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Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Mr Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.



Post Office Closures (Hampshire)

7.17 pm

Peter Viggers (Gosport) (Con): I beg to introduce a petition relating to the proposed closure of Bury Cross post office in my constituency, signed by Mr. Christopher Donnithorne and a considerable number of other constituents. [Interruption.]

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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I ask hon. Members who are leaving to leave quickly and quietly, so that I can hear the hon. Gentleman.

Peter Viggers: One always tries to avoid that particular blot on one’s escutcheon, Mr. Deputy Speaker.

The petition parallels one that was signed by 2,000 of my constituents. The main reason given by the Post Office for the proposed closure was that the Bury Cross post office lacked public transport facilities. I pointed out immediately to the Post Office that Bury Cross is the post office in my constituency best served by public transport facilities. Indeed, there is a bus stop outside it. That appears to have been ignored by the Post Office, which still intends to close it. To that I say that politics has taught me that the important thing is to win the war, not the battle. We will continue to hope that the post office will remain open. The petition reads:


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Post Office Closures (Hastings and Rye)

Motion made, and Question proposed, That this House do now adjourn. —[Ms Diana R. Johnson.]

7.20 pm

Michael Jabez Foster (Hastings and Rye) (Lab): Nearly 60 per cent. of older people say that the local post office is essential to their lives, according to a recent Help the Aged survey. We have just heard a petition against the closure of the post office in another constituency. The post office is a much loved institution, and I want to tell my hon. Friend the Minister for Employment Relations and Postal Affairs that I am proud of the Labour Government for rejecting Opposition calls to privatise this essential service. I am proud that, unlike their Conservative predecessor, this Government have recognised the value of our communities by preserving a comprehensive network of local offices and have agreed £150 million a year as an ongoing social subsidy.

We know that if the post offices were privatised, there would be just 4,500 profitable offices, and I suspect that they would be less profitable than they are now as a result of the run-down of the comprehensive service that is currently provided. I can therefore assure my hon. Friend the Minister that in asking him to reconsider some of the recent proposals, I am in no way relying on the petition-carrying Conservatives and Lib Dems, whose privatisation plans would destroy the service as we know it.

David Lepper (Brighton, Pavilion) (Lab/Co-op): On petitions, does my hon. Friend share my concern, which I hope the Minister also shares, about the impression given at a public meeting in my constituency by Gary Herbert of the national consultation team of Post Office Ltd that however many signatures it bears, a petition against the closure of a post office might count as only one objection? I find that an insult to the people who have been campaigning to save post offices. Does my hon. Friend agree?

Michael Jabez Foster: If that is the case, I certainly would agree. In my constituency there are thousands who have not just taken to the streets outside the post offices, but signed a petition against the closures, which they consider so important. I hope that such petitions will be given greater weight than my hon. Friend suggests.

It is the foresight of this Government that makes this debate possible. The Labour Government have recognised the need for a social subsidy to maintain the network, which it is not possible to operate wholly on a market basis. I know that my hon. Friend the Minister has inherited the current situation, but whoever made the decision to allow the Post Office to envisage 2,500 closures was mistaken, especially if they believed that that could be done without major social distress.

For reasons that I will come to in a moment, that was a wholly unnecessary proposition. The Government have given quite sufficient by way of subsidy to support the existing network. However, the real problem has been that getting figures from the Post Office about the projected losses is like pulling teeth. Only yesterday was
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I able to obtain the figures in respect of the four offices that are threatened with closure in Hastings and Rye. Having seen those figures, I encourage the Minister to stop the closures and challenge the Post Office to explain why it has come up with these foolhardy proposals.

I shall return to the financial situation, but first I shall say a little about why the four offices in Hastings must not be sacrificed. The proposals announced on 13 November by Post Office Ltd were for the closure of four of our local sub-post offices—the Tilling Green post office in Rye, the Hastings Old Town post office, the White Rock post office and the St. Leonard’s Green post office. Hastings is the 29th poorest town in the UK. We have an elderly population who both love and rely on their post office. There are people there whose quality of life depends significantly on access to their post offices. Mr. Alan Maxwell, sub-postmaster of White Rock post office, has been in the business for more than 20 years. The post office has been going for much longer than that, but now faces closure.

