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Baroness Miller of Hendon: My Lords, last February the Government announced new initiatives for the sub-post office network by encouraging new entrants. Those initiatives are welcomed by the National Federation of Sub-Postmasters on the basis that all contributions are gratefully accepted. The initiative that we are discussing today, and the one described by the Minister as the third, according to the DTI press release was:

The brief went on to say that the aim is,

    "to help support initiatives by volunteers and community groups to maintain or re-open post office facilities where the traditional post office is closing".

This is a massive exercise in bolting stable doors-- and precious few stable doors at that, according to the same press release, because the Minister confirmed that we are talking about establishing up to 200 community post offices in the UK and no more.

Rural post offices are closing because they are invariably housed in the local community shop which is currently suffering from the fierce competition from the giant supermarkets. The changed shopping patterns of the public mean that these days they often go to the out-of-town shopping centres for what they call their weekly "big shop" and simply use the village shop as a convenience store for when they run out of something or want to buy their newspapers. For people without their own cars, the disappearance of the village shop is an absolute disaster.

For many, the local shop is their only means of getting their hands on cash. But the threatened discontinuance of the payment of benefits via the post office--is not only a source of direct income to the post office but means that customers drawing their pensions or other benefits are likely to spend some of the money in the shop--is a major reason why so many sub-post offices are closing.

The Government's scheme will save the Treasury a theoretical £400 million a year. That is money taken directly out of the pockets of small businesses and out of the local economy. I say "theoretical" because an untold number of businesses will close; thousands of people will be thrown out of work in rural areas where there is no other employment and the taxes paid by the lost businesses will cease.

The short-term gains by the Treasury will be outweighed by the costs it will have to bear. And meanwhile small businesses will have been destroyed, the public put to enormous inconvenience; and they will have suffered the loss of essential amenities.

What do the Government offer in return? All they can offer is jam tomorrow from the income streams that they hope will become available in 2003 to keep sub-post offices open. That is a long time ahead and the sub-post offices are closing at an alarming rate. One of the streams which the noble Lord mentioned is

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the so-called "universal bank". The commercial banks are seemingly not falling over themselves to bail out the Treasury from the problems it has caused by strangling the sub-post offices.

By 2003, if the average decline continues at the same rate, another 1,000 post offices--more than 5 per cent of the present depleted network--will have closed their doors forever. All the Government can do is to offer this miserly one-off sum of £2 million.

Naturally, I welcome the assurance given in the other place to my honourable friend the Member for South West Hertfordshire that benefit claimants will be able to receive cash over the counter. However, to that I must add the qualification, "So long as there is still a counter there for claimants to use, which seems increasingly unlikely".

I have to add another observation about this subsidy scheme. I invite your Lordships to take a look at the annex to the order which lists the items for which the subsidies will be paid. They include all capital costs for items such as building and decorative work, legal and professional expenses and so on. But where is there any assistance with the actual running costs of these do-it-yourself post offices? The Treasury expects them to be run by unpaid volunteers in unheated, unlit premises, presumably provided rent and rate free by some local benefactor.

The scheme was rightly described by my honourable friend as,

    "a sticking plaster over the gaping wound that the Government have slashed across the face of our sub-post offices".

The wound is the removal from the sub-post offices of 30 to 40 per cent--and in some cases as much as 70 per cent--of their income. That is the money which a government, who have little knowledge of business and who habitually shed crocodile tears for small businesses in particular, do not seem to realise comes straight off the bottom line.

I spoke earlier about the bolting of stable doors. Continuing with the same metaphor, I am certainly not going to look a gift horse in the mouth and we are certainly not going to vote against the order today. However, I want firmly to put on the record that we believe that it is too little to resolve the problem which the Government have themselves created.

I was pleased to read in the accounts of Consignia that in the year 2000-01 there is a £66 million post-tax profit, which was a turnaround of a loss from the previous year of £264 million. But I say to the Minister that the dividends the Government will receive from Consignia for that amount to £93 million. With all our worries about sub-post offices, it seems to me that it would have been far better if the Government had intended to plough that back into the network rather than the miserly sum of £2 million. However, that is better than nothing.

8.45 p.m.

Lord McNally: My Lords, the noble Baroness, Lady Miller, has given a powerful indictment of the order. It is a small and ambitious piece of government action.

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She highlighted the concern that as regards the hoped-for new business--the seventh cavalry for the rural post offices which the universal bank and other initiatives will bring--we are doubtful about when they will arrive and what they will deliver.

Here is a perfect example of "not joined-up" government. There is evidence that the Government are addressing the real problems of rural areas and of keeping communities together. For example, the figure of 10,000 inhabitants is extremely small because much larger communities are losing their post offices.

