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Post Office Closures
12.30 pm
Mr. Steve Webb (Northavon): I was among those present in Central hall, Westminster as the National Federation of Sub-Postmasters held its rally to mark the culmination of a nationwide campaign to address the long-term demise of the post office network. It is important to set the context of my remarks, as I do not wish to pretend or imply that the problem is of the Government's making. Clearly, the decline of the network has been happening for decades, under Governments of both the larger parties. I sought this debate because of a sense that time is passing and not enough is being done. I want to provide the Minister with an opportunity to put on record what progress has been made. Various reports have been published and promises made, but the closures continue and--the Minister may correct me--appear to be accelerating.
My starting point for the debate--and my reason for seeking it--was the written answer given to me by the Minister on 2 November. According to that answer, 333 post offices had closed in the first six months of the current financial year. Shortly before arriving at this Chamber, I received a tip-off from a journalist that that was not the right answer, and that the Department had the wrong data from the Post Office. I was told that the figure was only--I say "only" with heavy irony, which does not translate well in Hansard--299 closures. Leaving aside the fact that I was slightly startled to receive such information from a journalist, not from the Department, the fundamental point is that post office closures are happening at an alarming rate. If anything, they are accelerating. I was puzzled by the Secretary of State's response to a written answer tabled by a Conservative Member on 17 November. He said:
- Post office closures remain below past peak levels.--[Official Report, Westminster Hall, 17 November 2000; Vol. 356, c. 810W.]
What action has been taken so far? Since the rally in April, a petition initiated by the Western Daily Press and other newspapers attracted millions of signatures, which I believe that the Prime Minister received personally. Promises were made and expectations were raised. The performance and innovation unit reported in June and various responses were made, yet the closures continue. I cannot put it any better than the Minister put it in his letter to the chief executive of the Post Office on 17 November. He said:
- A pre-requisite for the modernisation of the rural network is that there should be a network to modernise.
My worry is that, at the present rate of closures, there may be no network by the time that such new initiatives have come into place.
The Government have promised and the PIU report proposed that a universal bank was part of the answer to the problem--a universal bank designed to help people with no access to conventional bank accounts to obtain financial services and to benefit from discounts on direct debit, for example, that are not currently available to people without accounts. Such a product would clearly be a welcome innovation. If it brings people into post offices, so much the better. The PIU stated that the Post Office
- needs to take forward rapidly more detailed work.
The Minister and the Government have talked about two kinds of subsidies: subsidies to deprived urban areas and subsidies to keep the rural network going. In the summer, the sum of £270 million--presumably to be spread over a number of years--was announced as part of the comprehensive spending review. That was welcome. The Government also said that they
- were prepared to add substantial amounts to that sum--[Official Report, 2 November 2000; Vol. 355, c. 818.]
That is a rather mysterious phrase. As several months have now gone by, can the Minister tell us when the £270 million will be spent, and on what? When will payments reach sub-postmasters in my constituency and elsewhere? How will the money keep post offices open? How many more will have closed before it comes through? Does he have a clear idea of what "substantial amounts" means and what the additional money might be spent on?
The fundamental question--the spectre at the feast--is the threat to withdraw the present system of benefit payment and replace it with compulsory payment by automated credit transfer into an account. The PIU conducted some research--the results of which are perhaps not earth shattering--into why rural post offices close. Page 39 of its report states that reasons why a replacement sub-postmaster cannot be found include
- uncertain future financial prospects, which mean that no-one is willing to take on the role of sub-postmaster.
That is clearly what is happening. When people see that the sub-postmaster wants to resign or give up, they think, "Do I want to invest my money in a sub-post office when its future finances are so uncertain--especially given that the third of its income that comes from handling benefit payments is in jeopardy?"
The statistics in the report show that only about half of all new retirement pensioners are opting for credit transfer--despite a biased form that leads them to assume that it is the norm and to give their bank details. That means that half of newly retired pensioners--who are presumably the most forward looking and have the greatest familiarity with bank accounts--are still saying that they want their money over the counter at the post office.
The Government's policy goes against the free expression of half of all newly retired pensioners and many more than half the stock of pensioners. These arguments will be familiar to the Minister, but we have never received a satisfactory response to them. If the Government's view is that people are making the choice anyway, they should let them do so of their own free will.
