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The Parliamentary Under-Secretary of State for Trade and Industry (Barry Gardiner): I congratulate my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) on securing the debate. He has been absolutely assiduous in voicing concerns about recent changes to the local provision of post office services in Ellesmere Port on behalf of his constituents. I can honestly say that over the course of the past four or five weeks, I have not had a single refreshment in the House of Commons Tea Room without my hon. Friend sitting beside me to discuss these matters. Indeed, I was almost at the point of being able to deliver his entire speech to the House myself without notes. However, in saying that, I do not wish in any way to undermine the excellent work that he has done to represent his constituents' interests to the Government.

My hon. Friend spelled out clearly and fully his views and concerns about the changes that are planned by Post Office Ltd in the coming months to post office services in the Ellesmere Port town centre. The future of the post office network is relevant to every Member of the House. We all share concerns about the future provision of postal services in our constituencies. We all also recognise, as I know that my hon. Friend does, that until 1999 and the advent of the action taken by the Government, there had been underinvestment in the business for decades. Most of all, we know that advances in technology, greater mobility and changes in constituents' shopping and financial habits have resulted in a growing proportion of people simply not using post offices in the way in which they did in the past. For many reasons, custom across the network has sharply reduced, which has created a spiral of decline in certain areas.

If the post office network is to survive and thrive in the longer term, it needs to change significantly. The Government want a post office network that can prosper on the basis of the needs of today and the future, not those of 20 or 30 years ago. However, in doing so, we also have to face up to present reality. The Government are providing £150 million a year to support the rural network and will continue to do so until 2008—I am delighted to say that state aid clearance came through from the European Union only a couple of weeks ago.

May I correct my hon. Friend on a point about the directly managed Crown offices? He implied that his correspondent from the Post Office had been mistaken in calling them branches. In fact, the correspondent was entirely correct because the proper name for them is directly managed branches, although we colloquially retain the name Crown offices.

The Crown offices and the deprived urban area network are also losing substantial amounts. Collectively, some 500 directly managed offices have
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been losing £70 million a year. Clearly the status quo is not sustainable in such circumstances. Several important steps to restructure and revitalise the Post Office have already been taken, but the future of the network rightly remains an issue of national debate. It is clear that there are still considerable challenges to be faced.

The starting point for the Government's policy for the post office network is the performance and innovation unit report "Modernising the Post Office Network". The Prime Minister commissioned that report in 1999, because it had become clear that, following decades of decline and underinvestment, dramatic action was necessary to get the business on track and to secure its long-term future. We set about introducing policies that would help to achieve that, which previous Governments had totally failed to do.

The PIU report showed very starkly that the post office network had not kept pace with the changing needs of its customers. Too many post offices had become dingy and shabby through lack of investment and were losing business. The report was widely welcomed as squaring up honestly to the challenges facing the network, and the Government accepted and implemented all 24 of its recommendations.

It is important to remember that the post office network has been contracting since the 1960s. Between 1979 and 1997, Conservative Governments presided over 3,500 closures, and in all that time they produced not a single policy on how to ensure that the network 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 Government is significant, but above all changes in lifestyle and habits mean that a large proportion of our constituents do not use the Post Office as much as they used to and custom has sharply reduced. That is not a matter of the Government or some unseen market force acting against the interests of post offices and their customers; it is about ordinary people—our constituents—making personal choices.

Research commissioned by Postcomm, the regulator for postal services, has also noted that in other countries people are also 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 and converting directly run offices to agency offices. In Germany, for instance, the number of post office branches has been reduced by 17,000 offices, which is more than the entire UK network of 14,500 offices. 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 new ways of doing business. Those external changes pose big challenges to the network of post offices, which must be addressed, not ducked.

We must recognise that 96 per cent. of the nation's post offices are run by sub-postmasters, who are private business people who have invested not only their own money into their businesses, but a great amount of care and effort to help the post office network achieve its highly regarded status. My hon. Friend has said that we, the taxpayer, own the Post Office. I must inform him that we, the taxpayer, own Post Office Ltd, but we do
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not own the 14,500 sub-post offices up and down the country, which are private businesses that enter into commercial contracts with the Post Office. The reason why it is not possible for the Post Office to make available commercially confidential figures about the viability of those offices is because it would prejudice the capacity of that private business person to sell their business in due course.

