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Post Office Closures

– in the House of Commons at 5:51 pm on 11th March 2004.

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Motion made, and Question proposed, That this House do now adjourn.—[Vernon Coaker.]

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People 6:03 pm, 11th March 2004

I am grateful that the Speaker has once again come to my aid in allowing me to raise a matter of concern for communities in my area and across the country. The subject is the role of Post Office Ltd. and Postwatch in taking decisions on post office closures. I believe that it is important to hear whether the Minister feels that he can take action against the injustice and misinformation that abounds around the euphemistically named "network reinvention", which is closing community post office facilities with only passing reference to community needs. I am grateful to my hon. Friend Mr. Stunell and to Ms Coffey for their presence. We are all affected by post office closures, and I hope that, with your permission, Mr. Deputy Speaker, they will take part in the debate.

As far Cheadle is concerned, the process was flawed from the start. The information sheets supplied by Post Office Ltd. were riddled with errors, and Members of Parliament were not consulted in advance. Indeed, Postwatch told me on 4 December that Post Office Ltd. would not start consultation just before Christmas. However, it did just that, on 17 December. I applied for additional time, and was refused. Other areas were given extra time because the effects crossed constituency boundaries, but that was also true of my area. Postwatch appeared to have no powers over the process.

For more than a year, I have disputed the categorisation of Woodford post office as an urban facility. The 2000 performance and innovation unit report defines an urban settlement as one with more than 10,000 people. Yet Woodford is separated by carefully protected green belt from the urban sprawl to which Post Office Ltd. persists in referring, and it has just over 1,000 inhabitants.

The map used by Post Office Ltd. is wrong in detail and misleading in its entirety. A glance at the unitary development plan map, or even at an A to Z, would show the errors. The Greenway road post office in Heald Green serves an older and elderly population, and is located in one of the recognised pockets of deprivation in our area. Fortunately, Mr. and Mrs. Saleem, who run the nearby Long lane post office at the junction of Merwood avenue and Wilmslow road, are determined to carry on, even though Post Office Ltd. did not use it as a receiving branch.

Turves road post office is closing because the sub-postmistress has decided to go. I know that, because she told me that she would be going, whether or not Post Office Ltd. agreed to closure. We do not have an official date for that, although a handwritten notice in the post office states that it will happen on 22 March. Turves road post office was a receiving branch for another closure at Cheadle road. That office closed only six weeks before the present consultation process began.

The setting for the Turves road branch is such that it could be used as a model for a modernised post office at the centre of its community. It has a large surrounding population and is located in a run of shops as active as any in the area, now that the superstores have taken the weekly shoppers away. Of those responding to our campaign, 80 per cent. are over 55, some 40 per cent. have mobility problems and up to 20 per cent. lack cars. Many people chose to live in the area so that they could remain independent for as long as possible.

Other shops will suffer after the post office closes. The main receiving branch is up a steep hill, with no public transport and a car park that is full at all times. The post office in Jacksons lane, together with the Macclesfield road and Norbury offices in the constituency of my hon. Friend the Member for Hazel Grove, serves a very large population. Most of the customers are older people, but there are a good number of young people and their parents.

Saving at the post office is still regarded as an important part of a child's upbringing. The post office to which people will have to go is in a shop and already has queues that take 20 minutes to clear. It is difficult to reach and does not make good provision for disabled people.

None of that seems to matter to Post Office Ltd. It is driven by the Government to become profitable. Although that is not in itself a bad aim, what is the human and social cost? What will be the cost to other small businesses that are supported by customers paying bills, collecting money and doing their shopping? What will be the cost to the Post Office's customer base? People must be close to avoiding using post office branches. By what process will Post Office Ltd. make itself profitable?

My office received around 4,000 responses from individuals in the form of petitions and reply slips. Around 350 people came to public meetings. My office put together a 15-page report for Post Office Ltd., which was delivered on 27 January. It is difficult to see how we could have done more to alert Post Office Ltd. and Postwatch to the concerns of local communities. Representatives of Postwatch attended our meetings, and I was grateful for that, but they were dismissive. I was told that they were "not afraid" of me any more, that they were "not impressed", and that they had heard "nothing new". I am sure that there was a reason for saying all that. We have seen little evidence of any concern for the consumers whom Postwatch is supposed to protect.

The basic message from Post Office Ltd. in its correspondence with me was that the closures had to be carried out, that Post Office Ltd. was sorry that people were upset, that it was a shame about the inconvenience to customers, and that the closures were going ahead anyway. In my family, we call a response like that "sending out the cockroach letter". That is based on a joke, which we have long since forgotten, about a travel company writing to unhappy customers. Meanwhile, Postwatch sits on the sidelines, like a reluctant referee, giving information only when directly asked. The computer-generated letters come thick and fast, and occasionally someone personalises them with an extra paragraph; the process is a joke.

I want the Minister to tell us that he will act on the way in which our communities are being treated. He must know that the Post Office ensures that post offices close by offering sub-postmasters and sub- postmistresses deals that they cannot refuse. An average of £55,000 for each sub-postmaster and sub-postmistress was paid out in the quarter to December 2003, and more than £38 million was paid out in total. That money could have been spent on expanding and diversifying the service in line with the performance and innovation unit report of 2000.

