Future of the Post Office Network

– in the House of Commons at 4:15 pm on 13 January 2004.

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Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry 4:15, 13 January 2004

I beg to move,

That this House
deplores the programme to close 3,000 urban post offices because closure decisions are being made without taking adequately into account the needs of post office customers;
believes that honourable Members are insufficiently consulted when proposed closures are announced;
regrets the lack of time available to provide for a full consultation period and the failure of the consultation process to influence the closure programme;
condemns the Government as the sole shareholder of Royal Mail plc's wholly-owned subsidiary, The Post Office Ltd., for its failure to intervene in order to rectify the way in which the Urban Reinvention Programme is being implemented;
expresses its great concern about the programme to implement Post Office card accounts, which is failing to reflect the needs of customers, especially for the most vulnerable, including elderly and disabled people;
calls on the Government to give a firm indication that an Exceptions Service will be introduced and to provide the House with the details of how such a system will operate after 2005; and further calls on the Government to make a statement on the sustainability of the funding of rural post offices beyond 2006.

I was a little surprised to receive a message on my pager a moment or two ago, saying that the Secretary of State is unable to be with us today. I certainly hope that an early explanation will be given as to why she has not deigned to give her attention to this very serious issue.

It is a stark and undeniable measure of this Government's having failed communities throughout the country that since 1997, under Labour, there have been 66 debates in Westminster on the crisis in our post office network, compared with only 15 such debates in the five years to 1997, under the previous, Conservative Administration. Indeed, as we begin this debate, my hon. Friend Mr. McLoughlin is beginning another on just this subject in Westminster Hall, on his constituents' behalf. Surely this Government's arrogance and disdainful complacency, as revealed by the Prime Minister's and the Secretary of State's nauseatingly self-congratulatory amendment to the motion, is proof, if any were needed, of their lack of genuine concern about the relentless post office closure programme being inflicted on almost every rural, suburban and inner-city community in the country.

As Members know only too well, this situation is causing anxiety and sheer hassle in each constituency, particularly for the elderly, the disabled and the most vulnerable in our communities. The Government's high-handed approach to this cavalier closure programme leaves all those people sick at heart every time another post office is rushed to closure.

Photo of Oliver Heald Oliver Heald Shadow Leader of the House of Commons

Does my hon. Friend agree that for all their crocodile tears, it is the Government's fault that post offices are closing, because they have deliberately reduced the footfall in post offices through their changes to the benefit system?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend for that intervention, and as I hope to demonstrate as I develop my argument, he is absolutely right. Indeed, he rightly deserves his reputation for standing up for his constituents' interests at all times, not least in their communities.

Photo of Jim Knight Jim Knight Labour, South Dorset

I, too, attempted to secure a debate in Westminster Hall on this subject. The hon. Gentleman offers a spurious statistic on the number of debates initiated on this issue by the Opposition during this Parliament compared with the number initiated before 1997. Westminster Hall debates did not exist at that time, so the comparison is, if nothing else, disingenuous.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

To any rational person, 66 debates versus 15 is a pretty stark contrast, even without Westminster Hall. Furthermore, such a contrast is a sign of the depth of anxiety about this issue throughout the House and in each constituency. It is not simply to do with the statistical opportunities to debate.

Photo of Nicholas Soames Nicholas Soames Shadow Secretary of State for Defence

Does my hon. Friend agree that the discourtesy shown to the House by the Secretary of State's not turning up to respond to this debate will be deeply resented in Mid-Sussex? We did hope to be able to hold her to account for proposals that will bring grave inconvenience to many elderly people and mothers with young children. The Government have imposed appalling house-building targets on Mid-Sussex, and the proposed closure of several very valuable post offices will cause extreme inconvenience to many people.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend for that intervention. He, too, is known for the tremendous work that he does on his constituents' behalf, and I can assure him that their disappointment is matched by my own, in that I am unable to debate this issue with the Secretary of State, who is responsible for supervising the Post Office.

Let us look at the record of the post office network under Labour. I assure the House that my party and I mean no hint of criticism of the thousands of sub-postmasters and sub-postmistresses and all those who work diligently and tirelessly to provide a good service in our surviving post offices throughout the country. On the contrary, despite their valiant efforts, their dedication and their commitment to serve their communities and earn an honest and respected living, the Government's actions and omissions in using the genuine power and influence that they have at their disposal as the sole shareholder in Royal Mail plc, which wholly owns Post Office Ltd., to recognise the strategic community value of our post office network, remain an indictment of their record in government.

Photo of Mr Nick Hawkins Mr Nick Hawkins Conservative, Surrey Heath

My hon. Friend will be aware that I have campaigned to keep open post offices such as Mytchett in my constituency. I need to ensure that Post Office management and the Government are responding to the legitimate concerns raised by Members, especially on this side of the House. Does my hon. Friend agree that not only have the Government reduced the footfall by their changes to the benefit system, but they have signally failed to support individual sub-postmasters? They have been boxed in by the ridiculous and misnamed network reinvention programme. The Post Office claims that the programme operates only in urban areas, but it is hitting villages in constituencies such as mine.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I hope that my hon. Friend will find that my comments resonate fully with him and that he is able to report to his constituents that our feelings entirely accord with the campaign that he has run so diligently on their behalf.

It is not my intention to undermine confidence in Britain's postal services. The post office network is a vital part of the social fabric, as all right hon. and hon. Members know. My argument is that the manner in which the Government have discharged their responsibilities for the post office network is undermining the future of that vital service. We want to hold the Government and the Secretary of State, who is not present for the debate, to account for what is happening under their watch and with their connivance.

The network, which consists of more than 17,000 outlets, is the largest retail network in Europe. There are 45 million visits a week to UK post offices. After staggering losses, Royal Mail plc posted a marginal £3 million profit on the back of a 1p increase in the price of stamps, with another 1p increase on second class mail coming in April and proposals now in train to increase prices for size rather than for weight of posted items in future.

Apart from some 600 Crown post offices, which are run directly by the Post Office, the rest are sub-post offices, run by private business people—sub-postmasters and mistresses. Most of them run their post office business under the same roof as another retail business. In urban areas that is often a newsagent or stationery business. In rural areas it is typically a village shop. The post office business represents essential footfall—as my hon. Friends have pointed out—cash flow and reward for those combined enterprises. Those sub-post offices and their staff play a vital role in the life of their communities. They know and understand their customers and they know how to help to support the most vulnerable by alerting neighbours to potential concerns about the welfare of others through their regular contact.

Over recent years, however, there has been a continual decline in the number of sub-post offices operating in this country. Figures for the financial year 2000–01 show that 547 sub-post offices closed. That is the highest figure on record and it happened under Labour. Since then, closures have continued. In 2001–02, 262 post offices closed and in the most recent year for which figures are available, 2002–03, net closures totalled 345—another increase.

The rapid escalation of sub-post office closures under this Government had become a serious political problem by April 2000, when a petition bearing the signatures of 3 million protestors was handed in to Downing street to protest against the changes announced in respect of compulsory automated credit transfer. The sheer scale of that protest reflected, and continues to reflect, the importance of sub-post offices in their communities, especially in rural areas and suburban communities that depend on them. To throw a claimed £2 billion at the issue and to preside over stamp price inflation to produce none the less the continuing demise of sub-post offices is a matter of great concern to all in the House. Ensuring that that valuable service is adequately maintained needs to become a priority for the Government.

There are currently 9,000 urban post offices in the UK but the number has been falling steadily in recent years. There were 106 urban post office closures in 2000–01; 68 in 2001–02; and 230 in 2002–03—including 102 under what is known as the urban post office reinvention programme, which stemmed from a report published in June 2000 by the performance and innovation unit. That report suggested that local knowledge and consultation should help decide which offices should be protected from closure.

Photo of Gregory Barker Gregory Barker Opposition Whip (Commons)

Consultation in my constituency has proved to be an utter sham. Despite our taking up closures with Allan Leighton and his staff, the responses that my constituents and I received were standard letters—none of which addressed specific points that we tried to get across to the Post Office, which often included inaccuracies in its assessments. Is my hon. Friend aware of a single case in which local consultation has resulted in the reprieve of a post office?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend. I shall pose that very question during the course of my speech. My hon. Friend quite rightly pre-empted me but I shall look forward to reinforcing his point.

Photo of Tim Loughton Tim Loughton Shadow Minister (Children)

The headquarters of the National Federation of Sub-Postmasters is in my constituency, but not even that has saved nine urban sub-offices there which are to close. The Post Office's response to the representations made in respect of one office even spelled its name wrongly and the bus times given in relation to alternative post offices were for buses that do not exist. Does my hon. Friend agree—given that out of more than 1,000 proposed closures only four sub-offices will be reprieved—that the consultation exercise is an absolute sham and an insult to right hon. and hon. Members?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful for that further example of how the exercise appears to be consultation only in name, not in practice. We are most grateful also to the National Federation of Sub-Postmasters and its general secretary, Colin Baker, for all the assistance and information that they continue to give us in highlighting that scandal.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

We ought to acknowledge that Post Office consultation and decision making are about the fastest in the country. In West Worthing, seven sub-offices were up for consultation that ended on 23 December. Decisions were published on 8 January. So while other people were wondering what to do with their time over Christmas and the new year, the Post Office was deciding to close offices. One out of those seven offices has been given a temporary reprieve. I hope that my hon. Friend will invite the Minister to make sure that that becomes permanent, so that the Pier post office in Bath place is saved and does not go—unlike those in South Ferring, Rustington and other parts of Worthing.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I assure my hon. Friend that the Minister will have plenty of opportunities to give such assurances and we all look forward to hearing them. I am somewhat surprised that the consultation process was that short. I have an example from Stoke-on-Trent where the period allowed extended to 20 January from a similar starting point, which seems more generous.

The report also suggested that financial assistance from central Government or local authorities might be needed to support uneconomic offices in deprived urban areas. The programme was formally announced in April 2002 and there was a debate in the House on 15 October, to give consent to a £210 million compensation package for the necessary restructuring. The programme is aimed at ensuring that 95 per cent of the population in urban areas live within one mile of a post office, while closing one third of the 9,000 offices. That programme began in November 2002 and by the end of June 2003, 351 post offices had been closed. Post Office Ltd has announced that by December, it intends to close 3,000 of the 9,000 urban branches. Right hon. and hon. Members will be alarmed to learn that to achieve that objective, Post Office Ltd will have to impose at least 140 closures a month—some say 250 a month—throughout this calendar year. That is not alarmist, it is alarming.

Sadly, the effect of the accelerated rate of post office closures on the overall strategic incoherence of the programme, as well as on the credibility of the consultation process, cannot be overstated.

Let us consider the one-mile test—not a difficult concept, surely? But the number of examples is legion where one mile, in order to pass the test under the closure programme, is measured as the crow flies, thus apparently satisfying the Post Office. However, as people cannot fly, that is not the actual distance between where they live and their local community post office; they have to negotiate walking routes, bridges over roads, railways, canals and so forth. Even if we were to accept the knowledge of Post Office Ltd. rather than that of local people on that point, and I do not, in the evidence hearings of the Select Committee on Trade and Industry on 4 June 2003—I am glad to see that the Chairman of the Select Committee, Mr. O'Neill is in the Chamber—my hon. Friend Mr. Lansley rightly pressed that the distance from where people work be measured, too.

Mr. David Miller, chief operating officer of Post Office Counters, said:

"I think that is fair comment and one of the things that we are doing at the moment is reviewing how we are going to conduct the programme. I think that, in the initial stages, we have tended to look at individual offices but, much more now, we are going to look at areas and to get a proper integrated view. So I think you will see as we go forward over the next few months a wider range in terms of where we are looking and we will look at all the things you have talked about. It is very early days."

We have seen little evidence of change, however. The combined frustration of the whole programme is that its flaws are compounded by the consultation time being short and the fact that the process is apparently not genuine.

As my party's spokesman in South Dorset, Ed Matts, has so ably highlighted on behalf of all the people in Weymouth who are faced, despite their support for Mr Matts's tireless campaign on their behalf, with seven closures at Southhill, Lanehouse, Kings Street, Lennox Street, Radipole Spa, Westham and Wyke, the basis of selection is flawed and the consultation process is both truncated and a sham. I have given notice to Jim Knight that I would be referring to his constituency.

On 26 August 2003, the Post Office proposed closing its branch at 69–71 City way, Rochester, Kent and began to consult the affected community. Again, I have given notice of this point to Mr. Marshall-Andrews. Two months later, the Post Office distributed a final leaflet confirming that the branch would close on 25 November 2003. That leaflet was marked "Printed March 2003" As my party's spokesman in Medway, Mark Reckless, has rightly said:

"How can we have any trust in the consultation if that's the sort of game they're playing?"

I have another example close to my own area in Chester. Ms Russell has said on the record that she shares the concerns of Chester city councillors—as I do; I represent a large swathe of the Chester city council area. However, she does not think that the three proposed closures of Cliveden Road, Kingsway and Green Lane post offices

"represent any kind of sensible rationalisation", as they

"are all sited in local shopping centres and act as focal points for the local community".

She has highlighted the flaws in the process: those three branches

"have been singled out for closure" because

"all have sub-postmasters and sub-post mistresses who are willing to close down their businesses and accept the compensation package on offer.

I really find it hard to believe that these three particular post offices are the least profitable in Chester. Unfortunately, the Post Office is not willing to make the financial information available, on the grounds of commercial confidentiality/data protection, to support their arguments for closure."

I agree, and hope that the hon. Lady will take the opportunity to support our motion and not troop through the Government Lobby. I look forward to seeing her in the Opposition Lobby later.