I want to draw the Minister's attention to two cases of sub-post offices under threat in my constituency. One had a happy ending, whereas the other remains in the balance. The happy example was that of Marshfield post office, where the sub-postmaster was about to retire and wanted his property--from which the post office was run--to be returned to him. The post office's future was thus placed in doubt. The local parish council pursued the matter vigorously, a neighbouring sub-postmaster from the village of Wick was willing to help to keep the post office going and a local butcher was willing to have a post office counter at the back of his shop. I worked with Post Office Counters Ltd. and twisted a few arms and the result was highly satisfactory. There is now a shiny new post office counter at the back of Artingstalls butcher's shop and the community is pleased with the outcome. It would be pleasing if that pattern could be repeated.
The case on my mind at the moment is that of Olbury-on-Severn post office. It is a small post office combined with a small shop and the postmaster is about to retire, so the post office will close in the week before Christmas.
In his letter of 17 November, the Minister urged the Post Office to do everything possible when rural post offices are threatened with closure and to be innovative. Post Office Counters Ltd. deserve credit for doing exactly that at Oldbury-on-Severn. We had a dialogue and it is considering all the options, including alternative premises, community shops and so on. I welcome that and hope that it will be the pattern.However, I question whether there is any cash to back that up. If the answer is to convert existing premises in the village--for example, the village hall or pub--to what extent could Post Office Counters Ltd. provide money? Would any of the £270 million promised by the Minister find its way to Oldbury-on-Severn? I suspect not, because I do not believe that the money is earmarked to be spent in that way. If the money does not find its way there and if there is no other solution, that post office will close. By the time it could be reopened, its remaining customers would probably have made alternative arrangements and it might never reopen.
The thrust of my message to the Minister is urgency. South Gloucestershire council is proposing 100 per cent. rate relief, which will be a useful contribution, but the serious money must come from central Government. It has been promised but not yet delivered. Meanwhile, dozens of post offices continue to close. I have read the PIU report, but I have no clear idea of the Minister's long-term vision for the size and nature of the post office network. Clearly, it is intended for mergers to take place in towns, but I am not clear of the scale or what network is envisaged.
I shall draw my comments to a close to give the Minister as much chance as possible to set out where matters have got to. I am aware of what has been going on behind the scenes, and I am not suggesting that nothing has happened. My main concern is that the rate of closures is accelerating. That acceleration may be slightly less in rural areas this year, but it is greater in towns, where the number of closures is well up. There seem to be useful initiatives in the pipeline, but the danger is that the shadow of compulsory payment into accounts is hanging over the post office network and threatens to be the death knell of that network unless urgent action is taken. The action so far has not been sufficient or fast enough, and I hope that the Minister will give an alternative view.
12.42 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson ): I am pleased to have the opportunity to discuss this crucial matter. The hon. Member for Northavon (Mr. Webb) said that we were all in Central hall, Westminster in April. I was not in Central hall, Westminster, I was here in Westminster Hall, because that was the last time we debated the matter in this Chamber or in the House. The campaign of the National Federation of Sub-Postmasters mirrors a campaign in 1980 when the previous Government first introduced automated credit transfer for the payment of pensions and benefits. It also mirrors a campaign during the early 1990s, when the previous Government extended ACT to a series of new pensions and benefits.
The concerns of the National Federation of Sub-Postmasters were genuine. It was worried that moving to ACT would create an increasing trend. There were
differences of opinion about how quickly that would happen, but not about the fact that more and more people would move to ACT and that that would reduce the amount of work coming across post office counters. There was a huge and unhealthy dependency on one area of work, the disappearance of which it could foresee.It is important to find a permanent solution, not one that lasts for 10 or 15 years or that doubles every seven years. We thought that there was at least the prospect of a solution when the previous Government introduced their well-intentioned benefits payment card. It was only a seven-year solution for the period of the contract with the Benefits Agency. There was no doubt that at the end of the seven years we would have returned to the argument about moving to automated credit transfer. In any case, the benefits payment card project was based on a public finance initiative that was blighted from the start, as the all-party Select Committee on Trade and Industry said.
