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obvious sign to mark themselves as needing consideration from strangers.
The Minister has a bit of explaining to do, but he should realise that what he has heard in this debate may be repeated in all the other constituencies around the country. East Worthing and Shoreham and Worthing, West are leading the country not just in the number of elderly people that they have, but in the fight that we have described. I hope that the Minister will join us and give us words of comfort and then say to the Post Office, You can rescind these decisions. Let the people on the south coast and in Worthing and district have the facilities that they want.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate the hon. Member for East Worthing and Shoreham (Tim Loughton) on securing this debate on post office closures in his constituency and I congratulate the hon. Member for Worthing, West (Peter Bottomley) on his short contribution.
As I said in the debate on this issue a few weeks ago, I understand that this is a difficult process that causes concern in local communities. It has been a difficult decision. Like the hon. Members who have spoken, I appreciate that the Post Office provides an important and valued service in local communities. It is also a service that has evolved and changed over time. As the hon. Member for Worthing, West said just a few moments ago, the number of post offices has been falling for some years. There is a reason for thathowever difficult this matter is. The service is being used by fewer people than before and is losing significant amounts of money. There are 4 million fewer people going through the doors of post offices every week than there were just a couple of years ago. The network loses several million pounds a week. Of the just over 14,000 post offices in the network, three out of four lose money.
If the network were run on a purely commercial basis, which we do not believe it should be, the number of post offices would be about 4,000not 14,000with perhaps some more living on the margins of commercial viability. However, that is not the way that we think the Post Office should be run. As I said in the Westminster Hall debate, there are also some 1,000 sub-post offices competing with six or more branches within a mile of them for the declining number of customers.
So why is the number of customers declining? Why is the Post Office losing money? A big part of it is down to lifestyle change. People gain access to their money in different ways from before. They often pay bills in a different way. Particularly in the last few years, the way in which people communicate with one another has gone through a technological revolution. Let us take the example of pensions. Eight out of 10 pensions are now paid directly into bank accounts. For new pensioners, the figure is more like nine out of 10. Reference was made to some of the online servicesfor example, paying car tax. The option of paying car tax is still available in several thousand post offices, but now that the service is available online, it is used by about 1 million people a month. Almost half those people use the service outside normal office hours.
Such changes are unlikely to be reversed. Of course, as the hon. Member for East Worthing and Shoreham said, and as I entirely accept, they do not affect everyone. Not everyone is online. Not everyone chooses to pay their bills by direct debit. But the changes are real and have an impact on the pattern of custom at post offices. They are part of the reason why customer numbers have been in decline.
I acknowledge that there is also a cost element. It costs the taxpayer about 1p to pay a benefit or a pension directly into a bank account. It costs the taxpayer about 80p if the same transaction goes through the Post Office card account, while it costs the taxpayer about £1.80 a time if that is done by girocheque. A Government of any colour would look at those figures and add them up for the millions of pensions and benefits that are paid every week and every year.
As I said, the Government do not regard the Post Office as a purely commercial service. In fact, they are investing some £1.7 billion of taxpayers money until 2011, including an annual subsidy, which did not exist in the past, of about £150 million. However, even with that large public subsidy, it was necessary to reduce the size of the network. That point was recognised by the National Federation of SubPostmasters. At the start of the process, its general secretary said:
although regrettable, we believe that these closures are necessary to ensure the remaining post offices thrive in the future.
Reference was made to the compensation paid to sub-postmasters and mistresses leaving the network as a result of the programme. I do not accept the notion that the payment of that compensation somehow represents intimidation.
Peter Bottomley: The point that is being made is that the sub-postmasters and mistresses got the impressionas was the case last time roundthat if they did not accept the terms available now, those same terms would not be available if they were pushed out of business in one or two years.
While I am on my feet, may I ask the Minister to confirm that the Post Office will take account of not only the petition presented today by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) and that which I added to the petition bag, but others that have been handed in, such as that of Councillor John Rogers, the councillor for Castle ward, and, to be non-political, what the Liberals have done? Will the Minister ask it how many representations it has received?
Mr. McFadden: The hon. Gentleman raises two points. I am making the point that I think that it is right to recognise peoples service though the financial compensation process. That is a managed process for reducing the size of the network, and it is in contrast to what happened in the past, when people were leaving in an unplanned way, without access criteria, and thus leaving holes in the network. He also mentioned petitions, and I am sure that the Post Office will take all representations on the process into account.
