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14 Jun 2006 : Column 274WH—continued

Mr. Carmichael: Part-privatisation is an exciting and innovative scheme. It would involve a substantial element of employee share ownership, which is something that the hon. Gentleman has supported. I am surprised if he thinks that Royal Mail should be treated differently. It is a policy that I would not have countenanced a few years ago, but with the opening up the letter post market to liberalisation—that was done without proper consideration for the protection of the universal service obligation—it is essential and the only
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way in which we can ensure that the Royal Mail maintains its market position as things stand.

The Government must be prepared to bring the experts into the process. I do not mean the clever people in suits at the Department of Trade and Industry; I mean the sub-postmasters and sub-postmistresses. At the moment, it strikes me that the Government are willing to listen to Postcomm, but the people in the front line and at the sharp end of the process are often not heard or, if they are heard, they are ignored. Sub-postmasters and sub-postmistresses know better than anyone the challenges facing the rural network today. They have many interesting and exciting examples of things they have done in their own businesses to try to arrest the decline. That should be looked at, and where there is good practice it should be worked into the remainder of the network.

Tomorrow I host a seminar in Orkney, which I hope will be attended by local sub-postmasters and sub-postmistresses, as well as representatives from Postwatch and local people. I shall host a similar event in Shetland the next day. I am sorry that the Department of Trade and Industry was unable to send anyone. It said that we were not part of a process and that it would let us know when it decided what it was going to do. I think that my approach has something to commend it and I will ensure that the Minister is well informed of the outcome of the seminars. I particularly regret that Postcomm declined to send anyone to the seminars. As I told the Minister last week in the Chamber, its attitude is that it finds out all it needs to know about Orkney and Shetland by sending someone to Edinburgh, Dundee and Perth. That frankly demonstrates a particular lack of understanding. If TV Licensing finishes with the map and feels that it does not need it any more, it could pass it on to the chief executive of Postcomm.

How will the Government ensure that the voices of local sub-postmasters and sub-postmistresses are heard? They will be crucial in shaping the future of the Post Office. Can the Minister tell me that he has some thoughts about how to ensure that their voices and ideas become part of the future shape of the post office network?

Several hon. Members rose—

Hywel Williams (in the Chair): Order. Many hon. Members wish to speak and I appeal to them to keep their speeches short.

2.47 pm

Chris Bryant (Rhondda) (Lab): I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate. He may be wondering why on earth the hon. Member for Rhondda is speaking in a debate on the rural post office network—[Interruption.] That has not occurred to him, so the first part of my speech was unnecessary.

An interesting issue that is rarely commented on is that we tend to divide the rural post office network from the urban network, when many of us live in areas that are semi-rural or semi-urban. My constituency is not geographically large. Many people live in small
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villages where the only public service may be a pub or a post office, yet because the population density is relatively high in the area, it counts as an urban area, although communications may be difficult. The truth is that nearly everyone in the Rhondda lives within 150 m of a farm and we still occasionally have sheep coming down the street, so I think I am qualified to speak in the debate.

The significance of post offices in any community is dramatic. The hon. Gentleman referred to tax discs. Historically, people got their new tax disc from a post office but had to find the right sort of post office because not every post office in urban areas provided that service. People had to drive around trying to find the right one. It is difficult to find out online which post office to go to. However, it is much easier to buy a tax disc online. Thanks to a great recent innovation from the Department for Transport, we can do that now because the problem of checking whether a car is insured has been overcome—it can now be done electronically. It is a fine system and that is how I bought my tax disc earlier this year.

Many people use post offices to obtain or renew their passport—to get the forms and so on. In Britain, 86 per cent. of people have passports. I understand that that figure is the highest of any country in the world. Again, therefore, the passport plays an important role—but not as significant as it once did. Many people now get in touch directly by telephone or get the forms online, and the Post Office has thus lost an element of its business.

The hon. Gentleman referred to the BBC licence fee. Many people now pay that, and have for many years, either online or through direct debit. They never go through the process of buying a licence. However, many of my constituents do buy it. They save up stamps or money and when they know that the licence fee is due they have enough money to pay it. I entirely share the hon. Gentleman’s worries—the BBC needs to attend to the issue—about what happens in areas where there is still a large cash economy, where many people do not have the ability to write a cheque for £130 or whatever it is now, and where those people still expect to pay by cash but will not be able to, because there is no PayPoint outlet available locally. I do not see why, in those areas, the Post Office cannot find a means to fill in the gaps. The areas must be readily identifiable, and the contract must already have specified them, so I do not see why we cannot move forward in that way.

The main reason, however, why my constituents use the post office is to collect their pension and other benefits. In the hon. Gentleman’s constituency of Orkney and Shetland, 3,000 people use Post Office card accounts for the collection of their benefits or state pension. In all four of the constituencies of the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), 6,700 people do so, but in my constituency 16,300 do so. Nearly a quarter of my electorate use the Post Office card account system to collect their benefits. The Minister may think that the issue is one that Opposition parties talk about a lot. Actually, in the main, it is one that dramatically affects Labour constituencies. In former mining constituencies and places where there used to be large shipbuilding industry, where many people are on incapacity and other benefits, the issue is of dramatic significance.

