Post Office Services (West Derbyshire)

– in Westminster Hall at 4:12 pm on 13th January 2004.

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Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons) 4:12 pm, 13th January 2004

I am grateful for the opportunity to talk about post office closures in West Derbyshire. I do so reluctantly because I fully accept that, inevitably, closures take place. However, I cannot believe the scale on which they have been happening over the past six years in West Derbyshire. Ten years ago I had ministerial responsibility for the Post Office, so I am familiar with some issues that surround post office closures and the constraints that are placed on the Post Office. My constituency is one of the largest in the east midlands. Its boundaries stretch from Derby to Sheffield and across to the Staffordshire border. It extends over 350 square miles.

In 1997 there were 61 post offices in my constituency. By the end of March 2004 there will be only 45. Branches have closed in the rural areas of Fenny Bentley, Biggin, Brassington, Clifton, Cubley, Darley Bridge, Flagg, Haddon, Kniveton, Kirk Langley, Lea Bridge, Longstone, Quardnon and Taddington. I was absolutely shocked to receive a letter before Christmas from the branch closure division of the Post Office, which said that it was earmarking the closure of four post offices in Belper and one in Matlock Green. It was closing four post offices of the five in Belper, which meant the removal of 80 per cent. of the capacity of post offices in the area as a result of a supposed "reinvention" proposal. If ever there was a wrong word for a set of proposals, it is the Post Office's "reinvention" programme, given that so many post offices have closed.

From 1997, there has been a reduction of 27 per cent. in the post offices in West Derbyshire. That has caused considerable problems for the elderly. I have received a number of letters over the years from constituents about the closures and the proposed closures that I shall discuss today.

Belper has a population in excess of 20,000. These proposals would give us one post office to cover the entire area. The consultation exercise was extremely strange: 23 December was the closing date for representations, and I received a letter on 2 January outlining why those offices must close. It does not seem that during the period 23 December to 2 January much would have gone on in many offices. I would not have expected them to be working on 24, 25 or 26 December and I think there was a weekend in the midst of the period. During the same period of 23 December to 8 January, decisions were also being taken on 56 additional post office closures across the United Kingdom, from Bournemouth to Huddersfield to Worthing. I do not believe for a second that in the space of three to six working days, all the comments, letters and petitions were fully considered. I believe that the decisions were already taken and that they were taken when the letters were sent out about the original proposals to close.

I join a number of parliamentary colleagues who have said that the closure consultation process is nothing more than a farce. It does not exist in reality; the decisions are already being taken before the consultation programme is undergone. I am grateful for the work that Postwatch has carried out. As it happens, I had a scheduled meeting with Postwatch before the closures were announced. I met Irene Shiels, the representative for Derbyshire, and John Verspeak. I pay tribute to their hard work. I am glad that they put in their objections to the closure of the Windmill Lane post office. Of the four post offices proposed for closure in Belper, one has gone up to what I believe to be escalation scale one. It is disappointing that the closures seem to have been decided before we went for the consultation process.

Very little is being done to shore up the remainder of the post office network. I know that the Minister will tell us that £30 million is available for improvements. Perhaps she will also tell us how much of that £30 million has been spent so far. My understanding is that not much has been spent at all; in fact, so far only £1 million has been allocated, although the closure programme is halfway through. If it is going to be a reinvention programme, why not consider re-siting another post office elsewhere in Belper so that the people of Belper have at least two post offices available rather than having to come in to the centre of town all the time to use the one remaining post office, associated with the Co-op.

I am amazed by part of the letter I received on the closures from Paul Maisey, head of the area Post Office Ltd. Having told me that the closures are going to take place, he says:

"I am pleased to confirm in partnership with the remaining subpostmasters, coupled with financial support from the investment grant programme, we are planning to invest some £1,500 within the remaining Post Office branch network in the West Derbyshire area".

That is £1,500 for some 40 post offices. The letter continues:

"Specific improvement proposals are detailed within the attached appendices, but typically, they include a selection of the following:

Internal Decoration

External Decoration


Hearing Loop

2 extra counter positions".

I am not sure how much £1,500 will buy, but it will not buy much from that list if it is to be spread across all the post office networks. It works out at a mere £33 per post office, which is not very much for investment. Perhaps the Minister will tell me that the figure was actually a misprint or that there is something wrong in the letter that was sent to me.