Furthermore, there is an absence of lateral thinking. As the noble Baroness indicated, the proposal is characterised by the local community initiative, do-it-yourself-post-office approach and I strongly doubt whether that is a real solution to the problem. Part of the problem relates to the different changes of retailing patterns; some of the old familiar retailing outlets had enough foot-fall. I may be using some retailing jargon with which the Minister is not familiar, but the general through-put which kept a butcher, baker or candlestick maker no longer exists.

There is more hope in looking at joint enterprises which may take on a range of duties in a local community; for instance, part of pub, laundrette, chemist or garden centre premises used as a post office. However, I am not clear whether such lateral thinking would benefit from what is offered in the order and whether the subsidy can take effect if other economic enterprises are related to it. Are the Government determined to keep to the do-it-yourself approach, which might squeeze through as justifying the application? If so, I do not believe that the communal effort in the village hall realistically meets the needs of rural communities or is likely to happen in the real world in all but a few isolated cases.

Will the Minister tell the House whether the lateral-thinking approach, which would allow other enterprises to take on the role and still benefit from the subsidy, still applies? Why have the Government set such a low target? A community of 10,000 is very small and does not reflect the problem faced by larger but definitely rural communities.

Finally, the sub-post office also plays an important part in inner cities where some of the closures have an impact on communities that can be just as isolated as those in rural areas. I should also like to see some signs of joined-up government in terms of the impact of closures on those areas.

Like the noble Baroness, Lady Miller, although we shall not oppose this measure we should like some recognition by government that this small scheme is very limited in its ambition and, we suspect, its impact.

Baroness Byford: My Lords, perhaps I may add a few words to this important short debate on the order. I declare my interest as a patron of VIRSA, of which I believe the Minister is aware. VIRSA is an education charity that has done an enormous amount of work with rural sub-post offices within the community. I shall comment on that shortly. I also declare an interest in that I live in Leicestershire and look forward

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to seeing how the trial proceeds. I understand that the scheme is due to start in June of this year. Is it to run for six months; and, if so, will it be evaluated immediately thereafter? How soon will we know the results? That is important in the wider context of this order.

I understand that the £2 million that is to be made available is not a gift but is to be repaid. I do not see in the order, unless I have missed it, the time-scale over which repayment is to be made. Paragraph 6(1)(b) of the order refers to "reasonable value". Perhaps I may double-check with the Minister--he almost answered the point in opening--who decides what is "reasonable value". The noble Lord referred to the input of the local authority and of Post Office Counters which would run the scheme, but the position is not clear. Can we have greater clarity as to who assesses whether giving money to one particular sub-post office amounts to "reasonable value"? In addition, how long will it take for help to be given; in other words, will it occur within a month, two months, or more quickly?

I reinforce the observations of my noble friend Lady Miller. I too am very concerned that the sum of money involved is too little. The establishment of new sub-post offices in, say, village halls is likely to be much more costly than support of existing sub-post offices. Perhaps the Minister will comment on that.

I should like to put a question to the Minister which is not directly linked to the order. However, it is hugely important that we clarify the two matters that we are considering in looking to the future survival of sub-post offices. One is the setting up of universal banking services, which the Minister, my noble friend Lady Miller and I often debated during the passage through this House of the Postal Services Bill. I remain extremely apprehensive that a year later we still have no idea of what is to be put in its place, but that is another matter.

As to universal banking services, I understand that some 66 million could qualify to use the system. Can 66 million people use it? Has sufficient money been put aside for that, or has only so much money been allocated to universal banking services? One wonders what the Government's thinking is on that matter.

I add my concern about the change of benefits payments. Most sub-post offices receive between 40 and 70 per cent of their income from welfare payments. I listened long and hard to the Minister about the schemes that the Government had in hand. We are told not to worry and that the change will not happen until 2003, but there is very real concern among sub-postmasters who cannot see a secure future and remain worried about it. Perhaps the Minister can also clarify the position.

Finally, I return to the point with which the Minister started. The noble Lord said that rural sub-post offices were an important part of the community, and I reinforce that point. Rural sub-post offices perform a vitally important role in the community, and human contact is enormously important.

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I agree with the noble Lord, Lord McNally, that the amount involved is small. However, we are grateful for anything. The noble Lord did not believe that the community would be able to make an effort. The work done by VIRSA with local sub-post offices is an example of what can be done. Although I echo the noble Lord's concern, I do not share his total pessimism in that respect. I believe that it is possible to do it, but to enable this to happen requires a great deal of commitment and support from the Government and the sub-post offices themselves. I am sorry that I have put some direct questions, but I hope that before the House passes the order the Minister is able to comment on them.

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