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The hon. Member for Chorley said that Lancashire is being hit hard, but I suspect that hon. Members from across the country will say that every area is being hit hard. For example, Brent had 40 post offices in 1997. We now have 30, with another six set to close. That is a 40 per cent. reduction. We, too, have a diverse and deprived area. Many people do not have a bank account, and the queues at the remaining post offices are appalling. A common theme—it has been raised by hon. Members—is that even if a closure does not have a large impact on the immediate area, it can have a greater impact on neighbouring post offices.

Mr. Hoyle: In the hon. Lady’s constituency, a much higher concentration of people live in a much smaller area. We have geographical size, and closures mean that people have to travel much further to the next post office. That is why we have been hit so much harder than other areas.

Sarah Teather: I did not mean to suggest that less pain was felt in the hon. Gentleman’s area. I was making the same point that other hon. Members have made: we are all angry about the impact of closures on our constituents. I understand what the hon. Gentleman and others say about travel, particularly in rural areas. There is also a cost to the environment, which is never taken into account by the Government when they consider the impact of a closure programme.

Several hon. Members mentioned the impact of a closure on a particular shop, but closures in my constituency can affect small parades of shops. We tend to lose the whole parade because of the loss of footfall. A number of reports have considered the impact of post office closures on local areas. The New Economics Foundation suggests that for each post office closed, the loss to an urban area is an average of £277,000. The Government are saving only £45 million from the closure programme. If we add up the additional costs associated with closure, I wonder just how much of a saving is being made. For example, a loss of £277,000 to the local economy must be a loss of between £47,000 and £50,000 in VAT to the Government.

There must be all sorts of other hidden costs. In a rural area, studies commissioned by the Government suggest that for every £1 in subsidy, there is a £2 to £4 benefit to the rural economy. We have spoken about the impact of closures on the vulnerable, but they can also have a big impact on small businesses and local areas.

The loss of a post office is one of many losses about which my constituents feel strongly. We are losing things that are seen as a community’s hubs and centres. For example, we have lost many health centres, and police stations are now proposed for closure. That is in addition to the post office closures; and only last week jobcentre closures were announced. There is a real sense that all the places where people go for face-to-face advice and help are being closed.

It surprises me that the Government are going through this pain for such a small sum. In the bigger picture, £45 million is small change, especially when one considers that Royal Mail Group paid its board just over £4.5 million in bonuses. That would be more than enough to save all the post offices in London that have been
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proposed for closure—and, I suspect, those proposed for closure in Lancashire that have been mentioned today.

The Government have no long-term plan to save the network. Only 7,500 post offices will be required to meet the access criteria that the Government have set with the Post Office. It is as if the Government are managing the decline of the post office network. When we reach the end of the present 2,500-closure programme, are they going to stop there, or will they carry on whittling the number down until we reach 7,500? Worse still is the spectre of the 4,500 post offices that are financially viable. The belief seems to be that closing post offices that are not financially viable will force the footfall into those that remain, but I doubt whether the evidence supports that. It is more likely that a substantial proportion of people will simply change their behaviour. They will stop using post offices and use other services, including online services. All that will happen is that we will see a progressive downfall of the Post Office, and of course there will also be an impact on Royal Mail. Will people who run small businesses really stand in a very long queue in a post office that is several miles away from their area? I suspect that they will just use a competitor.

Several hon. Members said that the Government have systematically reduced the services that are provided by the Post Office. There is real uncertainty about the Post Office card account. Some 3.75 million people use that service at the moment and it will be devastating if the Post Office loses the contract for it.

We really need a full, proper and long-term plan for the Post Office. For example, we need a plan to ensure that the Post Office card account is more flexible, that ATM machines can operate from post offices, and that post offices have an opportunity to diversify their business. I think that post offices should be separate from the Royal Mail so that they have an opportunity to work with the Royal Mail’s competitors. For example, why cannot post offices be set up as depots to pick up parcels from a number of different delivery companies?

People throughout the country are immensely frustrated by this closure programme. There is a real sense that the Government do not understand the important social asset that post offices are and that they have no long-term plan for securing something that is valuable to the community. However, although the Conservatives have been campaigning in their local constituencies to save post offices, they have no long-term plan either. They have no plan for investment in the Post Office and their actions smack rather of opportunism.

