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Ms Hewitt: I was just about to explain exactly what we are doing to ensure that post offices such as that run by the hon. Gentleman's constituent do indeed have a thriving future.

Mr. Gray: I am looking forward to hearing what the right hon. Lady is going to do. Does she remember that,

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two years ago, the right hon. Member for Tyneside, North (Mr. Byers) made similar optimistic noises about sub-post offices? Does she realise that since then, 18 sub-post offices in my constituency have closed or are under threat? This week, we hear that the post office in the main town of Malmesbury will close. Does she think that the right hon. Gentleman's optimism was misplaced?

Ms Hewitt: We are taking action, which I am about to describe, to ensure that the post office network has a stronger future. That does not mean that we can prevent every closure, but we are doing a great deal to improve the situation, and I think that my right hon. Friend was right to be optimistic about the future of the network.

We started by commissioning the report by the Cabinet Office performance and innovation unit to which the hon. Member for Maldon and East Chelmsford referred. That excellent report was published in June 2000. We accepted all its recommendations and earmarked some £270 million to implement them. I shall explain exactly what is happening because clearly the hon. Gentleman is not aware of it. We started by placing a formal requirement on the company to maintain the rural network and prevent avoidable closures. That duty applies until 2006 in the first instance, and it is backed up, for the first time, by a fund to support community initiatives to sustain or reopen those vital post offices in rural communities.

We are developing universal banking services that will help to tackle financial exclusion while providing new income streams for the post office network. That is crucial in light of the decision to change benefit payments to the ACT system and to remove the old-fashioned giro system, which is not only extremely expensive to administer but costs taxpayers a substantial amount in fraud. I should have hoped that hon. Members from all Opposition parties would support strong action to deal with that problem.

The hon. Gentleman will recall that my right hon. Friend the Prime Minister gave a commitment that both before and after the change to ACT, benefit and pension recipients who want to continue to collect their payments in cash, in full, across a post office counter will be able to do so, and those services will be free to customers. We are making progress on universal banking services, and we have made it clear in our discussions with sub-postmasters that those services will strengthen the post office network not only by allowing benefit claimants to receive their money in cash over the counter if they want to, but by enabling other customers, who use other banking chains, to get more services at the post office.

Matthew Green (Ludlow): The Secretary of State spoke of strengthening the post office network. Will she explain to my constituents why Chelmarsh, Wall under Heywood and Monkhopton post offices have all closed in the past six months?

Ms Hewitt: If the hon. Gentleman looks at Postcomm's recent report on the subject, he will see that a large proportion of those post offices that closed last year were very small, generally operated part-time and were not attached to any wider retail outlet. More than half of them had fewer than 70 customers a week. There are genuine difficulties in attracting investment and new sub-postmasters to post offices when the existing sub-postmaster wants to retire, which is why we are determined to modernise and strengthen the post office

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network by investing in computerisation and ensuring that new services such as banking services, particularly universal banking services, are available.

Mr. Michael Weir (Angus): Before the Secretary of State moves on from universal banking services, can she say whether they will be available before automated credit transfer is implemented next year?

Ms Hewitt: That has always been the plan; we continue to make good progress on it.

The government general practitioner service was raised.

Mr. O'Neill: Has my right hon. Friend considered how we should handle the problem of small rural post offices with penny numbers—fewer than 100 customers or 100 benefit recipients—where, often, the postmaster or postmistress is old? Is she suggesting that to keep them open we should make it compulsory for those people to remain in their offices and stay at their desks, especially when nobody else wants to buy an unattractive retail proposition? After all, there is a movement in the House for people to carry on working after 65 and, indeed, 70. Has my right hon. Friend thought about that, as it seems to be the only answer?

Ms Hewitt: My hon. Friend makes his point extremely effectively. The way to strengthen the rural post office network and ensure that people who depend on it for cash payments can continue to do so is to increase the retail and business opportunities available to the network. When that is not possible, we should ensure that subsidies are available to support community-backed rural post offices; that is precisely what we are doing.

As has been said, we have created a pilot scheme—the "Your Guide" scheme—in Leicestershire and Rutland. As a Leicester Member, I have had the opportunity to visit several post offices where that project is operating, and have seen how customers welcome the innovative service and benefit from it.

Mr. Roy Beggs (East Antrim): Is the right hon. Lady saying that the subsidy scheme that is about to be introduced will secure income for smaller post offices to the same value as their present income?

Ms Hewitt: The precise position of any particular sub-post office will depend on the details of its circumstances and the nature of its application. However, we have established a fund to support community-backed rural post offices to ensure that when they are not going to be commercially viable, they can none the less continue to serve their community. We are, perfectly sensibly, evaluating the "Your Guide" pilot to see whether it would make sense to roll it out nationwide. The test is not only whether it will benefit the public, but whether it will benefit post offices by bringing in more retail trade, which they badly need.

Mr. Heathcoat-Amory: The Secretary of State is being highly disingenuous. The reason why sub-post offices are closing, or are not being taken over when the incumbent retires, is that they face the certainty that at least 40 per cent. of their income will disappear from next year. Against that, they have only the hope and the

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Secretary of State's word that some of that income may be replaced by the universal bank, which has not yet appeared. Can she give an assurance that the sum that sub-post offices will definitely lose as a result of the removal of the cash payment of benefits and pensions will at least be made up by the income stream that she anticipates and calculates will come from universal banking services?

Ms Hewitt: The right hon. Gentleman is doing exactly what the hon. Member for Maldon and East Chelmsford did earlier—scaremongering about the future of the post office network; I refer him too to what Colin Baker of the National Federation of Sub-Postmasters said. The right hon. Gentleman ignores independent research that shows that many benefit claimants have already moved to ACT or will do so in future, and will continue to get their benefits from their post office when banking services are available there. When they do so, they will buy things as well. Along with the automation of post offices that we have put in place, universal banking services will make it possible for sub-postmasters to offer a wider range of services to their customers and thus increase their income.

Mr. McLoughlin: Will the right hon. Lady give way?

Ms Hewitt: One final time; I have been generous in accepting interventions.

Mr. McLoughlin: The Secretary of State has been exceedingly generous in giving way. She accused Opposition Members of scaremongering, but what does she think about the chief executive of Consignia, who appeared before the Select Committee on Trade and Industry and dropped the information that there were likely to be 30,000 redundancies?

Ms Hewitt: The chief executive speaks for himself; he was simply pointing out the implications of a particular calculation and the need to deal with excessive rising costs in the Post Office. It is not I who accuses Opposition Members of scaremongering; I quoted the general secretary of the NFSP, who is fed up with press reports, constantly quoted by Opposition Members, about the inevitable mass closure of post offices. We are acting to stop closures; the Conservative Government, for 18 years, did not.

The hon. Member for Maldon and East Chelmsford spoke about the need for reform, greater choice, more competition and better management. However, the Government whom he supported did nothing whatsoever to enable the Post Office to thrive. Years of Tory inertia left the Post Office in a desperate state and in dire need of reform and investment. In opposition, we called for reform and investment; in power, we have delivered them. Under the Conservatives, we had cutbacks and cowardice. They ran the Post Office down with their policies, and are now doing so with their speeches. Under Labour, the Post Office has seen reform and investment—just what it needs to secure a better future for its customers, workers and sub-postmasters. I urge the House to support the amendment.

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6.7 pm

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