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and it is regrettable—

We believe that changes are necessary, but we also aim to give people new reasons to use the Post Office and provide a range of services that make it a local provider of choice.

Mr. Alistair Carmichael (Orkney and Shetland) (LD): Will the Secretary of State give way?

Mr. Hutton: No.

Let us remember that, even after the closure programme is over, the Post Office will still have a bigger network than all the banks put together. It will be some three times bigger than the top five supermarket chains combined. It will still have an unparalleled reach into every community—every corner of the UK—and continue to fill an important social and economic role through the post offices in the urban and rural communities that they serve.

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The Post Office has been rising to the challenge of innovation and developing new products, contrary to what the hon. Member for Rutland and Melton said. For example, it is the biggest provider of foreign exchange in the country and a major provider of car insurance. It has launched a new broadband service in partnership with British Telecom, whereby people can pay in cash if they want. It is introducing some 4,000 free-to-use cash machines, often in the most deprived areas.

Mr. David Jones (Clwyd, West) (Con): Will the Secretary of State give way?

Mr. Hutton: Not for the moment.

The Post Office has begun to exploit the great potential offered by internet shopping and mail order through the Local Collect service, which allows customers to collect deliveries at their local post office. It has introduced a new secure Christmas pre-payment scheme for savers from this Christmas onwards. The Post Office must travel that road of new services and new reasons to go to post offices, all built on a brand that people can genuinely trust.

The network must also fulfil its customers’ modern-day demands. That is the basis for the decisions that we have made, after careful consideration, about the best way of sustaining a substantial network of sub-post offices. It will remain a substantial network in the light of the significant changes in the way in which the public—our constituents—use those services.

The current difficulties that the post office network faces have rightly been the subject of many debates. It is undeniable—no one has sought to dispute the facts, because they cannot—that the Post Office made losses of approximately £3.5 million a week, every week, last year, with 4 million fewer people a week visiting post offices compared with just two years ago. That is a drop of nearly 20 per cent. in customers—again, our constituents—who use sub-post offices.

No undertaking could afford to ignore the consequences of changes of that magnitude. As my right hon. Friend the Prime Minister said today, 800 post offices have fewer than 16 customers a week, and each transaction costs the taxpayer—all of us—£17 in public subsidy. In urban areas, some 1,000 sub-post offices compete for business with at least six other post offices within a mile of them. That is happening at a time when the number of customers is falling. [Interruption.] Opposition Members say from a sedentary position that we are keeping some of those sub-post offices open. We are—that is the precise point of the access criteria and the subsidy. We recognise the social role of post offices and we have to strike the right balance. [Interruption.] If the hon. Member for Rutland and Melton is asking why we are not closing them—

Alan Duncan: No, I am not.

Mr. Hutton: Apparently, he is not saying that, though he was hinting at it. The point of our actions is to keep those sub-post offices open, despite the losses that they are making, to ensure that his constituents and rural areas get a proper service. [Interruption.] He says that we should stop going on about the losses.

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Mr. Deputy Speaker: Order. Interjections from sedentary positions make it difficult, not only for the House to know what is happening, but, more particularly, for the Official Report to understand what is going on. If hon. Members want to intervene, it would be helpful if they stood up and did it in the normal way.

Mr. Hutton: I accept the admonition, Mr. Deputy Speaker. It is my fault for responding to the childish observations of Opposition Front Benchers.

Sarah Teather: Let me take the Secretary of State back to his comments about the parcel collection service. Does he accept that decoupling Royal Mail from the Post Office would allow the Post Office to work with competitors and increase and expand the capacity for that, which could provide a new revenue stream for the Post Office?

Mr. Hutton: As the hon. Lady knows, the regulator has already made such a proposal, which will have to be carefully considered. It is a matter for the review that we have set up under Richard Hooper, who will examine all the consequences of proposals that people have made. However, today is not the time to deal with that specific proposal. The innovation that is under way in the Post Office confirms that we should support it in its pursuit of new business. We are doing that in parallel with the other difficult decisions that must be made now if we want the network to have a sustainable future. With great respect to the hon. Lady and the Liberal Democrat party, when one has been out of government for 100 years, one can make a series of decisions that have no consequences. Someone else will always pay for them and, worse, because we are considering Liberal Democrat economics, one can spend the same pound several times over. I have great respect for the hon. Lady but, in the real world, those are not genuine choices that Governments can make.

