Sub Post-Offices

Opposition Day – in the House of Commons at 3:48 pm on 10th January 2007.

Alert me about debates like this

Votes in this debate

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means) 3:48 pm, 10th January 2007

We now come to the debate on the future of the sub-post office network. I must tell the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry) 4:17 pm, 10th January 2007

I beg to move,

That this House
recognises the contribution that sub-post offices make in communities across the country;
pays tribute to sub-postmasters and postmistresses for the service they provide;
believes that sub-post offices have a key role to play in delivering new services in those communities for local councils, businesses and consumers;
condemns the Government's short-sighted plan to close 2,500 sub-post offices;
and urges the Government to allow sub-post offices greater freedom to develop their businesses.

The motion reflects the concerns of millions of people about the decimation of the post office network. The statement that the Secretary of State made to the House in December was insufficient to put at rest the minds of thousands of sub-postmasters and millions of people who rely on their local post office. When he came to the House last month to unveil his post offices plan, he claimed that his proposals would

"put the post office network on a stable footing and ensure that there is a national network across the country."—[ Hansard, 14 December 2006; Vol. 454, c. 1028.]

The measures in that statement are quite unclear about the way in which the Government will achieve that, and that is precisely why we have called for this debate.

The consultation document that the Secretary of State published last month outlines policies to close nearly a fifth of the remaining network; to compensate sub-postmasters who are pushed out; and to introduce new access criteria for the network. The statement was disappointing and wrong, and it will cause fear and anxiety among many people, particularly the most vulnerable, in every part of the country. Despite the fact that the Government have closed a quarter of the post offices in this country, their rhetoric about the importance of post offices has always been optimistic. The previous Secretary of State, Alan Johnson. recognised that

"post offices are an essential part of the country's social fabric."—[ Hansard, 19 January 2006; Vol. 441, c. 937.]

A previous postal services Minister, Barry Gardiner, said:

"The Government want to see a post office network that can prosper".—[ Hansard, Westminster Hall, 11 January 2006; Vol. 441, c. 128WH.]

Oh yeah?

More recently, Ministers have changed their tune, and they now argue that there are too many post offices. Hence their proposals, announced last month, to close a further 2,500. With over 4,000 post offices already closed and another 2,500 due to go in the next two years, the Government have earned themselves the record, by a large margin, for closing post offices faster than any other Government in history.

Photo of Bob Spink Bob Spink Conservative, Castle Point

I am grateful to my hon. Friend, who is making excellent progress. Does he accept that European Union rules, in particular article 88 of the treaty of Amsterdam, mean that the British Government can no longer pay the £150 million social network payment which has kept small post offices open? That is a major problem. In view of that, does my hon. Friend think it is time to re-address our EU membership?

Hon. Members:

Answer!

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I am pleased to say that I had my deaf ear towards my hon. Friend, but I will come to the essence of his point.

The Government have pointed out that post offices closed under the last Conservative Government too, but let no one be in any doubt that under this Labour Government, post offices have closed at almost three times the rate they did when we were in government. I shall give the House the figures. From 1985 to 1997 post offices closed at the rate of 201 per year, but under the present Government the rate of closure has been over 580 a year. Such massive cuts in the network have deprived thousands of vulnerable people of their vital services. Once again, the Government are ignoring the concerns of millions of people. What assurance can the Secretary of State give the House that the cuts will not be more than the 2,500 that he has already announced?

Photo of Philip Davies Philip Davies Conservative, Shipley

As my hon. Friend knows, the permanent post office in Bingley in my constituency has closed and we have only a temporary facility there. Does he agree that a town the size of Bingley should have a permanent post office, and that the Royal Mail and the Government should do everything possible to make sure that a permanent post office facility is maintained in Bingley?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

That is a perfect example of the problem in the network. One would have thought that a town as important as Bingley, represented by my hon. Friend, would merit a post office, but the present system means that it will close, and even his hardworking efforts on behalf of his constituents will come up against the buffers. Perhaps the Secretary of State can explain how large a town must be before it can justify a post office.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I notice that the hon. Gentleman's motion calls for greater freedom for the Post Office to develop. Does that freedom include the return of business which has been lost to the Post Office, such as the payment of benefits and payment of the TV licence, and would a Conservative Government subsidise those payments if that was the way forward?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

Nice try. I shall come to that in a moment. We are arguing for greater commercial freedom, which I shall define, if the hon. Gentleman will let me proceed.

I do not believe that Labour Ministers necessarily dislike the Post Office or that they have deliberately set out to cut a swathe through the network. [Interruption.] That view does not appear to be shared by those on the Conservative Benches behind me.

I am ever generous to my opposite number, but despite the Secretary of State's good intentions, Ministers have repeatedly failed to deliver on the words that they have uttered over the past decade. They have gone for easy headlines, but their actions have not matched their words. The problem has been and remains that the Government do not have a long-term strategy for the post office network. They say they want to support it, but in practice they have removed business from it and have failed to make the reforms necessary to underpin the network that exists at present.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

The reforms surely ought also to be in the way the Post Office operates. Is it not true that the Post Office is stuck in a model which is way out of line with other retailers, and that one of the problems is that it cannot catch up? The Government have some responsibility for not insisting on a much more up-to-date system.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

My right hon. Friend makes a serious point that is crucially entwined with the issue of the network but also takes us to the question that I shall deal with in a moment—that of ensuring, through its ownership and future investment, that the activities of Royal Mail can marry happily with the post office network.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

An important part of the context is that local communities face the closure not only of post offices but Department for Work and Pensions offices and tax offices. That will be a triple whammy that rural communities in Wales and elsewhere can scarcely bear.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I am sure that you would caution me, Mr. Deputy Speaker, were I to stray on to the operation of other Departments, but there is a serious point about how they operate in conjunction with the post office network. An essential part of our proposals is that the entire apparatus of government, particularly local government, can consider how it can properly use the post office network and channel much of its activity through it so as to give it a chance to remain in place.

To see why the network has been declining under this Government, we need to recognise how they have reduced the amount of Government business that post offices can undertake. The Government have not merely given people the option of, say, having their pensions paid into their bank accounts—they have, as is pretty well documented, used strong-arm tactics to press pensioners who wanted to support their local post office by using the Post Office card account into giving up their accounts. Customers no longer have the option of buying a TV licence at the post office or of having a pension book. The Government even considered removing passport services and abolishing the Post Office card account. Such measures not only massively reduce direct revenue for sub-postmasters but reduce footfall in branches and reduce the amount of non-Government business that branches do.

Photo of Danny Alexander Danny Alexander Opposition Whip (Commons), Shadow Spokesperson (Work and Pensions)

The hon. Gentleman is rightly identifying the hurdles that the Government put in the way of people who wanted to sign up for the Post Office card account when it was first introduced. One of the biggest risks to the Post Office's Government business in future is that when the replacement for the card account is introduced the Government may carry on with the same sort of bullying tactics to try to prevent people from switching to it. Those tactics would have a seriously detrimental effect on post offices, especially in vulnerable areas such as the highlands and islands.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

The hon. Gentleman makes a serious point. The ongoing uncertainty about the size of the network has hindered Post Office Ltd. whenever it has bid for contracts such as the TV licence contract, which it lost. The uncertainty created by the Government hinders its commercial ambition and scope.

When Adam Crozier said that he could fulfil Royal Mail's obligations with just 4,000 post offices, he created huge speculation about the future of the network. The Government needed to put an end to that speculation, but unfortunately the Secretary of State's statement to the House in December failed to achieve that objective.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

Why, then, does the hon. Gentleman think that the National Federation of Sub-Postmasters said that that statement

"provided a welcome first step to arrest the decline of the post office network"?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

A first step it may be, but the trouble is that there are many more steps to be taken, and with greater certainty than in December.

Part of the remaining speculation centres around the Post Office card account. That was designed to be a very simple form of account that can only have benefit payments made into it, but it is used by more than 4 million people, and transactions made with it account for 10 per cent of a sub-postmaster's net pay.

For most of 2006, the Government's message was that POCA would be scrapped in 2010. In December, the Secretary of State came to the House and promised some sort of replacement card account, although he gave no assurance that the Department for Work and Pensions would end the pressure that it has put on vulnerable benefit recipients to give up their card account. Of course, the U-turn in the face of pressure from Conservative Members was welcome. However, the Secretary of State created further uncertainty by announcing that the operation of the successor system would be put out to tender.

If the Post Office's ability to bid for the contract is hampered by speculation and uncertainty, pensioners may pick up their money from Paypoint outlets in a few years, with enormous consequent losses to the Post Office. The stark truth is that the very plan that the Secretary of State announced to enhance the post office network could prove to be the Trojan horse that poses the greatest threat to it.

The Government must recognise that continuing uncertainty is doing great harm to the prospects of a sustainable future for the post office network.

Photo of Peter Luff Peter Luff Chair, Trade & Industry Committee

Does my hon. Friend agree that one of the keys to the future prosperity of the sub-post office network is the Post Office card account having greater functionality and being more flexible than the current inflexible and inadequate version?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I agree, and some Labour Members claim that the successor account will do that. I hope that the Secretary of State will give that commitment today.

Photo of Robert Smith Robert Smith Liberal Democrat, West Aberdeenshire and Kincardine

The Government must understand and reinforce the important message that so many people chose the card account because it was a safe way for them to budget. There is no risk of bank charges or accidental overdrafts. It is important that they should not be bullied prematurely into moving into a banking system where those on low incomes are at risk of facing high charges.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

Let me marry all the interventions by converting them into questions for the Secretary of State. Will he tell us today the timetable for tendering for the successor card account? What differences will there be between the current POCA and its successor?

Uncertainty also surrounds the social network subsidy. In answer to parliamentary questions, the Secretary of State was unable to give a future figure for that. However, he said that it was not expected to exceed the current annual sum of £150 million. We can only conclude that the Government are planning to cut the subsidy that they provide to maintain the post office network. That is hardly reassuring to the thousands of sub-postmasters who rely on the money. The Secretary of State squints when I say that, so I look forward to a clear commitment that the figure will remain the same.

It is worth noting that the Government call the payment to the social network a "subsidy". When the Chancellor spends billions on the NHS, he never calls it "spending", it is always described as "investment". However, when the Government want to get away with reducing their support, even though it fulfils an important social purpose, they call it "reducing subsidy".

The ownership of Royal Mail is another uncertain matter. My right hon. Friend Mr. Gummer referred to that. The Government currently own all the shares. However, Royal Mail's management is still waiting for Ministers to decide on their proposals for employee share ownership. As the postal services market has been liberalised, Royal Mail, as my right hon. Friend again pointed out, has begun to face stiff competition from technologically well equipped rivals. If it is to compete effectively, it must be able to make significant investment. However, it must also change its methods to respond to a changed marketplace.

The Government have shown support for employee share ownership schemes in other sectors and they must now decide whether to back the management of Royal Mail and allow a share trust scheme to be set up. Will the Secretary of State tell us by what date he will make a decision about the proposal? Or, if, in the Government's current state of paralysis, he is unable to make a decision, will he confirm that the matter will have to await the arrival of the Chancellor?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I am always delighted to give pleasure— [Interruption.] I shall not take that further.

The hon. Gentleman mentioned the importance of the ownership of the Royal Mail Group and discussed employee trust ownership. However, as he knows, part privatisation is the only mechanism to get significant new investment into the family. Is he committing the Conservatives to part—or even whole—privatisation?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I am asking the Government the questions. They are about to give us a clear view on this matter. I have studied the Liberal Democrats' proposals—the hon. Lady may intervene on me to explain them if she likes—involving a part-privatisation, with some money being given to the pension fund and some being used for investment. I think that she will have to look again, however, at the difference in economics between stocks and flows, because I am not sure that the arithmetic will add up over time, once the proposal has been studied in more detail.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

Yes to the hon. Lady's proposal?

Back in December, the Government tried to sweeten the bitter pill of post office closures by claiming that their new access criteria would ensure that no one would live further than three miles from a post office. However, as Age Concern has pointed out, those access criteria take no account of the availability of public transport to reach alternative services. Nor do they take account of the number of benefit recipients in a given area who rely on a post office for access to their money.

The setting of access criteria has been suggested in the past. However, in 2000, the Prime Minister's own strategy unit rejected the idea, saying that

"numerical access criteria could well undermine the Government's policy rather than strengthen it".

The strategy unit went on to point out that such a commitment would not be worth the paper that it was written on. It made it clear that

"it would be possible for the Post Office to close down two-thirds of its rural outlets whilst still ensuring that 99 per cent. of people in rural areas lived within 3 miles of a post office."

Perhaps Ministers simply forgot to mention this fact in their policy document. In fact, there are a number of things missing from the Government's statement on the future of the Post Office. Most importantly, for instance, are radical proposals such as those that the Conservatives set out in October, to provide the essential reforms needed to give the post office network a genuine and sustainable future.

Photo of Kate Hoey Kate Hoey Labour, Vauxhall

Is the hon. Gentleman aware that difficulties with the access criteria exist not only in rural areas? In many urban areas—even in my constituency, close to the Palace of Westminster—elderly people or people with disabilities might live quite close to a sub-post office, but if it is closed it can be difficult for them to reach another one. Access is an urban issue just as much as a rural one.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I totally agree with the hon. Lady, and I am happy to echo her comments. One cannot stress often enough that the issue of post office closures is as much an urban issue as a rural one.

