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My hon. Friend represents a neighbouring constituency, and she is right to say that it is most distressing when something as serious as post office reorganisation, which is necessary, is used as a political football, which it has been in this case. It is very easy to produce election leaflets and raise fears, but we are here to make responsible decisions, and we know that the
role of post offices has changed. As MPs, we know that the way people communicate has changed. People use e-mails and the internet much more, but there is also a wider availability of bank accounts. That is why it is a reality that the post office network has lost some 4 million customers recently, and it is incurring losses of some £3.5 million a week. That is serious money, and as a responsible Government we have to deal with that.
Even the National Federation of SubPostmasters, as I understand it, accepts that we need to make changes, but they have to be made in a sustainable way. Some people might want to argue that the Government and Post Office Ltd could have been more creative in looking at how new business could be created, be it foreign currency, travel and car insurance, broadband and so on. However, in the light of the re-bidding for the network in 2011, the key thing is how we maintain a network that is sufficiently sustainable for a population such as Birminghams and that has the key post offices in place, so that all members of the community who wish to use a post office can do so.
This Government do not have to be ashamed of their record. Before 1997, post offices were not supported or subsidised at all. Since then, we have invested some £2 billion in the network, and I understand that in the run-up to 2011 there will be another £1.7 billion. This is an annual subsidy of £150 million, so the notion that this is reckless free-marketeering does not stickwe are aware of the social responsibility. However, I am much more concerned that when we come to the re-tendering of the post office card account contract, the structure of the Post Office is such that it is in a state fit to tender for that contract and to supply the best services for our communities. Unless that happens, the 99 per cent. of the population whom we want to be within 1 mile of accessing a post office will not be able to do so. If the Post Office itself does not realise that it has a significant responsibilityif the decisions that it takes in the next few weeks are not responsible onesit will reorganise itself into oblivion. I do not want that to happen.
When the announcement is made on 24 June, after which all our constituents will have a six-week period in which to respond to the proposals, the people concerned should look at the situation responsibly. They should look at whether the remaining post offices are in the right placeswhere post offices are due for closure, the post boxes and access for people to post their letters should be maintainedand they should look closely at what the alternatives are. I hope that the Post Office accepts that when it suggests that people go to nearby post offices, it needs to look at the capacity and in some cases actually increase it.
It is in all our interests that a network that has a commercial but also a social benefit is sustainable, that we can maintain it and that it is economically viable, and that the Post Office learns from the mistakes that it made in the first round of the review. Our constituents, depending on how they feel on hearing the announcement, should use that six-week period to make their representations, so that MPs across the south of Birmingham collectivelymy hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Birmingham, Selly Oak (Lynne Jones) are here, but my hon. Friend the Member for Birmingham, Hall Green
(Steve McCabe), who is not, is also very concerned about this issuecan take a responsible view and ensure that our constituents interests are reflected, and that there is a long-term, sustainable post office network that will help all of us in the 21st century.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing this debate. She is a very strong and effective campaigner for her constituents; indeed, her constituency is not too far from my own, so I know that she works very hard for the people of Birmingham, Edgbaston. I also thank my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Birmingham, Selly Oak (Lynne Jones) for their interventions.
My hon. Friend the Member for Birmingham, Edgbaston is right to say that this is by no means the first time that the House has debated this issue. I understand that it is of concern to hon. Members in all parts of the House and that it is a difficult issue. This debate is slightly unusual in that normally when hon. Members discuss the issue, they wish to highlight one or two post offices in a particular area plan, but, as she said, the area plan for Birmingham, Coventry and Warwickshire has not yet been published, so we cannot talk about particular post offices in that area. I understand that the plan will be published on 24 June.
As a Minister, I do not have a role to play in selecting which post office may stay open or which post office will close as a result of the programme. That is rightly a matter for Post Office Ltd, and the process involves Postwatch, which is the consumer voice in all this, as well as MPs and other local representatives. I may say some more about the role of MPs in a moment or two.
This difficult process is driven by three big changes taking place in society, the first of which is a change in lifestyle. I accept what my hon. Friend said about the post offices in her constituency often being used, particularly by elderly people, but I am also aware that post offices are not used by most pensioners to pick up their pension, for example. Eight out of 10 pensioners have their pension paid directly into a bank accountamong new retirees the figure is nine out of 10, and it is likely to grow. A lifestyle change in how we receive money and how we do things is part of this process.
Technology changes are also taking place. A service such as car tax online did not even exist a few years agoit was not even available. At the beginning of last year, that service was used by about 500,000 people a month and it is now used by about 1 million people a month. Its use has grown that much in just a year, and it means 1 million people a month no longer go to the post office to renew their car tax.
The third change is competition. Other networks now bid for work that was traditionally done by the Post Office. For example, the BBC, not the Government, made a decision, as it is free to do, to give the TV licence contract to an alternative network. Hon. Members may have their views about that decision, and I am not criticising it. I am saying that it illustrates the fact that other networks are competing for business traditionally done by the Post Office.
It is easy to say that the Government should just stop those changes, but the truth is that society is taking part in those changes; it is changing how it does business, and that is having an impact on our post office network.
Lynne Jones: But what role do the Government have in deciding the future of the Post Office card account, which pays out £27 billion a year? I understand from postmasters and postmistresses that they feel that if the Post Office is not awarded that contract, a further 3,000 post offices will have to close. That decision is in the hands of the Government.
