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16 Oct 2006 : Column 635
6.16 pm

Mr. David Drew (Stroud) (Lab/Co-op): I welcome the opportunity to take part in this debate. I have taken careful note of the recent exchange, as I shall no doubt refer to the points made.

The debate is opportune, with the lobby on Wednesday, to which I am sure that some of my sub-postmasters and sub-postmistresses will come to talk to me. We have had the Postcomm document, which is an interesting read—it is rather long on analysis, but not so helpful on how matters can be taken forward. Nevertheless, it is a detailed document containing a lot of useful information, and I hope that the Government will respond to it formally in due course. Other reports have come forward, such as the recent Age Concern report, which highlights the importance of sub-post offices in rural and urban communities. As I represent what I call a semi-rural constituency, I see the implications for both.

The debate is also opportune because I had the good fortune to meet some of my parish councils and sub-postmasters and sub-postmistresses in Bisley in my constituency, and we discussed all the issues that have been raised today. The Minister was saying that sub-postmasters and sub-postmistresses were becoming more optimistic, but, without mentioning any names, that was not necessarily the view that I heard from those who were present, several of whom were either in the process of trying to sell or had already sold their post offices. Later, I shall refer to one glowing example of how things can be turned round. The post office concerned, in a small village community, has shown that it can move forward.

What should we be doing? Certainly, we should not be privatising Royal Mail as the motion suggests. That is the worst possible way forward, and I share with my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) support for the CWU. It is the worst way forward for two clear reasons. First, how will taking away one of the network’s most profitable parts, Royal Mail, help that network? Secondly, how can we then expect the Royal Mail to bail out that network? I do not know much about business and competition, but I would have thought that the one thing that that new organisation would not feel any obligation about would be moving more business towards the post office network, as it would be in direct competition with it.

Some would allege that that has been one of the problems with the business. In recent times, there has never really been an attempt to co-ordinate the three parts of the business. We saw that under the last Government, and sadly my own party has not done enough to bring Parcelforce, Royal Mail and Post Office Ltd together so that a wonderful organisation can be used properly. I remind Members that that organisation is held in the highest esteem, as has been demonstrated by opinion poll after opinion poll. People trust the Post Office. If politicians received some of the ratings that it has received, they might feel a little more confident on returning to their constituencies.

I know that there is a lot going on. I have had meetings with Alan Cook recently, and I am aware that there is a new broom trying to sweep away some of the debris. But although some may want us to think that
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the financial opportunities of becoming a bank in the community are the answer, it would be helpful if the banking system itself recognised the advantages of the postal network rather than seeing it merely as a competitor.

Time after time, I am told that if only all the banks would use post offices in the rural network as an opportunity for people to obtain money, we would begin to see them acting as I should like them to act—altruistically. Sadly, however, because they have had basic bank accounts foisted on them with their arms forced up their backs, they are taking their revenge by making it clear that they will offer the most limited service possible in post offices. That is wrong, unfair and unsustainable.

I hope that we shall see some new developments. Alan Cook has been quite impressed by the way in which the new savings bank has embarked on its link with the Allied Irish bank, which has begun to take hold and is doing well—again, in the face of stiff competition from the rest of the banking network. Foreign exchange business has been a boon to the Post Office, as has the reselling of premium bonds. It may seem very old-fashioned, but in this day and age it gives people security, and there is nothing wrong with that.

I challenged my hon. Friend the Minister about the universal service obligation, and was pleased to hear his response.

Michael Connarty: Before my hon. Friend moves on to that subject, may I raise another issue? My hon. Friend talks as though competition were a good thing, and I am sure that others will make the same point. Does he remember when “power cards” were taken away from post offices and—at least in my area—introduced in petrol stations? The service then collapsed. Now PayPoint has taken over the payment of television licences. I believe—because we have not been told the facts—that it is being used as a cost-cutter, to undercut and attack the post office network and ensure that PayPoint becomes the only option in town. What guarantee can we have that once it has won the business from the Post Office, it will continue to deliver it in a suitable fashion that benefits the customer? We have heard about the difficulties in rural areas.