What the Government should have announced in December was, first, that they would give sub-postmasters greater freedom to find new business opportunities. At present, Royal Mail writes clauses into sub-postmasters' contracts forbidding them to take on certain business opportunities that might transform their finances, if only they had the chance. The long-term future of the network will be best secured if the Post Office is opened up to new markets and new customers. Just as many pubs that were tied to one brewery are now free houses, so post offices should be released from their ties and be allowed to offer a broader range of services.

We recognise the fantastic service provided by sub-postmasters to their local communities. They tell us that they do not want to depend on subsidy, but instead want the opportunity to do more business and serve their customers, yet that is exactly what the Government are denying them. Conservatives would rewrite the sub-postmasters' contract, allowing them to provide a greater range of products and services, including private mail services. Will the Secretary of State give the same assurance today?

Secondly, the Government should be following the lead of Conservatives in encouraging local councils to see what services they can provide through post offices and whether they could use the post office network in their area better to engage with local residents. There have been a number of plans and pilot schemes aimed at using post offices as one-stop shops to provide a wide range of information and services from local government and other local bodies, but the Government, instead of extending the range of service that they allow councils to offer, restrict it. Will the Secretary of State undertake to look at that again?

What about using post offices as a hub for government information? We are looking at how we can provide for people who have concerns about a range of Government services to be able to access advice and answers at their post office. The Government have talked about doing that, but the delivery, as so often, has added up to nothing. May I ask the Secretary of State also to look at that again?

On both sides of the House, there is an understanding that huge social benefits accrue from the post office network, but it is less well documented that there are clear economic benefits too. Perhaps the Secretary of State will tell the House what research his Department has done on that issue. I understand that the Treasury did a study and found that for each pound of support that the Government have put into the network, there has been more than £2 of economic benefit to the local area.

The Department of Trade and Industry should be thinking that if it can make the conditions right for more post offices to be successful, it will reap the economic benefits. Instead, the best that we have seen from the Secretary of State is a plan for the management of the decline of the post office network.

Photo of John Redwood John Redwood Conservative, Wokingham

Does my hon. Friend agree that one problem with those who are senior managers responsible for Crown offices or groups of Crown offices is that they are only cost accountable and have only cost targets? The only way that they can meet those cost targets is by staff reduction. Would it not be a more normal business procedure to make them profit accountable, so that they could grow the revenue instead of always having to cut staff? They would also have control of their balance sheets, so they could do property deals, for example, if that was also a way to improve the business and make money.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I look upon that intervention as an exciting teaser for the brilliant policy document that my right hon. Friend is due to produce later in the year, but the basic point is right.

Instead of managing decline, Conservatives are developing policies that can give a level of hope and certainty to sub-postmasters. Conservative Members are prepared to give the business people who run our sub-post offices a chance and a future.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

I am just about to finish, but I suppose it would be churlish not to allow the Secretary of State one little moment.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

Absolutely, and as the hon. Gentleman knows, I am always generous in giving way to him, although that may stop too. Before he gets to the final part of his peroration, will he tell us whether any post office should ever close?

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

That is easy. Of course some will close. That is the easiest question in the world to answer, but it is the magnitude and scale of the closures, which the Secretary of State is overseeing at 580 a year, that are causing everyone the concern that we are expressing today.

We want to give sub-postmasters a framework in which they can develop their businesses and make profits, whereas they are currently constrained and forced into loss. Unlike Labour, we will not limit sub-postmasters. We will give them the tools that they need to ensure that the post office network can thrive and continue to fulfil the important role that it plays in our local communities, which is why I urge the House to support our motion.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry 4:43 pm, 10th January 2007

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

"acknowledges the important role that post offices play in local communities, particularly in rural and deprived urban areas;
recognises that the business environment in which Royal Mail and the post office network are operating is undergoing radical change, with more and more people choosing new electronic ways to communicate, pay bills and access Government services;
applauds the Government's record of working closely with Royal Mail, Post Office Ltd. and sub-postmasters to help them meet these challenges with an unprecedented investment of more than £2 billion made by the Government in supporting the network since 1999;
endorses the Government's firm commitment to ensuring the continuation of the network, while acknowledging the widely held view that its present size is unsustainable;
supports the Government's approach of allowing Royal Mail the freedom to respond to future commercial challenges and opportunities, and in particular enabling Post Office Limited to determine the future shape of the network within clear Government rules governing criteria for local access, a requirement to develop new "outreach" services, full public consultation on proposals for each affected area and a continuing commitment to social network payments by the Government to reflect sub-post offices' social role;
and welcomes the Government's renewed commitment to allowing the public to get their pensions and benefits in cash from post offices if they choose to do so, including a successor to the Post Office card account when the current contract expires in 2010.".

I am grateful for the opportunity to debate the proposals that I made in December, which have led to the consultation that is under way. I dare say that there will be many other opportunities for the House to debate them further. Alan Duncan could not be with us on the day that I made my statement, so it was interesting to hear for the first time what his policy is.

May I say out the outset that these are difficult decisions? The post office network is facing a difficult time. I take as my starting point the conclusion of the Select Committee on Trade and Industry, chaired by Peter Luff who is in his place, that there is a widespread belief that the present network of 14,500 branches is unsustainable. The National Federation of SubPostmasters itself has said that.

When post offices have seen fewer and fewer people coming through their front doors over a number of years, with the associated loss of business, the House and any Government must consider what is to be done. Do we let closures continue on a haphazard basis, or do we try to manage the situation to provide support for the post office network while at the same time taking the action that we believe is necessary to put the network on a stable and long-term footing?

Photo of Peter Luff Peter Luff Chair, Trade & Industry Committee

I look forward to the Secretary of State appearing before my Select Committee two weeks today to discuss this issue again. I hate to correct him, but the starting point of the Select Committee's report was that the Government have withdrawn services from the post office network and so accelerated its decline.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I will deal with that point, but it is not unreasonable for me to point to the conclusion reached not just by the hon. Gentleman's Committee but, as he said, by the witnesses that appeared before it. Like the previous Government, we have been seeing post office closures year after year; I will come on to the question of Government business later. We must, however, address the question of what we can realistically do to ensure that we have a national network. For the avoidance of doubt, I have always been clear that we need many more branches than the number that are commercially viable. We need a national network of branches to ensure that people the length and breadth of the United Kingdom can get their benefits and pensions.

Several hon. Members:

rose—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I will give way, but not to everybody at once. I will give way first to my hon. Friend Geraldine Smith.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

Many people accept that changes in society mean that people have benefits and pensions paid into bank accounts. Surely the solution for the post office network is to find new business—to make the post office a shop front for Government services Has my right hon. Friend given any thought to a new Post Office bank account, which could be popular with the public?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I agree that the objective must be to do whatever we can to encourage new business in the post office. If I may, I will deal with the bank account issue later. The new chief executive of the Post Office has made it clear that he wants to encourage new business. I think that I am right that the Post Office is now one of the major providers of foreign currency exchange and is selling travel insurance and various other products that are bringing people into post offices. We want to encourage that. However, the fundamental problem is that over a number of years, under both Conservative and Labour Governments, fewer and fewer people have been going into the post office, which has created financial problems.

Several hon. Members:

rose—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I will give way to hon. Members in my own time.

In 1996, the last full year of the Conservative Administration, about 20 per cent. of people receiving benefits and pensions had their money paid directly into a bank account. Therefore, the problem has not just started in the past few years: it has been gathering pace ever since direct payments were introduced in, I think, the mid-1980s. As I said in my statement to the House in December, the problem is that over a number of years people's shopping and banking habits, including their use of the internet and e-mail, have meant that, one way or another, fewer and fewer of them have come into the post office. Let me deal with the point made by the hon. Member for Rutland and Melton and others that the Government are somehow forcing that to happen.

For years people have been choosing to have money paid into their bank accounts, such as child benefit and pensions. Indeed, most new pension claimants now ask for that to happen. I believe that people have the right to choose. It has been happening for years—and yes, it has resulted in fewer people going into the post office, but that too has been happening for a number of years.

The hon. Gentleman made much play of the fact that the Conservatives closed only 3,500 post offices, and that a greater number had been closed since then. The difference is that in the Conservative days the closures happened on a haphazard basis, and the Post Office was given no support to help it to deal with the situation.

Several hon. Members:

rose—

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Culture, Media & Sport

The Secretary of State says that "haphazard" closures are occurring, and says that he wants a consultation to establish a rational basis. If the current closures are haphazard, as he says, will he call a moratorium on unnecessary closures so that all closures can be considered on a rational basis?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

What I said was that during the Conservative years closures took place on a haphazard basis, and no attempt was made to help the Post Office manage the situation.

Several hon. Members:

rose—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I will give way in a moment.

The hon. Member for Rutland and Melton said—he made some play of this as well—that part of the problem was that the Government were encouraging people to have their benefits and pensions paid directly into their bank accounts. Yes, the Government have done that, for two reasons. First, as I said earlier, people were choosing to do it anyway. Secondly, all Governments have been under pressure to make themselves more efficient and to cut costs.

The hon. Gentleman implied—and did not respond to one of my hon. Friends, who challenged him to say whether he would stop the process—that it was somehow wrong to encourage people to have their benefits or pensions paid into a bank account where that was appropriate. At the last general election, the Conservatives' central plank on economic matters was their endorsement of the James report, which explicitly expressed support for the benefit payment system. In other words, the money that was saved had been banked by the Conservatives. It is a bit much for them to suggest now that they disapprove of what has been going on for a number of years.

Photo of Alan Duncan Alan Duncan Shadow Secretary of State (Trade and Industry)

What seems totally lost on the Secretary of State is that some sort of balancing effort is needed to ensure that people can obtain their money from other sources. On that, we hear nothing from him.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

The whole thrust of my statement acknowledged that the changes were taking place and made it clear that there would be financial support for the Post Office amounting to £1.7 billion between now and 2011, recognising that the post office network had lost business.

This is the difference between our approach and the Tory approach. We recognise that profound changes are taking place in post office business and are prepared to provide financial support to enable the Post Office to adapt to that, but we also recognise—as do many others, including the National Federation of SubPostmasters—that the present network, at 14,500, is unsustainable. We are proposing a reduction of about 2,500, which would still leave the Post Office with a network greater than that of all British banks.

Photo of Robert Smith Robert Smith Liberal Democrat, West Aberdeenshire and Kincardine

The Secretary of State speaks of a reduction of 2,500, which will concern all who are served by those post offices. In his document, however, that figure relates to a limit on the amount of compensation that he will give to Royal Mail. The access criteria do not enable our constituents to understand how their post offices will be affected, because there is no definition of remote areas, and the document does not specify the rural area to which the 95 per cent. figure applies. Does his model provide for a network of 12,000 sub-post offices to be maintained under those criteria?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

As we said in our consultation document and as I said in my statement, that is our intention. Any Government must put a cap on the amount of compensation that they can pay. When the consultation period ends and we reach our conclusions, the Post Office will look at its network in different parts of the country, come up with proposals and—this is an important point—try to manage the situation to ensure that there are post offices that meet the access criteria. We must not allow a situation to evolve in which people simply sell-up their businesses. It is important to bear in mind that most such businesses are owned by private individuals; they are not Government-owned. In areas such as that which the hon. Gentleman represents we do not want situations to arise in which people retire or sell-up their businesses and there is no longer a post office.

We must ensure that we manage the system properly so that there is a coherent national network. That will not happen if we return to the approach that the Conservatives adopted in the 1980s and 1990s, when there simply was no planning and the situation was allowed to run unchecked.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

With respect, the Secretary of State's rationale appears to me to be perverse. He is trying to justify the massive cull of post offices on the basis that it is an organised cull rather than a disorganised one, even though the former will take place at three times the rate of the latter.

What would the Secretary of State say to sub-postmasters Mr. and Mrs. Sodhota of Edgmond, Shropshire? They are doing a marvellous job of running that village post office, and also of running another part-time post office in Lilleshall. The Secretary of State has withdrawn business such as the TV licence business and the Post Office card account business, so what would he say to them about how they should invest for their futures and that of their children, and for the futures of the villagers they serve?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I entirely agree that there are many sub-postmasters and sub-postmistresses throughout the country who do a sterling job not only in carrying out their own business, but often above and beyond that in providing other services and forms of support.

I will discuss the Post Office card account shortly. I have said that we need to replace it, and that is why we want to put in place a new contract from 2010. The decision on the licence fee was taken by the BBC. It did not take it because there was a lack of network; it explicitly stated at the time that the reason was that large cost savings would accrue to it—and, like any other organisation, the BBC has to take account of costs.

On the hon. Gentleman's general point, I have explained time and again what has been happening over the past few years. People have chosen to conduct their business in different ways, and that changing behaviour has taken a toll on the Post Office. I want to make sure that we manage that process, and that we do not just leave things to chance. We should carry on supporting the Post Office, both directly through financial support and indirectly through measures such as the POCA and encouraging the Post Office to get other business in other ways. That is the best way of making sure that we get a national network.

