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We all owe a huge debt of gratitude to our sub-postmasters and sub-postmistresses, who provide such a fantastic service to their local communities. They tell us that they do not want to depend on subsidy but want to have the opportunity to do more business and to serve their customers—yet that is exactly what
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the Government are denying them in today’s statement, which is based on how many post office closures the Secretary of State thinks that he can get away with, not a real business case or an understanding of what consumers, especially the most vulnerable in our society, want and need. His vision is to have fewer post offices providing fewer services to fewer people.

The statement leaves many questions unanswered. When does the Secretary of State expect to publish a full list of the branches that are to close? Does he expect closures to be made disproportionately in rural areas? How will the process of selecting branches to be closed be carried out? Will the Post Office identify the branches to close, or will it allow sub-postmasters to volunteer for closure? How has the number of 2,500 been reached? Is it true, as reported in the press, that the Post Office wanted to close 7,000 of the 14,000 sub-post office branches? Allan Leighton and Adam Crozier are doing a remarkable job in trying to turn around the Royal Mail, but the Government appear to be determined to make them the fall guys for their own lack of vision.

The Secretary of State says that compensation will be paid where a post office closes. Can he confirm media reports that a sum of up to £70,000 is being considered? Does he anticipate continuing uncompensated closures? Will there be local consultation about possible closures? What will a local community have to prove to avert a closure? Indeed, will it have any say at all? What will the situation be if someone wants to reopen a post office that has been closed as part of this process or wants to open up a new one nearby? Would they be allowed to do so? He says that the annual subsidy will remain in place. Will that be at the same level as now for every year until 2011? Does the figure of £1.7 billion that he announced include compensation to those postmasters who close their post offices, and if not, how much extra will be made available for the compensation package?

We accept that Government and business must deliver their services in the most cost-efficient way, but the Government seem content merely to manage the decline of the post office network when they should be trying to bring new business opportunities to it. They should be announcing that they will allow post offices full access to working with carriers other than the Royal Mail. They should be announcing that they will work with local councils to encourage them to offer more council services through post offices. They should be doing more to give post offices the flexibility to offer a much wider range of business services than they envisage. They should be acting to prevent the Royal Mail from poaching businesses away from sub-post offices by undercutting the prices that they can charge for postage.

While the Government fail to come forward with policies to give post offices a better future, the Prime Minister blames it all on the customer. How can he say that, when it is his Government who have taken away £168 million of business from post offices this year?

The statement is a missed opportunity for the post office network, but worse than that, it is a tragedy for those who depend on it and the communities that will lose a vital piece of their economic and social structure. It brings us no closer to a sustainable post office network; as a result, we are destined to more years of uncertainty, decline and dissatisfaction.

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Mr. Darling: If the hon. Gentleman has been reading about these matters for the past week, he seems singularly unprepared for today. I am bound to say that I am confused. He seems to be saying at one and the same time that no post offices should close and that 7,000 should close, which is what he says the Royal Mail wanted. He must be aware that post offices have been closing for years. During the time that his party was in office, 3,500 post offices closed in a completely haphazard way with no help being given to enable them to restructure.

Let me deal with one fundamental point. It is a matter of fact that, for various reasons, people’s shopping habits and banking habits have changed—for example, they are using the internet more—and that is affecting every single business in the land. It is completely irresponsible simply to ignore that and hope that it will go away. People had the option of paying their benefits or pensions into a bank account during the Tory Government years as much as they have had that option during the years that we have been in power. As more and more people get bank accounts, they are asking that their money be paid into them. It is our job to respond to that and to support the Post Office.

Let me make another point to the Tories. I said today that we are ready to put £1.7 billion into the Post Office. If the hon. Gentleman’s position is that there should be no closures, he has to tell us where he would find the additional money to go into the network, especially given that his party is committed to £20 billion-worth of tax cuts, as well as unfunded, uncosted spending commitments across the board.

The hon. Gentleman raised several specific matters, which I shall tackle. I agree that we, along with the Post Office, must do our best to get more business into the Post Office. That is why the new chief executive is doing more to get additional financial services business into the Post Office. I have already mentioned foreign exchange, which is extremely important business. I agree—and said in my statement—that we should encourage local councils to do more business through post offices if they can. Our commitment today to continue with the Post Office card account will go a long way towards encouraging people to use post offices.

The hon. Gentleman asked about consultation. There will be a consultation for three months on the principles that I set out. After that, assuming that we decide to proceed, the Post Office will determine the post offices that need to be in the network. It must be for the management of the Post Office to decide about the appropriate network.

The hon. Gentleman asked about those who volunteer to go. We believe that many postmasters and mistresses want to go. The consultation document makes it clear that the Post Office will try to match those who want to leave the service with its rationalisation of the network.

