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Mr. David Drew (Stroud) (Lab/Co-op): I am in a unique situation; I went to a post office reopening today in my constituency, but we are like that in Stroud. Does
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the hon. Gentleman agree that one of the sad things about all that has happened to the Post Office is that it is not just central Government who have withdrawn their services from it; local government started the process. Members from across the political parties could encourage local authorities to look again at the services that they could still provide through the Post Office. Is that something that the Conservative party would like to do alongside the Labour party?

Chris Grayling: I would like Departments and local authorities to look at ways of strengthening our post office network, yes, but the significance of the debate is that it shows that there is no other step in the pipeline that would lead to such an extensive further closure programme in our post office network. That is why the debate is so important.

Justine Greening (Putney) (Con): My hon. Friend has not yet mentioned small businesses, but those in my constituency absolutely rely on local post offices. We have lost more than half our network in the past five years. Does he agree that this is the last time at which we should want to reduce small businesses’ access to post offices?

Chris Grayling: My hon. Friend makes an important point. We know that small businesses use post offices vastly disproportionately more than any other similar services available to them. The disappearance of the local post office can be a real blow to small local businesses, particularly emerging businesses in areas of society that face significant challenges.

Of course, there is another dimension to the financial pressure on families, apart from the lack of access to banking services. Someone without access to financial services cannot access the cheapest tariffs, because they do not have the basic ability to pay through direct debit. There have been all kinds of estimates of the cost of the poverty premium to people on low incomes—the extra that they pay to access basic financial services and utilities: the figure of £1,000 a year is common. The Financial Services Authority has said that the lack of access to those services pushes family costs up by as much as £700 a year—money that could be better used for other things.

What has the Government’s response been? Instead of looking at how we can build up the Post Office, so that it can offer people extra services, the Government are taking steps that risk emasculating the one institution that has national reach, and that could help to bridge the banking gap left behind as the branch networks of the big banks have retreated in the past 10 years. When the Secretary of State talks about renewing the Post Office card account, what is in doubt is whether, in the end, it will be a “Post Office” card account. If the post office network disappears or goes into another period of great retrenchment, we will condemn entire communities to a life in the financial wilderness, when a degree of planning and thinking could have turned—could still turn—our post office network into a real force for good in many areas, growing, becoming more diverse and offering a route into banking for those who are deprived of it. That is why we have proposed an extension of the functionality of the Post Office card account—initially to help people to access a better deal on their utility bills—and it is why we think that there is enormous potential in expanding the account into other areas.

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The concept of cheaper utility bills is simple. Ministers have talked a lot in the past few weeks about the fact that some of our poorest people cannot access the cheapest tariffs from electricity and gas providers. If people were able to use their Post Office card accounts to make direct debit payments for their utility bills, they would be able to access those much cheaper tariffs. It is a simple idea at a time of high energy bills, and I wish that Ministers would seize on it and turn it into a reality. The Post Office card account and the post office network could do so much more to help breach the barriers to financial services in so many of our deprived communities.

The Government have, step by step, brought us to what I think Members from all parts believe to be a sorry position. We know the constraints on the Secretary of State, and he cannot tell us exactly what is happening. It has been a theme of the process: we were not allowed to know what was in the tender documents, and we are not allowed to know who is bidding. There is no reason, however, why we cannot know, from a Government who 18 months ago said that they would bring a new sense of openness to governing, at least some basics about what is going on.

I hope that the Secretary of State will take away a strong message from the House in this debate. Local post offices remain of enormous importance and enormous concern, and the future of the post office network depends significantly on the decisions that he and his colleagues will take in the next few weeks. We have heard from the Secretary of State about all the things that the Government claim to have done for our post office network, but that is not the message that I and others in the House get from people who work in the network. They all say that, step by step, the Government have removed the services that have kept their businesses going, and that, as a result, many post offices have disappeared.

The future of the Post Office card account will determine the future size of the post office network—whether or not there is another wave of closures. I do not think that we can afford to see more post offices disappear, so my message to the Secretary of State is that it is time that the Government did what was actually right.

Several hon. Members rose

Mr. Deputy Speaker (Sir Michael Lord): Order. Before I call the next Member to speak, may I say to the House that a 10-minute limit on Back-Bench speeches will apply from now on? A very large number of hon. Members are seeking to catch my eye, and if they take less than their allotted time more of them will be able to speak.

8.37 pm

Sir Gerald Kaufman (Manchester, Gorton) (Lab): It is always a great pleasure to follow the hon. Member for Epsom and Ewell (Chris Grayling) in debate. He is always charming, and he is always implausible. He tried to wring Members’ hearts by saying how many people would be forced to obtain their benefits through bank accounts if Post Office card accounts failed, which I hope they will not. I should like to remind him that in his own constituency, 89 per cent. of benefit recipients obtain them through bank accounts, and that only
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9 per cent. do so through Post Office card accounts, so he is being very altruistic when he calls for the saving of Post Office card accounts.

