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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before I call the next hon. Member, I should tell the House that I have heard an awful lot of sedentary comment, some from people who are still hoping to catch my eye. They may fail.

8.36 pm

Mr. David Borrow (South Ribble): I am pleased to speak in support of the Bill, particularly after the hon. Member for Ribble Valley (Mr. Evans) who, four years ago--when I was leader of the council in Preston--represented part of my council ward. How things change in four years!

I welcome the fact that the Bill will give greater commercial freedom to the Post Office. However, we all have to recognise that the Post Office is not a single entity, and that its success depends on a public-private partnership to provide not only a UK-wide delivery service, but a UK-wide network of post offices from which postal services can be purchased. I should like to concentrate my remarks on that postal network.

Since 1970, 6,000 United Kingdom post offices have closed. We now have slightly fewer than 18,000 post offices. One of the primary arguments in today's debate has been about the importance to sub-post offices of income from benefits transactions. Probably 8,000 sub-post offices rely on benefits transactions for more than 40 per cent. of their income. Some 34 per cent. of benefits payments are made through the automated credit transfer system, but, among new recipients of pensions and child benefit, the percentage is 50 per cent. and rising. Moreover, as my hon. Friend the Member for Ochil (Mr. O'Neill) said, the reducing number of unemployed people is causing a reduction in the number of benefits claimants.

If we project the percentages into the years ahead, it becomes clear that we cannot sustain a Post Office network comprising 18,000 post offices that rely for their survival largely on benefits transactions. The Government will have to take the crucial decision on the network size that they will be able to maintain and on the mechanism by which the network can be maintained. The status quo is not an option. We cannot continue to allow the steady reduction in the number of post offices, the closure of which is determined solely by the mechanisms of market forces and of a steady increase in the number of benefits recipients receiving payment by ACT, with consequently reduced payments particularly to sub-post offices.

We also have to get away from the myth that only sub-post offices are at risk from the changes. One of the most interesting statistics provided by the Library reveals that, of the constituencies with a large number of post offices at risk, most are located in the most deprived urban areas. I think that all the sub-post offices in the Liverpool, Walton constituency depend on benefit payments for more than 40 per cent. of their income.

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We need to ask what sort of post office network we want and work out what we have to do to achieve that. Last Friday, I held a constituency surgery in the small village of Rufford. After spending three hours dealing with individual cases, I walked out of the surgery room to find a crowd of 20 people in the village hall waiting to speak to me about the future of the post office. Three quarters of an hour later, a number of clear messages had come out of the meeting.

First, those who relied on the post office wanted to continue to be able to receive their benefits in cash there. The method--a receipt book or some other means--was not important to them. What mattered was that they should be able to get cash at the post office. Secondly, if they received cash through a bank machine or similar system, they did not want to have to pay bank charges. Thirdly, a significant number of recipients of benefits do not have bank accounts or are unbankable. The Government need to ensure that everybody who receives benefit has an account through which the money can be paid and that it can be received through the post office system. Fourthly, any system that is totally dependent on ACT needs to cater for the many pensions and other benefits that are not claimed in person, but are paid through the post office by somebody else on behalf of the recipient.

The final concern is that Rufford is a small village with no bank and the nearest alternative post office is several miles away. If a computer-driven system crashes or there is no money in the cash machine, what happens to the pensioners or people on benefit? We all know the problems caused by a giro not arriving. In some ways, the ACT system can be better for claimants, because it is safer than relying on a giro, which can be mislaid or misdelivered or, for many people in houses in multiple occupation, can go astray completely. There are distinct advantages to the ACT system.

How do we build a system that delivers what recipients want? That is where sub-postmasters and sub- postmistresses come in. We have to ensure that their businesses are viable. The Government must specify the size of network that is required in their advice to the regulator. They must ensure that the Post Office is proactive in delivering that network. Alternative sources of income must also be available to replace the money from the benefit system. We should not subsidise private businesses through the benefit system when there is a cheaper and more fraud-resistant system. If we are to subsidise the sub-post office network, it must be done through a direct subsidy so that our purpose is clear.

