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Perhaps Ministers simply forgot to mention this fact in their policy document. In fact, there are a number of things missing from the Government’s statement on the future of the Post Office. Most importantly, for instance, are radical proposals such as those that the Conservatives set out in October, to provide the essential reforms needed to give the post office network a genuine and sustainable future.

Kate Hoey (Vauxhall) (Lab): Is the hon. Gentleman aware that difficulties with the access criteria exist not only in rural areas? In many urban areas—even in my constituency, close to the Palace of Westminster—elderly people or people with disabilities might live quite close to a sub-post office, but if it is closed it can be difficult for them to reach another one. Access is an urban issue just as much as a rural one.

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Alan Duncan: I totally agree with the hon. Lady, and I am happy to echo her comments. One cannot stress often enough that the issue of post office closures is as much an urban issue as a rural one.

What the Government should have announced in December was, first, that they would give sub-postmasters greater freedom to find new business opportunities. At present, Royal Mail writes clauses into sub-postmasters’ contracts forbidding them to take on certain business opportunities that might transform their finances, if only they had the chance. The long-term future of the network will be best secured if the Post Office is opened up to new markets and new customers. Just as many pubs that were tied to one brewery are now free houses, so post offices should be released from their ties and be allowed to offer a broader range of services.

We recognise the fantastic service provided by sub-postmasters to their local communities. They tell us that they do not want to depend on subsidy, but instead want the opportunity to do more business and serve their customers, yet that is exactly what the Government are denying them. Conservatives would rewrite the sub-postmasters’ contract, allowing them to provide a greater range of products and services, including private mail services. Will the Secretary of State give the same assurance today?

Secondly, the Government should be following the lead of Conservatives in encouraging local councils to see what services they can provide through post offices and whether they could use the post office network in their area better to engage with local residents. There have been a number of plans and pilot schemes aimed at using post offices as one-stop shops to provide a wide range of information and services from local government and other local bodies, but the Government, instead of extending the range of service that they allow councils to offer, restrict it. Will the Secretary of State undertake to look at that again?

What about using post offices as a hub for government information? We are looking at how we can provide for people who have concerns about a range of Government services to be able to access advice and answers at their post office. The Government have talked about doing that, but the delivery, as so often, has added up to nothing. May I ask the Secretary of State also to look at that again?

On both sides of the House, there is an understanding that huge social benefits accrue from the post office network, but it is less well documented that there are clear economic benefits too. Perhaps the Secretary of State will tell the House what research his Department has done on that issue. I understand that the Treasury did a study and found that for each pound of support that the Government have put into the network, there has been more than £2 of economic benefit to the local area.

The Department of Trade and Industry should be thinking that if it can make the conditions right for more post offices to be successful, it will reap the economic benefits. Instead, the best that we have seen from the Secretary of State is a plan for the management of the decline of the post office network.

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Mr. John Redwood (Wokingham) (Con): Does my hon. Friend agree that one problem with those who are senior managers responsible for Crown offices or groups of Crown offices is that they are only cost accountable and have only cost targets? The only way that they can meet those cost targets is by staff reduction. Would it not be a more normal business procedure to make them profit accountable, so that they could grow the revenue instead of always having to cut staff? They would also have control of their balance sheets, so they could do property deals, for example, if that was also a way to improve the business and make money.

Alan Duncan: I look upon that intervention as an exciting teaser for the brilliant policy document that my right hon. Friend is due to produce later in the year, but the basic point is right.

Instead of managing decline, Conservatives are developing policies that can give a level of hope and certainty to sub-postmasters. Conservative Members are prepared to give the business people who run our sub-post offices a chance and a future.

The Secretary of State for Trade and Industry (Mr. Alistair Darling) rose—

Alan Duncan: I am just about to finish, but I suppose it would be churlish not to allow the Secretary of State one little moment.

Mr. Darling: Absolutely, and as the hon. Gentleman knows, I am always generous in giving way to him, although that may stop too. Before he gets to the final part of his peroration, will he tell us whether any post office should ever close?

Alan Duncan: That is easy. Of course some will close. That is the easiest question in the world to answer, but it is the magnitude and scale of the closures, which the Secretary of State is overseeing at 580 a year, that are causing everyone the concern that we are expressing today.

