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24 Apr 2007 : Column 240WH—continued

In 2001, the Labour party promised to keep post offices open “except in unavoidable circumstances”. As we know, however, it has now overseen the largest annual closures of sub-post offices around the country, and 4,000 have closed since it came to power. If we take into account the 2,500 or more that will close as a result of the current process, the Government will have been responsible for closing one third of the post office network. As we know, Adam Crozier, the chief executive, has said that he can meet his legal obligations with a network of just 4,000 post offices—he is not saying that that is what he wants, but that is what he needs to meet his legal obligations. Against that backdrop, the outlook is very depressing, and 39 per cent. of sub-postmasters say that they now see no future whatever for their
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business—in urban areas, that figure rises to more than 50 per cent. The fact is that under this Government post offices have closed at three times the rate they did under the previous Government.

In their proposals for the future of the post office network, the Government set out plans for their new access criteria, which, as we have heard, sound impressive. They include ensuring that 99 per cent. of the population lives within one mile of a post office and that 95 per cent. of people in rural areas live within three miles of one. However, those distances are measured as the crow flies. Although they take account of some major geological and geographical factors, they generally do not take account of the roads, many of which, as we have heard, are very windy in rural areas, where it will often be much more than three miles to the nearest post office.

The Government’s pledge is essentially meaningless, because the Prime Minister’s performance and innovation unit has said that it would be possible for the Post Office to close two thirds of its rural outlets while still ensuring that 99 per cent. of people in rural areas live within three miles of a post office. What will the criterion for closure be? Will it be just the volume of business? Will it be the distance to the nearest post office? Will it be the areas to which people say they want to retire? If closures are carried out on the basis of distance, not only the most marginal post offices, but successful local ones could be forced to close. There is profound concern about how the whole process will go forward.

We also fully recognise that the post office network faces particular challenges. Only about 1,500 rural post offices are making money, and the rest require subsidies. We have heard that about 1,000 rural post offices have fewer than 50 customers a week. The Government have told us that the annual subsidy of about £160 million will remain, but since they said that, they have admitted that they are not guaranteeing that level of subsidy and that it is the maximum level. The subsidy could therefore be significantly reduced as soon as the Government have got the coming set of elections behind them. Originally, the subsidy was intended to support rural post offices, but it must now be spread more thinly across the entire network. Is the volume of subsidy for each post office therefore likely to decline? And what consequences would that have for the support available to local post offices?

We have heard much about Government business being taken away from the post office network—the figure for last year alone was £168 million. In some areas, however, the position is being made even more difficult. If I go online to renew my car tax, those involved can check automatically on their computer whether my insurance is up to date and the car has an MOT certificate. If I go to a post office, staff will not have a computer link to enable them to establish those facts. The ground is therefore being tipped against the Post Office, and things are being made even more difficult for it.

When the Government announced that they would phase out the post office card account, we and, indeed, the Liberal Democrats called on them to replace it, and we are pleased that they have decided to offer a new card. However, the process will be subject to commercial tender, and it is possible that PayPoint, with about 18,000 outlets, will choose to bid. If the Post Office loses out, that will be an absolute hammer blow for it.
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At the moment, people must physically go into the post office to enter their PIN number, but if they end up going to a different store to use PayPoint, they will not use some of the money that they take out in post offices and not bring those post offices additional business.

The Post Office is unable to invest at the same level as PayPoint, which has outstanding levels of technology in that respect. One issue that the Minister must address is what he will do about the structure of the Post Office and Royal Mail to allow them to compete. The Post Office and Royal Mail more generally are being starved of investment, because Royal Mail does not have access under its current structure to the funds that it needs.

There are wider issues of ownership. Submissions have been made, and Royal Mail has put forward its views on a future structure. However, the Government’s delays and dithering mean that they might undermine this vital institution still further. The Post Office has excellent management, particularly in Adam Crozier and Allan Leighton, who are doing an outstanding job. However, there is a risk that they will simply pull up stumps and walk away if the Government do not decide how to resolve the issue of the Post Office’s long-term structure.

What is missing from the Government’s strategy is a vision of what the Post Office could be doing, how it could play an even more vibrant part in our local communities and how we could bring more business to it—an issue touched on by many of those who have spoken. The Post Office should have the freedom to offer additional services and to work with other carriers. Many more local government services should be operated through its network and much more should be done to bring in new business. The Government are overlooking the non-economic aspects of the Post Office, and they have failed to understand the importance of post offices as a hub in the local community. They have overlooked the non-financial benefits, such as when post office staff identify that things are going wrong and that somebody has not been in to collect their pension. The greatest disappointment is that the Minister has been in his job for almost a year, but there is no new thinking. We have had no answers to our questions and no statement in response to the consultation document.