It is not only me who is saying that. I have had many discussions with the federation concerned in this matter. One thing that its representatives said to me prior to my announcement was, "For goodness sake, don't just walk away from this and do nothing. You've got to make sure that we have a chance of getting a coherent national network." I believe that our proposals do that.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

The Secretary of State is right that if nothing is done there will continue to be post office closures; we all understand that, of course. However, he is proposing a quantum leap in the number of closures, in the hope that that will somehow stop the process for ever and a day so that we are then stuck with what will be a new network. Instead, he should see how sustainable the current number is. He keeps saying that it is not sustainable, but he has not advanced any evidence as to why it is not sustainable. Why does he not shelve the idea of closing 2,500 and concentrate on the measures that have been put forward to enable post offices to develop their own businesses? If he does that, he will see both that the network can be viable and how it can become so, and he can then make any decisions on closures that might be necessary.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

As I said in my statement, last year the post office network was losing £2 million a week; the sum is now £4 million a week. On any view, the post office network has got problems.

I—in common, I think, with all other Members—do not believe that we should reduce the network to the commercial size, which at present is about 4,000; it might be possible to get it to 6,000, but that would be optimistic. We have got to have a national network with sensible access criteria because there will always be people the length and breadth of the country who want or need to get their money in the post office, and the Government have a clear social obligation to ensure that the network is there.

Several hon. Members:

rose—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

Let me deal with one point at a time.

That is why we took the judgment that a network of the size that I propose would be sustainable, and we are prepared to support such a network. That brings me to another point that the Conservative party must face up to. We propose to fund the Post Office to the tune of £1.7 billion. That is an annual subsidy. The social payment is about £150 million. Our Eurosceptic friend has gone, but the answer to the question that he put to the Conservative Front-Bench spokesman is that, yes, one does need state aid clearance for these things, but obviously we have had that so far and I am very hopeful that we will get it again. We are prepared to make that money available.

If anyone takes the view that what we are proposing goes too far and that there should be fewer closures—I asked my question of the hon. Member for Rutland and Melton because I wanted to find out his position on closures—I say that we would then have to be prepared to find the money to make up the difference in support. As I understand it, the Conservatives' position is that they would not spend any more money on the network. The sums simply do not add up.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

It could be argued that anybody in this Chamber who has bought a postage stamp from a garage, sent an e-mail rather than a letter or paid a bill in some way other than at a post office is being a little hypocritical in arguing that they are defending post offices when in their personal lives they are making other choices. It is that choice that the Government are so keen on that I would like to see implemented in favour of post offices, so that every consumer has the right to purchase any Government service, TV licence or something else of that nature at a post office if they wish. That is not to force them to do it; it is simply to give them the right. Will my right hon. Friend give that choice to consumers?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

As I said, the licence fee is run by the BBC, which took that decision. On pensions and benefits, I said that if people want to be able to get their money in a post office, they ought to be able to do so. I do not think that my hon. Friend was arguing otherwise, but people are free to exercise their choices, and it is not inconsistent to support the Post Office and to buy a stamp at another outlet from time to time. That is how people live their lives; they do what is convenient to them.

I have yet to hear anybody say that we can sort this out by trying to turn the clock back so that more and more people go back to getting their benefits and pensions at the post office—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

Well, maybe the Liberal Democrats think that that can be done, but I do not think so. Most people recognise that these changes have taken place, and the question is how we respond to that. Part of the response must be Government support for the network, and I have mentioned the money that the Government propose to spend over the next few years. Part of it is post office business, which I am about to return to, but as David Howarth has been so noisy in the past 10 minutes I shall give way to him.

Photo of David Howarth David Howarth Shadow Minister (Energy), Trade & Industry

Is the Secretary of State saying that it is now Government policy to do whatever it takes to maintain the network at around 12,000 sub-post offices, and that there will be no more proposals for cuts beyond that number? If so, that would be a new policy, and it is what people want to hear. In Cambridge, for example, we have lost a third of our sub-post offices, and the question is when the process will end. Is it the Government's policy to prevent the process from going any further?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

As I said in my statement, the Government believe that a network of about 12,000 sub-post offices, with outreach support, is sustainable, and we are prepared to provide the money to make that happen. If people are arguing, as the Tories now appear to be doing, that there ought to be fewer closures, so that the subsidy, by definition, would increase, they must be clear that they would have to find the money, but that is not the Tories' position.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

The Secretary of State is talking again about closure—we keep hearing about the closure of post offices—but he has also talked about the haphazard nature of previous closures. In the urban regeneration programme, it seemed to be that whoever wanted to go got to go. That has left the current network dysfunctional in many areas. Is there anything in the right hon. Gentleman's proposals that would allow an overall look at the network and the opening of new post offices to rebalance the network, and not just closing more post offices?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I never thought that I would see this day, but I totally agree with what the hon. Gentleman says—that should finish him off. The approach of leaving nature to take its course is wrong because if one or two postmasters or postmistresses in a particular area, especially a rural area, simply decided to sell up and stop trading, there would be gaps in provision unless things were organised properly. This time, the Post Office is going to examine individual areas and determine who wants to go in each area—quite a large number of postmasters and postmistresses are saying that they want to go. That might match up with what is required to bring about a more coherent network, but it might not. In circumstances in which an individual in one place wants to go while another wants to stay in business, it might be necessary to move the post office so that there is a better distribution of post offices.

That is what the Post Office is doing in relation to Crown post offices. Some towns and villages have two post offices, although there might be the business for only one. In my constituency, during the last round of closures, it was put to me on a couple of occasions that it would have been better to have closed a different post office from that which was proposed. We propose to have a more managed process. The Post Office is considering that, and when we have reached a conclusion, I will give further details to the House. However, the hon. Gentleman is absolutely right that the process must be managed.

Photo of Andrew Gwynne Andrew Gwynne PPS (Rt Hon Baroness Scotland of Asthal QC, Minister of State), Home Office

I welcome what my right hon. Friend says about considering a more managed approach. However, in Denton, in my constituency, the post office franchise was with the Co-op, and when the Co-op decided to terminate the franchise, the town was left without a post office for three months. A post office then opened in a new building, but that has remained a building site for 12 months, which is completely unacceptable to my constituents. When we consider the managed approach, can we please tighten up the franchising arrangements so that the situation in Denton that my constituents have had to put up with does not occur elsewhere?

J

The Junction Post Office in Audenshaw was closed about a year ago. I now walk to Droylsden Tollbar where there is a PO in a shop and I queue for 20 Minutes sometimes in the rain to send a parcel. Post Office closures are affecting everybody not just rural communities. The PO has a monopoly for dealing with the general public, it should be regarded as a public service. Denton...

Submitted by John Pearson Continue reading

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I understand the difficulties that will have been caused to my hon. Friend's constituents, but one of the problems is that the network consists of about 13,800 private businesses. Some of those businesses are run by people who carry out post office business in whole and others are run by those who carry out such business in part. When individuals take their own business and personal decisions, it can sometimes be difficult to manage things in a way in which a national organisation otherwise would. It is important that we give the Post Office not only financial support, but support through the policy that I am proposing to allow it to ensure that it can rationalise its network and get a coherent network with the right spread and the right opportunities of access.

Several hon. Members:

rose—

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

Let me answer one question at a time.

That can be done only if we are prepared to accept that changes need to be made, although they also need to be managed.

Photo of Elliot Morley Elliot Morley Labour, Scunthorpe

We have not heard much from the Opposition about the fact that pressures of change have built up in recent years. However, we have an opportunity for innovation, such as through mobile post offices, which were proposed in the White Paper. In my neighbouring constituency of Brigg and Goole, the West Halton post office, which had closed, reopened with the involvement of the parish council. Parish councils, community groups, local councils and the Local Government Association can play a role, but we have not heard much about that. When such an approach was proposed for my area of north Lincolnshire by the Labour group, the Conservative council voted against the proposal.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I am surprised to hear that, given that I understood that the Conservative leader had written to all his councillors saying that they should be looking at ways to put business the Post Office's way. My hon. Friend is right. An aspect of the proposals that I set out last December was for local authorities to have a greater financial influence over support for post offices. For example, they could see whether they could provide services jointly through post offices, and so on. As for additional business, it is important to recognise that most post offices are private businesses. It is therefore open to postmasters to take on different, non-post office business, and most do.

The hon. Member for Rutland and Melton asked about restrictions. Some restrictions exist, basically to prevent a postmaster from taking on an activity that competes directly with other Post Office business. I can see the business rationale for that, as I shall explain. For example, the Post Office sells products such as travel insurance. That is subject to national agreements, and helps to bring people into post offices, but a difficulty would arise if someone else were to cherry pick that business, as that would undermine the coherence of the national contract.

Moreover, since this Government opened up the postal services, a person who wants to use the post office network can go to the Post Office and try to reach a suitable agreement. If that is not possible, that person can go to the regulator—

Several hon. Members:

rose —

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I will try to give way to everyone, even though this is only a three-hour debate. I hope that we do everything possible to encourage postmasters and postmistresses to get additional business because, in the end, it is the number of people who come through the doors of post offices that will make the difference.

Encouraging extra business is absolutely essential, and is the other half of what the hon. Member for Rutland and Melton was saying, but on its own that is not enough: there still needs to be substantial public support. We are prepared to make that support available to ensure that the network survives, but my hon. Friend Mr. Morley and his colleagues in Lincolnshire are absolutely right in what they say.

I give way to Julia Goldsworthy, who has been very patient.

Photo of Julia Goldsworthy Julia Goldsworthy Shadow Chief Secretary To the Treasury, Treasury

I thank the Secretary of State for giving way. He has spoken about the need for rational planning for the network to prevent haphazard closures, but the reality is that many temporary closures become permanent because no one will take on a business that has a big axe hanging over it. For example, the sub-postmaster at the village of Beacon in my constituency died suddenly, and no one can be found to take on the business in the current uncertain climate. As a result, the office is the subject of a change-of-use order that would turn it into a residence. The closure is supposed to be temporary, but how can the post office survive?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

That is a fair point. I have published these proposals in part because I want to provide certainty, so that people who take on a business know what its prospects are. As was noted earlier, in the past the Post Office has not looked at a given area and decided which post offices were necessary to fulfil the access criteria. That is what I want to happen, and it is why I am making these proposals.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Patricia Hewitt, Secretary of State), Department of Health

I thank my right hon. Friend for giving way. I am pleased to say that all the post offices in my constituency are viable businesses that benefit the community, and my constituents want them to remain so. Will he confirm that, in future, people will be allowed to get their pensions or benefits from post offices, if that is what they choose? I have taken advantage of my local post offices' ability to supply foreign exchange and travel insurance facilities, so will he bring forward other new ideas so that those offices remain viable businesses in my community?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

Yes, I can confirm that people will continue to be able to get their pensions or benefits at post offices, and we have a commitment to that end. The foreign currency exchange facility has been hugely successful for the Post Office, and we very much want to encourage new business of that type.

I shall take interventions from those hon. Members to whom I have not yet given way, and then I shall move a conclusion, as half an hour is more than enough.

Photo of Mark Todd Mark Todd Labour, South Derbyshire

I thank my right hon. Friend for giving way. One thing that the Post Office insists on is that sub-postmasters cannot contract to install a pay-point outlet in their businesses. That is an anachronism, and unless the Post Office as a corporate body is able to provide a sensible, transactional bid for such a contract, it is one that should end. The Post Office has repeatedly lost contracts for basic transactional business: until it gets this matter straight, it is hobbling those sub-postmasters who want the work that I have described.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

They can get the Paypoint, but—for reasons that I set out earlier—they cannot use a pay point that competes with other business. If the Post Office has entered into a contract to sell travel insurance or to allow people to pay certain bills, I can see why it would not like to have a competitor sitting alongside. As I said, I am prepared to look at any proposal to enable the Post Office to get more business, but I want to avoid ending up with a situation in which its financial stability is undermined by someone who is able to cherry pick a particular bit of its business. That possibility would throw into question the viability of the rest of the Post Office network. We need to remember that much of that network is not likely to include post offices with valuable contracts; it is more likely to include those that are fairly well used.

Several hon. Members:

rose—

Photo of John Redwood John Redwood Conservative, Wokingham

I am grateful to the Secretary of State, who is very courteous. Can he tell us what public expenditure savings for Government Departments have been made from diverting business from Post Office services to banks, and how they compare with the extra subsidy, losses and borrowings needed by the Post Office on account of the lost business?

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I would want to give the right hon. Gentleman an entirely accurate picture, so I shall write to him about it. He may concede, however, that as long as I have heard him in the Chamber, he has been one of the most severe critics of Governments—his as well as ours—who spend too much. As I said at the start, successive Governments have rightly been under pressure to cut their administrative costs. Part of the administrative costs of the Department for Work and Pensions, where I was the Secretary of State for four years, related to benefit payments. It seems to me that if people choose to get their pensions paid into a bank account, the Government should facilitate that rather than stand in the way. The right hon. Gentleman will know—the James review is relevant—that at the last election, the Conservative Opposition banked those savings. Somehow to suggest that the Conservatives would not have made that change or would reverse the process is slightly disingenuous.

Photo of Alistair Darling Alistair Darling Secretary of State for Trade and Industry

I have been more than generous in giving way and I recall that Mr. Speaker said something about over-long speeches from Front Benchers, so in mitigation, it is not all my fault.

