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15 Oct 2002 : Column 244—continued

7.26 pm

Dr. Vincent Cable (Twickenham): The Minister got off to a good start by opening with the issue on which there is broad consensus—the PIU report, which includes the urban reinvention programme and the restructuring to which we have all, in different ways, signed up. He then rather recklessly called in aid the National Federation of Sub-Postmasters, citing the paper that it distributed to us all for this evening's debate. At the risk of detaining the House, I remind him that the NFSP said in its introductory sentences that over the past two years

It says specifically of the Government's role:

This afternoon's written answer, which the Minister confirmed, showed that the NFSP was being rather optimistic, as we have now lost the rollout of XYour Guide", which was an essential part of the process recommended by the PIU. The hon. Member for Brighton, Pavilion (Mr. Lepper) held out some hope that the GP concept has survived, but it is difficult to see how it can do so, as XYour Guide" was at its heart.

The Government said that XYour Guide" is not cost-effective or delivering services, but I do not know whether the Minister knows that the Post Office itself has produced a pamphlet which says on the front,

It goes on to say that it is Xa life saver" which

and says —


Clearly, that is a promotional document, but the chairman of the Post Office, no less, claimed that the success of the project

He went on to describe how, in relation to Government services, the pilot project was producing new jobs—people were finding jobs and receiving benefit entitlements. I appreciate that a former Treasury Minister may not regard helping people to get benefit entitlements as an achievement but, none the less, the Post Office's evidence suggests that the scheme was highly successful on its own terms. Someone's head should therefore roll; the Minister responsible has gone off to the Cabinet Office. The Secretary of State, who was so committed to the project that the pilot took place in her own constituency, has not turned up, and the Minister for E-Commerce and Competitiveness is being asked to take the rap. It is a fiasco.

I come specifically to the sums of money on which we have been asked to vote. Let us remind ourselves that, of the #210 million specifically for urban reinvention, #180

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million is specifically for compensation and redundancy. Only #30 million is for new investment, and there is a maximum of #10,000 per post office. If one wants to go further, there is no funding to do so. More importantly—the Minister carefully avoided mentioning this—the sub-postmaster must come up with match funding. How will any sub-postmaster raise a loan against a falling revenue stream in order to match the fund's #10,000 commitment? That simply will not happen. This urban reinvention will not take place. Will the Minister tell us in his reply what has already happened to the—I think—#30 million that has been pledged to inner-city deprived areas? As I understand it, very little of that money—if any—has yet been spent. That is the track record of urban reinvention in inner-city areas.

In many ways, the problem is even worse because the assumption on which the calculations are made is that a third of urban post offices will close. I have a letter from a sub-postmaster who speaks on behalf of Manchester sub-postmasters telling me that 60 per cent. of Manchester sub-post offices are planning to close. We are therefore facing a third closing with the Government's compensation package, a third continuing without compensation but not making money, and a third carrying the weight of the business.

Mr. Michael Connarty (Falkirk, East): I share the hon. Gentleman's general concern about people being able to reinvest, but I know of an enterprising sub-postmaster who has linked up with one of the minor supermarket chains and reinvented his store. It has now become a major focus for the community in which I live. He has either found the money from the bank, with the backing of the chain, or has found it directly from the chain with which he is partnered.

Dr. Cable: The hon. Gentleman describes an interesting trend, which I have seen. He is talking about post offices housed in Londis seven-11 stores. It is an interesting idea and if it works I shall be delighted for the people concerned, but he may not be aware that the National Association of Convenience Stores has said that the arrangement is very unsatisfactory. Many such stores are trying out the idea, but they have no commitment to the customers as postmasters did, and there have already been several examples in both convenience stores and supermarkets of post offices closing with little consultation. The idea is interesting, but the evidence so far is that it is not a solution to the problem.

The reason that that is not a solution to the problem—this goes to the heart of the business and answers the question that we have been asking ever since the Government announced automated credit transfer—is that we do not know where the #400 million income that post offices will lose as a result of ACT will come from. We now know that it will not be from XYour Guide". It was hoped that they would at least get something from the universal banking provisions and particularly the post office card accounts.

