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

[back to previous text]

Mr. Alexander: This has been an interesting, if somewhat truncated, debate on a significant issue that is important for the future of rural post offices throughout the United Kingdom. I thank you, Mr. O'Brien, for chairing the Committee. I also thank Opposition Members for their kind words in welcoming me to my ministerial post.

I was intrigued that the hon. Member for South-West Hertfordshire chose certain phrases to describe my brief. I do not share his view of the Post Office as a poisoned chalice. That view is perhaps a sad reflection of the record of previous Administrations on modernising what is a vital network throughout the country. The years of stagnation in the Post Office have exacted a considerable toll and the cause of modernisation is not well served by standing in its way.

In answer to the hon. Gentleman's specific point about benefit payments and ACT, I do not believe that we will create a post office network for the future by preserving outdated mechanisms of payment. Indeed, we will have to move the whole network forward if we are to ensure a sustainable future for the network, which I believe most of us want. The Post Office card account and policy action team 14 options will be modern, flexible and accessible through the post office network as part of the universal bank. Those will be significant income streams beyond 2003.

The hon. Gentleman raised a point about the Post Office's recent results. Although Consignia has returned to profit following the loss recorded last year due to the exceptional costs of the Horizon project, the Government agree that still more needs to be done to improve the company's performance. On the effect of those results on the network, the Government remain committed to maintaining a viable nationwide network of post offices, which is being done through investment and modernisation, and to implementing all the recommendations of last year's PIU report. Progress is being made not only by the Department of Trade and Industry, but by other Government Departments.

Entry costs and their effects were mentioned. They constituted an introductory payment of 25 per cent. of the post office's income in the first year. They were abolished because we felt that they were a significant hurdle in the way of both the community initiatives and the commercial options that are available when a post office closes for retirement or other reasons. The costs stood in the way of many potential commercial solutions for the post office in rural locations.

Brian Cotter: Is that 25 per cent. being waived in all cases and permanently?

Mr. Alexander: I think that I can give the assurance that the hon. Gentleman wants. The agreement was reached with Post Office Counters Ltd., and was one of several measures that dealt with sub-postmasters' concerns about the initial contract that they established with POCL. We felt it reflected a significant step forward in allowing people to take over vital local post offices.

The rate at which post offices have closed over recent years remains a regret, not only for the Government but for all Committee members, and the question was raised as to whether there would be funding beyond 2003. The scheme that we are debating offers a significant contribution to the protection of the network by dealing with some concerns caused by the transition. A separate tranche of support will come on stream from 2003, which includes the universal bank, the Government general practitioner scheme and direct Government support for the rural network. To that extent, we are dealing with the problem of uncertainty caused by the transition.

The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) asked about the £2 million funding. That is a fixed sum, but the timing of its allocation depends in part on the approaches that we receive. It is limited because, as I have said, there are several income streams that we believe will sustain and support the post office network after 2003. We anticipate that the £2 million will primarily be allocated between now and 2003.

Mr. Page: We are all on the same side, but the Minister is talking about the marvellous income streams that will come in 2003 to help sub-post offices to stay alive. Sub-post offices must know in advance that those resources will come on stream and they will want to cost them. As I said earlier, his predecessor was in manana mode, so will the Minister tell us now when an announcement will be made about the strength and value of the income streams available to sub-postmasters and mistresses? That would give them confidence to take over sub-post offices and to keep them going. Will he also guarantee that, if people wish to draw benefit payments as cash, they will remain available over the counter at sub-post offices?

Mr. Alexander: I can give an assurance on the second question. It remains Government policy that benefit claimants will be able to receive payments in cash over the counter. On the more substantive point about the additional revenue, that will primarily come from the payment of £270 million, which was ring-fenced from comprehensive spending review 2000. My predecessor—I pay tribute to his support and work for the rural network—has been in anything but the manana mode. We secured £480 million of investment for automation, primarily for computerisation of the rural as well as the urban network, which has proceeded apace. Significant progress has already been made—again, a contrast with the sad failure of previous Governments to ensure that rural and urban post offices were computerised.

Of the £270 million from CSR 2000, £35 million has already been allocated for the Government general practitioner scheme. As I mentioned, that is being trialed from this month in Rutland and Leicestershire. The £15 million from the Department of the Environment, Transport and the Regions is to ensure support for the separate challenges that the urban network faces. Those sums have already been allocated from the £270 million. The comfort and assurance that the network seeks about income streams beyond 2003 will be strengthened by further work to do with the universal bank and the review of the Government general practitioner scheme pilot that is under way in Leicestershire and Rutland.

Mr. Page: So manana.

Mr. Alexander: I disagree with the hon. Gentleman's characterisation.

