Post Office Closures

– in Westminster Hall at 12:00 am on 22nd March 2005.

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Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watson.]

Photo of Bob Spink Bob Spink Conservative, Castle Point 9:30 am, 22nd March 2005

I am delighted to have secured this important debate on the scandal of post office closures, which results, I hope to show, from specific policies set and followed by an uncaring Government. As so many colleagues are here this morning—I thank them for taking the trouble to attend—I will keep my remarks as short as I can.

One of my constituents, Mr. Keeler, wrote to me on the subject, and I can do no better than to read his measured and wise words. He said that our much cherished post offices

"enable people to enjoy and carry on their life", and continued:

"I am aware that government decree has removed many of the services which could be obtained from a Post Office, but little thought has been given to the hardship this will cause. Many elderly people . . . prefer to draw their pension in cash from their local Post Office. Each Friday, I take my 91 year old neighbour to collect her pension . . . If very mature folk have trouble walking, the use of the bus service is a further problem due to the length of time they might stand at a bus stop waiting for a bus."

Mr. Keeler goes on to make many telling and excellent points. He really cares about people and about his community, so we are indebted to him for informing the debate.

Post offices are important for society. They are the very social fabric of Britain, and closing them hurts vulnerable, disabled and elderly people most. Visiting the post office gives people interaction with their local community; they meet their peer groups there. For them, it is not simply a commercial venture or a chore. Post offices have an important social role that they have played well for many decades. It should not be underestimated or undervalued.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Is the hon. Gentleman familiar with independent research by Postwatch, in which 75 per cent. of respondents said that their local post office was extremely important to them, and 91 per cent. that it played an important role in their local community? Will he call on the Minister to review the way in which barriers are put in the way of old and disabled people who want to open and use post office card accounts but who are constantly pushed back to using existing bank accounts? Is that not a problem?

Photo of Bob Spink Bob Spink Conservative, Castle Point

Of course I agree with that entirely. I shall come to the excellent statistics provided by Postwatch, and I shall speak later about the services that the Government have withheld or withdrawn from the Post Office.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

My hon. Friend mentioned disabled people. In Clitheroe, a wheelchair-bound lady was able to go independently from her home to the post office and to access all the services that it provided. When her post office closed, she became dependent on somebody to take her by car to the post office that she had to use. However, when the car parked and she got out in her wheelchair, she found that the post office was on a hill with a steep gradient. That has detracted from her quality of life, and it is another reason why the network should be protected.

Photo of Bob Spink Bob Spink Conservative, Castle Point

My hon. Friend makes a telling point. When post offices are considered for closure, we should take into account not only the distances between existing post offices but physical obstacles that might have an impact on elderly or disabled people such as the lady from Clitheroe. We must have special regard to obstacles such as hills, rivers, canals, major roads and bridges between post offices, and we should consider the nature of the community served by the post offices, including factors such as deprivation and concentrations of older or disabled people in the area served by the post office threatened with closure.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Does the hon. Gentleman agree with the view of Mr. Pat Shawcroft, the sub-postmaster of Kegworth, a prosperous village in north-west Leicestershire, that, even in villages such as his, there are still pockets of deprivation and people who have a real need to use the post office? Their needs should not be overlooked when the Government, correctly, give priority to deprivation in urban areas.

Photo of Bob Spink Bob Spink Conservative, Castle Point

I agree entirely with that.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

At the outset of what promises to be a lively debate, I would like to put on the record the fact that Postwatch agreed to some sub-post office closures. Does the hon. Gentleman accept that some post offices had to close?

Photo of Bob Spink Bob Spink Conservative, Castle Point

I do accept that, but the question is whether the figure should have been 3,000 in the past three years. We should have been much more discriminating and taken into account the social cost of closing those post offices.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

It may be helpful to point out that in the west midlands, from where both the Minister and I come, Postwatch opposed 73 closures but only 15 post offices were saved. The opposition of Postwatch to many closures was totally ignored.

Photo of Bob Spink Bob Spink Conservative, Castle Point

In my constituency, there have been several closures—last year there were six, every one of which was fiercely opposed. Postwatch assisted me in opposing many of those, yet every closure went ahead.

Photo of Richard Younger-Ross Richard Younger-Ross Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions

The point is that Postwatch opposes many closures. Will the Government support Postwatch in its opposition to some closures? Will they ask the Post Office to consider the closure programme in total rather than piecemeal? Why has Decoy post office in my constituency, which was given notice to close in September, still had no answer?

Photo of Bob Spink Bob Spink Conservative, Castle Point

The hon. Gentleman makes an extremely telling point. The Minister has heard it and will no doubt address it. The social cost of closing post offices must be taken into account. In fact, I was saying before the interventions that we should not underestimate the social impact of post office closures and nor should we undervalue the social benefits that post offices bring to our community. If that means we need social funding, who cares whether we support our post offices at the expense of a couple of new politically correct Government quangos? We are not talking about a lot of money, and the post offices are much more useful and more valuable to our society than almost all the expensive quangos, put together, that the Government have created. The Government have seriously mixed up their priorities.

Post offices have a commercial dimension that we should not forget. They add to the viability of our shopping areas and community centres. They help newsagents, chemists, florists, grocers, cleaners and cafés to attract customers and to provide the critical mass of small businesses required for a centre where people will congregate. As the main banks drive for ever-more profit by shamefully closing branches in villages and in smaller urban shopping areas and high streets, post offices are increasingly important. It is more essential than ever not to close them, yet the Government have not got the message; they simply are not listening.

UNITE, the National Federation of Royal Mail and BT Pensioners, has an active and socially extremely responsible local branch in south Essex. I met its representative and treasurer, Mr. Colin Melluish, last year and I hope to meet UNITE again soon to discuss the better deal for pensioners that it is promoting. It is doing that because it is a good and caring group. UNITE is seriously concerned that the post office network in the UK is failing to meet the needs of our most vulnerable citizens.

According to a 2004 MORI poll, "Subpostmaster Income: The Impact of Changes to the Benefits Payment System", 44 per cent. of sub-postmasters have seen their income decrease in the past year and 43 per cent. are worried that their businesses will not have a future. The crisis in the rural post office network is such that 90 per cent. of those post offices are no longer commercially viable without Government subsidies, and many face closure. Independent research by Postwatch, another excellent organisation, shows that rural post office closures are having a profound effect on local communities. The research showed, as David Taylor mentioned, that 75 per cent. of respondents felt their local post office was extremely important to them. More than half—about 60 per cent.—thought that it was essential to their way of life, and 91 per cent. agreed that it played

"an important role in their local community".

Those figures increased among the elderly and those with disabilities that affect their mobility, which is hardly surprising.

