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Post Office Services (Morden)

1.30 pm

Siobhain McDonagh (Mitcham and Morden): I am grateful to have secured the debate on an issue that is of great concern and worry to my constituents who live in and around Morden. I secured the debate to express as strongly as I can in this place the local anger that has been caused by the cavalier announcement by Safeway on London road in Morden that it will close its in-store post office. The closure threatens a vital public service in the centre of Morden.

The debate is not only about the future of postal services in Morden, although that is an important issue, especially on a day when the Communication Workers Union is lobbying the House. It is also about the future of Morden, its shops, services and civic identity, as well as the future quality of life for local residents, especially pensioners and those with limited mobility who rely on the services in Morden.

Post offices in town centres such as Morden provide an essential community service, and the council and local residents welcomed Safeway's request to include a post office in its in-store services when it opened in the mid-1990s. The in-store post office saved a postal service when the old Abbotsbury road post office closed. Incidentally, that building is still there and is empty.

One only has to look at the long queues that form whenever the post office is open to see how essential a post office is to Morden town centre. It is not slowness of service that causes the queues but the popularity of, and need for, a post office. People collect their pensions, pay bills, add to their savings, buy stamps and apply for licences. Each activity is essential to them; it is an essential part of a service that they have every right to expect. That service is in peril for no apparent reason other than Safeway's wish to maximise its floor space. The chain has given no rational justification for its decision, which appears to have been taken for national business reasons. It is blind to local need and its responsibility to a vulnerable town.

It is small wonder that people are cynical about big business and its so-called corporate social responsibility. I understand that a meeting is taking place this afternoon, during which the council intends to push for some answers. Morden's post office is being treated like redundant stock or a discontinued line. That is utterly unacceptable, and I would welcome the Minister's assurance that he will make strong representations to Safeway to change its decision. I have written to Safeway, and I urge him to do the same.

At a time when Merton council is striving hard to sustain shops and services in Morden and to attract new businesses to the area, it is totally counter-productive and shows a serious disregard for the needs of customers for a major trader such as Safeway to decide that it no longer needs to house a post office. I have received many calls, letters and e-mails from local people who have heard that the post office is to close. They tell me anxiously that they have heard that other shops in the town centre will soon follow suit. They ask me what will be left if such and such a shop goes, and what the Government are doing for Morden.

Rumours have a habit of starting when something as significant as a post office closes. That is understandable when people are worried for the future of their town

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centre. In this case, I am confident that the rumoured closure of those other shops is just that—a rumour. However, as the Minister will doubtless agree, in high street after high street, in town or country, once a post office goes, that service vacuum sucks significant life out of the local economy. People start to go elsewhere, and the future of other shops begins to seem doubtful. As a sign displayed in the window of a furniture shop says, "Use us or lose us".

The rumour mill can have a damaging effect on the efforts of local authorities and other bodies seeking to regenerate an area and encourage new investment. It can have a demoralising effect on local people when they look around and see empty shops, pound shops or a proliferation of charity shops. Fantastic as the work of charity shops is, it must be said that they do not provide the sort of shopping opportunities that a town such as Morden needs to get back on its feet.

A domino effect starts when a post office closes—not an effect that the people of Morden want to see. They have enough to contend with. Antisocial behaviour and youth nuisance—graffiti, fly tipping, abandoned cars and the general lack of respect for the community—are giving the area, previously regarded as well-off suburbia, an undeserved bad name.

So far I have spoken about my local area. Many facts can be supplied to back up the emotion. I shall draw on the results of two surveys. The first, conducted by Merton council in 1999, comprised

In seeking to define the catchment areas for Wimbledon, Mitcham, Morden and Colliers Wood, including the Savacentre based there, the study drew on earlier research into Wimbledon and a residents' survey of February and March 1999. The study reported a significantly high level of empty premises in Morden and showed that Mitcham and Morden displayed a relatively high number of convenience retailers, as opposed to comparison goods retailers, against the national average. It further demonstrated the limited investment in Mitcham and Morden, noted that shopping in those places was characterised by locally based comparison and discount retailers, and highlighted the lack of a critical mass and anchor store to support other multiple retailers.