The Post Office still faces an uncertain future and continuing decline, and the Minister is doing nothing to prevent that. When the history of the Government is written, their abject failure to stop the decline of the Post Office network when they had the opportunity to do so will be one of the clearest reasons for their losing the trust of the British people.

12.20 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): I extend my welcome you, Sir Nicholas, as Chairman for the closing minutes of the debate.

I congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on securing the debate. He speaks regularly on Post Office matters, as I and my colleagues are only too well aware. He set out his concerns in relation to the rural nature of his constituency and its widely dispersed population, and made other strong points. However, the future of the post office network is of great relevance to all Members
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of the House, regardless of the type of constituency that we represent. I shall try to answer as many as possible of the points that have been raised, but hon. Members will understand that I am somewhat constrained, as it will be inappropriate to comment on the specific issues that the Department is currently considering, in the light of responses to the national consultation. Something that I can repeat, however, in response to points made by the Opposition spokesmen, is that the closure programme will not proceed simply on the basis of retirement. We have made that clear in several debates.

Mr. Clifton-Brown: Will the Minister give way?

Jim Fitzpatrick: If the hon. Gentleman will forgive me, I should be happy to give way towards the end of my speech, when I have answered points that have been made so far in debate.

The Government announced proposals to the House on 14 December with the aim of putting the post office network on a stable footing and to ensure that there is a national network across the country, because we know how important post offices are. Our proposals were the subject of a 12-week national consultation, which closed on 8 March, and we received more than 2,500 responses. We are grateful to those who took time to participate in the process. We are giving full consideration to the comments received and hope to be able to announce our final decisions in May.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey suggested that we have delayed a final announcement—I think that he used a phrase about a possible whiff of politics in the timing—until after the devolved Administration and local elections in early May, as a way of withholding bad news. That is utter nonsense and it appears to me that we would have been damned if we announced our response—for being too premature—and damned if we did not. I should have thought that hon. Members would agree that it is essential to take sufficient time to give full consideration to the issues raised by those who responded.

That very point was made by the hon. Gentleman’s colleague, the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore), who, expecting an announcement in March, said in a press release on 13 February:

In addition, the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) said:

It was always our intention to make an announcement as soon as it was possible. The hon. Member for Wealden (Charles Hendry) asked what changed in the last two weeks. What changed, very simply, was the volume of responses that we were getting. During the consultation
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I had been informally sharing with colleagues what was almost a running commentary about the number of responses that we were getting, and in various debates I had tried to provide reassurance that we were assessing the responses that were arriving, so that on 8 March we should not have a mountain to climb. Unfortunately—it is the way of consultations—the vast majority of people, because of cycles of meetings, the consideration that they were giving to the matter, or the timing of their own business, delayed and made their responses in the last two weeks.

We had hoped to make an announcement in March and we wanted to make an announcement then, although it would not have killed the uncertainty: it would have been our announcement of the access criteria and comments made on them, but would not have listed the offices that needed to be restructured. That will be done by Post Office Ltd six or eight weeks after we make the announcement, whenever that happens, in March or May. It will have to get to grips with changes that we make, such as amendments or alterations, in the light of responses received, to the Secretary of State’s statement of 14 December. I assure hon. Members—and I am sure that they will accept—that there is no duplicity. What has happened is a straightforward case of volume. We agree entirely that sufficient time is required for the proper consideration of responses. Our aim is to be in a position to announce final decisions in May.

To respond to comments by the hon. Member for Wealden, since 1999 the Government have committed some £2 billion to support the network. We now propose to make a further investment of up to £1.7 billion to support the national post office network. Last year we announced financial support to the tune of £1.7 billion to Royal Mail Group, in the form of a mixture of access to reserves and extra access to borrowing, to ensure that the business overall had the support that it needed to enable it to restructure, modernise and buy the necessary technology and equipment to put it on as sound as possible a footing.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked about the franchise arrangements with WH Smith. Franchisees are bound by stringent contractual requirements to ensure that service standards remain at the same high level. After a transfer from the direct management of Post Office Ltd, staff at franchise offices receive the same training as employees of Post Office Ltd. All the evidence from mystery shopper visits and feedback groups suggests high customer satisfaction. My hon. Friend the Member for Dumfries and Galloway (Mr. Brown) was among hon. Members who asked about the length of the contracts with WH Smith. The contract guarantees that a branch will operate for a minimum period of seven years. In the extremely unlikely event that WH Smith did not want to renew the contract when the initial period expired, Post Office Ltd would act to ensure that the main post office services were retained.

The hon. Member for Cotswold (Mr. Clifton-Brown) and others made some points about extending the opportunities for Post Office Ltd to function. We are very committed to that, as we have explained in detail in many debates in the past six months. I shall not go into the details now, but I assure the hon. Gentleman that we are doing all that we can to ensure that Post Office Ltd will be in a position to operate efficiently and effectively,
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and to expand its services. The vast majority of sub-post offices are individual small businesses. They have the licence to expand services, although there are one or two restrictions, such as using PayPoint to serve contracts that they already have with other suppliers; that is obviously a bit of a contradiction.

