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On the hon. Gentleman’s general point, I have explained time and again what has been happening over the past few years. People have chosen to conduct their business in different ways, and that changing behaviour has taken a toll on the Post Office. I want to
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make sure that we manage that process, and that we do not just leave things to chance. We should carry on supporting the Post Office, both directly through financial support and indirectly through measures such as the POCA and encouraging the Post Office to get other business in other ways. That is the best way of making sure that we get a national network.

It is not only me who is saying that. I have had many discussions with the federation concerned in this matter. One thing that its representatives said to me prior to my announcement was, “For goodness sake, don’t just walk away from this and do nothing. You’ve got to make sure that we have a chance of getting a coherent national network.” I believe that our proposals do that.

Mr. James Paice (South-East Cambridgeshire) (Con): The Secretary of State is right that if nothing is done there will continue to be post office closures; we all understand that, of course. However, he is proposing a quantum leap in the number of closures, in the hope that that will somehow stop the process for ever and a day so that we are then stuck with what will be a new network. Instead, he should see how sustainable the current number is. He keeps saying that it is not sustainable, but he has not advanced any evidence as to why it is not sustainable. Why does he not shelve the idea of closing 2,500 and concentrate on the measures that have been put forward to enable post offices to develop their own businesses? If he does that, he will see both that the network can be viable and how it can become so, and he can then make any decisions on closures that might be necessary.

Mr. Darling: As I said in my statement, last year the post office network was losing £2 million a week; the sum is now £4 million a week. On any view, the post office network has got problems.

I—in common, I think, with all other Members—do not believe that we should reduce the network to the commercial size, which at present is about 4,000; it might be possible to get it to 6,000, but that would be optimistic. We have got to have a national network with sensible access criteria because there will always be people the length and breadth of the country who want or need to get their money in the post office, and the Government have a clear social obligation to ensure that the network is there.

Several hon. Members rose—

Mr. Darling: Let me deal with one point at a time.

That is why we took the judgment that a network of the size that I propose would be sustainable, and we are prepared to support such a network. That brings me to another point that the Conservative party must face up to. We propose to fund the Post Office to the tune of £1.7 billion. That is an annual subsidy. The social payment is about £150 million. Our Eurosceptic friend has gone, but the answer to the question that he put to the Conservative Front-Bench spokesman is that, yes, one does need state aid clearance for these things, but obviously we have had that so far and I am very hopeful that we will get it again. We are prepared to make that money available.

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If anyone takes the view that what we are proposing goes too far and that there should be fewer closures—I asked my question of the hon. Member for Rutland and Melton because I wanted to find out his position on closures—I say that we would then have to be prepared to find the money to make up the difference in support. As I understand it, the Conservatives’ position is that they would not spend any more money on the network. The sums simply do not add up.

Colin Challen: It could be argued that anybody in this Chamber who has bought a postage stamp from a garage, sent an e-mail rather than a letter or paid a bill in some way other than at a post office is being a little hypocritical in arguing that they are defending post offices when in their personal lives they are making other choices. It is that choice that the Government are so keen on that I would like to see implemented in favour of post offices, so that every consumer has the right to purchase any Government service, TV licence or something else of that nature at a post office if they wish. That is not to force them to do it; it is simply to give them the right. Will my right hon. Friend give that choice to consumers?

Mr. Darling: As I said, the licence fee is run by the BBC, which took that decision. On pensions and benefits, I said that if people want to be able to get their money in a post office, they ought to be able to do so. I do not think that my hon. Friend was arguing otherwise, but people are free to exercise their choices, and it is not inconsistent to support the Post Office and to buy a stamp at another outlet from time to time. That is how people live their lives; they do what is convenient to them.

I have yet to hear anybody say that we can sort this out by trying to turn the clock back so that more and more people go back to getting their benefits and pensions at the post office—

David Howarth (Cambridge) (LD) rose—

Mr. Darling: Well, maybe the Liberal Democrats think that that can be done, but I do not think so. Most people recognise that these changes have taken place, and the question is how we respond to that. Part of the response must be Government support for the network, and I have mentioned the money that the Government propose to spend over the next few years. Part of it is post office business, which I am about to return to, but as the hon. Member for Cambridge (David Howarth) has been so noisy in the past 10 minutes I shall give way to him.

David Howarth: Is the Secretary of State saying that it is now Government policy to do whatever it takes to maintain the network at around 12,000 sub-post offices, and that there will be no more proposals for cuts beyond that number? If so, that would be a new policy, and it is what people want to hear. In Cambridge, for example, we have lost a third of our sub-post offices, and the question is when the process will end. Is it the Government’s policy to prevent the process from going any further?

Mr. Darling: As I said in my statement, the Government believe that a network of about 12,000 sub-post offices, with outreach support, is sustainable, and we are prepared
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to provide the money to make that happen. If people are arguing, as the Tories now appear to be doing, that there ought to be fewer closures, so that the subsidy, by definition, would increase, they must be clear that they would have to find the money, but that is not the Tories’ position.

