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I want now to focus on the Governments responsibility for post offices. A few years ago, I sought to raise the related issue of the way in which postcodes are allocated, because there is an ongoing problem in Beddington, in my constituency, whereby people are being allocated Croydon postcodes, which means that they must pay higher insurance premiums, for instance. However, I was not allowed to initiate a debate about that in Parliament because the Government have no control over the issue. The issue before us would appear to be very similar, because the Government say that they have no responsibility for post offices or for Royal Mail, although that flies in the face of what everyone in the country believes.
I asked a parliamentary question about the issue on 8 November and received a response on 13 November. I asked the Secretary of State for Business, Enterprise and Regulatory Reform what assessment had been made of the effects of post office closures on local communities in London. The response that I received said that the Government had no responsibility whatever in that respect and that it was for Post Office Ltd to take account of the impact of such closures. It concerns me greatly that the Government do not consider that they have any role in assessing the effects of proposed post office closures, when a range of peoplefrom business people through to very vulnerable groupsdepend heavily on post offices.
The Government cannot simply wash their hands of this issue; they are not an independent observer who can sit and watch as 2,500 post offices are closed throughout the country over the next few years. If they were willing, they could will the means in the way that my hon. Friend set out: they could introduce imaginative proposals to secure the future of many post offices, and perhaps the opening of new post offices in places where there is increased demand. I want the Minister to give us some indication that the Government are not simply watching events from afar, but are willing actively to engage in the process and particularly to assess the impact of post office closures, rather than leaving that to Royal Mail.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on securing the debate and the hon. Member for Carshalton and Wallington (Tom Brake) on the points that he raised. This is an important issue, and I cannot pretend that any process involving the closure of post offices will be popular or that it will not give rise to significant concern in local communities, so I appreciate the concerns that both Members have raised on behalf of their constituents. However, I want to take some time to show that, faced with declining customer numbers, increasing losses in the network and lifestyle changes that have affected how people access services and information, the Government and Post Office Ltd had to take the difficult decision that they did.
The background to this issue is the consultation document that the Government issued last December, which set out our initial view. That was followed by the Secretary of States announcement in May this year. In brief, he announced that there would be up to 2,500 post office closures and that sub-postmasters leaving
the network as part of the programme would be compensated for their service to the community. I am not quite sure whether that is what the hon. Member for Sutton and Cheam meant when he talked about financial arrangements, but it is right and proper that sub-postmasters leaving the network be compensated for their efforts, and that is part of the programme.
Mr. Burstow: Just for the record, I was referring to the network reinvention programme under which people were offered money as a financial incentive to leave the network, not to people being paid compensation when they were nominated to leave the network, which is what is now being proposed.
The Secretary of State also announced that there would be 500 new outreach services alongside the closures, and that there would be new access criteria to ensure reasonable access to post office services. The Governments role and Government support have been mentioned. As part of the present programme, the Government, on behalf of the taxpayer, will invest £1.7 billion in the network until 2011, including an annual subsidy of £150 million to keep open branches that would otherwise not be sustained.
Tom Brake: The Minister has rightly said that the Government are investing in the post office network. If they are doing so, however, why do they not believe, according to the parliamentary answer that I received, that they have any role in assessing the impact of post office closures?
Mr. McFadden: The Government set the financial framework but we do not make decisions about individual post offices, as I am sure that the hon. Gentleman understandsthat is a matter for Post Office Ltd.
If the Post Office operated on a purely commercial basis with no external subsidy of the kind that we have allocated, it is estimated that up to four times more branches could be under threat than under the current programme. However, the Government do not take the view that this is purely a commercial service, which is why we have committed such a large public subsidy to the Post Office and why we are working with it to secure a more stable network for the future. That was recognised by George Thomson, the general secretary of the National Federation of SubPostmasters, who recently said that
although regrettable we believe that these closures are necessary to ensure the remaining post offices are able to thrive in the future.
