Previous Section Index Home Page

5.18 pm

Susan Kramer (Richmond Park) (LD): There seems to be a real difference between Members who see the Post Office as a nostalgic and traditional network that is fading and should be allowed to fade gracefully, and those who believe that there is a vibrant future and very significant role for the network. For older people in my constituency, who still look to the Post Office for their pensions and to pay their bills, the key advantage is that they can do so safely with a known postmaster and postmistress who make them feel secure and can help them access the services that they need.

When I talked in 2004 to one my constituents, who was 80, she told me that the local post office was her “independence”. She lives in Ham, my most deprived ward, where there is now no longer a single sub-post office. My constituent’s independence has gone, so she has to depend on the charity of neighbours to access many of the services that she needs.

When the post office in rural communities disappears, the viability of the village or community itself is put at risk.

Mr. Roger Williams (Brecon and Radnorshire) (LD): Much of the debate has focused on post offices as stand-alone businesses, but most post offices are well integrated with other businesses in their community. Will the Government take that into account when they analyse the results of their consultation? That symbiotic relationship is vital to cover the overheads of a business that might be the only one left in a community.

Susan Kramer: My hon. Friend makes a significant point. Often the post office business is that marginal difference between the village shop staying open and it closing. It is important to consider the total package, but when I look at the new access criteria, as they have been described, I do not see that element being considered in the design of the new future post office network.

10 Jan 2007 : Column 367

I come from an urban background: I am a Londoner and I represent an outer London constituency. Financial deprivation is an extremely significant issue. The banking network has little interest in those who are financially excluded or who live on the financial margins, but they constitute the perfect community to be served by post offices. For people who need access to financial services, post offices, perhaps in co-operation with credit unions and others, offer a way in which to access those services and to change their life opportunities. The needs of such people will never be met by the banks, which will deal with them only when dragged, kicking and screaming, by Government regulation. That is not an enthusiastic and positive way of generating the new services that such people need.

Tim Farron (Westmorland and Lonsdale) (LD): My hon. Friend points out that the access criteria are worth dwelling on. The Secretary of State rightly pointed out that we are discussing only about 14,000 individual businesses. If we are to close 2,500 of them very quickly, the temptation must be to be opportunistic and carry out the easiest closures. An example can be found in Staveley, a large village in my constituency, where the sub-postmistress wants to leave and sell the business. That would be an easy closure if one were being opportunistic, but it would be wrong to do it because there is clearly a massive village community to be served. Although the access criteria may well be carefully drawn up, when such a vast swathe of post offices are to be closed in one go—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order.

Susan Kramer rose—

Mr. Deputy Speaker: Order. I have not finished yet. I just want to say to the House that time for the debate is limited and overlong interventions are not helpful. We want exchanges, but they must be kept as brief as possible.

Susan Kramer: My hon. Friend’s point, although lengthy, is entirely accurate, and I shall let it stand on its own.

For members of busy working families—I speak as one who played that role for many years—who cannot receive packages at home, the post office has huge potential if packages can be delivered to the post office and if people have one place to go to access a range of other services—for example, local council services, or to purchase financial products. My point is that a positive view can be taken of post offices and their huge potential, but that is not what I see Ministers doing.

Geraldine Smith: I understand that the Liberal Democrats want to privatise Royal Mail to help to maintain the network of sub-post offices, but what happens when the money from that one-off receipt runs out?

Susan Kramer: Because it is the best way, I have left that until last, but I shall deal with that proposal, which offers a viable future for both Royal Mail and the post office network.

10 Jan 2007 : Column 368

Let us consider the value of post offices. The New Economics Foundation has demonstrated that each post office saves local businesses approximately £270,000 per annum, and that, as it circulates, every £10 of income earned by a post office generates £16.20 for the local economy. That symbiosis that others have mentioned is key and must be central to the planning of the post office network.

All organisations need to change to meet the times, but if we started to think of the post office as having potential rather than as a fading organisation, the whole psychology would change.

Mr. Clifton-Brown: Some of my sub-postmasters and sub-postmistresses will be profoundly depressed by this debate, because it has concentrated entirely on negative thinking. There ought to be positive thinking. Each sub-postmaster and sub-postmistress should be free to compete with their neighbours in offering a greater range of goods and services. The other day one of my constituents told me that they could buy their television licence in their local pub but not in their local post office. The local post office would like to sell the licences but is not allowed to do so.

Susan Kramer: I very much welcome positive comments such as those that the hon. Gentleman has just made.

The potential of the post office will be squandered unless three things happen. The first is that we must stop further wholesale closure of sub-post office branches; indeed, a number of them need to be reopened.

Bill Wiggin (Leominster) (Con): Does the hon. Lady agree that one of the problems is the way in which some of the closures took place? The treatment of Leominster post office in my constituency, which was downgraded, was disgraceful. Today, I received a telephone call from Mrs. Turner complaining about the length of the queues, so there is clearly no shortage of demand. Her problem was that she wanted to post a parcel, and that could not be done anywhere else.