The much-respected National Federation of Sub-Postmasters has published a hard-hitting manifesto urging the Government to pull up their socks in the run-up to the general election. I expect another U-turn from the Government. If they are listening, they will certainly see the sense in that. The manifesto born out of the frustration of sub-postmasters all over the county lists a series of unfulfilled Government promises and warns that further inaction could mean the end of the post office network. The key demands include:

"Government must provide more funding to pay for the social and economic service provided by post offices. Government must take a leading role in ensuring that all major banks enable their customers to access their bank accounts at post offices."

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

The hon. Gentleman is making an important point about rural post offices. According to the Post Office, 85 per cent. of rural branches are loss making, and the Government have extended the subsidy for the time being, but unless they come up with more business for those post offices, the post offices cannot survive. He is hitting on that point: without business, the post offices cannot survive, but the Government have not yet identified that business.

Photo of Bob Spink Bob Spink Conservative, Castle Point

The hon. Gentleman makes an important point. Of course, the subsidy of £150 million is peanuts these days in terms of the social benefit for our communities across the country. The Government have given the subsidy until 2008. It is too little and it must be extended for longer to give certainty and clarity to post offices to encourage them to stay open and provide the service that they obviously do provide, which is needed both economically and in terms of social impact. As well as paying for that social benefit, the Government could help by providing more work; perhaps some benefit work can be given to post offices. So, there are two angles. Post offices need more work and, I am not ashamed to say as a Conservative, they need subsidy. They need certainty.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am sorry to disrupt the hon. Gentleman's speech, but I need some clarification on the point about subsidies. Is he saying that in his view—we will hear later whether the Conservative Front-Bench spokesman supports him—post offices, whether urban or rural, should be subsidised fully by the Government?

Photo of Bob Spink Bob Spink Conservative, Castle Point

My personal belief is that post offices provide a social benefit for our communities and we should be prepared to pay for that, but we would not have to subsidise post offices if the Government had not changed so many policies and, for instance, removed the pension book and introduced payments by automatic credit transfer directly into banks. That is why post offices need subsidy. I am disappointed by the Minister's intervention; I thought we were going to hear the U-turn that we all expect from the Government.

The third key demand from the National Federation of Sub-Postmasters is that a

"comprehensive range of local and national government services should be made accessible throughout the UK's post offices".

It goes on to say:

"Without urgent Government action our much-loved national post office network is in serious danger of extinction."

In short, closing our post offices is tearing the heart out of our communities. It is changing our shopping areas much for the worse. It is destroying many of our important and valuable small businesses. Most importantly, it is hurting vulnerable, disabled and elderly people, and that is unforgivable.

The latest figures show that about 15,000 post offices remain nationally and that closures have accelerated greatly over the past 18 months or so as a result of Government policy. We have seen more than 3,000 closures in recent times, and more are expected. That trend must be stopped. House of Commons Library research shows that 90 per cent. of urban closures in the past five years have taken place since March 2003, with the majority closed as part of the so-called network reinvention programme. So, it is essentially a recent problem that is accelerating out of control. Colleagues will not be surprised to learn that the Library research also shows that, yet again, London and the south-east come off much worse than the rest of the country from the Government-promoted closures. Until Labour took over in 1997, the fall in post offices was about 1 per cent. a year, but that rose to 7.4 per cent. under Labour last year.

Dozens of post offices have closed in Essex. Six have closed in Castle Point in recent times. Each and every closure was fought by me and by many caring constituents, such as Mr. Keeler from Benfleet, and excellent local councillors, such as Bill Dick, Colin Riley, Mark Howard, and Mr. Canvey himself, Ray Howard. We have produced petition after petition in the House of Commons and we have put in a lot of hard work behind the scenes. Working together, we are still fighting the closure programme. Indeed, we are starting to have some success. Councillor Ray Howard and I will preside over the reopening of the post office in Canvey village at Jones's corner, in Long road, which will be a great community asset. We hope to do that over the next week or so.

Councillor Ray Howard recently helped to get motor vehicle licensing facilities at the excellent Winter Garden post office. He speaks highly of the postmistress there, who is a caring lady. Councillor Mark Howard is fighting alongside me to get a new post office opened in the Canvey Island shopping centre on Furtherwick road to replace the post office that closed in the Martin's newsagents in the Knightswick centre. That is essential. The value of good, hard-working local politicians working with the Member of Parliament to save post offices and to get them reopened cannot be overestimated.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

The Government could be imaginative about where post offices are located. In my village, there was one in the pub, "The Swan with Two Necks". It was a part-time post office, but because it was not valued and given sufficient resources, the landlady, who was tied to the business, decided in the end that she could not go on with it. Lots of premises and businesses are semi-operative but could be made properly financially stable if services currently held by some post offices that cannot make a go of it were allowed to be transferred to them.

Photo of Bob Spink Bob Spink Conservative, Castle Point

My hon. Friend makes an excellent point. We have to be flexible in our considerations, and there is no one-size-fits-all solution. The problem is that with the Government withdrawing so many services a post office can provide, post office viability becomes questionable. Where a post office has no ancillary retail function, it is particularly difficult to retain viability. We must be flexible when we consider solutions.

Returning to Castle Point, there is no doubt that we have suffered badly from Labour's policies locally. We have seen many of our post offices close in recent years, and I congratulate the local press, particularly the Yellow Advertiser and Castle Point Evening Echo, on their campaigns to save them. One Yellow Advertiser front page from the middle of last year is headlined "Post Offices Set to Close." The story says:

"Sources confirm at least three proposed closures are to be announced later this month in the latest bid to centralise branches. The move comes just months after the axe fell on three other sites in Castle Point last year."

Castle Point is not a big community. It cannot afford to keep haemorrhaging post offices, and all six branches have closed. I am trying to replace at least one of them. The Yellow Advertiser went on to say in its exclusive, by Steve Neale:

"Post offices have seen trade dwindle since the Government introduced pension and benefits payments through the main banking outlets."

It is typical of the local press to be fighting for the interests of our community, and I congratulate them—there must be an election coming.

We must be clear about why so many post offices are being closed, because only by knowing what is happening and why, will we be able to understand and develop the necessary solutions. We must not blame the Post Office. It is easy to think that the Post Office is an ogre, but it is not. It has to respond to the situation in which it finds itself. We must not blame our excellent and caring postmasters and postmistresses. I commend them for their caring and diligent work over many years. They deserve to choose to retire when they wish to retire if they are offered a decent package, so I do not blame them at all. They would not have had to retire if the Government had left the services with them and their post offices were not unviable. The blame for the closures lies squarely with the Government, and I hope that with an election coming we will see the U-turn that I keep on hoping the Minister will tell us about.