Photo of John Bercow John Bercow Shadow Secretary of State for International Development

I am sure that all Members on the Opposition Benches look forward to welcoming Ed Matts and Mark Reckless as the Members for South Dorset and Medway respectively after the next general election. In the interim, can my hon. Friend tell the House what assessment he has made of the number of elderly people, of those who suffer from disabilities and of those who lack access to private transport who will be grievously affected as a result of the mass closure programme presided over by the current Administration?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I look forward to dealing with that point and I am grateful to my hon. Friend for raising it, not least because Malcolm Bruce has tabled an early-day motion to highlight the problem. I shall consider it shortly.

We should also consider Stoke-on-Trent where a report in the local paper, The Sentinel, only last Saturday, was coupled with a picture of Charlotte Atkins receiving a petition to save Rookery post office in Kidsgrove. The hon. Lady and I spoke earlier today and she is in the House today. Her neighbours, the hon. Members for Stoke-on-Trent, North (Ms Walley), for Stoke-on-Trent, Central (Mr. Fisher) and for Stoke-on-Trent, South (Mr. Stevenson)—I have indirectly or directly given notice to all of them—have vowed to continue their campaign to keep open 21 city post offices threatened by closure, following a heated meeting with the local Post Office boss. In all four constituencies the consultation period started on 10 December and finishes on 20 January, conveniently coinciding with the Christmas and new year break to minimize the effective time for marshalling local opinion to influence—vainly no doubt—the consultation. I look forward to seeing those hon. Members demonstrating their concern as much in Westminster as in their local press, by supporting our motion today and not throwing a comfort blanket over the Government by voting for the Secretary of State's amendment.

The so-called consultation exercise is truly an exercise in window-dressing. I hope that, when the Secretary of State gets up to speak, she will give a precise answer—[Interruption.] I realise that the right hon. Lady cannot do that now, so the Minister will have to do it. That shows the danger of having written a speech; I was reading and got carried away. I thought the Secretary of State might have been excited enough by the subject to discharge her responsibility, but I hope that when the Minister speaks on her behalf, he will be able to give precise answers to my questions. How many closure proposals under the urban reinvention programme have been reversed following the so-called consultation—the very point raised by my hon. Friend Mr. Bercow?

I wonder whether the Chairman of the Select Committee on Trade and Industry—the hon. Member for Ochil, who is here—has received a satisfactory answer to his Committee's perfectly valid and important recommendation at paragraph 94 of its report on post offices, published in July last year:

"We commend Post Office Ltd's assurance that it will make decisions about the future of individual post offices by reference to strategies for communities and areas rather than in isolation from each other. We urge that decisions are not made in a way which pre-empts a review of the procedure which relates the proposal for closure against a 'best fit' model, and that the Post Office makes its model publicly available".

Has it? Has the Secretary of State required the Post Office to do just that? Let us hear an answer today. Yet again, it is plain that the Government have a duty, as sole shareholder—let alone given the crying need on behalf of all affected local communities—to intervene to arrest the consequences of that flawed process and that apology of a consultation exercise. I hope that the Minister will now step in and get a grip on the process.

Owing to the vastly accelerated rate of closures, the consultation process has become confirmed as a rubber-stamping public relations exercise rather than a genuine dialogue to influence selection that involves the wider community. That decision-making process is not genuinely shared with the affected communities, as it was purported to be by the Government, and as is contemplated in the performance and innovation unit report.

Given the pressure to complete the closures in such a drastically reduced time scale, it is hardly surprising that there is no time for consultation involving hon. Members and customers at the strategic stage. Instead, the new area plans now being developed, rather than those produced on the previous even more haphazard case-by-case basis, are drawn up by the Post Office in consultation only with sub-postmasters and mistresses. As Richard Burden mentioned in an Adjournment debate on 11 December last year, MPs and customers are excluded from the process and are consulted only once the plans have been drawn up.

It is clear that post office closures are determined not by their overall profitability or strategic importance but according to which sub-postmasters or mistresses are prepared to close down their business or, most commonly, are the first to put up their hands to accept the compensation offer. Given that the reinvention programme was intended to introduce coherence into the restructuring of the urban post office network, that random approach is unacceptable.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Is my hon. Friend aware that the Post Office claims that the area plan system is an improvement on piecemeal closures, but that the truth, certainly in my area, is that other sub-postmasters would like to have been offered the same packages and that there is no guarantee whatever that other post offices will not close in due course, even after the area plans have been implemented?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

My hon. Friend is entirely right, not least because of the sharp reduction in income that many post offices will suffer as the new card accounts and proposed banking arrangements take hold. That is a very serious concern.

The Government must take this opportunity to commit themselves today to using their position to insist on a strategic approach focused on future customer service and convenience, particularly for the most vulnerable. Those people depend on the network, geographically as well as socially, as a fundamental part of the community, and we all wish to see them have the access that they deserve.

Furthermore, the whole process of closures has created enormous uncertainty, and it falls to the Government to account for that, not because the Opposition propose a motion to hold them to account, but because that uncertainty is truly undermining confidence in Britain's postal services.

Postcomm reports that some sub-postmasters have told it that they do not see why they should invest in their post offices when it is not clear what their future levels of business will be. That brings me on to another area of great anxiety: the introduction of the new system for the direct payment of benefits, which has had a serious impact on the profitability and sustainability of local post offices.

In August 2000, the then Secretary of State for Social Security set out the Government's plan to move to automated credit transfer for benefit payments from April 2003. That change affects 14 million people who previously collected such benefits in cash from their post office. As of September 2003, nearly a third of customers who had responded to being contacted had chosen the Post Office card account, despite the fact that the application process and the Government's information campaign were designed to ensure that as few people as possible chose that account. Indeed, the National Federation of Sub-Postmasters says:

"It is very clear that the Government prefers people to access their benefit payments through a bank account than via the Post Office Card Account. Government publicity makes this evident, and ministers have confirmed this on many occasions."

Internal memos from the Department for Work and Pensions reveal that customers are intentionally steered toward other forms of direct payment because of the excessive cost of the Post Office card account. That is in stark contrast to the Government's promise to

"be even-handed, open and honest, and . . . promote all kinds of account".

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

My hon. Friend is absolutely spot on. In August, I drove 150 miles around my constituency and visited 28 post offices. Postmasters told me again and again that the system is deliberately made as complicated as possible to discourage customers from taking up the card. I held a meeting with the Minister for Energy, E-Commerce and Postal Services about the matter—he is busy talking to the Chairman of the Trade and Industry Committee—and I have also spoken to the Minister for Employment Relations, Competition and Consumers and the Under-Secretary of State for Work and Pensions, Mr. Pond. The Government are in complete denial. The National Federation of Sub-Postmasters says that 22 steps are required before people receive a card, but the Government insist that there are only three. It is quite obvious that they do not want customers to take up cards and are thus making the process as difficult as possible.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend for highlighting that fact. He is my neighbouring Member of Parliament and I know from first-hand experience how assiduous he is on behalf of all his constituents. He is concerned not least about the combined pressure on his constituents' lives caused by the Government's total disregard for the interests of those who need to access post office services coupled with their relentless attack on motorists from rural communities who need to connect with services. The same situation is true in my constituency because our areas share many characteristics, such as sparse rural villages. I am grateful to him for his continuing campaign.

Most significantly, there is widespread concern that vulnerable pensioners and disabled people will not be able to use the new electronic card and personal identification number system. The PIN pad has been poorly designed, which means that disabled and blind people will have problems accessing their money. The Government have failed to explain how people who cannot use the new system will receive their money.

In response to those concerns, the Conservative party called a special debate in the Chamber on 11 June 2003 to highlight how the Government's drive was failing to meet the needs of customers, especially the most vulnerable. The motion that was debated had previously been supported by nearly 400 Members from all parties. However, after the Government ordered all Labour Members to vote the motion down, it was defeated by 314 votes to 187. One hundred and twenty-eight of the 175 Labour Members who had supported the motion prior to the debate actually voted against it. Such breathtaking double standards do nothing to inspire the confidence of those threatened by the changes throughout the country, especially those Labour Members' constituents.

Furthermore, if the Government agree, as they claim, that there is a need for an exceptions service for the often vulnerable people who cannot cope with their new direct payment options, will the Minister today at last commit to that and spell out details of how such a service will operate after 2005? Early-day motion 375, which was tabled by the hon. Member for Gordon and which my party and I support, calls for such action.

In addition to customers' concerns about the introduction of the system, we are equally concerned about the impact that the switch to ACT will have on the post office network itself.

Photo of Jim Knight Jim Knight Labour, South Dorset

I understand that the hon. Gentleman has three children and that he will thus be in receipt of child benefit. Has he, like me, opted to open a card account at his local post office to ensure that he supports it?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

If I am being completely honest, I have no idea, because that matter is dealt with entirely by my wife. It is far better for the wife to be able to access the money because she takes prime responsibility for ensuring that the children are fed and clothed. My wife is proud of the fact that she is a full-time working mother.

Before the automated credit transfer system was introduced, benefit payments accounted for about 40 per cent. of a post office's business, so the switch to ACT will lead to a considerable loss of revenue. Indeed, the Royal Mail has estimated that the move to ACT could reduce revenues across the post office network by as much as £400 million per year. However, that is only part of the danger. Sub-postmasters and sub-postmistresses depend, as we have said, on footfall generated by people collecting benefits to create a market for selling other goods such as groceries or stationery. Much of that business will be lost. Consequently, I share Postcomm's concern that

"the reduction in income to Post Office Ltd from the Department for Work and Pensions as direct payment is introduced, and general trends towards decrease in use of post offices and neighbourhood shops, are together bound to have an effect on customer numbers and on the economic viability of post offices".

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I shall, but I am conscious that as a result of accepting interventions I have spoken for longer than planned. I hope to conclude shortly.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

My hon. Friend mentioned other products sold by post offices. Does he accept that they need footfall to make a profit on items on which they make a gain of only 4 or 5 per cent.? Unless they achieve a certain turnover they will not get the cash income that they need.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my hon. Friend, not least because he is one of those unusual Members of Parliament with genuine business experience. It is rarely understood by Ministers making decisions on behalf of business people, whatever the size of their business, that the trade-off between volume and price is critical in the case of commodity products. A substantial volume must be shifted if people are to stock them at all and give customers a choice.

The National Federation of Sub-Postmasters commissioned the independent research company MORI to undertake a detailed comparison of sub-postmaster income before and after the introduction of direct payment. Will the Minister give an undertaking that the Government will act in the light of MORI's findings?

Rural post offices are supposedly protected, yet over the past two years nearly 80 per cent. of all closures have been in rural areas. All of us who represent rural areas know the immensely valuable role that those post offices play in the lives of their communities. Closures are therefore of primary concern to rural areas. In response to a consultation document by Postcomm on the preservation of the rural post office network, the National Federation of Sub-Postmasters concluded that some funding should be channelled to help sub-postmasters and sub-postmistress buy their post offices and receive sufficient income, good working conditions and adequate support. It also suggested that if those conditions are not met, sub-postmasters and mistresses would continue to leave, suitable replacements would become increasingly hard to find and many more rural post offices would close.

The Government announced a £450 million aid package on 2 December 2002, but the NFSP is concerned that none of that money will go directly to sub-postmasters and mistresses, even though many rural sub-post offices are barely viable. If a rural network is to develop modern sustainable services, post offices need to do more than simply struggle to survive, but we do not know whether funds will be available after 2006 to protect them. I urge the Minister to clarify the Government's intentions. Will there be funding for the rural postal network after 2006, and can he tell hon. Members on both sides of this House how the Government plan to sustain the rural post office network in the long term?

The post office network must adapt to accommodate changes in 21st-century lifestyles and consumer practices. It remains fundamentally the case, however, that the local post office plays a vital role in contributing to the social cohesion of localities small and large, rural and urban. The rushed and scattergun nature of the closures so far under the urban reinvention programme and the lack of guarantees to protect rural post offices in future are detrimental to the community in general, and are particularly damaging for its more vulnerable members—the elderly, the disabled and people on benefit. In that context, it is not the restructuring itself but the manner in which it is taking place that has given cause for complaint and created desperate anxiety about the Government's hurried and arbitrary approach.

In conclusion, while celebrating and paying tribute to the tireless service and dedication of sub-postmasters, sub-postmistresses and everyone who works on the front line in communities up and down the country in what survives of the post office network, I urge the Government to think again and for once avoid the knee-jerk reaction of amending our motion just because it was tabled by Her Majesty's Opposition.

Now is the time for the Secretary of State, and her Minister who will be replying today, to listen to the people in our communities who want the Government to heed what we and hon. Members in all parts of the House are saying on behalf of all our constituents, and for once to accept criticism and act. That is what will have to happen if the Minister and his Secretary of State are to have any hope of not going down in political history as the Ministers who presided over a record number of closures of the nation's community post offices on their watch, decimating the service and causing endless inconvenience and distress to people throughout the country, urban, suburban and rural alike, particularly the most vulnerable in those communities. Clearly, that reveals the true meaning of the words in Labour's 2001 manifesto, which says that Labour is

"committed to . . . a dynamic Post Office"— clearly, a dynamic in the wrong, negative direction.

I urge my colleagues, the Liberal Democrats and all other parties to join me in the Lobby. In particular, I invite Labour Members to put their vote this evening where their assorted early-day motions, petitions, photo-opportunities and crocodile tear-drenched press releases in their constituencies are, and support our fair and reasonable motion, rejecting the Government's self-serving congratulatory amendment. I commend the motion to the House, especially to Labour Members, who have more than two hours and 20 minutes to reflect carefully how to vote tonight.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

I have to inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 4:50, 13 January 2004

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"congratulates the Government for its commitment to modernise and invest in the national network of post offices while keeping them easily accessible to all customers;
notes that the choice of account for customers into which they wish their benefits paid is entirely a matter for the customer concerned and congratulates the Government on ensuring that all the necessary information is available to customers to make an informed choice;
applauds the Government's £2 billion investment in the Post Office network and its success in reducing the rate of rural post office closures;
notes the Post Office's commitment to ensuring that 95 per cent. of the urban population live within a mile of a post office, and the majority within half a mile, and that honourable Members are consulted on proposed closures as part of an agreed process between the Post Office and Postwatch;
further notes that 3,500 post offices closed under the previous administration;
and condemns those who seek to undermine confidence in Britain's postal services."