The Minister will be familiar with early-day motion 725, which calls on the Department of Trade and Industry to halt forthwith the network reinvention programme of post office closures while an investigation is carried out into flaws in the notification, consultation and decision-making process. I have written to the Clerk and Chairman of the Trade and Industry Committee asking them to investigate that. I am disappointed that no concessions have been made on the process, which proceeds with unseemly haste in spite of admissions from Post Office Ltd. that changes will be made to future constituency reinventions. That is no comfort to my constituents.

I am disappointed by the Minister's response to my letter pointing out how Members of Parliament and Stockport metropolitan borough council were misled into thinking that Eddie Herbert from the north-west was working on our consultation responses, when a decision was in fact made the same day in Skipton to close one of the post offices. The Minister's letter states:

"When Eddie Herbert wrote to you on 16 February that feedback was still being considered, neither he nor his POL colleagues would have known whether all the outstanding issues would be resolved at the first stage meeting that was taking place that day."

However, Eddie Herbert said on 16 February:

"I am still considering the feedback received in relation to the closure of Jackson's Lane and Turves Road".

How could Post Office Ltd. present the case for closure to Postwatch members when the man in charge had not finished considering the consultation responses?

Meanwhile, Judith Donovan of Postwatch, who was present at the meeting of 16 February, wrote on 23 February to say that

"an escalation meeting . . . will be arranged".

Perhaps she used the wrong tense. When the decision was made in Skipton by Post Office Ltd. and Postwatch about our communities' post offices, hon. Members did not have the date, the time or the venue. We did not know and could not know that a meeting was occurring. Post Office Ltd. decided what would be presented to Postwatch committee members. Hon. Members do not know whether corrected information was supplied, what arguments—if any—were put forward, whether public views were put forward adequately, or whether alternatives were examined.

The primary role of Members of Parliament must be to stand up for their constituents. I call on the Minister to do as my early-day motion asks, to halt the flawed process forthwith and to apply the principles of fairness with a dash of imagination, which our democracy depends on. I challenge him to halt the process and to allow all the key players—Post Office Ltd., Postwatch, Stockport metropolitan borough council and the public—to produce the business case and the energy to get behind our local post offices, allowing our community the chance to find imaginative ways to make our post offices thrive. At least some post offices can be made into profitable assets, both socially and in business terms. Post Office Ltd. will destroy its customer base if it carries on in this vein.

Post Office Ltd. should be required to transmit a clear, strategic, coherent vision of the future of the post offices at the heart of local communities, and Postwatch should have powers to ensure that public money is spent in the interests of the public and more wisely than has occurred so far.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 6:14 pm, 11th March 2004

I congratulate Mrs. Calton on securing this debate. She has been very active in voicing her concerns and she has conducted detailed scrutiny of Post Office Ltd.'s proposals for her constituency. We have exchanged correspondence on several occasions in the past year. I am also grateful to the hon. Lady for giving me notice of the concerns that she wished to raise in this debate. I am pleased to see my hon. Friend Ms Coffey in her place: she has also spoken to me a lot over the past few months about these issues.

The hon. Member for Cheadle explained clearly and fully her concerns about the impact of the closures that will take place in her constituency and the consultation process that preceded those decisions. The performance and innovation unit report that she mentioned showed starkly that our network of post offices has not kept pace with the changing needs of its customers. Too often, post offices have become dingy and shabby as a result of a lack of investment. Nor has the Post Office been able to take advantage of its highly trusted status as the provider of financial services. It was losing business and facing big challenges. The PIU report made it clear that if it did become apparent that it was necessary to reduce the number of branches in urban areas, it should be done in the way that we have suggested and the House has agreed to.

I was not entirely clear from the hon. Lady's remarks whether her argument was that in her constituency the wrong offices will be closed, because of problems with the process, or that none of them should be closed in any event. I suspect it was the latter, and we all sympathise with that point of view. None of us likes to see the closure of post offices, which inconveniences people. However, the realities of the Post Office's position are that the process is unavoidable. If we did not do it, branches would shut haphazardly and in an unplanned way, and that would cause far greater problems for her constituents and those in other urban communities than the present arrangements.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

The Minister presents two stark alternatives, but there is—in the words of his leader—a third way. That third way has arisen out of the consultation responses from other shopkeepers and the public. Other alternatives can be examined and it is not necessary to create a desert for whole suburban communities. It would be wrong to treat suburban communities as amorphous, with no defining characteristics. Communities should be respected, but they are not being respected—

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

Order. The hon. Lady must remember that interventions are one thing, but speeches are quite another.

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

It is a given of the process that at the end of it at least 95 per cent. of urban residents will be within a mile of their nearest post office. It is not about the creation of deserts. Indeed, the reverse is true: it is to ensure that there are no deserts that we are undertaking this careful process.