Mr. Morley, a wheelchair-using patron of Tilling Green post office, cannot get to the main town post office that is seen as an alternative; it is simply not accessible. Mrs. Eileen Clarke currently uses the Hastings Old Town post office. She is diabetic; if she walked long distances, she would risk a fall or worse. The Reverend Humphrey Newman, a disabled gentleman, tells me that he can walk only short distances and that he finds the St. Leonard’s Green post office a lifeline. Kyriacos Korniotis, the St. Leonard’s Green sub-postmaster, tells me that many of his patrons come from numerous local care homes. He is now serving second and third-generation customers who would have enormous difficulties if the post office closed.

As we have heard, thousands more have signed petitions to express their opposition to the proposed closures. No one supports the post office closures except the Post Office itself. It is no good telling people that they are 0.8 miles over hilly terrain from their nearest post office; they may as well be told that there is a particularly welcoming branch in Timbuktu.

I am not a luddite who believes that services should always be maintained, regardless of cost; I accept that if a service is unsustainable, there comes a point when it cannot continue. However, the fact is that many post offices are not unprofitable in the conventional sense. Why are we punishing with no good cause the poor, disabled and local folk who often use the post office for social interaction? Just two years ago, the Post Office decided on a range of closures; it was then losing £2 million a week. It closed branches, apparently to become commercially viable. Now it loses £4 million a week. What has gone wrong? We need a new ambition from both the Government and Post Office management. Short-termist closure programmes do not offer the solution.

I acknowledge that lifestyle changes mean that some of the services that were previously demanded are no longer required. However, that is not the whole story. The Horizon system, in which the Government invested just a few years ago, was to make the Post Office the public’s very interface with the Government.

I have to criticise Ministers lightly for how they have allowed public services, such as the BBC licence and the like, to be lost to our “in-house service”. That must
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not happen again. A degree of public nepotism is needed if we are to ensure that our post offices are used in the way intended. It is, of course, absolutely essential that post offices be used as our local banks, and the sooner the Government give assurances about the security of the Post Office card account, the better.

However, for all that, we are looking at the here and now. We are looking at a generous settlement from the Government, offering—as I said—£150 million a year of social subsidy. According to the Post Office, that is £18,000 a year for each office. Why, then, are we closing much-loved offices such as Tilling Green, the Hastings Old Town post office and others?

Fortunately, as a result of the recent disclosures, I am able for the first time to offer my hon. Friend the Minister some advice on why I think the Post Office is looking through the wrong end of the telescope. I have now received statistics in respect of the four local post offices that are candidates for closure. I do not have time to refer to them all, but I would like to take as an example the Tilling Green post office in Rye, run by sub-postmaster Roger Pankhurst. It shows why I believe that the Post Office’s case is so fundamentally flawed. The figures show that Tilling Green makes an operating profit of £3,500 a year. That is the difference between what the Post Office pay the sub-postmaster for running the service and the income that he passes to the Post Office. Mr. Pankhurst has agreed that I should tell the House what he receives—£18,400 to run the service within the branch. He pays back the excess £3,500 to the Post Office. What is incredible is that the Post Office says that he makes a loss.

Why is that? The Post Office adds infrastructure costs of more than £24,000. The post office at the local level costs £18,400, but the Post Office adds on-costs of £24,000. That is madness. Once those are set against the total cost, Mr. Pankhurst makes not a £3,500 profit but a loss of £10,000. These figures, which have not previously been published, at last show us where the real problem lies. How can the Post Office’s central cost in supporting a local office significantly exceed the cost of running the office itself?

Before decisions are made, it is necessary to look at the infrastructure costs. How are they made up? Where do they go? Where are the savings to be made? It appears that they are central transactional costs—that is, the costs of the business itself in relation to arranging bank accounts, paying out payments to claimants, and the like. I come to that view because of another figure that the Post Office has been able to give me. It has told me that if it closes Tilling Green, it will save £6,000 in infrastructure costs relating to that post office. It follows that the balance of £18,000 is the cost of the transactions.

The problem is that if one takes those figures at face value and reduces the current infrastructure costs of £24,000 by £6,000, one is left with a figure of £18,000. The post office gets £10,000 towards that from other incomes at the centre. However, it effectively means that the migrating business will take with it a loss of nearly £8,000. That is nonsense. I can envisage local post offices saying, “Please, not here.” That loss means in practice that an office that is profitable today will become unprofitable simply because of the migrating business. It is madness to close an office and then finish up by making another office even less profitable, and
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then no doubt include it in the next round of closures. Presumably, much of the loss attributed to the offices under threat may have come from the migration resulting from earlier decisions.