As I said at the outset, any decision about the Post Office that involves closures is difficult and I recognise that it will be controversial, but I would be failing in my duty—and the Government would be failing in theirs—if I did not recognise that, in the face of quite profound changes that have meant that the Post Office has lost many customers coming in through the front door, we have to take action to ensure that there is a national network of post offices. I am firmly committed, as are the Government, to maintaining such a national network and we have put substantial sums into the Post Office—not just Royal Mail—to ensure that we do. Over the next five years, £1.7 billion will be invested—a very significant level of support.

We must also recognise the duty to do all we can to help individual postmasters and postmistresses up and down the country. I firmly believe that unless we are prepared to face up to the difficulties, we are not properly supporting the Post Office, but simply posturing. It is important to do everything we can to support the Post Office, which is why I urge the House to support our amendment.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State 5:18 pm, 10th January 2007

There seems to be a real difference between Members who see the Post Office as a nostalgic and traditional network that is fading and should be allowed to fade gracefully, and those who believe that there is a vibrant future and very significant role for the network. For older people in my constituency, who still look to the Post Office for their pensions and to pay their bills, the key advantage is that they can do so safely with a known postmaster and postmistress who make them feel secure and can help them access the services that they need.

When I talked in 2004 to one my constituents, who was 80, she told me that the local post office was her "independence". She lives in Ham, my most deprived ward, where there is now no longer a single sub-post office. My constituent's independence has gone, so she has to depend on the charity of neighbours to access many of the services that she needs.

When the post office in rural communities disappears, the viability of the village or community itself is put at risk.

Photo of Roger Williams Roger Williams Opposition Whip (Commons), Shadow Minister (Environment, Food and Rural Affairs)

Much of the debate has focused on post offices as stand-alone businesses, but most post offices are well integrated with other businesses in their community. Will the Government take that into account when they analyse the results of their consultation? That symbiotic relationship is vital to cover the overheads of a business that might be the only one left in a community.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

My hon. Friend makes a significant point. Often the post office business is that marginal difference between the village shop staying open and it closing. It is important to consider the total package, but when I look at the new access criteria, as they have been described, I do not see that element being considered in the design of the new future post office network.

I come from an urban background: I am a Londoner and I represent an outer London constituency. Financial deprivation is an extremely significant issue. The banking network has little interest in those who are financially excluded or who live on the financial margins, but they constitute the perfect community to be served by post offices. For people who need access to financial services, post offices, perhaps in co-operation with credit unions and others, offer a way in which to access those services and to change their life opportunities. The needs of such people will never be met by the banks, which will deal with them only when dragged, kicking and screaming, by Government regulation. That is not an enthusiastic and positive way of generating the new services that such people need.

Photo of Tim Farron Tim Farron Leader's Parliamentary Private Secretary, Cross-Portfolio and Non-Portfolio Responsibilities

My hon. Friend points out that the access criteria are worth dwelling on. The Secretary of State rightly pointed out that we are discussing only about 14,000 individual businesses. If we are to close 2,500 of them very quickly, the temptation must be to be opportunistic and carry out the easiest closures. An example can be found in Staveley, a large village in my constituency, where the sub-postmistress wants to leave and sell the business. That would be an easy closure if one were being opportunistic, but it would be wrong to do it because there is clearly a massive village community to be served. Although the access criteria may well be carefully drawn up, when such a vast swathe of post offices are to be closed in one go—

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

Order. I have not finished yet. I just want to say to the House that time for the debate is limited and overlong interventions are not helpful. We want exchanges, but they must be kept as brief as possible.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

My hon. Friend's point, although lengthy, is entirely accurate, and I shall let it stand on its own.

For members of busy working families—I speak as one who played that role for many years—who cannot receive packages at home, the post office has huge potential if packages can be delivered to the post office and if people have one place to go to access a range of other services—for example, local council services, or to purchase financial products. My point is that a positive view can be taken of post offices and their huge potential, but that is not what I see Ministers doing.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

I understand that the Liberal Democrats want to privatise Royal Mail to help to maintain the network of sub-post offices, but what happens when the money from that one-off receipt runs out?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

Because it is the best way, I have left that until last, but I shall deal with that proposal, which offers a viable future for both Royal Mail and the post office network.

Let us consider the value of post offices. The New Economics Foundation has demonstrated that each post office saves local businesses approximately £270,000 per annum, and that, as it circulates, every £10 of income earned by a post office generates £16.20 for the local economy. That symbiosis that others have mentioned is key and must be central to the planning of the post office network.

All organisations need to change to meet the times, but if we started to think of the post office as having potential rather than as a fading organisation, the whole psychology would change.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Minister (Foreign and Commonwealth Affairs)

Some of my sub-postmasters and sub-postmistresses will be profoundly depressed by this debate, because it has concentrated entirely on negative thinking. There ought to be positive thinking. Each sub-postmaster and sub-postmistress should be free to compete with their neighbours in offering a greater range of goods and services. The other day one of my constituents told me that they could buy their television licence in their local pub but not in their local post office. The local post office would like to sell the licences but is not allowed to do so.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I very much welcome positive comments such as those that the hon. Gentleman has just made.

The potential of the post office will be squandered unless three things happen. The first is that we must stop further wholesale closure of sub-post office branches; indeed, a number of them need to be reopened.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

Does the hon. Lady agree that one of the problems is the way in which some of the closures took place? The treatment of Leominster post office in my constituency, which was downgraded, was disgraceful. Today, I received a telephone call from Mrs. Turner complaining about the length of the queues, so there is clearly no shortage of demand. Her problem was that she wanted to post a parcel, and that could not be done anywhere else.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

Unfortunately, the hon. Gentleman's experience is not unfamiliar.

The business restrictions on the network have been discussed. Some were imposed by Post Office Ltd, but some were imposed by the Royal Mail Group in the interests of the other arm of the organisation. The opportunity with the greatest potential—using post offices as a receiving hub for parcels, whether from DHL, Federal Express, TNT or anyone else delivering mail and packages—is being denied post offices by the Royal Mail family, so the second thing that must be done is to lift those restrictions. Thirdly, there must be significant investment in the system and the network, to make new businesses a reality rather than a myth.

Today, I have listened to both the Government and the Tories, but I have heard no realistic plans to deliver those goals. The Government have closed 4,000 branches and even the Secretary of State admits that it was not part of a properly organised master plan; certainly, in urban areas, as other Members have pointed out, closures depended on who was elderly and wanted to retire and who was so disillusioned by the threats that they decided they might as well get out while the going was good. Significant buy-out money was offered—£40,000 was a typical sum in my area. The results were completely haphazard.

Photo of John Barrett John Barrett Shadow Minister, Scotland

Will my hon. Friend comment on the fact that some of the most profitable and viable businesses are being closed? The busiest post office in my constituency, in the South Gyle shopping centre, was closed in the last round of closures, so no post office is safe.

C

Is Mr Barret not being a little economical with the whole story on this office. The supermarket operator had indicated some time previously that it had taken a...

Submitted by Charles Stewart Continue reading

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

My hon. Friend is right. Many of the post offices that were closed were among the busiest. I have seen that in my constituency, too.

The Secretary of State's assurances about a coherent plan for the future of post offices seemed to apply only to rural areas, but they should be just as true for urban areas, where access can be exceedingly difficult. In one of my wards, the best access to the nearest post office would require customers to walk on water across the Thames, which Post Office Counters did not realise when it closed the post office.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

I am confused by what I have heard from Members on both Opposition Benches. Are they arguing that the post office network should have complete commercial freedom? I think that is the hon. Lady's argument and it certainly seems to be the argument the Conservatives are making. If so, why should the network receive a penny piece of Government finance?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I remain committed to keeping Post Office Counters as a public service, and so does my party. Obviously, there is an argument for subsidy for social access reasons, but that would have to be in partnership with an effort to release the commercial and economic potential of post offices. If the Government cannot marry those two elements, they are missing out on the great opportunities that we face today. Many groups in the voluntary sector manage to balance a very commercial operation with a public service operation, and that is an entirely viable future for Post Office Counters. The withdrawal of Government business from the Post Office has been critical.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Culture, Media & Sport

The Secretary of State made it clear, from a sedentary position, that his comprehensive plan would apply to urban areas, too. Earlier, he told Mr. Weir, who is no longer in the Chamber, that under the plan, the opening of new post offices would be considered, if the network was too degraded in some areas. Does my hon. Friend Susan Kramer accept that proposed closures, such as that of the Crown post office in Newton Abbot, should be suspended until the comprehensive plan is in place, and until we can be sure whether Royal Mail is making the right decision?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

We always seem to be in a long "pending" period, and that is a time when a great deal of damage can occur to the post office network. It is important that such periods are accompanied by some kind of moratorium on the chain of closures.

Some 60 per cent. of post offices' business used to come from the Government, but that will soon be down to 10 per cent. The biggest harm to post offices came from DWP's threat to end the Post Office card account in 2010—I say "threat", but it will effectively do it. I understand that there will be a replacement; that was stated in a very recent announcement. The Secretary of State will be conscious that previous announcements—I remember them from my time as a member of the Select Committee on the Treasury—were all geared towards ending the Post Office card account in 2010. That contract was worth £150 million a year to the Post Office, and the card is used by 4.5 million people. Anyone who has tried to apply for one, and has gone through the processes involved, knows that one has to be really determined to get a card. It is not easy to do; a person has to really want it, as it has not been marketed. People have had to seek it out.

A replacement card is promised, and that is welcome, but does the Secretary of State recognise the damage that is already done? When I talk with my local postmasters, the one issue that they raise time and again is the number of people who no longer come in, having walked in with the letter that they received from the Department for Work and Pensions, which seemed to instruct them to open a bank account. That has been the consequence, and there has already been huge damage to the system.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

Is it the hon. Lady's understanding that what is proposed as a continuation of the Post Office card account will not necessarily be any such thing? If the contract is put out to tender, might not the service be provided through post offices? If so, would it not mean that people might be coming to incorrect conclusions?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I am concerned that the Government have not given us stronger assurances of the overwhelming likelihood of the Post Office winning the tender. Frankly, I do not think that anybody can guarantee that in a fair tender process. We would all like to hear what the contingency plan is, in case the Post Office is not successful in the tender. It has lost tender after tender because it has not been sure of its future, and because it has not been organised in a way that allows it to offer the most efficient and effective service available. The loss of the BBC licence fee service is a good example of that. The Post Office was not able to compete, in part because of the network uncertainty, and in part because of the many overhanging difficulties that mean that it cannot put together the most efficient, competitive tender.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Did not correct the original Post Office card account contract require a migration from the Post Office to banks? If that is included in the next contract, it will make matters even worse.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

The hon. Gentleman makes an important point. As I tried to explain earlier, the thrust of the Government's approach is to wind down the post office network. They want to help an old dinosaur fade out, instead of seeking a new opportunity and seeing a phoenix that can rise from the ashes. The latter attitude must prevail in future, as the former is a self-fulfilling prophecy that will result in the loss of the network.

May I challenge the Government's claims about the huge investment that they have made in post offices and the implication that that money is intended for modernisation? They put £1.7 billion into the network, £500 million of which was spent on the botched and incredibly late Horizon IT project. Obviously, that system has value, but one can argue that a significant portion of the £500 million was not spent effectively. Some £210 million was spent achieving closure, which certainly was not an investment in the future. Some £900 million was spent over six years on social network payments, which, I accept, provide a tremendous benefit. However, they are designed to keep the system ticking over—they are not designed to push for change or development, or to create new opportunities and drive forward business development.

The amount that has genuinely been spent on modernisation—sales, retail, competition and so on—is a modest £55 million, which has been used to focus on new business opportunities for post offices, rather than keeping the old system hanging on from day to day. We have been promised more investment, and I shall be fascinated to hear how the new £1.7 billion investment will be spent. How much will be targeted on closures, and how much will be used to develop new business? Many of the decisions and the presentation of arguments that would help to end the uncertainty for postmasters and sub-postmasters have been delayed, because the Government cannot decide how to develop their relationship with Royal Mail and whether to enter into an employee share scheme. Presumably, we have to wait until the Chancellor has had an opportunity to challenge for the leadership, as he needs support from Labour Members who are not keen on employee share ownership. It is extremely unfair that changes to such a fragile system should be pending while we await the outcome of those internal changes.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

The hon. Lady's is cynical about the £1.7 billion investment in post offices, but a great deal of manufacturing has gone to the wall and people have lost their jobs. If £1.7 billion was offered to people in the manufacturing industry, they would bite off the Government's hand to obtain it. What is the difference between those people losing their jobs and the position of post office workers?

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I do not support the hon. Gentleman's view that the post office network is the equivalent of a commercial service. My party believes that it offers a very different service, with a strong social component. Hon. Members have talked about the symbiosis between post offices and the viability of communities, and that key factor must be acknowledged in the handling of finances.

The Conservatives have got off scot-free. A total of 3,500 branch closures is not as bad as the total under the Labour Government but, my God, it is the difference between bad and worse. There has been much talk of unshackling, but there has not been any discussion of where the money for new development will come from. Enough Tories have engaged in business for them to realise that investment is a necessary part of change and new opportunity. The Tories called for this debate, so they should have some answers. Will they sell all or part of the Royal Mail Group? Will they keep Post Office Counters, Post Office Ltd and Royal Mail together? Will they make structural ownership changes?

