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Dr. Cable: Can the Minister clarify the specific point about the funding arrangements? Will the £180 million compensation package come out of the £280 million that was pledged for the renewal and sustenance of the network, or is an additional sum?

Mr. Alexander: The £270 million that was allocated in the previous comprehensive spending review was to implement the recommendations of the PIU report. They included a range of working programmes. One was urban reinvention, and another was the pilot that I mentioned. It is worth £25 million in terms of "your guide". Further work to support the rural network will be done, and we are determined to ensure that, if additional support is necessary, there will be a process whereby it can be considered as and when it is required.

There is no dispute about the fact that, in every part of the operation, the Post Office needs to adapt to new challenges. The public want it to provide world-class postal services and a thriving post office network fit for the 21st century. The Government want a universal service on which everyone can rely, with faster, more reliable mail deliveries, a strong network of modern post offices, and an effective partnership between management and the unions. We want a better Post Office for people to work in.

Standing still, as some suggest, is not an option. The business must move forward, tackle its shortcomings, and tailor its services to changing customer demands. The Government are implementing the terms of the PIU report and underpinning that by committing resources and strengthening management.

We cannot turn the clock back, but, with the right management, proper investment, the right support and the backing of customers and communities, we can realise the full potential of the Post Office in future. I urge the House to support the amendment.

4.40 pm

Mr. Nigel Waterson (Eastbourne): So we have yet another debate on the Post Office, or Consignia, as we have come to know it. I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the discussion. It is unusual to hold regular debates about a company in the private sector; it is even more unusual when that company is doing well. However, despite the hot air about commercial freedom, the Post Office remains mired in the public sector and its attitudes to innovation and service.

The Independent got it right when it stated:

I am sorry to see that the Post Office's sole shareholder has left us, doubtless for something that she considers more important.

Another reason for continually holding such debates is that the Post Office is, sadly, in deep trouble. It is a failing

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company. That was not always so: the Post Office made a profit in every year of Conservative government. As The Guardian stated:

The postie continues to be trusted and respected, but the Post Office is in deep trouble.

The Post Office loses £1.5 million a day and plans to shed at least 30,000 jobs. It has endured dreadful industrial relations and continues to miss its delivery targets. Some parts of the country go for days on end without a delivery. The Post Office is scrapping the second delivery and the early collection. If that were not bad enough, it is losing 1 million items of mail a week, according to the watchdog. It has been suggested that only one delivery a day should be made to private addresses at or around lunch time. That will affect hundreds of thousands of small businesses especially badly.

One of the most worrying aspects is the deterioration in the network of sub-post offices, which have been closing at an ever increasing rate with a record number of closures—547—last year. An average post office branch could lose 40 per cent. of its turnover overnight when benefits payments cease next April. The closure rate has decreased in the year to April 2002, and that is welcome, but the Government should not take too much comfort from that because there are problems of disposal and sale, and people are hanging on in the hope of receiving compensation. Of the 262 post offices that closed, 194 were rural sub-post offices. This is therefore a network in decline.

What has the Government's reaction been? They have set up a programme of so-called reinvention of the urban network. They have not, of course, fulfilled conclusion 6 in the PIU report, which proposed the production of a report by autumn 2001 about the future of the rural sub-post office network. I would like the Minister to tell us when we can expect those proposals to be brought forward.

The sad truth is that most of the money that has already been earmarked, particularly for the urban network, is actually being used to close it down, rather than to keep it open or even to expand it. The most serious problem, however, is that the Government have, as yet, no clear strategy to deal with the future of that network.

Dr. Pugh: I am having difficulty following the thread of what the hon. Gentleman is saying. He began strongly by saying that he thought the flaw in Consignia was that it was not acting sufficiently like a private company, and that it was too wedded to a public service ethos. If it is going to act exactly like a private sector company, should it not be released from the burden of a universal service obligation—private companies do not have such obligations—and left free to close what branches it wishes, if it is to work as a commercial operation? We would argue that neither of those things should happen, but the hon. Gentleman does not seem to be capable of arguing that.

Mr. Waterson: I do not think that the hon. Gentleman has been following my speech closely enough. He seems

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to be confusing two things. Overwhelmingly, the network of sub-post offices has nothing to do with Consignia; most of them are owned by private individuals who have opened them up using their own savings, perhaps from redundancy payments or whatever, collected over some years. Those are the people we are talking about.

The hon. Gentleman made a rather more important point on the universal service obligation, but he must remember that, at the moment, the Post Office is not meeting that obligation in some parts of the country. It is certainly not meeting its obligation on next-day delivery of first-class mail. Under the Postcomm proposals, any new private company entering the post office market would, I am sure, be equally obliged to fulfil the universal service obligation.

Mr. Alistair Carmichael (Orkney and Shetland) rose

Mr. Weir rose

Mr. Waterson: I give way to the hon. Gentleman.

Mr. Carmichael: To whom are you giving way, Sir?

Mr. Waterson: Let me see. I shall give way to the hon. Member for Orkney and Shetland (Mr. Carmichael).

Mr. Carmichael: Perhaps the hon. Gentleman would be kind enough to answer a question that I asked him when this matter was last debated in Westminster Hall. Is the Conservative party in favour of the deregulation proposals that Postcomm currently has out for consultation?

Mr. Waterson: The hon. Gentleman has indeed asked me that before, and he will get almost exactly the same answer—I hope—which is that we think that the Postcomm proposals contain a lot of interesting issues. It is for the Government to form a view on them, but most importantly, it is a matter for the regulator.

Mr. Carmichael: What is your view?

Mr. Waterson: I shall deal with Postcomm's proposals in some detail, so if—unlike some hon. Members—the hon. Gentleman can stay for most of the debate, I may be able to assist him. The reality is that we do not know what kind of shambles we shall inherit after the next election. It is clear, however, that by then Postcomm's proposals will long since have been implemented in the postal system.

Mr. Weir: Will the hon. Gentleman give way?

Mr. Waterson: I want to make a little more progress, then I shall be happy to give way again.

The Government seem to be involved in managing the decline of the network, and this process is being supervised by Postwatch, the consumer watchdog. I would like the Minister to deal with an issue raised, I think,

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by the hon. Member for Twickenham. Does he think that Postwatch is being properly resourced to carry out that task?

We have 10 months in which to complete the transition to automated credit transfer. Most people in the industry are very dubious as to whether that will be possible, from a technical point of view, within that time scale. The reality is that an awful lot of sub-postmasters and sub-postmistresses have to be trained, and their customers have to be put in a position to be able to use the new equipment. At the same time, however, despite the Minister's repeating the promise that there is to be no cap on the number of people holding post office accounts, we have now discovered that the Government have a working figure of 3 million, by contrast with the 16 million potential customers, on existing figures.

We also know that the Government are now pursuing a policy of actively managing choice. That is a wonderful civil service phrase, but to me it sounds a bit like persuading people—possibly elderly or vulnerable—that they need one sort of account rather than another. If the Government are successful in their policy of actively managed choice, that means that, on any view, the footfall for the average post office will not return to anything like the levels of the recent past.

I think there are serious concerns here, and so does the National Federation of Sub-Postmasters. The Minister enjoyed quoting some things said by Mr. Colin Baker of that organisation, but in its briefing for the debate the organisation also says this:

It goes on to say:

Those are very worrying statements.

The NFSP also says:

The briefing concludes:

I can only assume that the Minister was quoting a different Colin Baker.

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