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Mr. Edward Leigh (Gainsborough): Yesterday was my birthday, and as a present I was given that very interesting book by Simon Jenkins on England's 1,000 best churches. It contained the usual comment about Lincolnshire, which one reads so often, to the effect that the county is full of gems but is too little visited. I hope that after this debate Lincolnshire will no longer be a forgotten county, at least as far as rural post offices are concerned.
The Minister and the House need not rely on my inadequate efforts to explain what is going on in Lincolnshire post offices. Important as they are, they are perhaps not as fine architecturally as Lincolnshire's churches, but they are as vital a resource in the local community. I am very fortunate--indeed, honoured--that the key document in this debate is a Cabinet Office report entitled, "Counter Revolution" and subtitled, "Modernising the Post Office Network". One of the very few case studies mentioned in the report is a trip that the Cabinet Office researchers made from the villages of Saxilby to Corringham in my constituency. That is a very pleasant trip, which I recommend to the Minister. I would be delighted to accompany him, introduce him to the local sub-postmasters and give him an opportunity to find out for himself what is going on.
In a few well chosen words, the performance and innovation unit report describes the 10 villages and settlements along the seven-mile route, which have no less than five post offices. The report says:
Only the post offices at Saxilby and Sturton-by-Stow are busy--the others each do relatively few transactions.
Villages without a post office tend to be hamlets--four of the five villages without a post office have less than 100 residents.
Willingham is the only village with a significant population without a post office--almost 500 people. But here the post office closed when it proved impossible to find a replacement sub-postmaster.
The five post offices and the mobile bank which visits Saxilby three times a week are the only places to take out cash along this route.
This small stretch of road represents only a tiny part of rural Britain, and the five post offices only a tiny part of the rural post office network. But this part of Lincolnshire is typical of most parts of rural Britain. What is most striking is the way that post offices remain in villages which have very few other services, giving post offices a special place in the hearts of villagers.
I was slightly alarmed, however, when we talked to the sub-postmaster at Sturton this morning, to find that he had no knowledge that the Cabinet Office had visited his post office. He knew of it only when the Lincolnshire Echo alerted him to the fact. The mind boggles: mighty panjandrums from central Government have descended on a small part of Lincolnshire, and a photograph of the interior of Sturton post office appears in the report, but the sub-postmaster was not even aware that they had visited. No one talked to him, but I make no complaint about that as there was, no doubt, some reason for it. Perhaps the Minister will tell us the reason later if there is time for that information to reach him.
I have spoken to sub-postmasters along the route and others in order to get a feel of what is happening on the ground. We have had many debates about the post office network and rural post offices. It is useful, as the report makes clear, however, to try to find out more detail. Yesterday, I talked at length with Mr. Wright, the Lincolnshire secretary of the National Federation of Sub-postmasters, who made many interesting remarks. Knowing that the debate would occur, he had spoken to his members. He was pleased to have received the PIU report, but was desperate for more information on exactly how the £270 million subsidy would be spent. The money could be spread very thin if it goes evenly across the whole country.
Mr. Wright was delighted to hear of the proposal to set up a universal bank, but too few facts and figures are percolating down to sub-postmasters about how that will work. He made the point that someone receiving £60 or £70 a week on income support or other benefits can cope only with an extremely user-friendly bank. How will that make a profit for the Post Office? Some 3.5 million people have no bank accounts. I welcome the initiative to try to bring them within the banking system, but the concerns of local sub-postmasters are understandable.
Rural post offices are barely profitable, and village shops even less so. As Mr. Wright made clear, there is the question of footfall through the shops. Take benefits away from the post office and the post office will fail. Take away the post office and the village shop will fail.
In all our many debates, we have not often heard mention of the mechanics of how postmasters are paid. Typically, they might receive 13p for each pension transaction. There may be only 200 of those in a week. The amount of money coming in would not, therefore, be much. The Government constantly tell us that it costs 49p to deliver a benefit through the post office or a giro, and only 1p through a bank. One can immediately grasp what concerns sub-postmasters in Lincolnshire--what will happen once the 49p is converted to 1p? It will mean that the 200 pensions transactions worth 1p each will not keep a rural sub-post office in business.
The locals like to come here for a chat and to pay their bills, but nowadays there are a lot of new people in the village and a lot of new houses. Those people work in the city and leave home before I open and return after I've closed.
The Government's proposals for sub-post offices leave the job very far from done. I am not trying to make party political capital, but I have some serious questions about a matter in which I have long taken an interest. I was a junior Minister in the Department of Trade and Industry under my right hon. Friend the Member for Henley (Mr. Heseltine) and we wrestled with the same problem. Contrary to folklore, our plans were not heartless and they did not undermine the social role of post offices.