Let us be very clear about the issue: Post Office card accounts were created by this Labour Government. The Conservatives and the Liberal Democrats try to portray the accounts as a grand old British tradition, like fox hunting or the Poor Law, but the account was created by the Labour Government in 2003 as the electronic equivalent of the benefits order book, which people used to collect their pensions. The Post Office card account is a hugely valued public service, and it was created by this Labour Government.

Nationally, 4.5 million people have Post Office card accounts, and in my constituency, 8,110 people collect their benefits through them. The accounts offer a valuable service, and I want them to continue; throughout this controversy, my whole objective has been to persuade whomever is necessary that they should continue. Of course, the account costs money. It is quite expensive compared with other services, but so are other initiatives created by the Labour Government: Jobcentre Plus offices, Sure Start and the new deal are all expensive, but who today would disband any of them on the ground that they cost a lot of money? The answer, I suppose, is the Conservatives and Liberal Democrats, as they opposed their creation in the first place. However, the Labour party believes in creating public services for those who most need them, and the Post Office card account is a public service for those who most need it.

Hon. Members for rural constituencies often talk about post offices as community centres, and I respect that. I am sure that those hon. Members are right, but their point applies in the inner city as well.

Mr. Jim McGovern (Dundee, West) (Lab): Is my right hon. Friend aware that some rural post offices carry out as few as 14 transactions a week? That means that each transaction is subsidised to the tune of £18.

Sir Gerald Kaufman: I am grateful to my hon. Friend for that information, but nevertheless I respect what is said by hon. Members from both sides with rural constituencies when they point out that rural post offices are community centres. But post offices are also community centres in inner-city areas, such as my constituency of Manchester, Gorton. The Post Office card account keeps small post offices going; it represents £27 billion worth of transactions every year. That is important. The account provides custom for other post office facilities; people go in to collect their benefit and decide to make another transaction. The account also provides custom for local convenience shops. Pensioners and others on benefit in my constituency go to the post office for their benefit and spend some of it in the local shops for their household or personal needs.

As I have made clear to my right hon. Friend the Secretary of State, my constituents believe that it is essential that the Post Office card account should continue. Of course, we recognise that the Government have to conform to the European Union procurement rules; whatever else the hon. Member for Cardiff, Central (Jenny Willott) said, she, a representative of the Eurofanatic party, did not tell the Government to ignore EU
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procurement rules. The Government are not a totally free agent, so I understand why my right hon. Friend has not been able to announce a decision. However, the Liberal Democrats did not mention the European Union rules because they are totally opportunistic. They probably did not know that there were Post Office card accounts until the National Federation of SubPostmasters started organising postcards that alerted them to the fact that here was a little opportunistic horse on which they could ride. That is what the Liberal Democrats look for, the whole time—“What is the opportunity? What is the grievance? Let’s get on board. It doesn’t matter what we thought before or what we say next time. At the moment, this could be a vote winner.”

No doubt the hon. Member for Manchester, Withington (Mr. Leech) will be circulating “Focus” leaflets in his part of Manchester, so I am interested that he has not even bothered to turn up for this debate. We shall make that clear in Manchester when crocodile tears are wept about the Post Office card account. The Liberal Democrat MP who got his seat on a bogus scare about the closure of the cancer hospital cannot even be bothered to turn up and speak up for his constituents on the Post Office card accounts, as I—a loyal Labour Back Bencher—am doing. [ Interruption . ] There are all kinds of brands of loyalty. At the end of this debate I will vote with my Government, as I always do, because the last thing in the world that I will ever do is vote with the Liberal Democrats on an opportunistic motion that they do not even believe in themselves.

Mr. Robert Flello (Stoke-on-Trent, South) (Lab): I am thoroughly enjoying my right hon. Friend’s contribution. I could not agree more that we should not be walking through the Lobby joining opportunistic bandwagon-hoppers like the Liberal Democrats. Does he accept that the Post Office card account is so extremely popular with my constituents, as with his, partly because it is part of the Post Office, not PayPoint or any other organisation?

Sir Gerald Kaufman: I agree with my hon. Friend. Twenty-nine per cent. of my constituents who collect benefits collect them through the Post Office card account. It is a very valuable service for the people who send me to Parliament, and I want it to continue for their sake and for the Post Office’s sake.

Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con): It is unconscionable that the Post Office card account should go from the Post Office; in a sense, it is like a backstop. Does the right hon. Gentleman agree that in many communities—particularly, speaking as an urban Member, inner-city communities—we should think of these post offices as an outreach: a fantastic resource through which we could find many other ways of getting to people in difficulty instead of seeing them, as the Government do, as a problem because there are too many of them?

Sir Gerald Kaufman: I entirely agree with the right hon. Gentleman. What we have is a public resource going right back to Rowland Hill in 1840. These days, there are very few institutions that are greatly respected by ordinary people—obviously the national health service is one of them, but the Post Office is certainly another. The words “Post Office” and “Royal Mail” really mean
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something to people. That is one of the reasons why it is so essential that it remains a publicly owned service. I hope that the Government will look for other ways of using these centres to provide public services for our constituents—those of the right hon. Gentleman in the area that he represents and mine in the area that I represent.