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Another small but significant matter affects my constituency. The traditional postal service of sending a letter or parcel is particularly significant in areas where many people are in the armed forces. The people running most of the post offices in my constituency say that every week they send fairly large numbers of parcels to troops in Afghanistan, Iraq or other places. In most former mining constituencies, joining the armed forces is still the preferred career choice for a 15-year-old or 16-year-old. I am aware that for those families their post office is thus a particularly important resource.

New services have of course been introduced and the hon. Member for Orkney and Shetland referred to some of them. One is withdrawing cash. I tried to withdraw cash the other day from a post office but I was unable to do so; I bank with the Royal Bank of Scotland, despite the fact that it lent money for many years to the Conservative party.

Many of my constituents also choose to organise their travel money through the local post office, although that service is poorly advertised. Many people think that if they live in Blaencwm they must go all the way to a bank in Treorchy or Tonypandy to organise money. Actually they can do it perfectly easily from one of the post offices that are much closer to them.

David Taylor: My hon. Friend makes his points powerfully. Is he not illustrating the fact that the problem in the sub-post office network in Wales, England and elsewhere is not necessarily lack of initiative on the part of individual sub-postmasters and sub-postmistresses, but the fact that there has been poor leadership in the top management of the Post Office? That was evident from the framework for a pilot computer system in Leicestershire to see how well it would operate nationwide. The framework was very weak indeed; this was perhaps before my hon. Friend came to the House. Is not the top management in the Post Office the problem?

Chris Bryant: My hon. Friend makes an important point about leadership, which I think extends much further than the example he gave. How are ordinary postmasters or sub-postmasters served by the leadership generally? They need some confidence about the direction in which their business might go in the next three, five or 10 years, but they also need confidence that the services that they can offer will be well advertised not just for their own little business but for the whole network in the region and the country. From my experience, I do not think that the services are well advertised.

One further area that is relevant to potential new business is financial services. In communities such as mine, financial services from an honest broker such as the Post Office could be particularly valuable, especially in areas with high debt and with many people, including loan sharks, trying to force people into debts that they cannot afford. Of course, state aid is a difficulty. The Post Office receives direct financial support from the Government, which puts it in a difficult position in relation to other financial institutions, which would say, “You can’t steal our business on the back of a subsidy from the Government.” However, I think that we could be cleverer about it. There are communities in which we should be able to extend the relevant financial services much more significantly, perhaps in co-operation with
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credit unions and similar organisations. I wonder whether the leadership, both in Government and in the Post Office, could look at such matters more intelligently and acutely.

Mr. Andrew Turner (Isle of Wight) (Con): Does the hon. Gentleman agree that the issue of state aid would be better illuminated were the aid to be more transparent? At the moment, state aid for the rural post office network goes into the Post Office at the top level, filters down who knows where and ends up who knows where, benefiting who knows whom. If the aid were to purchase a particular service in an area of need, it would be easier to defend, and the rest of the network would clearly be free of that state aid.

Chris Bryant: The hon. Gentleman makes a pretty good point. I think that the hinge to the matter is proving the market failure. The market clearly fails in certain parts of the country, so it should not be difficult to advance a decent argument in favour of subsidy to enable the Post Office to interact in the market more effectively than it has so far. Therefore, I agree with the hon. Gentleman.

I am conscious of the time, and many other hon. Members want to speak. I want to finish by talking about the Post Office card account. I have already mentioned that 16,300 of my constituents use it weekly, fortnightly or monthly as their means of access to their benefits—their income. Those people feel deeply troubled by the current state of play. They worry that the Government are reneging on a commitment to them. They are worried that they will not be able to withdraw cash locally. That is the issue for them—whether they can do it locally. They do not particularly mind whether it is at a post office or somewhere else. They just want access to the money that they are entitled to.

That is why I hope that the Minister will be able to push us a little further forward in the debate by explaining what guarantee the Government will make that people will be able to access their benefits locally. One of the many petitions that my constituents have put together is from Tonpentre post office. I should happily welcome the Minister if he wanted to visit Tonpentre some time. Since the Rhondda is the area with the highest use of the Post Office card account in Wales, and the fourth highest in the country, he might consider that a valuable exercise.

Julia Goldsworthy: Has the hon. Gentleman any examples from his constituency of the Post Office card account being undermined in a rather underhand way? A constituent who made a pension credit claim wrote to me recently. He was informed as he was sorting out his claim on the telephone that only his first payments of the pension credit could be paid into his Post Office account and that all subsequent payments would have to be paid into a bank account. When he queried that and said that he understood that that was not Government policy, the person at the other end of the telephone told him that they were just a messenger. If that is indeed a message coming from the Minister, does the hon. Gentleman agree that at least the commitment to sustain the arrangement until 2010 should be continued, and not undermined in such a way?

