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The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I congratulate my hon. Friend the Member for Burton (Mrs. Dean) on securing this debate. As she demonstrated in her speech, she has been assiduous in voicing local concerns on behalf of her constituents about Post Office Ltd's urban reinvention proposals. She spelled out very clearly her views on the impact of the proposed post office closures in her constituency, to which I shall return shortly.
The future of the post office network is relevant to every Member of the House. We all share concerns for the future provision of post office services in our constituencies, and I want to assure my hon. Friend and
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other hon. Members that the Government are fully committed to maintaining a viable nationwide network of post offices. The starting point for Government policy for the post office network is the performance and innovation unit's report, produced in 2000, on modernising the post office network. The report was widely welcomed for squaring up honestly to the challenges that the network faces, and it made 24 recommendations for the future, all of which the Government accepted.
The PIU report showed quite starkly that our network of post offices had not kept pace with the changing needs of its customers. Too often, post offices had become dingy and shabby through a lack of investment, and were losing business. The Post Office faces an enormous challenge. In recent years, Post Office Ltd has incurred very substantial losses: £163 million before exceptional items in 2001–02; £194 million in 2002–03; and £97 million in 2003–04.
Ninety-seven per cent. of the nation's post offices are run by sub-postmasters—private business people who have invested in their businesses not only their own money but a great amount of care and effort to help the post office network to achieve its highly regarded status. However, with declining profitability in the network as a whole and, in many cases, at individual office level, the ability of sub-postmasters to sell on their businesses—the way in which they have moved on in the past—has taken a severe knock.
Decisive action had to be taken to ensure that we maintain a sustainable countrywide network for the future, and that is the action that the Government are taking. The post office network has been contracting since the 1960s. The previous Conservative Government presided over 3,500 closures between 1979 and 1997, but in all that time they produced no policy on how to structure the network and ensure that it could continue to remain relevant into the 21st century.
There have been reductions in post office usage for all sorts of reasons, and the absence of investment by the previous Conservative Government was an important one, but major advances in technology, greater mobility and changes in shopping and financial habits all mean that a large proportion of our constituents are simply not using the post office as they used to, and custom has reduced sharply. This is not a matter of the Government or some unseen market force acting against the interests of the Post Office and its customers. It is about ordinary people—our constituents—making choices. The decline in transaction volumes is not just about the changes in benefit payment arrangements that started to come into effect last April. The decline started well before then, and applies not just to benefit payments but to a much wider range of services, including Girobank and National Savings transactions, telephone bill payments and postal orders.
This change is not a uniquely British phenomenon. Research commissioned by Postcomm—the regulator for postal services—found that in other countries people are increasingly accessing services electronically, over the telephone and through the internet. In response, most countries have been remodelling their networks, usually by closing the smallest or least profitable offices
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and converting directly run offices into agency offices. In Germany, for instance, the number of post office branches has been reduced drastically from 30,000 to 13,000. In Britain, other networks, such as those of the retail banks, have been scaled back, too. Like them, the post office network needs to adapt to changes in people's preferences and to new ways of doing business. These external changes pose big challenges to the network of post offices, and they have to be addressed, not ducked.
In my hon. Friend's constituency, I understand that at the start of the urban reinvention programme there were 32 post offices, 18 of which the Post Office classified as urban and 14 as rural. Since September 2003, Post Office Ltd has prepared closure proposals on an area plan basis, using parliamentary constituencies, grouped together where appropriate, to give a clearer "once over the ground" view of future service provision. On 26 August, the area plan for Burton-on-Trent and the neighbouring constituencies of Derby, North, Derby, South and South Derbyshire went out to public consultation. In Burton-on-Trent, 11 closures and one new branch opening were proposed. As my hon. Friend said, particular concern was expressed in relation to the proposals for three sub-post offices. I have noted her views and disappointment that Post Office Ltd's final decision has been to proceed with seven closures and to confirm as permanent the closure of Shobnall road, which has been closed on a temporary basis for more than a year.
I also understand that, in the light of concerns and comments raised by my hon. Friend, her constituents and Postwatch, three proposed closures—Anglesey road, Calais road and Melbourne avenue—have been referred for further consideration under the escalation and review process. I am sure that she will welcome this evidence that the particular concerns raised about the proposed closure of those three offices are to be considered in further depth before final decisions are made. In the remaining cases, Postwatch has accepted that there is not enough business for them to remain viable. I understand that, with one exception, all the offices confirmed for closure have an alternative office within 1 mile and that as a result of the planned new Horninglow office, four will have an alternative within half a mile or less. In addition, significant investment in improvements to the facilities and service of the remaining offices will take place.
