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Malcolm Bruce: Your Guide was aimed at dealing with the public service side. Surely the Post Office does see this as an opportunity, and intends to take advantage of it. Would not the development of Your Guide have made a contribution?

Mr. O'Neill: Let me explain to those who may not be as clued up as the hon. Gentleman that Your Guide was intended to be a community access point. In many respects, it was about simply providing information, and it could be described as a repository of information.

One reason why I discovered the subject of today's debate so late was that last week I was in the United States looking at, among other things, e-government and interactivity. It is clear that we still have a long way to go. Institutions such as Royal Mail could be far more interactive, not least because we now have a network of
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post offices online. If we want to increase footfall, we should bear it in mind that many people do not receive benefits and do not currently visit post offices. In fact, they are the majority. There is currently a captive market consisting of clients who receive benefits. Those of us who are not in receipt of benefits rarely go into post offices, because in general we have other means of getting rid of our mail. We only visit them when sending packages or buying stamps, and stamps can be bought in many places now.

We could meet at least part of the footfall challenge. It may be too late for Royal Mail to become an internet service provider. It could be argued that most ISPs in the United Kingdom with any aspirations to size and critical mass are still quite short of that, and that there are difficulties that we may well have to reap in the future. We should, however, look beyond that and consider issues relating to the delivery of mail and the question of liberalisation. I think it fair to say that the pick-up of mail will continue to be a major responsibility for the Post Office as far as post boxes are concerned. One thing that a lot of our constituents do not really understand is that boxes are opened and emptied only once a day not because the Post Office is out to save money, but because of the scale of the sorting operations that the new equipment requires, which means that it need run only in the evenings to get the sorting done. If the sorting were done during the day, the equipment would be running at only half-cock, so at least part of the pick-up function will remain.

It is understandable that banks, utilities and local authorities, which all send out monthly bills and statements, might well be attractive customers for Deutsche Post or the Dutch postal service. However, it is interesting to note—no one who has spoken so far has mentioned this—that at the end of last year, Royal Mail entered into an agreement with one of the main private operators on the cost of access to the system, which had been one of the major obstacles to liberalisation. The Post Office is now working with the private sector to deal with some aspects of the pick-up and sorting of mail.

On sorting, the picture is now a lot better than once it was. In some areas of the country, certain sorting offices had many of the industrial relations problems that I hinted at, such as a recalcitrant work force who were resistant to change and resentful of the financial rewards that they were receiving, and who wanted to make higher pay claims. As a result there were difficulties, but at least to some extent they are now diminishing, although they have not gone away. I would like to think that the difficulties associated with the sorting of mail, which in many respects is the most critical part of the process, will be resolved before too long.

The last part of the process is of course the last mile delivery. I know from discussions with potential players in a liberalised market that they are not interested in delivering mail. Postman Pat's future is safe and anyone who suggests the contrary is scaremongering in the extreme. It must be made clear that the delivery of mail will remain, as far as I can see, the long-term monopoly of the Post Office, but it will not have a total monopoly. It will be subject to competition, and in some respects the competition will be painful; but I am confident that there is a mood abroad in the Post Office that can
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accommodate that. Both the trade union and management have shown a willingness to co-operate in this regard.

I was very critical of the Post Office's approach to the urban reinvention programme, and I remain critical of the amount of time allowed for consultation. Six weeks is too short a period; it probably should have been 12 weeks, as it is for a number of similar exercises. If local government, for instance, wants to do something, 12 weeks are usually given for consultation. One could argue that even 12 weeks is not long enough for some people, but it is probably true that the Post Office's intransigence has helped to stoke some of the fires of resentment. It should consider the issue again.

It is abundantly clear that Royal Mail is now willing to explain—it will do so if it is given the chance—that there is now a rationale behind the system of closure. There used to be no rationale to the way post offices were opened and developed in the United Kingdom. When the distribution of lottery outlets was conducted, however, Camelot used a map of the UK to identify centres of population, so that nobody would be denied access to the lottery—so that no one should be denied access to being ripped-off once a week if they so desired. In areas where that would have been difficult, Camelot changed the criteria and allowed smaller, less economic outlets the opportunity to sell lottery tickets. The Post Office did not have that luxury. Like the man going to Cork, it would not have started from where it was, but the post office network now has some rationality.

I accept that mistakes are made, sometimes serious ones, and they are sometimes badly handled—examples have been given today. However, by and large, the process is working reasonably well. As I said earlier in an intervention on the hon. Member for Lichfield, between one in three and one in four of the applications for financial reimbursement for closure have been denied. The argument is that it is Liberty Hall for post offices and if the owners want to close them they can, but that is not so.

There are even those who argue that the 28-month offer is too generous. Post office owners can not only close the shop but sell a piece of real estate and make a sizeable profit. In the grey areas that are not quite urban and not quite rural, people can acquire nice properties that used to be post offices at a reasonable price. That does not happen in all cases, but the property boom has meant that the price that can be realised for the post office building has been a significant factor. However, that is a risk that we have to take. Besides, we cannot keep people in business who do not want to be there. If people have worked in a post office until they are 65 or have reached an age at which they want to stop, it is not for Royal Mail to tell them to carry on.

We must also recognise that a post office may not be the kind of business opportunity that a young couple or a couple in early middle age who have retired from other occupations would necessarily find attractive. Franchised businesses are among the most dangerous and unsatisfactory activities for certain people. The Trade and Industry Committee last week took evidence from tenants of tied houses with the new pub companies. In some instances, people have put sizeable amounts of their own money into businesses that did not merit
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support. The evidence suggests that the average length of tenancy in a public house in such conditions is no more than three years. People have taken up options that were not realistic, and the position is similar for petroleum retailers. People have entered into complicated franchise agreements for gas stations across the country on the basis of poor information and advice. It ill behoves us to assume that a business that has provided a reasonable way of life for some retailers of a bygone generation will provide conditions that are attractive to people today.

