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15 Oct 2002 : Column 234—continued

Mr. Timms: No, certainly not. As I said, we accepted all 24 recommendations in the PIU report and I am making an announcement today on the XYour Guide" project. Perhaps that is what the hon. Gentleman has in mind. He may know that the project was piloted in Leicestershire and that an evaluation of it was published at the end of the summer. It concluded that XYour Guide" was popular but did not have a big impact on either increasing the number of customers using sub-post offices or generating additional income for post offices. As the cost of rolling out the initiative across the country did not represent good value for money for the Departments that would use the service, we have decided not to proceed with national implementation of XYour Guide".

The pilot highlighted the potential for Departments to deliver services through post offices in future. There is also significant commercial interest in placing kiosks in post offices. For example, a commercial service based on kiosks in retail outlets, including in some sub-post offices, is expected to be piloted in Cornwall from next year. So we can expect kiosks to appear in sub-post offices.

Mr. Andrew Robathan (Blaby): The Minister may not know that XYour Guide" was piloted in my constituency among others. The big complaint was that there was no publicity. People went into the post office and there it was, which was great, but there was no publicity elsewhere. People will go to the job centre down the road rather than to XYour Guide" unless they are pointed in that direction.

Mr. Timms: It is my impression that the project was well known in the areas of Leicestershire where the pilot was carried out. It was certainly well liked by those who were asked about it. Unfortunately, it did not meet the criteria in terms of increasing the number of people using post offices and providing good value for money for Departments. However, there will be commercial developments in the near future along the lines that I described.

Mrs. Betty Williams (Conwy): I recognise the case that my hon. Friend makes, but can he assure me that he will look into the complaints that sub-postmasters in my constituency have made to me about the complicated process and the long time that it takes to open a post office card account?

Mr. Timms: I am aware of concerns about that. Card accounts will be available from the beginning of the new

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financial year when automated credit transfer is introduced. We have made it clear all along that people will be able to obtain their money in cash at a post office through universal banking services. They will be able to do that either with a basic bank account provided by one of the high street banks, which allows their money to be accessible at a post office, or with the post office card account. There are a number of advantages to the basic accounts operated by the banks. For example, cash can be obtained from an automated teller machine as well as at a post office. In addition, basic bank accounts will support standing orders and direct debits. However, despite the advantages of a basic bank account, those people who have decided that they want a post office card account will be able to obtain one, which I think is what concerns my hon. Friend. There will be no barrier to that. People will simply need to ring the helpline and the process will begin.

I understand sub-postmasters' assertion that the post office card account is a more attractive proposition for them because it ties people into the post office. Many people will wish to be in that position. For others, however, there will be advantages in having a basic bank account as well, and we want people to be aware of those benefits—

Several hon. Members rose—

Mr. Timms: I think I need to make a little more progress.

The compensation payable will be based on terms agreed between the Post Office and the National Federation of Sub-Postmasters. Outgoing sub-postmasters will receive a payment equivalent to 28 months of their remuneration, based on the best annual remuneration for a financial year since 1999. The scheme is based on longstanding arrangements through the joint discretionary fund. Payments are subject to certain conditions, such as a requirement that sub-postmasters at closing branches offer active support for the migration of customers to surrounding branches that remain open.

As a result of declining profitability, there has been a lack of investment in a large proportion of urban sub-post offices for many years. In parallel with the closures, the standards of facilities and service will need to be improved at many of the remaining post offices. Urban sub-postmasters who expect significantly more customers as a result of closures elsewhere will have the opportunity to apply for a grant on the basis of matched funding provided by the sub-postmaster. So the #30 million grant that the Government are making available should be matched by a broadly equivalent level of private sector investment.

Mr. Jim Cunningham (Coventry, South): Can my hon. Friend clarify how the post office card will work? Will it be passed across the counter or put into a hole in the wall?

Mr. Timms: I am happy to explain that to my hon. Friend. Personal identification number pads—PIN pads—are appearing at post office counters all over the country. People will place their card in the reader, type in their PIN and have access to their cash.

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Grants of up to #10,000 will be available on a matched-funding basis for new counter positions and equipment, to support open-plan or combined post office and retail positions and to provide new fascias, adaptations for disabled customers and other refurbishments to improve the branch.

Mr. Alan Meale (Mansfield): The Minister mentioned earlier a mechanism for consultation. Will he ask Consignia to guarantee that local authorities will be fully consulted before any closure?

Mr. Timms: My hon. Friend makes an important point, and I can give him that assurance.

The PIU report concluded that our network of post offices had not kept pace with change or, until now, exploited its highly trusted status as a provider of financial services. It was losing business. Sub-postmasters are business people, and they have found it increasingly difficult to make a living. They have been leaving the network in increasing numbers. If we do nothing, very damaging gaps will open up in the network.

The programme is therefore vital to ensure that the Post Office can maintain an effective network, offer attractive prospects to sub-postmasters and improve the service for customers. We need to take this opportunity to set urban post offices firmly on the path towards sustained viability, which is the key to enabling them to offer improved services for their customers from better, more convenient and more accessible locations.

I commend the order to the House.

Madam Deputy Speaker (Sylvia Heal): I am very conscious of the time limit on this debate and of the number of Members who hope to catch my eye. May I remind hon. Members that this debate is about urban post offices and the level of compensation available to them?

7.1 pm

Mr. Andrew Robathan (Blaby): May I say how sorry I am that the Secretary of State is not here to support her Minister? This is a very important measure, and many people are concerned about it. The right hon. Lady's absence displays a certain discourtesy to her Minister and to the House. By contrast, the Minister was typically courteous and generous in giving way to so many Members during the debate. I hope that he will not think me unkind because I have some remarks about Government policy on the Post Office that he may not welcome.

The supposed main thrust of the Government's policy and the urban post office reinvention programme is to give the Post Office a sustainable future, as the Minister has just said, and it will be judged on that. Everybody in the House wants the network to survive and prosper. We all know the special place that post offices have in urban and rural communities. In villages throughout the country, in constituencies such as mine in Leicestershire and in deprived urban areas, the post office is often the only centre for meeting people and is valued as much for its community service as for its commercial activities.

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Today Age Concern wrote to me and, I suspect, to everybody else, saying that

Each week there are still more than 15 million benefit transactions in post offices, which account for 40 per cent. of Post Office Ltd.'s income, although in many deprived urban areas the proportion is much greater.

Post Office Ltd., however, is trading at a loss; it is insolvent. The Minister failed to mention that. Consignia lost #1.1 billion last year, which is certainly an unsustainable position.

Mr. Timms: I am sorry to interrupt the hon. Gentleman so early in his speech, but I need to correct the point that he just made. The Post Office is not insolvent. It is losing money, but being insolvent is a quite different matter.

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