The Government must do something to stop the rot. It mostly affects the grey vote, and retired people are keen to give the Prime Minister a clear and unequivocal message at the polls. The Government must re-examine the £150 million annual subsidy, consider extending it beyond 2008 and, in the meantime, look to replace the necessity for that subsidy by re-providing post offices with work that they can do to make themselves viable again.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

With respect to that £150 million of subsidy, does my hon. Friend agree with me and the National Federation of Sub-Postmasters that merely subsidising the income of sub-postmasters is only a short-term solution? As he has said, it takes us only to 2008. Should that money not be used, together with a change of Government policy, to recreate a new working environment for post offices so that they have a long-term future that will not require subsidy?

Photo of Bob Spink Bob Spink Conservative, Castle Point

My hon. Friend has put his finger on the point. We need certainty and confidence put back into the system, so that post offices know that they will be viable in the longer term and that they can redevelop their businesses as they ought to.

The Government must reconsider their callous withdrawal of the pension book. The new payment method is not better; it is not more convenient for elderly people. Elderly people do not like it, they often do not understand it and they forget their personal identification numbers. It is difficult for them, and it is not acceptable to treat elderly people contemptuously. One key problem created entirely by the Government was caused by their decision to switch payment of pensions and benefits from post offices to automated credit transfer into bank accounts. That drove a stake through the heart of our traditional post office network. It is estimated that it removed at one stroke 40 per cent. of post office income. How can post offices survive that loss?

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

We were all told that it would be okay, because people would be able to get debit cards, go to post offices and withdraw their pensions from machines. Does my hon. Friend agree that that might have been one answer to the problem except for the fact that in too many cases the machines charge senior citizens for withdrawing their money and that the charge, as a proportion of their pensions, is far too expensive?

Photo of Bob Spink Bob Spink Conservative, Castle Point

Yes of course. Added to the £1.50 withdrawal charge, there is the £1.50 bus fare to get to the post office, and, with the community charge, the pensioner has no money left out of his basic state pension to buy a loaf of bread.

The Government must reconsider support for Crown post offices, and they must offer a short-term financial package to prevent their closure. It would be a terrible blow if a large number of Crown offices were sold off to become hotels or—even worse— flats. The Government must act urgently to prevent that unacceptable loss of service to the public.

A few months ago the all-party Select Committee on Trade and Industry criticised the Government's level of subsidy for Crown post offices and called for short-term finance from public funds to prevent their closure. I fully agree with that conclusion. Its necessity distresses me, however, because the Government have withdrawn the work that post offices used to do.

We must see a viable plan to safeguard the post office network, enabling post offices to offer different financial services, such as full banking. That could include, for instance, direct debit, so that customers could obtain utility bill discounts and, through turnover, post offices could remain viable and open without the need for public funds to subsidise them.

The Government must start listening to local communities and must pay attention to their needs. Local people will send that message very clearly to the Prime Minister at the general election.

Photo of David Drew David Drew Labour/Co-operative, Stroud 9:58 am, 22nd March 2005

I am very pleased to speak in this debate. It is raised by Bob Spink, and I thank him for that. It is highly propitious, and I wish to speak entirely about one post office and the repercussions of its closure. I would like to say, however, that my hon. Friend the Minister has fought several closures in his constituency as a good constituency MP, so he has some experience of the way in which the process operates. Easy as it is to cast aspersions on the Department of Trade and Industry, it is also far too easy to say that responsibility lies at the door of the Government. Although the Post Office is a public corporation, or whatever its status is now, its way of doing things is set by its own independent management, and in the story I shall tell, I shall not let the Post Office off the hook.

I find it a little bit rum of the Opposition to talk about what they would like to do with the Post Office. If we are playing the game of U-turns, I hope that they might reconsider their policy, as far as I understand it, which is to privatise the Post Office. The Liberal Democrats have a policy of privatising the Royal Mail. I am not always of one mind with the Government, although I am a supporter, but I received a personal assurance from the Prime Minister on Thursday that it is the Government's intention to keep the Post Office public. If we can agree that today, we shall have made significant progress.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

Does my hon. Friend agree that the Liberal Democrats occasionally give opportunists and bandwagons a bad name? In North-West Leicestershire, there was a scurrilous, scaremongering and dishonest campaign to suggest that two urban post offices in Cropston drive and Meadow lane, Coalville, were to close. Despite confirmation from the Post Office that that would not happen, they are still campaigning on the basis that there is a secret closure list, even though that has been denied. Is that not opportunism gone mad?

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

I will leave that as a statement from my hon. Friend, as I have no evidence one way or the other. He has made his point, and I am sure that he feels as strongly as I do as a constituency MP that the aim is to keep open as many post offices as possible.

My story starts with the list produced some years ago by the Post Office to do with its designation of the branch network. It kindly referred to all its branches as urban or rural. Some of us would say that it could have referred to some as suburban, but the designation was made. When the list was produced, I had no real disagreements with the way in which branches were designated, except in one case, which was that of the Whiteshill post office.

Whiteshill is a village. It looks like a village, it feels like a village, and the people who live there know that it is a village. However, the Post Office designated the post office as urban. They did so because, by pure chance, a sliver of the village abuts the Stroud urban area. On either side, there is countryside, but it happens to be a traditional ribbon development that has begun over time, by a house or two, to be encroached on by the urban area. I am thankful that that is all the encroachment that will remain as we will fight any planning applications, including rogue ones—I will say no more about them—that have tried to infill. We have managed to defend the village.

One advantage of being designated as a rural post office is that rural subsidy applies, as the hon. Member for Castle Point mentioned. In Nympsfield, that led to the recovery of the village post office, which was lost but has reopened because of the subsidy. I hope that the Conservatives and Liberal Democrats will put it on the record that they will continue that subsidy. Although it could be used in other ways, it is a lifeline. The £150 million a year is not chickenfeed; it keeps a lot of our post offices open. Notwithstanding the migration of benefits to different methods of payment, the subsidy must be continued, not just now, and not just for the next year or two, but into the future. We need a rebirth of that way of keeping post offices alive.

When the original designations were made, I was told not to worry because they were merely designations. Then, network reinvention took place and all of a sudden an apparent slip of the pen became a crucial matter of how Post Office management considered a post office. Again, there was no immediate worry. When we looked at the first round of closures, only two were considered, followed by a third. They were Cam Woodfield, Cashes Green and Bath road in Stroud.

I had two criteria by which I judged it right to fight on behalf of those post offices. First, I considered how the community responded. In all cases, there was hurt, upset and questioning about whether closure was right. It depended on whether there were alternatives, which were certainly considered. The second criterion is not openly talked about, but I will talk about it. It was the attitude of the postmaster or postmistress.