Mr. Drew: No guarantee whatever. That is the problem. I will not go into the case to which my hon. Friend alludes, but I will say something about the BBC and PayPoint. I do not intend to dwell on this for long, but it has not been mentioned so far. In many places PayPoint does not exist, and, like my hon. Friend the Member for South Derbyshire (Mr. Todd), I have evidence that post offices that have tried to open it have been prevented from doing so. Worse, they have been prevented in the very areas where pensioners in particular need a point of access to television licences. I heard what my hon. Friend the Member for Rhondda (Chris Bryant) said about people having a justifiable reason for not obtaining licences. I will not go down that route, but I will say that unless it is guaranteed that people will be able to obtain television licences in all the areas where they could do so by means of the old service, by definition the service has been degraded and has deteriorated.

Julia Goldsworthy (Falmouth and Camborne) (LD): I have just taken a travelling surgery around my constituency, visiting many of the villages where
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PayPoint services are being withdrawn. Although TV Licensing informs people that the nearest service is only a couple of miles away, there is often no bus service to the neighbouring village. A trip to buy a television licence at the nearest PayPoint may therefore involve a significantly longer journey than is being suggested.

Mr. Drew: That was a helpful intervention. Like my hon. Friend the Member for Vauxhall (Kate Hoey), I have my own problems with the BBC at the moment, although for slightly different reasons; but I issue this challenge. If the BBC cannot prove that it can offer at least the same quality of service, it must take some pretty drastic action in respect of the organisation to which it has offered the contract. That contract is not acceptable: it represents a deterioration, and it will cost the BBC dear because it will accrue less revenue subsequently.

In a sense, I have already poured cold water on the role of banking. I have doubts about the idea that we are recreating a banking network, although I wish that we were. My hon. Friend the Minister mentioned the problems with competition, and, as I have said, the Post Office has made some moves in that direction. But another issue has not been mentioned, although it is very important, particularly to the 2 million Post Office card account holders—a figure given to me by the Post Office—who are unlikely to be able to draw their money in other ways. I think that credit union opportunities should be linked to the savings that we could make. Everyone who would like access to a credit union should be able to do so through the network. Problems are identified too often, and this would be a good solution. After people had drawn their cash by means of whatever follows the Post Office card account—a similar arrangement, I hope—they could save through credit unions. That would provide all the advantages that the socially excluded do not currently have, and we ignore it at our peril.

Let me make a point about the changing nature of the network. When people talk to me about sub-postmasters and sub-postmistresses, I sometimes hear criticism of what they are trying to do. I only wish that more people understood what some of them run their businesses on. It is all well and good for us to say that they run an unprofitable business; at national level that means that millions of pounds are unfortunately going in the wrong direction, but it also means that the people who are trying to run the business are doing so for a very small return. That is the problem with the £150 million so-called rural subsidy. Very little of the money actually reaches the sub-postmasters and sub-postmistresses: it is off the bottom of the accounts, so to speak. Some of it, admittedly—although very little—is intended to help reorientate businesses, and some is intended to encourage people to change the nature of their businesses.

The business that I said I would mention is a very small post office, Oakridge, in my constituency. The idea was to reorientate it by moving it to a different site, investing in an internet café linked to an advice centre and arranging meetings there. Michael and Kim Gorney—Kim is the postmistress—were able to take advantage of rural renaissance funds, but it is interesting to note how many hurdles they have had to negotiate. The project is
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not yet assured, so I shall not say much about its being a great success story, but it demonstrates that things can be done if the attitude is right.

In many villages, however, there will be no private-enterprise solution. The only solution will be some form of social enterprise. In my view, the organisation that should be key to that in rural areas is the parish or town council. I declare an interest: I am still a town councillor. My town council bought the post office, so we have some expertise in keeping them going. There was a threat that the post office would leave the premises where it had been for many a year. The position is different in other areas, though. When I went to Bisley, I challenged the parish and town councils to have regular meetings with sub-postmasters and sub-postmistresses to establish whether there were services that they could provide jointly through the postal network. Again, that is not the basis of the entire solution, but it should help.

If we are sensible about how the common agricultural policy should be funded under pillar two—with money finding its way into rural service provision, which is a good thing—we have to find similar ways of matching local initiative with available money. Parish and town councils can, through the famous 3p on the rates, find some money, but we also need to lock in national money, as in the case of the CAP and the operations of the central Government.