As the Minister for Postal Services, which is the reason that I am responding to the debate, I echo some of the points Mr. O'Brien made right at the end of his speech, and affirm how much importance I attach to the network of local post offices as a focal point for their communities in urban areas as well as in rural areas, particularly for those who are elderly and less mobile.

The starting point for the policy that we have adopted for the post office network is the performance and innovation unit 2000 report, which was mentioned by the hon. Gentleman and was widely welcomed in the House, not just on the Government Benches, as squaring up honestly to the big challenges that the post office network faces, having been utterly neglected by the previous Government. The report made 24 recommendations, all of which we accepted for the future.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I am slightly surprised that the Minister explained his presence at the Dispatch Box in terms of the fact that he is Minister for Postal Services. I have no disrespect for that job or his role, but surely this is such an important subject that one would expect the Secretary of State to be present. Is there no good reason for her not being here, other than the fact that she has delegated to the Minister?

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

I am the Minister responsible for policy on the postal services. That is why I am responding, entirely appropriately, to the debate. It certainly is an important issue, and one that the Secretary of State and I are closely engaged in. I notice, by the way, that the Conservative party does not have a member of the shadow Cabinet present for trade and industry business at all now. There is some puzzlement among my colleagues about that. However, it is quite appropriate that I am the Minister responding to the debate.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

Having known the Minister since our university days, I have come to respect the fact that he is a genuinely intelligent person, so I am surprised at his comments. With a shadow Chancellor and shadow Secretary of State for Economic Affairs, we are showing in opposition how joined-up Government is possible for the whole of business and economic affairs. That is how we organise our team.

Hon. Members:

Where is he?

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

Indeed. I should be delighted if the shadow Secretary of State for Economic Affairs were present, but he is not. Given that the hon. Member for Eddisbury queried the absence of my right hon. Friend the Secretary of State, it is appropriate to draw attention to the fact that his right hon. Friend is not present. It is also a mystery to the director general of the CBI, who had a rather embarrassing exchange with the leader of the Conservative party on that very point.

Let us return to the matter in hand. The PIU report pointed out, rightly, that our network of post offices has not kept pace with the changing needs of its customers, that too often in all our constituencies post offices have become rather dingy, particularly through a chronic lack of investment under the previous Government, and that the organisation had not taken advantage of its highly trusted status as a provider of financial services. It was losing business. It faces an enormous challenge. In the last financial year, Post Office Ltd., which is the part of the organisation dealing with the network, lost £194 million. The year before, it lost £163 million, and it has reported a loss of £91 million for this first half-year. With declining profitability in the network as a whole, the ability of sub-postmasters to sell on their businesses—the way in which sub-postmasters have been able to move on in the past—has also taken a severe knock. Decisive action is needed to ensure that we maintain a sustainable countrywide network for the future. That is the reason for our action.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

My constituency has some of the lowest incomes, highest unemployment levels, worst health problems and highest disability levels in the country, as well as poor public transport, a low level of private car ownership and an ageing population. My constituents are just the type of people who depend on their post office. The Secretary of State and the Under-Secretary of State for Wales have criticised the consultation process that is taking place in respect of the closures in Blaenau Gwent and have argued that our case to withdraw the closure programme there is unanswerable. Does the Minister support them in that?

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

I am aware that my right hon. Friend the Secretary of State for Wales has made some remarks on that process and I understand that the Post Office is responding. As I shall describe in a moment, there are features of the process that the Post Office has introduced that reflect the particular needs of disadvantaged areas such as those that my hon. Friend and I represent.

The network has been contracting since the 1960s. The previous Government presided over 3,500 post office closures—a statistic that was strangely absent from the speech of the hon. Member for Eddisbury—in rural and urban areas. There have been reductions in post office usage for all sorts of reasons, and the complete absence of investment in the Post Office on the part of the previous Government was very significant. However, there have also been other reasons. Dramatic improvements in technology, greater mobility and changes in shopping and financial habits all mean that people have simply not been using the post office as they used to, and custom has been sharply reduced.

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

Does the Minister not accept that many of the changes that he has mentioned are not appropriate to describe what has been happening in rural areas? Rural life has remained much the same. Rural people depend very much on post offices, but they see that service disappearing for reasons entirely outside their control.

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

I do not agree with the hon. Gentleman. It is not the case that life in rural areas is not changing. There have been changes during the past 20 years. For example, car usage has increased and people have become more willing to travel further to the shops in the past couple of decades. Those changes and many others have had a direct impact on the post office network.

Photo of Jim Knight Jim Knight Labour, South Dorset

I support those comments about changes in rural life. My constituency has a very high level of second home ownership, and in some rural communities, 50 per cent. of the population does not live in the local area much of the time. That has contributed to the closure of rural services such as post offices. I welcome the Government's commitment to keeping those services open—saving post offices on Portland, for example—while some in Weymouth are closing, as the hon. Member for Eddisbury has described.

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

My hon. Friend is absolutely right to draw attention to the importance that we have attached to maintaining rural post offices. I shall mention our action on that issue in a moment.

I need to draw the House's attention to a couple of facts. Before the switch to making benefit payments by direct credit started last year, more than 50 per cent. of benefit recipients were already receiving their cash directly into their bank accounts rather than by order books, compared with only 26 per cent. in 1996. In that short period, the proportion had doubled. Some 62 per cent. of all new child benefit recipients and 59 per cent. of all new pensioners already received their benefits directly into their bank accounts before any of the changes of the past eight or nine months. There are far fewer recipients of jobseeker's allowance now than in the past. All those changes pose big challenges to the post office network, which must be addressed, not ducked.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

Does the Minister agree that many problems arise in relation to the definition of what is an urban and what is a rural post office? For example, many of the old mining communities, which have been defined as urban although they are rural villages, need the support and help that rural post offices are promised.

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

There has been some controversy on that point. Under the Post Office's definition, a contiguous population of more than 10,000 should be classed as urban, while one of fewer than 10,000 should be classed as rural, and that has been applied consistently throughout the network. I am aware that it has given rise to concern in some areas, but it is right to have a clear definition.

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

I need to make a little more progress before I give way again.

In recent research, Postcomm pointed out that people in other countries, too, are increasingly accessing services electronically over the telephone or even through the internet. Most countries have been remodelling their post office networks, usually by closing the smallest or least profitable offices, converting directly run offices to agency offices, or relocating or opening new urban offices to take account of changes in urban population and customer flows. In Germany, the number of post offices was reduced from 30,000 to 13,000—a much more drastic change than is contemplated here—and other countries have embarked on a similar process. In the UK, other networks, such as those of the banks, have also been scaled back. Like them, the post office network needs to adapt, in both rural and urban areas, to changes in people's preferences and to new ways of doing business.

Photo of David Hamilton David Hamilton Labour, Midlothian

Does my hon. Friend agree with the early-day motion tabled by a Scottish Member that condemns the three main Scottish banks—the Royal Bank of Scotland, Clydesdale bank and the Bank of Scotland—for not co-operating with the Post Office to allow such facilities to be put in place? They are trying to bring people into their own banks, which militates against people in rural post offices.

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

I would welcome additional banks opening up their accounts to Post Office access, as have Lloyds TSB, Barclays, and Alliance and Leicester, and I am aware that the banks with much the biggest market share in Scotland are not in that group. I would welcome such changes—indeed, I have had discussions with one of those banks. I hope that their customers will demand that they should have the same opportunity as those of the other banks in being able to access their account at their local post office. I look forward to the day, which I think is not far off, when the post office will be the best place to do one's banking—to get cash, pay bills and do the other things for which people currently have to go to the bank—because, in many urban and rural areas, the post office is the best located place in which to do so.

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

Does my hon. Friend agree that it is not helpful to shut down the post office savings account, given that we need to maximise people's saving opportunities? Would it not be a good idea to link the continuation of the post office savings account to the opening up of post office card accounts instead of closing it to new recipients, which sets a dreadfully bad example?

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

As my hon. Friend will know, the Post Office has announced a joint venture with the Bank of Ireland to offer a whole range of new financial services products precisely in order to increase the amount of financial services business, including savings, that goes across post office counters. I believe that those products will prove attractive to many of our constituents and that they will enable them to deal with financial matters at their local post office, which is what many of them wish to do.

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

I need to make a little headway.

One of the recommendations of the performance and innovation unit's report was that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing funding to compensate affected sub-postmasters adequately for the loss of their business. Those men and women have worked hard, as the hon. Member for Eddisbury said, and it is right that they should be treated fairly even though the current level of business cannot support a post office network as dense as that of the past.

In November 2002, following parliamentary approval of the funding, Post Office Ltd. began its urban network reinvention programme. It was a dense network. Before the process began, more than 1,000 urban sub-post offices had more than 10 other branches within a mile. There is no longer enough business to sustain such a dense network in urban areas. Sub-postmasters have found it increasingly difficult to earn a reasonable income; too many have simply shut up shop and left. We therefore need the rationalisation that is under way. Without it, there would be unmanaged decline as many sub-postmasters shut down and leave. That would lead to unplanned big gaps in the network. The current programme can avoid that.

Photo of Tim Loughton Tim Loughton Shadow Minister (Children)

By reinvention, the Minister means "between a rock a hard place". Some postmasters or postmistresses have worked all their lives and now approach retirement. A choice between taking a compensation package now and getting at least something out of it—although the Government took away retirement tax relief—and holding on for a few more years, because they want to keep the post office open, but without a compensation package if, through declining business, they then wish to shut the post office, is no choice. They are being bullied and blackmailed to take the money and run, whether they want to or not.

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

The hon. Gentleman is wrong. The compensation payments are broadly based on what a sub-postmaster might have expected if the business had been sold two or three years ago, before the recent changes. They have been negotiated with the National Federation of Sub-Postmasters and based on long-standing views of the value of a business. It is appropriate for somebody who shuts down a business to contribute to establishing a network that is sustainable in the long term to receive a fair amount in compensation. The arrangements provide for that. Of course, if people stay in the network, as many sub-postmasters will, we can look forward to those businesses having a much more buoyant value in the future because of the reductions in the urban network. That is why the National Federation of Sub-Postmasters has been so supportive of the exercise.

Photo of Gerald Kaufman Gerald Kaufman Chair, Culture, Media and Sport Committee

Does my hon. Friend agree that popular support for a local post office is an important factor that should be taken into account? Will he pay tribute to the campaign by Levenshulme branch Labour party in my constituency to keep open the Albert Road post office? It has obtained 3,000 signatures. Will he draw the attention of the chief operating officer of the Post Office to those local wishes and the determination to keep the post office?

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

I agree that local support for a post office branch is an important factor. I am happy to congratulate the members of the branch Labour party that my right hon. Friend mentioned on their demonstration of that support. I shall be glad to ensure that the information is passed on.

It is right for hon. Members to engage in the process, draw attention to especially valuable post offices that should be retained and perhaps suggest others that should be closed instead so that the exercise can be completed successfully.

Several hon. Members:


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

I shall give way shortly.

The key to the exercise is that the largest possible number of customers from each closing branch should remain Post Office customers and move to branches nearby. The initial planning assumption was that perhaps 80 per cent. of customers from closing branches would do that. However, many more transfer to other branches. That is excellent news for the Post Office. It is important, however, that the right decisions are made about identifying the urban branches that should close.

Photo of Mark Fisher Mark Fisher Labour, Stoke-on-Trent Central

Does the Minister understand that although the strategy that he describes may exist in his head, it is not happening in practice? The Post Office is inviting sub-postmasters to apply for the scheme, but in Stoke-on-Trent—and, I suspect, many more areas—people accept the invitations but neither propose nor oppose closures. There is no plan; the process is led by the applications. There is no strategy and therefore a great deal of what the Minister says falls by the wayside.

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

I am aware of that criticism but I can assure my hon. Friend that it is untrue. Initially, 3,500 sub-postmasters expressed an interest in leaving the network under the programme, but something like 1,000 of those will not be doing so: 500 have been told already that their branches cannot close, and another 500 will be told the same thing.

Several hon. Members:


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

I need to make a little more progress before I give way again, but then I shall do so gladly.

Initially, closure proposals under the programme were focused on single offices known to be most at risk of closure because of poor viability. The aim was to minimise the possibility of damaging and unco-ordinated closures. It was in part in response to feedback from hon. Members and others that the Post Office moved, in September last year, to producing its proposals area by area, using each parliamentary constituency as the basis.

The House will acknowledge that a plan that tells us the ultimate shape of an area's urban network at the end of the process helps to provide a clear view of the level and configuration of provision that will be in place at the end of the programme. It also helps to put in context discussions about each individual post office.

The plan also helps to give sub-postmasters confidence about their prospects, as they know where they are going. Moreover, it helps to guard against unplanned closures, and it has also made a significant contribution to reducing uncertainty. Under the programme the aim is to complete all the public consultation by December this year, somewhat earlier than was originally intended.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

Three sub-post offices are earmarked for closure in my constituency, and one of them serves the most disadvantaged community in the area. People feel real anger and concern about the proposals, and oppose them massively. They are angry about the way that post offices have been identified for closure, and about the consultation process. One sub-postmaster in my constituency was told even before the consultation process had ended that the decision had been taken and that closure would go ahead. Finally, people are angry at the Post Office's failure to think about providing proper services as it embarks on its reinvention programme. That has caused real distress for many people, among them those who are most disadvantaged.