The hon. Member for Castle Point, quite fairly, talked about the packages that were made available. I talked to postmasters and postmistresses across the network, and those who have decided to stay in the suburban network—most of Stroud is what I call semi-rural and is not truly urban—deserve the highest praise. They have continued to run those businesses, which we all know are not terribly profitable, and many have said that they are working for less than the minimum wage. They are providing a social service, but they wish to do so. They believe that to be their life's work, and it is right that central Government should support them.

In each case deemed for closure, I checked and talked to the postmasters and, in one case, the postmistress. It was clear that it was difficult to run a viable business. It was wrong to stop them from getting the advantages of the packages. Maybe we could have taken matters forward in other ways, but I was clear and open with communities about the repercussions if we tried to keep a business going that would not only remain unviable but would become more so.

I point the finger at some communities, who want it both ways. They want the post office to remain open, but may not use it often. The Government can be blamed for the way in which they have moved through benefits changes—which are the responsibility not of the DTI but of the Department for Work and Pensions—but I have challenged people to go and get a post office card account. My wife and I have a post office card account for our child benefit, and it is not as difficult to have one as people tend to make out. If communities want to keep their post offices, it is important that they keep money coming through.

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

I take the hon. Gentleman's point, but I want to reflect a conversation that I had with my local postmistress. She said that of all the people receiving child benefit in our village—there are a lot of children in the village—only three have opened a card account. One is my wife. Other people have found it too much hassle and have not done so. It has not been made easy for people.

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

That is the perception and the problem. When people go through the process, as we have, they find it is not as difficult as they think, although I will not say that it is easy. There is evidence that even to this day the post office card account is seen as a poorer alternative to the other ways in which money can be drawn.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Let me be clear about the post office card account. Information came to my right hon. Friend the Secretary of State for Work and Pensions about the difficulties experienced with those accounts and to my office when I became a Minister. We have ironed out those problems, I hope, and the number of post office card accounts now stands at 4 million.

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

That is good to hear. It shows that people can use that means to draw money. I hope that they do so. I challenge all my constituents: if they want to keep their post offices, the minimum that they can do is look at how they can draw money in such a way. If it is not suitable for them, at least they have looked at the options.

Whiteshill village and its post office were in quite difficult circumstances because of issues of compliance with the Disability Discrimination Act 1995, which meant that work would have to be done. However, the key difference was always to do with the postmistress—I have to be circumspect, because we all know that postmistresses and postmasters are not supposed to talk to the general public if they are highlighted for closure and because there is still the potential of legal action. I cannot say much more as it would be improper, but hurt is so deeply felt that the community may choose to take matters further.

The post office wanted to remain open. By pure chance, the post office had been in the family in one form or another for more than 100 years. There was tremendous pressure on the family to keep it open, let alone on the wider community. That was not a problem at first, because it was not in the initial list of closures that were largely brought forward on the back of the Post Office's trawl to see who might want to phase in closure. The Post Office then changed the game slightly, by suddenly nominating Whiteshill post office for closure. That came as a shock to the postmistress, who had made it clear that she did not want to close her post office.

The process got under way, and we had consultation. I would like to say that it was full, frank, open and believable consultation. I have met people from the Post Office on a number of occasions, and I have always said that I do not agree with closure. I have also met people from Postwatch, and I have told them that I do not agree to the closure of this post office. As far as I know, Postwatch has never got back to me on the matter, and I have been very disappointed. When it has, it has sent a series of holding letters.

The Post Office has been told by all concerned that the post office in question is a rural one and should be treated as such. If it were deemed a rural post office, it could remain open, but if it stays as an urban post office—notwithstanding the fact that custom is not very good—it has to stay open for five and a half days a week, which is an increase on its current opening hours. That is not acceptable; the postmistress cannot do that because she does everything herself.

Lo and behold, under notice of closure we have a situation where the nominated branch, Paganhill is in a one-stop shop, which is about three quarters of a mile away down the hill. The one-stop shop has been taken over by Tesco, which has a policy of removing post office branches from one-stop shops wherever it can, and it has made it clear to us that it wishes to do that. It looked for all sorts of people to take it on; it was not easy. Eventually, the community got involved and, working with Tesco, the local council and the people who run Maypole hall, which is the local community hall, have said that once they can get an individual to consider taking it on—there is another postmaster in the area—they can run a community post office. Everyone, including the Post Office, seems to be happy about that.

During that time, the Post Office came on board, and it has had to suspend the process of closing Whiteshill, because its nominated branch was under threat of closure. We have not yet signed contracts or come to firm agreements on our ability to deliver Paganhill post office, but having suspended the process of consultation, the Post Office has started it again. It did so without anyone knowing it had started again, including the MP, which led to the announcement that closure will take place tomorrow: March 23. There was no further consultation, and that came as a total shock to everyone.

The Post Office nominated a branch that was itself under question. Admittedly, it also mentioned the main branch at Stroud, but that is well over a mile from Whiteshill. I thought that it was not possible in the network reinvention programme to nominate a branch that was further than a mile away. I would like clarification on that; I know it is an issue that concerns the relationship between the DTI and the Post Office, but we need clarification. If Paganhill were to close—I do not want that to happen because we have worked damned hard to make sure it does not—the nominated branch would be well over a mile away.

The process has been made much worse; I shall choose my words carefully. The pressure that was brought to bear on the postmistress and her husband is not fair. Some people would say it is a question of bullying and a matter of saying, "Sign this form because you cannot do anything but sign it. You are going to close." That is not negotiation or consultation: it is the imposition of a decision. In that village, we are fortunate because we still have a voluntary shop. It was always possible that we could negotiate an outcome that would lead to better throughput in the use of the post office, but that has not been offered to us. It has been a question of the Post Office saying that the post office is an urban one, so it will have to close.

I wish to put three points to the Minister. First, the original designation stands or falls by what size of population can be termed urban. A figure of 10,000 is used, and the Post Office has reinforced it with a series of maps. I do not know whether anyone has seen the maps, but they are computer-drawn—I almost said computer-driven; I wonder whether they are that, too—and they are so vague as to mean anything to anyone. I challenge the Post Office to say whether it is prepared to defend those with a definitive explanation of the difference between rural and urban Britain.

Secondly, we cannot have a process of consultation that is turned off and turned on again without people knowing about it. That results in closure where people have no opportunity whatever to say that the circumstances of the closure are wrong because of the designation.

Lastly, there is the point of how to nominate a succeeding branch that is acceptable to people who are losing services. That has to be clarified because it is wrong if the nominated branch may close; that is not an acceptable way of making such decisions. I use Whiteshill as an example of what is wrong.

The process is difficult, and my hon. Friend the Minister has to oversee it and the way in which the Post Office has to be called to account. We know that there is not enough money in the system; the Government have to pump-prime it. They have to do so because the post office is a public service, which, I am pleased to see, is beginning to make some money through the Royal Mail. That is well overdue but greatly to be welcomed.

