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11 July 2006 : Column 378WH—continued

The Post Office had declined dramatically. In 1999 there were 18,374 post offices in this country. There are now 14,400—a decline of 20 per cent. in just five years.
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In 1999, there were 43 post offices in my constituency. Now there are 28, a decline of a third in just five years.

Rural post offices account for about half the network; there are, perhaps, about 7,800. Nevertheless, they account for only 10 per cent. of the business. On average, they have something like 350 consumers a week, but 1,000 rural post offices have fewer than 50 consumers a week. We need to be sensible; we cannot simply preserve a business that is not operating well. Sometimes the postmaster or postmistress decides to move out. However, we need a strategy and long-term vision for what role the Post Office should play.

This year, the Post Office network will lose £2 million, and that loss is expected to double next year. In the course of that, the Government are withdrawing £168 million in Government contracts from the Post Office network. As we have heard, that will get worse. There are the issues of the Post Office card account, the changes in respect of renewing car tax licences online, and the moves, on commercial grounds, not by the Government but the BBC—although the Minister was accused of being responsible—to take the TV licence away from the Post Office and to give it to PayPoint.

The chief executive of the Post Office, Adam Crozier, has said that he can fulfil his legal obligations with just 4,000 post offices. We have to be very careful about how we interpret that; he is not saying that that is what he wants. We should also pay tribute to the outstanding job done by him and Allan Leighton in turning around the Post Office. However, we need to understand that Mr. Crozier can meet his legal commitments with just 4,000 post offices. If we want more than that, it is up to the Government to come forward with a strategy. The Post Office has a business to run, but a Government strategy and vision is completely lacking in this debate.

As my hon. Friend the Member for Eddisbury said, current Government funding for the Post Office network runs out in 2008. Decisions are being made now. In the coming months, people will sit down to decide whether they should close down or sell on their business. They may turn it into a house because they simply do not know what the future holds.

The Minister has to start coming up with answers. We look particularly to him to give examples of how we can bring new business into the Post Office network. Could post offices be used as centres for storing undelivered parcels? Courier companies often cannot deliver huge numbers of parcels. Rather than taking them back to their bases, why should they not take the parcels to the village post office, where they could be collected in due course? Can more be done with what is called the first mile of the postal network? Businesses in communities might bring their post to the Post Office and send it to whatever postal service delivery network they wished to use.

What are the Government doing about a successor to the Post Office card account? Ministers have to take the lead on that issue. In the 14 June debate, I said to the Minister that there had been too many examples of people being instructed to move from Post Office card accounts to bank accounts for that to have been happening by accident. Ministers must confirm that they will send a message to every single agency stating that they should put no pressure on people to move away from the POCA if they do not wish to do so.

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In the months since then, has the Minister had a meeting about the issue? Has he written or spoken to his counterpart in the Department for Work and Pensions to make the point clearly? Furthermore, has he told his counterpart that DWP Ministers cannot simply stand back from the issue and say that it is a matter for the Post Office? It is a matter for the Post Office and the Government, and the banking community should be brought in as well. We need the Minister to take a lead on the issue, and I hope that he will give some more encouraging news today.

In the light of what we have heard today, will the Minister ensure that he has a discussion with the Deputy Prime Minister soon? The Deputy Prime Minister has very little else to do apart from sticking his tongue out at the media, so why has the Committee that he chairs not met? We are debating one of the most important issues, which affects every single constituency in this country. If the Deputy Prime Minister, with his reduced responsibility, has not found time to chair that Committee, that is a complete scandal.

There are ways forward, but so many of them are in the hands of the Government. We look to the Government and the Minister to give clear examples of how to move forward. However, I want to finish on a positive note. At this time of year, we go every weekend to village fĂȘtes and to see what communities are doing to make themselves vibrant, successful and good places in which to live. We owe an incredible tribute to the people who make that happen: those who write the parish magazines, put on the village fĂȘtes, run the local sports clubs and give cricket, football or rugby training for youngsters.

The communities in this country remain incredibly special. The fact that our communities are losing some of their economic vitality should concern us all. However, they remain immensely special places because of the desire of so many people who live in them to contribute to and improve their communities. We owe a tremendous debt of gratitude to the many people in our constituencies who make that happen.

10.50 am

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): It is a pleasure to see you in the Chair today, Mrs. Humble. I associate myself with the concluding remarks of the hon. Member for Wealden (Charles Hendry). It was clear from the response of other hon. Members that they also supported those remarks.

I congratulate the hon. Member for Eddisbury (Mr. O’Brien) on securing this debate. I shall keep my remarks to a minimum but try to respond to as many of the points raised by hon. Members as possible. However, I am not able to provide a definitive timetable, so the outcome of the debate will not be to everyone’s satisfaction.

Let me make it perfectly clear that the Government have heard everyone’s concerns and will take heed of them in their continuing deliberations on the future of the post office network. If it is to survive and have a sustainable future, it must adapt to the changing circumstances and environment in which it operates. Many sectors of the post office network lose
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substantial amounts of money. The rural network loses some £150 million a year, and the directly managed Crown offices have been losing some £70 million annually. The status quo is simply not sustainable. 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.