Susan Kramer: Unfortunately, the hon. Gentleman’s experience is not unfamiliar.

The business restrictions on the network have been discussed. Some were imposed by Post Office Ltd, but some were imposed by the Royal Mail Group in the interests of the other arm of the organisation. The opportunity with the greatest potential—using post offices as a receiving hub for parcels, whether from DHL, Federal Express, TNT or anyone else delivering mail and packages—is being denied post offices by the Royal Mail family, so the second thing that must be done is to lift those restrictions. Thirdly, there must be significant investment in the system and the network, to make new businesses a reality rather than a myth.

Today, I have listened to both the Government and the Tories, but I have heard no realistic plans to deliver those goals. The Government have closed 4,000 branches and even the Secretary of State admits that it was not part of a properly organised master plan; certainly, in urban areas, as other Members have pointed out, closures depended on who was elderly and wanted to retire and who was so disillusioned by the
10 Jan 2007 : Column 369
threats that they decided they might as well get out while the going was good. Significant buy-out money was offered—£40,000 was a typical sum in my area. The results were completely haphazard.

John Barrett (Edinburgh, West) (LD): Will my hon. Friend comment on the fact that some of the most profitable and viable businesses are being closed? The busiest post office in my constituency, in the South Gyle shopping centre, was closed in the last round of closures, so no post office is safe.

Susan Kramer: My hon. Friend is right. Many of the post offices that were closed were among the busiest. I have seen that in my constituency, too.

The Secretary of State’s assurances about a coherent plan for the future of post offices seemed to apply only to rural areas, but they should be just as true for urban areas, where access can be exceedingly difficult. In one of my wards, the best access to the nearest post office would require customers to walk on water across the Thames, which Post Office Counters did not realise when it closed the post office.

Colin Challen: I am confused by what I have heard from Members on both Opposition Benches. Are they arguing that the post office network should have complete commercial freedom? I think that is the hon. Lady’s argument and it certainly seems to be the argument the Conservatives are making. If so, why should the network receive a penny piece of Government finance?

Susan Kramer: I remain committed to keeping Post Office Counters as a public service, and so does my party. Obviously, there is an argument for subsidy for social access reasons, but that would have to be in partnership with an effort to release the commercial and economic potential of post offices. If the Government cannot marry those two elements, they are missing out on the great opportunities that we face today. Many groups in the voluntary sector manage to balance a very commercial operation with a public service operation, and that is an entirely viable future for Post Office Counters. The withdrawal of Government business from the Post Office has been critical.

Richard Younger-Ross: The Secretary of State made it clear, from a sedentary position, that his comprehensive plan would apply to urban areas, too. Earlier, he told the hon. Member for Angus (Mr. Weir), who is no longer in the Chamber, that under the plan, the opening of new post offices would be considered, if the network was too degraded in some areas. Does my hon. Friend the Member for Richmond Park (Susan Kramer) accept that proposed closures, such as that of the Crown post office in Newton Abbot, should be suspended until the comprehensive plan is in place, and until we can be sure whether Royal Mail is making the right decision?

Susan Kramer: We always seem to be in a long “pending” period, and that is a time when a great deal of damage can occur to the post office network. It is important that such periods are accompanied by some kind of moratorium on the chain of closures.

Some 60 per cent. of post offices’ business used to come from the Government, but that will soon be down to 10 per cent. The biggest harm to post offices came from DWP’s threat to end the Post Office card account in 2010—I say “threat”, but it will effectively do it. I
10 Jan 2007 : Column 370
understand that there will be a replacement; that was stated in a very recent announcement. The Secretary of State will be conscious that previous announcements—I remember them from my time as a member of the Select Committee on the Treasury—were all geared towards ending the Post Office card account in 2010. That contract was worth £150 million a year to the Post Office, and the card is used by 4.5 million people. Anyone who has tried to apply for one, and has gone through the processes involved, knows that one has to be really determined to get a card. It is not easy to do; a person has to really want it, as it has not been marketed. People have had to seek it out.

A replacement card is promised, and that is welcome, but does the Secretary of State recognise the damage that is already done? When I talk with my local postmasters, the one issue that they raise time and again is the number of people who no longer come in, having walked in with the letter that they received from the Department for Work and Pensions, which seemed to instruct them to open a bank account. That has been the consequence, and there has already been huge damage to the system.

Mr. Graham Stuart (Beverley and Holderness) (Con): Is it the hon. Lady’s understanding that what is proposed as a continuation of the Post Office card account will not necessarily be any such thing? If the contract is put out to tender, might not the service be provided through post offices? If so, would it not mean that people might be coming to incorrect conclusions?

Susan Kramer: I am concerned that the Government have not given us stronger assurances of the overwhelming likelihood of the Post Office winning the tender. Frankly, I do not think that anybody can guarantee that in a fair tender process. We would all like to hear what the contingency plan is, in case the Post Office is not successful in the tender. It has lost tender after tender because it has not been sure of its future, and because it has not been organised in a way that allows it to offer the most efficient and effective service available. The loss of the BBC licence fee service is a good example of that. The Post Office was not able to compete, in part because of the network uncertainty, and in part because of the many overhanging difficulties that mean that it cannot put together the most efficient, competitive tender.