We must build confidence in the network. I always remember the statistic showing that people still trust the Post Office more than any other public service, but unless we sort out the Whiteshills of this world, that trust will go. It will evaporate, and people will say that the Post Office just reneged on its promises.

I work on verbal understandings. I had assurances from people that the Whiteshill post office would not close until and unless we sorted out Paganhill. It is wrong that we have been told that it will close anyway. It is not I who bears the brunt, although, I have to be honest, it is not an electoral asset to have it closing in advance of a probable general election. I am thinking not about myself, though, but about the way the community has been short-changed and the pressure that has been put on the postmistress, which is unacceptable and must be fought. I hope that the Government will listen carefully and do something about that.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry 10:17 am, 22nd March 2005

This is a very important debate, which goes on in every constituency in the country. We all have to deal with the issue, and I shall not pass up this opportunity to raise some constituency issues as well as discussing wider national ones.

I have been a Member of the House for 22 years and when I started there were Crown offices and branches in my constituency. I lost the Crown offices about 15 years ago and was told at the time that it would make no difference. However, very often when I ask in certain post offices for certain services, I am told that they are reserved for Crown offices and I cannot have them, so it did make a difference.

The post office in Keith, which is currently in my constituency but will not be when the new boundaries take effect, has long asked for passport forms. The postmaster runs another post office where he does have passport forms, and he therefore knows how to deal with them, but he has been denied them on the grounds that Keith was never a Crown office. That has nothing to do with whether it would benefit the community or whether it was a relevant service; he cannot have them because the post office was never in a particular category. That is simply bureaucracy and not a real response to the service, which is partly a criticism of the Post Office and its relationship with the agencies. When one takes the matter up with the Post Office, it says that it is a matter for the Passport Office. The Passport Office says, "No, we just did a deal and they tell us which branches they are distributed through." That issue has never been satisfactorily resolved.

My constituency, within its current boundaries, is substantially rural although the main town, Inverurie, was designated during the very first round of urban reinvention. As I was leaving a meeting with Post Office management, one of them said, "By the way, I have just written to tell you that Inverurie has been designated as urban." My immediate response was to ask which office was being closed. He said, "No, no. We are just designating it as urban." Three weeks later, we were told which office was being closed. There was no consultation and, unlike in the case of Bob Spink, although I was more than willing to fight a campaign, the postmaster said, "I'm sorry. I'm taking the money, and I'm not prepared to stay." The will to fight for it did not really exist in the community, which was somewhat disappointing.

In Aberdeen city, part of which will be in my constituency under the new boundaries, there was a proposal to close 15 offices. At the end of the process, 11 were closed. That was after phase 2 of urban reinvention when, under pressure from Members on both sides of the House, the Post Office agreed to review the process. What it actually did was to put up more offices for closure and close the ones that it was going to close anyway. It did not fundamentally change the process, but it made it look better and made some people feel better.

The postmistress at Bankhead post office, which will be in my constituency under the new boundaries, happens to be the secretary of the local branch of the National Federation of Sub-Postmasters. She told me, "The business has gone from this office in the last 12 months, so I'd like you to fight to keep it open, but frankly all that will happen if you do is that I'll have to close it myself in 12 months' time, and I'll get no compensation." It is not always easy to fight to keep post offices going, because the financial considerations are significant.

The owner of one post office in my constituency, in Pitcaple, decided simply to change the business as he did not wish to continue it. The Post Office is keen to keep a post office going there, but for the past two years it has not found anybody to run it or any premises in which it could operate. Clearly, that post office is not going to reopen.

Here is a tragic case: a good, lively shop with a post office in the village of Auchleven, which I have visited regularly and which is a real model of the kind of village shop that can survive in this day and age as a successful business, was perfectly reasonably sold by the owners because they wanted to retire. They sold it in good faith to somebody who said that they would take the business over, but within three months the new owner closed the business and applied for planning permission to convert it to a dwelling house. I am still fighting to get the Post Office and the local council not to co-operate in that venture, but I am left with the problem that someone must be persuaded to operate both the post office and the shop; they are not attractive businesses any more because their fundamental long-term viability does not inspire confidence or tradability.

Photo of Bob Spink Bob Spink Conservative, Castle Point

That is the point. Although we must sympathise with postmasters and postmistresses who decide to take the package and retire, as they have every right to do, and with people who wish to change the nature of their businesses, the problem is that there are no new people taking their places because the Government have removed post office functions and destroyed the viability of the post offices. The Government must address that.

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

That intervention was timely because I was just about to move from examples in my constituency to the national picture. The hon. Gentleman made my point exactly: it is all very well challenging parties to say that they would continue support for rural post offices, as Mr. Drew did—I have no problem with that, but it is not enough unless there is confidence in the long-term future. For the record, my party does not have any plans to privatise the Post Office, which we see as a public service. We are not so sure about the future of Royal Mail, but the Post Office is a social service, as the hon. Member for Stroud said, and will inevitably require support one way or another.

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

No, our policy is not to privatise either of them. We said that the liberalisation of Royal Mail may require some rethink in the future. Royal Mail is actually subsidising the Post Office, so one way or another, we must make sure that the Post Office is adequately supported as a public service. I hope that that clarifies the position.

We need to move from the current situation to a position in which there is confidence in the future of the network and individual businesses. Over the past few decades, post offices have been closing at an average rate of 305 a year. In the past 10 years, the number of post offices has reduced from 19,251 to 14,976, so there was a dramatic fall in the number of post offices under the Conservatives, which has accelerated under Labour, particularly with the urban renewal programme, and there is no end to that in sight. People are concerned about urban reinvention and the likelihood of some kind of rural reinvention because even though, theoretically, the idea is to end up with a stable, reduced network in which we can have confidence in the future, the reality is that we are reducing the network but the confidence in the future is not there.

The hon. Member for Castle Point rightly said that we need a plan that gives guaranteed revenue and guaranteed business for the valuable work of the post offices, but there are two problems with that. When I was in a post office in Leicestershire, looking at the community point—I shall come back to that—the postmistress told me that it was a busy shop and post office and that people said to her, "Oh, you'll never close; look how busy you are." But she pointed out that although the post office is busy and there is always a queue at the counter, the value of transactions is very small. Lots of people want to use the service, but they spend only £1 or £2. That is the real issue: we have to pay more to those who run post offices, subsidise post offices or find other kinds of business that will effectively cross-subsidise them.

I am tabling questions to all Departments to ask what their information purchases cost—the cost of forms, distribution and printing—to see whether co-ordinating that and using the Post Office, not necessarily exclusively, but principally, might generate substantial revenue for post offices.