We want to give sub-postmasters a framework in which they can develop their businesses and make profits, whereas they are currently constrained and forced into loss. Unlike Labour, we will not limit sub-postmasters. We will give them the tools that they need to ensure that the post office network can thrive and continue to fulfil the important role that it plays in our local communities, which is why I urge the House to support our motion.

4.43 pm

The Secretary of State for Trade and Industry (Mr. Alistair Darling): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

I am grateful for the opportunity to debate the proposals that I made in December, which have led to the consultation that is under way. I dare say that there will be many other opportunities for the House to debate them further. The hon. Member for Rutland and Melton (Alan Duncan) could not be with us on the day that I made my statement, so it was interesting to hear for the first time what his policy is.

May I say out the outset that these are difficult decisions? The post office network is facing a difficult time. I take as my starting point the conclusion of the Select Committee on Trade and Industry, chaired by the hon. Member for Mid-Worcestershire (Peter Luff) who is in his place, that there is a widespread belief that the present network of 14,500 branches is unsustainable. The National Federation of SubPostmasters itself has said that.

When post offices have seen fewer and fewer people coming through their front doors over a number of years, with the associated loss of business, the House and any Government must consider what is to be done. Do we let closures continue on a haphazard basis, or do we try to manage the situation to provide support for the post office network while at the same time taking the action that we believe is necessary to put the network on a stable and long-term footing?

Peter Luff: I look forward to the Secretary of State appearing before my Select Committee two weeks today to discuss this issue again. I hate to correct him, but the starting point of the Select Committee’s report was that the Government have withdrawn services from the post office network and so accelerated its decline.

Mr. Darling: I will deal with that point, but it is not unreasonable for me to point to the conclusion reached not just by the hon. Gentleman’s Committee but, as he said, by the witnesses that appeared before it. Like the previous Government, we have been seeing post office closures year after year; I will come on to the question of Government business later. We must, however, address the question of what we can realistically do to ensure that we have a national network. For the avoidance of doubt, I have always been clear that we need many more branches than the number that are commercially viable. We need a national network of branches to ensure that people the length and breadth of the United Kingdom can get their benefits and pensions.

Several hon. Members rose—

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Mr. Darling: I will give way, but not to everybody at once. I will give way first to my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith).

Geraldine Smith (Morecambe and Lunesdale) (Lab): Many people accept that changes in society mean that people have benefits and pensions paid into bank accounts. Surely the solution for the post office network is to find new business—to make the post office a shop front for Government services Has my right hon. Friend given any thought to a new Post Office bank account, which could be popular with the public?

Mr. Darling: I agree that the objective must be to do whatever we can to encourage new business in the post office. If I may, I will deal with the bank account issue later. The new chief executive of the Post Office has made it clear that he wants to encourage new business. I think that I am right that the Post Office is now one of the major providers of foreign currency exchange and is selling travel insurance and various other products that are bringing people into post offices. We want to encourage that. However, the fundamental problem is that over a number of years, under both Conservative and Labour Governments, fewer and fewer people have been going into the post office, which has created financial problems.

Several hon. Members rose—

Mr. Darling: I will give way to hon. Members in my own time.

In 1996, the last full year of the Conservative Administration, about 20 per cent. of people receiving benefits and pensions had their money paid directly into a bank account. Therefore, the problem has not just started in the past few years: it has been gathering pace ever since direct payments were introduced in, I think, the mid-1980s. As I said in my statement to the House in December, the problem is that over a number of years people’s shopping and banking habits, including their use of the internet and e-mail, have meant that, one way or another, fewer and fewer of them have come into the post office. Let me deal with the point made by the hon. Member for Rutland and Melton and others that the Government are somehow forcing that to happen.

For years people have been choosing to have money paid into their bank accounts, such as child benefit and pensions. Indeed, most new pension claimants now ask for that to happen. I believe that people have the right to choose. It has been happening for years—and yes, it has resulted in fewer people going into the post office, but that too has been happening for a number of years.

The hon. Gentleman made much play of the fact that the Conservatives closed only 3,500 post offices, and that a greater number had been closed since then. The difference is that in the Conservative days the closures happened on a haphazard basis, and the Post Office was given no support to help it to deal with the situation.

Several hon. Members rose—

Mr. Darling: I will give way first to the hon. Member for Teignbridge (Richard Younger-Ross), because he rose first.

