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House of Commons

Thursday 11 July 2002

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]


Barclays Group Reorganisation [Lords]

Considered, to be read the Third time.

Oral Answers to Questions


The Secretary of State was asked—

Sub-post Office Network

1. Tim Loughton (East Worthing and Shoreham): What recent representations she has received regarding the future of the sub–post office network. [66366]

4. Dr. Julian Lewis (New Forest, East): What recent representations she has received regarding the future of the sub-post office network. [66369]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): I receive representations about the future of the sub-post office network from numerous sources, reflecting the valuable role that sub-post offices play in their local communities, particularly in rural areas and for the elderly and less mobile. The Government are committed to ensuring that the post office network has a thriving future.

Tim Loughton: Well, that did not tell us much. A recent letter from Consignia to Members of Parliament stated:

How do the Government intend to deliver on the Prime Minister's pledge that all those who wish to continue to receive benefits in cash will be able to do so if more than half the sub-post office network is closed, especially in places such as Worthing in my constituency where there are a great many old people who simply will not be able to travel to the few post offices that are still open? Can the Secretary of State also guarantee that the post office-based universal bank will be open for business in April 2003, given both the recent resignation of Basil Larkins, the

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architect of the universal bank, and the fact that apparently no decision has even been taken on which software it will use?

Ms Hewitt: We have significantly reduced the number of post office closures, especially in rural areas—[Interruption.] We have significantly reduced the number of post office closures. Two years ago, we lost more than 500 sub-post offices across the country, most of them in rural areas; last year, we halved the rate of closure, and more than halved it in rural areas. We are already seeing the benefits of our decision to put a duty on the company to prevent avoidable closures in rural areas. That is already benefiting customers of the Post Office.

We have made it clear that all claimants will be able to go on collecting their benefits in cash from the post office, whether they are using network banking, a new basic bank account or a post office card account. The universal banking service is indeed on track for introduction by April next year. The important point, which I have stressed to the sub-postmasters and mistresses, is that whatever kind of bank account or post office card account the claimant is using, they will be able to do their banking and get their cash at the post office, and the sub-postmaster or mistress will be paid for that.

Dr. Julian Lewis: That answer sounded rather like Stalin claiming credit for the fact that he was running out of victims in the great purge. Is it not a fact that, up and down the country, hundreds if not thousands of communities fear the loss of their sub-post office, and hundreds if not thousands of people who invested their life savings in building up the business of the sub-post office network are wondering what is going to happen to their careers? When those post offices close—as they will continue to do—what compensation will the Government offer those people who have invested their life savings in building up businesses that are about to be destroyed?

Ms Hewitt: The previous Conservative Government did nothing to reduce the rate of post office closures, nor did they do anything to compensate sub-postmasters and mistresses who needed and wanted to close their businesses. What we have done is to agree with the National Federation of Sub-Postmasters a compensation package that will include not only compensation for sub- postmasters and mistresses in urban areas whose post offices are closing, but investment grants for sub- postmasters and mistresses to improve the remaining offices so that we can deliver a much better service.

The fact is that there are too many underused post offices in some of our towns and cities. Indeed, a sub-postmaster in a part of my city—Leicester—said that there were 10 sub-post offices within a square mile. They were all competing against each other and none was able to make a sensible living or deliver a good service. That is why, under urban reinvention, the Post Office will be making proposals for a reinvention of that network, which will mean a better service for customers and a much better future for the sub-postmasters and mistresses.

Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that it is not all black over Bill's mothers? In Bolsover, where there are more than 20 post offices in a constituency 30 miles long and where we have miners' welfare, there is an imaginative scheme to save the post

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offices—although we have hardly lost any over the years; I spend my time trying to keep them open instead of yapping in here. The latest scheme is to make sure that we get the miners' welfare at Palterton to take on the post office because we could not find anyone to look after it. That looks like being a rip-roaring success. Cheques from the DTI will be gladly received.

Ms Hewitt: My hon. Friend is absolutely right. In many parts of the country, we are getting partnerships between community organisations and the Post Office so that we can keep post office services open, but not simply as part of free-standing post offices because half of the rural post offices that closed last year were part-time and had only 70 customers or fewer a week. By combining them with miners' welfare or other community organisations, we can substantially increase access to post office services. That is what we want to do, and I would encourage my hon. Friend's constituents to apply for a grant from our community fund, which is designed to support exactly that kind of initiative.

Mr. Lindsay Hoyle (Chorley): Is my right hon. Friend aware that while Post Office bosses chatter, we see the network continuing to close? Will she use her good offices to ensure, as the sole shareholder, that the Post Office will remain a universal service but a sustainable one so that it will continue into the future? We need a good input from her good self.

Ms Hewitt: One of the most important things that my hon. Friend the Minister for E-Commerce and Competitiveness and I have done is to ensure that we have a new chief executive for the post office network—David Mills, who comes from a retail banking background. He is already considering ways in which we can make the post office network much more commercially successful, with products such as household and travel insurance and so on, which are already proving hugely successful. As I have said in the House previously, I am expecting David Mills and Allan Leighton to produce a new strategy for the future of the network in September, and we will do everything to support them in ensuring that our post offices are not only as commercially successful as possible, but continue to play their absolutely vital role in local communities.