Specifically focusing on Morden, the survey indicated that 20 per cent. of respondents had been using Morden town centre less often for shopping over the past five years. The main reasons provided by 52 per cent. of respondents for their declining use of shopping facilities were the quantity and quality of shops. The Savacentre in Colliers Wood, a huge pantechnicon of a hypermarket, opened some years before the five-year period started, drawing people away from Morden in the absence of much that would induce them to stay. We should not forget that that was before the other two local shopping centres in Colliers Wood—Tandem and Priory Park—were fully operational. The main destination for food shopping was Savacentre at Colliers Wood, used by 33 per cent. of respondents.

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Twenty-eight per cent. used Safeway in Morden for their main food shopping. The majority of top-up food shopping was undertaken in Morden.

It was noted that the use of the town centre for shopping was declining and that the most desired additional facilities were better quality clothes shops, mentioned by 39 per cent. of respondents; shoe shops, mentioned by 33 per cent.; a cinema, mentioned by 22 per cent.; and a Marks and Spencer's, mentioned by 15 per cent. Interestingly, if we substitute the Co-op department store for Marks and Spencer's, those are the sort of shopping facilities that Morden used to boast of before its decline.

I have carried out my own survey in the Morden area since the beginning of autumn. From time to time, I carry out surveys in different areas of my constituency to ascertain what is concerning local people and to keep in touch with their worries. Hundreds of residents responded to my survey, either on the doorstep, on the phone or by freepost. I should take a moment to praise the valiant postman who delivers my mail to my constituency office. While he retains his job, there is hope for postal services in Morden.

Morden residents who responded named crime and environmental problems such as graffiti and fly tipping as their two major concerns, but almost without exception they were unsatisfied with the facilities and appearance of Morden town centre as well as the intimidating gangs of youths gathering outside the tube station. Though praising the excellent transport links that local residents have on their doorstep—the Northern line, the nearby tram, two Thameslink stations and the many buses running from outside the tube station—they virtually all commented on the unkempt nature of the town centre and the lack of adequate shops.

Merton council is working to cure the mismatch between excellent transport links and poor town centre services. As long as we protect essential services such as the post office, there is no earthly reason why Morden should not have a town centre to be proud of. I call on Safeway to live up to its much-vaunted corporate social responsibility by providing a post office service at least until a suitable new venue in the heart of Morden and a new postmaster can be found.

Given the strong local opposition to the proposed closure of the post office, I would be interested to hear the Minister's comments on the review of urban post offices, which has just begun. It has already caused disquiet in several corners of my constituency, and the visit by a local development manager was taken to be the death knell for the local post office. Given that all my constituents rely on urban post offices and that all the post offices in my constituency are to be reviewed, I would be grateful for my hon. Friend's assurance that the review will be carried out with due regard to residents' customer needs and to securing the future of communities. Can he tell me what safeguards are in place to ensure that the process is transparent and welcomes residents' views?

As I said, post offices are vital community services. The initial closure of Morden's purpose-built post office in Abbotsbury road and its transfer to under Safeway's roof, under the banner of Post Office modernisation, were greeted with scepticism, and it would appear that

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local fears were justified. Once a corporate partner such as Safeway decides to operate a post office counter, it should not have the freedom simply to renege on its commitment, in the same way that it might randomly decide not to stock any more cans of beans. If there is such a thing as corporate responsibility—I presume that the Minister thinks there is, because it is part of his portfolio—it does not appear to have been worth more than a can of beans in this instance. I would welcome his comments on anything that he can do to encourage Safeway to take a more socially responsible look at its duty towards the people of Morden.

1.41 pm

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms) : I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on securing the debate. She has a deep understanding of the issues that affect the quality of life of her constituents and, in particular, her elderly constituents. She also has a good understanding of the tough challenges facing the Royal Mail Group, and she has spoken about that on the Floor of the House.

I listened carefully to what my hon. Friend said about Safeway's behaviour and I well understand her concern. My understanding is that the post office franchise in the Safeway store formally came to an end on 1 November, and that the store originally proposed a closing date in January—that is to say, next month. I am told, however, that it subsequently moved the date to October 2003, not least in response to representations from my hon. Friend. She referred to a further meeting, which is due to take place this afternoon.

It is certainly the intention and the hope that Post Office Ltd., which is responsible for the post office network, will continue to provide a post office branch facility in my hon. Friend's area. It is continuing its search for suitable premises and for someone to run the business. I hope that delaying the closure until October will give it an opportunity satisfactorily to achieve that.