Richard Younger-Ross (Teignbridge) (LD): The Secretary of State says that “haphazard” closures are occurring, and says that he wants a consultation to establish a
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rational basis. If the current closures are haphazard, as he says, will he call a moratorium on unnecessary closures so that all closures can be considered on a rational basis?

Mr. Darling: What I said was that during the Conservative years closures took place on a haphazard basis, and no attempt was made to help the Post Office manage the situation.

Several hon. Members rose—

Mr. Darling: I will give way in a moment.

The hon. Member for Rutland and Melton said—he made some play of this as well—that part of the problem was that the Government were encouraging people to have their benefits and pensions paid directly into their bank accounts. Yes, the Government have done that, for two reasons. First, as I said earlier, people were choosing to do it anyway. Secondly, all Governments have been under pressure to make themselves more efficient and to cut costs.

The hon. Gentleman implied—and did not respond to one of my hon. Friends, who challenged him to say whether he would stop the process—that it was somehow wrong to encourage people to have their benefits or pensions paid into a bank account where that was appropriate. At the last general election, the Conservatives’ central plank on economic matters was their endorsement of the James report, which explicitly expressed support for the benefit payment system. In other words, the money that was saved had been banked by the Conservatives. It is a bit much for them to suggest now that they disapprove of what has been going on for a number of years.

Alan Duncan: What seems totally lost on the Secretary of State is that some sort of balancing effort is needed to ensure that people can obtain their money from other sources. On that, we hear nothing from him.

Mr. Darling: The whole thrust of my statement acknowledged that the changes were taking place and made it clear that there would be financial support for the Post Office amounting to £1.7 billion between now and 2011, recognising that the post office network had lost business.

This is the difference between our approach and the Tory approach. We recognise that profound changes are taking place in post office business and are prepared to provide financial support to enable the Post Office to adapt to that, but we also recognise—as do many others, including the National Federation of SubPostmasters—that the present network, at 14,500, is unsustainable. We are proposing a reduction of about 2,500, which would still leave the Post Office with a network greater than that of all British banks.

Sir Robert Smith: The Secretary of State speaks of a reduction of 2,500, which will concern all who are served by those post offices. In his document, however, that figure relates to a limit on the amount of compensation that he will give to Royal Mail. The access criteria do not enable our constituents to understand how their post offices will be affected, because there is no definition of remote areas, and the document does not specify the
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rural area to which the 95 per cent. figure applies. Does his model provide for a network of 12,000 sub-post offices to be maintained under those criteria?

Mr. Darling: As we said in our consultation document and as I said in my statement, that is our intention. Any Government must put a cap on the amount of compensation that they can pay. When the consultation period ends and we reach our conclusions, the Post Office will look at its network in different parts of the country, come up with proposals and—this is an important point—try to manage the situation to ensure that there are post offices that meet the access criteria. We must not allow a situation to evolve in which people simply sell-up their businesses. It is important to bear in mind that most such businesses are owned by private individuals; they are not Government-owned. In areas such as that which the hon. Gentleman represents we do not want situations to arise in which people retire or sell-up their businesses and there is no longer a post office.

We must ensure that we manage the system properly so that there is a coherent national network. That will not happen if we return to the approach that the Conservatives adopted in the 1980s and 1990s, when there simply was no planning and the situation was allowed to run unchecked.

Mark Pritchard (The Wrekin) (Con): With respect, the Secretary of State’s rationale appears to me to be perverse. He is trying to justify the massive cull of post offices on the basis that it is an organised cull rather than a disorganised one, even though the former will take place at three times the rate of the latter.

What would the Secretary of State say to sub-postmasters Mr. and Mrs. Sodhota of Edgmond, Shropshire? They are doing a marvellous job of running that village post office, and also of running another part-time post office in Lilleshall. The Secretary of State has withdrawn business such as the TV licence business and the Post Office card account business, so what would he say to them about how they should invest for their futures and that of their children, and for the futures of the villagers they serve?

Mr. Darling: I entirely agree that there are many sub-postmasters and sub-postmistresses throughout the country who do a sterling job not only in carrying out their own business, but often above and beyond that in providing other services and forms of support.

I will discuss the Post Office card account shortly. I have said that we need to replace it, and that is why we want to put in place a new contract from 2010. The decision on the licence fee was taken by the BBC. It did not take it because there was a lack of network; it explicitly stated at the time that the reason was that large cost savings would accrue to it—and, like any other organisation, the BBC has to take account of costs.

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