Sir Robert Smith: The Minister's assurance that cash can still be obtained over the counter stands good only if there is still a counter operating in the community. Therefore, if the £2 million is used up more quickly or proves more effective in helping than he expects, will he consider whether the scheme should be funded further?

Mr. Alexander: With the greatest respect to the hon. Gentleman, the discussion focuses on a draft order for £2 million. Any subsequent funds would be for discussion on another day. The figure of £2 million was reached in consultation not just with the Post Office.

The point was raised about how we came up with the figure of £20,000 as a specific sum for the support of community sub-post offices. That figure gives significant headroom over the sum that we estimate will actually be required, on the basis of discussions with rural transfer advisers. The view that 200 sub-post offices can be supported by the revenue reflects the fact that the sum involved is often significantly less than £10,000. We wanted to provide maximum headroom and allow for every eventuality.

Leaving aside for a moment the issue of support of the rural network, the hon. Members for South-West Hertfordshire and for Weston-super-Mare made points about urban deprivation. I represent an urban community that has significant problems of deprivation. I am fully aware of the difficulties that such communities face and the significant contribution that local post offices make to the capacity of the community to sustain itself. For that very reason, I welcome the £15 million that was allocated through the DETR to support the urban network. However, I make the same point that I made in relation to the £2 million for 2003: it is a specific sum that has been allocated. A raft of proposals about the renewal of the urban network—the challenge of ensuring that we have bigger, better and brighter post offices in our urban locations—is still to come. That separate dimension will be dealt with through the £270 million allocated from CSR 2000, for which we will make proposals in due course.

The issue of consequential funding was raised. Given that the £15 million is DETR money, consequential funding has obviously been allocated, consistent with general policy, to Scotland, Wales and Northern Ireland. It is for the devolved Administrations to decide what provision to make for post offices in deprived urban areas within their communities. That deals with the specific point about devolved Administrations who are not covered by the DETR.

I hope that I have dealt with the point that was made by the hon. Member for Weston-super-Mare about the urban network, recognising both the significant contribution that it makes and the fact that in time we will return with specific proposals to support it. Today's discussion and the scheme before the Committee reflect the fact that the urban and the rural network face different challenges. A one-size-fits-all approach would fail to recognise that many of the challenges faced in rural communities are somewhat different from those faced in a constituency such as mine. It is important that the Government have recognised that in their proposals for the reinvention and renewal of the urban network and for new income streams for the rural network.

The final point that the hon. Gentleman raised concerned the relationship of Post Office Counters Ltd. to the scheme. One of the most attractive features of the scheme is that it will ease the transition from a potential closure to a community initiative by ensuring that the people to whom the community must speak are the same. It would be unnecessarily clumsy to have discussions with rural transfer advisers and an entirely separate stream of conversations with the Government about the support that could be made available. While retaining the Secretary of State's discretion, we have been able to integrate the scheme, so that a community goes to the same point for advice about taking on a post office and the support that is available.

That bears on a separate point that was raised by hon. Members about the time scale of 18 months. If the draft order is agreed in Committee and in the other place, the scheme will cover not only post offices that may close in future but all those that are deemed temporarily closed at the moment. Of the most recent closures, only four are deemed permanent and so a significant number of sub-post offices could be affected. That suggests the merits of an expeditious approach to ensure that the draft order is passed.

The reason why the time scale is 18 months—the Post Office definition of temporary is a year—is that an extra six months seems a reasonable time for discussions to establish whether a community scheme is viable. If it had been merely a year, some worthwhile schemes might not have come forward. Eighteen months reflects the traditional definition of a temporary closure as a year, plus the six months necessary to hold discussions with the community. I was asked whether the scheme could apply to the closures this year. It most certainly could: if those closures, with the exception of the four I mentioned, are deemed temporary, they will be covered by the scheme.

The draft order will ensure that postal services can be provided in some of the most isolated and rural communities in the country. It will be of benefit to thousands of people living in hundreds of villages and small settlements up and down the United Kingdom.

Question put and agreed to.


    That the Committee has considered the draft Sub-Post Office Start-Up Capital Subsidy Scheme Order 2001.

Committee rose at thirteen minutes past Five o'clock.

The following Members attended the Committee:
O'Brien, Mr. Bill (Chairman)
Alexander, Mr.
Bacon, Mr.
Barker, Mr.
Beard, Mr.
Colman, Mr.
Corbyn, Jeremy
Cotter, Brian
Linton, Martin
Page, Mr.
Pearson, Mr.
Pollard, Mr.
Quinn, Lawrie
Shaw, Mr.
White, Brian

The following also attended, pursuant to Standing Order No. 118(2):

Smith, Sir Robert (West Aberdeenshire and


Previous Contents

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2001
Prepared 9 July 2001