I spoke a bit about the lifestyle trends behind declining post office customer numbers. Those trends are unlikely to go away; in fact, they might well intensify. That creates a challenge for the post office network. The answer will be not turning back the clock to the situation some years ago, because these technological changes will not go away, but giving people new reasons to use post offices and offering a range of services that will make them the local provider of choice.
I recognise that the process is difficult for the local communities affected, but even after the programme is over, the post office network will be bigger than that of all the banks put together. The network will still be some three times bigger than the top five supermarket chains combined, and it will still have an unparalleled reach into every corner of the UK, both urban and rural.
The Minister has been speaking for 10 minutes, and while I agree with much of what he is sayinga lot of it is what I quoted him as saying on 29 Novemberthe debate is about post office closures in Worthing and Adur, yet he has not mentioned Worthing and Adur once. I want a response to the severe proposals that will affect my constituents and those of my hon. Friend the Member for Worthing, West (Peter Bottomley). Will he turn his attention to that?
Mr. McFadden: If the hon. Gentleman does not mind, I shall reply to the debate in my own way, rather than with the speech that he wishes me to make. The Post Office management have been trying to develop new products and to rise to the challenge of innovation, in order to attract new customers. For example, the Post Office 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, for which people can pay in cash. It has introduced 4,000 free-to-use cash machines, often in the most deprived areas. It has also begun to exploit the potential of internet shopping and mail order through its local collect service, which allows customers to collect deliveries at their local post office.
The hon. Member for East Worthing and Shoreham criticised the Christmas prepayment scheme, but I welcome its launch. Given what happened to Farepak, there is an appetite for secure Christmas prepayment schemes. The scheme will be in place for next Christmas. I welcome that kind of innovation. Innovation is taking place, and it is important that it does, because for post offices, the future is dependent on increasing customer numbers.
The hon. Gentleman asked about process, the consultation and the implementation of the closure programme. The plan covering his constituency is one of 47 area plans, based on groups of parliamentary constituencies. The plans have to comply with the access criteria announced in May by the Secretary of State. Even though the network will reduce in size, the access criteria are designed to ensure that unacceptable gaps are not left in the network. The hon. Members for East Worthing and Shoreham and for Worthing, West asked about the access criteria; I shall go into a little more detail on that point for them. Under those criteria, 95 per cent. of the population in urban areas should be within 1 mile of a post office.
Mr. McFadden: Yes, as the crow flies. Deprived urban communities were originally defined as the bottom 10 per cent., but as the hon. Member for East Worthing and Shoreham rightly said, it is now the bottom 15 per cent. Some 99 per cent. of the population in such areas should be within a mile of a post office. In rural areas, 95 per cent. of the total population should be within 3 miles. We are talking about the nearest post office within a radius. That is how the access criteria are worked out. I hope that that gives hon. Members clarity on the points that they raised. The Post Office is supposed to take into account other factors, such as whether there are motorways in the area, public transport availability, local geography and so on. It has to take a number of factors into account in applying the access criteria.
The hon. Member for East Worthing and Shoreham asked about the length of the consultation period. The Government consulted for 12 weeks on their overall proposals for the post office network, which were published a year ago. The consultation considered the principle of whether there should be post office closures, and the new outreach proposals. The hon. Gentleman asked about the six-week consultation period; the same period was used in the last round of planned closures, during a process called urban reinvention. The consultation is preceded by discussions between Post Office Ltd, local postmasters, local authorities and so on. So the whole process in each area takes significantly longer than six weeks, and the process of pre-consultation helps to frame the proposals before they go out to consultation. The process across the country will take about 15 months from start to finish.
To minimise distress amongst sub postmasters, it is important that the local consultation process is carried out sensitively and speedily. Prolonging decision making regarding sub post office closures will blight the business as well as creating a stressful environment for sub postmasters.
