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Ms Sally Keeble (Northampton, North) (Lab): Three sub-post offices are earmarked for closure in my

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constituency, and one of them serves the most disadvantaged community in the area. People feel real anger and concern about the proposals, and oppose them massively. They are angry about the way that post offices have been identified for closure, and about the consultation process. One sub-postmaster in my constituency was told even before the consultation process had ended that the decision had been taken and that closure would go ahead. Finally, people are angry at the Post Office's failure to think about providing proper services as it embarks on its reinvention programme. That has caused real distress for many people, among them those who are most disadvantaged.

Mr. Timms: If my hon. Friend were to tell the Post Office that, in her view, a particular post office should not be closed, but that she knew of another office for which closure would be appropriate, then I would hope that the Post Office would be open to engaging in a discussion with her.

I want to speak about the consultation process, as the very important role played by Postwatch has not yet been mentioned. Postwatch is consulted on every proposal, and it monitors the programme as a whole. After discussions with Postwatch about how to take forward consultation on the new area plans, it was agreed that the consultation period should be extended to six weeks. In addition, Postwatch is to receive two weeks' notice of closure proposals.

A question was asked about how many changes there have been as a result of the consultation exercise. I can tell the House that, by the end of December, there had been just over 1,400 closure proposals in the programme notified to Postwatch. Of those, 46 were withdrawn or delayed for more detailed consideration as a result of the advanced process—under which Postwatch considers proposals in advance of the public consultation. A further 66 proposals were withdrawn or delayed for reworking as a result of the public consultation.

Those withdrawals therefore account for more than 100 of the 1,400 closure proposals. I think that there have been about 650 closures so far. That shows that there has been a significant degree of change as a result of the consultation process, and it is quite right that there should be. However, I am concerned that the process must be effective. I am very keen to know from hon. Members about any difficulties that may arise. When a particular post office is the cause for concern, the key is that the view of Postwatch should be taken very seriously indeed by Post Office Ltd.

Simon Hughes (Southwark, North and Bermondsey) (LD): The Minister will know, both as the Minister with responsibility for post offices and as a London MP, that we are five months through the 11-month consultation process across the whole of Greater London. It started with a letter from the regional head of external relations that said that about half of the urban post offices were not profitable. Can the hon. Gentleman indicate what percentage of the current London post office network it will be acceptable to close? Is one of the criteria that a post office is not profitable? If that is the case, about 50 per cent. of our post offices, in his borough and mine, are scheduled for closure.

Mr. Timms: The hon. Gentleman will know from the plans that have been published in London that the

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proportion suggested for closure is significantly less than his estimate. I do not have the figure, and at this stage we do not know precisely what the final number will be, nationally, in London, or in any region. I am confident, however, that as a result of this process we will end up with a viable network, which will continue to serve every part of London, as well as the whole country. That would not be the case if we simply allowed post offices to carry on declining.

An important additional element of the programme is the £30 million that we have provided for modernising and adapting the post offices that remain in operation. The key to improving those offices will be the increased volume of business that they can expect, especially given the high levels of migration that I have mentioned and the grants of up to £10,000 for each office that expects to take on a significant number of additional customers—in some circumstances, grants of £20,000 will be available—to be matched by the same sum from the proprietor. Those grants will be an important boost.

It is worth pointing out that that is the first ever programme of Government investment in urban sub-post offices; in the past they have never spent money on those offices, and that investment is an additional measure on top of those recommended in the PIU report. That is a clear instance of us addressing past chronic under-investment, which has led to so many post offices becoming unattractive places to visit, particularly in urban areas, and it reflects the importance of making the post offices of the future far more attractive.

Several hon. Members rose—

Mr. Timms: Given the time, I need to make a little more progress. I will gladly give way in a few minutes, if I can.

I want to say a little about the arrangements in deprived areas. We have required Post Office Ltd. to ensure that, after the programme, 95 per cent. of the urban population will still be within a mile of their nearest post office. In addition, we have asked the company to make sure that, other than in exceptional circumstances, its proposals do not include closure of offices within the most disadvantaged 10 per cent. of urban wards where there is no other post office within half a mile. In accordance with another of the recommendations in the performance and innovation unit report, we have made available support for post offices at risk of closure in the most disadvantaged areas.