It is manifestly the case that the problem is not the lack of profitability per se at Tilling Green or, for that matter, the Hastings Old Town post office—at least those two—but the vast infrastructure costs that are being incurred at the centre. If those central costs were trimmed by just a third, it would cost less—far less—than the average of £15,000 by which my hon. Friend the Minister has agreed to subsidise each of these post offices to keep them open. The Government have rightly recognised that social subsidy, which would rightly enable these offices to remain as they are, serving the public.

As I said, we are looking through the wrong end of the telescope. The problem arises not at the local level but at the centre. We should have had the figures throughout—then the negotiation, consultation and petitions would have had a meaning—but at least we have them now. Such costs are not lost by the closure of local offices, or at least not the greater part of them. What is needed is not cosmetic surgery but a heart transplant right at the centre.

If these decisions are not changed, what will I have to say to my 100-year-old constituent, Mrs. Roma Brierly, who has been using White Rock post office for many years and will now be cut off from what, for her, is an essential service? What am I to tell the small businesses of the old town in Hastings, which find it hard enough already in a deprived area but will now have to travel to town to do their banking? Incidentally, they have already told me that it will not be at the Post Office. The figures that I have given to the Minister suggest that that may be just as well, because it loses everything that it touches.

What am I to tell the lady who uses Tilling Green post office because she can park her mobility carriage outside, which is impossible at the town centre office that is the alternative? I am certainly not going to tell her that it is the Government’s policy, because I do not believe that it is their policy to close these post offices. My constituents will be mystified when I tell them that, with all this Government subsidy, the Post Office management have chosen to punish them.

I thank the Post Office management for at last, albeit late in the day, giving me the figures proving the real reason why these closures are being proposed. I want to ask the Minister whether local authorities are prepared to make up the shortfall, although that should not be their task. Will he recommend that the Post Office consider such an offer? Post Office officials have told me that they would be happy to consider it, but they want not only to cover their losses but a contribution to their potential profits, or savings as they call them. Such profits or savings, however, are fanciful and unproven. The track record shows that the transfer of business will make them even greater losses. At the very least, they are speculative. Given the level of Government subsidy, I hope that the Minister will say that making up the loss is all that would be required, if it is possible to bring people on board.

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By my calculations, the proposals are no quick fix. Compensation alone would take two years, in the case of two of my branches faced with closure; in the case of the office in the old town, it would take 42 years to recover the compensation, based on the loss proposed by the Post Office. That is an amazingly stupid thing to do, but that is the figure and I challenge anyone to challenge it.

I am sorry to give my hon. Friend the Minister such a hard time because I know that the current plan is not of his making. I appreciate that he will be noble enough vicariously to defend the Post Office and what it proposes, but may I counsel him against that approach? If he were my client, I would advise him that he should put his hands up for this one. He should offer mitigation, and offer it as soon as possible. That would start with a new direction for the Post Office. We should remember that we own it. It is our Post Office; thankfully, it has not been privatised by his Government. I want him to tell it to rethink its plans, open the books, halt the closures, stop what it is doing and work out how the Post Office can be the proud organisation that we, as a Labour Government, want it to be.

7.35 pm

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I begin by congratulating my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster) on securing this debate on post office closures in his constituency. As he implied at the end of his speech, he practised as a solicitor before he entered Parliament, and based on what we have just heard and his many other speeches in the House, I am sure that he was a very effective spokesman for his clients; he certainly has been one for his constituents tonight.

My hon. Friend mentioned the branches in his constituency—Tilling Green, White Rock, Hastings Old Town and St. Leonard’s Green—and I appreciate his concern for those local communities. As I have said during previous debates on this issue, I understand that a difficult decision has been taken, which causes concern among hon. Members of all parties, and in the local communities represented. The Prime Minister talked a week or two ago about having to take difficult decisions in Government and I am afraid that this has been one such decision. I am in no doubt about the concern my hon. Friend has raised tonight. He made a number of detailed points and asked some detailed questions, particularly on post office financing, which I will come to, but I hope that he does not mind if I set out briefly why the decision was made and announced last May.

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