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Chris Bryant: I have come across a similar incident, but I was a bit more aggressive in pursuing it, and my constituent’s problem was sorted out by the following week. Clearly, some officials need better training on precisely what the rules and regulations are, and perhaps the Minister will have an opportunity to say something about that later.

The important issue for my constituents is that they should be able to transact their pensions and other benefits in a way that is as efficient as possible for them, rather than for the Post Office and the Government. This is about their rights, as much as it is about the Government’s drive for efficiency.

3 pm

Mr. Owen Paterson (North Shropshire) (Con): I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on raising this important issue for public debate. Although we disagree on some areas of public policy, I think that we are as one on this important issue.

I have a rural constituency—I shall try not to repeat too many of the comments that I have made on numerous occasions on this issue—and on a hot August day two years ago, I drove around it and visited 28 of my 32 rural post offices, and I have been on the case pretty well ever since. On that day, I established just how important benefit payments are—they are the core function of those post offices, some of whose turnovers include as much as 40, 50, 60 or 70 per cent. from pensions and benefit payments. That leads to a whole series of other activities. There is the sale of Post Office products, such as stamps, and of things related to postal activities, such as stationery, glue and pens. The vast majority of my post offices sell dried and frozen food, and there are also off-licences. The key element is that, in most cases, the post office is the information centre. The village notice board is usually located in the post office, and that is the place to advertise jobs. The post office is the centre of activity.

I took one of my most active postmasters to see the then Minister with responsibility for post offices, who is now the Chief Secretary to the Treasury, and I want to give hon. Members this memorable quote from my constituent:

The post office has a serious social function, because those who visit it often live alone and may be elderly. If they do not turn up for their payment or their pint of milk, that will be brought to people’s attention. That has an incalculable social benefit that none of us can put a finger on, but which is very tangible. That is the first message: post offices have a function way beyond the mechanics of delivering benefits and other Government products efficiently.

I am afraid that the Government have massively mishandled the issue, because it touches a whole number of Departments, but there is absolutely no coherent view of it. We saw that in how benefits cards were brought in. The previous Government were going to introduce swipe cards, which would have cut out fraud, been efficient and kept benefits and payments going through the post offices, at an income of roughly £400 million. This Government came to power, swept
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aside that approach and introduced the card account without telling anyone that it would be a temporary measure.

It was only in a debate such as this that the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), announced that the card was always intended to be temporary. He read partially from a Government document, and I am grateful to the Speaker, because I put a point of order to him, and he insisted that that document was placed in the Library. To the astonishment of everyone involved—no one in the Post Office knew anything about this—it was revealed that the contract between the Government and post offices had made this statement all along:

None of us knew that—an enormous deception and fraud was perpetrated on millions of benefit recipients.

Several trials have now been imposed at very short notice, and some 40,000 card holders have been forced into taking direct payments from February to March. There has not been much debate about that. I have had correspondence showing that people received letters in February that bluntly told them:

That is not exactly consultation; it is a central Government diktat, with no right of appeal. The issue was not properly debated on the Floor of the House, although Back Benchers have brought it up in this Chamber. In one fell swoop, however, we shall absolutely hammer the groundwork that forms the basis of the post office network.

I have the great honour to be the secretary of the all-party group on sub-post offices, on which I serve under the chairmanship of the hon. Member for Vauxhall (Kate Hoey), who sadly cannot be here today. [Interruption.] I am sure that the hon. Member for Rhondda (Chris Bryant), wearing his semi-rural hat, ably deputises for her. Adam Crozier, the chief executive of the Post Office, came to one of the group’s meetings at the end of February or perhaps in March. He revealed that his task—he is under the cosh and under great public scrutiny—is to make the Post Office efficient. He currently has 14,400 branches, but he said that he needed only 4,000 to deliver an efficient physical post service. He has had some unjustified flak for asking, quite publicly, what he is supposed to do with the balance of post offices above the 4,000 that he needs to run the Post Office efficiently if the rug is pulled out from under them and there is no Government justification for them and no Government view on them.

This is where I would be very critical of the Government, because there is absolutely no clear overview and no co-ordination. We saw a classic example recently when the BBC decided to switch its TV licences from the Post Office to PayPoint. I wrote to
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Michael Grade, the chairman of the BBC, who wrote me a sensible letter dated 5 June. He explained that there were serious commercial gains to the BBC from switching from the Post Office, that the arrangement accounted for only 2.11 per cent. of the turnover of Post Office Ltd and that, as far as the BBC was concerned, it was a straight commercial decision. That is fair enough for the BBC, given that it spends very large sums of public money, and that some of us can be critical of how it does so. In this case, I would not criticise what it is doing, because it is being careful and going for a sensible business decision, but I would criticise the Government for not co-ordinating things. I specifically asked what discussions the BBC had had with Ministers, and its chairman said:

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