I am not the only person who is disappointed by the way in which the Post Office has conducted the consultation programme. The Southern Derbyshire Pensioners Association has written to me on behalf of the senior citizens of southern Derbyshire to convey their thanks for my support for keeping post offices open. In letters that I receive from my constituents and in meetings with them, one issue that is constantly raised is the service that they are receiving.

The Government have continued to undermine the remaining Post Office business. There is a direct correlation between their policies and a rise in closures. Direct payment of pensions and benefits into building societies has reduced the flow of business to post offices. Indeed, the Minister for Energy, E-Commerce and Postal Services admitted in November 2003 that the

"traditional business of post offices has been declining. For example, 43 per cent. of benefits recipients now have their money paid into a bank account".—[Hansard, 6 November 2003; Vol. 412, c. 923.]

The Government's policy has cost the Post Office 40 per cent. of its income, which helps to explain why the Royal Mail Group is losing £1.1 million a day.

There was a little bit of annoyance at the way in which the Women's Institute treated the Prime Minister when he talked about post offices in that famous address that he made when he was handclapped. The writing was on the wall that post offices would not get the kind of support about which we had heard thitherto. The Prime Minister has said constantly at the Dispatch Box that pensioners would be able to claim their benefits from the post office if they so wished. That is fine, but going around closing post offices does not leave people with much opportunity to use them.

I am not the only person to raise this matter. Just before Christmas, there was a debate in the House on a Trade and Industry Committee report. Members from both sides of the House all made the same protests about the closure programme.

Indeed, there have been many complaints about the card account as a viable alternative. The Department for Work and Pensions showed a severe bias in its leaflets, which highlighted the positive points of bank accounts but underplayed the card account's strong points. The Government allocated £25 million to publicise a move to direct payments, but the vast majority of the information, including the UK-wide advertisements, does not even mention the Post Office card account. This Government are not trying to support post offices but undermining them so that they can come up with closures. Post offices are not even allowed to advertise the card account.

The Government have not been straight when telling us of their plans for the post office network. Those of us who represent rural areas have seen a huge number of closures in the rural networks in the past few years. There is now an even larger closure programme in the urban network. There has been tremendous pressure from both sides of the House, but basically the Government have ignored it. The longest early-day motion in the last parliamentary Session was signed by 391 Members of Parliament, including 180 Labour Members.

A staggering fact is that when for a while I was the Post Office Minister, I answered hardly a debate in the House on post offices. That was because they were not closing. Since 1997, there have been 66 debates on Post Office services; there were only 15 from 1992 to 1997. That shows the level of concern.

I said earlier that I accepted that there would always be post office closures and that there would always be times when people wanted to sell the business and move away, and people could not be recruited to take on a particular post office. The scale of closure that we are currently witnessing is unprecedented in recent years.

Every debate and every EDM shows that the Government's policies are to blame for the decline, and they must be held to account. They have recently made a great play of having a big conversation; there was a fairly big conversation in the House of Commons before Christmas when we debated the Trade and Industry Committee report. Every Member—on not only the Opposition Benches, but the Labour Benches—asked the Government to rethink what they were doing. The way in which the closures are taking place is unacceptable.

There is grave concern about the Government's post office policies. I hope that the Minister can provide some answers. It is no coincidence that while we are debating post offices in Westminster Hall the House is debating the same issue. The Government should address that issue. If they are to stand by the commitment, given so often by the Prime Minister, to allow people to collect their pensions and benefits from the post office, there must be a post office counter network.

I sadly believe that we will see a complete decline in the network so that it does not become a viable option. One way or another, the Government will be able to say that people do not use the post offices because they are becoming more and more difficult to use. I hope that the Minister will address those points.

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry 4:26 pm, 13th January 2004

I congratulate Mr. McLoughlin on securing the debate on post office services in his constituency—and slightly further afield, to which I will also venture in my response.

I want to reassure the hon. Gentleman that the Government are committed to maintaining a viable nationwide network of post offices. We fully recognise their importance as a focal point for communities, and to those customers who are elderly and less mobile. I should also like to reassure him, given his comments about benefit recipients, that we are committed to ensuring that they can continue to collect their entitlement in cash from the post office.

