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Mr. Burns : Will the Minister give way?

Mr. Timms: I want to make a little more progress before I give way again.
5 Jul 2004 : Column 565

The whole House will realise that change had to be made. For the most part, the change has gone reasonably smoothly and in most places things are now working well. In some places, however, there have been serious problems and my right hon. Friend the Secretary of State for Trade and Industry has been given Allan Leighton's personal assurance that those problems will be vigorously tackled, while the single delivery is being introduced, and that solutions will be found. Adam Crozier has taken personal responsibility for improving the company's performance and I shall be watching out to ensure that the problems are solved and that performance is restored to at least the level achieved last year, when there was next-day delivery of 93 per cent. of first-class letters.

The post office network has been the subject of numerous debates in the House, with a further one today, reflecting the immense interest of all Members in the post offices in their area. Under the previous Government, the background was familiar: a failure to invest, resulting in inexorable decline—a decline that we have been determined to reverse.

We brought in a new management team, led by David Mills as chief executive of Post Office Ltd. He has a successful background in banking and has been doing a superb job since his appointment. We have invested in the network; £500 million to computerise and connect every post office branch, which is one of the biggest IT projects ever undertaken in the UK and an unqualified success.

We have encouraged the introduction of new products and services, taking advantage of the fact that IT allows electronic banking to be offered at every sub-post office in the country. We have recognised that the number of post offices in urban areas needs to be reduced to reflect the fact that fewer people are using them and so that the business has a viable future serving all our urban communities as well as our rural areas.

Malcolm Bruce (Gordon) (LD): Will the Minister address the particular problems in Scotland, where the Scottish banks have not co-operated with the Post Office? There is a rundown of services and a switch away from benefit payments at post offices, but the option of receiving payment through a bank account will not be available in Scottish post offices. Does he have a separate plan for Scotland? In Aberdeen, where the Post Office wants to close 15 branches, when the city asked for discussions with the Post Office about council tax payments being made through local post office branches, the Post Office was not even prepared to discuss it. Can the Minister explain that?

Mr. Timms: On the hon. Gentleman's first point, every high street bank, including those in Scotland, is now offering basic bank accounts, which can be accessed at every post office branch, including those in Scotland. Secondly, there have been some encouraging discussions—several of my hon. Friends who represent Scottish constituencies have taken part in them—with at least one of the Scottish banks, which suggests that we may see some progress on that front. I agree that it is important for Scottish post office customers that we encourage the banks to consider opening up their
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accounts to access at post office branches, as we have seen on the part of Lloyds, Barclays and Alliance and Leicester in England and Wales.

The programme that commenced at the end of 2002 is difficult and is causing inconvenience, but it is absolutely necessary to maintain an urban post office network with reasonable access for customers in every urban area. With about 16,000 branches, the network still has more branches than all the high street banks and building societies put together. Before the programme started there were more than 1,000 urban offices with more than 10 others within a mile. There is no longer sufficient business to sustain so dense a network, and to his credit, the hon. Member for Lichfield has accepted that.

Mr. Weir : I notice that the Government's amendment to the motion reiterates their view that no one should be more than a mile from a post office. Although the latest letter that I have received from the Post Office about branch closures mentions that in passing, it also states:

Can the Minister explain which figure is correct? Is there to be a post office within one mile or within three miles? If it is to be three miles, most medium-sized towns could be served by one office in the centre.

Mr. Timms: At the end of the urban reinvention programme, at least 95 per cent. of residents in urban areas should live within 1 mile of their nearest post office. That clear criterion has been laid down for the whole programme. The alternative to the managed restructuring that is under way would be an unmanaged, unplanned contraction of the network, with ad hoc closures leaving a very uneven geographical spread of offices and some areas losing all access to post office services. The managed programme to reduce overprovision—difficult though it undoubtedly has been—is far preferable to the alternative of unco-ordinated closures resulting from falling income.

I do not agree with the hon. Member for Lichfield in suggesting that the compensation available has been excessive. A standard formula, based on 28 months' income, has been negotiated with the National Federation of Sub-Postmasters. The 28-month figure for the value of a post office business is of long standing and well understood. We are effectively saying that the compensation is roughly equivalent to what sub-postmasters could have expected if they sold their businesses two, three or four years ago, before the changes of the past few years. That is fair. It is entirely reasonable that people should receive a decent price for their businesses—in many cases, after giving years of valuable service to their local communities. His remarks about excessive payments will cause great offence to the National Federation of Sub-Postmasters and its members.

Michael Fabricant: I am not commenting on the size of the thing—28 months may well be appropriate—and I certainly do not suggest that it should be decreased, but does the Minister not accept that Postwatch says that the closures have been patchy? Where closures have taken place, the distance between consumers in an urban
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area and the next post office can be more than a mile, and where the distance is less than a mile, sometimes—we gather from our correspondence that this happens more than sometimes—major obstacles, such as hills or major roads, prevent vulnerable people in our communities from getting to those post offices. Should those issues not be taken into account?

Mr. Timms: Those issues certainly should be taken account of, and they are being taken account of. The chairman of Postwatch has told me that the consultation process has improved significantly following my statement on 5 February, and that the process itself works well. That is not to say that there will not be closures that cause inconvenience to significant numbers of customers. I hope that the hon. Gentleman will recognise that the reality is that it is not possible to close a large number of offices in the way that we have to without causing inconvenience to some, but the issues that he raises are precisely those that are taken account of in the consultation exercise.

Mr. A. J. Beith (Berwick-upon-Tweed): The Minister will remember that, on 26 February, he replied to an Adjournment debate about the closure not of a sub-post office, but of a main Crown post office. Surely it is not part of any planned programme that there should still be no main Crown post office in Berwick nearly a year after the original closure? Although there is talk of a franchisee being found, does not that reveal that the Post Office should have a fall-back plan for such circumstances?

Mr. Timms: The right hon. Gentleman did indeed raise his concerns about that case in a debate with me some time ago. I am disappointed to hear that the case has not been resolved as yet, but he will acknowledge that it is not through want of trying on the part of the Post Office. A rather different category of case is involved from those being considered under the urban reinvention programme, but I will certainly find out from my officials what the latest developments on that branch are.

Mr. McLoughlin: Will the Minister give way?

Mr. Timms: No. I need to make some progress.

The hon. Member for Lichfield surprised the House by drawing attention to issues in Leicester, South. Post Office Ltd. has not yet reached a decision on the proposal to close the Knighton Church road, or south Knighton, branch. The company is giving the proposal further consideration in view of issues that have been raised during the consultation by the community and Postwatch. The programme is not about only closures. The plan for the area includes the proposal to relocate a branch at Park Vale to a nearby convenience store to offer improved facilities for customers. If the proposals for Leicester, South go ahead, there will be £150,000 of improvements to the remaining branches in the area that will receive additional custom as a result of the closures. The previous Government did not undertake such investment, but it is now, thank goodness, coming into place.

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