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The reality of the situation was quite different. The affected communities had been told that Post Office Ltd was actively seeking new people to run those post offices and were given no notification of the change in policy. The matter was taken up with Post Office Ltd, Postwatch and the Government and all three replied in identical terms, suggesting that a formal agreement was
made behind closed doors to remove all temporarily closed branches at an arbitrary date in 2007 without telling the affected communities and without any regard to the assurances that had been made to those communities. Will the Minister confirm whether that was the case?
There is more than a suggestion of collusion in the fact that the Post Offices supposedly independent regulator and the Government now use the same words to describe a position that had not previously been made public. Neither of them has produced any evidence to suggest that the agreement referred to was reached or publicised at the time. It was certainly not mentioned in any of the debates that we had in the House. That is a clear breach of the Post Office code of practice. Parliament was never told that more than 2,500 branches were to be closed under the heading of the network change programme.
In some correspondence, Post Office Ltd has suggested that the code of practice no longer applies. However, it seems clear that the code of practice does apply. Perhaps the Minister can also confirm that. It is referred to on page 41 of the Governments consultation document. Thanks to this agreement to close extra post offices, seemingly by stealth, an extra three closures have taken place in my constituency and an extra four in my right hon. Friends constituency.
I do not know what the position is across the country. It seems reasonable to conclude that hundreds of other communities may well be in the same position. I cannot give the exact figure. I have asked Post Office Ltd for the figure, and it says that it does not hold information on temporary closures. It has given me some figuresalthough it did not explain how they were calculatedthat suggested that about 250 branches had been closed between March 2006 and September 2007. However, it is not clear whether those relate to temporary closures or not. The way in which requests for information on this matter have been dealt with has been a model of obfuscation. A modest estimate, based on the highland experience, suggests that, in addition to the 2,500 closures, an extra 100, 200 or even up to 500 temporarily closed post offices have been airbrushed from history under this process. Clearly, we are getting a good deal more than the 2,500 closures that were proposed.
I ask the Minister to reconsider the temporary closures and instruct the Post Office to reconsider its closure programme. I specifically include those branches that have been temporarily closed on the basis that communities were given to understand that if a branch was temporarily closed, the Post Office would actively seek someone to take over that branch and continue with it. I wish to press the case strongly for the restoration of the post office in Balloch, outside Inverness. The post office is desperately needed in a growing community. The previous one closed not because of lack of interest or support from the community, but because the Somerfield supermarket, in which the post office was housed, closed. After a long delay, the premises have been taken on by another supermarket, which I understand is enthusiastic about reopening the post office. It would be truly astonishing if the closure programme forced Post Office Ltd to look
that particular gift horse in the mouth. It would be a huge let down for a community that wants and needs that service. I hope that the Minister will take on board that point in relation to that particular community and undertake to go away and consider the matter further. I hope that the Post Office will reconsider its decision.
In addition to those specific points about the closure programme in the highlands, there are wider points that directly affect the highlands, including the way in which the future health of the network is to be guaranteed. I do not wish to be back here in four or five years time having a similar debate if there is another round of closures. To prevent that from happening, the Government must set out what they will do to turn the tide in the Post Office. I am talking not about a guaranteed programme of keeping post offices openI know what the Minister will say about that in relation to the funding that has been providedbut about extending the range of services that post offices are able to offer, such as Government and banking services. I know that the Post Office is continually trying to join the Link network to enable a greater range of banking services to be provided by post offices. The question of the Post Office card account is still unresolved. Post offices derive a great deal of business from people using them to collect their pensions, benefits and so on. Yet it is still not clear from the Department for Work and Pensions whether that new contract for the Post Office card account will even be awarded to the Post Office.
Constituents report to me changes in the practices of some commercial organisations in using post offices. For example, electricity companies use post offices for the sale of tokens for pre-payment electricity meters. That has been of some interest to the House under another guise. Yet it seems that some of those companies are withdrawing the sale of those products in some post offices, which will have an impact on the post offices ability to be sustainable in the long term.