Let me emphasise to hon. Members that the Post Office has a problem and it is up to the Government of the day to try to help manage it. We are willing to do that and we have the means to do it. That is the difference between us and the Opposition.

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Kate Hoey (Vauxhall) (Lab): It is a pity that the Secretary of State did not mention that the Government are taking away business from the Post Office. Will he give us a commitment today that he will work with all Departments as well as local authorities to put back some of the business that has been taken away or at least make it easier for people to use the post office? He also knows that the consultation will be perceived by the 4 million people who signed the petition—and the many millions who did not, but want to keep their post offices open—as nothing more than something that will be listened to but ignored. If many thousands of people throughout the country are prepared literally to go out on the streets to support as well as to use their post offices, will he agree that the sustainable Post Office must continue and that the Government will go back on today’s statement?

Mr. Darling: On my hon. Friend’s last point, of course the Government will listen to representations made in the consultation. However, I emphasise that nobody—well, I cannot say “nobody” because my hon. Friend disagrees—but most people, including the National Federation of Sub-Postmasters, recognise that the problem needs to be tackled. Ignoring it, hoping that it will go away or that something will turn up will not do.

My hon. Friend mentioned Government business. If I said at the Dispatch Box, “From now on, people will not be allowed to have their money paid directly into their bank accounts”, people would justifiably complain. The problem that the Post Office faces is that many people who used to go to the post office to cash their giros, get their pensions and so on are choosing to do things differently. Another example is renewing tax discs on cars. People can choose to do it in the post office or online. Choice is right but the fact that the Government are making £1.7 billion to support the network shows our determination to maintain a national network, which will have 12,000 branches—more than the total of all the bank branches in the country.

Mr. Edward Davey (Kingston and Surbiton) (LD): May I thank the Secretary of State for his statement but tell him how angry he has made millions of people throughout the country, including pensioners, whom the Government bullied into moving their pensions into bank accounts? Does he realise that he is sounding the death knell for thousands of local shops, rural businesses and communities?

The Government are trying to blame the public for post office losses but will the Secretary of State tell us the value of Government business withdrawn by Ministers from post offices since 1997? Post offices used to get 60 per cent. of their income from Government business; soon it will be only 10 per cent. Surely that proves that post offices losses were made in Whitehall.

The Secretary of State told us how generous the Government were to keep a subsidy for the Post Office. Will he confirm the results of a Treasury study that shows that, for every pound of subsidy for post offices, the rural economy benefits from between £2 and £4? Has any new study been undertaken of the high economic and social returns from the subsidy? Will he publish those studies?

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The Secretary of State waxed lyrical about his proposed innovations to keep some limited postal services in remoter places. Why are his ideas so weak? How can we be sure that the policy will bring the new services and products that the Post Office needs? Why is he keeping Post Office Ltd under the control of the Royal Mail Group? He says that there are plans for new parcel pick-up services linked to mail order companies. That is great if it happens. However, does he not realise that Royal Mail Group puts restrictions in its contracts with post offices that are designed to benefit Royal Mail at the expense of sub-postmasters? Will he stop that?

There is a huge hole in the heart of the statement—the Secretary of State’s failure to say anything about the future of Royal Mail. Will he confirm that its financial future is grim and that, on top of a massive pensions deficit, Royal Mail is losing huge amounts of business to private competitors? Will he therefore explain why he has failed yet again to make a final decision on the draft Royal Mail package that was produced more than seven months ago? Is not the truth that he will not stand up to pressure from the unions and Labour Back Benchers, and that he rejected the idea of an employee share ownership trust, which Liberal Democrats and Royal Mail management proposed, because of how it would look for the Chancellor when he needs some votes? Is not his failure to make the tough decision to sell shares in Royal Mail the genuine reason why he cannot offer the freedoms and the £2 billion investment fund for post offices that we propose, for which there is a hard-nosed economic and social case?

The statement and the Government give us the worst of all possible worlds. The Government are betraying our post offices, the Royal Mail and local communities throughout the country.

Mr. Darling: I suspect that many postmasters listening to the hon. Gentleman will despair of any coherent policies from the Liberal Democrats. His proposal appears to be to break up the Royal Mail Group. He complains about competition, yet under Liberal Democrat proposals for privatisation, there would presumably be more competition. He is completely inconsistent. His party would not have the money to support the post office network because Liberal Democrat spending commitments do not add up.

The hon. Gentleman asked about the annual subsidy to support the network. It will remain in place throughout the next spending period and it will be needed beyond that. We are prepared to maintain it, yet the hon. Gentleman reverts to the point about the Government taking away business. Most of the business that has gone stems from the decreasing number of people who get their benefits or pensions from the post office. People have been choosing not to do that for the past20 years—it has not happened recently.