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

If my hon. Friend were to tell the Post Office that, in her view, a particular post office should not be closed, but that she knew of another office for which closure would be appropriate, then I would hope that the Post Office would be open to engaging in a discussion with her.

I want to speak about the consultation process, as the very important role played by Postwatch has not yet been mentioned. Postwatch is consulted on every proposal, and it monitors the programme as a whole. After discussions with Postwatch about how to take forward consultation on the new area plans, it was agreed that the consultation period should be extended to six weeks. In addition, Postwatch is to receive two weeks' notice of closure proposals.

A question was asked about how many changes there have been as a result of the consultation exercise. I can tell the House that, by the end of December, there had been just over 1,400 closure proposals in the programme notified to Postwatch. Of those, 46 were withdrawn or delayed for more detailed consideration as a result of the advanced process—under which Postwatch considers proposals in advance of the public consultation. A further 66 proposals were withdrawn or delayed for reworking as a result of the public consultation.

Those withdrawals therefore account for more than 100 of the 1,400 closure proposals. I think that there have been about 650 closures so far. That shows that there has been a significant degree of change as a result of the consultation process, and it is quite right that there should be. However, I am concerned that the process must be effective. I am very keen to know from hon. Members about any difficulties that may arise. When a particular post office is the cause for concern, the key is that the view of Postwatch should be taken very seriously indeed by Post Office Ltd.

Photo of Simon Hughes Simon Hughes Liberal Democrat, North Southwark and Bermondsey

The Minister will know, both as the Minister with responsibility for post offices and as a London MP, that we are five months through the 11-month consultation process across the whole of Greater London. It started with a letter from the regional head of external relations that said that about half of the urban post offices were not profitable. Can the hon. Gentleman indicate what percentage of the current London post office network it will be acceptable to close? Is one of the criteria that a post office is not profitable? If that is the case, about 50 per cent. of our post offices, in his borough and mine, are scheduled for closure.

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

The hon. Gentleman will know from the plans that have been published in London that the proportion suggested for closure is significantly less than his estimate. I do not have the figure, and at this stage we do not know precisely what the final number will be, nationally, in London, or in any region. I am confident, however, that as a result of this process we will end up with a viable network, which will continue to serve every part of London, as well as the whole country. That would not be the case if we simply allowed post offices to carry on declining.

An important additional element of the programme is the £30 million that we have provided for modernising and adapting the post offices that remain in operation. The key to improving those offices will be the increased volume of business that they can expect, especially given the high levels of migration that I have mentioned and the grants of up to £10,000 for each office that expects to take on a significant number of additional customers—in some circumstances, grants of £20,000 will be available—to be matched by the same sum from the proprietor. Those grants will be an important boost.

It is worth pointing out that that is the first ever programme of Government investment in urban sub-post offices; in the past they have never spent money on those offices, and that investment is an additional measure on top of those recommended in the PIU report. That is a clear instance of us addressing past chronic under-investment, which has led to so many post offices becoming unattractive places to visit, particularly in urban areas, and it reflects the importance of making the post offices of the future far more attractive.

Several hon. Members:


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

Given the time, I need to make a little more progress. I will gladly give way in a few minutes, if I can.

I want to say a little about the arrangements in deprived areas. We have required Post Office Ltd. to ensure that, after the programme, 95 per cent. of the urban population will still be within a mile of their nearest post office. In addition, we have asked the company to make sure that, other than in exceptional circumstances, its proposals do not include closure of offices within the most disadvantaged 10 per cent. of urban wards where there is no other post office within half a mile. In accordance with another of the recommendations in the performance and innovation unit report, we have made available support for post offices at risk of closure in the most disadvantaged areas.

What we are doing in urban areas will allow us to make the transition to a successful urban network that can meet the needs of our constituents in the future and be commercially viable. The network of post offices serving rural communities is also vital to maintaining local access to essential services, particularly for vulnerable groups. As recommended by the PIU report, we have already asked Post Office Ltd. to maintain the rural network and to prevent avoidable closures, in the first instance, to 2006. Post Office Ltd. has underpinned its commitment to achieving that aim by appointing 31 rural transfer advisers around the country who often become closely involved with community efforts to reopen or save rural post offices. They have had considerable success in finding alternative sub-postmasters to replace those who have left, in locating suitable replacement premises where necessary, and in giving encouragement to community efforts to provide post office services. The House and rural communities up and down the country owe those individuals a great debt of gratitude for their success in preventing otherwise inevitable rural post office closures, and in identifying new people to run sub-post offices when the old personnel wanted to leave.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North

Can my hon. Friend tell us the difference between the closure of a rural post office that will disadvantage many people, and that of a post office in a deprived inner-city area? Rural areas often contain former mining communities, and the devastation caused to people who cannot afford the transport costs involved will be just as great. Can we look again at the definition of urban areas?

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

As I have said, the scheme includes arrangements for the most disadvantaged 10 per cent. of urban areas, because we recognise the importance of post offices in those communities. If distances of more than half a mile are involved, closures should not occur.

Photo of Liz Blackman Liz Blackman Labour, Erewash

I have written to Postwatch because I am unhappy about the consultation process in my constituency. I fully accept many of my hon. Friend's arguments about the need for change, but what discussions has he had with Postwatch about consultation, and what major themes of concern has it raised with him?

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

I am in regular contact with Postwatch about that. We have given it substantial extra resources to ensure that it can do a thorough job. I consider effective consultation on all the proposals to be vital to the success of the exercise as a whole.

It has been settled that when Postwatch and the local post office management disagree on a proposal and the disagreement escalates and reaches higher levels in both organisations, there will if necessary be discussions between the chairman of Postwatch and David Mills, who runs Post Office Ltd. So far Postwatch has told me that it is happy with the way in which the arrangements are operating, but I want to keep an eye on that because, as I have said, I think it is key to the success of the whole exercise.

Several hon. Members:


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

I want to say a little more about rural post offices, because the hon. Member for Eddisbury mentioned them a number of times. What we have done has had a significant impact. There were 115 net closures of rural post offices in the financial year 2002–03, compared with 194 in the previous year. That is the smallest number of rural closures since 1994–95, and it reflects the effectiveness of our measures to prevent avoidable closures. Our funding package for the rural network more than meets the PIU's recommendations. We are making a major investment in the network, and providing additional funds for the piloting of new ways of delivering services in rural areas.

We are investing substantial sums to support the transformation of the entire post office network—a total of some £2 billion. We have established a strong management team at the Post Office, and have given it the task of turning the business around. It is continuing, crucially, to develop and introduce new products and services to build a commercially successful network for the future. There has been half a billion pounds of Government support for what has proved to be one of the UK's biggest information technology products, resulting in the computerisation of every post office in the country. That means that the Post Office can continue to pay benefits and pensions in cash, but it also gives the Post Office a vital opportunity to widen its customer base by increasing its offer of banking products and providing access to bank current accounts at local post offices.

At the heart of the problems of the post office network is the fact that in the past it has been locked into a shrinking customer base. Now its task is to go on servicing those customers well, but also to attract new customers. It needs access to expanding banking markets, not just to dwindling markets as in the past. I mentioned the recent announcement of a joint venture with the Bank of England to provide a range of financial products. The Post Office already provides electronic access to their accounts for all holders of current accounts with Lloyds TSB, Barclays and the TSB, and I hope that other banks will be involved before too long. Access is now possible to basic accounts with every major high street bank and building society at every post office in the country, and a major advertising campaign for travel insurance and bureau de change services is also helping to make customers want to use post offices.

Photo of Michael Weir Michael Weir Scottish National Party, Angus

I was interested to hear what the Minister had to say about financial services. He will be aware that none of the major Scottish banks is offering such services. Will he join others in the House in calling for the major Scottish banks to join in, which could be very useful for rural post offices?

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

The hon. Gentleman may have been absent when that point was dealt with earlier.

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

May I take my hon. Friend back to his definition of a deprived area? Being a London MP, as I am, he will know of pockets of deprivation that are smaller than those he mentioned, but none the less areas of extreme deprivation. In that context, can he look into the closure of Grahame Park post office in my constituency? Grahame Park serves the most deprived part of my constituency where many people are on benefit, many have disabilities and there are many lone parents. There is a day centre that caters particularly for people with disabilities. Public transport links are poor and car ownership is low. At the same time, the estate is about to be regenerated and there will be a significant increase in the population over the next few years. It seems completely daft to close the post office when there is no alternative facility nearby and it is a deprived area. Something should be done about it.

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

I am sure that my hon. Friend will make that case to the Post Office and to Postwatch, which would both be interested and keen to hear his views.

A couple of years ago, many people were seriously concerned about financial inclusion, and I believe that that is still a major issue in the present discussion. I therefore particularly welcome the recognition made in a recent citizens advice publication on financial inclusion:

"The Government, the banking industry and the Post Office should be commended for the progress they have made in establishing universal banking services. The ambition to enable all people to own the most basic and financial services—a bank account—is one we share."

That is absolutely right, and the recent changes have taken us many vital steps forward.

Photo of Brian Jenkins Brian Jenkins Labour, Tamworth

The Minister must be aware that in my constituency, the two most vulnerable areas are having their post offices shut. What causes us most concern is the fact that in the south-east of Tamworth, all the post offices are proposed for closure. The new proposed post office does not accord with the Minister's criterion of the majority of the local population living within half a mile of it. In fact, just 20 per cent. are within half a mile. Is that the majority? We have had a commitment from the Post Office and the Minister saying that the majority of the population will live within a certain distance of post offices. Is that a commitment, a guarantee, a wish, or is it merely a platitude?

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

The commitment is that, nationally, 95 per cent. of the urban population will be within a mile of their post office—most within half a mile. That will certainly be the consequence of the programme that applies to the country. My hon. Friend has written to me about particular issues in Tamworth. I know that my officials have been in discussion with the Post Office about them, and I am sure that my hon. Friend has been in discussion with the Post Office and Postwatch as well.

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

I shall not give way again.

The Post Office faces a wide range of challenges in making sure that the network can remain viable and sustainable. I share the concern of hon. Members about ensuring the network's future. We need to ensure that it can prosper on the basis of today's and future needs, not those of 20 or 30 years ago. That is where our policies are leading, and I commend them to the House.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry 5:28, 13 January 2004

I commend the Minister for his brave defence of the Government's policies and I acknowledge that he is a thoughtful, intelligent and assiduous Minister, but he must know that he is in a big hole and that his Secretary of State has abandoned him in it. The explanation that she is not here because he is here is totally inadequate. The Post Office is, after all, the only significant business that the Government still own, and Ms Hewitt is the Secretary of State responsible for it. The fact that she is not here is reprehensible, and I hope that she will take note that the House is less than pleased about her absence.

Photo of Mark Francois Mark Francois Opposition Whip (Commons)

The hon. Gentleman will be aware that the House last debated these issues on 11 December 2003. That was also a heated debate. Today's Minister was not present then, and deputising for him was the Under-Secretary of State for Trade and Industry, Mr. Sutcliffe. Hon. Members raised important constituency points that night, and that Minister undertook to respond to our points in writing. Most of us are still waiting for those letters, myself included. Does the hon. Gentleman agree that if Ministers agree to write to Members, they should keep their word, or does he think that the letters are lost in the post?

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

The hon. Gentleman will be aware that the Department of Trade and Industry is struggling—it has only 10,000 civil servants, so obviously it does not have the staff. [Hon. Members: "One for each post office."] So far—and falling. The figures will probably cross over in about six months.

The Government maintain that they are investing £2 billion in the post office network, but I would like clarification of at least some of that figure. The reality is that it includes, for example, £450 million over three years for maintaining the rural post office network. We recognise and welcome that investment, but the idea was that that would happen while a solution was created to the problem of providing income for those post offices. If we have not done that at the end of three years, such money will be not an investment but simply a maintained expenditure, which will not change the situation at all.

Of course, we are also using such money to pay postmasters and postmistresses to leave the Post Office. And according to the Library, approximately £800 million is not specified at all, and is believed to be debt write-off and dividends forgone. Most of us do not really regard that as real money. It certainly does not constitute investment—it simply covers the losses. Indeed, if £2 billion were really being invested in the post office network in this short period, the Government ought to be commended, and we would expect as a result a super-modern, efficient and streamlined Post Office with a dynamic range of services, run by confident people with high morale. This debate clearly shows that no one except the Minister believes that that is the outcome we are currently heading for.

We all acknowledge that change is necessary, and indeed, it was taking place. No one denies that the process of transferring payments to bank accounts, for example, which was ongoing and undertaken out of choice, would have led to a decline in income for post offices. But the point is that the Department for Work and Pensions has accelerated that process, thereby creating a problem for the DTI. It has been wrestling to find solutions, but so far it has come up with no convincing answers. The small but significant—and by no means cheap—experiment of "Your Guide" enjoyed fairly widespread support, but it has been abandoned, presumably because the Government are not prepared to make the investment. On the one hand the Government claim to be investing, but when such an opportunity presents itself, the resources needed to make the project work are not available. In that climate, it is hardly surprising that when those who run sub-post offices are given the chance, they are taking the money and running, especially as it is better than the figure they could realise on the market.

A high proportion of closures are taking place in rural areas, even though the policy there is not to close. In fact, the situation in such areas is almost worse. Although income is guaranteed, people can see business dwindling week by week, and they can envisage that in three years' time, income will stop and the business will have no value. So when somebody wants to retire, it is almost impossible to tempt a member of the community to take over the service. I can quote constituency examples, as can all other Members. A post office at Pitcaple—it serves my hon. Friend Sir Robert Smith—with more than 100 customers closed two years ago. The Post Office said that it was more than happy for it to continue, but two years later it said that the premises were unsuitable, despite the fact that a local shop offered to take it over. It subsequently said that it could find nobody else to run it. That post office still has not reopened.