As regards disabled access to, and facilities in, post offices, Post Office Ltd is taking action to meet the requirements of the Disability Discrimination Act 1995. That includes self-assessment packs for all sub-postmasters to help them understand any specific issues at their branch. Disability awareness training is being provided to all staff and support packs including a signature template, magnifier, fat grip pens and clipboards distributed. In some branches, level access, drop-down counters, automatic doors and mobile hearing induction loops are being installed. Several such measures are to be taken at offices in my hon. Friend's constituency.
It has been suggested, although not by my hon. Friend, that the programme is wholly driven by sub-postmasters' wishes. Two years ago, Post Office Ltd surveyed urban sub-postmasters for non-binding indications of interest in leaving the network. Around 3,500 expressed an interest in leaving and those
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responses helped the Post Office prioritise its proposals in the early stages of the programme. I wholly agree that sub-postmasters' preferences should not be the sole determinant of Post Office Ltd's closure proposals. Indeed, it would lead to many of the problems that we associate with unplanned closures, such as gaps in the network. Post Office Ltd has given assurances that sub-postmaster preference is not the key driver of change when preparing an area plan. Post Office Ltd seeks to achieve a balance between sub-postmasters volunteering to leave the network, those offices that are not viable, and the need for relocations and new openings. Post Office Ltd maintains that reasonable customer access to alternative offices is always the prime consideration in developing its proposals. As a result, some 1,000 of the 3,500 sub-postmasters who expressed interest in leaving the network under the programme will not have their offices entered into the consultation process and will not be allowed to go. More than 500 have already been informed of that as their areas have come up for consideration.
Therefore, it is important to clarify that, from the start of the programme, Postwatch has recognised that action was necessary to ensure the future survival of the network. It accepted that with too many post offices competing for the same customers in many urban areas, it would not be sensible to oppose every office closure where it was clear that customers would have reasonable access to alternative offices.
My hon. Friend has raised concerns about the distance to alternative offices. In common with the rest of the population, many elderly people and those with young families regularly travel a mile or more to access a wide range of services, including post office services. For example, people will travel to the high street or an out-of- town shopping centre to shop. I believe that people do that largely out of choice, and that is part of the challenge faced by the Post Office, which the restructuring of the urban network must address. Changes in post office provision at local level need not therefore increase car usage overall. For some of our most disadvantaged people, the distance to a post office will be academic, for they may be housebound or able to walk only a few yards. Those people's specific needs should be targeted. They should benefit from home helps and community transport initiatives. My hon. Friend asked about mobile post offices and the possibility of flexible arrangements; I am very interested in the points that she raised, and intend to talk to Post Office Ltd about the future for a viable network.
My hon. Friend said a great deal about the need for the post office network to accommodate the needs of our constituents. Among the performance and innovation unit's recommendations was the recommendation that if the Post Office decided that fewer offices were needed in some urban areas, the Government should consider providing funding to compensate sub-postmasters adequately for the loss of their business. Those men and women have worked hard and it is right that they should
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be treated fairly now, when the current level of business in the post office network can no longer support such a dense urban network.
In November 2002, following parliamentary approval of the funding, Post Office Ltd began its urban network reinvention programme. The network consists of around 16,000 post office branches, split almost evenly between urban and rural communities. That is more than all the banks and building societies in the country put together. Before the programme started, more than 1,000 urban sub-post offices had at least 10 other post offices within a mile. There is no longer enough business to sustain such a dense network in urban areas.
Over-provision has damaged the individual businesses of sub-postmasters. They have been finding it increasingly difficult to earn a reasonable income, and have been simply shutting up shop and leaving of their own accord. Such unmanaged closures are undoubtedly inconvenient to customers. They are also damaging to the company, and perpetuate the perception that the network is in decline.
We need the rationalisation that is under way because without it there will be unmanaged closures, either as a result of individual sub-postmasters deciding to shut or because Post Office Ltd is unable to attract a suitable replacement where an office has closed because the sub-postmaster has left. Without any action, big gaps would begin to open up in the network, and that is precisely what the current programme will be able to avoid.
My hon. Friend talked about the money that the Government have provided for the modernisation and adaptation of post offices that remain, and we shall continue to provide that money. She was very clear about the situation in her constituency, as have many Members in the numerous debates to which I have responded since taking responsibility for Royal Mail and the Post Office. The work of Postwatch, which my hon. Friend commended, is vital. It would be wrong for Government to intervene in every case. The House voted for commercial freedoms for Royal Mail and the Post Office, for the reasons I gave relating to the amount of money that they were losing. It would be wrong for us to interfere in that commercial aspect. Postwatch is there to protect the consumer's interests, supported by the work of Members of Parliament.
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