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9.42 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): All the self-preening pontification of Opposition Members cannot disguise their total lack of credibility on this issue. If I was being kind about their stewardship of the Post Office--[[Interruption.] There are members of the previous regime sitting on the Conservative Benches. We do not want to upset them unduly. If I was being kind, I would call their stewardship maladroit. If I was being unkind, I would say that Postman Pat's black and white cat would have provided better stewardship of the Post Office over the term of the previous Government.

Let me take hon. Members opposite through this issue--it will not take long. This is a "Hitchhiker's Guide" to the previous Government's policy on the

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Post Office. First, in July 1992 they announced that they would split away Parcelforce and sell it off. Then they announced, two weeks later, that they were going to review the rest of the business. Then they announced that they could not split Parcelforce away from Royal Mail, because that would be detrimental, so they would bring it back again. Then they announced that they would split Post Office Counters away from the Post Office business and keep Royal Mail and Parcelforce together as a privatised part of the Post Office--so there would be that small public sector minnow called "Counters" split away from all the synergies, all the cross-fertilisation in terms of work and finance, that it received from the rest of the business.

The Government spent £1,613,002.28--I am grateful to Hansard for telling me this--of taxpayers' money on consultancy fees to go out to consultation on a Green Paper that said they would privatise Royal Mail and Parcelforce and keep Post Office Counters in the public sector. I am told that receiving 200 replies to a Green Paper is doing well. They had 15,400 responses, only 60 of which were in favour of their proposals.

I have not ended the "Hitchhiker's Guide" yet. Then the Conservative Government said that they would reduce the external financing limits to half the Post Office's forecast post-tax profits in the autumn, something that we are doing in the Bill: 50 per cent. this year, reduced to 40 per cent. next year. They said they would make progress on that in the autumn. That autumn they hiked the EFL to 300 per cent. of that year's Post Office profits. The reason why a first-class stamp costs 26p is that the Post Office was forced to respond by increasing the tariff four years ago.

After all that, the Conservatives ended their term of office with a miserable little paragraph in their 1997 manifesto saying that, if elected, they would sell off Parcelforce and review the status of the rest of the business--right back to where they were in July 1992.

The pity of all that is that the solution was there all along. The solution was staring them in the face. The hon. Member for Tiverton and Honiton (Mrs. Browning) said that the Conservatives were enthusiastic about privatising the Post Office; well, we are enthusiastic about the Conservatives standing at the next election on that basis.

The right hon. Member for Hitchin and Harpenden (Mr. Lilley) said that the Post Office network was already in the private sector. I have heard that myth before, and it is ludicrous. The Post Office network--Post Office Counters Ltd.--is driven and financed from the centre, from a publicly owned Post Office network. The private business is a public-private partnership, but private businessmen come into the business on the basis of a network 10,000 of whose constituents make a loss, and have to be cross-subsidised to the tune of £30 million a year from the rest of the network. They can do nothing about that because the system is socially necessary, although not always commercially viable.

The right hon. Member for Hitchin and Harpenden said--I thought this a bit rich--that the Post Office had missed the glittering prizes that would have belonged to it if it had been in the vanguard and not in the rear. After all the Conservatives' maladroit handling of the Post Office, the answer was staring them in the face all along. It was the Select Committee on Trade and Industry in 1995, under a Conservative majority, that rejected the

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argument that the only way to commercial freedom was through privatisation; there was a public sector solution. The Committee said:

    "We recommend that the Government introduce legislation to convert the Post Office . . . into a 100 per cent. government-owned plc . . . in the knowledge that the future sale of any of the Government's shares in Post Office plc would be subject to parliamentary approval."

An earlier speaker suggested that there was no enthusiasm among Labour Members, or among the Post Office work force, for anything other than the status quo. That is not true. We always argued that the Post Office needed commercial and financial freedom, but we rejected the dogmatic approach of the then Government and argued that our approach would provide a solution.

Arrangements were introduced in 1995. The Post Office has been under permanent review for the past eight years, and has suffered as a consequence. All our rivals in Europe have gained ground; we could have been much further forward. Conservative Members are talking out of the back of their collective lorries. Their record demonstrates that we need no lectures from them.

The other great myth that has featured in the debate--the other issue that I believe needs to be addressed--is the argument that we are debating the future of the Post Office network in relation to problems experienced in the transfer to ACT, and the fears raised in that regard. Let us be clear--the Bill has been welcomed by everyone, including the National Federation of Sub-Postmasters, the Mail Users Association, POUNC and others. They see it as a way of underpinning the viability of the Post Office Counters network.

The problem for the last Government, and the problem that the Opposition have now, is that they never found a solution to privatisation of the Post Office that did not involve breaking it up--and breaking it up, and making a split with counters, provides no viable solution, even under the measures that they have proposed.

The Bill is good news for the whole Post Office, including the counters network. The introduction of access criteria is a positive advantage for the network. However, we need to deal again with the issues that were raised in the debate about whether or not the network is condemned to decline. I thought that the hon. Member for West Dorset (Mr. Letwin)--perhaps I can ruin his career as well--made a good speech, which should have been a speech from the Front Bench. If the argument is just about timing, all the scare stories that are going around will be removed.

On the position in relation to the Post Office Counters network, Conservative Members cannot continue to say that they have found a solution through the benefit payments card. By the time we came to office, that solution was already curling at the edges. They had to reconfigure it themselves before we even came to office. We found a private finance initiative where the financier was the same as the developer. The project had overrun by three years and was vastly overspent. As the Select Committee on Trade and Industry has rightly said, it was blighted from the start.

We had a choice. One was to continue to watch decline turn to crisis and crisis turn to collapse, leaving it as someone's else problem down the road. The network has shrunk by 20 per cent. in 20 years. Under the previous Government between 1990 and 1997, 10 per cent. of the rural network closed. It was gradually seeping away.

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There is no question that any responsible Government would fail to recognise, first, that people were going to move to ACT as a safe, secure system of paying people's benefits; and secondly, that it needed to be planned on the back of an automated Post Office network, which is what the Horizon platform is all about.

I understand the concerns that have been expressed by sub-postmasters, sub-postmistresses and their communities. We understand that fully. We ask: where is the winning post? If it is a Government commitment to a national Post Office network, we have given it. If it is a Government commitment to modernise that network, we have given it. If it is a Government commitment on choice--the general secretary of the National Federation of Sub-Postmasters, a very astute trade union leader, said:

the choice is there. We will ensure that anyone who wishes to draw their payments in cash across the post office counter will continue to be able to do so. We will not force people to open bank accounts. We will not dilute their benefits through bank charges and so on.

We have given those assurances, but the argument sometimes creeps in, particularly from those who are whipping up the furore that will undermine the Post Office network, in favour of the status quo--that we should force people to queue up for benefits and should not give them the option of having them paid into their bank account

Therefore, we have given all the assurances in terms of the Post Office network. We admit that, at this stage, not every answer is in place. That is why the migration will not be completed until 2005. That is why we have said that we will approach the issue through a performance and innovation unit study that was commissioned last year, which will look at the whole network and its contribution to the Government's aims and objectives.

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