In respect of the one town in my constituency that qualifies for urban renewal, it was a case of, "Hands up who wants to close their post office? Here's the money: go." Of course, the other two post offices were very happy to vote for that, because the business was shared among them. That is part of the problem.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Does the hon. Gentleman accept that what the Minister said on this issue is totally unrealistic? He said that if a post office in our constituency is under threat and we want to save it, we must choose another post office to close instead. That would be like being a judge at a good-looking baby contest, where the MP has to choose the good-looking baby, thereby disappointing the many others. It is just not credible.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

The hon. Gentleman is of course right. The Minister is saying, "Please join me in my dirty work and share the blame."

I have some sympathy for Mr. O'Brien, who could not answer the question about child benefit payments to his own household. I assure hon. Members that my wife was the first—and as far as I know only—person to register for a card account at the local post office. The evidence shows that the connection between the availability of a post office and the choice of where to collect child benefit has been lost on many child benefit claimants. Mothers I have spoken to say that payment through bank accounts is more convenient and that they were asked for their bank details, so they supplied them. When it is pointed out to them that the consequence of opting for that form of payment means that post offices are unable to provide other services, because of the loss of income, many say that they would have preferred to retain payment through the post office. The original letter to child benefit claimants simply invited them to provide their bank account details and gave no indication that any other option existed.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

If the hon. Gentleman will forgive me, I would like to make progress because several other hon. Members wish to speak.

The spokesman for the Conservatives and some Back Benchers have articulated examples of the management of closures. Just before Christmas, my party's candidate for Mid-Sussex contacted me to say that she had chaired public meetings in the constituency to campaign against a proposed closure. She was told that the final date for closure was 23 December, with confirmation to come early in the new year, and Mr. Soames referred to those problems earlier in the debate. It is a disgraceful way to treat people who are trying to obtain the views of the public. The Post Office's effective message is, "We are not interested." It is offensive that Postwatch—I mean no sweeping criticism of that organisation—is given advance information on closure proposals in confidence, on condition that it does not disclose the details to anybody, especially elected representatives of the public. There is no justification for a consumer watchdog having an advantage over elected representatives.

The failure to consult local authorities in their capacity as planning authorities means that possible future patterns of trade, which could be relevant to closure, are not taken into consideration. That is a failure to use the resources that are available.

Photo of Sarah Teather Sarah Teather Shadow Spokesperson (Health)

Will my hon. Friend join me in condemning the nature of the consultation in my constituency? Despite a vigorous campaign to save the Brondesbury and Gladstone Parade post offices, they both closed in the summer. I found it extraordinary and outrageous that hundreds of signatures on petitions of protest were recorded as one objection. When we asked the general area manager what we would have to do to change his mind about a closure, he said that he had complete confidence in the decision-making process and it would be difficult to change his mind. What a sham.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

As my hon. Friend points out, it does not matter whether there is one objection or a thousand, because no one will take any notice of them anyway. It is nonsense to suggest that a genuine process of consultation occurs.

Given the Minister's dealings with the Post Office, I wish to make a serious point about its middle management staff, who treat their power as a means to patronise Members of Parliament and representatives of the public. The attitude of middle management is that they have the power and nothing we do or say will change that because our views are irrelevant. That is an outrageous attitude for a public service. On many other occasions, we fight on behalf of the management to try to secure a future for the business. It should recognise that we need a partnership, not an arrogant dismissal of the legitimate role of Members of Parliament.

I have received representations from our candidates for Mid-Sussex, Newcastle, Essex and Leeds, all complaining about the same problems as have been articulated here tonight. Under the urban renewal programme, the Government have put up £30 million for reinvestment for those post offices that have been retained in the network. However, it has already been proved that post offices are closed, not according to the needs of the community but on the basis of self-selection by postmasters and mistresses, and nobody can blame them for that.

In addition, theoretically there is money available for offices that are continuing within the network, to improve their premises to meet growing business. I am told that scheme is supposed to be completed in three months. So far, of the £30 million made available, less than £1 million has been taken up. That is hardly surprising. If one is in the middle of an extremely controversial process where morale is low, one would be unwilling to put up 50 per cent of the money to secure the other 50 per cent of match funding to invest in one's business before having the chance to establish what the new pattern of business was likely to be in the future.

Will the Minister explain the time scale? Should it not be extended? Does he recognise that if less than £1 million of the £30 million has been drawn down, reinvention in the sense of investment in the remaining network is empty and meaningless?

Where will the new business for post offices come from, given that "Your Guide" has been rejected. There is clearly demand by many Government agencies to use the Post Office network to distribute information, forms and so on—for which service those agencies presumably pay, yet there seems to be no suggestion that arrangement should be reviewed and reconsidered. If there is to be reinvention, presumably it ought to be possible for additional post offices to be registered for vehicle licensing, passport applications and so on. Instead, one tends to find that the whole deal is rigid and restricted. The Post Office has a network but buyers have no idea what it is—and individual changes are almost impossible. When a Member of Parliament is approached by a post office that wants to issue vehicle licence, driving licence or passport forms, there is no mechanism by which such requests can be processed. That should be part and parcel of a genuine review of the future role of the Post Office.

Photo of Alan Beith Alan Beith Chair, Constitutional Affairs Committee

In the town of Berwick the Post Office was unable to maintain its former Crown office, which has been closed for many months. Anyone who wants to obtain a vehicle motor licence must either go to Scotland or to a post office 16 miles away in England. Does that not indicate that even in an area in which the Post Office is supposed to be maintaining traditional central offices, it is not doing so?

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

My right hon. Friend has anticipated my next point. The role of the Crown office has become extremely unclear. When the large number of Crown offices that used to exist were effectively privatised or abolished by the previous Government some 10 years ago, it was said that that would make no difference to services. The right hon. Gentleman confirms that the loss of a Crown office means the loss of a service.

The town of Keith in my constituency has a population of 4,000 or 5,000, so it is comparable to several others in the area. For historical reasons, Keith has never had a Crown office so the office there is not allowed to issue passport forms—even though it is owned by a postmaster with another post office that has the capacity to do that work. That kind of bureaucratic nonsense does not address the needs of the community but is a historical hangover. It is one reason why many of us are less than convinced that the proposals really are a reinvention or renewal but believe that they represent systematic closure, rationalisation and a rundown of the service. While the focus currently is on urban post offices, we are waiting for the money to run out for rural offices and for the roof to fall in on them.

Progress with the card account is also unclear. The figures that are regularly published tell us that so far, 7 million of the 30 million accounts have been approached. Of the 7.25 million account holders who have been invited to convert, 2.25 million have not even replied. One third of those who did reply said, "Take a running jump" or applied for a card account. In other words, they were not interested. The future requirements of millions of people and their implications are unknown to the Government and the Post Office. That is particularly true of child benefit.

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

The hon. Gentleman makes a number of thoughtful points, but I want to clarify that applying for a Post Office card account does not amount to saying "Take a running jump." It is an entirely proper outcome of the process. Something like 2 million people have so far indicated their preference. That is their right and that is what they will get.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I am slightly rebuked by the Minister. Of course, we are keen for people to take out card accounts. The fact that sufficient numbers have struggled through the system to get an account is welcome. Perhaps the 2.25 million who have not replied are, in effect, telling the Government to take a running jump.

Photo of Mr Adrian Flook Mr Adrian Flook Conservative, Taunton

Is the hon. Gentleman aware that a pensioner in Winsford, a village in my Taunton constituency, who has a bank account tried to get a post office card account? After considerable effort, the pensioner obtained an account number but it turned out to be a dummy. The Post Office had no intention of giving her a card account because she already had a bank account.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I am of course well informed about the situation in Taunton. I certainly understand the hon. Gentleman's point; every Member could give a similar example. Every time we debate this subject, the Minister must be aware how much anger and frustration there is on both sides of the House. If he does not tell the Secretary of State that there is a problem—as she did not have the courtesy to attend the debate—he will not be doing his job. There is a problem and the Government had better realise it, or they will find out about the consequences in a painful way.

The exceptions service has already been mentioned, and I have tabled an early-day motion about it. A significant number of people are likely to be affected—the Government estimate that it could be 3 million. For various reasons, some short-term and some long-term, those people will be unable to use any of the techniques currently on offer. They may not be able to make use of a card account, as they cannot cope with pin numbers, or they may not have a bank account. They may be ill for a couple of weeks or there may be a long-term problem. At present, they can sign their book and hand it over at the post office, or they can ask a proxy—an agent—to do that for them and bring them the money.

Under the new arrangements, we do not know what people will do. When we pressed the Government, we were given suggestions such as, "They will be given a cheque", but those people need cash so a cheque is not really the answer. It has even been suggested that they could receive cash from the Department for Work and Pensions by special courier. I have a vision of special couriers touring the country, trying to deliver cash to people in remote rural areas, to ensure that they are not excluded from the system. I suspect that it will cost substantially more than £400 million or £500 million a year to do that.

Another suggestion is that people would be given a special payment form that they or their agent could take to the post office to receive cash. It is even proposed that for convenience, so that a new form does not have to be issued each week, people could be given several forms stapled together to make a little book—[Laughter.] People could then take the book to the post office. Does that sound familiar? If that were to happen, several million other people would say, "What about us, why should we miss out?" That may be why several million people have cottoned on to the fact that the best thing to do when they receive letters from the DWP is not to reply and to keep the Government guessing until they come up with an answer.

Almost everything that matters in this situation is unknown. We still do not know how many people will apply for a card account or for payment by direct debit through the bank, or indeed how many people will not apply. We do not know how much the DWP will save through the new operation, especially as we know neither the mechanism for the exceptions service nor its cost. We do not know what the loss to sub-post offices will be, so we do not know how much business they can win back or from where; the scale of business that they need to find to cover the gap is unknown.

The Government are hell-bent on taking the process to a conclusion by a defined date, although almost every significant variable is unknown and they do not know what the outcome of any of the major parameters will be. The Government are heading for a serious fall. I suggest that until our questions are clearly answered, they should listen to Members, slow down the consultation process and recognise that the communities affected have a right to be consulted. The Government must explain the real long-term future for the Post Office, not merely the outcome of their current closure programme.

Photo of Mark Fisher Mark Fisher Labour, Stoke-on-Trent Central 5:49, 13 January 2004

I am grateful to the House for the opportunity to contribute briefly.

The Minister is right to say that post office closures have been taking place for 15 years. Moreover, probably for the 20 years that I have been a Member, there has been a process of slow erosion. So, in many ways, a major programme should be welcome in that it would allow for planning and coherence, instead of the drip, drip that we have had for the past 20 years. The Minister has been listening to the debate and looking at his postbag, so he must understand that—whatever his brief says and whatever Postwatch and the Post Office tell him—there is no strategy in practice. There is no coherence. If there were a strategy, the Post Office would look at each community, and its needs, scale and geography would be considered and an assessment made about how many post offices were needed to serve that community. That is not taking place, and it is no good the Minister closing his ears to that.

I had had a very unpleasant and heated meeting with the regional management in my constituency last Friday, and it is clear that all that they have done is wait and see. They have put out the notice saying, "Please apply for closure," and have accepted every application that has come in. They have not varied that at all. They have had no view of their own. They have not varied; they have not opposed. They have simply taken whatever has been offered to them, because that is the cheapest and easiest way to meet their targets—dread words for this Government and most other Governments, but there it is.

There has been no strategy whatever, and the result in my constituency is not a closure programme; it is butchery. There are 21 closures in the city of Stoke-on-Trent and seven in my constituency, most of them down one side of the constituency, where two and half large wards, with more than 20,000 people, are now left without a single post office. That is not a planned, strategic closure programme; it is a complete cop-out and a waste, and it is destroying the services that should be there.

Photo of Michael Weir Michael Weir Scottish National Party, Angus

I agree with the hon. Gentleman, but are not things slightly worse than he says? The Post Office is giving the impression that there is a planned programme. Did he, like me, receive a letter from the Post Office saying that it will now consider constituencies as a whole? The original letter said that the Post Office would look at my constituency in the spring of this year—that was in November last year—but two weeks later, I received a letter saying that one of the post offices in a borough in my area would close. The Post Office told me one thing one week and the complete opposite two weeks later. There is no strategy, just as the hon. Gentleman says.

Photo of Mark Fisher Mark Fisher Labour, Stoke-on-Trent Central

The hon. Gentleman is extremely lucky; he has been consulted by the Post Office. Most of us have not been consulted at all. If there is no strategy, there is virtually no consultation. The shadow Minister tried to suggest in opening the debate that Stoke-on-Trent was being favoured by having a six-week closure consultation programme. Almost all that time was over the Christmas period, so we effectively had about 12 working days.

In the past 20 years, hon. Members have had a great deal of experience of library and primary school closures, as well as of the closure of chemists and other local facilities. We are eroding our communities, and what we are doing with this closure programme is a continuation of that. We ought to understand what we are doing. It may make commercial sense, but it makes absolutely no social or community sense. That ought to be considered if we are to have public services.

The Minister should understand that there is no consultation at all. It is simply not taking place. We have all had experience of closures, but when a closure programme involves a local school, we have proper consultation, not 12 days. We have public meetings, and the local education authority and Ministers, if the issue goes to them, listen to and are lobbied by those putting the community case. None of that is happening.