The National Federation of Sub-Postmasters and its staff expressed understandable concerns at an effective rally in April. In June, a joint vision for the future was developed through the publication of the performance and innovation unit report, which we had all waited for with bated breath. It contained 24 recommendations and the Government accepted them all. I cannot find a response from the hon. Member for Northavon, but I presume that he was mildly pleased.
- We are delighted that the Government recognises the network's strengths and is determined...to harness the full potential of the network.
A representative of the Village Retail Service Association said:
It is not only a well composed comprehensive report but also very positive. I am pleased that the Government has accepted the recommendations without reservation.
The NFSP said that the report was
a first class analysis of the post office network and...an excellent foundation upon which to start building the new network of sub post offices.
The Women's Institute, an important body in relation to the matter, said:
We congratulate the Government on commissioning the PIU report and on not only agreeing to implement its recommendations in full but also promising to back this up with funding.
Lord Dearing, a distinguished former chairman of the Post Office, said:
I congratulate the Government on their immediate and positive response to the PIU report. It is such an excellent report in its recommendations on rural sub post offices that it would be well to see the Government's wishes incorporated into legislation.
In June, the cavalry came over the hill. It would have been good to have had such detailed analysis of the problems of the network and ideas for its future 20 years ago.
The hon. Gentleman says that nothing has happened, but what has happened was due to happen under the PIU report. The Post Office was due to present a business plan for the universal bank by 1 September, and it did so. We were due to enter negotiations with the banks, and our negotiations were due to conclude by the end of the year. All the temptations to hold the negotiations in public, or make them semi-public through Hansard or the media, must be resisted. The banks are being extremely constructive in their discussions with the Government.
So that it is understood how central the universal bank is, it is as well that I state that it is the key element of the PIU report. It will neither only attract new network banking work into post offices, nor be only a vehicle for people to access the basic bank accounts that are being set up by all the major banks and building societies. It is key to our setting out this firm pledge: even after the switch to ACT between 2003-05, any pensioner or benefit recipient who wants to receive the money in cash, in full and undiluted by bank charges--across a post office counter and not at the nearest bank, wherever that may be, or through an ATM, hole-in-the-wall cash machine--will still be able to do so. It is a matter of personal choice--which was the point raised by the hon. Gentleman.
Mr. Webb : Is not that promise worth only the paper on which it is written--and then only if a post office is available? The worry is that by the time we reach that point, the Oldbury-on-Severns of this world will have gone. The promise comes too late. Yes, things are going on, but the Minister seems to have no sense of urgency.
Mr. Johnson : I shall attempt to leave the hon. Gentleman with a sense of urgency, but he should not try to move the goalposts. His said that the start of ACT in 2003 would be the focal point for the decimation of the network; but if was not for the move to ACT, we would not be having this debate. There have been no 7.10 am "Today" interviews during the past 20 years about the network gradually drifting away. The focal point is 2003. The PIU's recommendations were widely welcomed. Indeed, I have some wonderful quotes from Opposition Members welcoming the fact that the report set out a clear time scale that was geared up to 2003. I shall come in a moment to what happens before then.
The hon. Gentleman cited my letter to the Post Office, but we must have a network to preserve. The key elements for the change are geared around 2003, and nothing will happen until then except for the half a million people a year who are already volunteering to switch to ACT. A new generation of pensioners and people coming up to pensionable age are used to cashless pay and that trend will continue.
I turn to the problems that we face today. The letter that the hon. Gentleman cited relates to a PIU recommendation. The PIU said that the Post Office has
always gone to extraordinary lengths to keep post offices open in rural areas. It was a specific recommendation. However, the PIU said that the Post Office did it out of the kindness of its heart and that its policy could change because it has been given commercial freedom in the public sector under the Postal Services Act 2000.The PIU said that the Government should place a formal obligation on the Post Office to continue to prevent avoidable closures. As the hon. Gentleman knows, 18,000 of the 18,500 rural post offices are run by private business people on their own premises. When they retire, those people may want their premises back for their own domestic use, and if the Post Office cannot find a suitable alternative sub-postmaster or venue, the sub-post office is closed as a result of force majeure. We have placed that obligation on the Post Office, it will be written into the social and environmental guidelines under the Postal Services Act and there will be money to back it up.