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

As a Conservative Member with a business background, I believe that the hon. Lady is mistaken about the post office network, which is predominantly run by owner-proprietors, who have access to capital for investment if they can make a commercial case and there is a stable environment in which financial backers can invest for profit. Does she agree with Conservatives that the Government have not provided that stability? If people are not sure that they will receive income from the Post Office card account or be given greater freedom, that investment will not be made.

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

Order. The hon. Gentleman is in danger of using up the time that he might otherwise wish to occupy if he caught my eye.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

You will be glad to know, Mr. Deputy Speaker, that I am coming to the final part of my remarks.

I am now slightly worried about the business skills. Of course, uncertainty and risk are critical in any kind of business environment, but capital and investment are also critical for training, marketing and all the other development that will be necessary if we are to take the post office network from where it is today to the vision that we have of it in the future.

Photo of John Leech John Leech Shadow Minister (Transport)

Does my hon. Friend agree that a level playing field is necessary as well? When I needed to renew my car tax, I realised that I could do so on the internet without producing any insurance document, but if I went to the post office I would still have to provide an insurance document. Surely there should be a level playing field for the post office and the internet.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

My hon. Friend points out an anachronism of which I was not aware.

There is good news, as one party at least has put together a coherent plan that offers a future for the post office network—a comprehensive policy that deals with Royal Mail and the Post Office. First, the two must be separated. They are not the same business and there is no reason that they have to ride in tandem. The post office network belongs permanently within the public sector. It needs to be free to develop its business without being trammelled by Royal Mail and Royal Mail's own and rather different objectives.

We propose that, having made that separation, 25 per cent. of Royal Mail goes into an employee trust so that shares are effectively owned by the employees to provide the necessary incentives; 25 per cent. remains in public hands with Royal Mail, because with its universal distribution requirement there is a public service element, though it is a relatively small one; and 45 per cent. of the shares are sold on the open market. That yields about £2 billion in addition to the subsidy programmes that the Government have suggested, to put into an endowment to rebuild the network. That initial money will allow training, development and marketing to be put in place and will allow the network to be rebuilt.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

The hon. Gentleman may say "Tosh", but put that offer in front sub-postmasters and postmistresses, and in front of communities that know that their post office is under threat or declining, and the response will be very different. People can see the future and can see that our proposal works.

In the last debate on the Post Office, the Minister for Consumer Affairs and Competition Policy, who has not yet had an opportunity to speak, used a quote from a disillusioned postmistress writing in the Somerset newspaper, the Western Daily Press, which I think accurately summed up the Government's attitude towards post offices. He said that

"people do not use the post office, they only think they need one!"—[ Hansard, 16 October 2006; Vol. 450, c. 614.]

We have heard variants of that echoed over and over.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

I am grateful to the hon. Lady for being so generous in giving way. Mr. Davey, who previously spoke for the Liberals on the matter, used the same tactic of attributing that quote to me. It was not a quote from me. It was a quote from a sub-postmistress, which I was using to explain to people who did not know that even sub-postmistresses, not just the Government, were saying that there was a problem with the network.

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

I thank the hon. Gentleman, but I was careful to get the attribution correct, as he heard. The selection of the quote is significant, because it has been echoed time and again today. It comes back to my original point. Whether or not the Post Office has a future will depend on whether the Government believe in a viable and thriving post office network that can contribute to all kinds of social cohesion, but which also has a commercial future. If they take that approach, they will look at the plan that we have recommended and see that there is a way forward—a way to guarantee the future by keeping the social role that the post office network plays while providing it with the necessary investment. I recommend that plan not only to the Government but to the Tory Opposition, whom I hope will come up with a final strategy of their own at some point; it is sad that they did not do so today.

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health 5:45 pm, 10th January 2007

I am pleased to be able to take part in this debate and to follow Susan Kramer. Given her lengthy speech, it is somewhat surprising that the Liberal Democrats have not tabled an amendment to the motion. Perhaps that is because they are a bit coy about their policy, which includes privatising Royal Mail, and do not want it published in the Order Paper.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale

The Liberals usually like popular policies, and I do not think that they will find that privatising Royal Mail is very popular with the general public.

B

Since the arrival of Ebay and various other on line companies such as Amazon, the Royal Mail must...

Submitted by Bernard Hough Continue reading (and 2 more annotations)

Photo of Susan Kramer Susan Kramer Shadow Secretary of State for Trade & Industry, Trade & Industry, Shadow Secretary of State

Liberal Democrats like policies that work; sometimes they happen to be popular and sometimes they do not. We have always been willing to choose the hard road when necessary. The reason why there is no amendment on the Order Paper is that in October we had our own Opposition day debate and set out our proposals in great detail. There seemed no need to weary the House with yet another amendment that was not going to be selected.

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

It is great that the Liberal Democrats are not going to weary the House, because they do that far too much already, but that is a feeble excuse for not putting their policies and thoughts on to the Order Paper today.

I was not originally going to take part in this debate— [ Interruption. ] David Howarth should be very careful, because if he carries on jeering and cheering like that I will retaliate by using up all the time available and preventing anybody else from getting called. [ Interruption. ] Does the hon. Gentleman want to intervene?

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

Good, because I would not have let him anyway.

The Conservative opening speech was such a misrepresentation of the Government's proposals that I felt that I had to take part in the debate to try to bring a bit of balance to a very important subject. I am sure that all Members in the Chamber recognise the importance of the post office network. We all support our own local sub-post offices and Crown offices, whether in rural or inner-city areas. Wherever we are, up and down the country, we all recognise that sub-post offices, in particular, are the lifeblood of communities.

Photo of John Leech John Leech Shadow Minister (Transport)

Does that mean that the hon. Lady will support keeping all the post offices in her constituency open but is happy for 2,500 to close elsewhere?

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

If the hon. Gentleman will give me a wee bit of time, I will explain my thoughts on these matters, and then he can reach his own conclusions.

In spite of the way in which the Conservatives and the Liberal Democrats have portrayed the Government's position, the reality is somewhat more complex. We have heard a lot today about how people's spending habits have changed over the years. This Christmas, I am sure that people did more shopping on the internet than ever. That is not necessarily bad because, when I visited my local sorting office at Christmas, I was told that the number of packages that internet shopping generated was valuable.

Not only changing spending habits have had an impact on our post office network. Banking habits have also changed. One does not have to go back many years to the time when few women had bank accounts; hence many payments, especially child benefit, were made through order books. It was not done because people especially wanted that but in recognition of the fact that many women did not have bank accounts. That also applied to elderly people. As the years have passed, more and more people have bank accounts. People who retire now are more than likely to have a bank account, whereas that was unlikely several decades ago.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

I wonder what the hon. Lady's constituents will make of her speech. She represents a rural constituency that is similar to mine, and hearing their Member of Parliament act as an apologist for the Government's post office closures and provide every excuse for their shutting down thousands of post offices throughout the country, including in her constituency, will go down badly with her constituents, who would expect her to fight for them, not try to excuse the Government's mismanagement.

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

I shall not thank the hon. Gentleman for that intervention. Given that he supported my private Member's Bill on the Humber bridge, I expected better of a Member from north of the River Humber. I do not know whether he has paid the toll on the Humber bridge to travel south into my constituency, but it is not entirely rural. Indeed, Grimsby and Cleethorpes are the largest urban areas in that part of the east of England. However, the constituency has a rural hinterland and I care passionately about the rural network and also about what anywhere else would be deemed an inner-city network in deprived urban electoral wards.

Let me consider some of the concerns that sub-postmasters and the National Federation of Sub-Postmasters have expressed to me. Some of them have already been mentioned and I should like the Government to consider discussing them with the Post Office. They include Paypoint. The Secretary of State said that there was a problem about competition that involved Paypoint. Paypoint wants more outlets, but because of the notion that there will be competition, a sub-postmaster who would like a Paypoint machine cannot have one because it is a rival product. The Secretary of State mentioned travel insurance, but if Paypoint provided, for example, only TV licences, I do not understand why that would constitute a rival product. I should therefore like a little more explanation of the restriction on Paypoint. In parts of the rural hinterland of my constituency, the post office remains the best place to pay bills and people have to travel further to reach the nearest Paypoint machine. That should be tackled.

Constituents mentioned paying British Telecom bills and some claimed that they can no longer pay them at the post office. People can do that, but if one examines the section on how to pay at the back of BT bills, it says nothing about paying at the post office. That is not something that the Government have done. BT itself says that paying bills at the post office is the most expensive way of paying them, so it has taken a commercial decision on the matter. It has not stopped people paying in this way, but it is no longer promoting it.

We need to bear in mind the fact that commercial decisions are often involved, and that this is not just about the Government. If BT is saying that this method of payment is too costly, the Post Office needs to start looking at what it is charging such organisations to collect these payments. Perhaps it is not demonstrating as much business sense as it should, if it is driving away custom. In a sense, that is what happened with the payment of television licence fees. The BBC said that collecting those payments through the Post Office was very expensive. Conservative and Liberal Democrat Members have been pointing the finger of blame at the Government in today's debate, but things are never that simple or straightforward. There are many other issues involved. If we are to have a thriving network, the Post Office will need to examine its charging structures.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Culture, Media & Sport

I accept the tenet that not everything can be laid at the door of the Government, and that the Post Office is in part at fault for some of the problems that it faces. For example, Newton Abbot Crown post office is to close shortly, but the Post Office it is not even able to say whether that office is making a profit or a loss. Its inability to put a figure on this demonstrates its lack of financial competence. Does the hon. Lady agree that such post offices should not close because of the inability of the Post Office to understand its position, at least until the Government's review has been completed?

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

It would be way beyond my pay grade to comment on the future of post offices in the hon. Gentleman's constituency.

People have expressed concern to me about the future of the post offices in their area, but I occasionally hear another side of the argument—if not exactly the flip-side of the coin—which does not often get mentioned. An example was something that a resident of my constituency told me recently. They wanted to send a letter by recorded delivery and went to their local village sub-post office. Unfortunately, it was shut that day, so they went to the shop in the next village. Unfortunately, the sub-post office in the shop was also closed that day, so they had to make quite a lengthy journey to the nearest town. This was not at some obscure time; it was in the middle of the working week. The reason for this happening is that the nature of some of the sub-post offices' contracts means that they are not open at certain times of day. We need to look at the issue of opening hours.

I work closely with the Union of Shop, Distributive and Allied Workers, and I am very conscious of the issues relating to working hours. There should be much more flexibility for the opening hours of sub-post offices and Crown offices. They often do not reflect modern working practices, in that they are open when a lot of people are at work. Indeed, the main Crown office in the centre of Cleethorpes is probably one of the few that is open on Sundays, when it does excellent business. We need to examine those issues as well.

Photo of Mark Williams Mark Williams Shadow Minister (Wales)

I do not see how the person involved in the example that the hon. Lady mentioned could have the luxury of travelling from village to village. Public transport is also an important dimension of this issue, but not everyone has the capacity to have a car of their own. Nor does everyone have the capacity to access public transport. I represent 147 villages and hamlets, so public transport is a big issue in my area. That conspires against the thesis that she put forward.

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

I shall not try the patience of the Chair by straying into a discussion on public transport. Suffice it to say that accessibility is a crucial issue as well.

Recently, I met members of the National Federation of SubPostmasters from my area, when they came down to lobby Parliament. [Interruption.] I thought hon. Members were trying to intervene, but they are not. I am intrigued, because I do not recall any Conservative or Liberal Democrat Front-Bencher mentioning meeting members or delegations from their areas when they came down to Parliament, but given the distances involved, I was pleased to be able to meet 23 members from South Yorkshire and northern Lincolnshire.

My hon. Friends the Members for Barnsley, East and Mexborough (Jeff Ennis) and for Scunthorpe (Mr. Morley) and I, as well as others, had a constructive meeting with those people from our area, and some of them told us that they were not all totally opposed to the idea that there had to be closures. Closures will always be controversial, but some of those people said that they want to retire and sell their businesses. However, they want that to be managed properly. When the Government made their statement in December, and following that meeting, those members felt that what the Government said about the future of the network was very good and positive. There are those who want to retire and sell up. Property prices have increased, so people can realise their property assets and retire. That does happen.

Selling up could leave a gap in provision. A lot of people have been running sub-post offices for many years, which has skewed the age profile to the top of the range. Many of those people are thinking of retiring. They think that the package is good, and if they want to retire they can do so. Now, we have back-up. In the past, we would not know whether a gap in provision in a village would be filled by another sub-post office, but, due to what the Government are saying, that would now be carefully analysed. If an area was left without a post office, we would look at bringing in another one. That is absolutely vital for the future.

Photo of Dawn Butler Dawn Butler Labour, Brent South

I thank my hon. Friend for that apt description of some postmasters who want to retire. When post offices are closing, should not the Opposition be a little more responsible in their campaigning with regard to their terminology, language and approach? Should they not try to work with the Government to ensure that there are no gaps in provision for specific areas?

Photo of Shona McIsaac Shona McIsaac PPS (Caroline Flint, Minister of State), Department of Health

I certainly think that the difference between what the previous Government did and what we are suggesting as the way forward for the future is the social aspect of the post office in communities. We will try to ensure that we have that coverage nation wide in the network. That is very welcome. I hope that the Conservative party will support that aspect of the proposals.