Post offices provide an essential outlet for the sustainability of communities. Post offices and shops go together. In rural areas especially, vulnerable groups, pensioners and people without access to transport need the post office for access to cash and to services. It is often the only way in which people in such communities can get a face-to-face service. The Government should see all those attributes as a huge opportunity. We have seen the state increasingly withdraw from the provision of face-to-face services. Post offices offer a huge opportunity for the Government to return to that way of delivering policy. I hope that the new MinisterI think that this is the first time we have debated matters relating to post offices since he took officewill have a more innovative approach to developing and supporting new services to go through post offices so that the network in the highlands and elsewhere has a sustainable future for many years to come.
Mr. Alan Reid (Argyll and Bute) (LD): I congratulate my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on securing the debate on this important subject in the highlands and islands and on presenting the case so well and thoroughly.
I want to raise a couple of points. In response to the consultation, the Government said that they wanted to encourage more community-run post offices. In my constituency a local environment group, EnviroKirn, approached the Post Office about taking over Kirn post office, which was threatened with closure. The group was given three months by the Post Office to come up with a business plan, but it has not been offered any encouragement. Three months is not long enough.
The Essex county council initiative in which councils participate and take over post offices is certainly a welcome opportunity to save more post offices. The Government should give local councils and community groups more time, encouragement and back-up when they show an interest in taking over their local post offices. I appeal to the Government to suspend the closure programme for post offices, such as the one in Kirn, when a local community group or a council is interested in taking it over, and to give time and back-up for such a takeover to be achieved. Kirn is due to close on 9 April, so I hope that the Government will move quite quickly.
Another concern that was raised by my hon. Friend is the long-term viability of post offices that have escaped the axe, particularly those in the many small communities throughout the highlands and islands. A post office at St. Catherines was temporarily closed a few weeks ago. The Post Office says that it is actively seeking someone to take it over, but in view of the revelation by my hon. Friend about other post offices throughout the highlands and islands being in a similar position for a long time, I am very concerned about the future of the post office at St. Catherines.
I ask the Minister to give us an assurance that the post offices that have escaped the axe this time will have a secure future and that they will be given enough Government business and support to ensure that they remain open in the long term.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on securing the debate. Whatever else may come between us, he certainly has one of the most beautiful constituency names in the House, although his highland colleagues might disagree.
The hon. Gentleman said that this was the first time that we have debated the matter. It might be the first time for him, but I assure the House that it is certainly not for me. He mentioned several post offices in his constituency, and I shall try to respond. However, I start by saying, as I do frequently, that, as a Minister, I do not play a role in decisions about whether to close individual post offices. Quite rightly, that is a matter for Post Office Ltd, following a local process involving Postwatch, which is the consumer voice, MPs and other local representatives. I am sure that Post Office Ltd will have heard what the hon. Gentleman said.
The hon. Gentleman spoke about how unpopular the current process is and the concern in his constituency and others in the highlands. That is natural, and I understand it. He did not touch on why it is happening
or the challenges that the Post Office faces, the extent of which we should not underestimate. It is going through the difficult process of reducing the size of the network by just under a fifth. I understand that that is an unpopular process even though, as I shall explain, we as a society use the Post Office a lot less than we did because of a number of lifestyle changes. It operates today in a technological and competitive environment very different from that which once existed.
The hon. Gentleman did not mention competition at all. To take one example, the BBC licensing contract was lost partly because a competitor bid for it and won. I am afraid that that is the environment in which the Post Office operates, and it cannot be wished away. Difficult and unpopular though the current process is, there is a context to it. The Governments response has not been to stand back and leave the network to stand or fall on its own devices. Before the Government came to power, there used to be no subsidy for the Post Office, but that is not the case today. In fact, we are in the midst of a programme of support for the Post Office that will be worth up to £1.7 billion by 2011. It contains a number of measures, including an annual subsidy of £150 million, which never existed under the previous Government and without which thousands more post offices would be under threat. There is talk of a Government-inspired closure programme, but greater Government support on behalf of the taxpayer than has ever existed should be taken into account.
