Draft Sub-Post Office Start-Up Capital Subsidy Scheme Order 2001

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Mr. Richard Page (South-West Hertfordshire): I welcome the Minister to his post and thank him for his comments about the measure, which we also welcome. However, I commiserate with him on being handed the poisoned chalice of the Post Office. That cup is brimful of problems. Whenever Post Office matters came up in the last six or nine months of the previous Parliament, I could see a hunted and haunted look in the eyes of his predecessor, as he realised the dilemmas facing the Post Office and sub-post offices in particular.

We are certainly not going to vote against the measure because we welcome anything at all that will help our beleaguered sub-post offices, but why is it before us today? It is because of the clumsy way in which the Government announced the removal of benefit payments through sub-post offices. They saved a magical £400 million, then suddenly discovered, to their amazement and horror, that a large number of sub-post offices would be ruined. It became apparent to them that some 30 to 40 per cent. of sub-post office incomes came from the payment of benefits. In some cases—not all cases, obviously—that income stream made up as much as 70 per cent. of their income. At a stroke, the Government devalued our sub-post offices and put them at risk.

The Minister makes much of the fact that the Government removed the entry cost, but they had to do that because no one wants to take on sub-post offices any more. They used to be a valuable asset, but their value has been dramatically reduced. People who put their life savings into them have seen the value of their investments slashed due to the Government's introduction of a policy that was stupid and badly thought through.

Sub-post offices are closing at record rates. Last year, more of them closed than ever before. Sadly, that closure rate is continuing. Our sub-post offices provide a unique and valuable support system for our communities, and the Government have had to scramble around to find ways to prop them up. I wanted the Minister to say more about the figures with regard to universal banking services; the actions that he plans to take, and how much they will cost, are still shrouded in mystery. Whenever I asked the previous Minister, he would always reply, ``Manana, manana.'' We are still waiting to learn how much sustaining the present situation will cost taxpayers, clearing banks and other financial institutions. It is time that we were told the true cost.

A sum of £2 million does not even amount to a sticking plaster over the gaping wound that the Government have slashed across the face of our sub-post offices. Consignia's accounts show that it is operating on the edge, and that its profits do not match those of previous years. I have spent some time studying Consignia's accounts and, as models of clarity, they are not in the first league; it is not easy to extract financial information from them. If my sums are wrong, the Minister can shoot me down, but, so far as I could work out, Post Office Counters Ltd. lost at least £100 million last year, and possibly as much as £130 million. When faced with losses on that scale, £2 million will not help much to solve the problems. The entire Committee must realise that. [Interruption.] I am unsure whether the hon. Member for Bexleyheath and Crayford (Mr. Beard) is nodding or shaking his head, but we face a severe financial problem with regard to keeping alive our sub-post offices.

I want answers to a few questions. Compared with the previous year, there was a much greater reduction in the number of post offices last year—in excess of 500, I believe. That is a record figure. Will the scheme that is proposed under the draft order help to ensure that there is not another record level of closures this year? How many restarts will be achieved, and how many closures will be prevented, due to the measure?

The scheme does not provide financial assistance to protect rural post offices between 2003 and 2006. In July 2000, the Government's spending review announced funding of £270 million to help to solve the problem that had been created by their inefficiency. What can the Minister tell the Committee about the progress of the wider scheme to keep open rural post offices?

My next question concerns an issue that I am sure has not been deliberately omitted. I understand that the Department for Transport, Local Government and the Regions has been awarded £15 million to spend on improvements to post offices in deprived urban areas of England. What is being done to protect post offices that are located in similar areas in Scotland, Wales and Northern Ireland?

I conclude, however, by reiterating that we welcome the measure. Opposition Members will support anything that keeps our sub-post offices open.

4.49 pm

Brian Cotter (Weston-super-Mare): I, too, welcome the Minister to his new post. I hope that he will show the determination and enthusiasm shown by his predecessor in standing up for the Post Office. Unfortunately, he was not always successful, but he went to the wire with the Chancellor of the Exchequer on the issue because the House was becoming extremely worried. We have had some responses from the Government, but the issue is very much on-going.