Mr. Mike Weir (Angus) (SNP): The Secretary of State is talking again about closure—we keep hearing about the closure of post offices—but he has also talked about the haphazard nature of previous closures. In the urban regeneration programme, it seemed to be that whoever wanted to go got to go. That has left the current network dysfunctional in many areas. Is there anything in the right hon. Gentleman’s proposals that would allow an overall look at the network and the opening of new post offices to rebalance the network, and not just closing more post offices?

Mr. Darling: I never thought that I would see this day, but I totally agree with what the hon. Gentleman says—that should finish him off. The approach of leaving nature to take its course is wrong because if one or two postmasters or postmistresses in a particular area, especially a rural area, simply decided to sell up and stop trading, there would be gaps in provision unless things were organised properly. This time, the Post Office is going to examine individual areas and determine who wants to go in each area—quite a large number of postmasters and postmistresses are saying that they want to go. That might match up with what is required to bring about a more coherent network, but it might not. In circumstances in which an individual in one place wants to go while another wants to stay in business, it might be necessary to move the post office so that there is a better distribution of post offices.

That is what the Post Office is doing in relation to Crown post offices. Some towns and villages have two post offices, although there might be the business for only one. In my constituency, during the last round of closures, it was put to me on a couple of occasions that it would have been better to have closed a different post office from that which was proposed. We propose to have a more managed process. The Post Office is considering that, and when we have reached a conclusion, I will give further details to the House. However, the hon. Gentleman is absolutely right that the process must be managed.

Andrew Gwynne (Denton and Reddish) (Lab): I welcome what my right hon. Friend says about considering a more managed approach. However, in Denton, in my constituency, the post office franchise was with the Co-op, and when the Co-op decided to terminate the franchise, the town was left without a post office for three months. A post office then opened in a new building, but that has remained a building site for 12 months, which is completely unacceptable to my constituents. When we consider the managed approach, can we please tighten up the franchising arrangements so that the situation in Denton that my constituents have had to put up with does not occur elsewhere?

Mr. Darling: I understand the difficulties that will have been caused to my hon. Friend’s constituents, but one of the problems is that the network consists of about 13,800 private businesses. Some of those businesses
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are run by people who carry out post office business in whole and others are run by those who carry out such business in part. When individuals take their own business and personal decisions, it can sometimes be difficult to manage things in a way in which a national organisation otherwise would. It is important that we give the Post Office not only financial support, but support through the policy that I am proposing to allow it to ensure that it can rationalise its network and get a coherent network with the right spread and the right opportunities of access.

Several hon. Members rose—

Mr. Darling: Let me answer one question at a time.

That can be done only if we are prepared to accept that changes need to be made, although they also need to be managed.

Mr. Elliot Morley (Scunthorpe) (Lab): We have not heard much from the Opposition about the fact that pressures of change have built up in recent years. However, we have an opportunity for innovation, such as through mobile post offices, which were proposed in the White Paper. In my neighbouring constituency of Brigg and Goole, the West Halton post office, which had closed, reopened with the involvement of the parish council. Parish councils, community groups, local councils and the Local Government Association can play a role, but we have not heard much about that. When such an approach was proposed for my area of north Lincolnshire by the Labour group, the Conservative council voted against the proposal.

Mr. Darling: I am surprised to hear that, given that I understood that the Conservative leader had written to all his councillors saying that they should be looking at ways to put business the Post Office’s way. My hon. Friend is right. An aspect of the proposals that I set out last December was for local authorities to have a greater financial influence over support for post offices. For example, they could see whether they could provide services jointly through post offices, and so on. As for additional business, it is important to recognise that most post offices are private businesses. It is therefore open to postmasters to take on different, non-post office business, and most do.

The hon. Member for Rutland and Melton asked about restrictions. Some restrictions exist, basically to prevent a postmaster from taking on an activity that competes directly with other Post Office business. I can see the business rationale for that, as I shall explain. For example, the Post Office sells products such as travel insurance. That is subject to national agreements, and helps to bring people into post offices, but a difficulty would arise if someone else were to cherry pick that business, as that would undermine the coherence of the national contract.

Moreover, since this Government opened up the postal services, a person who wants to use the post office network can go to the Post Office and try to reach a suitable agreement. If that is not possible, that person can go to the regulator—

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Several hon. Members rose

Mr. Darling: I will try to give way to everyone, even though this is only a three-hour debate. I hope that we do everything possible to encourage postmasters and postmistresses to get additional business because, in the end, it is the number of people who come through the doors of post offices that will make the difference.

Encouraging extra business is absolutely essential, and is the other half of what the hon. Member for Rutland and Melton was saying, but on its own that is not enough: there still needs to be substantial public support. We are prepared to make that support available to ensure that the network survives, but my hon. Friend the Member for Scunthorpe (Mr. Morley) and his colleagues in Lincolnshire are absolutely right in what they say.