We do not view the Post Office as a purely commercial network, which is why we give it such support. In fact, there are just over 14,000 branches in the network. If it were run as a purely commercial concern, the number would be about 4,000. That gives some idea of the importance of the subsidy and the number of branches that are being prevented from closing by the Governments action to support the network.
Even with such public subsidy and with other funds in that £1.7 billion to cover losses over and above what the subsidy can bear and to invest in the modernisation of the Crown network and so on, the network is not sustainable at its current size. It simply does not have the customers that it used to. Some 4 million fewer customers go through the doors of our post offices each week than just a few years ago. That has been accepted, although reluctantly, by the National Federation of SubPostmasters, whose general secretary recently said:
Although regrettable we believe that closures are necessary to ensure the remaining Post Offices are able to thrive in the future.
Across the country, that means a reduction of about 18 per cent. in the size of the network. Precisely because we recognise the important social and community role of post offices, however, and because we have access criteria to ensure a coherent network in both rural and urban areas, the reduction in the size of the network in the highlands is significantly smaller, at about 9 per cent. Of course, the situation is still difficult for those who are affected by the closures. I accept that, but the reduction is smaller than elsewhere in the UK. That reflects the nature of such a large, sparsely populated area with significant distances involved.
Some parts of the highlands and islands are also affected by one of the requirements of the access criteria, which the hon. Gentleman mentioned: to ensure post
office provision in postal districts where none previously existed. In addition, alongside the closure programme, some 500 new outreach services are being introduced, many of which were pioneered in rural Scotland. They include part-time services hosted by local shops for a set number of hours a week and mobile vans that visit particular locations at set times. In the hon. Gentlemans constituency, as he said, three of the 38 post offices are scheduled to close. There will be five new outreach services, and two new branches will be introduced.
The hon. Gentleman asked about temporary closures, closures by stealth and so on. One of the post offices that he mentioned closed in August 2006more than a year before the programme began. As I understand it, Post Office Ltd has made significant efforts to find a sub-postmaster to run it. The hon. Gentleman will know that, following the announcement by the Secretary of State for Business, Enterprise and Regulatory Reform last May, Post Office Ltd agreed a position with Postwatch that meant that post offices temporarily closed would not be considered in the new plan unless they were about to be reopened and that those temporarily closed after March 2007 would be reviewed against the access criteria and considered on a case-by-case basis. I understand that Post Office Ltd has written to the hon. Gentleman setting out that position.
Even somewhere as sparsely populated as the highlands, after the completion of the programme, more than 99 per cent. of the population will have seen no change to their local post office or will remain within 1 mile by road of an alternative branch. The hon. Member for Argyll and Bute (Mr. Reid) talked about post offices that escape the axe, but we need to bear that figure in mind even though we accept the difficulty of the process.
I turn to some of the challenges that have led to the process. The Post Office is losing some £3.5 million a weekhalf a million pounds for every day that it is open. In some of the least used post offices, which might include some in the highlands, the subsidy per transaction has risen to £17. In others, some of which have fewer than 20 customers a daythose are not just a few that are used the least, but the 1,600 least usedthe average subsidy is £8 a transaction. A significant subsidy helps to keep those post offices open in the smallest and most sparsely populated communities.
There have been significant lifestyle changes, such as benefits being paid directly into bank accounts. Eight out of 10 pensioners and nine out of 10 new retirees now choose that as their preferred method of payment. I suspect that those figures will not change.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked me about the Post Office card account and its successor, and I understand how important it is to the networks future. I understand that he has tabled questions on the matter to my colleagues at the Department for Work and Pensions. He will know that there is a competitive tendering process, and tenders have to be judged against proper criteria. That is legally necessary, and I am sure that he would not want me to say anything that prejudiced the Post Offices chances of winning the contract. Perhaps he will understand if I leave it at that.
The process is difficult, and I understand the points that hon. Gentleman made. However, the highlands have been less affected than other parts of the country, precisely because of the special nature of that part of the UK. In future, we want a viable and sustainable network that is supported by the subsidies that I have mentioned.