Members may not have looked at the sub-postmasters' experiment with community point, which is not yet a definitive answer but is nevertheless an interesting way forward. Regrettably, the Government pilot scheme, "Your Guide", did not go forward because it was considered to be too expensive—I make no comment on that. The postmasters have tried to develop the scheme using the same pilot area of Leicestershire because people there are familiar with it. They have not had the e-Government support that they deserve and need to make it work, but one thing that came across to me as having big potential was that if each post office had a computer terminal with a printer behind the counter, virtually every Government form could be immediately accessible online and printed in the post office, for which a charge could be credited to the account. That would save on printing costs, as printing would be done to order, and there would be no worries about stockholding and pulping, or about forms being out of date because they would be accessible, up to date and online. I hope and believe that that solution is a way forward in partnership with Government that could help to boost the viability of the post office network.

In an ideal world, everything that happens in the post office would be paid for as a fully commercial business, including public services, although I accept the point made by the hon. Member for Castle Point that if a small subsidy is needed to keep the social network, it would be a disaster if that network were destroyed for the sake of a relatively small amount. We need to agree what is the viable total network and try to support it in the best way possible.

It is interesting that post offices run by the Post Office appear to lose the most money. That leads me to believe that as the Post Office has changed, the relationship between it and its branches has not changed fast enough. For example, an Office of Fair Trading adjudication is going through the system in which convenience stores with post offices have challenged the restrictions imposed on them by the Post Office. That is a point of contention on which not all postmasters agree, because the postmasters and shopkeepers are not necessarily the same people. I can see the point of view of shop owners who say, "We are operating a business here, of which the post office is a part, not the sole aspect, and we object to the Post Office telling us what we can do in the other part of the shop," but I also understand the Post Office's reasoning, particularly as it is developing new services. I shall be interested to see the OFT's conclusion.

I support Post Office management trying to introduce new commercial services, but I do not know how successful they will be, as the environment is very competitive. One reason why the Royal Bank of Scotland refuses to co-operate with the Post Office is that it regards it as a direct competitor in both cash and financial services, and it says that under no circumstances will it co-operate in allowing its customers to access money through the Post Office. HBOS has taken the same position. I am glad that Clydesdale bank has now started to allow people to get cash through the Post Office.

I am conscious of the time, but let me make a Scottish point. We in Scotland are particularly disadvantaged as a result of the decision of our two biggest banks, the Royal Bank of Scotland and HBOS, not to co-operate with the Post Office, because that means that many people in Scotland—a high proportion are customers of those banks—will not be able to obtain cash through the Post Office, and yet the card account has not come across as the ideal alternative.

Although MPs make party political points on this issue, all of us know how important the post offices in our constituencies are and how much they are valued and used. We want to find a solution to this dilemma that will give confidence for the future. The Government face a great challenge; they are going through a process that is demoralising and damaging to confidence, and most sub-postmasters and sub-postmistresses are not at all convinced about how the endgame will finish. I have made some constructive suggestions, and I hope that the Government will address them in a sensitive manner. They must ensure that the combination of business and whatever subsidy is required will guarantee a future. The fact is that 85 per cent. of rural post offices are not profitable, and unless we solve that problem, swathes will be cut through the service in rural areas. Postmasters and postmistresses will simply walk away, as they will be unwilling to continue to subsidise the Post Office, because the tables have turned; the Post Office is not subsidising them any longer; it is the other way around now.

This has been a good debate, and I am sure that we will continue to discuss the subject through the coming election campaign.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs) 10:31 am, 22nd March 2005

We have had a number of debates on the Post Office in the past few years, and one thing that characterises them is a sense of unanimity. There is a strong feeling among MPs of all parties, who, after all, are elected to represent their constituents, that the post office system has tremendous value. We recognise that post offices exist not just to sell stamps; they also play a valuable role in our communities. Debates on this subject are pleasant because, although we might have specific differences about how to maintain the post office network, we all agree that it has huge value.

It is a great pleasure to me that my hon. Friend Bob Spink has secured the debate, and I congratulate him on that. He and I, and my hon. Friend Mr. Evans, who was present earlier, were elected to the House at the same time, in 1992. We are still here—more or less.

The debate has been interesting. All Members, regardless of political party, care about the Post Office. Mr. Drew pointed out the importance of the Post Office brand, and, as Malcolm Bruce said, that brand is not being utilised enough. I think we all agree on that. The Post Office brand is recognised and respected, and it is regarded as having great integrity. The BBC used its brand to enable it to operate in a wider range of areas, which has cross-subsidised its programme making, but the Post Office has decided not to use other services as a way of keeping post offices viable, either because of externally applied restriction or because of its own restrictions.

The hon. Member for Gordon raised a fascinating point: he explained how, historically, there are differences between post offices that had always been sub-post offices and those that were originally Crown post offices. What does it matter if they are now sub-post offices and they want to offer certain services, such as providing passport applications? Why should they be disallowed from doing so? I have no idea. Can the Minister answer that? Have the Government put that restriction in place, or, as I suspect, has the Post Office done so? Either way, will the Government intervene to ensure that all post offices are able to offer a large number of services, because that is what will keep them viable?

David Taylor spoke about the fact that some people find it difficult to get to their post office. With regard to the urban reinvention programme, the Post Office said that it would not close post offices more than one mile distant. The Post Office also claimed that it would take into account natural obstacles, but that simply does not seem to be the case. We have heard time and again, not only in this debate but in debates in the main Chamber, about areas where elderly people live and where there are mountain ranges, canals or torrential rivers—I exaggerate slightly, but I am making my point—and the Post Office says, "Well, there are two post offices within a mile of each other, so one of them can close," even though, in practice, the other is inaccessible. That is wrong, and it must be addressed.

The Government cannot get off lightly, because they have played their part. We heard from the Minister today that 4 million post office users are now account holders, but not all of them wanted to be. Many elderly people have difficulty in operating cash cards. Many have difficulty in remembering their personal identification number—as do I. Many, and many disabled people, too, find it difficult to enter their PIN on the little keypads that are provided; they really are quite small. For understandable reasons, the banks are now introducing chip and PIN, but lots of people have problems in operating keypads, when they go to the gas station to buy petrol, for instance. That is an important issue.

The Government are spending an extraordinary amount of money to try to persuade people to give up their cash books. Some £10.5 million of taxpayers' money is being spent to persuade benefit claimants to abandon their order books in favour of direct payment; that figure has been obtained by the National Federation of Sub-Postmasters. That is equivalent to the taxpayer spending £70 per benefit claimant. Of course, the direct payment facility should be available at post offices for people who have bank accounts, or who do not like dealing in cash; it was initiated by a Conservative Government, and I applaud new Labour for continuing with the programme. However, it is wrong to do that in a way that prevents people who wish to keep their benefit books from doing so, particularly as those people are vulnerable, and find using such benefit books difficult enough.