I suggested that the regional management should hold meetings in my constituency. If the regional management believe that they have a good case for closing post offices, they should put it to the public. When I put it to them that they should do so, they just laughed. They thought it was a ludicrous idea. They said, "There is no time for that," but there is no enormous time pressure; we have to get this right. The Post Office and the Government will not get it right unless they first have a strategy, and secondly, listen to the people who will be affected. At the moment, there is no strategy or consultation and, as a result, there is a great deal of anger on all sides about the incoherent butchering of the service. We are seeing the end of the service as such, which will have an effect on communities. If the Minister is serious when he says that he wants an effective process, will he undertake, even at this late stage, to examine the individual cases that hon. Members of all parties have put to him?

Photo of Mark Fisher Mark Fisher Labour, Stoke-on-Trent Central

I am about to conclude, because many other hon. Members wish to speak.

Will the Minister recognise that the position on the ground is such that there is no strategy or consultation? If necessary, he could lengthen the consultation process and use the Government's position in relation to the Post Office to require it to have a coherent strategy. Such a strategy would start with assessing populations, needs and geography before planning a network, rather than simply saying, "Who wants to close, because you all can?"

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 5:56, 13 January 2004

This is far from the first time that I have raised post office closures in Eastbourne. I have raised the matter in several debates—the most recent debate that I secured was held on 14 October 2003—and even during Prime Minister's questions. I hate to seem a little like the ghost of Christmas yet to come. However, I was one of the lucky ones whose constituency was among the very first to be blessed with the area plan procedure, so I am here to give a warning, I hope not in too ghoulish a way, of what is to come for hon. Members whose lives have not yet been touched by the process; they should know what lies in store.

My constituency was singled out for the area plan approach in early August last year. While almost everyone was on holiday or thinking about other things, a letter suddenly arrived about post office closures. There were two separate consultation processes. One process related to three, and subsequently four, sub-post offices in my constituency, and the other proposed the closure of the Upperton Road post office, which most people in Eastbourne regard as the main post office in my constituency. We eventually persuaded the Post Office to hold both consultations together and to extend the overall consultation period. I personally asked the Post Office to send senior people to attend a public meeting in Eastbourne town hall, which took place toward the end of last year, in addition to participating in the ordinary consultation exercise.

My perhaps naive belief, which was shared by Postwatch, was that because our area was one of the first to be involved in the process, all procedures would be followed to the letter and taken seriously by the Post Office. I could have not have been more wrong. Four sub-post offices—Whitley Road, Avard Crescent, Compton Street and Church Street—have closed, and the main post office on Upperton road is due to close on 7 February.

I pay tribute in passing to Postwatch—as did the Minister—and especially to Mr. David Bland, for being extremely co-operative and helpful throughout the process. However, Postwatch has no teeth or power. It is true that the dispute was escalated—to use the jargon—and that Peter Carr, the national chairman of Postwatch, personally raised the Upperton Road closure with no less a figure than Mr. David Mills, the chief executive officer of the Post Office. However, as I have explained, the post office is to close in a few weeks' time. Postwatch was so disturbed by the way in which its views were disregarded that it made more global representations to ensure consideration

"of better integrating Branch closures into Urban Reinvention Network Area Plans" so that both sub-post offices and Crown post offices would be taken into account with as much equality as possible throughout the process.

There is a real issue, and I have three brief observations to make from my experience. First, the Post Office is adept at ignoring even the business case for keeping a post office open. Leaks from the staff of the Upperton Road post office showed that, far from suffering the losses that were alleged, it was doing rather well. Indeed, the staff have subsequently received substantial bonuses for their efforts. It makes little sense for the Post Office to enter into a deal worth £100 million-plus for financial services with the Bank of Ireland, as we have heard, given that in Eastbourne it is shutting more than a quarter of our post offices, with the closure of five of the 19 post offices in the town.

As I pointed out to the Minister in an intervention, there is no guarantee that the area plan system will work. It was proposed as a better alternative to piecemeal closures, but in my constituency sub-postmasters who would have liked a deal were not offered one, and their businesses, largely as a result of Government policy, are now extremely marginal and may well close in due course. There will therefore be closures under the plan, but there will also be other piecemeal closures.

Finally, I turn to the consultation, which in retrospect I regard as flawed and entirely bogus. There was a vast expression of local opinion, in petitions, letters and e-mails and at a public meeting, all of which was disregarded by the Post Office. It was as plain as a pikestaff from its attitude in correspondence and at the public meeting that it was not interested in taking note of those strong feelings or the massive disadvantages, particularly for elderly people in my constituency, of the closures.

I shall close by talking about two other interesting straws in the wind. I was approached by a constituent who was prepared to take on a business that the Post Office proposed to close and continue to run it as a sub-post office. The Post Office was not in the least interested in accepting his proposal. The other straw in the wind concerns the staff at the main post office on Upperton road, who were told well before the consultation that it would close on 5 February. That is now the official closure date, and they must migrate, presumably along with a lot of customers, to the other end of the town centre to another branch that is already extremely busy, overused and short of space. In a nutshell, the consultation was a travesty, and any hon. Member who faces even the suggestion of consultation should question very carefully indeed whether they are simply being led up the garden path by the Post Office.

Photo of David Clelland David Clelland Labour, Tyne Bridge 6:02, 13 January 2004

When I read the motion on the Order Paper, I agreed with almost all of it, apart—given that my regional Whip, Mr. Kemp, is on the Front Bench—from the phrase "condemns the Government", which I could never do. However, I am afraid to disappoint Opposition Members, but I shall not join them in the Lobby. Although I agree with the wording of the motion, it is born of the Opposition's cynicism and opportunism. After 18 years in government, when they closed 3,500 post offices, they have the cheek to talk about breathtaking double standards and crocodile tears, as Mr. O'Brien put it.

I object to the number of closures in my Tyne Bridge constituency. Under the programme, no fewer than nine of our 21 post offices are scheduled for closure, three in Newcastle and six in Gateshead. All the indicators show that my constituency is one of the most deprived in the country, and the least worthy of such a blow. I am not suggesting that the service should not be rationalised by any means. Some people are voting with their feet and have found alternative ways of collecting pensions, welfare benefits and so on. That trend will continue. More and more pensioners, for example, will choose to have their pensions paid into their bank accounts because their wages and salaries were paid in that way. I therefore accept the need for rationalisation in some instances, but the closure of nine of the 21 sub-post offices in Tyne Bridge is excessive, and does not take sufficient account of the terrain.

The Post Office has told me that its staff walk the areas around post offices before making a decision about closure. If they did so in Tyne Bridge, they would have to be pretty fit. One post office is the aptly named Deckham Hill—whatever direction people walk in they go up and down very steep inclines indeed. The people who rely on post office services are generally elderly or infirm, or are mothers pushing prams, and will find access very difficult indeed.

In the case of another post office, the Dun Cow, which serves the Dunston Hill area of my constituency, 1,200 local residents signed a petition against its closure. I pay tribute to the Labour councillors in the area who kept the people so well informed and gathered the names on the petition. Similarly, in Newcastle, another 1,200 people signed petitions against recently announced post office closures, which will be a devastating blow to local people and raise concerns about more closures in the future.

It appears that not enough account is taken of future development. The Low Teams post office in my constituency is scheduled for closure on the basis that there has been some demolition in the area. However, new development is taking place to replace the demolition. New houses are being built on the riverside in the former garden festival site and around the post office itself. That does not seem to be taken into account by the Post Office. A similar argument applies to the Armstrong Road and West Benwell post offices in Newcastle, in an area known as the "going for growth" area of Newcastle, where substantial redevelopment is planned.

Photo of Patsy Calton Patsy Calton Liberal Democrat, Cheadle

Perhaps I can help the hon. Gentleman. I have a letter from the chief executive of the Post Office, who tells me clearly that he believes that

"extensive modelling and analysis of an area including what published plans the local authority might have for the area" are included in the consultation process. In fact, as the hon. Gentleman knows from his experience and as I know from mine, that does not seem to be happening. Does he think that the top levels of the Post Office may not know what the intermediate levels of the Post Office are doing?

Photo of David Clelland David Clelland Labour, Tyne Bridge

That may well be the case. My experience would bear that out. I do not believe that the Post Office could have investigated in the way that it says it has and come to the conclusion that it reached.

There is a rule that sub-post offices in the most deprived areas should not be closed if there is not an alternative within half a mile. However, in the case of the Armstrong Road and West Benwell post offices, which I mentioned earlier, the Post Office argued that if both are closed at once, that rule does not apply. I have taken the matter up with the Minister, who I am pleased to say supports me. I understand that the matter will be re-examined. I had a letter from the Minister in December, in which he writes that

"there would still be four alternative offices within one mile of West Benwell and three within one mile of Armstrong Road, all with good public transport access and concessionary fares."

Concessionary fares are just that: they are not free. People still have to pay, and concessionary fares do not apply to all those who use the post office services. Moreover, one mile is an awfully long way to walk in the terrain that I described earlier.

The Minister told me, and he repeated today, that some postmasters are leaving the system owing to a lack of business. That may be true in some cases, but not in all. Some retirements are taking place, but in many cases, such as that of the Dun Cow post office in Dunston, there is no lack of business, with 1,200 people in the immediate vicinity asking for it to be kept open. Some postmasters are retiring, but many are being bought out by the sweeteners being offered by Post Office Ltd.

Despite the changes that are undoubtedly taking place—I accept that changes are taking place—the sub-post offices in Tyne Bridge remain an important and necessary service for thousands of my constituents. The proposed closure of almost half the total outlets in Tyne Bridge is excessive and will cause hardship. It should be reconsidered by the Post Office, whose duty to run an efficient business should not undermine the very services that it exists to provide.

Photo of Roger Gale Roger Gale Conservative, North Thanet 6:09, 13 January 2004

The subject was last debated on the Floor of the House on 11 December, when the House considered the Trade and Industry Committee report and the Government's response to it. Replying to that debate, the Under-Secretary of State for Trade and Industry, Mr. Sutcliffe said:

"A viable post office network is important to all hon. Members."—[Hansard, 11 December 2003; Vol. 415, c. 1288.]

He was right. That was a two-hour debate, during which there were 21 contributions—10 from Labour Members of Parliament, seven from Conservative Members, and four from minority party Members. Every single contributor to that debate was hostile to the Government and to the post office programme. So far in today's debate, every contributor on both sides of the House has been hostile. If there is an hon. Member present who is prepared to stand up and say, "I support entirely what the Government and the Post Office are doing", I will willingly give way to them. However, I do not detect anyone coming forward to say that, as making such a remark would be electoral suicide in one's constituency. As the Under- Secretary rightly said, this matter is vital to every hon. Member.

The thrust of the debate on 11 December was the availability, or lack of availability, of Post Office card accounts. The Chairman of the Select Committee on Trade and Industry, Mr. O'Neill, said that the Department for Work and Pensions had

"made applying for the account more difficult and complicated and has been able to load the choice system with active discouragement."—[Hansard, 11 December 2003; Vol. 415, c. 1259.]

Postwatch has said:

"The Post Office Card Account application process requires the customer to retain and assimilate documents that they receive at different stages in the process. The duration between receiving these documents is often quite long. It can be confusing and is potentially off-putting."

As my hon. Friend Mr. Paterson reminded the House in Westminster Hall on 7 January 2004 and has said again in the House this afternoon, there are 22 steps in the process of obtaining a Post Office card account. That is effectively a deliberate attempt to dissuade post office customers, including sub-post office customers and the business customers of the sub-postmasters, from obtaining Post Office card accounts.

In replying to the 7 January debate in Westminster Hall, the Under-Secretary of State for Work and Pensions, Mr. Pond, said:

"The move to direct payment and the introduction of universal banking services has resulted in a number of benefits, including an increase in customer choice".

He also said:

"The Government believe in choice, and in giving our customers the dignity of the financial inclusion that the rest of us enjoy."—[Hansard, Westminster Hall, 7 January 2004; Vol. 416, c. 107–8WH.]

That is rubbish. It is what is now called, in prime ministerial parlance, a whopping great totality. My constituents, the elderly who live in Herne Bay and Margate, are not interested in what the denizens of Islington regard as inclusion. They are not queuing up for new mortgages, they do not want to do share dealing and they are not even trying to apply for passports. They want to be able to take their post office book down to the post office to get their cash and to buy the things that they want from the little shop that is attached to it. If they cannot do that, they want a Post Office card account, and they would like to get one easily, please, and because of age and probably physical capability, they do not want to have to jump through 22 hoops to do so.

That footfall, which was mentioned earlier, is vital to these small businesses. It is not surprising that small business people, which is what sub-postmasters are, are taking the money and running, because the alternative would be bankruptcy. Businesses on which they were relying for their retirement, which they now cannot sell, would be destroyed by Government action and the post office programme.

The Under-Secretary of State for Trade and Industry, the hon. Member for Bradford, South, said in this Chamber on 11 December:

"We want people to use post offices because they want to, not because they are forced to do so"—[Hansard, 11 December 2003; Vol. 415, c. 1289.]

The Government amendment to the motion before us refers to a

"commitment to modernise and invest in the national network of post offices while keeping them easily accessible to all customers" and

"notes the Post Office's commitment to ensuring that 95 per cent. of the urban population live within a mile of a post office".

That is a mile by a straight line, but I have news for the Minister; my constituents, particularly the elderly, do not walk in straight lines through buildings. They follow the roads. Neither do they particularly want to have to climb up hill and down dale, which is often the shortest route as measured by the Post Office, but not the most reasonable one.

The so-called consultation process is a total charade. It is absolutely meaningless. I am sure that there is not a single Member in this Chamber who has not tried to protect a post office, and I should be very surprised if anyone had succeeded in doing so. Yes, Postwatch has stayed some executions, but, mark my words, those post offices will close. The Post Office's failure to do its homework and the lip service that the Minister pays to that is disgraceful.