Some local Conservative representatives—I do not include the hon. Gentleman—would be better advised to encourage people to use their local post offices to take up the opportunities that exist through the card accounts, which are not advertised because they are for benefit recipients; the basic bank accounts from which benefits can be accessed at all post offices; and the current accounts of several large banks, which provide more flexible benefit access than previously.

It is important to view Post Office action and Government support in context. The recommendations in the performance and innovation unit's 2000 report, which formed the basis of Government policy for the post office network, provide the context. It was an in-depth study of the issues facing the Post Office and it made 24 recommendations for the future of the network. We accepted all its recommendations, including the proposal that, if the Post Office decided that fewer offices were needed in urban areas, the Government should consider providing funding so that sub-postmasters affected could be adequately compensated for the loss of their business.

Following parliamentary approval of the funding in November 2002, Post Office Ltd. began its urban network reinvention programme. I understand the concern of Members about post office provision in their areas, but it is important for all Members to realise the difficult conditions that the Post Office management face. We must work constructively with the company to ensure that we achieve the aim of maintaining a sustainable network for the future.

In the past financial year, Post Office Ltd. made losses of £194 million before exceptional items. In the previous year, losses were £163 million. The Post Office has again reported very significant losses of £91 million in its half-year results. The previous Government let the situation drift. I was not going to say that, but I was tempted by the hon. Gentleman's contention that he never faced controversy during his period in government when 3,500 post offices closed. He argued, when highlighting post office closures, that what we now need is decisive and urgent action to ensure that it is possible to maintain a viable, managed network.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

The Minister referred to 3,500 post office closures during the 18 years of the previous Conservative Government. When the figures are available, I shall be proud and pleased to compare the number of closures between 1996 and the end of 2004—some eight years—with the number of closures during the 18 years to which she refers. I believe that they will substantially match.

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

During those 18 years there was a considerable lack of interest by the Government in a sustainable future for post offices. That is part of the reason for the pressure that the Post Office finds itself under now, along with past underinvestment, lack of commitment to developing a sustainable network and other factors, such as changing customer choices.

I challenge the hon. Gentleman, who is criticising the Government for providing choice for benefit recipients, to say whether he expects everyone who receives benefits such as child benefit to be forced to receive them through the Post Office. Is he arguing that the Government should take choice away from benefit recipients? I hope that he is not. We must recognise the changes in context and ensure that we support both the urban and rural post office network, and particularly sub-postmasters, who have been finding it increasingly difficult to earn a reasonable income from their business and, consequently, have been shutting up shop and leaving of their own accord.

It is vital to have rationalisation in parts of the network to improve its sustainability. Without that, there will be unmanaged decline as sub-postmasters continue to shut down and leave. We faced a supply situation in which, before the urban reinvention programme began, more than 1,000 urban sub-post offices had at least 10 other post offices within a mile. Allowing that unmanaged decline to happen would bring the real prospect of serious gaps in provision and would be much more damaging for our constituents and the viability of the network as a whole than the current managed process.

The hon. Gentleman rightly referred to the situation in his constituency, where the Post Office has come forward with a programme of planned closures. Initially, closure proposals under the Post Office urban reinvention programme were focused on single post offices known to be at most risk of closure because of poor viability. In response to input from stakeholders and to reduce uncertainty about the future shape of the network, the company moved, in September 2003, to producing its proposals on an area-by-area basis, using each parliamentary constituency or geographical groupings of them as the basis.

Producing an area-wide plan brings the benefit of giving a clear view of the level of service provision at the end of the urban reinvention programme and provides the Post Office with the opportunity to understand the views of Members of Parliament and local authorities about the wider plans. I understand that during the consultation period the company responded to the hon. Gentleman's written correspondence and met representatives from Derbyshire county council. As the hon. Gentleman said, he was able to voice his concerns via Postwatch, whose funding has been increased precisely so that it can provide that important watchdog service on the proposals.

It is worth outlining that those proposals relate to urban post offices in the hon. Gentleman's constituency—I want to talk about rural post offices in a moment. Under the proposals, Post Office Ltd. reviewed all its urban offices in the West Derbyshire constituency after producing an area plan, which included the proposal to close five branches under the terms of the urban reinvention programme. I understand that although the four post office branches in Belper facing closure obviously attract some loyalty from local people, their transaction levels would not match even average levels of business at a single-counter-position branch. The main Strutt street Co-op branch is expected to receive the additional business created by the closure of those branches. There will be various improvements including two additional counter positions, a ramp, a hearing loop and internal and external redecoration.