Brian Cotter (Weston-super-Mare): May I point out to the Secretary of State that there is a great lack of confidence in the Government among sub-postmasters? That has not been helped by the fact that in my part of the country claimants are saying that they have received letters from the Department for Work and Pensions asking for their bank details with a view to the payment of benefits in the future. Will the right hon. Lady investigate that urgently with that Department? Irrespective of whether that is the case, may I urge her to ensure that letters are sent to claimants clearly saying that they can carry on receiving their payments over the counter?

Ms Hewitt: We have already stated publicly and clearly that all claimants who want to get their benefit in cash at post offices will be able to do so. I want to stress a point that I have made both in the House and directly to the National Federation of Sub-Postmasters: the decision about what kind of account to use for benefit payments in

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future will be one for the claimant, but irrespective of whether claimants use their own existing bank accounts, new bank accounts, basic bank accounts, or the new post office card account, they will continue to be able to get their cash over the counter at post offices. They will also be able to gain access to a much wider range of banking services thanks to the universal bank, and the postmaster and postmistress will continue to be paid for those services. That will be hugely beneficial to sub-post offices in ensuring that they not only keep their existing customers but get new ones as well.

Mr. Russell Brown (Dumfries): May I tell my right hon. Friend that I met representatives of Consignia last week, and one of the issues that we discussed was the whole concept of the one-stop shop pilot project in Leicestershire and Rutland? They have assured me that that has been a significant success and that the footfall that they required has been achieved. What plans are there to roll out that programme UK-wide?

Ms Hewitt: We have now received the evaluation of the results of the pilot project, and we have been considering the response of members of the public, who in many ways have welcomed the very useful access to Government information and services that "Your Guide" has provided. We have considered whether "Your Guide" has brought in new customers to the post offices in those pilot areas, as that was part of the intention. Of course we are considering whether a national roll-out of the scheme would provide value for money to Departments. We will publish the evaluation report shortly, and then discuss it with all the interested partners before making a decision on a national roll-out.

Mr. John Whittingdale (Maldon and East Chelmsford): But the Postcomm report advising the Secretary of State how to provide financial support for the rural network has been sitting on her desk for six months. Four weeks ago she said that an announcement was imminent. The performance and innovation unit's report said that the full roll-out of the "Your Guide" electronic information system should be achieved by mid-2002, yet today the Secretary of State is unable even to say whether the Government have decided to go ahead with it. We have had no details of the universal bank, despite calls that it should be up and running well before the April deadline. There is less than nine months to go before the changes to the system take place, but all we have had are words. Time is running out. When will the Government start delivering?

Ms Hewitt: The Government are already delivering, as the hon. Gentleman knows because we have discussed this matter on many occasions in the House. We have already radically restructured the management and leadership of the Royal Mail Group and of the Post Office. We have a new chief executive in place and we will soon have a new chairman for the Post Office network itself in place. The universal banking service, on which an enormous amount of work has been done, is on track, just as we said it would be. Sub-postmasters and mistresses will benefit enormously from the creation of the universal banking service. We will meet the commitment that the Prime Minister gave that benefit claimants will continue to be able to obtain their benefits in cash at the post office. We

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have significantly reduced the rate of post office closures, particularly in rural areas, and we are considering how best to put in a payment for the community service provided by rural post offices without in any way reducing the incentive to sub-postmasters and mistresses to maximise their commercial income as well.

As I have just explained, we will publish the evaluation report on "Your Guide" shortly, and we shall consider value for money for the Government and, crucially, for the post offices. I should be astonished if the hon. Gentleman expected us to make a decision without taking value for money into account. We have, as I have said, a new chief executive who will come forward in the autumn so that we can put in place a comprehensive strategy to guarantee the future of our crucial post office services.

Mr. Whittingdale: All that the Secretary of State seems able to say is that it will be all right on the night. Is she aware that this morning the National Federation of Sub-Postmasters, the Village Retail Services Association, the Federation of Small Businesses, the Forum of Private Business, as well as Help the Aged, the National Association of Citizens Advice Bureaux and Postwatch, the Government's own consumer body, have all joined us in expressing concern about the deafening silence from the Government on these vital issues? If she is not willing to listen to Conservative Members, perhaps she will start listening to those organisations.

Ms Hewitt: We have been listening all the way through to all the organisations to which the hon. Gentleman referred and we have worked closely with them. The National Federation of Sub-Postmasters has warmly welcomed the compensation and investment package that we have put in place—some £210 million—for the urban reinvention programme. We discuss regularly with the federation and other partners who have an interest in the issue how best we can deliver on the strategy that was set out in the PIU report, and we shall continue to do that so that we have the action, not the words, that will deliver the post office services that everybody wants to see.

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