Sir Nicholas Winterton (Macclesfield) (Con): I am one of those who was here when the Conservative party was in government. I want to ask two questions. First, how many sub-post office closures during that period were voluntary, in that the postmaster or postmistress retired and no one could be found to replace them? I do not know whether the Secretary of State has that figure, but it is relevant if he levels complaints about the Conservatives when they were in office. Secondly, I have just renewed my passport and driving licence at a post office in the Palace of Westminster. Will the Secretary of State give an assurance that the proposals— [Interruption.]

Mr. Deputy Speaker: Order. That is enough of an intervention. The Secretary of State has indicated that he wants to make progress. Many hon. Members are trying to catch my eye. I appreciate that it is important to debate such matters but, unless we have fewer interventions or more progress, many hon. Members will not catch my eye and will be disappointed.

Sir Nicholas Winterton: I apologise, Mr. Deputy Speaker. Will the Secretary of State seriously consider the proposition by Essex county council and other organisations to save post offices, because they believe that they can put money in, which will enable the post offices to stay open?

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Mr. Hutton: Yes, I want the Post Office to consider the proposal from Essex county council seriously. I have made that clear, as has my hon. Friend the Minister for Employment Relations and Postal Affairs. It is also clear and transparent in the letter to which I referred earlier. The letter is in the Library and the hon. Gentleman can read it at his leisure.

I, too, use the sub-post office here regularly. Indeed, I renewed my car tax here rather than online. I suspect that the hon. Gentleman and I share one thing in common: perhaps we are not the greatest internet users.

Several hon. Members rose

Mr. Hutton: I must now take into account other Members’ desire to contribute to the debate and I will make a little more progress.

We are invited to support or reject the motion, which asks the Government to instruct the Post Office to suspend the closure programme. My strong view is that it is a cocktail of false hopes, flawed economics and opportunism of the highest order. That is especially true, given the record of previous Conservative Governments in office. Postponing those difficult decisions would be wrong. It would result in more uncertainty for those sub-postmasters who are ready to accept the compensation deal on offer and leave the network with much of its original investment intact. The proposals would also

Those are not my words, but the views of the National Federation of SubPostmasters, and it is right that we should give them serious consideration.

Postponing sensible decisions is rarely a sensible course of action to take. Additional resources—taxpayers’ money—would need to be found. The Opposition have given no indication today or in the past of where those additional resources would come from. We can all conclude, therefore, that their proposal is another unfunded and uncosted spending commitment, which forms part of a growing list of unfunded and uncosted spending commitments.

The network needs to change if it is to adapt to changing demand. We do not believe that it can continue as it is. If we fail to act now, I am afraid that matters will only get worse. The underlying fundamentals have to be confronted and addressed. That is what we are trying to do, in a way that supports the economic and social role of the network, while giving it a long-term sustainable platform on which to build for the future.

Rob Marris: I should like to reinforce my right hon. Friend’s point. The difficulty with the Conservatives’ motion is that it simply calls for a moratorium, because they do not have a policy. They are not fit for government and they do not want to take tough decisions. Some of them do not even seem to understand a sub-post office’s measure of profitability or otherwise and look at it only through the eyes of the sub-postmaster or sub-postmistress. The Conservatives do not look at central costs—for IT, IT support, cash handling, delivery, security and so on—when assessing whether a post office is profitable. One cannot look at only one sub-post office, however; one must also look at how much it takes out of central financing. However, the Conservatives do not understand the financing, yet they claim that they are pro-business.

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Mr. Hutton: I agree strongly with my hon. Friend. We have to be clear: all the costs that he referred to are met by the Post Office, not by the sub-postmasters, and it is entirely appropriate that we should take those costs into account.

Mr. Simon Burns (West Chelmsford) (Con): On the question of the Essex scheme, would the Secretary of State be prepared to try to persuade the Post Office briefly to delay the decommissioning of post offices, so that Essex has more time to put its scheme into place and ensure that it is a success?

Mr. Hutton: I understand that the Post Office has already agreed to do that in some cases in Essex. I hope that the hon. Gentleman will find that the Post Office is open to a proper exploration of what Essex county council’s proposal could look like and what it would mean. I want to discuss the Essex proposal in a minute, because it is an issue of genuine importance, not just in Essex, but for the future course of the consultations.

Mr. Davey rose—

Malcolm Bruce rose—

Kali Mountford (Colne Valley) (Lab) rose—

Mr. Hutton: No, I am not going to give way.

A number of points have been made about the access criteria, and so on, which I should like briefly to deal with. The access criteria that we have set down will ensure for the first time—it is important that hon. Members appreciate that—that almost all the urban population of the UK, that is 95 per cent., will be within 1 mile of their nearest Post Office outlet and that 95 per cent. of the rural population will be within 3 miles. This is the first time that such a safeguard has been provided for vulnerable consumers throughout the UK, particularly in deprived urban areas and remote areas. The additional requirement for Post Office Ltd to take account of factors such as the availability of public transport, local demographics and the impact on local economies when developing its area plans means that the criteria are more robust and should help to ensure an accessible network.