I acknowledge the generous comments of the hon. Member for Wealden about the success of the chairman, chief executive and staff of Royal Mail in turning around that service, which only a few years ago was losing £1 million a day. It has moved back into profitability and is investing on behalf of the taxpayer in a much more successful business. However, as everyone acknowledges, that involved painful changes.

As the Minister with responsibility for postal services, I have a contradictory role, given the circumstances in which I find myself. I want to help ensure the widest provision of services but also a sustainable network. Just before the debate, the hon. Member for Eddisbury and I discussed that contradiction in the corridor. There is clearly a need for a community network, but it must have the bedrock of a sustainable commercial network.

I appreciated the tone of the debate. It would have been easy for hon. Members to come here and criticise. I am not saying that there were no criticisms—clearly, there were—but in the vast majority of the contributions they were delivered in a constructive way. I assure hon. Members that I and officials at the Department of Trade and Industry are working extremely hard with officials and Ministers from other Departments on the issues that were raised in the “Groundhog Day” debate only a few weeks ago. Obviously, we will consider issues that have been raised today that are separate from those, but I suspect that all the bases have been covered in our considerations. We want to arrive at the best possible strategy in our conclusions. As colleagues would expect, I have also initiated discussions with Post Office Ltd and the National Federation of Sub-Postmasters in past weeks.

The hon. Gentleman said that the number of signatures on petitions shows the depth of feeling. Our response to that is straightforward: many people express an affinity with their post office by signing petitions. Unfortunately, as my hon. Friend the Member for Stroud (Mr. Drew) said, that does not mean that they use the services. There is an affinity with rural services but translating such support into commercial usage of the post office is obviously one of the challenges that we face. The least used 20 per cent. of offices in the rural network average 40 customer visits per week, and the least used 10 per cent. average just 16 customer visits per week. At £17 per visit, those figures loom large in our calculations.

The hon. Gentleman and other colleagues discussed the difficulty in selling on sub-post offices because of the uncertainty of the future. We recognise such concerns, but the sale of sub-post offices on a commercial basis continues. In 2005-06, there were 1,243 successful transfers—649 rural and 594 urban—and an increase on the number for 2004-05, which was 1,179.

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The hon. Gentleman suggested that post office partnerships with stores such as pharmacies and with churches ought to be considered. From our initial £450 million support package, £25 million was set aside for a flexible fund to enable the Post Office to pilot new ways of delivering services in rural areas in a sustainable way.

The hon. Gentleman made some interesting suggestions about how other partnerships and other business services could increase viability. The Post Office is undertaking several pilot initiatives aimed at increasing usage of rural post offices; for example, the pilot with the police, which was mentioned by the hon. Member for Solihull (Lorely Burt), in which the local sub-postmaster or postmistress handles simple inquiries in the community and can report crimes. Post Office Ltd is also considering working with tourist information offices to enable the local post office to offer advice.

Furthermore, the Post Office is testing alternative means of service delivery. The core and outreach model, which was mentioned by colleagues, is being piloted by the company to expand the reach of the network to meet the needs of outlying small communities. Typically, the core sub-postmaster provides a service at locations such as the local village hall or pub for several hours each week. The Post Office published its report on the pilot trials in March. The lessons from the pilots will play an important part in the consideration and informing of the Government’s longer-term decisions on the future of the network.

The hon. Gentleman asked about Adam Crozier’s comments about what he would need to fulfil the licence obligations. He answered his own question when clearly identifying them as a hypothetical response.

Sir Robert Smith: Will the Minister give way?

Jim Fitzpatrick: If the hon. Gentleman will forgive me, I am trying to get through as many answers as possible.

The hon. Member for Eddisbury said that 93 per cent. of people lived within a mile of a post office, but that that was not the case in rural situations. In rural areas, 85 per cent. of households are within 2 km of a post office. That compares with 79 per cent. of rural households that are within 4 km of a doctor’s surgery. There are 8,000 rural post offices—some 55 per cent. of the network—catering to only 19 per cent. of the population. That clearly suggests an imbalance.

The hon. Member for Castle Point (Bob Spink) is not in his place, so I will pass by his question. The hon. Member for Eddisbury said that the Government were forcing people away from post offices. I do not want to be partisan, but it was the previous Conservative Government who first introduced direct payments. Not only this Government have changed how benefits are provided.

The hon. Gentleman said that the Government should use post offices as a primary outlet for their services. I assure him that other Ministers and I are
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considering exactly what we ought to be doing to ensure that we identify the protection that Government services might be able to offer.

My hon. Friend the Member for Stroud asked about fee-charging automated teller machines in some offices. Post Office Ltd has changed its cash machine strategy and is withdrawing from its contractual arrangements with the existing ATM suppliers, which supply fee-charging machines. A new partnership with the Bank of Ireland will result in the introduction of 1,500 Post Office-branded free-to-use ATMs across the network in the next few years. My hon. Friend may take that message to his constituents.