There are other sources of income for sub-post offices. We need to consider the idea of a Government gateway. Lancashire county council has worked with BT to develop a number of computer terminals in rural areas that give access to information. I see a lot of scope for a gateway in sub-post offices that gives access to information such as public transport timetables and details of neighbourhood watch schemes, and allows people to purchase tickets, pay fines and perform other interactive functions. Some 28 million people a week use the post office network, which potentially means business worth £8 billion.

We must ensure that the benefit system is run efficiently and is as free from fraud as possible. In the next few months, by the time that the Bill goes to the other place, the Government need to be clear about what

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they have to do to ensure that the sub-post office network continues to deliver the services that our constituents need and deserve.

8.46 pm

Mr. Stephen O'Brien (Eddisbury): From the outset, one of the Government's prime stated intentions in bringing forward the Bill is repeatedly proclaimed to be to give the Post Office more commercial freedom and the ability to compete. It is the genuineness of that intent that I wish to examine.

In all walks of life, but above all in business, true competition can exist only if it is on equal terms. If that is so, consumers will get the service that they want at a value that they are prepared to pay. It is the leaders of those businesses who take the strategic, financial, human resource and day-to-day operational executive and management decisions that make a business an effective and successful competitor. In making those decisions, the board of a company--especially a public limited company, where the directors' functions are executive and their accountability is measured by performance judged by a broadly spread ownership--has daily to evaluate risk and decide courses of action in the best interests of the business as a whole.

If the Post Office is to compete on equal terms with its international competitors, which it must, its board of directors need the full scope and authority of real commercial freedom to evaluate the risks and opportunities. That is all basic common sense to anyone with any experience of having responsibility for an independent international business, especially one with plc status. It is therefore a mystery to me why the Government have stopped woefully short of granting the Post Office that full commercial freedom, despite the stealthy cloak of plc status.

I am bound to ask, in trying to understand the Government's intent, while retaining 100 per cent. ownership instead of selling at least 51 per cent. of the shares: what are the Government afraid of? Are they concerned that we do not, after all, have the most efficient postal service in the world, ready to take on all comers? Or are the Government, in their habitual style-over- substance way, sending a message to the Post Office's customers, competitors and the financial markets that they do not have the confidence in the senior management on the back of whose commercial judgment the Government are proposing to lend money to the new plc, potentially at below average commercial rates?

No, it is none of those. I fear that the only possible conclusion is that the Government have been got at by the unions. And is it any surprise that the Government have no understanding of how commercial risk is judged and the conditions for success achieved in the boardrooms of UK plc? As I scan the Government Benches, I wonder how many Labour Members have ever served in a boardroom, let alone in the boardroom of a fully independent UK public company. If they had, they would know that one cannot evaluate risk and take commercial decisions in the best interests of the company when at the same time one has to look over one's shoulder at the crushing hand of Government.

The Bill, an unholy compromise, a halfway house and half-hearted measure, will be like the difference between what we should have--a skilled, competitive risk-judging

15 Feb 2000 : Column 855

high diver prepared to take the plunge--and what we are presented with in this Bill--the instant thrill-seeking, headline-grabbing bungee jumper, secure in the knowledge that he can always bounce back into the arms of Government. So much for the Government's genuine intent to release the Post Office from their clutches into the real, competitive, commercial, international world of the future.

The Government's strategy on postal reform can be summarised in two words--compromise and uncertainty. It is a compromise between old Labour unionism and new Labour spin. It contains nothing to placate the fear and uncertainty over the future of the Post Office network, but plenty to serve the interests of the unions.