My hon. Friend asked me to comment on the process on which the Post Office is embarking in relation to the urban post office network. I assure her and the whole Chamber that we fully recognise the importance of the sub-post office network. We are committed to maintaining the network, because sub-post offices are very important. She made the point very effectively that they are important focal points for local communities. That is well understood in the context of rural areas, but it needs to be understood equally in the context of urban areas. Post offices are very important for urban communities and, in particular, for the elderly and those who are less mobile.

The post office network serves 28 million people each week. It is the largest retail network in Europe. It has half as many branches again as all the banks and building societies in the country put together. It is precisely because it is so important that the Post Office needs to respond to the changing demands of its customers and to the opportunities arising from new technology. The truth is that people are not using post offices as often as they used to, and that presents challenges to Post Office Ltd., to the individuals who run post office branches and to us in government, too. Some 42 per cent. of benefit recipients now access their benefit

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payments via bank accounts rather than by order books, compared with 26 per cent. in 1996. There has been a sharp drop in the number of people using giros and order books for reasons that we can all understand.

Over the past five years, the number of recipients of retirement pensions and widow's benefit payment has increased by 1 million, but the number of those paid by order books and giros has decreased by more than 1 million: from slightly more than 6 million to less than 5 million. Incapacity benefit payments at the post office have fallen even more dramatically, from more than 2.5 million to less than 1 million. Similarly, over the past five years, Girobank transactions at post offices have fallen by 37 per cent. and the number of stamps sold at post offices has declined.

Such changes create big challenges for the Post Office. Last year, it's overall operations lost £1.1 million per working day. A major process of change is now taking place. It is backed by substantial investment on the part of the Government to enable the Post Office to be renewed and to return to commercial good health. The problems in the network have affected the ability of sub-postmasters to sell on their businesses; they have taken a severe knock. A vibrant market in respect of the buying and selling of post offices is important to sub-postmasters who serve their communities.

My hon. Friend is familiar with the fact that the Prime Minister asked the performance and innovation unit to develop a strategy for modernising the post office network. Its report made 24 recommendations, all of which were accepted by the Government. Since that acceptance was announced, we have been working closely with Post Office Ltd. and the National Federation of Sub-Postmasters to implement the recommended measures. The PIU found that, over the years, the network of post offices had not kept pace with change, or built on its highly trusted status to develop a wider range of financial services. The Post Office is uniquely trusted; it is one of the most trusted brands in the country, which gives it huge potential. The unit found that it had lost touch with what many of its customers wanted; that it was losing business. As business people, sub-postmasters have found it increasingly difficult to make a living and have begun to leave the network in increasing numbers.

In many urban areas throughout the United Kingdom, there is too little business for the number of post offices that are operating. Of just more than 9,000 urban post offices, more than one in eight has 10 or more other branches within a mile and 155 post offices have 15 or more other branches within a mile. The volume of business is not sufficient to support so dense a network of branches. The Post Office is taking forward a programme that is intended to restore the urban network to commercial viability, restore the confidence of sub-postmasters and attract much-needed new investment so that customers can continue to enjoy access to a full range of services. It must be able to deal with problems such as that described by my hon. Friend when she referred to the decision by Safeway, and be willing to open and to run a replacement office.

My hon. Friend has asked me to set out some of the thinking behind the proposals that Post Office Ltd. has made for closures under the programme that I mentioned. Those proposals will be determined on the basis of the proximity of offices in a particular area, the

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current and projected business volumes of each office and whether individual sub-postmasters have already indicated that they want to leave the network, which is important in the early days. Post Office officials will walk the streets in every area and make a careful study of the location of the offices relative to each other. Those officials will consider important factors for customers: the convenience of alternative branches nearby, if there are any; the availability of public transport links; the provision of access for the disabled and other facilities for people with mobility impairments; and the ability of branches nearby to absorb the extra work that may result from the closure of a particular branch. There may even be potential for expansion in such branches.

A formal consultation will be carried out before any changes are made, in accordance with the existing code of practice on post office closures. That is designed to meet the call for transparency that my hon. Friend underlined. In every case, that would involve consultations with local communities, interest groups, councillors and Members of Parliament. In every instance, there would also be extensive consultations with the consumer body Postwatch, which has taken seriously the importance of its role in the process. We have given that body additional resources so that it can do the job thoroughly and well.

One aim will be to ensure that, if a particular office needs to close, it is as easy and convenient as possible for customers to use other offices nearby. Another aim will be to maximise the amount of business from a closing office that can be captured by other branches nearby. It is, of course, in the interests of the Post Office to retain as much of the business from the office as possible. Equally, it is in the interests of all of our constituents that their concerns be taken fully into account. The programme will start with smaller urban post offices, in which sub-postmasters are under the greatest pressure. The National Federation of Sub-Postmasters has had a full discussion with the Department and the Post Office about how the process can be taken forward as successfully as possible.