I am going to mention another point as regards the Post Office card account. Of all the issues raised in my postbag, that came up the most. People were very concerned about the possibility of the Post Office card account ending. The announcement that there would be a replacement card account was therefore welcome, and it has eased many of my constituents' fears.

I would like the Under-Secretary of State for Trade and Industry, my hon. Friend Jim Fitzpatrick, and my right hon. Friend the Secretary of State to consider ways of linking in credit unions to the future replacement for the card account. The areas in my constituency with high post office usage are often those with fairly high levels of deprivation. There are still people in those areas who do not have access to bank accounts because of their credit ratings, and the North East Lincolnshire Credit Union is working to keep those people away from loan sharks. Links with credit unions therefore have immense potential for tackling financial and social exclusion in the future.

In northern Lincolnshire, my hon. Friends the Members for Scunthorpe, for Brigg and Goole (Mr. Cawsey) and for Great Grimsby (Mr. Mitchell) and I have always worked closely with our post office network. We heard earlier from my hon. Friend the Member for Scunthorpe that my parliamentary neighbour and regional Whip, my hon. Friend the Member for Brigg and Goole, worked with one of his parish councils to have a sub-post office reopened. That shows how we can work together for the future of the network.

I was astonished, however, by the support from Alan Duncan for the idea that more local council services could be delivered via the sub-post office network. Perhaps he might like to have a word with his Tory colleagues on North Lincolnshire council. While my neighbouring MPs have worked with our Labour colleagues on the council, his colleagues voted against extending the community use of sub-post offices and the Local Government Association position, in complete contradiction to the policy he espoused today. That is just another example of today's Tories saying one thing and doing another.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth 6:07 pm, 10th January 2007

I am grateful to Shona McIsaac for leaving a little time for the rest of us. I shall try to use as little of it as I can. I want to speak about who is to blame for the situation in which we find ourselves, who suffers as a result and what might be done about it.

The Government talk a great deal about choice and the importance of offering people choice. Of course, using the local post office to collect one's pension or benefit payments is, or was, a choice. It might not be the most efficient choice available to an individual, and certainly not the most convenient choice for the Government, but that is not a good reason to prevent people from making it. The Government, with their considerable resources, could have made the case to all those affected as to why it would be better, more sensible and more beneficial for them to have their benefits or pension paid into a bank account, while leaving them the option to do something else. But that is not what happened. The Government put pressure on all those individuals to do what the Government wanted. They must therefore accept some responsibility for what is happening to the post office network now. By removing that choice, they have effectively removed a large part of the post office network's income.

I accept that other pressures, some of which have been mentioned, have been exerted on the profitability of small post offices. Of course, the use and prevalence of e-mail has an effect, and the existence of an online stamp system will have even more of an effect. Ministers cannot, however, escape significant responsibility for loss of post office income through the removal of Government business—last year, in the order of £168 million. Last month, in a spectacular display of adding insult to injury, the Prime Minister said that the closure of post offices would be the fault of customers for not using the services that his own Government had taken away.

We now face plans to reduce the post office network again, significantly, and we know where the axe will fall. It will fall on communities where shops and services have already gone, and where the post office may well be all that is left. Those communities could be rural or, as has been observed, they could be urban. Indeed, postmasters and postmistresses in deprived urban areas are among the most pessimistic about their future. However, I want to focus for a moment on the rural communities that I represent.

The Government talk a great deal about communities. They even have a Department for communities nowadays. But "communities" rarely means rural communities. It rarely means villages where the post office is not just the only shop, but often the only point of social contact for many elderly and vulnerable people. It is sometimes the only reason for them to leave the house, and gives them the only opportunity of human contact. Sub-postmasters and sub-postmistresses provide not just stamps and benefit payments, but a smile or a friendly inquiry. It is not surprising that 98 per cent. of those consulted in a recent survey by Age Concern regarded post offices as a lifeline.

The Government have argued that life is changing and we must change with it. That argument is part of their justification for what is happening, but there is a difficulty with it.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

The hon. Gentleman is making the case that post offices are vital to the community, which is absolutely true, but does he agree that local shops are also vital to the community? A recent report suggested that literally thousands of local shops would close in the next five years. Will we be subsidising those as well?

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

I agree that local shops are important, but my point is that there are communities in our country where all the shops have gone. The post office is all that is left, and it is where people go not just for commercial purposes but for a degree of social interaction. The situation that the hon. Gentleman describes is regrettable, and I should have thought that the worst thing we could do would be to make it worse. That is why we are saying that the post office network needs to be sustained.

As I was saying, the Government argue that life is changing and we must change with it. The problem with their argument is that because of some of those changes in lifestyle, the post office network has become even more important in some of the communities that I am describing. More people now live alone, particularly the elderly. They may be distant from their families, who may have moved away—especially in rural areas, where the movement of younger family members has been caused by the increased cost of living in those areas. The sub-postmaster or sub-postmistress may be the only person who notices that something is wrong when someone does not come in to collect a benefit or pension. The decisions that are being made have commercial implications, but they also have social implications, and we must bear those in mind.

Photo of Mark Williams Mark Williams Shadow Minister (Wales)

What the hon. Gentleman is describing is certainly recognised in my constituency. Is he satisfied that the consultation on which the Government have embarked deals adequately with that broader picture, the social dimension that he is describing?

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

No, I am not, and I think that the hon. Gentleman has made a fair point. I do not believe that what the Government are doing will compensate for that loss. They must recognise that they cannot simply regard the post office network as a commercial entity; they must also regard it as a social entity, and they must take account of what will be lost in social terms if village and urban post offices disappear.

What can be done? I think that Susan Kramer was somewhat unfair in saying that no positive ideas had been advanced on either side of the House. It seems to me that positive ideas have been advanced, and I give the Government a degree of credit for at least mentioning some of the things that might be done. However, I remain sceptical about their willingness to pursue some of those positive ideas.

There is certainly potential and opportunity for post offices to deliver more local and central Government services. If this Government have achieved anything in the field of job creation, they have surely achieved a huge growth in the marketplace for those who can help us to navigate the labyrinth of Government benefits and services that now exist.

Post offices are already a trusted source of advice, information and help on a variety of day-to-day needs. They are ideal candidates for having that role extended and doing more of such work. For example, the take-up of pension credit is inadequate, and post offices are the kinds of places where we can increase that take-up and give the necessary advice and help. However, they will be able to do that only if they are still in business. If we want them to perform such functions, there is simply no value in the Government pursuing a wholesale closure programme—they have substantially brought that about by their own actions—and in then being worried and disturbed to find that no one is available to deliver the good ideas that Members in all parts of the House are putting forward.

I hope that the Minister will take account of the genuine concerns that have been expressed by Members in all parts of the House in respect of the value that the post office network provides not only commercially but socially, and that the Government will desist from doing any more damage to communities that they have done quite enough damage to already.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness 6:15 pm, 10th January 2007

This summer, I had the pleasure of spending several days cycling around my constituency. I went from village to village, and the post office was, of course, the heart of the community in those villages. As I travelled along the coast to places such as Aldbrough, Mappleton and down to Withernsea, time and again people told me of the importance of the post office to their way of life and their local community.

Such small rural villages have had to put up with a lot since 1997. Community hospital facilities have either been closed or had services heavily reduced. Bus services are inadequate, inconveniencing the elderly and those without transport. Farmers' incomes have collapsed, and the single farm payment scheme has descended into chaos due to Government mismanagement. Rural areas feel neglected and question the Government's understanding of the countryside. Post office closures are, therefore, about as welcome as the Foreign Secretary at a Young Farmers dinner.

It is difficult to overstate the importance of the post office to small, remote towns and villages. The poor, the old and the ill particularly depend on it for a wide range of services. As Members in all parts of the House have often said, sub-postmasters act as a focal point for the community. My hon. Friend Jeremy Wright mentioned an Age Concern report that showed that most elderly people in rural areas regard the post office as a lifeline. That report also found that 56 per cent.—more than half—of such people thought that post office closures would lead to them being isolated. The current Government have already been the author of 4,000 such closures at three times the previous rate, and they are now proposing 2,500 even more swiftly than before.

The Government's mismanagement of the post office network has had a devastating impact on such communities. In my constituency, eight post office branches have been lost since 1999, and following the Secretary of State's announcement of last month a further six could soon be shutting their doors.

Last year, the sub-postmaster of Burstwick post office in my constituency announced that he would resign his post. The reason was that he was losing money and had to do a second job in order to subsidise his post office branch. He said that he was tired of swimming against the tide and predicted that many more post offices would close in rural areas if the Government carried on their policy of wilful neglect.

Residents in Burstwick have now been told that they will have to visit a post office several miles away in a nearby village. That might be fine for a young couple with two cars parked in their drive, but for the elderly, who often live alone and have little or no access to transport, it is asking too much. Such examples are common and are doing untold damage to the social fabric of this country, especially in rural areas.

The situation is likely to get worse. Sub-postmasters are voting with their feet. More and more of them are either going out of business or cutting their losses and leaving the profession entirely. When questioned in a recent MORI survey, 39 per cent. said that they could see no future whatsoever for their businesses. It is not hard to understand why. The average salary for a sub-postmaster is now only £1,000 a month—a fall of 6 per cent. since 2004.

During the summer, I wrote to every sub-postmaster in my constituency. Every respondent told me that it had become harder for sub-post offices to survive since the Government came to power, and 94 per cent. said that the Government had failed to support rural post offices. One went so far as to say that Ministers had done everything that they possibly could to destroy the post office network. More and more sub-postmasters are facing the same dilemma.

Try as they might, Ministers will not escape the blame for this crisis; it has taken place on their watch. In his statement to the House last month, the Secretary of State blamed everyone and everything for the current situation, but he categorically failed to mention the ruthless and persistent removal of Government business from the network, a point that was picked up by Labour Members. Kate Hoey said that it was a pity that the Secretary of State did not mention that the Government were taking business away from the Post Office. Mr. Drew greeted the statement by saying that it was very disappointing. Tom Levitt said:

"Given my right hon. Friend's statement...the future for stand-alone dedicated post office branches is bleak".—[ Hansard, 14 December 2006; Vol. 454, c. 1039.]

That is the real understanding of the situation, even on the Labour Benches, where Members are not taken in by Front-Bench spin.

Last year, the Government provided £150 million to the network through the social network subsidy, but in the same year they took £165 million out of the network in post office business. Five years ago, according to Adam Crozier, 60 per cent. of post office revenue came from Government business. In two years, that figure will be down to 10 per cent., yet the Secretary of State insults sub-postmasters and this House repeatedly by maintaining that it is nothing but changing circumstances. He says, "It's the internet." It is not; it is the way in which the Government have systematically withdrawn business from the network that has affected its viability. That is why closures, which were happening under the Conservatives, have trebled under this Government.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

Will the hon. Gentleman explain to the House the change in the ethos and thinking of the Conservative party? It used to argue that business must stand on its own two feet and should not be publicly subsidised. He may also recall that a Conservative Government subcontracted work to the private sector and, at times, abroad, causing 3 million people to become unemployed. What has changed since then?

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

The hon. Gentleman is persistent in his view. Like many Ministers and certain, although not all, Labour Members, he seems unable to see that there is a social value in what the post office network provides, and social value is what Government spending is for. We pay taxes so that the Government can provide services. That is why we have people coming in to look after the elderly in their homes. That is why successive Governments have sought to maintain a post office network.

The question is whether the Secretary of State's statement last month provided a vision, gave stability and created a robust situation in which sub-postmasters can invest. The truth is that it did not. What we have is the continuing managed decline of the network, with the exception of the welcome announcement on the Post Office card account, an issue to which I will return. Conservative Members have campaigned long and hard for that, and it would be good to see the Government put their hand up and say that they have listened to the arguments put forward by the Conservatives and accepted that it will continue, if indeed it will.

Does the Secretary of State support Conservative proposals to give sub-post offices greater freedoms to offer a wider range of commercial products? The answer would appear to be no. Does he envisage local authorities offering more council services through the post office? Nothing substantial has been promised. Does he want post offices to be given full access to working with carriers other than the Royal Mail? We appear not to have an answer. We have heard almost nothing on these important issues to try to give stability and a framework within which business could invest. All that people in rural areas can expect is a visit from a van for a couple of hours every week.

The Government's position is that there are no guarantees that closures will be capped at 2,500. David Howarth offered the Secretary of State the opportunity to make a clear statement that the Government intend to maintain the size of the network. No guarantee was made.

We have heard no guarantees that the Post Office card account will continue to be provided in post offices. There was indrawn breath in the House when I suggested that sending out the message to people that it was continuing and they could relax and plan on that basis, even though it might not go through the post office network at all, was a deceit, especially for sub-postmasters, 10 per cent. of whose income comes from the POCA. Perhaps I used unparliamentary language, but I have heard nothing from Ministers to reassure me that sub-postmasters will be able to rely on that money coming in.