12.11 pm

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is a great pleasure to serve under your chairmanship, Mr. Atkinson. I welcome the Minister, although I do not envy him, because I cannot remember a debate in my entire time in Parliament in which the Government’s actions have been so fully condemned by so many Labour Members. The programme of closures that the Government are embarking on is clearly highly unpopular and I am not sure that it is entirely wise.

I pay great tribute to the hon. Member for Chorley (Mr. Hoyle) for securing this debate. He made a cogent case about the situation in his own constituency, which
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bears many similarities to the situation in my own constituency, as I will demonstrate later. At the outset, I should say that my hon. Friend the Member for Wealden (Charles Hendry) usually speaks for our party on these matters, but he is tied up in a Public Bill Committee elsewhere. I am sure that the Minister will understand that.

I offer my condolences to the residents of Chorley who use the Bolton road, Chapel lane, Charnock Richard, Eccleston Bridge and Withnell Mill post offices, which are to be closed, and to those other residents in Lancashire who use the 54 other branches earmarked for closure. In my local media, I have described these closures as being worse than the Beeching railway cuts of the 1960s. As has been said elsewhere, in many areas people now wish that they were able to open those branch lines that were closed, and indeed I think that one or two of them will reopen. The same may well be true of some of these post offices; in 10 years’ time, I suspect that one or two of them may well reopen.

Of course, as the party spokesman it would be unwise of me to claim that the Post Office network could feasibly have remained unchanged. However, as the hon. Member for Pendle (Mr. Prentice) suggested should happen, the Opposition would have embarked on a period of lateral thinking about how the post offices could have been used more viably. The hon. Member for Chorley mentioned the BBC contract, and there has also been the driving licence contract. There are lots of other ways in which the Government could have encouraged greater use of all the post offices. County councils could have used them for all sorts of services and the district councils could have used them for residents to pay council tax.

With a little lateral thinking, there is no reason why more post offices should not become more profitable. I mentioned the provision of ATMs in post offices earlier in the debate; one could think even more laterally about that issue. Why could not one have an individual ATM programmed so that the Post Office card account could be used for benefits claimants to draw cash in their own area? There are lots of possible innovations, but we have seen nothing from this Government about how they might make the Post Office more viable.

In its area plan proposal for Lancashire and Fylde with Southport, Post Office Ltd reports that 33 per cent. of residents in the area live in rural communities and it is those communities that will be hardest hit by closures. I am sure that those residents who will be affected by closures would like to understand the thinking of the Government on these closures, when they are saving a mere £140 million and then investing £1.7 billion in restructuring. That really is the politics of the madhouse.

Mr. Evans: My constituency is due to lose seven post offices, all of them in rural areas, and the rural bus service is particularly useless. Would my hon. Friend agree that the social importance of the post offices in these villages cannot be underestimated? The post office is a place where local people gather and converse, and if that centre is to be closed, a very important social tool in villages will be destroyed.

Mr. Clifton-Brown: My hon. Friend made an effective short speech, proving the old maxim that the shorter the speech the more effective it is. His intervention is also absolutely spot on. As I have said, village post offices are the glue that holds rural
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communities together. So much is transacted in the post office that goes far outside the post office’s normal business. If somebody is sick, it is the postmaster or postmistress who knows about it and gets something done. If somebody is in trouble, one way or another that news comes through the post office. That network is what the Government are destroying in this process of closures. I entirely agree with the hon. Member for Morecambe and Lunesdale (Geraldine Smith) about how much people in rural areas value their post offices.

I come now to one or two of the more technical aspects of the debate. The access criteria that the Government have produced for closing these post offices are flawed in many ways. The Government have not taken into account geographical features. If there is a very steep hill, how can one ask an elderly person or somebody in a wheelchair to get to their nearest post office? The post office may be only 3 miles away, but if there is no bus service or there is a bus service that goes only once a week, it might as well be 30 miles away. The 3 miles is measured as the crow flies, but very often the distance is much more than 3 miles if one has to walk or go by car. Furthermore, as has already been said in this debate, the programme has not taken into account the businesses that might well be damaged by the closures.

