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6.14 pm

Mr. Christopher Chope (Christchurch): This debate has been dominated by the threat to our sub-post office network. That threat is totally unnecessary: it was avoidable; it would not have happened if the Government had stuck with the Horizon project, as they should have done. I am not persuaded that the Government's decision to abandon the project was the right one.

After hearing the speech of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), I am even less convinced that the Government's decision was

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the correct one. I am convinced that my right hon. Friend left a golden legacy to pensioners, other benefit recipients, sub-postmasters and rural communities--a legacy of a network of post offices that could continue to pay out benefits over the counter on an exclusive basis. He left a system which would have guaranteed the future of thousands of sub-post offices across the country. That system was destroyed by the Government.

Many of the observations of the Government are disingenuous in the extreme. As my right hon. Friend the Member for Hitchin and Harpenden said, the responses to parliamentary questions show that the Government have shifted their ground. Last July, the Minister of State--who we believe is ill, and who we hope gets better soon--told me that the current plans provided for all post offices to be automated by the end of the year 2000. I then asked him why the date had been shifted to the end of 2000, as against 1999. The right hon. Gentleman replied that it was always expected that the original planning assumptions for this project would be tested and reviewed as the programme moved forward. There was no mention of the programme being three years behind, or of the fact that the Government had inherited a situation from the previous Government that was untenable or unmanageable.

In July last year, I asked the then Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), why the Government had decided not to assess alternative options to the ICL Pathway project. The hon. Gentleman had plenty of time to think of his answer, which was that ICL Pathway was engaged in a project to automate Post Office Counters Ltd. under contracts agreed in 1996. He said that the Government remained committed to the objectives of the project.

We have heard today--and from the Secretary of State yesterday--red herrings about renegotiations in February 1997. This time last year, it was satisfactory for the Government to refer to the contract in 1996, and there was no talk of modifications, changes or difficulties. I am not convinced by the Government's story on this.

Nor am I convinced by comments to the effect that the points that we are making are exaggerated or scaremongering. In today's edition of The Independent, John Roberts, chief executive of the Post Office, is quoted as saying that the decisions of the Government


He is in a strong position to know the facts, and he is expressing grave concerns about the Government's claims.

Earlier this year, I was speaking to a 97-year-old constituent about the pleasures of life in Highcliffe-on-Sea. She told me that one of her great pleasures is walking to the local post office every Thursday to collect her pension, having a gossip with people on the way, and perhaps taking a bit longer than some of us would do. She does not want her post office to be closed by the Government so that she can no longer gain access to her pension once a week. She is one of 15 million people in a similar position.

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In the amendment, the Government have said that they have a commitment to "a network"--not "the existing network", or a "network similar in extent to the existing one", but


That is just not good enough.

In the White Paper, the Government said that all benefit recipients who wished to collect their benefits in cash at post offices would continue to be able to do so, both before and after the change. But what happens if the post office from which those benefits have been collected in the past is closed? What do they do then? I have been told that about half the existing 18,000 sub-post offices are not viable without cross-subsidy--even with income from benefit payments. Without the benefit payment income, they will need much more cross-subsidy to survive, but the post offices that will provide that subsidy will themselves be under financial pressure.

That is why it is not an exaggeration to say that up to half the existing sub-post offices are threatened with closure by the Government's policies. If a network is halved, is it safeguarded? It would be consistent with the Government's use of language for them to say that they had safeguarded the network but reduced it by half.

We wondered whether a future official line was being tried out on the Select Committee by Mr. Baker yesterday, when he told my hon. Friend the Member for Banbury (Mr. Baldry) that Germany had a much larger population and half as many post offices. One can imagine Ministers trotting out that line when half the network has been closed down.

On page 63 of the White Paper there is a reference to the Government standing by, ready to play their part in easing the transition, and supporting existing post offices "of special value". Which post offices are of special value? Are not all post offices of special value? I believe that one Minister was forced to concede that.

The Government have erected a false prospectus in the White Paper. The Post Office Counters network carries out over 800 million transactions a year. To find a replacement for all of them will take more than the Secretary of State going along to the post office and making a withdrawal from his savings. The policy is disastrous, and I strongly commend the motion to the House.

6.21 pm

Mr. Lindsay Hoyle (Chorley): There is a lot of emotion about today. People's jobs are at stake and we are discussing the future of urban, rural and town post offices. It is too easy to forget that for 18 years post offices withered on the vine and closed without a word from Conservative Members. They have a memory of convenience, which is not acceptable. If we are serious about the future of post offices, we should say that we welcome the White Paper and the freedom that it offers, and we should look for new ideas.

We should introduce a people's bank. The main facility that is missing from rural areas is the bank. Everyone seems to agree that the local post office is the focal point, and we have a golden opportunity to introduce the bank back to the post office and give banking facilities to those who have been denied them. We can extend the facilities on offer well beyond tax discs.

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With the new technology links that will come to rural post offices we can provide many new facilities. Instead of bickering and scoring cheap political points, why do we not sit down and concentrate on saving our post offices and protecting the work that they provide for self-employed people by ensuring that they can take advantage of the new opportunities?