In this debate, and in others, we have heard of the many campaigns that Members have run to keep their post offices open. Postwatch has played its part. It may not have replied to the hon. Member for Stroud, but it is generally quite proactive. As I mentioned in an intervention, it opposed 73 closure proposals in the west midlands but only 15 were withdrawn. When there is unanimous opposition to certain post office closures among local authorities, local communities, Members of Parliament, and Postwatch, and yet the Post Office still closes those post offices, one has to wonder whether it is completely deaf. Does it not recognise that the Post Office, as well as the Government, has a duty of care in this area?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

The hon. Gentleman suggested in his earlier intervention that my constituency was part of the west midlands. Bradford does not want to join the west midlands. It is strictly Yorkshire.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

I am grateful for that helpful intervention; I do not know what made me think that the Minister represented a west midlands seat. My geographical knowledge of the United States is far better than that of the United Kingdom. I thank the Minister—I like to refer to him as my hon. Friend—for making that helpful, creative intervention.

Postwatch also pointed out the question raised by the hon. Member for Gordon: when is it convenient and when is it not convenient to close a post office? Sometimes it is convenient to do so because the postmaster wants to take payment from the Post Office to surrender their position. As Postwatch said:

"We believe that POL's choice to use subpostmaster preference as a major part of selecting which post offices to close has in a number of cases meant that businesses closed that were in some ways better than those that remain."

That issue must also be addressed by the Government. Although I understand and accept that Post Office Ltd is a separate organisation in law, the House and Members should not forget that it is a wholly owned subsidiary of the Government. It is not right for them to say, "Mea non culpa. This will operate at arms' length. We shan't intervene". As a former Secretary of State for Trade and Industry might have said, the Minister should be intervening before breakfast, before lunch and before dinner, so far as some closures are concerned.

It is not just hon. Members who have been intervening, or trying to intervene, to keep post offices open. I have received a series of e-mails and letters from people in their communities who have been trying to keep various post offices open. Such people include: Pamela Singleton in Pudsey; Marco Forgione in Richmond Park; Ian Gibb in North Warwickshire; Stella Kyriazis in Telford; Richard Aitken-Davies in Derby, North; Robert Buckland in South Swindon; Richard Willis in Sutton and Cheam; Margaret Harper in Worcester; Mark Garnier in Wyre Forest; Justine Greening in Putney; Andrew Griffith in Corby and east Northamptonshire; Alexandra Robson in Wolverhampton, North-East; Anne Milton in Guildford; Mike Freer in Harrow, West; and George Lee in Leeds, North-West. They have all run campaigns to try to keep their post offices open. They have joined in the local community. In some cases they have succeeded, and in others they have not.

Under the Conservative Government, about 1 per cent. of post offices closed each year; under the new Labour Government, the rate is running at 7 per cent. The total number of post offices has fallen by more than 3,200—17 per cent.—since the Government came to power. The last figures available show that 15,304 post offices in the United Kingdom still existed at the end of 2004.

The hon. Member for Stroud, whom I am pleased is taking part in the debate, tabled a written question. He asked the Secretary of State for Trade and Industry

"what discussions she has held with . . . parish . . . councils".

The Minister for Employment Relations, Consumers and Postal Services replied:

"I have not held discussions with parish and town councils or with the National Association of Local Councils at this stage."—[Hansard, House of Commons, 21 December 2004; Vol 428, c 1615–16W.]

I hope that the Minister will hold such discussions, because I know that he cares about the issue. He is a caring sort of Minister, but caring just is not enough; doing is what matters.

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

As the hon. Gentleman has quoted me, I would like to respond. To be fair to the Post Office, the rural network has tried to evolve an interesting way in which parish councils and other voluntary groups can be brought in to help run it. That is exactly what should be done as a matter of urgency. We need that to be brought forward and not left as a future possibility. Does the hon. Gentleman agree?

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

As I said near the beginning of the debate, many of the issues cross party boundaries. Yes, I agree with the hon. Gentleman's point. There should be greater community involvement, not only at the stage of discussing whether there should be a closure, but, as was said, to help keep post offices open in a constructive way; that could be as part of a village shop or, as we heard from my hon. Friend the Member for Ribble Valley, as part of a pub.

There are all sorts of different mechanisms of having full-time or part-time post offices by which we can create a footfall. But the position has been damaged under the Government because of the Post Office card scheme. I am talking about a footfall that improves the viability of post offices. Sub-post offices depend on people coming into them for their survival. Under the Government much business has been lost. We have stated:

"A Conservative government would aim to increase the number of services available from urban and rural post offices and so increase their long-term viability. We will . . . work . . . with the National Federation of Sub-Postmasters".

I meet with that body on a regular basis.

The Government have failed to give adequate backing to the Post Office card account. They have made too complicated the process by which customers open accounts. The Government have betrayed the trust of local people by doing so, and they have tried to dragoon people into using card accounts, as my hon. Friend the Member for Castle Point said. That has been done against people's will, and public money has been used to force them to do it. That means that customers are likely to open bank accounts out of frustration. Trade at the local post office, which is the village shop, will dry up.

Local post offices provide a focus for the community as well as merely being places that provide stamps. Our aim must be to create an environment where post offices thrive in the United Kingdom, not only for the benefit of the Royal Mail, but for the benefit for the communities we serve.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 10:47 am, 22nd March 2005

I congratulate Bob Spink on securing today's debate. He has been assiduous in voicing local concerns on behalf of his constituents about Post Office Ltd's urban reinvention programme proposals for his constituency. I add my congratulations to him and his colleagues on the efforts that they have made on behalf of their local community. I was pleased to hear him say that one of the post offices will reopen. I congratulate him on that.

Since I became the Minister with responsibility for postal services in September 2004, I have examined the whole area of postal services with great interest. Some people have accused me of being a masochist in accepting that responsibility, given the nature of the problem that we face in relation to a trusted service. My hon. Friend Mr. Drew is correct in saying that despite all the issues relating to the Royal Mail and the Post Office, people still trust them as brand names.

The hon. Member for Castle Point spelt out his views clearly and fully. That is why I questioned him on subsidy. He spoke strongly about the social aspects of post offices and the importance of maintaining subsidies. I will return to issues relating to his constituency a little later if I have the time to go through them in great detail and if he allows me to do so.

Today's debate has been important. I agree with Michael Fabricant that what tends to happen in situations such as those that we are discussing, particularly with a possible general election around the corner, is that the issues become politically emotive as we all knock spots off each other in determining who was responsible for things. I will return to some of those issues.