What we are doing in urban areas will allow us to make the transition to a successful urban network that can meet the needs of our constituents in the future and be commercially viable. The network of post offices serving rural communities is also vital to maintaining local access to essential services, particularly for vulnerable groups. As recommended by the PIU report, we have already asked Post Office Ltd. to maintain the rural network and to prevent avoidable closures, in the first instance, to 2006. Post Office Ltd. has underpinned its commitment to achieving that aim by appointing 31 rural transfer advisers around the country who often become closely involved with community efforts to

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reopen or save rural post offices. They have had considerable success in finding alternative sub-postmasters to replace those who have left, in locating suitable replacement premises where necessary, and in giving encouragement to community efforts to provide post office services. The House and rural communities up and down the country owe those individuals a great debt of gratitude for their success in preventing otherwise inevitable rural post office closures, and in identifying new people to run sub-post offices when the old personnel wanted to leave.

Ms Joan Walley (Stoke-on-Trent, North) (Lab): Can my hon. Friend tell us the difference between the closure of a rural post office that will disadvantage many people, and that of a post office in a deprived inner-city area? Rural areas often contain former mining communities, and the devastation caused to people who cannot afford the transport costs involved will be just as great. Can we look again at the definition of urban areas?

Mr. Timms: As I have said, the scheme includes arrangements for the most disadvantaged 10 per cent. of urban areas, because we recognise the importance of post offices in those communities. If distances of more than half a mile are involved, closures should not occur.

Liz Blackman (Erewash) (Lab): I have written to Postwatch because I am unhappy about the consultation process in my constituency. I fully accept many of my hon. Friend's arguments about the need for change, but what discussions has he had with Postwatch about consultation, and what major themes of concern has it raised with him?

Mr. Timms: I am in regular contact with Postwatch about that. We have given it substantial extra resources to ensure that it can do a thorough job. I consider effective consultation on all the proposals to be vital to the success of the exercise as a whole.

It has been settled that when Postwatch and the local post office management disagree on a proposal and the disagreement escalates and reaches higher levels in both organisations, there will if necessary be discussions between the chairman of Postwatch and David Mills, who runs Post Office Ltd. So far Postwatch has told me that it is happy with the way in which the arrangements are operating, but I want to keep an eye on that because, as I have said, I think it is key to the success of the whole exercise.

Several hon. Members rose—

Mr. Timms: I want to say a little more about rural post offices, because the hon. Member for Eddisbury mentioned them a number of times. What we have done has had a significant impact. There were 115 net closures of rural post offices in the financial year 2002–03, compared with 194 in the previous year. That is the smallest number of rural closures since 1994–95, and it reflects the effectiveness of our measures to prevent avoidable closures. Our funding package for the rural network more than meets the PIU's recommendations. We are making a major investment in the network, and providing additional funds for the piloting of new ways of delivering services in rural areas.

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We are investing substantial sums to support the transformation of the entire post office network—a total of some £2 billion. We have established a strong management team at the Post Office, and have given it the task of turning the business around. It is continuing, crucially, to develop and introduce new products and services to build a commercially successful network for the future. There has been half a billion pounds of Government support for what has proved to be one of the UK's biggest information technology products, resulting in the computerisation of every post office in the country. That means that the Post Office can continue to pay benefits and pensions in cash, but it also gives the Post Office a vital opportunity to widen its customer base by increasing its offer of banking products and providing access to bank current accounts at local post offices.

At the heart of the problems of the post office network is the fact that in the past it has been locked into a shrinking customer base. Now its task is to go on servicing those customers well, but also to attract new customers. It needs access to expanding banking markets, not just to dwindling markets as in the past. I mentioned the recent announcement of a joint venture with the Bank of England to provide a range of financial products. The Post Office already provides electronic access to their accounts for all holders of current accounts with Lloyds TSB, Barclays and the TSB, and I hope that other banks will be involved before too long. Access is now possible to basic accounts with every major high street bank and building society at every post office in the country, and a major advertising campaign for travel insurance and bureau de change services is also helping to make customers want to use post offices.

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