Mr. McFadden: I understand that the Post Office card account is very important to our post offices. I recently spoke at the annual conference of the National Federation of SubPostmasters, where that point was made very strongly. I hope that my hon. Friend will understand if I do not say too much about that matter tonight, because, legally speaking, the process has to be done by competitive tender and it is out to competitive tender at the moment. The Government are committed to a successor product to the Post Office card account, and the decision on that will be made later this year by my colleagues at the Department for Work and Pensions. I certainly understand its importance; but given that the process must be done properly by competitive tender, I hope that the House will understand why I do not say too much about who should win. The decision must be taken on a proper basis.
I was talking about the changes in society that affect the Post Office, and my hon. Friend the Member for Birmingham, Edgbaston referred to them, too. All thatthe lifestyle, the technology and the competitionadds up to a situation in which our post office network is sadly losing £500,000 on every day that it is open for business and has lost some 4 million customers per week. That lost of custom and business is why the National Federation of SubPostmasters has recognised the need for some post offices to close. Its general secretary said at the start of the programme:
Although regrettable, we believe that closures are necessary to ensure the remaining post offices are able to thrive in the future.
Recognition of the need to reduce the size of the network does not stop with the National Federation of SubPostmasters. Hon. Members may be surprised to note that that view is also shared by the Conservative spokesman who said that
we have to face the facts about the future of postal services in this country... we fully expect the network to shrink in size.[ Official Report, 19 March 2008; Vol. 473, c. 947.]
We do not often hear that quote repeated locally, but I hope that, if political capital is made of the situation in constituencies in Birmingham, perhaps my hon. Friends might remind their constituents of the Opposition Front-Bench spokesmans expectation that the network would shrink in size.
I understand that no one likes their post office to close, even though many people do not use their post offices as often as they used to. The Governments response to the challenges that I have talked about has not been to walk away and to say that this is a purely commercial network and that no social role is involved. We absolutely recognise the social and community role in having a strong post office network. That is why we have put so much public support into the Post Office.
My hon. Friend mentioned some of the figures. She is absolutely right. At the moment, some £1.7 billion is going into the post office network. That is on top of £2 billion, which went in before the current programme of support. Without that support, many more thousands of post offices would be under threat, over and above those that sadly have to close. So we absolutely recognise the social and community role of post offices.
Lynne Jones: I am very pleased to learn that, but will the money that the Government are putting in be taken into account when the DWP decides on the results of the tender for the Post Office card account? Surely, we must take that into account. It is not purely a commercial consideration if the Government have to support post offices and then take a commercial decision with another Department. It is all Government money.
Mr. McFadden: I am sure that the DWP will have heard the point that my hon. Friend makes. Even after the current round of closures has finished, we will still have a post office network that is three times larger than the top five supermarket chains put together, that is hugely larger than all the banks put together and that still has an unparalleled reach in both urban and rural parts of the country.
In the few minutes that I have left, I want to turn to some of the specifics that my hon. Friend the Member for Birmingham, Edgbaston raised about how the consultation works. She is right to say that the consultation is about the how rather than the whether. The letter to MPs sent last July from Post Office Ltd said that the consultation
would not concern the principle of the need for change...nor its broad extent and distributionthat has already been established by the Government in its Response Document issued last May. Rather consultation will be seeking representations on the most effective way in which Government policy...can be best implemented in the particular Area in question.
The Select Committee has also called on the Post Office to make it clearer that the consultation is not a referendum on whether people want to see closures, but is about how we will do this in certain local areas.
Mr. McFadden: I would not quite put it like that. The Government have made funding available for a network of about 11,500. I think that my hon. Friend is referring to the fact that, on a strict numerical basis, the access criteria set down by the Government would require fewer post offices than that, but the Government have funded well above the minimum needed to meet the access criteria. Not only that, but we have guaranteed that funding until 2011. We have provided financial stability for a network of about 11,500 post offices.
I was talking about the consultation process. My hon. Friend raised the different characteristics of several post offices in her constituency. Next week, when the details of the plan covering Birmingham are made public, if my hon. Friends or other MPs in Birmingham, Coventry or Warwickshire want to make representations, they should do so through Postwatch, which is the consumer voice. Postwatch has the capacity to ask the
Post Office to review a particular closure, but only if the criteria are breached. That process starts locally and can ultimately go right up to Allan Leighton, who is the chairman of Royal Mail Group and can make the final decision on a particular local branch. A mechanism is built into the system to review the cases of particular branches if the Post Office has got it wrong.
My hon. Friend the Member for Birmingham, Northfield mentioned the access criteria. They are designed to ensure reasonable coverage in both urban and rural areas. The £1.7 billion to which I have referred a couple of times is not just the annual subsidy for running thousands of post offices that would otherwise be under threat, but includes some funding to deal with the queuing issues that have been raised and to ensure that the migration, as they call it, of business from one office to neighbouring offices can be handled. I understand that it is not merely a numbers game about the number of officesit is also about the quality of service and that is important.
When my hon. Friend says that, will he take into account the experience of a number of sub-postmasters? Although funding is theoretically available, accessing it is sometimes quite difficult for small sub-postmasters who operate on fairly narrow margins.
That might be an area where we might need to have further discussions with Post Office Ltd.
Mr. McFadden: My hon. Friend makes a good point, but I hope that he recognises that up to £1.7 billion is a significant level of support. As my hon. Friend the Member for Birmingham, Edgbaston said, it is more support than was given by the previous Government, who provided no subsidy at all. I understand that the process is difficult, and that hon. Members will rightly want to make representations about it. I see no contradiction between accepting the overall need for change and making representations about particular post offices.
In future, the Government will continue to play our role by providing the subsidy that I have set out. However, the Post Office must play its role by continuing to innovate in new business areas such as foreign currency, insurance and broadband. There is no future in turning the clock back, but there is a future for a healthy, thriving post office network.