I agree that all of us, when we get down to the detail, want a viable post office network, and we want the Royal Mail to survive and develop. We need to try to find ways of examining the issues together. I was grateful for some of the suggestions that Malcolm Bruce made. We are at the next crucial stage. The first plan for Royal Mail recovery was in 1999, and it concludes this year. We need to consider what the next plan will entail. Remarks were made about the rural subsidy. What is interesting is that the time frame has given us the opportunity to see what local communities want to do about the range of services that post offices should provide. Some innovative ideas have come from the pilots, which could contribute to a future plan.

The post office network is relevant to every Member of Parliament. We all share concerns about the future provision of post office services in our constituencies. I assure hon. Members that the Government are fully committed to maintaining a viable nationwide network of post offices. The truth is that there have been decades of underinvestment, and the business was in a spiral of decline. If the network is to survive and thrive, it needs to change significantly. The Government want a post office network that can prosper on the needs of today and the future, not those of 20 or 30 years ago.

Because the Government have grasped the nettle and taken the necessary steps to restructure and revitalise the Post Office, the future of the network has rightly become an issue of national debate. We all share concern for the future provision of post office services in our constituencies, and we want to maintain a viable network. Everyone involved faces a massive challenge. I pay tribute to those local communities and people who have voiced their concerns about post office closures. However, I take the point that my hon. Friend the Member for Stroud made about the fact that some people have unfortunately joined the campaign after the horse has bolted, so to speak, given the massive problems that the network was facing.

The starting point for Government policy on the post office network was the performance and innovation unit's report of 2000, "Modernising the Post Office Network". The Prime Minister called for that report in 1999, because it was clear, following decades of decline and zero investment, that dramatic action had to be taken to get the business on track. We set about producing policies that would help secure a future for the post office network, which was something that the previous Government failed to do.

I was interested to hear the Opposition say what they would do if they ever return to power. I would ask why they did not do those things when they had the opportunity during their previous reign.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

The Post Office was not under such pressures then. It is primarily because of the introduction of the card scheme that we now have to propose such measures.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

That was a good try, but not an effective enough one, because closures were already taking place during the Conservative reign, as hon. Members have pointed out. If we consider the problem honestly, we find that it has much to do with the relationship between the Royal Mail and the Government. They have basically been at arm's length since 1967. On other agencies using the Royal Mail and post offices, lots of good work could have been done to ensure that Post Office Ltd played an integral role in community regeneration, especially if we consider the money that the previous Government invested in regeneration and what this Government have done. There could have and should have been an opportunity to involve post offices and other services in such regeneration. That did not happen, and we all stand to blame for that.

The PIU report showed quite starkly that the network of post offices had not kept pace with the changing needs of its customers. Too often, post offices had become dingy and shabby through lack of investment and were losing business. The Post Office faces an enormous challenge. In recent years, Post Office Ltd has incurred substantial losses: £163 million before exceptional items in 2001–02, £194 million in 2002–03, and £97 million in 2003–04. Some 96 per cent. of the nation's post offices are run by sub-postmasters—private business people who have invested not only their own money into their businesses but a great amount of care and effort into helping the post office network to achieve its high status.

I pay tribute to the National Federation of Sub-Postmasters. I meet the federation regularly and have discussed its manifesto, which contains many interesting ideas, although, as the federation acknowledges, they are uncosted. It is run by people who are committed to the network, as hon. Members have said. It is vital that we listen to the federation and to people who have invested many years of their life in the network.

It was right that Post Office Ltd gave those people who wanted to get out the opportunity to do so through the payments that were made. Some people were put under a great deal of pressure over some decisions. I shall return to the example that my hon. Friend the Member for Stroud raised from his constituency, because I am concerned if people have been put under the pressure that he described. I will write to him with details about the two post offices that he mentioned and will look at the issue of undue pressure being put on people.

The post office network has been contracting since the 1960s. The previous Government presided over 3,500 closures between 1979 and 1997, but in all that time produced no policy on how to structure the network and ensure that it would remain relevant in the 21st century. There have been reductions in post office usage for all sorts of reasons. The absence of investment by the previous Government was an important one. However, major advances in technology, greater mobility, and changes in shopping and financial habits mean that a large proportion of our constituents simply do not use post offices as they used to and that custom has sharply reduced. That trend is not a matter of the Government or some unseen market force acting against the interests of the Post Office and its customers; rather, it is about ordinary people—our constituents—making choices.

The decline in transaction volumes has not been caused just by the changes in benefit payment arrangements that have recently been completed. The decline started well before the move to direct payment and applies not only to benefit payments but to a much wider range of services, including Girobank and National Savings transactions, telephone bill payments and postal orders.

As the recent National Audit Office report noted, the change is not a uniquely British phenomenon. Research commissioned by Postcomm, the regulator for postal services, has noted that people in other countries increasingly access services electronically over the telephone and through the internet. In response, most countries have been remodelling their networks, usually by closing the smallest or least profitable offices and converting directly run offices to agency offices. In Germany, for instance, the number of post office branches has been reduced drastically, from 30,000 to 13,000. In Britain, other networks, such as those of the retail banks, have also been scaled back. Like them, the post office network needs to adapt to changes in people's preferences and new ways of doing business. Such external changes pose big challenges to the network of post offices, which have to be addressed not ducked. That is what the Government have done and it creates the emotion that we have seen.

Postwatch has done a tremendous job of creating a picture for consumers, through its response to Post Office Ltd's plans. That was a deliberate plan by the Government, in order to create a balance, so that a number of things could be dealt with. Royal Mail and Post Office Ltd were losing money, and the Government set them targets: to turn the situation round, to stop those loses, to maintain a viable network, and to ensure that there were no unplanned closures. The difficulty would have been an acceleration in those closures, creating gaps, which would not have put us in the position of having post offices within a mile of one that had closed.

Postmaster preference, Postwatch operating on behalf of the consumer, and Post Office Ltd were involved in trying to create a viable network. Clearly, there have been difficulties. Since becoming the Minister with responsibility for postal services in September 2004, I have tried to ensure that hon. Members in all parts of the House have had the opportunity to meet Post Office Ltd directly. I have done that through arranging surgeries in the House on Thursdays with senior management of Post Office Ltd, so that hon. Members can at least have face-to-face discussions about the concerns that have been raised.

The Government are listening. When we look at the new plan, we shall have to consider the role of Postwatch and Postcomm, the regulator. Postcomm is looking at a survey of how the urban reinvention programme has affected certain areas. If gaps appear, we shall have to ensure that they are filled.

We are debating a difficult issue to which I am sure we shall return, notwithstanding what happens in the general election. Hon. Members have shown great dedication in dealing with the issue. If we take party politics out of the debate, as I am sure we will after the election, and consider the good ideas that are around, I am sure that we can restore and develop our constituents' confidence in Royal Mail and Post Office Ltd. That way, we can ensure that our constituents understand what has happened and what we all agree is the need for change, and that the change is as painless as possible for them. If we do that, I am sure that confidence will return.