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Rural Post Offices

4. Miss Anne McIntosh (Vale of York): What recent representations she has received on the rural postal network. [90935]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): DTI Ministers and officials regularly receive representations from a wide range of people and organisations about postal services and the network, including rural post offices.

Miss McIntosh : I understand that a rural post office is defined as one that serves a community of fewer than 10,000 people. As the right hon. Lady will be aware, the Vale of York has a number of post offices serving such communities. Royal Mail has written to me this week and assured me that there is a downward trend in post office closures, from 125 in the same six-month period last year to 65 this year, but that is still a very high figure. Will she take a personal interest in reopening post offices in villages, such as Sessay, where a young couple operates a farm shop—appropriate premises and people—and take a favourable view? Will she also give the House an assurance that the red post box in rural communities will continue for ever?

Ms Hewitt: I am sure that, like me, the hon. Lady will welcome the fact that post office closures in Yorkshire have fallen from 50 a year to just 21. The #450 million of new funding for rural post offices recently announced to the House will ensure that we can continue to reduce the number of rural post office closures—something that the Conservative Government never did—so I hope that the hon. Lady will welcome that. She referred to a village post office in particular, and of course I will ensure that Post Office management take a very close look at that because the fund that they are already making available, along with more of the #450 million that we are putting into rural post offices, is precisely designed to help to keep open and, in some cases, reopen rural sub-post offices by combining them with village shops, pubs or other community facilities. We have had a great deal of success already, and I will look specifically at the village that she mentions.

David Taylor (North-West Leicestershire): As successive generations of my family ran our village post

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office for most of the 20th century, I am particularly disappointed by what I view as a breach of faith, which has led to the closure of about 1,000 village offices in just three short years. Will the Secretary of State reassure the House that, when the #450 million lifeline ends in 2006, we shall not just return to a haemorrhaging of village offices, with all the consequent social and economic disadvantages for the elderly, the disabled and people without transport in those communities?

Ms Hewitt: I entirely agree with my hon. Friend about the vital importance of post offices in rural communities—something that he knows better than many people. I am sure that he will welcome the fact that we have already put an obligation on the Post Office, which is no longer allowed to close a rural post office unless it is completely unavoidable—in other words, nobody can be found to run it. As a result, we have already halved the number of rural post office closures across the country. As I have just said, we are putting in an additional #450 million to support that, on top of the Countryside Agency grants that already help to keep rural post offices open. Of course, we shall look at the situation again in 2006; we need to see how effective we are with the #450 million that we are allocating over the next three years and we can then consider how to continue to keep that vital local service open.

Dr. Vincent Cable (Twickenham): May I take the Secretary of State to task for serious discourtesy this morning in releasing, an hour ago, a written statement that has far-reaching financial implications for the rural post office network and the network in general, without giving us an opportunity to question her in an oral statement and without even referring to it in answer to a supplementary question? Can she confirm that, in addition to the #450 million for rural post offices, she proposed this morning an extra #1 billion in the form of emergency assistance to the post office network to save it from immediate financial collapse? As #420 million of that money is in the form of short-term loans, can she explain how those loans are to be repaid, since the post office network has been deprived of its main source of income generation?

Ms Hewitt: I announced in June the total funding package for the Mail's business—the use of the #1.8 billion of accumulated gilts and interests—and of course that was done by way of a written statement. This morning, my hon. Friend the Minister for E-Commerce and Competitiveness made a written statement to Parliament, which was tabled in the Library at 9.30. That statement sets out the details of that very welcome financing package for the whole business. About #2 billion of accumulated profits and interest, which in the past was creamed off and returned to the Treasury, is now being made available to the business as part of the entire restructuring plan that will return the Royal Mail to sound health. That includes debt financing on commercial terms of just over #1 billion, which will allow the Royal Mail to implement its renewal plans, and of course those loans will be repaid as the Royal

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Mail, through its restructuring, sorts out its finances. The rest of the money will be used to support the post office network.

Ms Meg Munn (Sheffield, Heeley): Does not the future of rural post offices depend entirely on the funding stability of Post Office Ltd? Does not the statement that my right hon. Friend has just made mean that the financing position of Post Office Ltd. will be much more stable? Will that not benefit urban post offices in areas such as mine, which struggle to continue to provide a service to elderly and disabled people who cannot get to other post offices to collect their benefits and pensions?

Ms Hewitt: My hon. Friend is right. What we have done—starting with the appointment of Allan Leighton as chairman—is to ensure that the Royal Mail and the Post Office as a whole have the leadership, management and financial stability that they need in order to return the business to financial health. All Members of the House understand that rural sub-post offices are, in many cases, not commercially viable. That is why, over the next three years, as part of the overall financing package, we are putting in #450 million specifically to support the rural network.

As regards the urban network, the urban reinvention programme means that by reducing the number of post offices in areas where there are too many sub-post offices for the number of customers, we can ensure that sub-postmasters make a better living and that customers continue to be served. The package is very good for the Royal Mail, sub-post offices and, especially, for our constituents—their customers. I am sure that the House, which welcomed the statement that I made in June, will welcome the details today.

Mr. Tim Yeo (South Suffolk): The Secretary of State has exploited the new system to make a written statement when she should have made an oral statement, and has now amplified that without allowing hon. Members on both sides of the House the opportunity to question her properly. What she has announced is the spending of profits made by the Post Office in the years of the Conservative Government. That is not new money in any realistic sense.

To return to the subject of the question, rural post offices, does she understand not only that the Government's decision to abandon the Horizon project undermined rural post offices but that the preparations for the card account are now in chaos? Will she confirm that the personal invitation document, which should have been circulated to post office customers by the start of this year, has been delayed until 25 March, only six days before the new system is due to start operating? How will vulnerable people in rural areas, who depend on collecting cash benefits from their local post office, be protected?

Ms Hewitt: The hon. Gentleman is wrong. People who want a post office card account simply ring the helpline, and if they decide that they want the card account, the application is sent to them. The post office card account and the broader universal banking services—and the migration to automated credit transfer—are on track, as we said that they would be.

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Not only will they deliver a more efficient benefit payments system with much less risk of fraud but, above all, they will enable all our constituents who want to continue getting benefits in cash at the post office to do so, whether through a card account, a basic bank account or the increasing number of other bank accounts that can also be used at the post office.

Mr. Harry Barnes (North-East Derbyshire): The opening of a post office card account is not as simple as the Secretary of State has just described. People must ring a helpline and answer a set of gruelling questions; they are then told to use their current account if they happen to have one, which is incorrect, and to write in in connection with that. If people want to join a bank through that system, all they have to do is tick a box. Why cannot they just tick a box in connection with the post office card account?

Ms Hewitt: The helpline exists to ensure that all claimants understand the options available to them and make an informed choice. It is up to the customer, however, to decide whether they want to use an existing bank account or open a new account, and if so, whether they want to open a bank account or post office card account. I have gone through the script, as has my hon. Friend. It is a simple and helpful service. The bottom line is that customers decide for themselves what kind of account they want to use to get their benefits and, if they want, to get them in cash at the post office.

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