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Lord Bach moved Amendment No. 102A:

On Question, amendment agreed to.

[Amendments Nos. 103 and 104 not moved.]

Lord Bach: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Post Office Network

4.1 p.m.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, with the leave of the House, I shall now repeat a Statement on modernising the Post Office network which is being made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:

    "Post offices are a vital part of the fabric of our country. They serve 28 million people every week, performing a vital role in local communities, whether they be rural or urban. But the Post Office also faces challenges. Its traditional work needs to respond to the changing requirements of customers, to changes in society and to the opportunities arising from new technology.

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    "Last October the Prime Minister asked the Performance and Innovation Unit to draw up a strategy for the future of the Post Office network. The Performance and Innovation Unit's Report is being published today. Copies have been placed in the Library of the House and will be available from the Vote Office. The Government accept all of the report's 24 recommendations. Working with the Post Office and the National Federation of Sub-Postmasters, we shall implement the measures proposed in full and back them with financial support. We shall set aside ring-fenced funding as part of the spending review.

    "The Post Office is the largest retail network in Europe. More than nine out of 10 people live within a mile of a post office, but for too long the Post Office network has been a neglected national resource. Now is the time to harness its full potential and to develop in totally new areas. The PIU report identifies three such areas where developments should take place, made possible by investment in a modern on-line computer system for every post office, to which the Government are contributing over £500 million: first, to establish a universal bank; second, to provide Internet access and exploit e-commerce; third, to provide an enhanced role in government services.

    "The Government are aware that their decision to move to a system of automated credit transfer between 2003 and 2005 has caused concern, but people were already voting with their feet and choosing to have their benefits paid into their bank accounts. Today I can guarantee that even after the move to ACT, pensions and benefits can still be paid in cash in full at the post office if that is the choice of the individual pensioner or benefit recipient. The universal bank outlined in the PIU report would provide the means of achieving this. It would ensure that all benefit recipients and pensioners, now and in the future, can continue to use post offices to receive their cash. It would be a post office based solution, as called for by the National Federation of Sub-Postmasters.

    "Today in Britain up to 3½ million adults have no bank account. The universal bank would bring these people into the banking mainstream by providing basic banking services. Customers of the universal bank would be able to take out cash at any post office and use cash machines to take out money. They would be able to set up direct debits to pay bills, enabling them to benefit from discounts on gas, electricity, telephone and other bills.

    "The second area is Internet access and the exploitation of e-commerce. By installing Internet terminals in front of the counter and ensuring staff are trained to provide assistance, post offices can help ensure that more people have access to the Internet, and the skills they need to use it. Post offices have an opportunity to market themselves as a convenient local place for people to collect goods that they have ordered on the Internet.

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    "The third area is an enhanced role in government services. Post offices have traditionally been places where people can conduct a range of government business, from renewing a car tax disc to getting a fishing licence. That role will be further strengthened with the PIU's recommendation that post offices become one-stop shops--general government practitioners--for advice and information on government services. We shall support pilot projects on this and Internet access.

    "This vision of the 21st century is one which applies to all post offices, but the PIU report also identified the particular needs of the network in urban areas and rural communities. The rural post office network has been slowly contracting over the past 20 years. This Government are committed to ensuring that the rural post office network is maintained. The importance of rural post offices cannot be underestimated. Often, they are the last remaining local shop, providing a vital service and also acting as a focal point for the community. The maintenance of such services is, above all, a tribute to the invaluable role of sub-postmasters and mistresses who often provide to their communities much more than is required or expected of them. This Government have already made provision in the Postal Services Bill for the Government to provide financial assistance to post offices.

    "In order to protect rural post offices, the Government will place a formal requirement on the Post Office to maintain the rural network, and to prevent any avoidable closures of rural post offices. An unavoidable closure would be when no-one is prepared to take over from a departing sub-postmaster or where an associated retail business is no longer commercially viable. The PIU recommended that this requirement to maintain the rural network should apply--in the first instance--for a period of six years. We accept this recommendation. During this period the Postal Services Commission together with the Consumer Council for Postal Services will monitor the network. The commission will report annually to me on the rural network.

    "Presently the Post Office defines a rural post office as one which covers 6,300 inhabitants; 7,500 post offices are currently covered by this definition. However, the Countryside Agency defines a rural post office as one serving a settlement of 10,000 or fewer people. Around 10,000 post offices would come within this definition. I am pleased to inform the House that for the purpose of the policy of protection from avoidable closures we shall be applying the wider definition and therefore cover nearly 10,000 post offices. It is not just in rural areas that post offices play an important community role. We want to maintain convenient access and improve the quality of post offices, in our towns and cities as well as the countryside.