The hon. Gentleman asked how that money could be used, but it is linked in the PIU report to 2003. The report said that we should place the obligation on the Post Office in the autumn of 2000 and that we should talk to the Department of the Environment, Transport and the Regions and others about how to channel financial assistance to the rural network. The PIU report suggested a number of alternatives, including through local authorities, central Government or the Post Office itself. It said that discussions should be concluded by the autumn of 2001 and that the changes should be ready for 2003. It is the PIU report's recommendations that we are carrying out.
I do not know who the hon. Gentleman spoke to, but this is my opportunity to set the record straight on the closures so far, which is what I intend to do. We published a couple of weeks ago the information that there had been 333 closures at the six-month stage of this financial year. Because of the written question, we needed to obtain the Post Office's response quickly. It told us that some verification was needed. Now that that has been obtained, I can inform hon. Members that in a matter of two weeks I have saved 34 post offices, because the number has come down to 299. That is ahead by seven on the closures for the same point last year, when there had been 292 at the six-month stage. It is not possible to extrapolate a full-year outcome from the six-month figure.
Interestingly enough, rural closures are down by 20 per cent. and not the 10 per cent. that I first cited. A disturbing increase in urban closures has emerged. As I think I said in the written answer that I gave, we are asking for a very detailed analysis. We recognise that the universal bank, Government general practitioner and all the PIU recommendations are not yet on stream; they are not due to come on stream yet. What is being done is not an instant solution. We are working on all the things that I have mentioned. The analysis showed that only 6 per cent. of closures were due to the financial non-viability of the outlet. The number of people resigning has declined from an average of between 10 and 12 per cent. a year to about 4 per cent.
One of the problems--and I am not trying to duck the issue--relates to people buying into the network to replace retiring sub-postmasters and sub-
postmistresses. A tremendously professional campaign has been run by the NFSP--which I do not criticise, having been part of its campaigns in the past--but, given that people have been standing outside post offices asking for signatures to petitions, and saying that they are sure to close without a campaign to keep them open, people are bound to have the idea that the network is condemned to decline and collapse.
Mr. Webb : On the point of urgency, the Minister is suggesting that I tell my constituents in Oldbury-on-Severn that talks about how the money will be used in subsidy will end in autumn 2001, with a view to implementation in April 2003. Can he imagine the reception that I will be given?
Mr. Johnson : I hope that the hon. Gentleman will tell his constituents that the Post Office will consider ways of dealing with Oldbury-on-Severn in the same way as Marshfield. It would have done so even without the letter, but it will now redouble its efforts. Some of our suggestions, such as consulting the parish council, are being carried out in Oldbury-on-Severn.
Those who have accepted the PIU report and congratulated the Government on accepting every dot and comma of all 24 recommendations should not then criticise us for following those recommendations. Next year, when we have decided how to channel the money, will be the time to decide whether we need to act faster. As to rural post offices, the measures that the Post Office is taking, all over the country, are less matters of finance than they are to do with fostering confidence in the idea that buying into the business means a secure future.
We have mentioned the figure of £270 million and have said that we are prepared to add to it substantially. That is because some of that money is being spent on pilot schemes, such as GGP. Perhaps it is not the snappiest title in the world, but we picked the idea up from the National Federation of Sub-Postmasters, which suggested that we reward and train sub-postmasters, sub-postmistresses and their staff for something that they already do without training or reward, although their role is appreciated and cherished by their communities. We should make them the centre for distribution of Government information and build on the back of the Horizon network. We have converted 14,000 post offices, computerising a counter position once every five minutes. That is the biggest IT programme ever and is on time to be completed next spring. That will provide us with the opportunity for a Government gateway, to provide people with Government services across the post office counter. The Post Office has already begun work on matters such as e-commerce. A trial in 1,000 post offices in the west country was announced a couple of weeks ago.
All the PIU recommendations are being attended to. We are ending the complacency and neglect of the past and aiming to restore faith in the future. Yes, sub-postmasters and their staff want the PIU report to be implemented. I assure hon. Members that among my officials and the Government there is no complacency, and the NFSP, whose executive I addressed recently--and whose members I have spoken to all over the country--understands that.
- It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.
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