The hon. Member for Ceredigion (Mark Williams) asked about the consultation. More than 2,500 hard copies of the consultation document were issued by the Department, including to Postwatch and the National Federation of Sub-Postmasters. The consultation document was also available electronically through the Department of Trade and Industry and Directgov websites, and was downloaded 3,700 times; so more than 6,000 took the opportunity. As to remarks about sub-postmasters not knowing that the consultation was going on, I do not for a second challenge them, but with the national publicity and the campaigns being run by virtually every regional newspaper in the country, and some nationals, one or two of which actually mentioned me, I find it hard to accept that sub-postmasters do not know what is happening to their services—especially when the national federation is so centrally involved.

Several hon. Members raised the question of thresholds for the access criteria. The proposed criteria were designed to balance the Government’s desire to preserve a national network with the need to put Post Office Ltd on a more sustainable footing. They were developed in a way that would offer as much protection as possible to vulnerable communities most in need of Post Office services. Clearly, we accept that there is no “one size fits all” approach and that there are geographical obstacles to be overcome. When we deal with the consultation with Post Office Ltd we shall be able to address some of the points that have been raised.

I shall respond in writing to points raised by other hon. Members. Much has been made, rightly, of the valuable social role played by post offices. Not only do we accept that, but we are putting our money where our mouth is, by supporting them to the tune of £1.7 billion between now and 2011. In May we shall be presenting our response to the thousands of submissions that we have had following our announcement on 14 December. However, it makes no sense to suggest that we should remove the choice of how services can be accessed, and force people to use post offices. Last year, for example, more than 5 million people renewed their car tax disc online. That was 4 million more than the previous year.

We have set out proposals to create a sustainable framework for the good of the network in the future, so that the Post Office can move forward with confidence and rise to the challenges of the 21st century.

Sir Nicholas Winterton (in the Chair): We have run out of time. I am grateful to the Minister for telling hon. Members that he will write to them about matters that he was unable to cover in his response.

We now move to the next debate. Two hon. Members have indicated that they have approached the initiator of the debate and, I hope, the Minister, about wishing to intervene. I am happy that they should do that.

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Water Bills (South-West)

12.30 pm

Matthew Taylor (Truro and St. Austell) (LD): Thank you for those comments, Sir Nicholas. I have indeed had approaches from two Labour Members, and I think that some of my colleagues may also wish to speak, but they should let you know if that is the case.

I welcome the opportunity to raise this issue, although, unfortunately, addressing Ministers on it is all too familiar. I have faced successive Ministers—both Labour and Conservative—in a large number of Adjournment debates over the years. Indeed, back in 1988 and 1989, I warned the then Conservative Government’s Ministers and MPs that privatisation would lead to unbearably high bills in the south-west, not least because the cutting off of the public and European Union funds that were needed to clean up beaches would leave the region to foot an unreasonable proportion of the national cost of those programmes. I was ignored, but when rates did rocket, I heard Conservatives claim that they had not seen it coming. That was probably the most decisive single issue that led to the loss of Conservative seats in our part of the country, so perhaps they should have listened.

When I faced Labour Ministers on this issue in the past, I met them with a degree of sympathy about the difficulties of tackling that messy legacy. It was not Labour’s fault that the Conservatives radically underestimated the cost of cleaning up Britain’s beaches and left only a £1.5 billion so-called green dowry from the much larger proceeds of privatisation for what turned out to be a £6 billion job. They left bill payers to cover the difference, and used the receipts to cut taxes for the very wealthy.

It is harder to excuse the fact that 10 years into the Labour Administration we are here again because the surface of the problem has not even been scratched, let alone the problem resolved. This is the fifth Liberal Democrat-initiated debate since Labour has been in government, and debates have also been initiated by Labour Members who made much the same case. I welcome the fact that they have been raising this issue.

Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): I congratulate the hon. Gentleman on securing the debate. Does he agree that it is important that all Ministers, not only those with responsibility for water, should understand that there will be no possibility of successfully concluding the mission to end child poverty unless something is done about our high water bills?

Matthew Taylor: I strongly agree with the hon. Lady. Bills have started to rocket much higher in the past two or three years, with an average rise of 10 per cent. in this year alone.

Sir Nicholas Winterton (in the Chair): Order. May I say to the hon. Member for Plymouth, Sutton (Linda Gilroy) that if she wishes to intervene in a half-hour Adjournment debate, it is courteous and the tradition of the House that she should advise the occupant of the Chair as well as the Minister and the initiator of the debate.

Linda Gilroy: I did advise—

Sir Nicholas Winterton (in the Chair): I must say that I have not received any note on this, but if she indicated her intent to the Speaker’s Office—

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