The hon. Member for East Worthing and Shoreham described a number of ways in which the proposals will affect his constituents and his constituency. In addition to the access criteria, there is an important role for Postwatch, which he mentioned. There is the possibility of a three-stage review process for contentious cases, which will take place when Postwatch and Post Office Ltd disagree about individual decisions. He implied that that was the case with one or more of the proposals affecting his constituency. Post Office Ltd announced recently that in cases where no agreement can be reached between Postwatch and Post Office Ltd a review process will take place through several levels. At the final stage, Allan Leighton, the chairman of the Royal Mail Group, will review the issues before reaching a final decision. If it is helpful to the hon. Gentleman, I am happy to send him the press release announcing the review process, which was issued a couple of weeks ago.
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 public consultation on 2 October. Eight consultations have now closed and four are currently open. The first final closures were announced last week, although none will take place until after the Christmas holiday period. Under the current timetable, the final consultations are due to be completed by October 2008 and it is intended that the whole process should be concluded around the end of next year.
Tim Loughton: With the greatest respect to the Minister, he has now been speaking for almost 20 minutes. I entirely accept that he wants to answer the debate in his own way, but the debate is about post office closures in Adur and Worthing. The speech that he has made so far, which may be informative, although I have not learned anything new from it, could have been made about post office closures in Kent, the west midlands or the north of England. I hope that his own way of responding to the debate will include talking about the subject of post office closures in Adur and Worthing, which he has signally failed to do so far.
I understand the hon. Gentlemans point, but he knows that, although the Government have set the framework for the closure programme, I do not as a Minister take decisions about individual post offices. I do not seek to deny the Governments role in the decision; I would not do that. The decision was based on the consultation document released a year ago and the announcement was made by the Secretary of State in May. However, I do not make the decisions
on the individual post offices in the hon. Gentlemans constituency. That is a matter for Post Office Ltd, which has published the plan that the hon. Gentleman has spoken about, and is consulting on it.
The hon. Gentleman asked me to ensure that representations would be taken into account. I can do that, but I cannot avoid the difficult decision taken as part of the programme: to reduce the size of the network by the proportions that we have set out; to try to put it on a more stable basis for the future; to compensate the sub-postmasters affected; and to try to develop with Post Office Ltd new products that will attract more custom in future. I want to be clear to the hon. Gentleman that I do not have a role in decisions on individual post offices.
Tim Loughton: I am grateful; the Minister is being very generous. However, he will understand my frustration about the specific issue affecting my constituents. Notwithstanding everything that he has just said, he mentioned proportions. May I prompt him in this way? If his Wolverhampton constituency were faced with losing not the average 18 per cent. but more than half its sub-post office branches, and if in the central part of his constituency no fewer than 60 per cent. were to be lost, would he think that he had a case for saying that his constituents were being treated unfairly and being hit disproportionately? That is certainly what mine are saying.
Mr. McFadden: The plan that will cover the area that includes my constituency has not yet been published. That will happen in due course. I accept that the process is difficult for local communities and I accept the hon. Gentlemans genuine feelings about it. However, I repeat that I do not have a role in deciding which individual post offices stay open or close. I have set out how the process is decided and the review process, which may or may not be available depending on the views of Postwatch and Post Office Ltd.
May I put this question to him? Suppose that, having heard the representations from local people, councils and MPs, the Post Office decided to keep the Strand or Heene Road post offices, or Bowness Avenue post office or one of the others in my hon. Friends constituency. If it decided to keep three of those proposed for closure, would it then have to close three others that it would not otherwise have closed?
We have set the overall framework to reduce the size of the network by about 2,500, so that would happen in some cases. It would not necessarily happen in every case; reference has been made to the proposals for elsewhere in the country where one or two decisions have been changed. Sometimes that will happen. The point to remember is that the costs to be considered include the costs of the individual sub-post
offices and the support costs for the whole network. The Post Office is seeking not only to close the number of branches that has been set out, but to reduce its central costs as well. If the number changed hugely, the Post Office would continue to face the losses that it currently faces.
As I said at the beginning, the process is not easy and I understand the concerns that have been raised this evening. I have to inform the House that I am afraid that I shall have to decline the invitation extended to me to visit the constituency of the hon. Member for Worthing, West on Thursday. Post office closures have
been happening for some years and they are also happening in some other countries. However, we have tried through the process to manage the reduction in the size of the network, and to ensure compensation for the hard-working sub-postmasters who have served communities so well.
I hope that the new access criteria and the investment over the next few years will mean that the programme, while it reduces the size of the network, will give the post office network some financial certainty as it goes forward to plan its future.