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Mr. Byers: It is good to have that on the record. I hope that my hon. Friend will circulate that communication and not keep it pinned up on his notice board.
Mr. Tim Collins (Westmorland and Lonsdale): Will the Secretary of State give way?
Mr. Byers: I will give way once more, but then I want to draw my remarks to a close. I also want to talk about the important matter of the financial assistance that we may be able to offer to the post office network.
Mr. Collins: I want to return to the vital issue of the income stream. What does the Secretary of State say to my constituent Mrs. Hilary Pavitt, the sub-postmistress of Kent's Bank post office near Grange-over-Sands?
She says that she will lose more than a third of her income under the Government's proposals. Is he guaranteeing to replace all that lost income?
Mr. Byers: I have two points to make. First, the hon. Gentleman's constituent will need to convince those who presently receive their benefits in cash to continue to do so. I am sure that she has a good relationship with them, so she need only tell them that they have a choice. People who want to continue with the status quo and have their benefits paid in cash are entitled to do so. They will continue to have that choice until 2003, between 2003 and 2005, and beyond 2005. That is what I would advise her to do to ensure that her customers stay loyal and keep receiving their payments in cash.
Secondly, the hon. Gentleman's constituent needs to know that her post office will be automated as a result of a £500 million Government investment. She will be able to offer new services, which will result in new people coming in to her post office. That will give her new vision for the future. I hope that she will recognise that this way will provide her with opportunities that she does not have at the moment.
Mr. Nicholas Winterton: Will the right hon. Gentleman give way?
Mr. Bercow: Will the right hon. Gentleman give way?
Mr. Byers: I will try to if I have time, but I have already spoken for far longer than the hon. Member for Tiverton and Honiton, and I want to provide Back Benchers with the opportunity to contribute.
I want to take right hon. and hon. Members through the subsidy. If the hon. Member for Buckingham (Mr. Bercow) has any further questions, he may put them after I have gone through how it will work.
I have already, I hope, made it clear that benefit recipients who want to continue to have benefit paid in cash in full at the post office will still have that choice. Next week, we will table a new clause to the Postal Services Bill when it is debated on Report. It will enable me to set up a financial scheme to ensure that essential services can still be delivered through a nationwide network of local post offices. Our key target is a viable future for the network. We want to ensure that the Bill covers all possibilities. It may well be that in future, because of changes that are being introduced, financial assistance should be offered to the network.
The power is a safeguard, intended to keep open the option of financial assistance. The Government believe that the Post Office should modernise the network and be able to provide new and updated services and products, developing alternative revenue streams to replace income that may be lost because of the transition to automated credit transfer beyond 2003.
We recognise the real concerns of many people throughout the country about continued local access to post services, particularly in rural areas and also in some of our inner-city areas. The new clause will provide an additional safeguard in the Bill to provide financial
assistance if it proves necessary to do so. This underlines the Government's commitment to a nationwide network of post offices.
Mr. Winterton: I am sure that the Minister for Competitiveness will, if asked, tell the Secretary of State that some Conservative Members were not in favour of the privatisation of Post Office Counters. I happen to fall into that category. The then Government did not proceed with privatisation because of the number of Conservative Members who opposed it.
The Secretary of State is announcing some very encouraging proposals. Sub-post offices in rural villages are as vital as the village school and the village pub. Will the right hon. Gentleman assure me that his proposals will ensure that they survive so that our rural areas have the facilities that they need?
Mr. Byers: The important thing is that, through the amendment that we will introduce on Report, we are providing a mechanism that will allow financial assistance to be given. It does not exist at the moment, but we will put it in place. There will be opportunities to provide financial support if it is appropriate to do so. I am sure that it will make a big difference to many small rural post offices as well as some in the inner cities. It is a safeguard, and we intend to introduce it next week.
Mr. Bercow: Will the right hon. Gentleman give way?
Mr. Alasdair Morgan (Galloway and Upper Nithsdale): Will the right hon. Gentleman give way?
Mr. Byers: I have already given way generously, and I want to draw my remarks to a conclusion.
The hon. Member for Tiverton and Honiton said that I can look forward to 18,000 birthday cards arriving tomorrow. I understand that this is also good news for post office workers in Victoria SW1, who are likely to receive a bonus--negotiated by the Communication Workers Union a few years ago--as a result of the high volume of cards that I am likely to receive. They will have cause for celebration as well.
The network of post offices has never been static, but the Government must acknowledge the important community and social role played by individual post offices to which we should provide new opportunities. We can use the great strengths in the post office network to reach out to people and to give them access to information and services.