Kali Mountford: I am grateful to my right hon. Friend for giving way on that very point. Will he warn people—especially people such as Nicola Turner, the Liberal Democrat councillor in my area—to be careful not simply to stick a pin in the map and simplistically say, “I’m putting a circle of three miles around each post office,” before coming up with a figure for how many post offices will be closed? If we look at things in that way and do not look at the entire picture and at all the criteria, we will leave people feeling unnecessarily vulnerable and that their post offices will be closed, when that is entirely not the case.

Mr. Hutton: Let me reassure my hon. Friend that she really has no reason to worry about the Liberal Democrats in her constituency. She should also know that it is not the Liberal Democrats who are designing the consultation in her area. However, I am sure that her points are entirely appropriate.

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There is a proper appeals process, as part of the consultation exercise that we have put in place, which has three stages. In the most difficult cases, the Royal Mail chairman, Allan Leighton, will review the issues and make the final decision.

Frank Dobson (Holborn and St. Pancras) (Lab): Although I entirely endorse my right hon. Friend’s views on the opportunistic activities of the Tories, may I tell him that the post office that serves the most deprived ward in my constituency is now threatened with closure? What a lot of local people find most disturbing is that when other closures were pushed through, during previous consultations, they were assured that things would be all right, because they could always go to the Crowndale road post office. However, that is the one that it is proposed for closure.

Mr. Hutton: Obviously I do not know the precise details of the consultation in my right hon. Friend’s constituency, but I urge him—I am sure he will not need urging from me—to make those arguments to the Post Office, because they are perfectly credible and strong arguments. As I have said, the Post Office is under an obligation to take them into account and to justify the proposals that it is making.

There is one other important factor that we should all try to reflect on in this debate, as we come to making up our minds about which way to cast our votes. In the 23 area plans that have been published to date, on average, 90 per cent. of customers will see no change to the post office that they currently use and 99 per cent. will either see no change at all or be within one mile by road of an alternative branch. That is the reality of what we propose. I hope that hon. Members in all parts of the House will take that into consideration.

I want to turn briefly to Essex county council, which has been raised on a number of occasions. Some hon. Members have already raised the interest of local authorities in taking over the services provided by some existing sub-post offices, and I am sure that others will raise it later. Where a local authority makes serious proposals to maintain a service where branches are scheduled for closure, I would encourage Post Office Ltd fully to explore all those avenues.

It is clear that Post Office Ltd will want to ensure that all relevant costs are covered—my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) made an important intervention on that point—that there is a commitment for several years and that there will not be a damaging impact on post offices in the area that are not currently scheduled for closure. Councils will need to account to local taxpayers for expenditure on a network that is currently loss making. Ultimately, it is for Post Office Ltd and any local authority to discuss and agree the details of those arrangements, and to ensure that those rules are compatible with EU rules on state aid.

As I have said, I have today written to Post Office Ltd, the Local Government Association and the National Federation of SubPostmasters to set out the Government’s position. I have placed a copy of that letter in the Library.

Mr. Baron: Will the Secretary of State give way on that point?

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Mr. Hutton: I have already given way to hon. Gentleman once on this point. I now intend to conclude my remarks.

If there is a way forward that might allow more sub-post offices to remain open, while retaining a sustainable network, I am sure that the Post Office will want to look closely at how any such proposals could work in practice.

There is much more that I could say; fortunately for many hon. Members, they will not have to hear me say it. There are many arguments that I could deploy if I had the right amount of time. I hope that my hon. Friends will understand what we are trying to do and the way we are setting about doing it. As I said at the beginning of my speech, I appreciate and understand the concerns that have been raised today. All of us understand the importance of such issues. Post office closures have been happening for many years and, as we know, thousands closed under the previous Conservative Government. However, what we have tried to do in the current process is manage the reduction in the size of the network, ensure reasonable access criteria for our constituents, introduce new access services in some areas and give Post Office Ltd some financial certainty, which it desperately needs.

We have made a significant financial investment in the future of the network, to allow it to adapt to the changing society that it seeks to serve. I believe that it can do so. Our responsibility is to ensure that the network has a sustainable future. For this to happen, there needs to be change. I do not believe that there is any serious, credible alternative option on the table today, and the Opposition have certainly not presented one.

For all those reasons, I ask my hon. Friends to support the Government’s amendment and to reject the cynical opportunism that is so manifestly reflected in the motion that has been tabled by the Leader of the Opposition.

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