As recently as April, my hon. Friend the Member for Newbury (Mr. Rendel) asked about the rate of closures according to the Government's latest figures. The Minister has said today that 200 sub-post offices will be helped by this measure, but in April we were given the figure of 382 closures, so there is considerable concern.

Will the Minister clarify what the cut in entry costs means for sub-post offices? Does it mean that no payments or capital expenditure will be involved, regardless of where they are sited? Presumably, Consignia must be held to account to ensure that it helps with entry costs.

I support the hon. Member for South-West Hertfordshire (Mr. Page) in expressing concern about the urban situation. I should like clarification because the draft order refers specifically to rural post offices. I am not clear about whether there is a similar scheme for urban post offices. In my constituency, one sub-post office recently closed in an urban area, and it is incorrect to suggest that the problems of deprivation and access for old people do not apply in such areas. The transport problem applies not only to old people, but to disabled and various other people. The same problems often exist in urban areas, where sub-post offices seem to be the hub of the community. The issue of urban post offices is therefore extremely important.

It is of great concern that post offices are already losing revenue because people have anticipated that their benefits cannot be paid in the regular way through sub-post offices. I think that there will be a relevant scheme in 2003, but post offices have already lost income. We have talked about the universal bank replacing some of the lost business and we all hope that that will help, but a considerable gap still needs to be made up to prevent £400 million or thereabouts from being lost.

The universal banking services scheme will represent a gain of £100 million. It is an encouraging initiative, but we must take into account consumers' needs. In fact, the initiative will cover the major banks and perhaps one or two of the major building societies, but not many of the thousands of smaller building societies upon which many people depend for their savings and so on. Those building societies will be at risk as well as consumers if they cannot access the scheme.

We need therefore to deal with many issues. The Minister considers that the measure will help 200 sub-post offices, but there were 382 closures in the last year for which figures were available, so we are talking about a big deficiency.

Mr. Page: I think that the closure rate is considerably greater than the hon. Gentleman has said it is. The figure for the post offices that may be saved should be treated with caution.

Brian Cotter: I thank the hon. Gentleman. I am quite prepared to believe what he says. I am going on the last declared figure. My hon. Friend the Member for Newbury was told on 23 April that there were 382 closures. The figure may well have increased since then. We are talking about a large number of sub-post offices. I am concerned about urban post offices, too, and the fact that, although the draft order helps and is more than merely a lick of paint, it is confined to the building and various things within it. I look forward to hearing the Minister's comments.

4.55 pm

Sir Robert Smith (West Aberdeenshire and Kincardine): I reinforce what the Minister said about the vital role that sub-post offices play, particularly in rural communities. In many communities in my constituency, they are the last remaining public access point. Once they are gone, nothing is left at the hub of the community. The hon. Member for South-West Hertfordshire and my hon. Friend the Member for Weston-super-Mare (Brian Cotter) pointed out that we are here because of the money taken out of the system as a result of the Government's change to the way that benefits are paid. The draft order provides assistance to get over some of the capital hurdles, which in many rural areas will be substantial. New premises may have to be found if the old sub-post office was in the home of someone who still wants to live in the community and cannot offer the facilities to the next person who might want to run it.

The scheme might work more effectively if there were a more attractive income prognosis. It should be made clear to benefit recipients that, until such time as the system changes, they can still use the sub-post office. The local community should be encouraged to bring as much business to their sub-post offices as possible by using them to pay their council tax, rent and so on. Such transactions, which do not cost anything, will help to make it more attractive to a new owner to start up.

I wondered why 18 months was chosen as the limit beyond which one cannot try to resurrect a sub-post office. The Minister mentioned an estimate of 200 post offices at an average of £10,000 per start-up. How were those figures arrived at? Were they arrived at following research by Consignia, or was wider research undertaken? He mentioned that it was an on-going source of funding. Once the £2 million is used up, are there plans to bring forward further tranches of start-up grant because this is a problem that will not go away? Obviously any step in the right direction must be welcomed, but I hope that the Minister will recognise that it is a small step and that there is still a big job to be done if we are to save our sub-post offices.

4.58 pm

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