Let me set out some of the current challenges faced by the post office network. Post Office Ltd has been losing money for some years now, and those losses ran at about £3.5 million a week last year. Four million fewer people visit post offices every week, compared with just two years ago. Eight hundred post offices have fewer than 16 customers a week, and each transaction in those offices costs the taxpayer about
£17 in public subsidy. Some 1,600 offices have fewer than 20 customers a day, and the subsidy per transaction in those offices is about £8. In urban areas, 1,000 sub-post offices are competing for business with at least six other post offices within a mile of them, and at a time when the overall number of customers has been falling.
The Post Office is also being challenged by lifestyle change. Eight out of 10 pensioners have their pension paid into a bank account, and the figure is nine out of 10 among new retirees. Last year, half a million people a month renewed their car tax online, but a million people a month have done so this year, with almost half of them doing so outside the normal office hours of nine to five. Other changes, such as direct debit and competition from those offering bill payment services, for example, also have an impact.
Reference has been made to Government decisions on these fronts, but the Government have a duty to respond to trends in the way that people expect their money to be paid to them. There is also the legitimate issue of the public purse. It costs 1p to pay a benefit or pension into a bank account, but 80p to do so through the Post Office card account and £1.80 a time to do so using a girocheque. Do we really believe that any Government will reverse the trend toward putting services online so that people can access them 24 hours a day, and go back to girocheques that cost £1.80 a time, with the increased risk of fraud that that would entail?
I was asked about the future of the Post Office card account. There will be a successor product but the Government cannot legally just allocate it to the Post Office, which is why it is out to tender. The Post Office is bidding and we believe that it is in a strong position, but there must be a tendering process involving the competition that is out there, whether the hon. Gentlemen like it or not.
The challenge to the Post Office is real because of lifestyle changes and competition. Of course, not everyone is online and not everyone is gaining access to services, paying bills and receiving money in that way, but millions are, which inevitably affects the way that people access Post Office services. The trends that I have described will not go away; they will probably intensify. I do not believe that the future for the Post Office can involve a call to turn back the clock. Instead, it will be a question of giving people new reasons to use it, and of providing services that make it a local provider of choice.
I still think that the Post Office will have great strengths. Even after the closure programme, the network will be bigger than that of all the banks put together, and about three times bigger than that of all five of the biggest supermarket chains put together. It will still have an unparalleled reach into every corner of the UK. The Post Office has been rising to the challenge of innovation and the development of new products. It is now the biggest provider of foreign exchange in the country; it is a major provider of car insurance; it has launched a new broadband service in partnership with British Telecom; it is introducing 4,000 free-to-use cash machines; and it has recently, and perhaps topically, announced a new, secure Christmas pre-payment scheme, aimed at Christmas 2008, which will be in full operation next year. That is
the road that the Post Office must travelproviding new services and new reasons to go to it, all based on a trusted brand.
At the same time as the closures are happening, Post Office Ltd will open about 500 new outreach services in outlets such as community centres, retail outlets and mobile post offices, all of which could help to mitigate the consequences of the planned closures in some areas.
Tom Brake: I thank the Minister for giving way on the subject of the consequences of closures. I hope that he will respond to my question about the extent to which he expects account to be taken of the impact of closures on neighbouring post offices, and particularly on queues.
Mr. McFadden: Postwatch, the consumer body, is closely involved in the preparation of the plans. Several factors are taken into account, and I shall come to the way in which the process of network change is working. Let me answer some of the questions about that, and about timing and the six-week consultation period.
It is true that representations were made to the Government about making the six-week consultation period 12 weeks or longer; that view was taken in the report by the Select Committee on Trade and Industry, and by others. We had a decision to take. The process is already taking 18 months, and we felt that to increase the consultation period significantly would increase uncertainty in the network. We had to take a decision that would give the right balance, and we think that a six-week period achieves that. The six weeks are for public consultation, but before that stage the area plans seek input from Postwatch, local authorities and sub-postmasters. It is then that the six-week consultation process begins.