I have a post office in my constituency that serves 10,000 people, 750 new homes are about to be built near it and yet it is scheduled for closure. The hon. Member for Pendle says that one of the towns in his constituency will have only one post office for 14,000 people. In Cirencester, if the two post office closures go ahead as proposed, there will be one post office for 17,000 people. The people of the Cotswolds will gather in Cirencester on Saturday for a stamp-buying exercise. It will be interesting to see what happens to the centre of Cirencester then and whether Post Office Ltd takes note that that crowded post office will not be able to cope if the other post offices in Cirencester close.

As has already been made clear in this debate, there is evidence that if one post office that is scheduled for closure is saved another post office has to close. I hope that the Minister will be able to confirm today that that is not the case. However, if it is the case, I ask him sincerely how he will campaign in his constituency, how the Prime Minister will campaign in his constituency, and how the 20 Ministers will campaign in their own constituencies. I hope that they will not use their undue influence to keep their own local post offices open at the expense of those in other constituencies.

As has also been mentioned in the debate, the consultation period is simply not adequate. Six weeks is simply not enough time to get people motivated to protest and to find real hard evidence as to why their post office should not be closed. In the Cotswolds, 12 post offices are either scheduled for closure or for an outreach service, some for as little as two hours. There is a post office in Stratton where the postmaster has been offered £100,000 if he will retire and he still wants to keep the post office open. Last month alone, his turnover was £468,000 and yet that post office, which also serves 10,000 people, is scheduled for closure. We are closing some of the most profitable post offices, which really is the politics of the madhouse.

The hon. Member for Chorley rightly points out in his early-day motion 763 the importance that post offices play as focal points for their communities; my
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hon. Friend the Member for Ribble Valley (Mr. Evans) has also made that clear. The hon. Member for South Ribble (Mr. Borrow) said that he has organised local post office meetings in his constituency at very short notice. I had seven such meetings two days after the closures in my constituency were announced. Up to 250 people attended each of those meetings. I have another one scheduled for this Friday, where people will express their real anger. I have also received more than 500 letters about this closure programme. All of this evidence shows how unpopular the closure programme is.

Given this scenario of closures, it is likely that it will be the younger and, ironically, the more mobile residents who will be the first to move out of the affected areas when these changes occur, because they are the people who are able to move. It will be the poor, vulnerable, elderly and disabled who will be left in these isolated rural areas without the services of a post office.

I want the Minister to answer a number of simple questions. A number of post offices are scheduled for outreach in Lancashire, while eight are scheduled for outreach in my area, and I want some assurances. We are talking about not only the post offices that will close under the current programme, but the many that have been offered very limited outreach—one post office in my area has been offered only two hours. For how long is the funding for outreach guaranteed? How will it be modified if the outreach proves not to work or is insufficient? Is what is happening now merely a prelude? Will outreach be provided this year, with the post offices that receive it likely to be scheduled for the next round of closures?

As the hon. Member for Chorley and his constituents, the residents of the Cotswolds and people across the country know, the present round of post office closures has been badly managed and will cause devastation to local communities. The financial calculations do not make sense, the access criteria are too limited and the consultation period is too short, but perhaps the Minister can reassure us that that is not the case and that the closures will not be as bad as we imagine.

12.21 pm

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. I congratulate all the Lancashire Members present on expressing their views and I very much appreciate the concern that they have shown in pursuing their constituents’ feelings about the proposal to close post offices. Five post offices are scheduled for closure in my hon. Friend’s constituency, and other hon. Members spoke about the closures in their constituencies.

I concur with my hon. Friend the Member for Pendle (Mr. Prentice), who pointed to the expertise in this matter of our hon. Friend, who is a member of the Business, Enterprise and Regulatory Reform Committee. The Committee has looked into these issues in some detail—most recently in the report that it published just a couple of weeks ago—and my hon. Friend brings an impressive knowledge and expertise to the debate.