We also have no guarantees that post offices will be freer to compete for business. There are no guarantees at all. The situation is far from one of stability and certainty in the post office network. Instead, the post office bike—rather like myself in the summer going round my constituency from village to village—may easily lose its balance and fall in a ditch unless the Government get a proper grasp on the situation and listen to further arguments from Front-Bench Conservative spokesmen, the Government of whom the post office network will have to wait for in anticipation.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Minister (Foreign and Commonwealth Affairs) 6:25 pm, 10th January 2007

I am grateful that I have caught your eye, Mr. Deputy Speaker. I had not intended to speak in the debate, although as I represent one of the largest rural constituencies in the south of England, rural sub-post offices are extremely important, especially as the situation comes on top of a range of closures in rural areas. I am delighted to follow my hon. Friends the Members for Rugby and Kenilworth (Jeremy Wright) and for Beverley and Holderness (Mr. Stuart) because they used the time that will not be available to me to describe in graphic detail the desperately important nature of a post office in a rural area. I was especially struck by Susan Kramer, the spokesman for the Liberal Democrats, when she said that if a rural sub-post office closes, elderly people, especially those without a car—as is the case in many rural constituencies, my constituency has no public transport—often have to rely on the charity of neighbours to allow them to collect their benefits and access the services that such sub-post offices provide.

It was disappointing that the Secretary of State did not have a greater vision of what he wanted from the rural sub-post office network. He had nothing to offer to House. Given that he was making a major speech on rural sub-post offices, I would have thought that he would be able to provide greater certainty. I do not envy the Under-Secretary of State for Trade and Industry, Jim Fitzpatrick, for having to wind up the debate. I hope that he will be able to provide greater certainty in his speech. There is no doubt that if the access criteria in the consultation paper are applied to my constituency, nearly three quarters of its rural sub-post offices could be closed, because the criteria are based on averages, not absolute figures.

I thought that there was a huge difference between the speech made by the Secretary of State and that made by my hon. Friend Alan Duncan. One speech was a breath of fresh air that espoused what we wanted to hear: a situation in which sub-post offices are allowed to thrive.

If I were an already struggling sub-postmaster or postmistress who had listened to the debate, I would be profoundly depressed. Hon. Members have mentioned that 39 per cent. of sub-postmasters and postmistresses think that their business has no future. That is very bad for morale. I would like to think that we were managing a thriving business that was going forward. The Secretary of State finished his speech by addressing the question of closing post offices, but I want post offices to be opening. Indeed, one or two post offices have opened in my constituency. There has been new, innovative thinking. Post offices have opened in clubs, pubs and on farms—in whatever other facilities are available in rural areas. Indeed, the same thing is happening in suburban areas. The closure of a post office in the suburbs causes as much hardship as a closure in a rural area. The Government need to come forward with a lot more innovative thinking. I disagree with the Secretary of State because I think that Post Office Ltd should treat its network more like a franchise, with a basic range of services that has to be provided and an additional range of services—a pick and mix range—that individual sub-postmasters could choose to provide, with their expertise and knowledge of their local area, so that they could make a profit and encourage customers to come to the sub-post office.

As my hon. Friend the Member for Rutland and Melton said, the Government could facilitate the availability of a range of extra services. When I intervened on the hon. Member for Richmond Park, I said that one of my constituents had written to me to say that although he would like to buy his television licence in a post office, he had to go across the road to buy it from a pub, even though he had never been in the pub in his life and did not wish to go there. He wanted to buy the licence from the post office and the post office wanted to sell it, but it was not allowed to do so. The Government could have done something about that daft state of affairs, or at least made more of a fuss about it.

First of all, the sub-post office could become the hub for all Government services. It could provide information about them, and that would bring people through the door. It is all very well to say that people are choosing not to use sub-post offices, but that is bound to happen if the range of services available is getting smaller and smaller.

Secondly, as my hon. Friend the Member for Rutland and Melton said, the Government should encourage local councils to allow people to use sub-post offices for their services. There is no reason why people should not be able to perform council tax and housing benefit transactions at sub-post offices, or why a greater range of financial services could not be made available. My hon. Friend was right to say that the Post Office should look at its contract carefully, with a view to allowing an individual office to provide whatever services it chose. For example, there would be nothing wrong with an office contracting with a local bank some distance away to provide some of that bank's services.

Thirdly, we live in a changing electronic world, and there is no reason why sub-post offices could not provide various telecoms and IT services. Elderly people may not be able to afford—or may not want—to have computers and broadband in their homes, but they could use their local sub-post office to send or receive e-mails, for example. In addition, for foreign telephone calls, it may well be cheaper to use a Post Office telephone that operates over the internet than it would be to use an ordinary domestic telephone. The Government should encourage sub-post offices to offer a range of such services.

I want to give the Minister and my hon. Friend Charles Hendry plenty of time to wind up the debate, so I shall end by saying that we need to provide some certainty for the sub-post office network. The Government should announce, as soon as possible, that they have reached a definite decision on the Post Office card account. That would provide a great deal of certain income to struggling businesses. The longer the uncertainty goes on, the more post offices will close.

I hope—indeed, I am sure—that that is not the Government's intention, but we need as many thriving post offices as possible. In particular, we must make sure that the average age of those who operate them ceases to rise as it has done recently. People feel that they are unable to retire, so we need to encourage young people coming out of school or university to consider setting up as sub-postmasters or sub-postmistresses and establishing thriving businesses in rural areas. If such businesses were to combine with others in the provision of services, there is no reason why the network should not thrive, to everyone's benefit.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform) 6:33 pm, 10th January 2007

This brief debate has been interesting and well informed, and it has dealt with one of the most important issues affecting hon. Members today. It began with a clear analysis of the decline of the post office network from my hon. Friend Alan Duncan. He set out the challenges that it faces, and described how the Government were wrong to try to manage the network's decline instead of developing the new business opportunities that might sustain it.

My hon. Friend asked the Secretary of State some very clear questions, but the right hon. Gentleman did not answer them. My hon. Friend asked for an assurance that more than 2,500 sub-post offices would not close, but there was no reply. He asked how large a town would have to be to merit its own post office, but we remain none the wiser. He asked whether POCA 2 would offer a greater range of services. That question was endorsed by my hon. Friend Peter Luff, the Chairman of the Trade and Industry Committee, but it was not answered.

My hon. Friend the Member for Rutland and Melton also asked for the timetable for tenders for the Post Office card account replacement programme, but we did not get that information. Most importantly of all, he even asked for the date when a decision would be made about the future structure of the Royal Mail, but not a single word was given in reply.

For those of us who have seen the Secretary of State working in the House over some years, it was perhaps one of his most remarkable performances, because he looked tired and disinterested. Perhaps his mind had moved on to his new job, where he hopes to be in a new environment as Chancellor of the Exchequer and to see his old Department abolished. That is not too surprising because, apart from the remarkable speech of Shona McIsaac, not a single speaker on the Labour Benches offered any support to the Government's position. We are talking about one of the most sure-footed Cabinet Ministers, but the Secretary of State looked extraordinarily uncomfortable in defence of his policy today.

The right hon. Gentleman says that he wants to encourage new business in the Post Office, but he simply will not take the steps necessary to make it happen. He says that there are perhaps only two options: to maintain the network as it is without a single closure and at a high level of subsidy; or, alternatively, to reduce the network and reduce the subsidy as the Government have proposed. What he has completely ignored is the third way, which I would have thought would be obvious to him. One would have thought that he would want to explore the amazing range of new business opportunities for post offices in order to make more of them economically viable so that more can stay in business with less subsidy to keep them that way.

I am sorry that the right hon. Gentleman is not in his place to hear what I am saying, as we had a remarkably interesting insight into Darling economics— [Interruption.] Here he comes, so I will wait for him to resume his place. I am more than willing to go over the earlier part of my speech again, so that he can hear what he missed. We had an astonishing insight into Darling economics: if one post office closes because the sub-postmaster wishes to take a redundancy package, the Post Office may instruct another post office nearby to close and transfer to the new location.

What the right hon. Gentleman is saying essentially is that the Government would tell a private business, which may have been operating for years in a particular location, serving its community and understanding its customers, that it must close and move to a new location in a community that it does not know, losing all the consumer good will built up over time. What if the postmaster declines to do so? What if he says that he wants to stay where he is and carry on serving the community? It is quite clear from what the Secretary of State said that the postmaster may be told that he may not do so, as his branch may be closed and a new person found to set up the other branch.

At the heart of the debate is the extraordinary amount of affection that all our constituents have for the post office network. Susan Kramer mentioned it in her speech and almost every intervention and speech by a Back Bencher referred to people's enormous affection for it. Yet we all know that it goes beyond that: it is not just about affection, but how we can bring new business into the post office network. The hon. Member for Richmond Park spoke about post offices becoming a hub for packages that couriers cannot deliver, but she went on to ruin her argument with an economically illiterate funding arrangement, whereby the Post Office would be separated from the Royal Mail, which would be part-privatised and the funds used to subsidise the separated-off post office network.

We have heard significant discussion about the Post Office card account. My hon. Friend the Member for Rutland and Melton, introducing the debate, spoke about the near compulsion on people to have their pensions paid into bank accounts. The hon. Member for Richmond Park talked about the letter sent to people when they retire, urging them not to go to the Post Office, but to use the banks instead. My hon. Friend Jeremy Wright, who has campaigned strongly on these issues, rightly said that the Government must bear some responsibility—indeed, the lion's share of it—for the problem.

The Secretary of State says that the use of bank accounts rather than the Post Office has been the result of a long-term change, but when we were in government, we never put the same sort of pressure on people to use the banks. People did not get the same letters then, and they were not rung up—as elderly, frail and vulnerable people often are today—and told not to use the Post Office, but their banks. Under the present Government, we have seen an unparalleled level of pressure applied on people to put their pensions into a bank account rather than into the Post Office.

I am not surprised that the hon. Member for Cleethorpes is not in her place to hear the wind-up speeches or any responses to her remarkable 22-minute speech. She started off by saying that we should close post offices, albeit none in Cleethorpes, and then developed an argument on why post office closures are right. I do not agree with her, but she is a brave person, with a majority of 2,000, to take that position. I hope that her comments will be widely publicised in her local newspapers—in fact, in a spirit of good will, I am prepared to help her by sending a copy of her speech to her local press and pointing out what she is saying on behalf of her constituents about why their local post offices should be closed.

The hon. Lady highlighted other issues, such as the fact that British Telecom bills do not tell customers how they can pay their bills at a post office—but has she done a single thing about it? Has she ever written to British Telecom to point out the omission and to ask it to change its practices? Hers was an extraordinarily weak speech—one that was apparently designed to shore up the Government's position, but failed to do so.

My hon. Friend Mr. Stuart took us on a cycling tour of his constituency and explained how the post office is the hub of every community. Were I to go on a cycling tour of my constituency, the doctor's surgery would be the important hub that I sought in every community. He spoke about the social roles that post offices play and highlighted the way in which many sub-postmasters are being ground down and demoralised by the lack of long-term vision for a post office network.

My hon. Friend Mr. Clifton-Brown summarised effectively the sense of disappointment that all of us felt at the Secretary of State's lacklustre speech and the great contrast between that and the vision set out by my hon. Friend the Member for Rutland and Melton, who is indeed a one-man think tank on the post office, with a raft of ideas for its future.

Some 5,000 post offices have been closed since the Labour Government came to power. That means that, in 10 years, taking into account the announcements made in December, 40 per cent. of the post office network will have closed under Labour. That is a national issue. As Kate Hoey said, closures affect urban areas every bit as much as rural areas. In Wales, 250 post offices have closed; in my constituency, a third have closed in the past five years.

We know that we owe a huge debt of gratitude to the sub-postmasters and sub-postmistresses for the work they do in serving their communities. They deserve better than they are getting from the Government. The Government's decision on the future of the network has been based on how many post offices they think they can get away with closing, rather than on a real business case or an understanding of what consumers want and need. The Secretary of State's vision is to have fewer post offices providing fewer services to fewer people.

A month after the statement, far too many questions are still unanswered. A raft of parliamentary questions were tabled following last month's statement, but the Minister for Consumer Affairs and Competition Policy, who is one of the most delightful men in government, has been unable or unwilling to say what proportion of closures would be urban or rural. He cannot give a precise figure for the social network subsidy, which implies that it could well be less than the present £150 million a year. He cannot say how much will be invested in improving Crown post offices or how many Crown post offices will close in the next three years.

The Minister has made no assessment of the likely environmental impact of closures, despite the Government's professed commitment to avoid unnecessary car journeys in order to protect the environment. Whatever happened to joined-up thinking? He cannot give us details of the level of support for mobile post offices. We still do not know whether press reports that the Post Office wanted to close 7,000 of the 14,000 sub-post offices were true. He cannot tell us what a local community would have to do to avert a closure—indeed, he does not even tell us whether local communities will have a say.

We are seeing a massive missed opportunity. Worst of all, the Government's policy does not recognise that the problems caused by the closure of the post office often result in the last shop in a community closing as well. The debate is not only about our post offices; it is about the whole of the communities in which so many of our constituents live. The Government should be announcing ways to develop the Post Office, allowing it work with carriers other than Royal Mail. They should end the restrictive practices and enable the problems of unfair competition to be tackled. They should be working with local councils to encourage them to offer more council services through post offices. Conservative councils are already doing that by encouraging people to pay their rent and access other council services at post office counters. We should be doing more to give post offices the flexibility to offer a wider range of businesses services than is currently permitted, and we should be considering imaginative approaches such as those employed in Wales, where the Welsh Conservatives in the Assembly have announced plans to support local post offices through help with business rates and expansion of the post office development fund.