As I say, no force on earth will get me to walk through a Division Lobby with the Liberal Democrats on a motion tabled by those cynical opportunists. However, the fact that I will not vote with them does not mean that I do not expect something from my Government. What I expect from my Government, recognising that they cannot make the announcement this evening and have to abide by the European rules, is a firm decision, as soon as it is possible for them to make it, to continue with the Post Office card account. I have been in correspondence with my right hon. Friend the Secretary of State and with my right hon. Friend the Prime Minister, who sent me an encouraging, but of course not conclusive letter. I say to my right hon. Friend the Secretary of State: come up with what we want, James, and you will be an even bigger hero than you are now.

8.48 pm

Peter Luff (Mid-Worcestershire) (Con): I intend to speak primarily as Chairman of the Business and Enterprise Committee, which this morning produced a report on this very subject. We published it because we were so concerned about the extraordinary delay in reaching a decision that was originally trumpeted as coming in early 2008, then hinted at before the summer recess, and now here we are in the middle of November still with no decision. I commend the report to the House. I am grateful to the hon. Member for Chorley (Mr. Hoyle) for waving a copy.

However, I also want to speak as a constituency Member of Parliament, because it is from our constituents that we understand the importance of this issue. An 84-year-old man from Droitwich rang my office this morning to say how worried he was about the future of the Post Office card account. He explained that he and his elderly friends find it increasingly difficult to sort out their affairs because they can no longer speak to anyone to in order do it. He said that they find all these “touch machines”—his words—for statements of accounts and so on very confusing, and that even parking the car and using ticket machines is worrying. He said how important the post office was to him and his friends because, as the National Federation of SubPostmasters pointed out in its submission, they get advice there on how to do these things. That personal touch is what the card account brings to elderly, disabled, worried, confused or deprived people.

I shall speak as a Select Committee Chairman, but I want to make one brief partisan comment first. I thought that the Liberal Democrats’ motion was extremely good, and I discovered that that was because the hon. Member for Chorley drafted it. They have copied his early-day motion word for word and comma for comma, as he said. That explains the excellence of the drafting, which I commend to the House, and I invite the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) to vote for it in view of its origins, which are honourable indeed.

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I was a little surprised and disappointed by the Government’s amendment in two respects. First, touching on an issue we have already debated, it trumpets the fact that there was no subsidy before 1997. A word in the Secretary of State’s ear: that is the wrong attack. Royal Mail Group is in trouble because the Conservative Government probably took too much money out of it, denying it the investment it needed, because it was making so much money. It did not need subsidy. I strongly advise the Secretary of State not to repeat the line about no subsidy before 1997. If he wants to attack my party, there is a better way of doing it. Subsidy is not a particularly good thing to trumpet anyhow because the Post Office does not want to be subsidised; it wants to be commercially viable again and it has a plan to work towards that. That is really important.

On an even more partisan note, I would like to deal with this idea that the card account can be replaced with the

So we replace a much-loved card account used every week by pensioners, through which they receive money, with an ID card that they do not want, which they replace perhaps once every 10 years, and for which they have to pay for the privilege. I find bewildering and surprising the idea that ID management in some sense replaces the Post Office card account. I shall vote with pleasure for the Liberal Democrat motion, knowing its origins, and with pleasure against the Government’s amendment because it is so outrageously wrong.

We are talking a lot about the future of the post office network and the potential for up to 3,000 closures. That potential certainly exists, but this debate is all about the 4 million vulnerable people who choose to use the Post Office card account. As we say in paragraph 12 of our report:

They actually want the Post Office card account as a separate pot of money. Some of them have bank accounts, but they want that separate pot, too, because it helps them to manage their affairs. I sometimes think that the Department for Work and Pensions has a slightly patronising attitude of, “We know better than you how you should run your financial affairs.” Actually, 4 million people still choose to run them this way, in the face of massive incentives not to have a Post Office card account, and those wishes deserve to be respected. As we say in our report:

as the Government reach their decision.

I would like to highlight the question of state aid, which is a thorny question for the Government. The state aid permission for subsidising the network was given on five specific grounds, and as the hon. Member for Cardiff, Central (Jenny Willott) said, at least two of these depend directly or indirectly on the continuation of the card account:


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As we say in our report:

If the Post Office does not get the card account, the Government could also lose the ability to subsidise it. That will be necessary until the post office network makes money once again, as I believe it can under its new and very good leadership.

As I said in my intervention on the Secretary of State, the Committee had some reservations about the access criteria, but broadly speaking we endorse them in the current circumstances. What a shame they were not spelt out in the tender documentation in the original advertisement in the Official Journal of the European Union. The journal entry contained an important phrase. It said that the ATMs and personal teller outlets should be “located throughout the UK”. It is an important phrase that the Secretary of State needs to note carefully. I believe that it gives him the opportunity to make the right decision on the future of the card account.

There are two criteria that the Government need to bear in mind relating to that remark about the distribution throughout the UK. In paragraph 13 of our report, we say:

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