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Mr. John Bercow (Buckingham): Does the hon. Gentleman accept that the concerns that have been expressed are not Opposition scaremongering? Is he aware that it is the general secretary of the National Federation of Sub-Postmasters who has expressed the concern that payment via bank accounts will result in a

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30 per cent. cut in the turnover of the average rural post office? That individual is not a member of Her Majesty's Opposition.

Mr. O'Neill: I believe that that figure is an exaggeration. With respect to the hon. Gentleman, it is only natural for the National Federation of Sub-Postmasters to exaggerate, because it must ensure that its members obtain as good a charge as possible for the services that they provide. That is megaphone diplomacy at an early stage of what will be a prolonged negotiating process. We must recognise that there will be many arguments, one way and the other.

We should aim for a deal to get all the post offices in the UK on-line. That need not cost as much as was suggested from the Dispatch Box this afternoon by my right hon. Friend the Secretary of State for Trade and Industry. The price of computers is dropping rapidly and access to the network is becoming cheaper, so the figures that have been quoted may be exaggerated.

If we have an on-line postal service in the United Kingdom, there will be access to the internet from every community. In two or three years there will still be many people who do not have computers, but in every community there will be trained people who can offer a service, albeit at a modest price. At their local post office, people will be able to make purchases through the net and pay with their smartcard. We hope that all the appropriate consumer safeguards will be in place by then.

It is unrealistic to suggest that there should be computers in libraries and access to the net from them. Among my constituents who are most dependent on post offices, the only book that most of them ever read is their benefit book. They are never seen in libraries.

We want on-line facilities in post offices, to give people access to world markets. That could be a liberating influence and could generate revenue. We have only begun to scratch the surface. As my right hon. Friend the Secretary of State told us yesterday in the Select Committee on Trade and Industry, he envisages good deals being struck. Given the number of benefit payments that are transacted, it should be possible for the banks to reduce their charges to a minimum.

We know that the Post Office has been able to negotiate a deal with British Gas, for example, whereby the payment of gas bills in post offices across the country is free to the consumer. That should be replicated on a wider scale. The deals have yet to be struck, but we now have a clear timetable in which to operate and a deadline, which will help to concentrate the minds of Ministers.

Mr. Hoyle: Does my hon. Friend agree that the Horizon project was a disaster, which we must put behind us, although it left a financial hole that must be plugged? Does he agree that urban and rural post offices could benefit from the link-up and attract new business, which would give them greater freedom through our proposals?

Mr. O'Neill: I agree with my hon. Friend. Probably the only body that would be capable of getting to the bottom of the Horizon story is the National Audit Office. The capabilities of Select Committees are somewhat limited in that respect. The National Audit Office would be better equipped to scrape below the surface--[Interruption.]--especially when the hon. Member for

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Buckingham (Mr. Bercow) is no longer assisting us in the Select Committee on Trade and Industry. Even with his talents, I doubt whether we would have got to the bottom of the matter, which requires close examination.

I know that initially, Ministers showed a relaxed attitude to the Horizon programme, but that changed suddenly. There was a realisation that the project would not be delivered within a reasonable time, and that the sums involved were getting ever greater while the returns on the investment became ever smaller. A line had to be drawn under it and a new approach had to be taken, but it would benefit us all if the NAO undertook a proper examination of the project so that we could establish what influence the customer and the Treasury had on it, in the first instance and afterwards, and how they were involved.

The Government have said that the proposed timetable can be realised and that, within the next five or six years, we will have a proper system across the United Kingdom that does not look back to the old benefits system, but which is geared to the future.

Mrs. Dunwoody: The only point that concerns me greatly is that British banks have no particular record of either innovation or imagination. Indeed, they have to be pushed into making most changes and they show no desire whatever for people with small amounts of money to have accounts. Since that is the case, and particularly in view of their reaction to the code of conduct--they are supposed to support it, but they make sure that nobody knows about it--there are grave reservations about their attitude.

Mr. O'Neill: I share my hon. Friend's concern about the indifference of the banks to many poor communities. They are not prepared to establish facilities in those communities, even to the extent of providing automated teller machines. However, although we could put ATMs in post offices and make proper arrangements, not all the banks conform to the picture that she paints. The Co-op bank and the Alliance and Leicester, which has taken over the Girobank, have links with the Post Office and they are currently positioning themselves to take advantage of the market opportunities.

Many of the arguments that we hear being made in respect of the poor and disadvantaged are the same ones that many of us advanced when we were anticipating the worst excesses that would follow the liberalisation of the supply of electricity and gas. The cherry-picking has not been as bad as we had anticipated, however, and arrangements have been reached for looking after the disadvantaged people in the community. A great deal more still needs to be done and one would hope that the regulatory criteria that are set down for the operation of the new system will include meeting serious social obligations so that the concerns of my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) and myself are given due recognition.

