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Mr. Lilley: I was not.

Mr. Chidgey: I beg the right hon. Gentleman's pardon. He corrected me, but he knows that Treasury influence is

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clearly present, and it is here to stay. The Treasury is bridling at losing Post Office profits, and is determined to retain an option to cash in Post Office shares when the coffers start to empty.

The Government have made no case to show that conversion to a plc would bring more benefits to the Post Office than would a conversion to an independent, publicly owned corporation. It would give no greater freedom, flexibility or competitiveness. In his statement on 8 July at column 1188 of Hansard, the Secretary of State claimed that his research had found fundamental weaknesses in the IPOC model. That sounds like a smokescreen for his failure to prize the dead hand of the Treasury from plans to modernise the Post Office.

The plain fact is that the Treasury rules established in the 1920s prevent the Post Office from converting to a publicly owned corporation fit for the 21st century. The political will is needed not just to convert the Post Office, but to modernise the Treasury at the same time and prevent it from continuing to operate under the same rules as have applied for almost a century.

Even under the Government's proposals for greater freedom, the Post Office will still not be able to compete equally. At the same time, the Government plan to add to the threat to the Post Office by reducing its monopoly in its home market, in advance of similar agreements to liberalise postal services elsewhere.

Under the Government's proposals, the Post Office will face new financial pressures that could amount to a future loss of profits of some £300 million a year. The key to international success for any enterprise is a strong home market. To succeed overseas, the Post Office must be able to offer a full range of flexible services, delivered with the benefits of modern technology to its home market. Yet the Post Office is expected to cope with the halving of the letter monopoly, resulting in the loss of £100 million profit; the loss of interest on Post Office reserves, which is a loss of £107 million profit; and the DSS's decision to pay benefits directly into bank accounts by 2003, which is a loss of another £100 million of income. That will hit rural post offices in particular, which, as many hon. Members have noticed, are going out of business at the rate of 200 a year.

The Post Office is doing its best. It has responded well to the impact of the closure of thousands of branch banks in small rural communities and in urban areas. There have been 3,500 such closures since 1990. More than a quarter of inner-London wards have lost all their banks since 1990. I raised that issue in my early-day motion 203 on 19 January, in which I urged closer co-operation between clearing banks and Post Office Counters Ltd. to accelerate the transfer of over-the-counter services from closing branch banks to local post offices.

Closure of branch banks and no over-the-counter cash services at post offices have had a tremendous impact on the viability of small retailers, who need to be able to bank their cash at the end of every day's trading. Such retailers also lose the benefit of additional trade for the bank, which brings business into their shops, and all too many go out of business. In Botley, a small village in my constituency, Lloyds bank customers were so incensed by the prospective closure of their branch that both personal and shopkeeper customers marched on Lombard street with a big black plastic horse, upside down, to demonstrate their views on the bank's policies.

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I am glad to say that over-the-counter services are now being transferred to post offices. A contract has been signed providing for 15,000 post offices to take over such services from Lloyds-TSB. The Post Office, however, cannot provide the full service until it is completely automated. The sorry saga of the Pathway project, which was supposed to link Benefits Agency and DSS payments to a swipe card, has severely damaged the viability of thousands of sub-post offices throughout the country. The debacle of mismanagement, added to the rivalry between Departments, has led to the demise of the project, the loss of £1 billion to the taxpayer, and the risk of closure for thousands of rural post offices.

It is because the Government have failed to get a grip on their legacy from the Conservatives that the replacement Horizon project will arrive years later still. Hundreds more sub-post offices will close--and, to make matters worse, the delay in automation could result in 10,000 rural post offices' losing £350 million of business when the Benefits Agency and the DSS convert benefit payments to automatic transfer in 2003. Without an automatic platform, the Post Office cannot compete, and the business will be lost.

I listened carefully to what the Secretary of State said. He guaranteed that the contracts to introduce the automated platform would be in place by 2001. That is reassuring, but we know from recent experiences of huge computer projects how easily they can fall behind, and how easy it is for delays to mount up. I want a commitment from the Government that the re-tendering of service contracts that are currently placed with the Post Office by the Benefits Agency and the DSS will be phased in following the successful introduction of the Horizon platform project. I do not want to see another disaster brought about by delays in the Government's sponsored computerisation programme. We need a commitment for the Post Office to be given a fair chance to retain the business that is crucial to the survival of rural and urban sub-post offices alike.

The Government have claimed that they propose to extend the range of services available to post offices. I could not agree more that that is a vital ingredient of post offices' viability, but the Government could make a start with the DVLA. It is a fact that only about 4,000 post offices out of 19,000 are able to issue vehicle tax discs, which is a source of intense frustration throughout the country. The postmaster at Fryen Hill post office in my constituency has been complaining for years that he cannot get POCL to give him the right to sell vehicle tax discs.

A few weeks ago, on a Wednesday afternoon, when all the other local post offices were closed, 33 people went to that post office trying to buy tax discs. That shows the level of frustration caused by the DVLA's rather arcane view that only a limited number of post offices--less than one in four--should be able to sell the discs. The reason that it gives is the increased cost of the extra paperwork to the taxpayer.

