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Simon Hughes (Southwark, North and Bermondsey): Does my hon. Friend accept that there is another indirect way in which people are being coerced to change their accounts? For example, just a mile away from here the Elephant and Castle branch office was said to be closing about three years ago. The decision was then deferred, but the closure was announced again. Those involved consulted wrongly, so they had to do it again. The staff were telling people all the time that the branch may not be open in the future, so people were being persuaded to move their accounts elsewhere. Of course, that is self-fulfilling. At the end of an exercise in which an urban post office is threatened with closure, the number of people using it decreases significantly so the case for its staying open is significantly reduced. That is another example of death by 1,000 cuts, which is surely exactly why we need to have clear policy, clear commitment and a belief that people, particularly those without other accounts, should be encouraged to use the Post Office if they wish to do so, not discouraged from doing so.

Dr. Cable: That was a very helpful intervention. I shall come a little later to what is now rather euphemistically

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called the urban renewal process—the urban closure process would be a more accurate description—and my hon. Friend's comments are highly germane to that.

Let us stick for the moment to the problem of banks. If large numbers of people at the bottom of the income scale move into the banking system with varying degrees of coercion, or voluntary acceptance, a lot of problems will confront them. We know from the work of the FSA and others that there are all kinds of hidden charges—for example, when people are late with direct debits. Vulnerable members of the community can confront all sorts of practical problems if they use banks, but not if they use the Post Office.

Let me take an example from my constituency experience. Two or three years ago, I dealt with a very elderly lady—she was 93 and blind—who was used to using the Post Office for most of her transactions, but who had an account with the Halifax. She sent her carer to a branch of the Halifax to collect some money for an irregular and unusual transaction. The bank staff said, "Sorry. We will only dispense money to people in person. If you are a carer, that is not satisfactory. If you produce a letter from a lawyer, we will release the money to you. Under no circumstance will we release it on any other basis."

Those letters cost £75. I fought the case with the company. I eventually dragged the Halifax through the Daily Mail and, with some reluctance and ill-grace, the chief executive gave up. There is no tradition in the banking system of helping vulnerable customers, carers and people who genuinely need help. Very large numbers of people who have been pushed—I think that the phrase is "actively managed"—into the banking system will encounter that problem over and again.

Pulling the threads together, we have been largely considering the affects on the customers, but we have to go back to the fundamental issue: income. How much income will post offices derive from the universal bank and from "your guide"? I have never heard a figure cited for how much money will come in. It could be as little as £50 million, which is the fee paid for the post office card account, but it may be more. Will the Minister tell us, at the end of the negotiations that we have had for 18 months, how much of the £400 million income will be replaced?

If the income is not replaced, or even if it is replaced in part, there will be substantial post office closures. So we now need to consider what is happening in terms of those closures. The fact is that closures have been taking place. In 2000–01, there was a record number of closures—547. The figure fell substantially last year, and the Government drew a lot of encouragement from that, although the sub-postmasters to whom I talk say, "Yeah, sure, we are not selling." They are not selling because they are expecting compensation and because they cannot find buyers. None the less, the Government may well feel justified in the short run in drawing some consolation from the promise of the PIU programme.

What is happening in terms of closures? First, the Government have given an undertaking that they will prevent rural closures, beyond those described as unavoidable. The Labour party manifesto says:

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The problem is that closures are still happening. Despite the Government's assurance, in the last two years, 80 per cent. of all closures have been in rural areas. There is a programme providing £2 million of help to rural post offices, and several of my colleagues have asked parliamentary questions about that. At the last count, only seven projects had been approved—perhaps the Minister will update us on that—which accounts for a tiny fraction of the £2 million sum.

Malcolm Bruce (Gordon): On the law of statistical averages, my constituency is clearly a blip. We have had 5 closures in the last 12 months. In every case, the Post Office said that they were not permanent, and that it would do everything that it could to replace them. None of those post offices has reopened, and nobody believes that they will. That is the reality—nobody will take them on because it is not worth the money.