I finish by emphasising that we need security, so the network must be supported, and also stability in that people must know exactly where their businesses are going. We need to recognise that the role of the state is crucial: there is no alternative.

6.31 pm

Hywel Williams (Caernarfon) (PC): My particular concern is rural sub-post offices, of which there are many in my constituency. Last week, I was pleased to meet representatives of the National Federation of Sub-Postmasters in Wales. We are, of course, talking about people working in the private sector, but we all acknowledge the importance of their adhering to the highest standards of public service. It was clear from talking to them that they are worried about the uncertainty of their investment decisions and the value of their businesses, which often are their retirement pensions.

The Minister provided something of an answer to those worries when he said implicitly that there were too many branches and too many sub-post offices: what that does for the social functions of the sub-post office, I do not know. Clearly, sub-postmasters and mistresses have their worries. Rural sub-post offices act as focal points for the community in paying pensions and benefits and providing other services. In some places, sub-post offices provide only a limited range of goods, but in others sub-postmasters and mistresses have taken the bull by the horns and provide a surprisingly wide range of vital, if low-key, goods and services. Many of those services would not be viable without the post office element. If that element goes, we face the closure not only of sub-post offices but of vital small businesses in rural areas.

There are multiplier effects, as people using the sub-post office to collect pensions or benefits are more likely to spend locally, and a pound spent locally tends
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to circulate locally rather than swell the profits of the large supermarket giants. At a time when we are all worried about the effect of supermarkets on small rural communities, here we see the Government going—perhaps by default—in the very opposite direction.

In my constituency, sub-post offices have closed and been replaced by the post office van. The Minister provided us with a long description of the pilot schemes that operate at present—it will be interesting to see how that reads in Hansard tomorrow—but what I see in my constituency is a van that visits for just an hour or two. Before, the sub-post office was open all day, all week, so the effect of the changes can be clearly seen, as the pilot schemes will show when the results are published. The closures have also forced people into their cars, but I am not going to pursue all the green issues this evening, as I want to keep my remarks brief.

Mr. Roger Williams (Brecon and Radnorshire) (LD): I am sure that the hon. Gentleman will pay tribute, as I do, to the Post Office in Wales, which has supported the re-opening of post offices in many rural areas. We have also seen some innovative schemes, using village halls and other facilities. Even with the support that the Government now provide to rural post offices, 1,200 of them have closed in the past six years. That shows the scale of the problem, and many more will close unless the Government continue to provide support on a similar scale.

Hywel Williams: The hon. Gentleman makes a very good point. As we know that further closures are likely, sub-postmasters and mistresses face that degree of uncertainty, which is corrosive. The hon. Gentleman will also know that while cars are a costly luxury in cities, they are a necessity—sometimes even two to a household—in his and my constituency. The coincidence in Wales of high car ownership and low wages is not surprising, particularly in rural areas such as ours. If local services disappear, we shall face rural depopulation—an issue that fails to secure the attention it requires. What we have seen is a rush towards concentration in the south-east of Wales as well as the south-east of England.

Other hon. Members mentioned TV licences. I met the federation last week and was asked to draw the House’s attention to the Driver and Vehicle Licensing Agency, which advertises the fact that vehicle excise duty may be paid by phone or on the internet. I understand that it is printed on the envelope. It is very convenient for the DVLA, which fails to advertise the fact that the duty can be paid through the Post Office—a method convenient to customers. What comes first here: the customer or the DVLA? Clearly, it is the DVLA. Many people do not want to divulge information over the phone or down the line. It is a small point, but it is symptomatic of the corrosive effect of uncertainty on the morale of sub-postmasters. That was certainly the impression that I gained. People want to provide a good service, but they are worried and their morale is at rock bottom.

Tim Farron (Westmorland and Lonsdale) (LD): Does the hon. Gentleman accept that one of the major causes of the loss of post offices has been precisely that lack of
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confidence? There is a good example from Witherslack in my constituency, where the postmaster and mistress whose family has provided a service for nearly 100 years want to sell their business on to someone who can run the post office. They are incapable of doing so, because the market is so thin. There is no rural support grant and people lack confidence precisely because of uncertainty about the future.