I give way to the hon. Member for Falmouth and Camborne (Julia Goldsworthy), who has been very patient.

Julia Goldsworthy (Falmouth and Camborne): I thank the Secretary of State for giving way. He has spoken about the need for rational planning for the network to prevent haphazard closures, but the reality is that many temporary closures become permanent because no one will take on a business that has a big axe hanging over it. For example, the sub-postmaster at the village of Beacon in my constituency died suddenly, and no one can be found to take on the business in the current uncertain climate. As a result, the office is the subject of a change-of-use order that would turn it into a residence. The closure is supposed to be temporary, but how can the post office survive?

Mr. Darling: That is a fair point. I have published these proposals in part because I want to provide certainty, so that people who take on a business know what its prospects are. As was noted earlier, in the past the Post Office has not looked at a given area and decided which post offices were necessary to fulfil the access criteria. That is what I want to happen, and it is why I am making these proposals.

Anne Snelgrove (South Swindon): I thank my right hon. Friend for giving way. I am pleased to say that all the post offices in my constituency are viable businesses that benefit the community, and my constituents want them to remain so. Will he confirm that, in future, people will be allowed to get their pensions or benefits from post offices, if that is what they choose? I have taken advantage of my local post offices’ ability to supply foreign exchange and travel insurance facilities, so will he bring forward other new ideas so that those offices remain viable businesses in my community?

Mr. Darling: Yes, I can confirm that people will continue to be able to get their pensions or benefits at post offices, and we have a commitment to that end. The foreign currency exchange facility has been hugely successful for the Post Office, and we very much want to encourage new business of that type.

I shall take interventions from those hon. Members to whom I have not yet given way, and then I shall move a conclusion, as half an hour is more than enough.

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Mr. Mark Todd (South Derbyshire): I thank my right hon. Friend for giving way. One thing that the Post Office insists on is that sub-postmasters cannot contract to install a pay-point outlet in their businesses. That is an anachronism, and unless the Post Office as a corporate body is able to provide a sensible, transactional bid for such a contract, it is one that should end. The Post Office has repeatedly lost contracts for basic transactional business: until it gets this matter straight, it is hobbling those sub-postmasters who want the work that I have described.

Mr. Darling: They can get the Paypoint, but—for reasons that I set out earlier—they cannot use a pay point that competes with other business. If the Post Office has entered into a contract to sell travel insurance or to allow people to pay certain bills, I can see why it would not like to have a competitor sitting alongside. As I said, I am prepared to look at any proposal to enable the Post Office to get more business, but I want to avoid ending up with a situation in which its financial stability is undermined by someone who is able to cherry pick a particular bit of its business. That possibility would throw into question the viability of the rest of the Post Office network. We need to remember that much of that network is not likely to include post offices with valuable contracts; it is more likely to include those that are fairly well used.

Several hon. Members rose—

Mr. Darling: I will give way to the right hon. Member for Wokingham (Mr. Redwood), and then conclude.

Mr. Redwood: I am grateful to the Secretary of State, who is very courteous. Can he tell us what public expenditure savings for Government Departments have been made from diverting business from Post Office services to banks, and how they compare with the extra subsidy, losses and borrowings needed by the Post Office on account of the lost business?

Mr. Darling: I would want to give the right hon. Gentleman an entirely accurate picture, so I shall write to him about it. He may concede, however, that as long as I have heard him in the Chamber, he has been one of the most severe critics of Governments—his as well as ours—who spend too much. As I said at the start, successive Governments have rightly been under pressure to cut their administrative costs. Part of the administrative costs of the Department for Work and Pensions, where I was the Secretary of State for four years, related to benefit payments. It seems to me that if people choose to get their pensions paid into a bank account, the Government should facilitate that rather than stand in the way. The right hon. Gentleman will know—the James review is relevant—that at the last election, the Conservative Opposition banked those savings. Somehow to suggest that the Conservatives would not have made that change or would reverse the process is slightly disingenuous.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con) rose—

Mr. Darling: I have been more than generous in giving way and I recall that Mr. Speaker said something about over-long speeches from Front Benchers, so in mitigation, it is not all my fault.

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As I said at the outset, any decision about the Post Office that involves closures is difficult and I recognise that it will be controversial, but I would be failing in my duty—and the Government would be failing in theirs—if I did not recognise that, in the face of quite profound changes that have meant that the Post Office has lost many customers coming in through the front door, we have to take action to ensure that there is a national network of post offices. I am firmly committed, as are the Government, to maintaining such a national network and we have put substantial sums into the Post Office—not just Royal Mail—to ensure that we do. Over the next five years, £1.7 billion will be invested—a very significant level of support.

We must also recognise the duty to do all we can to help individual postmasters and postmistresses up and down the country. I firmly believe that unless we are prepared to face up to the difficulties, we are not properly supporting the Post Office, but simply posturing. It is important to do everything we can to support the Post Office, which is why I urge the House to support our amendment.

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