    "But--under pressure from changes in the pattern of retailing--the quality of many post offices and associated retail business has declined in urban areas over the years. The best way to address

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    this is for the Post Office, working closely with the National Federation of Sub-Postmasters, to build bigger and more extensive offices, reversing years of under-investment. As recommended by the PIU, we will encourage them to do so.

    "Post offices in deprived neighbourhoods and estates have a particularly important role, often providing the basis for the only local shop. Our aim is to ensure that people in these areas, where there are few other facilities, continue to have access to high quality post offices, preferably co-located with good shops. To support this we will set up a new fund to improve the quality of post offices in deprived urban areas, better serving the needs of the local community. Uses of the fund would include installing security measures and modernising the premises.

    "These proposals provide a significant package for guaranteeing access to post offices and enabling post offices to provide new services which meet the changing needs of customers. The Post Office will need urgently to develop its plans for taking forward these opportunities. I have asked them to provide these plans by September.

    "By providing financial support for these initiatives, the Government are backing a viable, sustainable future for the post office network. But the Post Office itself also needs to respond to the challenges. The PIU report shows that much more needs to be done to maximise the commercial potential of the network, to improve efficiency, and to raise the quality of post offices. The vision set out in the PIU report--which we support--is closely in line with that of the General Secretary of the National Federation of Sub-Postmasters, with whom we have been in close dialogue. The package announced today complements the measures in the Postal Services Bill, to protect consumers and enable the post office to modernise. Post offices, and their customers, in all areas will benefit from the wide range of opportunities offered by a modern on-line computer system in every post office and proposals to establish the Universal Bank, Internet learning and access points and General Government Practitioners.

    "Customers in all urban areas should benefit from bigger, more extensive post offices, offering a wider range of services. Those in rural areas will also benefit from the requirement to maintain the rural network. Those in inner cities and estates will benefit from measures to ensure post offices provide good local shops which serve the community.

    "This announcement will ensure that people across the country--in rural communities, in our cities and towns--have convenient access to a post office providing quality services. It will offer the opportunities the Post Office needs to face the future with confidence, and to build a network which can thrive rather than just survive in the 21st century. I commend it to the House."

My Lords, that concludes the Statement.

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4.15 p.m.

Baroness Buscombe: My Lords, I thank the Minister for repeating the Statement. Perhaps I may say how very much better it would have been if the Statement had been made yesterday before the lengthy discussions on related issues under the Child Support, Pensions and Social Security Bill. Does the noble Lord realise that many Peers would not have been kept at a late hour in this House debating the important issue of rural post offices--being totally in the dark so far as concerns the Government's intentions--if the report had been laid before the House? Did he ever consider that point? Is not this one more conspicuous example of this Government's unacceptable contempt for Parliament?

I must ask the noble Lord directly: was the PIU report in his hand yesterday? If so, why did the Minister not offer this Statement yesterday? Did his noble friend Lady Hollis ask him to make the report available to the House? If not, why not? If the noble Baroness did so, why did the noble Lord's department not agree to do so?

Will the Minister tell the House whether there are any aspects of this Statement which could lead to primary legislation? If so, does he accept that we should be ready on our side to consider delaying the Third Reading of the Postal Services Bill in order to accommodate agreed amendments, if that would help rural post offices?

I turn to the detail of the Statement. We welcome the fact that the Government have at long last put together a package for sub-post offices. Sub-postmasters have waited for more than a year, unable to plan and invest for the future. Post office closures have escalated during the past year. This year 500 have closed. Sub-postmasters have demonstrated their deep-seated concern in many ways--for example, by holding a rally in April, which was attended by more than 2,000 sub-postmasters, and through submitting a petition containing more than 3 million signatures to the Prime Minister at No. 10 Downing Street.

Would not it have been better for the Government to have waited to announce their future intentions until they had developed a practical workable strategy for the future of the Post Office before making half-hearted announcements last year? Those announcements will lead to the loss of £400 million income from sub-post offices, have caused much uncertainty and concern and have led to the appalling number of post office closures.

We welcome the Government's determination to maintain a minimum network. But can we have clarification of what that network will really mean? We note their commitment to maintain the rural network. The Minister states:

    "I am pleased to inform the House that for the purpose of the policy of protection from avoidable closures we shall be applying the wider definition and therefore cover nearly 10,000 post offices".

Currently there are 18,500 post offices. Does it mean that 8,500 post offices will be at risk? How will those which will be maintained, and which the Government

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guarantee will not close, be funded? How will that £400 million loss be recouped through the services that they will provide, a matter referred to in the Statement? For example, where will the banking charges fall to cover the 3.5 million potential new customers for the universal bank? Will they fall upon the customer, the post office, the bank or the taxpayer?