The hon. Member for Argyll and Bute (Mr. Reid) asked whether the Government are to blame for the decline in the post office network. I remind colleagues that we cannot force people to use post offices. We ought to do as much as we can to provide Government services through them, but we also provide services on the internet, by telephone and by mobile phone, and people readily access them through such means. We must work within the context of that trend. I am sure that those who are responsible for television licensing will receive suggestions about free use of TVs on islands and respond to them directly. However, I am not sure that they will agree.

My final comment is to the hon. Member for Wealden. I had a meeting with a Minister from the Department for Work and Pensions on the Post Office card account and other issues raised in our last debate and with other Ministers on the issues that clearly are of concern to both Government and Opposition Members. Inevitably, suggestions for change in and restructuring of the post office network—

Mrs. Joan Humble (in the Chair): Order. We must move on to the next debate.

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Affordable Housing (Rural Areas)

11 am

Paddy Tipping (Sherwood) (Lab): I am pleased to introduce this debate, particularly in the context of the Affordable Rural Housing Commission’s report that was published in May. I thank the Minister for commissioning the report and congratulate the commission on its work, but towards the end of my speech I shall press her on what the next steps are, because affordable housing is a big problem in rural communities. Although progress has been made, we need to make further progress.

From my experience in Nottinghamshire, people have difficulty moving into the rural villages that surround the Nottingham conurbation. I know a family in Farnsfield, for example, three generations of whom live together—grandparents, parents and children. The children aspire to live in the village, but there is no affordable accommodation for them. There are similar problems in places such as Lambley, Lowdham and Woodborough. They are attractive villages where house prices have spiralled and young people have difficulty getting into the market. The situation is difficult in Nottingham, but I am painfully aware that it is far worse in other parts of the country, particularly the south-west, most of the south and the national park areas.

Everyone has a right to decent housing, whether they live in the town or the countryside. It is important to acknowledge that many people aspire to move out of the town and into the countryside. The Countryside Agency suggests that 100,000 people a year move out of the town and into the countryside, hoping for a better quality of life. We need to ensure that there is not an urban-rural divide. Some people, including some politicians, argue strongly that urban issues are different from rural issues, but rural housing is one side of the same coin—people move out of the town because they are worried about poor educational standards, high levels of crime and a decaying environment.

We need to continue to work hard as a Government to build on what we have achieved, to ensure that our town centres are revitalised and become places where people feel pleased and comfortable to live. The Government have a long history and a good platform on that. We need to continue that work, but of course we need to do things in the countryside too.

That is why I was delighted that our rural manifesto at the last general election contained a commitment to establish a commission on rural housing:

The commission was established shortly after the general election. It was chaired by Elinor Goodman and produced a comprehensive and well inter-linked report in May. The commission is keen to make progress with the report and so am I.

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The commission has described its report, saying that it offered

The commission achieved that aim. Its report contains a range of measures that, taken together, can be a move towards providing affordable housing.

Before I come to solutions, however, I want briefly to consider some of the evidence that the commission gathered. The statistics tell a compelling story. There was a 6 per cent. decline in rural new build as compared to a 29 per cent. increase in urban areas between 1998 and 2005. Average house prices in the countryside rose by 73 per cent., as compared with 68 per cent. in towns, between 2000 and 2005. It is therefore not surprising that, with rising prices linked to spiralling demand and falling supply, house prices for first-time buyers are 12 per cent. higher in rural districts than in towns and that the median house price in a rural area is 6 per cent. higher than in the towns.

If that was not problem enough, the average earnings in the rural economy are £17,400 a year, compared with an urban average of £22,300. The combination of high house prices and low incomes in rural areas means that people seeking to buy, even at the bottom end of the rural market, have to pay seven to 10 times their earnings, compared with an average of 3.4 to four times in urban areas. Rural dwellers, particularly young rural dwellers who have low incomes, face a real problem in accessing the housing market.

The consequence is that someone on such an income could probably afford housing in 50 per cent. of urban wards, but in only 28 per cent. of rural wards and 2 per cent. of rural wards in the south-east. Some 45 per cent. of newly formed households cannot afford to set up home in the ward in which they currently live. It is also important to note that the public sector is not compensating for market sector failure. There was a 22 per cent. increase in urban affordable housing provision, but only a 3 per cent. increase in rural areas between 2001 and 2005, and only 5 per cent. of houses are social housing in rural areas, compared with a national average of just over 23 per cent. Those figures spell out the stark reality for people who are looking for entry into the housing market in rural areas. There are problems of market access not only in Nottinghamshire but across the south, and particularly in the south-west.

What is to be done? Clearly we need to build a lot more affordable housing, not only in market towns—important as that is—but in villages of less than 10,000. They make up 19 per cent. of the population but receive only 10 per cent. of Housing Corporation grants. The commission has calculated how many new homes will be necessary and suggests that 11,000 new affordable homes will be needed in rural areas each year, which would be made up of 7,600 for rent and 3,200 for low-cost shared ownership. No one doubts that that is a big task, but the commission’s recommendations are compelling. We are taking those ideas forward, but we should do so much more firmly.

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