I do not believe it is the hon. Gentleman's fault, but there appears to have been some confusion about the nature of the £1,500, which is part of £30 million for modernisation and adaptation, but specifically identified for the Strutt street Co-op branch. I shall go on to talk about support in the rest of the constituency in a moment.

It is worth pausing to consider the issue of the £30 million. It is worth noting that during the period when there was an unmanaged decline in post office numbers, there was neither the investment in improvement of remaining capacity nor the maintenance of the rural network that has been undertaken by this Government. In fact, the £30 million represents the first ever programme of Government investment in urban sub-post offices, and it is an additional measure to those recommended by the performance and innovation unit report that started the whole process, as I outlined.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

But can the Minister confirm whether I was right about the fact that so far only £1 million of that £30 million has been allocated, despite the fact that we are halfway through the closure programme for the urban offices?

Photo of Jacqui Smith Jacqui Smith Minister of State (Industry and the Regions and Deputy Minister for Women), Department of Trade and Industry

Well, actually, I can confirm to the hon. Gentleman that spending on this aspect of the programme has now reached £6.5 million. Post Office Ltd. is confident that take-up of that funding will increase as sub-postmasters become more confident about their future. The funding is matched by investment from sub-postmasters. I must say that in the previous environment I would not have been very confident about investing in my business if I were not sure that I would be part of a viable, sustainable network. Sub-postmasters can now be sure of that, and I would expect the take-up from that £30 million to increase.

I shall now discuss rural post offices in the hon. Gentleman's constituency. In urban areas restructuring has taken place under the urban reinvention programme but, as recommended by the performance and innovation unit, we have already asked Post Office Ltd. to maintain the rural network and prevent avoidable closures in the first instance until 2006. That has involved considerable investment. Post Office Ltd. has underpinned its commitment to achieving that aim by appointing a network of rural transfer advisers who often become closely involved with community efforts to reopen or save rural post offices. They have had considerable success in finding alternative sub-postmasters to replace those who have left, in locating suitable replacement premises where necessary, and in giving encouragement to community efforts to provide post office services.

The rural network benefits from £450 million of investment, available from 2003–06, which will help it continue to provide access to services in rural areas that could not otherwise be sustained on a commercial basis. That follows on from the £2 million that we provided for the rural sub-post office capital start-up scheme. Under that scheme, more than £25,000 has been paid out for successful grants benefiting three rural post offices in West Derbyshire, at Kirk Ireton, Hulland Ward and Turnditch. In addition, funding from the Countryside Agency and Derbyshire rural community council enabled a post office to reopen in Ashford in the Water, and Hartington post office in the hon. Gentleman's constituency won the best rural post office award for 2003.

In 2002–03, rural post office closures were at their lowest since 1994–95, which demonstrates the commitment that Post Office Ltd. is showing to the Government's requirement to prevent avoidable closures, and the use of the additional investment being put in by the Government. We have put in place a strong management team at the Post Office and we have tasked that team with turning the business round. Post Office Ltd. continues to develop and introduce new services and business activities. It is not the case that provision of services by the Post Office is being run down. Most recently, the Post Office announced its intention to offer a range of financial products in a joint venture with the Bank of Ireland. That is in addition to arrangements already in place that allow customers of Alliance and Leicester, Barclays, Lloyds TSB, the Co-op and the internet banks Smile and Cahoot to cash cheques and make cheque deposits at post offices free of charge. The Post Office now provides electronic access to all current account holders at the Alliance and Leicester, Barclays and Lloyds TSB—some 20 million customers.

Other initiatives, including acceptance of debit card payments and a major advertising campaign for travel insurance and bureau de change services, are helping to make the post office a place that customers want to visit. The hon. Gentleman chided us for a lack of advertising. I hope that he has seen the advertisements with the ants making use of post office services. [Interruption.] He grimaces, but it is a good advertisement.

There are many challenges facing the Post Office management as they take the necessary measures to ensure that the network remains viable and relevant to the changing needs of its customers. However, the combination of rationalisation and Government investment is the only realistic way to maintain the viable post office network that all our constituents want and need, and which the Government are committed to maintaining into the future.

It being eighteen minutes to Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.