Mr. Nigel Waterson (Eastbourne) (Con): The hon. Gentleman makes an important point that the network reinvention programme was oversubscribed—more people wanted to receive compensation than could do so—but does not that undermine the Post Office's claim that once its plan has been carried out in any particular area, there will be no further closures? In reality, if other post offices are operating at the margins, they may go out of business subsequently anyway.

Mr. O'Neill: There is a flaw in the hon. Gentleman's logic. If there is a limited amount of business in an area and one of the players is taken out of the equation, the same business is spread between fewer people. If the smaller number still cannot operate, that is another issue. It is fair to say that there are people in the business with artificially low ambitions. We have all been in some pretty appalling post offices. The best are very good—excellent outlets—but some are dreadful. Sometimes, it is as if people in such post offices are doing us a favour by offering services that they are required to provide under their agreement. People expect to be able to shop all day on Saturday, but some post offices close at 12 noon on Saturday. Why? Because they have always shut at 12. That is just one example of apparent indifference.

It could be argued that such people were not making enough money from the business, but that is why the Government have made £30 million available, through the Post Office, to improve facilities. Some post office counters have closed but the shops have been left open and are being given assistance to tart themselves up—for want of a better expression. The rate of take-up may not be as high as it should be because people are uncertain, as the hon. Member for Eastbourne suggested.

The process of getting post offices online has been an unsung triumph for the British IT business; it took a long time to get to that point, but it is now remarkably successful. However, we do not yet offer anything like the range of services that we should. When I raised with one of the Scottish banks the fact that it was denying my constituents access, I was told, "You've got to appreciate that the Post Office signed an agreement with Allied Irish Bank, so why should we allow a competitor privileged freedom of access to our customers?"

The Royal Mail was damned if it did and damned if it didn't. David Mills has done a remarkable job at Post Office Ltd., but the fact that he is able to offer a range of financial services has of necessity put the nose of some of the other banks out of joint. What brought the issue
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to the table was the failure of the British banking system to take into account small savers and people whose accounts were not particularly active; it penalised them. Now, we have a commitment to a more social banking system. I hope that the financial services regulator will return to the issue and will set up incentives, or perhaps impose penalties if there is a failure to address the social obligations in the banking system. For all their good intentions and warm words, nobody could describe bankers as philanthropists.

We cannot deal with the issue once and for all; we must return to it. The spread of banking facilities and the integration of banking in the post office system is something that we cannot afford to ignore.

The Royal Mail had a monopoly in the public sector. Competition and liberalisation are beginning, and with a system of regulation and service obligations, are enabling those of us on the left of politics to see how important financial services can be offered in a socially responsive way throughout the country. The Conservatives are not interested in addressing that challenge. They want privatisation and liberalisation of the Post Office, probably through a more rigorous form of franchising than exists at present. I certainly think we could improve the franchising arrangements but under the Conservatives they would be rather more punitive than the laissez-faire approach that, sadly, the Post Office and its predecessor bodies have adopted.

The Post Office is still an organisation in transition. We have legislated to create the regulatory system and the system of obligations and to make the Royal Mail independent of Government interference. Of course, the difficulty is that putting something at arm's length from the Government does not protect them from the responsibility of taking the blame for everything that goes wrong. This Government do not need to take too much of the blame.

I have not spoken this evening about direct payments, cards and the like. I have gone over all that on a number of occasions, and my hon. Friend the Minister knows my views. Good friends though we are, there are some things on which we might well disagree. There is evidence of a small change, even on those issues. The Department for Work and Pensions, which I never find the most sensitive of Departments, was perhaps at least to an extent stung by the criticisms made by my colleagues and me about the way in which the card system was foisted on people, the limited range of choice and the cynical way in which the system was presented.

There is evidence of a change of tack. Whether the Department has gone as far as we want, or whether it could go as far as we want and still retain the existing system is a different matter, but the Government and the Royal Mail have a sense of the fact that there must be change. The trade union is trying its best to bring its people behind those changes, but none the less there is a feeling—I have some sympathy with it—that a system of mail delivery in the broadest sense should be a national priority and that, given its near monopoly status in that last area, it should remain in public ownership.

If the Government are true to their word—I like to think that I can believe my colleagues—we will have a publicly owned Royal Mail service that enters into competition and benefits from liberalisation. Before too long—let us hope that this happens in the next
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12   months—we will see an improvement in the standards of service, which have been sacrificed because of the need to sort out the Post Office's financial circumstances. I do not justify that, but I understand it. If we can get strong finances, good investment and good industrial relations, we will get the proper kind of service delivery that we want.

We may not hit all 15 targets next year—there is more than an even chance of doing so—but I hope that the four targets that the board members and senior management depend on for their bonuses will be regarded as a priority. If they are not regarded as a priority and they are not met, I hope that we will consider extending the criteria on which those bonuses are paid. Financial hanging very often concentrates the mind. That need not be done at the moment because I am confident that Allan Leighton, Adam Crozier and their colleagues barely need to be told what their responsibilities are. That is one of the jobs of government, and I am confident that my right hon. Friends are making it quite clear that we will not stand for an inadequate postal service and an inadequate Royal Mail, which should be a source of pride as a British institution, but was in danger of becoming a source of embarrassment. We have just avoided that, but there is still some way to go before it is the kind of institution in which the public sector and the public at large can take pride and satisfaction.

5.54 pm

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