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7.15 pm
Mr. Stephen Timms: I begin by congratulating my hon. Friend the Member for Gower (Mr. Caton) on securing the debate. I agree with much of what he said about the important role of post offices in local communities, both rural and urban. He rightly raised a number of issues of wider interest beyond Kittle about the future of the post office network, but I shall begin by concentrating on the particular post office that he is, understandably, concerned about.
I must make the point, though, that he will be heartened by the general trend in post office closures in Wales. As he knows, we have made a commitment that there should be no avoidable rural closures. Kittle is designated a rural post office. The number of closures in Wales has fallen sharply in the past couple of years. In the year ending March 2000, 31 Welsh post offices closed. In the following year the number was 68. In the year ending March 2002 it was 26; in the year ending March 2003 it was 18. We have made good progress in reducing the number of closures in Wales.
I am worried that my hon. Friend said that inaccurate information was given in the course of the closure process. I was informed that the post office was due to close on 9 July; he told us that the date is actually 7 July. Perhaps more serious are the inaccuracies that he mentioned concerning the status of the alternative post offices that people will have to go to instead.
On the central issue of whether it is right to insist on opening hours that are consistent with the sub-postmaster's contract, I must say that I agree with Post Office Ltd. about that, and I shall explain why. My hon. Friend explained that the background is a disagreement between the sub-postmaster and Post Office Ltd., following a request from the sub-postmaster for a variation in opening hours that would allow him to close the post office counters in his shop for an hour at lunchtime while the retail side of the business remained open. In considering such requests, Post Office Ltd. takes a range of factors into account, including the level of transactions undertaken and the trading hours of other retail outlets in the vicinity. In this case, Post Office Ltd. concluded that the level of business was sufficient to justify a full-time branch. The post office is in a parade of shops that all offer lunchtime opening and
attract passing trade. It is on a fairly busy road and is used by holidaymakers travelling through the village. All those factors, combined with the sub-postmaster's intention to keep open the retail side of the business at lunchtime, led to Post Office Ltd. rejecting his request.My hon. Friend raised several concerns about the lack of contact between the sub-postmaster and Post Office management during that process, and I shall certainly ask my officials to check that serious matter. Whatever the deficiencies in the process, however, the sub-postmaster subsequently advised that notwithstanding his obligations under his contract—my hon. Friend said that that is not in dispute, as it is very clear—he would go ahead and close the branch at lunchtime.
My hon. Friend quoted remarks made yesterday by Allan Leighton at the annual conference of the National Federation of SubPostmasters in Scarborough. The trend needs to be towards longer opening hours for sub-post offices. Of course we can all remember the time, not so long ago, when many businesses shut at lunchtime. However, retail businesses, including banks, which formerly had short opening hours, have increasingly recognised that they need to open for longer hours to fulfil their customers' needs. Post offices can be no exception.
The performance and innovation unit report, which was published in the summer of 2000, looked forward to a much stronger commercial future for sub-post offices and devised the description, "bigger, better, brighter." Longer opening hours play an important part in the way in which post offices better fulfil the needs of their customers, thereby attracting more customers and halting the decline throughout the country.
In the case that my hon. Friend raises, the sub-postmaster was made fully aware of the consequences of his breach of contract. Post Office Ltd. tells me that it was left with no alternative other than to give the sub-postmaster three months' notice of termination in February. Post Office Ltd. has advertised the vacancy and is currently pursuing an application to operate the service from alternative premises. I understand that, at least at this stage, the applicant appears likely to be successful. On 5 June, Post Office Ltd. issued a temporary closure consultation letter because the new branch is unlikely to be operational by 9 July. The Post Office greatly regrets—as I do—the interruption to service provision in Kittle. However, I am advised that it will be temporary and that a new post office should be operational as soon as possible.
It is important to understand the broader context and the way in which the issues relate to aspects of the contractual terms and arrangements between Post Office Ltd. and 17,000 sub-postmasters throughout the country. The Post Office was established as a public corporation in 1969 and it has been successive Governments' policy that decisions about the day-to-day running of postal businesses, such as contractual terms and conditions, are the operational responsibility of the board and management. The Government's role in Post Office matters is confined to broad general policy and overall financial control.