The process itself is unavoidable. Simply moving a post office into another establishment does not tackle the problem. At the beginning of the exercise, there were more than 1,000 urban sub-post office branches that had 10 other such post offices within a mile. The network was too dense, given what has happened to the business of post offices in the past few years. Our response was to acknowledge the need for a reduction in the number of urban branches, and to invest in technology. Banking services are now offered at every post office branch in the country following Government investment of £0.5 billion—unprecedented in the history of the Post Office. Funding has also been provided for improvements at receiving offices. For the first time, there is support for an investment programme for urban sub-offices. Both approaches will give the network the viable commercial future that the Post Office needs.

Sub-post offices have always been private businesses. The hon. Lady said that sub-postmasters have been offered deals that they cannot refuse. In reality, the payments made are those that sub-postmasters might reasonably have expected if they had sold their businesses a few years ago. Reductions in the use of sub-offices in recent years mean that the prices sub-postmasters may obtain for their businesses have sharply declined. We took the view that it was fair that compensation should reflect the prices sub-postmasters might have expected a few years ago—not more generous prices but comparable, which is fair. The individuals concerned have worked hard in serving their communities over many years. It is not right for the hon. Lady to suggest that compensation payments are excessive. They simply reflect the prices that sub-postmasters would have expected if they had sold their businesses a few years ago.

Photo of Patsy Calton Patsy Calton Shadow Minister (Health), Spokesperson On Older People

My point was not so much that compensation payments were excessive, but that the money could have been more wisely spent.

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

The hon. Lady referred to a deal that sub-postmasters could not refuse. The payments are based on the reasonable expectations of sub-postmasters if their businesses had been sold not long ago. As for whether that money should have been spent differently, the basis of the House's approval for the programme was that the rationalisation of sub-offices in urban areas would give the whole network a viable future in serving all our communities for many years to come.

Postwatch has been critical of some developments in recent months and raised concerns about the consultation experience with me earlier—as did hon. Members. Postwatch has been a doughty and effective defender of communities. In a large number of cases, a decision has been withdrawn or reversed following representations from it or hon. Members. I do not accept the hon. Lady's criticism of Postwatch, which has recognised that rationalisation is indispensable if we are to secure a viable future for the post office network throughout urban communities.

Photo of Ann Coffey Ann Coffey Labour, Stockport

Part of the fundamental difficulty with the consultation exercise is the basis on which it has been undertaken, because closures were proposed against criteria that had already been set. In future, it would be helpful if Postwatch could share its observations on proposed closures with hon. Members. I was not aware of Postwatch's views on proposed closures in my constituency.

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

My hon. Friend makes a helpful point. I will take it up with the chairman of Postwatch, with whom I regularly discuss such points. I am inclined to agree with my hon. Friend that when Postwatch reaches a conclusion as a result of discussion with hon. Members and members of the community affected, it would be entirely reasonable for that information to be made known to MPs with whom Postwatch has been in discussion.

As I said, one of the recommendations of the performance and innovation unit 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. Thus, in November 2002, following parliamentary approval of the funding, the programme that we are discussing commenced.

The network is made up of about 16,000 post office branches, split almost evenly between urban and rural communities—more than all the banks and building societies in the country put together. In many places, that network is dense, with damaging results for the individual businesses of sub-postmasters at a time when the number of people using post offices has been in decline. The heart of the problem was that the Post Office was locked into a shrinking customer base; its task now is to continue to serve those customers with excellence, but also to win new customers. It needs to access expanding banking markets, taking advantage of the technology that the Government's investment has provided, rather than remaining locked into dwindling markets, as in the past. That is the key to future success.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

Does the Minister agree that social inclusion is an important criterion? The closure of post offices, such as those in Cherry Tree lane and Offerton in my constituency, seriously undermines the Government's intention to promote social inclusion.

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

In almost every instance, the closure of a particular office causes inconvenience to some people. The purpose of the whole exercise, and why we provided substantial funding to Postwatch and why the Post Office itself is committing so many resources, is to ensure that the right post offices are closed. When Members raise concerns that the wrong office has been chosen and a different one should be closed instead, I always tell them that the case should be put to Postwatch and to the Post Office. As a result of the process, I hope that we end up with the right decisions.

Those decisions will not be welcomed by everyone. The closure of any post office will cause inconvenience to some people, but I think that Mr. Stunell will accept that business realities for the post office network over recent years make it necessary to introduce rationalisation of that kind, to give the network a viable future and to ensure that it can continue to serve our communities. As I said earlier, it is a given of the exercise that, at its end, 95 per cent. of people living in urban communities will be within a mile of their nearest post office branch. That is the basis of the exercise.

Last week, I visited a directly managed post office in my constituency. The staff pointed out that for the first time in many years they can see that the organisation for which they work is being turned around. New customers are coming in to use the Post Office banking services, whereas, in the past, the number of such customers was in decline.

In a couple of weeks, the Post Office's first financial service products will be on sale at branches throughout the country. Personal loans will be sold through the Post Office, new products will be available and new markets will be opened up. In that way, through the commitment of the new management team at Post Office Ltd.—the staff at my local branch told me that they thought the new team was doing a superb job—through the investment we are making and through the painful, but necessary, process of rationalisation of the post office network in urban areas, we shall see a viable and attractive commercial future for the network in all our urban communities, for the benefit of all the people who live in them.