The Statement raises many more issues. Is it the Minister's intention to allow parcels to be handled by commercial freight and parcel carriers other than Parcel Force? Is that how he will recoup the £400 million of revenue lost to post offices? What about the subsidies? On these Benches, we understand that the Post Office does not want subsidies. In the debate in this House at Second Reading, the noble Lord, Lord Dearing, said,

    "There is no security in subsidy".--[Official Report, 2/5/00; col. 958.]

Has the Minister made an analysis of the potential distortion for competition here?

This is a very important point. It raises important questions with regard to competition with other small local businesses which it was thought the Government are also seeking to support.

In responding to the Minister's Statement, I have asked a number of questions. I make no apology for that. This is a crucially important issue and we on these Benches would be failing in our duty if we did not press the Minister for a full reply.

4.20 p.m.

Lord Razzall: My Lord, it will not come as a surprise to noble Lords to realise that the tone of the response from these Benches will be slightly different from that of the Conservative Opposition. I must say that when listening to the Conservative Opposition on this subject it always amazes me that they never actually mention that it was the Conservative government's decision to introduce automated credit transfer which caused this problem in the first place. However, that is obviously a matter upon which they will reflect.

I am sure noble Lords will appreciate that this is a massive victory for those who have been campaigning in favour of the sub-post office network over the past year or two. When this campaign started there was relatively little recognition from the Government that there was a problem. The campaign, led throughout the country by people involved in the sub-post offices and the political parties, has today brought the beginnings of a result. One wonders why that is.

The Prime Minister is often fond of teasing the Liberal Democrats that its policy at the last election to put 1p on income tax to fund education was the longest P in history. I believe that in this particular case the Prime Minister has found that post office closures and pensions are the two disastrous Ps in electoral terms over the past year or so, at least until he met the Women's Institute. I believe we must recognise and welcome the significant shift in government policy that the Statement represents.

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I am sure the Minister will not be surprised if, having welcomed the Statement, I probe him a little on one or two of the fundamental points of detail.

First, the critical issue that is missing, and missing from all government pronouncements, is how much money is going to be put into it and will that money be guaranteed? No doubt the Minister's answer will be somewhat analogous to Mr Byers's response on the radio this morning when he said, "More than you expect". I believe this House deserves a response and an undertaking from the Minister on behalf of the Government that satisfactory financial resources will be found in the Comprehensive Spending Review to maintain the commitments set out in the document, and that that commitment will be given for the whole period until 2006. We require a guarantee that whatever financial requirements are set out in this report the money will be made available. If the Minister can, he should take the opportunity to make that undertaking today.

My second point is particularly important as regards the continuation of rural post offices. I have noticed a slight discrepancy between the Statement and the report of the Performance and Innovation Unit. The Statement indicates that the Government will ensure that the finances are available to maintain the rural sub-post office network unless a closure is unavoidable. In the Statement an "unavoidable closure" is defined as one where no one is prepared to take over from a departing sub-postmaster--an obvious requirement--but it goes on,

    "or where an associated retail business is no longer commercially viable".

Those words do not appear on page 86 of the Performance and Innovation Unit report which indicates that the Post Office would be required to maintain post offices in rural areas except where it was impossible to find replacements for departing sub-postmasters. Nowhere can I see in the Performance and Innovation Unit report any reference to the second requirement regarding the associated retail business no longer being commercially viable.

It may seem a small point of language but it is actually a fundamental point of principle. In a large number of rural sub-post offices there may well be an associated retail business which is not commercially viable but which the community may want to retain and which somebody may be prepared to take over from the retiring sub-postmaster. Therefore the Minister needs to indicate whether he accepts what the Statement says. The Prime Minister's letter states that the Government accept all the recommendations of the report and that the words that have crept into the Statement about the associated retail business are a gloss which is not accepted by them. In other words, the Government will agree to subsidise sub-post offices where necessary, provided that there is somebody prepared to take over from the departing sub-postmaster, whether or not there is a failure of the related commercial business.

My next point relates to urban closures. There is an assumption that only rural post offices are involved. It is quite clear to those of us who go around the country

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that it is just as much an issue for urban post offices. I know the unit's report indicates, and the Government have accepted, that a fund would be set up to provide a subsidy to urban post offices where necessary. But the Minister ought to give an undertaking that the Government regard the problems of urban sub-post offices with exactly the same concern as they do those of rural post offices. Members of the House who canvassed in the Tottenham by-election recently will recognise the problems of urban post offices.