I want to see how we can use the local post office as the first source of information on central and local government services. We need a new vision for the Post Office of the 21st century. I want the local post office to interact directly and electronically with business, and to be a channel of delivery for electronic government. With the new technologies that we are giving to the post office network, all that is possible.
By giving the Post Office greater commercial freedom, investing in new technology and providing safeguards to ensure reasonable access to Post Office Counters services, we are helping the Post Office to adapt to change, expand its services and respond to changing consumer demands. We intend to work with the Post Office. As my right hon. Friend the Prime Minister said this morning to
Colin Baker, the general secretary of the National Federation of Sub-Postmasters, we intend to work in partnership to meet the challenges that lie ahead.
Mr. Peter Lilley (Hitchin and Harpenden): Will the Secretary of State confirm that he is talking about the possibility, for which there is as yet no substance, of replacing a loss of revenue that is certain and definite? Will he confirm that the Horizon project, as now truncated, deals only with the internal management and revenues of sub-post offices, and that it as yet does not have the functionality to deliver the banking and other services of which he has speculatively spoken? Will he confirm that he will not even go out to tender to obtain the necessary software until later this year?
Mr. Byers: The problem that we inherited was that the scheme concocted by the right hon. Member for Hitchin and Harpenden (Mr. Lilley) was three years behind schedule. Our project will deliver automation for every post office by spring 2001. In addition, the changes that I intend to introduce to the Postal Services Bill next week will provide a safeguard and a mechanism. Even if we have to use that mechanism, we shall not have to do so until 2003, when ACT is introduced. We are giving plenty of notice of change, which will continue from 2003 until 2005.
For more than 150 years, the Post Office has been an important part of the social fabric of our country. The Government are committed to ensuring that it continues to play an important role in British society by building a modern, vibrant network fit for the future. We shall deliver that, and I commend the amendment in the name of the Prime Minister.
4.48 pm
Dr. Vincent Cable (Twickenham): I welcome the debate and pay tribute to the National Federation of Sub-Postmasters, which has assembled one of the largest petitions ever presented to Government. It has been extremely successful in promoting its agenda, for which, as a small organisation, it deserves great credit. Colin Baker came up with a phrase this morning that captures, in many ways, what is so important about the network. He described postmasters and postmistresses as the general practitioners of Government, the people who provide communities with government services. The network comprises not just a group of small businesses that have fallen on hard times, but people who play a key role in communities.
We must focus on what is happening in businesses. Much attention has been devoted to the decline in numbers, but that is just the tip of the iceberg. Anyone who talks to people who work in the post office network will confirm that behind those who have sold up stand many more who want to sell but cannot because of the collapse of asset values. Many more people would sell up their businesses if they could.
The Secretary of State made the particularly unhelpful suggestion that much of the crisis was caused by scaremongering by Opposition Members and others. We are talking about rational, hard-headed small business men and women who can make rational calculations about their future earnings and the value of their assets. If they have a crisis of confidence, it is because there is a crisis of confidence. That is what the Government are being
called on to redress. We call on them to give a clear, unambiguous guarantee and undertaking to preserve the network. What the Secretary of State said today about subsidy is helpful, and it is an advance, but the Government still need to do a lot of work to remedy the crisis of confidence that underlies the closure programme and the collapse of asset values.We keep coming back to the issue of the loss of income and what it means--what is the money flow. The answer to a question asked by my right hon. Friend the Member for Yeovil (Mr. Ashdown), the former leader of my party, established that the loss of income by 2005 would be about £640 million. We have used the figure of £400 million, but it would be due to rise to something of that magnitude. That is the income that is being lost to the post office network.
It is useful to break down that figure and analyse what it consists of. There are two main elements to it. One is genuine technological advance. The automated credit transfer process is a technological advance; it replaces a cumbersome paper-driven operation with electronic switching. There is a real gain in productivity there, and no one seriously argues that that process should be stopped. The other element in the £640 million is the payment that would otherwise be made to the post office network for performing a genuine service, which will still have to be performed by someone.
My colleagues and I have been trying to establish through letters and questions to the Department of Social Security the split between the technological improvement and the fee income to the post office for services. It is a clear question, and the DSS does not deny that such a distinction can be made. However, it has told us that it is a commercial secret. That raises a fundamental issue. We are dealing with a transaction between a Government Department and a state agency, albeit a limited, incorporated entity, which the Government choose to regard as a matter of Government confidentiality.
Some colleagues will recall that we voted a few evenings ago on whether information leading to advice, as well as the advice itself, should be kept secret. We have a good practical example here. Information crucial to an understanding of the debate is being unnecessarily withheld. The issue will be pursued with the ombudsman, but we have great difficulty understanding what is going on, because the Government simply refuse to divulge the split between the technological gain and the remainder of the fee income.
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