As I study the Bill, I simply cannot find the logic--the glue that binds the whole policy together. I cannot see a clear-cut business strategy that will take our Post Office forward so that it can adapt, compete and continue to be great in the future. Instead, we have the Secretary of State's spin. He has promised modernisation but, in fact, his trumpeted plan of modernisation is based on a failed idea from the previous century--that of the state owning all the shares in a key industry. I dare say that many Labour Members must be thinking, "If only this were the sort of modernisation that the Secretary of State would talk of in the context of the utilities."

The Government have, I admit, recognised the need for the Post Office to be competitive. Last July, during the statement on the White Paper, the Secretary of State said that the proposals for Post Office reform were

If the Secretary of State recognises that millions of consumers will benefit from greater competition, why not maximise that competition instead of limiting it, thereby limiting the benefit to the consumer? For if the plc structure proposed for the Post Office stands for anything under this Government it is, I suggest, "politically limited competitiveness".

Certainly, the limitations on competitiveness are clear to see. In addition to the fundamental flaw that I have already mentioned regarding the socialist approach to share ownership, borrowing will be underwritten by the taxpayer, the long-standing privileges enjoyed by the Post Office will remain, there is no evidence that cross-subsidies will be avoided through greater transparency, and the £1 limit on the reserved area remains.

So we are forced back to consideration of the Bill's genuine intent. The shape of the Bill has been driven by a compromise with the unions. The Government have guaranteed that actual privatisation would require new primary legislation. When the Secretary of State gave his assurance of primary legislation for any wholesale public share offering, the Communication Workers Union stated:

That is a statement of union backing for a union-driven fudge, if ever there was one. It is also clear evidence that, under new Labour, appeasing the unions comes before

15 Feb 2000 : Column 856

pleasing the consumer. It is the consumers who would benefit most from the Post Office enjoying full competitiveness and commercial freedom, as a truly independent public limited company, untied from the nanny state. They are not getting that under this Government.

As I said, the Bill is about compromise and uncertainty. It does nothing to address the uncertainty hanging over the future of the Post Office network. Post offices, small, medium and large--such as the ones in Tilston, Tarporley, Winsford, Audlem and Sandiway in my constituency, and especially the small, rural and suburban community sub-post offices--fear for their future. It is not just in my constituency--it is the same all across the country. There is great uncertainty. The only certainty is that the Government's decision to scrap the Horizon swipe card plan poses the biggest threat.

The National Federation of Sub-postmasters has estimated that 40,000 sub-post office staff will lose their jobs. Against all the Government's words stating their commitment to social inclusion, the overall result of this measure will be a massive increase in social exclusion. And the Secretary of State's answer to the uncertainty over the future of the networks is posters. There is little chance that those posters will tell the truth. If they did, they would say, "Your post office is not safe in Labour's hands, and we have no intention of rethinking our scrapping of the policy that could have preserved the network."

Overall, the Government's strategy for the Post Office is a combination of political fudge and economic uncertainty. The Secretary of State has consistently stated his support for greater competition in the wider economy to improve services and drive the best bargain for the consumer. Yet he is introducing a Bill in which competition is kept to a minimum to keep the unions happy. The Bill does not address any of the major questions hanging over the future of the Post Office.

We shall have to work hard in Committee on the many new clauses and amendments that the Secretary of State has told us about. He knows what they are, but we are not allowed to know because that would go against his spin. My recent experience on the Standing Committee that considered the Freedom of Information Bill tells me that we shall argue a lot with the Government, who will put up a lot of straight bats. We may even receive some courteous rebuffs for our improving amendments. Ministers will read out hastily scribbled rebuttals handed to them by officials. They are never minded to let the benefits of a hard-won democratic procedure improve a Bill for fear that that would be interpreted as meaning that their original thinking was wrong, or even not 100 per cent. perfect.

The Government should listen. There is little political benefit for the Opposition in improving Government Bills in Committee, far from the public gaze. Yet, in good faith, again and again, we shall try to do so, because we are determined to pass good law, even if, as Opposition Members, we disagree with the underlying policy. Many battles await us in Committee.

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