We made no secret about the fact that we preferred proper privatisation of the mail delivery service, but we made a conscious decision to continue the subsidy to which paying benefit through sub-post offices amounts. We recognised that the rural network was sustained by cross-subsidy from the urban network.
The Minister for Competitiveness has said, very unfairly, that my right hon. Friend the Member for Henley wanted to privatise the Post Office lock, stock and barrel. We must slay that dragon, and establish that there was no such intention. We always realised, as do the Government, that the social role of what is a unique network is vital.
The Post Office provides 170 different postal, Government and commercial services. Staff in rural offices provide intimate contact for customers, and they offer help and advice with regard to filling in forms. The network offers the potential for first-name relationships. Most people will have used a post office, but their most frequent customers are older and poorer people. That personal, intimate, first-name contact, and the help and advice on offer can be very important, especially to older people, and beyond monetary value. Who provides this
In Lincolnshire, there are more than 300 post offices--more than 250 in rural areas. Sixty have closed during the past 10 years and the pace is accelerating--10 closed last year. A typical comment was made by the sub-postmistress at Welbourn. She said:
Rural post offices, by the nature of the communities they service, tread a fine line between profitability and bankruptcy. According to the Post Office, 45 per cent. of all post offices in Great Britain or 7,890 from a total of about 17,635 depend on benefits agencies for at least 40 per cent. of their work. As a result, an estimated 8,000 rural post offices could become non-viable from 2003, when automated credit transfer comes on stream.
If the new income streams do not come on line as quickly as the Government predict, not only is the rural sub-postmaster in danger of losing a large chunk of his income, which he cannot easily absorb, there is also the danger that the resale value of the business will be damaged. Consequently, sub-postmasters in their 50s--as many of them are--who are planning their retirement may find that their pension is underfunded.
If the Government are determined to speed up the move to ACT ahead of the natural evolutionary development of the Post Office, they must accept responsibility for the reduction not only in the income of sub-postmasters but of their pension expectations.
The risks to the community are equally great. The post office may be the only amenity left in a village and may well be coupled with a retail outlet. The loss of the post office could lead to the loss of that outlet, so rural communities could face the removal of all village amenities.
The Government's constant refrain is that the Post Office must modernise. We all accept that. It is clear that the post office network is already under considerable pressure to modernise. Currently, about 200 post offices are closing--1 per cent. of the network--every year, and have been doing so for the past 20 years.
Like many people who are directly and indirectly involved with the Post Office, I welcome--to a degree--the recommendations of the PIU report. However, the report and the Government's response are significant not for the breadth of ideas proposed--although some of them are fine--but for the significant questions that are unanswered. It is clear that the Government are attempting to speed up the course of evolution in the postal services by withdrawing benefit payments. They have put their faith in a considerable number of maybes, possibles, and perhapses regarding future income streams. That is what concerns sub-postmasters.
The Government think that the use of post offices as village banks will provide suitable replacement income as well as introducing increased IT services--turning post offices into one-stop-shop advice centres. However, they have put no figures to the levels of income that that might generate nor have they put a figure to the level of financial support in the form of subsidies from the Government to be handed out to those post offices that are not in the short term viable. One of the most common words bandied about by the Government is "billion", but it is conspicuously absent in discussions on this problem. The Government's report mentioned the figure of £50 million and that is way short of the £400 million needed to fill the gap.
I have a few questions for the Minister. The Village Retail Service Association is a charitable trust dedicated to helping rural communities to keep their village shop and post office. Like many vested interests, it is concerned about this issue and it has asked some particularly good questions. It asks whether the time available to set up the alternative income streams is too short because the call on IT-based transactions by rural residents during the next six years may never be sufficient to produce significant income. How are the training standards, IT proficiency, financial expertise and marketing requirements to be installed? Where will the subsidies for the sub-post offices fall--on council tax payers? Are the Government really saving money on the one hand to give it away with another? The impact of Government policy is seriously affecting market conditions for rural retailers at present, and no one perceives any change in that as 2003 approaches. It is essential that wider banking provisions are introduced into the Post Office system as soon as possible and it is true that the universal bank will, to some extent, fill a void. However, where will the costs fall for the banking provision?
The sub-postmasters and sub-postmistresses of Lincolnshire have expressed to me and to others similar concerns. The Minister must remember that we are dealing with genuinely frightened people. In a message to the No. 10 website, the sub-postmistress for Welbourn says:
I ask the Government to give postmasters what they are crying out for: not subsidies, but guarantees of business so that they can make their own business viable in the long term and can continue to provide the unique community service that should be the prime concern in any alteration to the arrangements for sub-post offices. We are dealing with frightened people who provide an essential service. The Government need to answer their concerns.