The Post Office tells me that it is possible to drive from the former Studd Hill post office in my constituency to the Sea Street sub-post office—assuming, of course, that one has a car—in three minutes. Michael Schumacher could not do it in that time: it is simply unrealistic. At the other end of my constituency, the Post Office has done its homework so well—I have mentioned this in the Chamber before—that I am told that the rail service and the underground are the alternatives to the non-existent bus. I have represented Margate for 20 years, but I have not yet found the metro station—unless the Post Office means that everybody will have to travel to London to use the post office. It is ridiculous.

The Minister says that local people have to demonstrate local support. In my constituency, and I suspect in every constituency represented in this Chamber, people have been queuing up to demonstrate local support to try to keep open the services that they want for themselves and their families. However, the petitions and the letters from Members of Parliament and local councillors of all political persuasions are not worth the paper that they are written on. It is a charade, and the Minister should be ashamed of it.

Sadly, it will be a little while yet—possibly until the end of this year—before this Government are reinvented and closed. In the meantime, post office closures are continuing. For me, the sadness is that the people who are responsible will be long gone by the time it is left to the rest of us to try to clear up the wreckage.

Photo of Mr Iain Luke Mr Iain Luke Labour, Dundee East 6:17, 13 January 2004

I rise not only to speak specifically about my constituency, as many hon. Members have done, but as someone who has watched the financial troubles of the Royal Mail and Consignia, to make the point that we should remember that many of the problems that we face today date back to the 1980s and 1990s, when the Post Office was cash-strapped and the then Government, who are now in opposition, were unsure about whether to privatise it.

I have received briefings from the Post Office locally and nationally. I have heard Allan Leighton—who changed Consignia's name back to the Royal Mail in his efforts to create what he sees as a first-class, world-class postal service—speak about reinventing the Post Office. I accept that some sort of change is necessary. I am saddened by the tenor of the motion tabled by the Opposition, who seem to deny that there is any need for reinvention and put forward no positive response to the Government's suggestions. However, although their motion contains some negative terms, I have some sympathy with some of their arguments.

When the consultation began, I wondered how it would work. Unfortunately, it is now evident that six weeks was too short a period, and the process seemed inflexible. In the case of three of my local post offices, the consultation process on their closure was due to finish on 6 January. As the two weeks over Christmas are dead time, I wrote to the Post Office to ask if it would be possible to extend the process for another two weeks to allow for problems with the mail. I put in that request well before Christmas and got my reply on 5 January, the day before the consultation ended. That gave me a little time to mount a representation, which I did. The inflexible and short-term nature of the process suggests that this is a done deal and that in the end the consultation will have made no difference.

The basis of some of the decisions must be flawed. I know that from my local community and one of the post offices, which is proposed for closure and based in Barnhill in Dundee. It is centred in a vibrant and busy shopping centre but the alternative was somewhere isolated and out of the way. It has subsequently been found that the alternative post office is for sale and may close. That means that Barnhill, which is fairly populous, would be without postal services.

A Conservative councillor has taken up the matter on behalf of constituents. I have worked with Postwatch to try to put the case. My case was that, given the presence of two large supermarkets, if the post office had to close, why not try to locate it in one of them. I believed that the Post Office would consider that in the run-up to the consultation and present that option rather than the smaller, isolated, less used post office that may close.

The Minister made the point that some reviews have taken place. I learned something today and I was chasing it up as late as 2.30 pm before the debate. I was led to believe that, on the basis of my representations, those of Councillor Mackie, who is Conservative councillor for Barnhill, and those of Postwatch, a hold will be put on the decision until my alternative can be examined. Lack of alternatives damns many hon. Members' cases.

The option was easy to devise because in Dundee, West, where a large Tesco is located, the same thing happened. A post office was to close in Lochee but it was successfully relocated in the Tesco superstore. However, it takes time to work out the options and it is obvious that time was at a premium in the process. Given the importance of ensuring that we have a first-class, world-class postal service, we need to take more time to consider the matter.

I have a dilemma with the current partial success—I cannot say that the process will ultimately be successful because there is a long way to go. I know from my work in writing and making phone calls to get some sort of feedback that the dilemma is mirrored throughout the country. Only four post offices are proposed for closure in my constituency. Other hon. Members have mentioned statistics such as 29 post offices. The problem in Dundee is therefore not on the same scale as those in some areas, but the services are all vital to their communities.

I made the point to the Minister at the beginning of the process that I believed that the Government were brave to tackle the problem. We have heard Allan Leighton speak about the Post Office losing millions of pounds; something had to be done. The Minister and the Government now have to be brave and say that there needs to be time out, to use a basketball term, to tease out some matters. When good cases have been made, there should be a review. The Government should be able to tell the Post Office that there should be a review process as a backstop. Postwatch has played a role but it needs to be beefed up to ascertain whether, given more time for thought about what the process would entail, there could have been more detailed work on the economic, social and community basis for closures and for keeping post offices open.

I want briefly to consider two further vital issues. I accept the need for exceptional services. Some people need to go to post offices to get their pensions and benefits over the counter. That should continue. I have been sufficiently lucky to ensure that several pensioners—one a sprightly 94-year-old—managed to keep their Post Office pension books. It is not well known that the exceptional circumstances can continue. Like many people, I am worried that after 2005, they will disappear. The Government must make a commitment to continuing them.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

Does my hon. Friend agree that it would be better if the Government made it easier for people to get the cards and keep their pension books?

Photo of Mr Iain Luke Mr Iain Luke Labour, Dundee East

The system has to be simplified and publicised more widely. There has to be a commitment that it will still be all right after 2005 for pensioners and people unable to get to a bank to obtain a Post Office benefits book. That commitment should be made public as soon as possible.

Lastly, 90 per cent. of people in Scotland use the three major Scottish banks. They have moved away from post offices because the major banks will not locate facilities there. That is one major element in ensuring that post offices in Scotland continue to be viable. I have made that point to Allan Leighton, and the Government should be pressing it home with the banks.

Photo of Mr Archy Kirkwood Mr Archy Kirkwood Chair, Work and Pensions Committee, Chair, Work and Pensions Committee 6:25, 13 January 2004

If the speech by Mr. Luke amounted to support for the Government, I think that they face some difficulty. At best, it could be described as tentative, but the hon. Gentleman did as well as he could.

This is a very important debate. I congratulate Mr. O'Brien on bringing this subject forward. Today's debate has come in our second week back after Christmas, but the theme will recur throughout the year. I am an officer of the all-party group on sub-post offices and we will be convening meetings in the very near future to try to keep track of events. The level of concern demonstrated by hon. Members of all parties is palpable and obvious. We need to watch this matter carefully.

In passing, I want to commend the work of the National Federation of Sub-Postmasters, which keeps all of us objectively informed about what is happening in our constituencies, and about the wider issues. The federation's general secretary, Colin Baker, is a particular expert on these matters.

I want to say a word about context of the issue. The problem has been evident for nearly a decade. I first became aware of it when I watched Mr. Lilley wave a magnetic swipe card at the 1995 Conservative party conference. He claimed that it would be the answer to everything, but the project was cancelled after £800 million of taxpayers' money had been spent. That shows the extent to which policy on the matter has been mishandled, and the huge sums of money that have been spent and lost. That money will be needed in the long term to put matters right.

The year 2002 was an important one. I was present at Westminster's central Methodist hall when a massive rally involving nearly 1,600 people—ordinary people—was held. Those people wanted to demonstrate their support for continuing back-up and provision for their post offices. That level of public interest and willingness to demonstrate has been maintained, as the Government will find out if they are not careful to ensure that the proposed system is better organised.

I was delighted when, in 2000, the Cabinet Office's performance and innovation unit produced a report that I consider to be both enlightened and sensible. It provided a basis for taking matters forward, but its 24 recommendations have been more or less discarded.

When the PIU report was published, we were talking about making available a Government general practitioner service on an electronic basis. My hon. Friend Malcolm Bruce mentioned the "Your Guide" pilot schemes, which were discarded before they had been properly evaluated. Those pilots were an integral part of the PIU report. We were talking about all sorts of ways of generating a modern platform, and sub-postmasters and sub-postmistresses across the UK were pleased with the template for the future that the report provided. They are now totally disillusioned about what has happened since the report was published. I shall return to that matter a little later in my remarks.

The other point in terms of context is that the Government could make a potential saving, according to their estimates—I agree with the comment of my hon. Friend the Member for Gordon that those estimates are inexact—of £400 million each year, every year, starting in 2003 and continuing until 2005 when the current policy is implemented properly and fully. That huge amount of money is a resource that intelligent policymakers at a strategic level would use sensibly to put in place a transition process and underpin the network, but we have seen no evidence of such investment.

Let us bear in mind that post offices had 16 million to 17 million customers weekly in 2002 when we started looking at the issue of providing magnetic swipe cards, although the footfall of people going to post offices has started to collapse, for obvious reasons. Important issues and big amounts of money are at stake. We are dealing with domestic households that are financially disadvantaged, that work with cash week to week, that have had no experience of credit facilities, banking services and the rest, and that feel uncomfortable about the future. Clearly, even if 2 million people use the Post Office card account, there is a huge gap between 2 million and 16 million. That context needs to be recognised.

As I said earlier, the federation is increasingly disillusioned. It was a willing partner, and was enthusiastic about the PIU report, but it has been let down. In spite of all the evidence that has come from debates such as this, from parliamentary questions, from pressure groups, consumer groups and others, it feels that its arguments have been ignored, and, for the first time, it now has real concerns for the future of the post office network. It has been a willing partner and eager to make this project work, but now there is evidence of its concern about the good faith that the Government are bringing to bear on the matter.

Of course, the federation recognised the need for re-organisation and it, more than anyone, had an interest in making sure that that worked. It recognised that there was a need for a brighter and better network of post offices, more modern and high-tech, which offered beneficial services for customers—indeed, an ever greater range of services. It accepted that some post offices would have to close, which was part of the package in the PIU report.

The practice since 2000, however, has been different. The federation never anticipated 3,000 closures—I certainly did not anticipate that—and the programme, as Mr. Fisher rightly said, no longer represents a strategy but a campaign of closures. Little evidence exists of bigger, brighter and more modern post offices, certainly in urban areas. The £450 million that has reputedly been put into trying to support rural post offices has never reached the local sub-post office network. Were it do so, it would merely keep an ailing network on its knees, and would not change anything in the long term. Since 2000 and the PIU report, the Government have given with one hand and taken away with the other. The remuneration for the new services being brought on-stream—I subscribe to the view that the Government need to put pressure on Scottish banks in the Scottish context—does not make up for the money previously received from direct payment.

The federation is astounded that the Department for Work and Pensions claims that there is an unbiased choice in the selection of the best future option for customers. As Chairman of the Work and Pensions Committee, I know that ample evidence exists of an active and aggressive campaign to prevent people from getting Post Office card accounts. That is a disgrace, and it should change. It should not just be a question of improving the forms—there should be a positive promotion campaign to increase take-up and access to the Post Office card account.

The federation is not afraid of the future. With the activities of the Department for Work and Pensions to which I have just referred, the problems surrounding the network reinvention, and the reluctance of the banks to get involved, however, it is nervous and concerned.

In his foreword to the PIU report in June 2000, the Prime Minister said he was

"confident that by working together with subpostmasters and the private sector we can deliver a network of post offices fit for the 21st century . . . a network that continues to occupy the special place it has in Britain in all our lives".

Instead, we have been left with confusion, uncertainty and a feeling of being cut adrift.

Like every other area, the biggest town in my constituency is experiencing a calamity. The largest post office there has just closed. It was part of Safeways in Hawick, but apparently it was notified about two years ago that the supermarket had decided it could make more money by selling baked beans than by providing a service for its customers. During that time there has been a lot of to-ing and fro-ing in an attempt to renegotiate the lease. Now the Post Office has decided that this is part of the reinvention programme. Consultation is in progress on the closure of the biggest, most modern and most service-rich post office in the biggest town of my constituency. Come April that will happen, and I shall be left with two branches.

Both those branches are run well. Indeed, the one in Sandbed wins prizes, and is managed by an enthusiastic, energetic man who knows a lot about the business. But there was no plan, no strategy, and no possibility of the six-figure investment that is needed to get retail premises kitted out properly and to inspire confidence that a future income stream will repay capital. Who in his right mind would go to a bank manager and say "I want to buy a couple of shops, knock them together and provide a service that is really needed by a town containing 16,000 people"? No one is going to do that.

I promise the Minister that this is the first of many debates. He will be brought back here time and again, for a Liberal Democrat if not a Conservative Supply day. He will return here, and to Westminster Hall, day after day and week after week until the penny drops and he realises that he must promote the Post Office card account and establish sensible capital investment programmes to ensure that urban networks are properly financed once the reinvention programme takes hold. He must also realise that the rural programme needs proper support; otherwise the service will dwindle, postmasters will go bankrupt and go out of business, and the people who suffer most will be our constituents.

The Government have a duty to act, and they have no more than the next few months in which to get the programme right for the long term.

Photo of Chris Bryant Chris Bryant Labour, Rhondda 6:37, 13 January 2004

As my time is limited to two and a half minutes, I shall move swiftly to the matter in hand for my constituents, which is the Cwmparc post office. I do not know whether any Members have seen the film "Very Annie Mary". In the opening scene, Jonathan Pryce goes down from the Bwlch into the beautiful Bwlch valley, sweeping past a glorious rural area—an idyll which, unfortunately, the Post Office describes as urban because, apparently, it is contiguous with a community of 10,000. It is in Treorchy ward, a large ward with three members on the local council which includes some wealthier areas. It does not count as a deprived area, although many of the houses in Cwmparc are among the poorest accommodation in Wales. It is all private accommodation, owned by former miners and their families.