I want to be clear about what the process involves. It is essentially about how, not whether, the plan is implemented. That was made clear to Members in the
letter that they received from the Post Office in July, setting out the closure process. It stated:
As you will understand, the consultation in respect of the Local Area Plan will not concern the principle of the need for change of the Network, nor its broad extent and distribution...Rather consultation will be seeking representations on the most effective way in which Government policyas set out in the Response Documentscan be best implemented in the particular Area in question.
The first area plan went out to consultation on 2 October. Five public consultations have now closed. The first closures will be announced next week and under the current timetable the final process should be completed around the end of next year. I understand from Post Office Ltd that evidence from the initial area plans shows that on average, about 15 per cent. of the original closure proposals have been changed following input by local authorities and stakeholders.
As I said at the beginning of my remarks, the process is not easy and I appreciate the concerns raised in communities. Post office closures have been happening for some years. They are happening in other countries, too, precisely because of the lifestyle changes that I have talked about. We have tried through the process to manage the reduction in the size of the network, to ensure reasonable access criteria for the population, to introduce new access services in some areas and to give Post Office Ltd some financial certainty.
Mr. Burstow: I want to ask the Minister about something that he did not cover in his response. Once the programme is complete and closures have taken place, what safeguards will be put in place to ensure that new gaps do not open up in the network?
Mr. McFadden: There is always turnover in the network. Some 10 per cent. of post offices change hands every year. The process is not something to which the Government can put a stop. However, I believe that the access criteria offer some certainty for the future, which will help to ensure reasonable access to the network in both urban and rural areas.
Mr. Mark Hendrick (Preston) (Lab/Co-op): Just over 20 years ago, Nicholas Ridley, the then Secretary of State for Transport, decided that the best way to address the declining bus industry was to deregulate services and open them up to competition. In doing so, he unleashed chaos on to our streets and sent bus usage plummeting.
The Transport Act 1985 removed the duty of local authorities to co-ordinate public passenger transport. It meant that operators could run bus services where they liked, when they liked and as they liked. There was no requirement for bus operators to consult before making changes to timetables or the position of bus stops. The criteria for registration did not include any reference to public demand or to existing services. The only place where that did not happen was London, where there has been regulated competitioncompetition for the market, rather than the cut-throat on-the-road competition of deregulation. Thanks to that, only Transport for London decides the routes, timetables and fares for buses in the capital.
In the majority of towns and cities deregulation has been a miserable failure. Statistics show that, since 1985, the number of bus journeys outside London has fallen. Journeys inside the capital have, however, increased significantly. Deregulation has led to reduced services, particularly in off-peak times, confused and changeable timetables and increased fares where there is a local monopoly. Since bus services are disproportionately used by the poor and those without access to a car, it is the socially excluded who are the worst hit by disruptive services.
Large operators in so-called bus wars very often use dirty and underhand tactics intended to drive out smaller competitors, rather than improve services. One such war is taking place on the streets of my constituency in Preston. The transport monster, Stagecoach, has moved in and is trying to kill off the local employee-owned Preston Bus company, which has been established for more than 100 years. It is the last employee-owned bus operator in the country and the only operator in Lancashire that has been involved in partnership schemes with the local authority. Of its 300 staff, more than 10 per cent. have worked for the company for more than 25 years, which highlights the integrity of the organisation. For three years, Stagecoach has targeted the profitable routes in Preston and undertaken an aggressive fare policy to increase pressure on Preston Bus business.
The situation intensified last summer when it emerged that Stagecoach wanted to buy Preston Bus. Selling to Stagecoach would result in serious job losses and cuts in service, so Preston Bus resoundingly said no to the proposal. During discussions with Stagecoach, Peter Bell, the managing director of Preston Bus, was left in no doubt that, if he did not agree to the sale, Stagecoach would secure the operations by hostile competitive means.