Hywel Williams: The hon. Gentleman makes a very good point. I refer him to my early-day motion on the support grant and encourage him and other hon. Members to sign it.

I want to deal briefly with the Post Office card account, which has been mentioned. There are 360,000 customers in Wales and 7,810 in my constituency, 3,960 of whom draw their state pension through the POCA. That is the measure of the impact on my constituency with 3,960 pensioners and 7,810 people in all, as I said. I also have a list to demonstrate the effect on other constituencies in Wales. I noted, for example, that 14,810 people use the POCA in Merthyr Tydfil and Rhymney—probably the poorest constituency in Wales apart from that of my hon. Friend the Member for Blaenau Gwent (Mr. Davies), which also has a high level of card use. If the POCA is to go, we must have a replacement. The Minister referred to one earlier, but if we are to have a proper replacement, it should be possible to use the Link system. I am concerned that the banks are closing out the Post Office, which is anti-competitive.

Finally, will the Minister clarify what Government Departments are doing individually to promote the Post Office in bringing services closer to people in rural areas? There is huge potential for using new technology in such areas. What is being done to support post offices in providing facilities such as face-to-face interviews for passport applications, for example? If we are to proceed in that direction, individual postmasters have to take decisions now. I hope that the Minister will respond to that point in his reply.

6.39 pm

Mr. Henry Bellingham (North-West Norfolk) (Con): We have had an interesting and wide-ranging debate. There has been a great deal of agreement across the House about the state of the crisis. There is, indeed, a threat. In today's Financial Times, there is talk of large-scale branch closures. Adam Crozier has said that, if the £150 million a year subsidy under the social network payment is ended, 10,000 post offices could close. He also said that the Post Office could operate with only 4,000 post offices and that that would be enough for the Post Office to fulfil its obligations, yet the Minister and the Secretary of State say that they want to give the Post Office certainty. How can they possibly give the Post Office certainty when the chief executive himself is making such remarks?

We all know that the role of the Post Office in our constituencies, in the towns and villages, is absolutely vital. It is pivotal in many of the small communities. Often, as I go around my constituency, I see post offices that are at the heart of the village and pivotal in supporting the shops that are attached to them. They are very much part of the social fabric of villages, too.

After all, we have here an organisation with a unique brand. It is a powerful retail network. It has a massive
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head start with its 28 million customers. It is a huge cash handler—£90 billion a year goes through the tills of the Post Office, which is quite phenomenal. Why has it all gone so badly wrong? How can it be losing so much money? Why can it survive only on subsidy? Why is the rural network losing £3 million a week? Why have 3,200 post offices—17 per cent. of the network—closed since 1997?

The Minister with responsibility for employment relations in postal services wrote to me the other day. He said:

I put it to him and to the Secretary of State that part of the problem has been the actions, or inaction, of Her Majesty’s Government.

I will not rehearse the saga of automatic credit transfer, for which the Government were responsible. It did save the Department for Work and Pensions many millions of pounds, but think of the extra cost through the subsidy and of the redundancy payments to so many sub-postmasters who suffered as a result of post office closures.

We have heard about the Post Office card account fiasco and about BBC licence applications being moved elsewhere. I asked the Minister what discussions he, the Department of Trade and Industry and the Department for Culture, Media and Sport had had with the BBC. It is largely independent under its charter, but are you telling me, Mr. Deputy Speaker, that Ministers did not have some say or influence in that?

We have heard about the many constraints that the Government have put on the commercial freedom of the Post Office and sub-post offices. We have also heard about the many other things that the Government could be doing to support the network. Why have they not shown a bit more imagination? Why is there not more initiative on the part of the Government? Why, for example, has the Post Office only recently told sub-postmasters that transaction payments, which they receive for automated council tax, gas, water and electricity payments, are being cut from 11.2p to 7p per transaction? What about the DVLA? Surely much more could be done to ensure that its service is firmly entrenched within post offices and sub-post offices. That is vital in terms of supporting businesses in post offices and sub-post offices.

Mr. Geoffrey Cox (Torridge and West Devon) (Con): I wonder whether my hon. Friend is aware that the DVLA has recently sent all its customers a card that encourages them not to use the post office, but rather to register online. Surely that is an example of what should not be happening if the Government are properly to support the rural post office network.

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