Mr. Peter Bone (Wellingborough) (Con): Did not correct the original Post Office card account contract require a migration from the Post Office to banks? If that is included in the next contract, it will make matters even worse.

Susan Kramer: The hon. Gentleman makes an important point. As I tried to explain earlier, the thrust of the Government’s approach is to wind down the post office network. They want to help an old dinosaur fade out, instead of seeking a new opportunity and seeing a phoenix that can rise from the ashes. The latter attitude must prevail in future, as the former is a self-fulfilling prophecy that will result in the loss of the network.

May I challenge the Government’s claims about the huge investment that they have made in post offices and the implication that that money is intended for
10 Jan 2007 : Column 371
modernisation? They put £1.7 billion into the network, £500 million of which was spent on the botched and incredibly late Horizon IT project. Obviously, that system has value, but one can argue that a significant portion of the £500 million was not spent effectively. Some £210 million was spent achieving closure, which certainly was not an investment in the future. Some £900 million was spent over six years on social network payments, which, I accept, provide a tremendous benefit. However, they are designed to keep the system ticking over—they are not designed to push for change or development, or to create new opportunities and drive forward business development.

The amount that has genuinely been spent on modernisation—sales, retail, competition and so on—is a modest £55 million, which has been used to focus on new business opportunities for post offices, rather than keeping the old system hanging on from day to day. We have been promised more investment, and I shall be fascinated to hear how the new £1.7 billion investment will be spent. How much will be targeted on closures, and how much will be used to develop new business? Many of the decisions and the presentation of arguments that would help to end the uncertainty for postmasters and sub-postmasters have been delayed, because the Government cannot decide how to develop their relationship with Royal Mail and whether to enter into an employee share scheme. Presumably, we have to wait until the Chancellor has had an opportunity to challenge for the leadership, as he needs support from Labour Members who are not keen on employee share ownership. It is extremely unfair that changes to such a fragile system should be pending while we await the outcome of those internal changes.

Jim Sheridan (Paisley and Renfrewshire, North) (Lab): The hon. Lady’s is cynical about the £1.7 billion investment in post offices, but a great deal of manufacturing has gone to the wall and people have lost their jobs. If £1.7 billion was offered to people in the manufacturing industry, they would bite off the Government’s hand to obtain it. What is the difference between those people losing their jobs and the position of post office workers?

Susan Kramer: I do not support the hon. Gentleman’s view that the post office network is the equivalent of a commercial service. My party believes that it offers a very different service, with a strong social component. Hon. Members have talked about the symbiosis between post offices and the viability of communities, and that key factor must be acknowledged in the handling of finances.

The Conservatives have got off scot-free. A total of 3,500 branch closures is not as bad as the total under the Labour Government but, my God, it is the difference between bad and worse. There has been much talk of unshackling, but there has not been any discussion of where the money for new development will come from. Enough Tories have engaged in business for them to realise that investment is a necessary part of change and new opportunity. The Tories called for this debate, so they should have some answers. Will they sell all or part
10 Jan 2007 : Column 372
of the Royal Mail Group? Will they keep Post Office Counters, Post Office Ltd and Royal Mail together? Will they make structural ownership changes?

Mr. Graham Stuart rose—

Susan Kramer: Perhaps the hon. Gentleman will tell me.

Mr. Stuart: As a Conservative Member with a business background, I believe that the hon. Lady is mistaken about the post office network, which is predominantly run by owner-proprietors, who have access to capital for investment if they can make a commercial case and there is a stable environment in which financial backers can invest for profit. Does she agree with Conservatives that the Government have not provided that stability? If people are not sure that they will receive income from the Post Office card account or be given greater freedom, that investment will not be made.

Mr. Deputy Speaker: Order. The hon. Gentleman is in danger of using up the time that he might otherwise wish to occupy if he caught my eye.

Susan Kramer: You will be glad to know, Mr. Deputy Speaker, that I am coming to the final part of my remarks.

I am now slightly worried about the business skills. Of course, uncertainty and risk are critical in any kind of business environment, but capital and investment are also critical for training, marketing and all the other development that will be necessary if we are to take the post office network from where it is today to the vision that we have of it in the future.

Mr. John Leech (Manchester, Withington) (LD): Does my hon. Friend agree that a level playing field is necessary as well? When I needed to renew my car tax, I realised that I could do so on the internet without producing any insurance document, but if I went to the post office I would still have to provide an insurance document. Surely there should be a level playing field for the post office and the internet.

Susan Kramer: My hon. Friend points out an anachronism of which I was not aware.

There is good news, as one party at least has put together a coherent plan that offers a future for the post office network—a comprehensive policy that deals with Royal Mail and the Post Office. First, the two must be separated. They are not the same business and there is no reason that they have to ride in tandem. The post office network belongs permanently within the public sector. It needs to be free to develop its business without being trammelled by Royal Mail and Royal Mail’s own and rather different objectives.

Next Section Index Home Page