Mr. Hoyle: As the hon. Gentleman will know, the problem is that if every post office issued vehicle licences, the income of other post offices that are very reliant on vehicle licensing would be diluted.

Mr. Chidgey: I agree, and the question of which post office is most vulnerable is interesting, but we must also bear in mind the frustration of customers. Many people find that continued frustration difficult to bear.

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With that sort of approach--that lack of joined-up government--it is hardly surprising that, since 1979, over 3,500 sub-post offices have gone out of business and that the rate is continuing at some 200 a year. The approach is removing vital services in poor and socially excluded communities every week of the year. With the closure of bank branches, it is accelerating the failure of thousands of small shops throughout the country. The Government have a duty to ensure that sub-post offices can retain their core business and develop new flexible services through modern technology.

The Government statement is very good on sentiment and concern, but my colleagues and I are concerned that they are ducking the key issues in the creation of a dynamic enterprise overseas and a robust and reliable post office service at home. The Secretary of State has lost his fight with the Treasury for an independently owned public corporation which is free from state control, leaving the Treasury free to dip its hand in the till. Any further delays in modernising the system will place at risk the future of thousands of sub-post services, which are vital to the survival of the communities that they serve. I urge the Government to think carefully about how they bring their White Paper forward to legislation.

6.6 pm

Mr. Bob Laxton (Derby, North): Unlike some Opposition Members, I feel buoyant about the Post Office's future. I welcomed the White Paper when it was presented to the House on 8 July. Not being, I trust, an over-cynical individual, unlike some hon. Members who have spoken, I take at face value the absolute assurance that, although the Government propose to convert the Post Office to plc status, there is no prospect in the foreseeable future of a share sell-off. In fact, we have been assured that that would require primary legislation. Unlike some hon. Members, I am eminently satisfied with that assurance.

I welcome the statement in general because, for the first time in years, the Post Office will have some stability and a clear knowledge as to what the future holds for it. For a long period during the Conservative Government, a debate raged within the Conservative party. We remember the desire of the hawks to sell off the Post Office, with little, if any, concern for the future of rural sub-post offices. The plan was: "Just get rid of it. Take the money into the Treasury. That is all we are after."

During that process, we saw how well loved and respected the Post Office was. The British public were hostile to that plan. It drove huge wedges between the ideologues and the perhaps more pragmatic individuals--the very few pragmatic individuals--in the Conservative party. There were enough of them for the prospect of privatising the Post Office to diminish. The statement will provide stability for the future.

About an hour and a half ago, I made an intervention because I was particularly interested in the Horizon project issue. The hon. Member for Tiverton and Honiton (Mrs. Browning) left-footed, or right-footed, my intervention and side-stepped answering it, so I was particularly keen to listen to the speech by the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I was not at all satisfied with the response.

I was particularly concerned about the fact that the contract for a computer project of this magnitude was signed in May 1996, and after only nine months,

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I understand, went through major renegotiation. I readily understand the comment that it was part of managing the project, but there is a lot of difference between tweaking and managing a project and rewriting a contract. We do not have access to the information--which is privileged--on how decisions on the project were made. Moreover, the other day, members of the Select Committee on Trade and Industry were unable to get answers to our questions on the matter because the relevant documents were not available to either Department of Trade and Industry Ministers or to the Secretary of State.

The current Government inherited plans for a technology--yesterday, it was described as "Lilley's legacy"--which, had it been introduced, would have been not only extremely expensive for the Post Office, thereby impacting on Post Office Counters Ltd. and the rural sub-post office network, but obsolescent, and perhaps even obsolete. Nevertheless, we have to be mindful of new technology, new work practices, and new methods of service delivery.

I have great respect for, and some involvement with, the Post Office, as many of my constituents work for it. Derby is a Post Office centre of excellence, with a huge mail sorting office and a mammoth mail operation located at East Midlands airport, moving mail by aeroplane at night around the countryside, and to and from the Isle of Man and the Channel Islands. As the Post Office employs many of my constituents, with whom I am closely involved, I know a great deal about how it operates.

In the debate, there has seemed to be an air of despondency about the future of rural sub-post offices. However, as we move into the new millennium, there are new opportunities and ways of working--such as using the worldwide web, electronic commerce and e-mail. Sub-post offices, particularly, will have to adapt to those new technologies, and--as my hon. Friend the Member for Ochil (Mr. O'Neill) said--thanks to drastically reduced computer hardware costs, will have to start providing services utilising those technologies.

Across the United Kingdom, including many of our rural areas, about 1.5 million people are working--teleworking, as it is euphemistically called--from home. Increasingly, people in rural areas will work from home and want services that, hitherto, they have not used. Previously, many people went to urban areas to work and to shop--like the Secretary of State, to get their newspapers and tins of beans. In the new millennium, with the new technology, people will want sub-post offices to offer high-technology services.

The message for the Post Office, therefore--particularly for rural sub-post offices--is not of despondency, but of buoyancy and hope.


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