Anxieties are being expressed about the monopoly and the reduction in the mail monopoly price from £1 to 50p. Although the likely reduction in the profitability of the Post Office by £100 million in a year is a cause for concern--superficially at least--it must recognise that it must face severe competition if it is to survive in an internationally competitive world. Cutting the monopoly price will give the Post Office a cold shower and provide a salutary lesson to it, but if it can survive that, I cannot see it having the difficulty that some of my hon. Friends suggest it might face.

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The Post Office is an admirable institution and it has a tremendous opportunity to expand and develop as a consequence of the sound approach that the Government have mapped out for it to take. The financial arrangements, such as the fast-track for borrowing, and the experience that has already been gained through the acquisition of the German Parcel business are encouraging signs and, under the White Paper, the future of post offices in rural and deprived areas is not anything like as bleak as people believe. I certainly think that we have little to fear if the Post Office is to be backed up by a counters network of the kind that we have at present and if proper commercial advantage is taken of the opportunities available.

The motion is nothing less than scaremongering of the kind that frightens people in rural communities, but they are somewhat cynical about the crocodile tears that the Conservatives are shedding for people to whom they paid no attention during the years when they were in power.

5.50 pm

Mr. David Chidgey (Eastleigh): To pick up the theme of the closing remarks of the hon. Member for Ochil (Mr. O'Neill), my impression from today's debate is that Conservative Members are somewhat off target. They are in danger of being so wide of the mark that they could be indulging in an exhibition of collective shooting in the foot.

We are to understand that the Conservatives are condemning the Government for not privatising the Post Office fast enough. I recall the Conservatives, when in power, backing away from it as a privatisation too far. From today's comments, we are given to understand that the Conservatives are condemning the Government for delays in automating the Post Office. Yet, again when they were in power, they mismanaged and bungled the Pathway project to such an extent that it effectively ground to a standstill.

We are also expected to understand that the Conservatives are wringing their hands in deep concern at the fate of rural communities being deprived of sub-post offices. Yet, for most of their 18 years in power, they stood idly by while 3,500 sub-post offices closed their doors. I do not recall them showing a care in the world about their fate. This is one of the best examples that I have witnessed in this House of an Opposition party offering free target practice to the Government. No doubt the Government will take full advantage in due course.

The key issues that we should address are surely how best to turn a highly successful and respected public service into an equally successful international enterprise; how best fully to automate a network of 19,000 post offices so that they can retain their core business with the Government agencies--their prime customers; and how best to improve efficiency and attract new business sufficient to sustain the national network of sub-post offices, and reverse the disastrous pattern of closures in rural and urban areas alike--the key social obligation that post offices serve so well. Those are the key issues about the future of post offices and it is on them that the Government's proposals in the White Paper should be tested.

The Liberal Democrats argue that although we welcome the sentiments of support for the Post Office in the White Paper, we are concerned that, as they stand, the proposals lack the political will and the plans for action essential for the Post Office to thrive.

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For the past 350 years, the Post Office has served the nation well. The uniform price and next-day postal service delivered nationwide are a fundamental commitment. Each year for the past 23 years, the Post Office has returned a profit to the Treasury, hitting its external financial limit targets time and again. Since 1981, the Post Office has contributed £2.4 billion to Government finances. But for some years--all hon. Members will recognise this--it has been clear that without greater commercial freedom, the Post Office has been losing ground to its competitors in an increasingly liberalised world postal market.

Yesterday, the Post Office announced its pre-tax profits for 1998-99 as some £608 million. That is good in itself, but those figures are down by £65 million from the previous year. That is a clear sign of the impact of increasing competition and of the fact that without greater commercial freedom, the Post Office will decline.

Analysts tell us that in a liberalised global postal market, there is room for only four or five really global players. At present, the Post Office is hanging in at about fifth place. Without greater commercial freedom and the ability to internationalise its business, the Post Office is bound to slip out of the major league. Therefore, the case for greater commercial freedom is crystal clear. The question is: what form should it take?

The Government propose to turn the Post Office into a plc which, I think, is a clear departure from the previous Secretary of State's preference for an independent, publicly owned corporation. Why? What extra benefits would a plc bring over an IPOC? In all its pleading for greater commercial freedom--and very well justified it is--the Post Office has not shown any desire to become a plc. The Government claim that, by raising shares, the Post Office could expand its business through share swaps and transfers. So it could, but it could equally well make direct investment in other companies internationally, as it has already started to do.

Anyone in the City would say that the prime purpose of raising shares is to sell them. It is clear that whatever Ministers may say, turning the Post Office into a plc will pave the way for a future privatisation. I give Opposition Members credit for noticing that. The Government tell us that they have no plans to sell shares in the Post Office for the foreseeable future, and that any proposed share sales would have to gain parliamentary approval. As most Governments are incapable of predicting events a week away, referring to "the foreseeable future" is meaningless. As Governments invariably exercise their majority to impose their will, seeking parliamentary approval is just as meaningless, unless the Government are prepared to pledge that any proposals brought before the House to sell shares in the Post Office will be subject to a free vote. The Minister makes no comment.

It seems to me that converting the Post Office into a plc is the result of pressure from the Treasury. It is interesting that the two principal spokesmen were both Chief Secretaries to the Treasury.

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