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My hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) concluded her speech by saying that we should back the Post Office, and that is where I would like to begin. The Government do back the Post Office and we will have backed it to the tune of £3.7 billion by 2011, which includes past subsidies starting from 1997 and current subsidies going forward. I do not want to be partisan in a debate that affects hon. Members from all political parties, but there was no subsidy at all under the previous Government.

It is not a question of the Government turning their back on the Post Office or not backing it; the Post Office is undergoing huge change because of the changes in people’s lifestyles, which my hon. Friend the Member for Pendle and others mentioned. We are talking about a difficult process, and I have no doubt that it is unpopular, but the change affecting the Post Office would be a great deal larger if it were not for the Government’s support and subsidy to the network.

When we take into account the direct costs to local post office branches and the costs of central infrastructure support, such as IT, cash handling and other services, which are not paid for by the sub-postmaster or sub-postmistress, it becomes clear that three out of four post office branches lose money for Post Office Ltd, which is why the commercial network on its own would have only about 4,000 branches.

Significant Government support is therefore going into the post office network. Nevertheless, at just over 14,000 braches, the network was judged to be unsustainable, by not only the Government, but the general secretary of the National Federation of SubPostmasters, who said:

Let us look at some of the figures and at why the Post Office is in such a difficult position. Post Office Ltd lost £174 million last year, or £3.5 million a week. The hon. Member for Brent, East (Sarah Teather) referred to staff bonuses, but paying none of those bonuses would cover the Post Office network’s losses for only about 10 days. What would it do after those 10 days? The network loses £3.5 million a week; every day the Post Office is open for business, it loses £500,000 or more.

There has been a significant decline in custom. Some 4 million fewer people visit post offices every week, compared with just a few years ago. Past closure programmes have been mentioned, but 1,000 sub-post offices in urban areas are competing for business with at least six other sub-post offices within a mile of them, and that is at a time when the number of customers is falling.

The decline in customer numbers is influenced by huge changes in people’s lifestyles, which we all know about. We tend to think, for example, that one of the core services that post offices offer is the capacity for pensioners to pick up their pension, and a number of pensioners do that. However, I should point out that eight out of 10 pensioners have their pension paid into their bank account, so about one in five are picking up their pension at the post office. I do not know what all the hon. Members present intend to do if they reach retirement age and live to a glorious old age, as I hope that they will, but the number of new retirees choosing to have their pension paid into a bank account is not eight out of 10, but nine out of 10.

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Geraldine Smith: Have the Government done enough to look for new business for the Post Office? The network can fulfil a really good and helpful function by bringing Government agencies close to people.

Mr. McFadden: My hon. Friend makes a good point, and some of the suggestions for new business that she and other hon. Members made during the debate are being taken up. Hon. Members mentioned free ATMs, and I am happy to say that 4,000 free-to-use ATMs are being installed in post offices. Hon. Members also asked why the new Post Office card account cannot be used at ATMs, but I am happy to confirm that it will be possible to use it at ATMs. Such new business ideas are important, and we should give the Post Office management credit for some of the—

Mr. Hoyle: Northern Rock.

Mr. McFadden: I shall come to Northern Rock. We should give the management credit for some of their innovations on foreign currency, insurance and so on. My hon. Friend mentioned Northern Rock, and I should tell hon. Members that the Post Office already offers a mortgage service to the public. There is therefore new business and there is support through Government subsidy. Even given those two factors, however, the Post Office still faces the difficulty that three out of four branches are running at a cost to it.

Mr. Clifton-Brown: Will the Minister answer one key question? If one post office that is scheduled for closure remains open, does that mean that another post office must close?

Mr. McFadden: The reason why that has happened in a number of cases is that the average cost to Post Office Ltd of post offices that are scheduled for closure is £18,000 per branch per year. If one is saved, therefore, the Post Office must find that saving somewhere else. I can confirm to hon. Members, as I did to the Select Committee, that that will not happen in every circumstance, but that is why it happens in some circumstances.

Time does not permit me to go through much else, other than to say that I understand the feelings that hon. Members have expressed. We are talking about a difficult process, which is being driven by lifestyle change, and I can assure hon. Members that the Government are committed to continue supporting the Post Office in the years to come.

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