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Mr. Byers: Those are exactly the post offices that we want to continue. I believe that, as a consequence of the commercial freedoms that we have now given the Post Office, it will have the opportunity of investing in the network.

One reason why the network has had difficulties is that the Post Office has been starved of resources. The hon. Gentleman will know that during the period in which he was serving in the previous Government, the Treasury was taking 95 per cent. of the Post Office's profits. The White Paper that we published last week makes it clear that we shall bring that down from the current rate of 80 per cent. to 50 per cent. this year and 40 per cent. in subsequent years. Next year, that will free up £175 million extra for the Post Office; this year, it will free up about £100 million. I hope that the Post Office will use that extra money to secure the future of the Post Office network--and that is what we shall be looking for in the five-year strategic plan.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale): The White Paper goes a bit further than that, saying that the Government are committed to supporting

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post offices that are of "special value" to the community. Will the Secretary of State tell us which post offices are of special value, and how he will assess special value? Moreover, will the support be specific Government support, or--as he has just outlined--simply allowing the Post Office to keep more of its own money?

Mr. Byers: The White Paper puts in place, for the first time, a mechanism that will allow local people and local communities to express their view on the value of the post office in their own area. In a moment, I shall say a little more about the process and mechanism that we have created on the basis of the White Paper's provisions. There have been so many closures in recent years first, because the Post Office has not had commercial freedom; and, secondly, because we have not had a mechanism for local people to express their objection to a local post office closure. We provide such a mechanism in the White Paper.

I hope that if we can find a slot in the Queen's Speech later this year, we shall be able to introduce legislation securing the right of individual consumers and communities to express their view on the value of their local post office, as such a right would act as a very real deterrent against potential closures.

Mr. Ian Bruce: I think that the right hon. Gentleman will know that many people who have been dealing with the Government's proposals to deliver electronic government have suggested that post offices would be a good place for people to access information technology. Will he tell the House more about how he intends to get such an IT network installed in post offices, in light of the fact that implementation of the Horizon contract--which was signed by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley)--was financed by private industry, which would be paid on the basis of transaction costs? There was virtually no provision for cancellation costs in Horizon because of the way in which the contract had been drafted. From where will the right hon. Gentleman find the money for that IT network? Will the Government sign real contracts with the post office network to deliver new electronic services?

Mr. Byers: Even as we debate the issue, agreements are being signed between the Post Office and Departments. I am pleased that, in just the past week or so, a three-year agreement has been signed for the Post Office to issue vehicle licences. Such developments are already occurring, and I think that the Post Office network has a great future role to play in implementing the modernising government agenda, using the benefits and opportunities available in new technology. I do not think that we have done enough to take advantage of those opportunities, but the Post Office network is in a great position to be the interface between the Government and communities--such as the rural communities that were mentioned earlier, and inner-city communities on housing estates that need the same type of provision. The White Paper will provide the means by which we will be able to do that, and the agreement that we have secured with ICL and Post Office Counters will guarantee that automation of the network will occur by 2001. When we achieve that, a raft of new opportunities will be open to the network.

Ms Helen Southworth (Warrington, South): Does my right hon. Friend agree that the opportunities that are

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opening in electronic commerce to small businesses provide a tremendous opportunity for the Post Office network, much of which runs alternative businesses to support the network? The modernisation of the Post Office will encourage sub-post offices, such as the one in Lymm in my constituency which e-mailed me yesterday to express enthusiasm for some of the things that we have been talking about, including action on automation and enhancing skills to take advantage of e-commerce.

Mr. Byers: My hon. Friend makes an important point about the new vision for the Post Office and the network. There will be a need to embrace new technology to meet the challenges that lie ahead. The important thing to remember about the Post Office and the network is that things cannot stand still. People are choosing to have their benefits paid through automated credit transfer rather than by the traditional giro or other means through post offices. People are making a choice, and it is wrong for the Government to stand in the way of that choice. The challenge for the Government is to find alternative means by which we can protect the network. We believe that the White Paper, with the new commercial freedoms and the new mechanism, will do precisely that.

The White Paper is a good deal for consumers, the network and those who work for the Post Office. It has been clear for a number of years that the Post Office has to meet the global challenge it faces from other postal services, which are moving rapidly. We can see developments on the continent and other postal services worldwide where the post office has had the freedom to invest and acquire other like interests and, as a result, has gone from strength to strength. We have reflected that in the White Paper, and we want the Post Office to become a global player. We will introduce a new structure and corporate personality for the Post Office, but based on our manifesto pledge to give new commercial freedom to the Post Office while it remains part of the public sector. That is what the White Paper does.

The White Paper has been well received. I mentioned the views of the Post Office. The Post Office Users National Council said that it thought that there would be "considerable benefits for users" of Post Office services. The Mail Users Association has described the package as a


I received a very friendly letter from the general secretary of the Communications Workers Union, who said that, despite his reservations about the reduction in the monopoly threshold, he thought that the White Paper was an "extremely good document". There we have it--someone who knows the industry and its future direction has extended a warm welcome to the White Paper.

The Opposition motion talks about concern about the long-term viability of the Post Office. In fact, the Post Office is in now in a far stronger position because of the new commercial freedoms that we are giving to it. We are giving it the opportunity to borrow, without further approval, £75 million a year. If it wants to borrow more, it will have to get approval for that, but we will fast-track any application. The application will be judged on how robust it is commercially, the strategic plan--which has been agreed with the Government--and the risk that might be attached for the taxpayer. If the Post Office can satisfy those three tests, approval will be given and it can borrow substantially more than £75 million, if appropriate in the circumstances.

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In addition, the Treasury take from the profits of the Post Office is to be reduced substantially--from about 80 per cent. last year to 50 per cent. this year, and 40 per cent. next year. That will give the Post Office £600 million extra between now and 2003.

Mr. Edward Davey (Kingston and Surbiton): Why did the Government light on the figure of £75 million of borrowing without approval and what amount would the Secretary of State and the Treasury be prepared to permit after consultation with the Post Office?

Mr. Byers: It would be inappropriate to give a fixed figure, but it is a matter of public record that when I was Chief Secretary I agreed to borrowing of £300 million or thereabouts for the acquisition of German Parcel. That is an example of a sum that we would be prepared to consider. We are talking about hundreds of millions of pounds, provided that it is in the interests of the Post Office, as it was in that case.

A large acquisition will almost certainly require more than £75 million, and we felt it appropriate for that to require Government approval; borrowings below that figure are likely to be for investment in the infrastructure within the United Kingdom, which will be able to go ahead without Treasury approval.

Mr. McLoughlin: Even under the freedoms that the Secretary of State says he is giving the Post Office, the taxpayer will ultimately pick up any liability arising from failure, which I expect is why there has to be Treasury approval. What does he regard as fast-tracking Treasury approval, bearing it in mind that I have been waiting some considerable time for an answer from him about the future of post offices? What time scale does he envisage?


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