Dr. Cable: That is what unavoidable closures means—the process of closures is continuing, will continue, and once the emptiness of the follow-up to the performance and innovation unit report has been demonstrated, the process of closures will accelerate on a very large scale, and it will happen in rural areas. I hope that the Minister will clarify one aspect of the Labour manifesto statement that I do not understand. It says that £270 million was set aside in the comprehensive spending round for rural post office development. My understanding—which I hope will be corrected—is that £180 million of that has now been siphoned off to compensate postmasters in urban areas. Is that right? Is that money, as was pledged in the Labour party election manifesto, going to sustain the rural network? That is a very important question, as in many cases the rural network is teetering on the brink of collapse. If there is money to sustain it, there is hope, but if there is Enron-type accounting, and the money is being shifted somewhere else, large numbers will collapse. I hope that, at the very least, clarification of that basic point will be given today.

Mr. Roger Gale (North Thanet): Will the hon. Gentleman accept that, as an extension of what he is saying, we are seeing uncertainty blight on the ground? Postmasters wishing to retire simply cannot sell. This is not just a rural problem; it is now becoming a suburban problem. Corner shops and the post offices that have sustained them are disappearing left, right and centre. That is due entirely to the uncertainty generated by this lack of policy.

Dr. Cable: That is absolutely right. The uncertainty is spreading into the suburbs and the towns.

Mr. Jim Cunningham (Coventry, South): I am sure that the hon. Gentleman agrees that it is vital that we retain post offices, whether in rural areas or in the inner cities, for some of the reasons that he has outlined. Many pensioners and disability groups rely on the local post office, particularly in villages where it can be the focal point of village life.

Dr. Cable: I think that the hon. Gentleman agrees with me, and I take his intervention as constructive. I want to mention one small problem in reference to my hon. Friend the Member for Guildford (Sue Doughty), who has

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pointed out that one of the sources of uncertainty is that it is not always terribly clear whether the post office being talked about is urban or rural. She has a village in her constituency called Shalford, which I think has been reclassified as urban to permit a closure to proceed. There may be a conspiracy theory at work, but anyway the post office, which would have been protected under the rural programme, is now being exposed to closure. That kind of device is being used everywhere.

In towns, the Government have an urban renewal programme, which, when it was announced, seemed attractive. We now know, however, as many postmasters have had letters in the last week, that 3,000 of those 9,000 post offices are likely to be closed. In some cases, there may be commercial logic to that. Some post offices are close together, but many of them are not. In Twickenham two years ago, a post office closed for six months after a problem of dishonesty had been discovered. No bus service was available and that meant that many pensioners had to walk a mile in one direction or a mile in another direction to reach another branch. That problem will be repeated many times in urban areas when a third of all branches close.

We now know that the label for the Government's urban renewal programme is desperately misleading. The programme is about closures, and who will decide whether a branch should shut? There will be an arbitration process that will be looked after by Postwatch, but how will that organisation evaluate 3,000 appeals in two years? It does not have the resources, so it cannot be expected to handle that number. Many branches will close willy-nilly.

I would like Ministers to address, in particular, the issue of funding. Under the comprehensive spending review, £270 million has been pledged to the network, so will they explain exactly where that money has gone and where it is going? There is enormous confusion among the beneficiaries about that.

On the general strategy, we are dealing with a big project that could go well—I do not wish to prejudge matters—but it could be a disaster. Let us therefore have a proper system of planning and of targeting objectives. At the moment, there is an enormous lack of clarity about fundamental issues—the technology used in the universal bank and the fees that will be paid. All that should be spelled out much more clearly.

If, as we gather from inside the problem, the problems are as serious as they seem, are the Government giving any thought to spreading the plans for automated credit transfer over a longer period? The Horizon project, which the previous Government introduced, is a precedent. It had to be abandoned at short notice six months before it was due to come in even though the then Secretary of State, the right hon. Member for Hartlepool (Mr. Mandelson) still endorsed the project. The technology did not work. That could very well happen again. Would it not be sensible and would it not help if the Government adopted a much more measured and deliberate approach to the introduction of the programme to ease much of the uncertainty and pain that is now felt by postmasters and postmistresses?

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