The hon. Gentleman mentioned the ability to use the internet to renew tax discs. Is he saying that people should not be allowed to do that? It would be astonishing if he told his constituents who use that facility that they cannot do so. Surely all hon. Members, whatever our party, must recognise that changes are taking place in society. People are doing things differently but we want to maintain a national
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post office network and we need to support it. That means that the Government of the day must find the money to do it. We are willing to do that and to support the Post Office to make the changes that it wants to make.

As for the Royal Mail, the hon. Gentleman must have missed a rather big statement—one of the first that I made as Secretary of State for Trade and Industry—in which we announced a major package of financial support for the Royal Mail Group in May.

Several hon. Members rose—

Madam Deputy Speaker (Sylvia Heal): Order. Many hon. Members wish to catch my eye and the main business of today is still to follow. I remind hon. Members of Mr. Speaker’s ruling that Back Benchers are limited to one supplementary question.

Mr. David S. Borrow (South Ribble) (Lab): What will be the criteria for the Post Office account card when it is retendered? Will a minimum number of outlets need to be part of the network, and will that minimum number allow more than one organisation, in addition to the Post Office, to bid for it?

Mr. Darling: I shall be brief, too, Madam Deputy Speaker, in the spirit of your remarks. It is intended that the new card account will be subject to same criteria and access arrangements as at present.

Mr. David Curry (Skipton and Ripon) (Con): My constituency stretches over 900 square miles of the most remote part of the Pennine dales. The National Audit Office report on tackling pensioner poverty showed that pensioners’ take-up of benefits is lowest in precisely such deeply rural communities. When the Secretary of State considers which post offices will remain, and the configuration of such outreach services, will he bear in mind the crucial importance of safeguarding the interests of those most vulnerable members of the community? Will he also bear it in mind that that stable base for local services cannot be replaced by a fleeting weekly visit by a van?

Mr. Darling: I agree with the right hon. Gentleman that a stable network is important, especially in rural areas, and that is precisely what I want to achieve. If we did not take the action that I propose today, we would not have the stability that the Post Office itself wants. He also makes a fair point about pensioners, and we want to make sure that those who are entitled to the pension credit or to any other such help should be able to get it.

Mr. David Kidney (Stafford) (Lab): I thank my right hon. Friend for continuing the subsidy for rural post offices after 2008 and announcing the successor to the Post Office card account after 2010. Under the urban reinvention programme, residents of Doxey near Stafford found that their post office was closed because the operator was willing to take the leaving package. Will he ensure this time that the willingness of an operator to take the money will not of itself be the reason to close a post office?

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Mr. Darling: My hon. Friend makes a good point. I want to make sure that the Post Office has a coherent national network. While a number of postmasters and mistresses want to go, it might not always be possible to align that wish with the operational needs of the Post Office. It is therefore important that the Post Office manages the scheme. Undoubtedly, therefore, some people who want to go might not be able to do so, as it is important to have a national network.

Mr. Peter Lilley (Hitchin and Harpenden) (Con): Does the Secretary of State recall that I warned him, when he began the policy of requiring pensioners and other recipients of Department for Work and Pensions’ benefits to receive their benefits in their bank accounts, that the savings that he hoped to make of some £300 million or more a year on the payment previously made by the Department of Social Security to post offices would largely be absorbed by the subsidy required to keep the post office system going? He has just confirmed that by saying that the annual subsidy will be more than £300 million. Does he consider it a good deal effectively to close down a network and make no net saving?

Mr. Darling: The annual subsidy is actually £150 million. As I said earlier, that will continue. The £1.7 billion will go to the overall losses of the Post Office but also to restructuring. I am sure that the right hon. Gentleman remembers that when he was Secretary of State for Social Security, as I was, the policy was to provide people with a choice, which they increasingly exercised. I think that I am right that when he was Secretary of State many people started to use bank accounts simply because their working life had changed and they found it more convenient to do so. That is a fact of life, and we must deal with that, as many other businesses have had to do.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): I welcome the announcement of the continuation of the Post Office card account as well as the recognition that customers in deprived urban areas should also be protected. Within the consultation, will my right hon. Friend provide more information about new access criteria in relation to deprived urban areas and rural areas, so that we can have informed debate?

Mr. Darling: Yes, I can give that commitment. The consultation document contains the criteria both for rural and deprived urban areas. My hon. Friend is right to make that point because many recent post office closures have been in urban areas, not rural areas. We need to strike the right balance to ensure a coherent national network That is what we, and postmasters and mistresses, want to achieve.

Mr. Michael Jack (Fylde) (Con): May I seek an assurance from the Secretary of State that in a constituency such as mine, which has an above-average number of pensioners, the access criteria to which he has just referred will be finely tuned to meet the needs and characteristics of individual communities?

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