The debate has highlighted once again the paucity of the Government's thinking on the issue. We need a real long-term vision for the future of the post office, not the Prime Minister blaming the consumer alone; the Government have been responsible for many of the problems but they have failed to come up with a vision. We need that vision. We need a long-term structure, but we do not have one and as a result we are destined for more years of uncertainty, decline and dissatisfaction.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services) 6:45 pm, 10th January 2007

I take as my starting point a quote from Charles Hendry. On BBC News 24, when it was put to him that

"people are arguing that demand for the Post Office's services has declined and therefore we need fewer than we had", the hon. Gentleman said:

"There are clearly some which are marginal. There are about 1,000 of them which have less than 50 customers a week and it's going to be quite difficult to give them a viable future."

That says it all.

For our part, we know there is a problem; we know that we have to address it and try to come up with solutions. I shall outline how we intend to deliver them and return later in my speech to the solutions proposed by the Conservatives and the Liberal Democrats.

I agree with the hon. Member for Wealden that we have had a useful debate about the future of the post office network, a subject of great relevance to the House. We keep coming back to it, and I am sure we shall continue to do so during the consultation period and right through to the announcement from Post Office Ltd in the summer. As always in these short debates, a number of questions have been raised and I shall try to deal with them in due course.

In the proposals now out for consultation, the Government clearly demonstrate their continuing commitment to the post office network. Our proposed strategy between now and 2011 is intended to maintain a national network of post offices, and to enable Post Office Ltd to undertake modernisation and some reshaping to put the network on a stable footing for the future. Since 1999, the Government have committed about £2 billion to support the network. Under our new proposals, we envisage that up to £1.7 billion will be provided between now and 2011 to support the Post Office—to support the social network and to pay for the wider necessary reconfiguration and modernisation that are key elements in achieving a firm basis on which to move forward.

At the heart of our strategy is clear recognition of the important social and economic role that post offices play, particularly in rural and deprived urban areas, and of the need for ongoing public funding to support them. We also propose to underpin that commitment to a national network by introducing new access criteria for post office services, which will include specific provisions to protect vulnerable customers.

Overall, nationally, 99 per cent. of the population will be within 3 miles of a post office and 90 per cent. will be within 1 mile—hardly a framework for destruction of the network, as has been alleged by some Members. Within that framework, there will be changes. Up to 2,500 post office branches will close, with Government-funded compensation to sub-postmasters who leave.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

If the hon. Gentleman will forgive me I shall not give way now. If I have time towards the end of my speech, I shall certainly take interventions, but I want to cover points raised in the debate, when, with respect, he was not in the Chamber.

It would be wrong to take things out of perspective and to dismiss the fact that the remaining network of about 12,000 post office branches will still be more than the entire UK banking network. Furthermore, Government support will enable the Post Office to open at least 500 new outreach locations, to provide access to services for smaller and more remote communities, using mobile post offices and post offices in other locations such as shops, village halls, community centres, or mobile vans. There will also be changes to the network of Crown post offices to restore that segment of the network to profitability, but Post Office Ltd will consult locally on those changes, as with all other changes in service provision, before taking final decisions on its proposals.

During the debate, a number of Members suggested that the network's problems lie squarely at the door of the Government, as a result of the move to pay all benefits into accounts, including the Post Office card account. It might be convenient to blame the network's problems on the Government, but the reality is far more complex, as I am sure all right hon. and hon. Members know. The transition to paying benefits into bank accounts began in the early 1980s. The Government introduced the POCA in 2003 to enable people to claim their pensions and other benefits in cash at the post office, and they remain committed to allowing people to get their pensions or benefits in that way, if they choose to do so. A range of accounts are available at the post office to make that possible.

The POCA contract ends in March 2010, and the Government have decided that they will continue with a new account after 2010. It will be available nationally, and the basis for eligibility will be the same as it is now. EU procurement rules leave us with no option but to tender competitively for that product, and we must ensure that the best value for money for the taxpayer is achieved, but the Post Office is well placed to put in a strong bid, given the size of the network and the access criteria that we are introducing.

In addition, cash will be available at post offices through some 4,000 free-to-use ATMs, which are being introduced across the network, as are a range of interest accounts. Those accounts will be attractive to both new, additional customers and those POCA users who choose to build up balances in their access accounts. Our proposals will ensure that people can get their money at post offices, and that there is a national network across the country. Although many people will say that they like their post office and value it highly, we all know that the reality is that many now prefer to pay their bills by direct debit, to use one of the Post Office's competitors, to do their banking via the internet, to use cashpoint machines, to renew their motor vehicle licence online, and to communicate by e-mail or text message. The result is that in some places too many branches are competing for the same customers. Some 4 million fewer customers use post offices weekly than two years ago.

Of the 11 million pensioners in this country, 8.5 million have their pensions paid into a bank account, and most people making new state pension claims choose to have it paid that way. Last year, the post office network lost £2 million a week. This year, it is £4 million a week, and that figure will continue to grow. It is therefore not surprising that both the National Federation of Sub-Postmasters and the Select Committee on Trade and Industry recognised that the present situation is, to use their word, unsustainable. That is why, under the Government's proposals, we look to Post Office Ltd to take a more active role in ensuring that the right post offices are in the right place, and the National Federation of Sub-Postmasters supports that. Change is clearly needed. Of the 14,300 current businesses, about 4,000 are commercially viable. Many never can be, and we should not realistically expect them to be.

Turning to points made in the debate, Alan Duncan made much of the accelerated rate of closures in recent years, but that is very much reflected by the accelerated pace of technological change. Yesterday and today, the media were full of stories about new advances in mobile technology, and that will have an impact on post office services in future. He also made a comparison with public houses, saying that free competition and free houses had saved pubs. It may come as a surprise to him that pub numbers are down by 12 per cent. since 20 years ago, and even free houses have closed in their thousands.

Susan Kramer sought assurances that the restructuring would cover the urban network, as well as the rural network, and that the procedure would not be as haphazard as that experienced in some areas under the urban regeneration programme. I repeat that we are much better placed to offer her that reassurance now, as there is new Post Office management and an improved Postwatch, and as we have the experience of what happened last time. She raised the issue of people being forced to use direct payment of benefits, but, as I said, direct payment of benefits was introduced in the '80s. More than 4 million people opened a Post Office card account—a figure that undermines the claim that the account is overly difficult to open. She asked whether post offices could become a hub for postal delivery services. At present, Post Office Ltd's mail contract is exclusively with Royal Mail. Royal Mail uses the network to satisfy its universal service obligation to maintain coverage of access points. Widening the service to include other providers would create capacity problems and, the hon. Lady will accept, have major strategic implications for the company. In any event, the matter is being considered by the regulator.

The hon. Lady asked whether post offices could become storage sites for undelivered items. Royal Mail already offers such a service via the post office network, as its local collect service enables customers who order goods from selected mail order catalogues and internet suppliers that use Royal Mail and the Parcelforce worldwide service to choose to have goods delivered directly to their local post office branch if they do not expect to be at home to receive the delivery. The matter has therefore been dealt with.

Mr. Leech intervened on the hon. Lady to argue that there was not a level playing field for the Driver and Vehicle Licensing Agency and post offices, because people had to produce their insurance certificate at the post office, but they did not have to do so for the DVLA. I have to inform him that the renewal form has a DVLA reference number, which is typed into the online link to the DVLA website, which automatically checks that the vehicle is insured and has a valid MOT. No one receives a tax disc without being in possession of the relevant additional documents.

My hon. Friend Shona McIsaac was subject to an uncharacteristically unchivalrous attack by Mr. Stuart. [ Interruption. ] There is some dissent among Labour Members, and I apologise for their remarks. My hon. Friend made some excellent points on technical matters. I do not have time to deal with them now, but I shall write to her.

Jeremy Wright made a thoughtful speech in which he confirmed that the Government were open-minded about service delivery options and new business opportunities for post offices. I am grateful for his remarks, and we look forward to his contribution to the consultation.

The hon. Member for Beverley and Holderness continued in his aggressive, interventionist mode, and attacked the Government's record on rural affairs. I have to tell him that rural affairs are a key priority for the Government. The access criteria outlined in the consultation document aim to protect services in remote areas and go substantially further than the current universal service obligations. The introduction of new, innovative outreach programmes will help to mitigate the impact of any closures in rural areas. More generally, unemployment under the Government has fallen by 40 per cent. in rural areas, and 50 per cent. rate relief has been extended to village shops. The rural bus subsidy grant, which was worth £53 million in 2005-06 was introduced to support more than 29 million passenger journeys a year.

Photo of Jim Fitzpatrick Jim Fitzpatrick Parliamentary Under-Secretary (Employment Relations & Postal Services)

The hon. Gentleman might have a chance to speak in a moment.

Mr. Clifton-Brown wanted to see post offices opening. We would certainly like that, too, but we must make sure that the network is sustainable and is in sound health so that it can move forward. When I was promoted to the Department of Trade and Industry, I asked my officials to insert in my diary an engagement to open a new sub-post office, but they said that that was not usual practice for postal services Ministers. In response to the hon. Member for Richmond Park, post offices are opening across the country and, as the Secretary of State outlined, we want to make sure that a network is spread as evenly as possible across the country.

The hon. Member for Wealden asked many questions, some of which we cannot answer, because they will be included in the consultation that we will publish in due course.

The Opposition believe that the free market will solve everything, but it will not save thousands of post offices. The short-term solution from the hon. Member for Richmond Park is to privatise Royal Mail and use the proceeds. However, when the money runs out, what would she do? I emphasise that the Government—

Photo of Patrick McLoughlin Patrick McLoughlin 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 241, Noes 310.

Division number 22 Opposition Day — Sub Post-Offices

Aye: 241 MPs

No: 310 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

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 301, Noes 228.

Division number 23 Opposition Day — Sub Post-Offices

Aye: 301 MPs

No: 228 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly agreed to.

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

Resolved,

That this House acknowledges the important role that post offices play in local communities, particularly in rural and deprived urban areas; recognises that the business environment in which Royal Mail and the post office network are operating is undergoing radical change, with more and more people choosing new electronic ways to communicate, pay bills and access Government services; applauds the Government's record of working closely with Royal Mail, Post Office Ltd. and sub-postmasters to help them meet these challenges with an unprecedented investment of more than £2 billion made by the Government in supporting the network since 1999; endorses the Government's firm commitment to ensuring the continuation of the network, while acknowledging the widely held view that its present size is unsustainable; supports the Government's approach of allowing Royal Mail the freedom to respond to future commercial challenges and opportunities, and in particular enabling Post Office Limited to determine the future shape of the network within clear Government rules governing criteria for local access, a requirement to develop new "outreach" services, full public consultation on proposals for each affected area and a continuing commitment to social network payments by the Government to reflect sub-post offices' social role; and welcomes the Government's renewed commitment to allowing the public to get their pensions and benefits in cash from post offices if they choose to do so, including a successor to the Post Office card account when the current contract expires in 2010.

Photo of Patrick McLoughlin Patrick McLoughlin Shadow Chief Whip (Commons), Opposition Chief Whip (Commons)

On a point of order, Mr. Speaker. Even at this late stage, is there any way in which it would be possible for the Home Secretary to come to the House and make a statement? This morning, I wrote to the Home Secretary explaining that four people have absconded from Sudbury prison who were charged with either murder or manslaughter, and that there was growing concern about that in my constituency. By the time that the letter had been prepared for me to sign, I had to add an addendum saying that another person, also charged with murder, had escaped, bringing the total to five people convicted of murder or manslaughter who are at the moment out of prison and on the loose. Although I appreciate that the Home Secretary is dealing with a number of other problems today, serious concern has been raised for some time about the people who are being sent to open prisons. Is there any way, even at this late stage, in which the Home Secretary can inform the House of any action that he may take?

Photo of Stephen O'Brien Stephen O'Brien Shadow Minister (Health)

Further to that point of order, Mr. Speaker. I was contacted this afternoon by my constituent, Michael Walker, whose son was killed by one of the fugitives who have absconded from this open prison. In 2002, the judge was so appalled that he sentenced Gary Smith to 10 years for manslaughter with no parole. Less than five years later, he has absconded from an open prison. That has left my constituent and his family in perilous fear about where this man might now be, as well as dredging up appalling memories of what they had to suffer at the hands of a murderer who is now free.

Photo of Edward Garnier Edward Garnier Shadow Minister (Home Affairs)

Further to that point of order, Mr. Speaker. The urgency of the matter is underlined not only by the two points of order that you have just heard, but by the fact that the Home Secretary signed off a memorandum within the Home Office in which he said that he was prepared to take the risk that by removing people from the secure estate and placing them in the open estate such problems might occur. In the light of the points that we three Members of Parliament have brought to your attention, can you arrange for the Home Secretary to come to the House urgently to deal with those concerns?

Photo of Michael Martin Michael Martin Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons

I am disturbed to hear of the difficulties that hon. Gentlemen find in their constituencies. They will know, however, that I am bound by the rules of the House, which hon. Members have made for me to apply properly. I have no powers to bring the Home Secretary to the House at this time in the evening. All experienced Members who have raised such a point of order will know that there are ways of seeking to ask questions of the Home Secretary. The urgent question system can also be used in such circumstances, although I am not saying that I would grant such a request. I would like Members to reflect on the courses open to them.