Andrew Miller: If the Minister had listened to me, he would have heard me talk about Station Road, which was a sub-post office that had suffered under mismanagement by the previous owner. This debate is about the closure of the Crown office, and only the Post Office has a commercial interest in its viability.

Barry Gardiner: My hon. Friend has referred to separate post offices today—he has referred to the Crown office, and he has also referred to the Station Road office. I am seeking to explain that there are conditions of commercial confidentiality, because the capacity of any sub-postmaster in Ellesmere Port to run their business viably and to be in a position to sell it on in future depends to some extent on commercial confidentiality between themselves and the Post Office.

Andrew Miller: Is my hon. Friend saying that Members of Parliament should not be entrusted in confidence with such information?

Barry Gardiner: Neither my hon. Friend nor I would expect to be made privy to information relating to the commercial viability of any private business in our constituency. We must therefore agree to part company on the matter.

Turning to the substance of my hon. Friend's argument, I have said that we must recognise that 96 per cent. of the nation's post offices are run by sub-postmasters. However, as there is declining profitability in the network as a whole, the viability of many individual offices has taken a severe knock. Decisive action in the form of the urban reinvention programme was taken to restructure a sector of the network where there was extensive over-provision with the aim of better matching supply to demand and of creating the viability necessary for a sustainable network for the future. That is why we backed Post Office Ltd's plans for managed restructuring of the urban network, which resulted in almost 2,500 office closures while ensuring that, nationally, 99.3 per cent. of people in urban areas, including Ellesmere Port, still live within a mile of their nearest post office.

We now need to address the issues facing the loss-making sectors of the network that are no longer financially sustainable in their present form. It is no longer clear that the needs of customers are best served
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by the traditional costly and inflexible network structure, so we must find innovative and more cost-effective ways of delivering post office services. My hon. Friend diligently monitors the issues in his constituency, as he has made very clear tonight. He took a keen interest in the urban reinvention programme, probing and challenging Post Office Ltd's area plan proposals for Ellesmere Port and Neston. Ultimately, as part of that programme, two of the 17 sub-post offices in the constituency closed. I accept that he had particular concerns about force majeure events, including the attempted burglary of the Station Road sub-post office, which led to its closure ahead of schedule just before Christmas 2004.

I should like to point out to my hon. Friend that the Station Road closure was, indeed, a voluntary closure under the urban reinvention programme. A former sub-postmaster volunteered for closure at the same time as he sold the premises. He was not the post office manager at the time—indeed, he had to secure a tenant, because he could not manage the premises—but the closure was voluntary, as is the case for every single one of the 2,500 closures under the urban reinvention scheme. There was therefore a voluntary closure of Station Road by a former sub-postmaster who was selling the premises. It was not something that was done by Post Office Ltd or by the Government to the people in the area around Station Road—the closure was volunteered by the former sub-postmaster.

More recently, my hon. Friend challenged Post Office Ltd's plans for changes in service provision in Ellesmere Port, setting out his concerns in an early-day motion tabled on 23 January. As he has explained, on 6 February 2006, Post Office Ltd confirmed its intention to merge the operations of the existing directly managed office in Marina walk and the existing Market Square branch in Asda into the new Asda Market Square store when rebuilding work is complete. In the interim, Asda will take over the management and operation of the Marina Walk office while the existing Asda Market Square office will close as the premises are to be demolished to enable redevelopment of the site.

Before addressing specific details raised by my hon. Friend, there are some key points of general principle that it would be helpful to clarify. First, although the urban reinvention programme achieved its aim of better aligning post office service capacity with current levels of demand in urban areas, it was never envisaged that that would preclude further changes to the urban network as the need or opportunity arose. Secondly, the plans for Ellesmere Port relate to the combined results of the impending demolition of the present Market Square office premises—

The motion having been made at Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

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