Let us support the Post Office and give it the freedom that it needs to ensure that it has a long-term future and does not continue to wither on the vine, as it did under the Conservatives.

6.24 pm

Mr. Tony Baldry (Banbury): We are considering two things this afternoon. The first is the Government's proposals for the future of the Post Office. I, like many other hon. Members who have spoken, am a member of the Select Committee on Trade and Industry and we seem to have had innumerable sessions on the subject in the past two years while the Government have changed their mind about the future of the Post Office.

The decision to grant plc status is welcome, but the Post Office will still be subject to Treasury controls. As the Financial Times said last week, it is


On the Government's proposals for the future of the Post Office, The Economist observed:


    "The results are an uneasy and probably unworkable political fudge. The Government have defended the decision not to press ahead with even a partial share sale on the grounds that the necessary legislation could not be introduced for years. The White Paper's backing of plc status reveals just how thin this excuse is. The reality is that the unions have blocked privatisation and the Government, even with its huge majority, is unwilling to risk taking them on."

We will end up with a Post Office that will be hobbled in terms of international competition.

It became clear yesterday, in hearings before the Select Committee, that when Ministers were drafting the White Paper they did not take into account the decisions that would be taken on the Horizon project. Amazingly, the business plan that the Post Office has drawn up for the next five years has taken no account of Ministers' decision on that project.

The history of the Government's relationship with the Horizon project is a sorry tale. In April last year, the DTI told the Select Committee that


No scintilla of a suggestion appears that there was any problem with the Horizon programme at that time.

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In November, the then Secretary of State for Trade and Industry--the right hon. Member for Hartlepool (Mr. Mandelson)--appeared before the Select Committee. He said:


That was only a few months ago, and again, there was no scintilla of a suggestion of any problems.

Suddenly, out of the blue at the end of May, there was a complete change of plan. In effect, what has happened is that Ministers have, for whatever reason, changed their mind in the middle of a major contract. One suspects that they were rolled over by the Treasury. ICL, the contractor, must have been left with a substantial loss. I imagine that the only reason why it has not issued litigation is that its parent company, Fujitsu, hopes to float some time next year and would like to retain the Government as a major client.

I agree with the hon. Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee, that the matter should be referred to the National Audit Office. I hope that the Select Committee will find a way unanimously to recommend that approach and I hope also the Public Accounts Committee will examine the issue. It is a scandal and we need to get to the bottom of it. There is no way that Ministers can pretend that it was the previous Government's problem, when just a few months ago--on the record--the Secretary of State made it clear to the Committee that he supported the project.

Scrapping the ability of post offices to pay benefit is a threat to the network of sub-post offices, to rural post offices and to post offices on the edges of towns, on housing estates and elsewhere. Yesterday, the Select Committee heard a clear acknowledgement that 40 per cent. of the revenue of Post Office Counters Ltd. comes from benefit payments.

How will that lost revenue be made up? We heard about the automated platform, and were told that the revenue would be made up by allowing rural post offices to have cash cards. Another suggestion--which I hope hon. Members will investigate when they look at the record of our proceedings--came from a senior official from the Department of Trade and Industry. He said that when people moved house in future they would be able to tell every Government Department where they had gone by filling in one form. If that was the best that he could do, it was rather bizarre.

When asked how many post offices the Government thought would close as a result of the proposals, DTI officials said that Germany had only half as many post offices as this country, even though it is twice the size. The only reasonable inference to be drawn from that is that, because German post offices do not pay out benefits, the proposed change would cause the closure of something like half of our post offices in the areas to which I have already referred.

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The proposals will also cause many village shops to close. In the areas that I have mentioned, post offices and shops are mutually dependent, but, in future, people who cash benefit cheques in the post office will spend the money in the part of office that is a shop. The proposal amounts to yet another attack by the Government on the fabric of rural Britain and on the livelihoods of people there.

Three Secretaries of State lined up yesterday before the Select Committee to explain that they were going to do away with previous proposals to protect the secure network of post offices, but they did not have the smallest suggestion as to how post offices will make up the 40 per cent. of revenue that they will lose. I asked them why the marketplace had not already caused post offices to use all the bright technological ideas that they described. They had no answer.

The truth is simple: the Treasury has put pressure on the DTI and thinks that a massive saving can be made. The people who will pay for it are those in rural England and on housing estates, because the numbers of post offices available to them will be decimated. Moreover, many people will be forced to use bank accounts against their wishes. At no time has any Minister attempted to explain who will deal with the bank charges or with mothers who will have to open a separate bank account if they want to keep their child benefit payments to themselves. The Government have not even begun to anticipate the number of letters that will come from constituents receiving benefit when they understand the full implications of the measure, and that they will be forced to open a bank account if they are to receive benefits in the future.

This is a shabby piece of work by the Treasury, and it does the Government no credit. The people of rural and urban Britain alike will pay for it and, sadly, the most vulnerable in our communities will pay the most.


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