There is, properly, a compensation process for sub-postmasters whose post offices will close. European Commission approval for Government funding of that compensation was received on 18 September. Parliamentary approval for the programme itself was gained on 15 October. Post Office Ltd. wrote to all hon. Members on 25 October with a full explanation of its objectives for the programme. When a sub-post office closes under the programme, the Government will meet the costs of compensation, which we expect will total £180 million over the next three years. In addition, a further £30 million will be available for modernising, adapting and investing in those post offices that remain. That will apply, for example, if it is necessary to add another counter to a post office so that it can handle the extra business that comes its way. The key to improving the standard in the offices that remain will be the increased volume of business that they can expect. There will also be grants of between £5,000 and £10,000 for each office that expects to take on a significant number of additional customers. That amount should be matched by the proprietor of the office. Those grants will also be an important boost for the offices that remain.

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This is the first time that there has been a programme of Government investment in urban sub-post offices. That programme is an additional measure to those that were recommended in the performance and innovation unit report. The fact that investment is being made reflects the importance that the Government attach to the urban sub-post office network. The Post Office will generally require offices that receive trade from an office that has closed to improve their facilities and to increase their opening hours, so that increasingly sub-post offices will maintain the same hours as associated retail business. That will considerably improve access to post office services for customers in urban areas.

I think that my hon. Friend will agree that having a properly managed programme of the kind that I have described is preferable to the alternative, which would be unmanaged closures resulting from dwindling income. Without the programme, many more urban sub-postmasters would shut their business altogether—not for the reasons that applied in the case that she described, in which the decision was made by a big corporate organisation, but because the sub-postmasters felt that they could not carry on with such a falling off in business. Such a random process of unmanaged closures would cause much greater disruption to customers than the properly managed process that I have described.

Even after the changes, when whatever closures are needed have taken place, 95 per cent. of people in urban areas will still live within, at most, a mile of their nearest post office branch. The majority will, we expect, live within half a mile. I assure my hon. Friend that, other than in exceptional circumstances, the scope of the programme will not extend to post offices in the most deprived 10 per cent. of urban wards in the country if they are more than half a mile from the next post office. Indeed, we intend to improve and sustain post offices in deprived urban areas. The Office of the Deputy Prime Minister will shortly be announcing details of a programme of funding to support post office services and the development of associated retail facilities in those deprived districts, precisely because post offices have such an important role in struggling urban shopping centres of the kind that my hon. Friend described.

The programme to restructure the urban post office network will run for three years. It has only just begun. There is no predetermined list of offices that will close. Nor is any arithmetical formula being used to determine the number of closures in an area. Sub-postmasters have already been asked to express possible interest in closing under the terms of the programme, but initial expressions of interest are not binding either on Post Office Ltd., or on the sub-postmaster. Before any changes are made under the programme and before any closures can happen there will be meetings with sub-postmasters and full consultation will take place. Postwatch will examine every proposal and monitor the programme.

The performance and innovation unit suggested not only that the Government should help if the Post Office found that fewer offices were needed in urban areas but that we support the introduction of the concept of universal banking. That will be important for the future well-being of the urban post office network. The introduction of universal banking has been made

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possible because the Government have made the biggest ever investment in the Post Office—£480 million for online computer systems for every post office in the country. We are making good progress on preparations to introduce universal banking services from next April. The ambition is to build on the Post Office's uniquely trusted brand and to modernise and extend its commercial banking arrangements, so that it becomes the nation's leading provider of access to bank accounts—the universal bank. Increasingly, the message to be conveyed to my hon. Friend's constituents will be, "Do your banking at the post office." The Post Office has had some big successes with new products and services, including travel insurance and bureau de change services. We shall need more new

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ideas and additional investment, so that post offices can thrive again by providing the services that people need. All the high street banks have now signed up to their part of the universal banking arrangements. Those will be in place from April through the basic bank accounts offered by all the high street banks and major building societies and through Post Office card accounts. Those will be usable only at a post office. Many people will want that simple form of account, so that they can receive their benefit payments.

Our aim must be to restore the urban network to commercial viability and to restore the confidence of sub-postmasters. That is critical if we are to attract much-needed new investment to the network.

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