The Conservative spokesman correctly touched on the mounting evidence that Departments other than the Department of Trade and Industry, especially the Department for Work and Pensions, are, with Treasury backing, actively discouraging applicants from using the

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post office card accounts. They are actively sabotaging the work of the Minister's Department. This is a very serious matter.

I have here a pack that is being issued to people who want tax credits. It is very complicated; I honestly do not know how people who have problems of financial exclusion can cope with this plastic pack which contains many documents. On the page on which it deals with payments, it says that if somebody wants their credit to be paid into a bank, they must simply supply their sort code and account number. However, if they want a Post Office payment, they are advised to go to page 36 of the explanatory notes. I eventually found the explanatory notes and page 36 where it next instructed claimants to ring the helpline. We tried to do so but could not get an answer. That is the kind of maze of bureaucratic instruction that people are beginning to encounter if they try to use a post office card account.

If one wants a bank account, one just fills in a form. If one wants a post office card account, one has to be interviewed.

Matthew Green (Ludlow): Have my hon. Friend's constituents raised similar concerns to those raised with me about how during such interviews they feel pressurised not to take up the card account?

Dr. Cable: I have indeed; I have spoken to some people about the pressure that is being exerted. Hon. Members should prepare themselves to encounter this in their constituency surgeries. People are being told that if they go for a post office card account, the cash will arrive a month late. They lose a month's liquidity. I have discussed the matter with young women who have been split from their partners—this is even more disreputable—when talking to them about arrangements for the working families tax credit. They have been told that they are best to go through a bank otherwise the tax credit will be paid to their partners—losing all the benefits of the enfranchisement of women that the tax credits were supposed to create. Those are the kind of tricks that Department for Work and Pensions officials are getting up to—bullying people into giving up their opportunities to use the Post Office.

Mr. David Laws (Yeovil): Has my hon. Friend heard the complaints from sub-postmasters that I have heard in my constituency that it is staggering that even at this stage no information is being made available in accessible form either by the Government or the Post Office about how the card account will work? That reinforces the pressures that he is discussing.

Dr. Cable: Indeed; there is no proper explanation. The people who are promoting the migration are well informed of the benefits of using banks because they set them out. Draft material from the Department for Work and Pensions sets out in argued form why people should enjoy advantages by using a bank, but does not explain—the Minister did not either—that people on low incomes are subject to extremely high charges if, for example, they fall foul of standing order provisions. The presentation is entirely one-sided. All that the postmasters have been asking for is even-handed treatment. They are not asking for preference or protection. All they are saying is that the relative merits

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of a post office account and a bank account should be dealt with even-handedly and that people should be given an equal opportunity to use one or the other.

On top of that—the Minister knows about this although he did not refer to it—there are serious problems concerning both groups of sub-post offices. First, there are the modified sub-post offices—larger units that are often staffed by ex-Post Office employees. Many are in an appalling financial position as a result of the type of contracts under which they operate, which often do not even cover their staff. I met a group of people representing modified sub-post offices in Yorkshire a couple of months ago. Their position is parlous. As the smaller units close with urban reinvention, such post offices are expected to carry the burden, but they are not in a position to do so.

The other group of sub-post offices, as the Minister should have acknowledged, is currently in the middle of a serious dispute over the terms of their contracts. The federation representing them has said that the entire reinvention programme is Xhanging by a thread" owing to the lack of certainty over their contractual future. The position is very serious.

My final point concerns the mechanism used when post office closures occur. Several Labour Members have asked with an open mind for assurances. They have said that they accept that closures must occur but that they want to be assured that there is a proper appeal procedure and that local councillors and Members of Parliament will be consulted. That is fine, but let us look at the evidence put forward by the consumer protection body Postwatch. It has been clear from the beginning that it did not see a justification for 3,000 closures and that that was way in excess of what was required. It has however said that it will help with individual cases, judging the viability of particular post offices. It can only deal with three or four such cases at any time, not 3,000. It will be overwhelmed by the sheer volume of closures.

When such matters are dealt with properly and carefully, sensible decisions can be made. In the past few weeks, the Post Office has gone back on a closure at Child's Hill in London as a result of Postwatch intervention. If a closure programme is carried out gradually, carefully and slowly, it can be managed, and restructuring can take place, but the Government's scheme will bring about a disorderly collapse and cause a great deal of harm.

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