The regional director of Stagecoach, Tom Wileman, told Preston Bus that, if it did not sell, Stagecoach would take its business anyway. That resulted in the current fiasco in Preston in which Stagecoach is
attempting to run Preston Bus off the road. Since their meeting, Stagecoach has waged war on Preston Bussomething that has made passenger services unreliable, disrupted and downright dangerous.
Stagecoachs aim is to carry as many customers as possible at the expense of Preston Bus, and it has dispatched an additional 40 buses to run in the Preston area. The companys tactics mean that it rarely keeps to registered timetables. The tactics have included keeping buses at stops until they fill with passengers; it is not unusual to have gaps of 20 minutes between services that should run every seven or eight minutes. The company has also taken an ad hoc approach to dispatching buses, so when a bus arrives at a stop without customers on board or without customers waiting, it will be sent back to the terminus to be dispatched at a busier time.
Controllers monitor the departure of Preston Bus vehicles, so that they can put a Stagecoach bus in front at key departure stops. My constituents have reported that some Stagecoach staff have driven dangerously to get in front of a Preston Bus vehicle. Those reports include one of a driver making a three-point turn on a busy main road and of one overtaking on the wrong side of the road. Some reports say that Stagecoach controllers have virtually forced passengers to board their buses rather than wait for a Preston Bus. I witnessed a controller taking a woman with a child by the elbow to get her to board a Stagecoach bus.
Stagecoach has also deliberately given false information to customers with the aim of undermining Preston Bus, including suggesting that Preston Bus was about to go bust, that its prices would be going up and that services were about to be cancelled. If manhandling and misleading customers were not enough, two Stagecoach drivers were convicted of throwing eggs at moving Preston Bus buses. The Lancashire Evening Post has reported extensively on those incidents.
Graham Stringer (Manchester, Blackley) (Lab): I have listened carefully to the story of woe that is transport in Preston. Unfortunately, I am not shocked or surprised to hear it, because exactly the same thing happened in Manchester two years ago. Stagecoach has an appalling record. It is a subsidy junkie and a predator, and it engages in anti-competitive behaviour. Does my hon. Friend agree that we need to strengthen the Local Transport Bill, so that we can stop Stagecoach and other companies from behaving in a dangerous and anti-competitive way?
Stagecoach has altered its fares to undercut Preston Bus. It has offered free rides, and free day and weekly tickets to customers who would want to catch a Preston Bus vehicle. In September, Stagecoach increased fares in its other Lancashire operations, but froze fares that competed with Preston Bus. Those services operate at a substantial loss, but Stagecoach is a large international bus operator with some 10,000 buses, as well as major rail interests, so it can afford to spend money to gain a monopoly in Preston.
None of that enhances bus services or encourages higher patronage. Clearly, passenger satisfactionand
safetycomes a poor second to Stagecoachs profits. Stagecoach now operates on most of Preston Buss most popular routes, but it provides no early morning service and limited or no evening or Sunday services. Fares have been lowered in Preston, but they are effectively subsidised by customers in other parts of Lancashire who pay a good deal more than double the new Preston rates, usually to travel on much older buses.
I should point out that Preston is only the latest city to witness such tactics. In the 20 years since deregulation, Stagecoach has resorted to bullying and hostile competitive practices around the country. Many people remember what happened in Darlington in 1995, when the local authority put its municipal bus operation up for sale. On failing to win the bid, the Darlington Transport Company was faced by Stagecoach, which rapidly recruited many of the formers drivers, registered services from commercial routes and began to operate on a free-fares basis. The local company could not survive the onslaught and, following the withdrawal of the chosen bidder, it went bust. Stagecoach argued that the Darlington company was in trouble long before it arrived, but the Monopolies and Mergers Commissionnow the Competition Commissiongave a damning verdict on its actions, stating that the company was
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