I pay tribute to my hon. Friend Harry Cohen, as I believe that he has represented that constituency for 25 years. I congratulate him on that, and on speaking so strongly and eloquently about the Leyton Green post office and the hard work of Mr. and Mrs. Bashir. I also pay tribute to them and to the thousands of sub-postmasters up and down the country, in both urban and rural areas, who give such sterling service to our community. The Post Office is a highly valued institution; it is valued highly by the public and by the Government, and I shall discuss that when I explain to my hon. Friend why the closures are taking place.

As the Minister, I can set out Government policy on this matter, but I do not have a role to play in selecting or not selecting individual post offices for closure or in intervening in any such closures, and I think that my hon. Friend will understand that. We set the overall financial framework for the amount of public subsidy that can be put in—I shall say more about that—but it is for the Post Office to decide on the details of this programme. Obviously, Postwatch, the consumer voice in all this, has an important input, as do others, such as MPs, local authorities and members of the general public, who care passionately about their post offices.

Many would prefer no change to take place, but change is taking place well outside anything that the Government are doing. Change is happening in society and that is affecting the use of the post office. I shall mention some of those changes. My hon. Friend said that the post office is used by many pensioners in his constituency to collect their pension. That is one of the traditional roles of the post office, but across the country it is no longer the case for eight out of 10 pensioners, as they have their pension paid directly into their bank account. For new retirees, that figure is nine out of 10, and it will probably increase. When 80 per cent. are no longer collecting their pension from the post office, that inevitably has an impact on the network.

Another change is the new services that are available online, which have grown phenomenally in recent years. When my hon. Friend came into Parliament 25 years ago, the internet had not really been invented—perhaps it existed in the minds of a few defence researchers in the US. Even when this Government came to power, the internet was still in the early stages of common use. Now we can apply for car tax online, and 1 million people a month do so, including my hon. Friend's constituents. That is 1 million people a month applying for one product alone, and they are no longer using the local post office.

Another change is competition. Whether we like it or not, there are other networks out there offering to do jobs that were traditionally done by the Post Office. Perhaps the greatest example of that is the BBC choosing to give the television licence contract to another network. We may have an opinion about that one way or another, but it is a choice that the BBC is free to make. Competition is another factor that the Post Office has to face.

What do all these changes mean for the network? They mean that it loses £500,000 every single day. I have to take issue with some of my hon. Friend's figures for Post Office customer numbers. The Post Office has lost 4 million customers a week over the past few years, partly because of the changes that I have mentioned in how people are paid money, the technology they use to pay bills and the competition from other networks. Those figures are not static. The losses have been increasing and customer numbers declining.

The hon. Gentleman said that Leyton Green post office was profitable, but I must take issue with him on that. Before the start of this closure programme, there were some 14,000 post office branches. Only 4,000 of those ran at a profit to Post Office Ltd. The rest cost the Post Office money to run. Three out of four post offices cost money to run. It is very difficult for even a sub-postmaster to gauge that, because their books show only one half of the equation—what comes in and what goes out, in terms of what the post office pays for services. What they do not see, but are very real in the Post Office's accounts, are the costs of moving cash around a network that size; of the IT systems that the sub-postmaster does not pay for, so they do not appear in his books; and of a range of other services that make it possible to run a post office. Those costs may not appear in the individual post office's books, but they are real costs for the Post Office. The branches closing at the moment cost the Post Office, on average, £18,000 a year to keep open. Therefore, I urge my hon. Friend to be cautious about saying that a particular branch is profitable.

What is the Government's reaction to all this? Have we just walked away? Absolutely not. We have stepped in with huge public support for the post office network. When the previous Government were in power, the Post Office received no subsidy at all. Between 1997 and 2006, the Post Office received some £2 billion in public support because of decisions made by the Labour Government to support the network. Another £1.7 billion will be provided in public support for the network between 2006 and 2011.

Although this is difficult for my hon. Friend, for his constituents and for those of other hon. Members, without that level of Government support thousands more post office branches would be closing because of the changes that I have talked about. The whole of society is taking part in those changes in how money is paid, how we carry out transactions, how we find out information and how we communicate with one another. For example, we used to be able to track mail volumes and economic growth almost together. When one went up, the other went up. That link appears, for the first time ever, to have been broken. The volume of mail posted in the country has been declining over the past few years. That is happening in a number of other European countries, too.

Big changes are going on, and the Government have stepped in with significant levels of public support. We value the post office network and understand that it is not purely a commercial enterprise. The extra subsidy that we have put in, rather than leaving the post office with just those 4,000 commercial branches, will allow it to maintain a network of about 11,500 branches. That is the difference that the subsidy makes. At the same time, it is true that we must have some regard to the public purse. and to the degree of exposure that would affect the subsidy, which, if no action were taken, would have to go up year after year as the numbers declined because of the changes that I have talked about.

We have played our part by putting in that subsidy. My hon. Friend referred a little to the debate that took place on 19 March and to the position of the other parties. Alan Duncan, who is the Opposition spokesman on these issues, said during that debate that

"we have to face the facts about the future of postal services in this country...we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close".—[ Hansard, 19 March 2008; Vol. 473, c. 947.]

He accepted that the network would have to shrink in size, although that might or might not be what his party is saying in my hon. Friend's constituency—the Opposition spokesman accepted in this House that the network would have to shrink in size. That has also been accepted by the National Federation of SubPostmasters. Its general secretary, George Thomson, said at the start of the programme:

"Although regrettable, we believe that closures are necessary to ensure the remaining post offices are able to thrive in the future".

So, the federation itself understands the need for the network to shrink in size.

What does the future hold for the Post Office? Society is unlikely to turn back from new ways of doing business, and people are unlikely to stop using the internet and direct debit, so the Post Office has to innovate. We can be optimistic about that, because the Post Office has been innovating: it is now the leading seller of foreign exchange and it is expanding in car insurance, home insurance and broadband provision. There is great potential in biometric ID management in relation to passports, driving licences and perhaps ID cards in the future. There are new areas of work for the Post Office, although the business will have to be won fair and square, because of the competition I have outlined.

The Government will play their part by continuing to subsidise the network to the tune of £150 million a year as part of an overall package of public support of £1.7 billion, but the Post Office itself needs to innovate. I accept that it is difficult for my hon. Friend and his constituents, but even after the closures are complete, we will still have a network that is three times bigger than the top five supermarket chains combined and bigger than all the banks combined.