark Simmonds Mark Simmonds Conservative, Boston and Skegness 11:30 am, 20th March 2003

If she will make a statement on the provision of Government services by rural post offices.

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

Every community is entitled to good access to postal and Government services. We will continue to ensure good access through the post office network, in particular through the rural network.

Photo of Mark Simmonds Mark Simmonds Conservative, Boston and Skegness

Does the Minister acknowledge that, with the imminent commencement of the universal bank and the withdrawal of 40 per cent. of rural post offices' business, many rural post offices will have to make staff redundant and, ultimately, close as the Government withdraw the lifeline that allows those post offices to continue in business? How will the Government replace that lost income stream? Is this not just another example of the Government's disdain for rural post offices and local small businesses?

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

Following the publication of the performance and innovation unit's report, we made a commitment to end avoidable closures of rural post offices. As a result, we have seen a dramatic reduction in the number of closures. The hon. Gentleman talks about withdrawing a lifeline, but it is quite the contrary. We have just announced £450 million to maintain the rural network up to 2006. We have invested £500 million to provide the platform for ACT from next month. That will allow post offices to provide modern services of the kind that people want, which will secure a successful future for the post office network. Over a long period, there has been a decline in the old-fashioned business of the Post Office. That is why we have had to make the changes that we have made, laying the foundations for the successful future of the whole network, including the part of the network that is in rural areas.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire

Would not rural post offices be assisted if the Post Office card account system was run on a decent and full basis? Why is it so difficult to obtain a Post Office card account, despite the issuing of new literature today? Why cannot an account simply be obtained from a post office by people who are known there, or why cannot people simply tick a box to get a Post Office card account, as they can if they want to get a bank account? That is what is wanted.

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

We are ensuring that those who wish to choose a Post Office card account can do so. However, it is important to take the opportunity of this change to address the problem of financial exclusion. Many people in rural and other areas are disadvantaged because they do not have a bank account. We want those people to have the opportunity to consider whether, given the change, they now want to open a bank account. That is the reasoning behind the helpline. However, if people decide that they would prefer to have a card account, they will get their card account.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

Despite the gloss that the Minister puts on the situation, is it not a fact that—and this applies to urban as well as to rural post offices—post offices' income is dropping, the value of sub-post offices is dropping, the footfall is dropping, and the number of services to the elderly and vulnerable is dropping? Only 311 out of 3,000 sub-post offices that are facing compulsory closure know their fate. When will the Minister let those sub-post offices know whether they are going to have to close? He cannot keep them in limbo for ever.

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

It is true that custom at post offices has been declining. The Government that the hon. Gentleman supported did nothing; by contrast the Labour Government are addressing the problem and ensuring that there is a successful future for the Post Office. In 1996, 40 per cent. of benefit recipients received their benefit in cash at the post office, but today that proportion is down to just over a quarter, as a result of the choice that people have made. The Post Office has to reflect the changes in the wishes of its customers and provide services that meet their needs, so we have invested in technology for the post office network the very large sum that I mentioned. The Post Office will be able to use that as a platform to deliver modern services that people want.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

May I return my hon. Friend to the issue of the Post Office card account and ask that he hold further discussions with our ministerial colleagues at the Department for Work and Pensions? Some of my constituents have received forms from the DWP regarding their benefits after the changes take place, which have no reference whatever to the Post Office card account as an option. That is seen, rightly, as discrimination against the account and the matter ought to be put right.

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

If my hon. Friend looks at the leaflet that accompanies the form to which he refers, he will see that the position is clearly spelt out. However, the point that he made has been drawn to our attention and a change will be made to ensure that there is a reference to the Post Office card account on the form.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

Is not the truth that thousands of vulnerable people who have hitherto relied on receiving benefits in cash at post offices will find it harder to do so? Post offices will lose thousands of customers because the Government have made it almost impossible for them to open a Post Office card account. The Government's disastrous double whammy is more post office closures and more problems for pensioners, young mums, disabled people and other vulnerable people in the community.

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

No, the hon. Gentleman is wrong about that. He should not mislead and worry people, especially the elderly, who will be concerned about what he said. People who want to continue receiving their benefit in cash from their local post office will be able to do so through one of the means that I mentioned. We built that requirement into the process from the start and it will be delivered when the arrangements are put in place next month. Given our investment in technology and the fact that post office services will use modern technology in the future, as opposed to the old-fashioned systems left behind by the previous Government, there will be a much better future for the Post Office and the services that it provides for the benefit, especially, of elderly and vulnerable people in every part of the country.