My next point is one of timing. As the noble Baroness, Lady Buscombe, indicated, post offices are closing as we speak. I am concerned that the consultation mechanism regarding rural post offices will not be completed, according to the unit's report, until approximately the autumn of 2001. I believe the Minister does need to give an undertaking that steps will be taken to accelerate the subsidy if necessary to stop the urgent and very dramatic problems that are occurring as more and more post offices close.

Clearly, the Government think that this Statement will give confidence to rural sub-postmasters and therefore that the closure programme will stop. But the Minister ought to indicate that the programme will be accelerated if the Statement and what flows from it does not staunch the closures that are currently occurring.

Finally, on a small point of detail but a big point of principle, we on these Benches welcome the desire to turn the sub-post offices into--dare I say?--Internet cafes. The rural sub-post office can become the Internet cafe of the future. There is one small technical point of which I am sure the Government are aware. In order for that to happen, effective ISDN lines into those post offices are required. Noble Lords who live near rural sub-post offices will be aware that it is virtually impossible to get an ISDN line into those offices or into one's house. If the Government are going to implement the proposal, they will have to give an undertaking to solve the problem of ISDN lines going into rural areas.

4.30 p.m.

Lord Sainsbury of Turville: My Lords, perhaps I may first make clear to the noble Baroness, Lady Buscombe, that I did not have the report in my hands last night. If I had, I would have made it available and commented on it. The first time I saw it was when it came off the presses this morning.

Perhaps I may also make clear that it is extremely important to get these measures right and we asked for the PIU report because we wanted to get them right. The task of producing a report on such a complicated issue in eight months was extremely difficult, but it has been well done.

I find it extraordinary that the party of a government who presided over the closure of 3,000 post offices during 18 years--in 1992 alone, they presided over the closure of 478 post offices--should come here and say that we should have acted with greater urgency. That smacks of a hypocritical

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approach. If the issue is so urgent, it was urgent when they were in power and they should have done something about it.

The noble Baroness criticised the timing. We first had to clear up the incredible mess that had been made of the computerisation of the post offices. It was started by the previous government and was done extremely badly. It was three years behind schedule and was costing a great deal of money. We first had to correct that system; we have now moved on to deal with the viability of the post offices.

We are not giving a guarantee about the other 8,000 post offices. We believe that the major problem with the rural post offices results from the declining population in those areas. We want post offices in urban areas to remain on a commercial basis. We are providing them with financial assistance on the basis that it will give them time to develop new services. We want to try to keep them on a commercial basis, but we recognise that there will be problems while they make the changes. We want to help them do that. That is exactly the right course. It retains the commercial basis while taking a position on access and social justice. That combination lies behind these processes.

What alternative has been suggested? It is that nothing is done and that we maintain old systems, which the previous government realised should be changed, and wait while the lifeblood of the Post Office flows away. I cannot believe that any government could see that as a responsible approach to the system.

The proposals will cost a considerable sum of money. It is significant in terms of total government finances and therefore it will form part of the spending review. It will be part of the 2000 spending review and that will be the appropriate time to give details.

The noble Lord, Lord Razzall, queried the position of shops attached to post offices. That is covered on page 85 of the PIU report. The distinction is that we are considering giving financial support to the Post Office and its services. An open-ended commitment covering shops attached to or containing post offices is a different consideration.

I turn to the differences between urban and rural post offices. The problems are different. The decline in the rural population is creating a major problem, while urban areas have suffered from a long period of under-investment. We are setting up a fund to correct that situation and to enable post offices to go forward on a commercial footing. I believe that the policy meets the needs of rural communities and of deprived urban communities. It does so, not by looking backwards and trying to preserve the systems and views of the past, but by looking forward and trying to create new businesses and opportunities which will make post offices viable. They will be able to continue to provide valuable services to rural communities.

4.34 p.m.

Lord Boardman: My Lords, I welcome any proposal put forward to help post offices, to stop their decline

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and, it is to be hoped, to reverse it. However, it would have been helpful if the Statement had been made before last night's debate. Indeed, today's Statement appears to be almost a response to last night's attacks.

I shall not attempt to go through the Statement, but I want to make one general point. It appears to be a knee-jerk reaction to the criticisms made and needs to be considered in detail. However, I was struck in particular by the security angle. I am concerned about the number of post offices which will be equipped to provide the degree of security necessary to safeguard the amounts of cash which they must handle. Village post offices are vulnerable as it is, but for large parts of the day only one person is left in charge. The security aspect will need careful consideration and no doubt will receive that from the Government.

The Statement raises the question of whether the large number of rural post offices, often in small cottages, will be capable of providing the security required to provide the service that is contemplated. I hope that a satisfactory answer will be forthcoming. However, I welcome any proposals to help the Post Office, but I shall await more detail in due course.

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