I believe that Cwmparc post office should stay open, for the simple reason that it falls between two stools. It counts as neither "rural" nor "urban deprived". In some cases statistics do not help us, and we should make it possible for post offices to stay open.

I am delighted that the Government established Postwatch. I was consulted from the start. It was not difficult to consult with people of Cwmparc on whether they wanted their post office to remain open: they said yes very firmly and very swiftly, within 24 hours. A petition with some 2,000 names was gathered and Postwatch supports us in wanting to keep the one post office out of 29 in the Rhondda that might be closing. I hope that in the coming months we will find that the Cwmparc post office will be staying open. If we ever reach a point at which the postmaster, who also has the post offices in Treorchy, Abergorky and Treherbert and therefore has a local monopoly, decides of his own volition that he wants to close the post office in Cwmparc, come what may, I hope that the Post Office will look closely into finding other means of ensuring that the services that the people in Cwmparc desperately need are available to them.

Finally, what sometimes happens when a post office closes is that the post box closes as well. That can be disastrous for a local community, so I greatly hope that neither of those things will happen to the people of Cwmparc.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs) 6:41, 13 January 2004

Well, the Prime Minister wanted a big conversation and, boy, he certainly got that this evening. Hon. Members on both sides of the House have been highly critical of changes in the post office network, so I hope that the Prime Minister was listening. I have to say that it is a great shame that the Secretary of State was not here to listen. It is clear from the debate why she has left the poor old Minister hanging out to dry. That is obvious from the nature of the interventions that the Minister has taken from his own side. The poor Minister has had to face it now, and he will have to face it later on, too.

Two points have been made clear by right hon. and hon. Members on both sides of the House this evening. The post office network is an absolutely vital part of our social fabric, and it must be preserved. However, we have heard that the pattern of closures is no pattern at all. Mr. Fisher said to the Minister that the closure strategy might exist in his head, but was not happening on the ground. There is no closure strategy; there is no coherence. That was the very point made by my hon. Friend Mr. O'Brien in opening the debate.

My neighbour, Mr. Jenkins, spoke about deprivation in south-east Tamworth. He spoke about the commitment to keeping post offices in such areas open and asked the Minister whether it was a commitment or a "mere platitude". We all look forward to hearing the answer to that.

My hon. Friend Mr. Waterson paid tribute to Postwatch, but pointed out—sadly, quite rightly—that it had neither teeth, nor any powers. Perhaps the Minister will tell us this evening how he intends to give Postwatch the necessary teeth and powers. Mr. Clelland agreed with the whole motion, except for the tiny bit that condemned the Government.

I have to say that in the whole debate today, not to mention that of 11 December, not one of all the hon. Members who have taken part—not even my old friend, Chris Bryant—congratulated the Government on their handling of this particular issue. That is the whole problem. The programme to close urban post offices is piecemeal, with insufficient consultation.

The future of our rural post offices hangs in the balance and the new system for the direct payment of pensions and benefits is causing widespread difficulty to pensioners and other vulnerable people. The closure programme has been brought forward by a year to the end of December 2004, which, according to Postcomm, has resulted in a closure rate of up to 150 a month.

The pace of that closure had led to several concerns being expressed today. There has been a lack of consultation with local communities and with MPs in drawing up plans for future local provision of post office services. Instead, plans have been drawn up in secret, with consultation only on individual closure proposals arising from the plan on a branch-by-branch basis.

I have a letter from David Mills, the chief executive of the Post Office, in which he says:

"We walk the ground, and we talk to the subpostmasters to understand whether they can make investments in their branches."

Well, all I can say is, "You could have fooled me." Indeed, the same can be said of everyone present for this debate.

My hon. Friend Mr. Turner sent me an e-mail in which he talked about the closure programme in his constituency, which is quite typical. He said that the Post Office

"were given money for the network reinvention scheme on the basis that they would have a plan for the network. It appears that they are merely spending it where sub-Post Masters want to retire, leaving for example 2 post offices within a quarter of a mile in Cowes but none in Gurnard over 1 mile from the nearest post office."

He continues by saying that that is

"not an economic use of public money."

I agree.

In addition to the consultation programme, we are particularly concerned, as my hon. Friend the Member for Eddisbury has pointed out, about the impact of the new system for the direct payment of benefits: the automated credit transfer scheme, which has been heavily criticised for failing to reflect customers' needs. First, the Post Office card account application process is tortuous. As my hon. Friend Mr. Paterson and others have pointed out, one has to go through some 22 stages in order to obtain such an account—and it would seem to everyone that the Government's information campaign has been designed to ensure that as few people as possible choose this account. Secondly, the campaign to switch to ACT started too late and has been poorly executed. Thirdly, there is widespread concern that vulnerable pensioners and disabled people will be unable to use the electronic card and PIN system. I look forward to the results of the MORI survey mentioned by my hon. Friend the Member for Eddisbury, which will involve a comparison of sub-postmaster income before and after the introduction of direct payment, as reported by Postcomm.

Aside from the closure of urban post offices under the reinvention programme, we are also concerned about the rural post office network. Funds are being made available, but what will happen after 2006?

This morning, the Prime Minister presented a radio show on LBC. When asked, his official Downing street spokesman told journalists that the Prime Minister would now consider doing weddings and bar mitzvahs, too. Somewhere in that busy schedule, I hope that he will also ponder the future of the Post Office, for yes, he has a responsibility for post offices too. As they continue to close around the country at breakneck speed, the needs of our local communities and of vulnerable people within them are not being properly met. The Government are ultimately responsible for a closure process that is running at breakneck speed, without showing due regard for the way it is being operated. Local characteristics are being ignored and local communities are not being properly consulted. There is inadequate long-term planning and a lack of a co-ordinated framework. Let us be clear: although the Post Office is a public corporation, it is the Secretary of State—she is not in her place today—who appoints its board, and the Government wholly own its shares. They cannot duck responsibility for the Post Office's future, and for their oversight.

The Minister must now answer these questions. What will the future of the 9,000 rural post offices after 2006 be? Will funding continue, or does Labour plan to abandon rural post offices after the next election? Why have the Government not intervened over the manner in which urban post offices are being closed; or, despite what the Minister has heard today, does he still believe that all is going well? What steps will he take to ensure that future closures are properly consulted on, in order to meet local needs? And when will he intervene to ensure that the direct payments system works properly? Will he change the procedure to make applications for card accounts simpler and quicker? Will he ensure that the 22-stage questionnaire is abolished? Will he insist that the PIN pad be changed to enable disabled and blind people to use it more readily? And will he meet his colleagues in the Department for Work and Pensions—his ministerial colleague Nigel Griffiths, has strolled in and sat down on the Front Bench at the last moment—to ensure that Post Office card accounts become an equally attractive alternative to bank accounts? Now is the time for the Minister to answer. Now is the time for this Government finally, perhaps, to deliver.

Photo of Oliver Heald Oliver Heald Shadow Leader of the House of Commons

On a point of order, Mr. Speaker. In your role as guardian of the rights of Members of Parliament, can you provide your guidance on the fact that the Secretary of State has failed to attend the debate, despite the fact that the shadow Secretary of State moved the motion at the beginning? Is it right that Secretaries of State can evade accountability in that way, just as the Prime Minister refuses to say whether he will open for the Government in the debate on the Hutton report? Will you defend the rights of the House in this important matter?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 6:50, 13 January 2004

With the leave of the House, I wish to reply to the debate. On the point of order, I remind the House that we did not know the subject for the debate today until last Thursday. What is striking about such debates—today's has been no exception—is how strongly people feel about the future of the post office network. I make no bones about the degree of difficulty inherent in deciding that future and we have rightly been reminded of that in the debate. However, we have the worthwhile objective of a viable, countrywide network of post offices that is able to prosper in today's conditions and those of tomorrow, not just stuck in the conditions of the past. That objective needs to be pursued with vigour and determination. We are doing that, but the necessity of doing so has been powerfully underscored in our debate this afternoon.

If I may make a personal point, I recall using a post office—I suspect that many other hon. Members have similar memories—when I first started working, after I had concluded my studies with Mr. O'Brien. I used to obtain cash regularly from my local post office. Indeed, the other day I dug out my old post office book, which showed the last transaction occurring in 1983. By then, we were all in the new world of cash point machines and bank cards and I no longer needed to go to the post office for cash. However, since July, I have been able to access my bank current account with my bank card at any post office in the country. There is a post office on the high street around the corner from where I live in East Ham, so I have started to pop in on a Saturday morning to obtain some cash and to buy a newspaper. Many hon. Members have mentioned the importance of footfall and that is right, but some 20 million current accounts are now accessible through every post office in the country, thanks to the investment that we have made. That is part of developing a viable future for the post office network, without the need to try to cling on to business that is ebbing away. Instead, post offices need to win new business in an expanding market that can be the basis for a commercially successful future.

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

No, I need to respond to some of the points that were made in the debate.

Malcolm Bruce made a thoughtful contribution, to which I listened with interest. He asked where the investment went: some £500 million went into the technology that has computerised every post office. That investment will provide a viable future for the network, because it will be able to offer banking and other financial services much more widely and effectively.

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

The hon. Gentleman was not present for the debate, but we aired that issue fully. I wish to respond to the issues raised in connection with the subject of the debate and the resolutions that are proposed.

The hon. Member for Gordon asked about "Your Guide". Interestingly, since that exercise concluded, three wholly commercial projects to provide kiosks in post offices have been developed, and they may be best placed to contribute to the future success of the Post Office. I know that the National Federation of Sub-Postmasters has been in close discussion on one of the projects.

The hon. Gentleman raised concerns about the speed at which the £30 million is being invested. Ideally, that investment will be undertaken within three months but that is not a requirement. The hon. Gentleman makes a fair point, which we need to examine. I was particularly concerned by his suggestion that right hon. and hon. Members feel patronised by Post Office middle managers. That is of great concern to me and to Post Office senior management, who will have noted the hon. Gentleman's comments.

I listened carefully to my hon. Friend Mr. Fisher but do not agree with his characterisation of the process. There will be the opportunity next week in an Adjournment debate to examine the issues in Stoke-on-Trent. We have heard about a number of changes made as a result of the consultation process. I gave figures for sub-postmasters who indicated that they were willing to go but were told that they will not be able to go. However, I will of course listen to my hon. Friend and others, to make sure that we get it absolutely right.

I share the concern expressed by Mr. Waterson that there should be effective consultation. I was pleased by the examples given by my hon. Friends the Members for Dundee, East (Mr. Luke) and for Rhondda (Mr. Bryant), and by Peter Bottomley, about changes made as a result of consultation.

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

The hon. Gentleman did not participate in the debate. I want to respond to important points made in the debate by the hon. Member for Eastbourne and others.

I have kept closely in touch with Postwatch and met Peter Carr, its chairman, not long before Christmas. He told me—I summarise—so far, so good, but we do need to keep a close eye on how the process develops.

I was grateful to my hon. Friends the Members for Tyne Bridge (Mr. Clelland) and for Dundee, East for recognising the need for rationalisation. I completely agree that if two post offices less than half a mile apart were closed at the same time, that would get around the requirement not to shut down post offices in disadvantaged areas. Such an approach is clearly unacceptable and I know that the Post Office has taken that on board. However, I make the point that it is not possible to take through a programme of this kind without causing some inconvenience.

Mr. Gale said that it is extremely difficult to get a Post Office card account, but 62 per cent of pensioners are requesting and getting card accounts, so the evidence on the ground is that the impossible hurdles that the hon. Gentleman described do not exist. Interestingly, much smaller proportions of those receiving incapacity benefit, jobseeker's allowance and carers' benefits have opted for Post Office card accounts—which illustrates that the Post Office has been locked into a reducing number of customers. It needs in future to attract and serve a much larger number of customers—including many like me, who did not use post offices in the past. Thanks to the half billion pounds of investment in computerisation in particular, that is the prospect ahead.

The contribution made by my hon. Friend the Member for Dundee, East was helpful in many ways. I am glad that the Post Office is considering the alternatives that he proposed. He was right to note that the policy of the previous Government, of simply neglecting the Post Office—worse, using it as a cash cow—is at the heart of many of the problems that the network faces.

Sir Archy Kirkwood referred to the difficulties experienced with Safeway. I am grateful to him for drawing that point to my attention. I understood that Safeway decided that it did not want to have a post office in the store, but that confusion arose because signatures for a petition against the closure of the post office were collected in the store, even though the closure was Safeway's idea.

Photo of David Maclean David Maclean Shadow Chief Whip (Commons), Opposition Chief Whip (Commons)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 205, Noes 326.

Division number 28 Future of the Post Office Network

Aye: 205 MPs

No: 326 MPs

Aye: A-Z by last name


No: A-Z by last name


Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 322, Noes 203.

Division number 29 Future of the Post Office Network

Aye: 322 MPs

No: 203 MPs

Aye: A-Z by last name


No: A-Z by last name


Question accordingly agreed to.

Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.


That this House congratulates the Government for its commitment to modernise and invest in the national network of post offices while keeping them easily accessible to all customers; notes that the choice of account for customers into which they wish their benefits paid is entirely a matter for the customer concerned and congratulates the Government on ensuring that all the necessary information is available to customers to make an informed choice; applauds the Government's £2 billion investment in the Post Office network and its success in reducing the rate of rural post office closures; notes the Post Office's commitment to ensuring that 95 per cent. of the urban population live within a mile of a post office, and the majority within half a mile, and that honourable Members are consulted on proposed closures as part of an agreed process between the Post Office and Postwatch; further notes that 3,500 post offices closed under the previous administration; and condemns those who seek to undermine confidence in Britain's postal services.