All sub-postmasters and franchisees are appointed under contract as agents to provide services. They are not Post Office employees. As agents, their contractual terms and conditions differ significantly from those of
an employee. A sub-postmaster's contract is a commercial arrangement between himself and Post Office Ltd. As a standard condition of the contract, both parties can give three months' notice of termination and neither party is required to give reasons. There is no right of appeal on either side. The contract is designed to be even-handed. Sub-postmasters terminate contracts far more frequently than Post Office Ltd.Several references have been made to the conference of the National Federation of SubPostmasters, which I addressed on Monday. The federation fully supports the principle that underpins the current arrangements, because if one sub-post office provides a poor service, that strengthens the view that the whole network deals shabbily with its customers. That is an important consideration for the National Federation of SubPostmasters and everybody else who works in the Post Office network. It wants people to perceive the Post Office as a modern organisation that, with other retail organisations, is anxious to fulfil its customers' needs and provide a good service, especially as regards opening hours.
Those arrangements have been in place for a long time. There will occasionally be disputes about the background to a decision by Post Office Ltd. to terminate a contract. That is probably inevitable, given the sheer size of the network and the number of people who work in it. On the whole, however, the arrangements appear to operate satisfactorily, from the perspective of the sub-postmasters and of the company. As I have said, I will investigate my hon. Friend's concerns about what seems to have been rather limited contact in the course of the process that he described.
The Post Office maintains the most extensive retail network in Europe. It has more branches than all the banks and building societies in the UK combined. It is vital for the Government that the network should continue to provide services in every part of the country, as it does at present. Decisions relating to the operational arrangements for the postal businesses, including the contractual terms and arrangements relating to sub-postmasters, certainly need to remain the responsibility of Post Office Ltd., but I am certain that the chairman and chief executive will take note of the concerns that my hon. Friend has raised in this debate.
My hon. Friend mentioned Your Guide—the experimental kiosk-based system in Leicestershire—and made the point that it had not yet been rolled out nationally. The Government contributed £25 million to the Your Guide pilot to test the concept of the "Government general practitioner" role for post offices, in line with the recommendations in the performance and innovation unit's report. The pilot showed that Your Guide would not provide a lifeline for rural post offices, as had been hoped. It was very popular with those who used it—people liked it and the postmasters liked having it—but only a small proportion of postmasters reported that it increased the number of people coming into the post office. I think that about 18 per cent. of the people involved in the pilot said that it had increased numbers.
It was, of course, the intention that it would be possible to attract new customers by offering a new kiosk-based service. That was not the experience of the pilot, however. It was therefore concluded that it would not be good value for money in terms of the public
spending that would be involved, given the quite substantial cost that would be associated with rolling out the pilot and establishing a nationwide system of kiosks in post offices.However, the pilot highlighted a number of areas in which Departments might deliver services in the future, and we are looking at those. A number of parties are also interested in a commercial approach to the provision of kiosks in post offices. A pilot started recently in Penwith, in Cornwall, with some quite ambitious aims. I suspect that in due course, we shall see some of the attractions of the Your Guide pilot being taken forward in different ways for the benefit of post offices in rural areas. We remain absolutely committed to the maintenance of a viable nationwide network of post offices in both rural and urban areas. In particular, we remain committed to ending the avoidable closure of post offices in rural areas, and we have backed that up with a commitment of £450 million over this year, next year and the year after. We have recently received European Commission approval for that spending.
The PIU report set out a vision of a modern network with new business opportunities, and we are committed to implementing its recommendations. The package of support for the rural network, together with the introduction of the banking products to which my hon. Friend referred—which featured in Allan Leighton's speech to the National Federation of SubPostmasters yesterday—give a high degree of confidence that that
vision will be achieved. At the conference on Monday, it was announced that Lloyd's TSB was close to enabling its customers to obtain cash from any post office in the country free of charge, by putting their cards into the PIN pads that are now in every branch and receiving cash over the counter. That is already happening for customers of Barclays, and of Alliance and Leicester. Nineteen million accounts with those three institutions will soon be accessible in that way from every post office in the country.That provides millions of people, for the first time in many cases, with a compelling reason to visit their local post office, and we hope that while they are there they will undertake other transactions as well. That is a valuable commercial opportunity for the post office network. There are also new financial services and products, including personal loans—Allan Leighton referred to those too—that represent an attractive commercial opportunity for the network.
The combination of Government support and the expansion of banking products will help the network to continue to play its vital social role, which, as my hon. Friend said, is essential in rural areas—and, indeed, in urban areas, too. I shall certainly look into what he said about what seems to have been a rather unsatisfactory process leading to the decision in respect of the Kittle post office.
Adjourned accordingly at twenty-nine minutes to Eight o'clock.
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