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We have to recognise that the financial difficulties of Royal Mail are well known. There is almost a consensus on the reasons for them but there is never agreement on the significance of each factor’s contribution. That some £200 million is the cost attributed to Post Office Counters Ltd for the support of the Post Office branch network is not in dispute, but the level of subsidy varies. Where the service offered is, for example, combined with a local grocer’s shop or a filling station, it is probably part of quite a viable business. In other instances, where it is in a remote rural area and the number of beneficiaries for whatever reason has declined, so the footfall or viability of the business comes into question. Equally, where the people who run the post office are nearing retirement age, they are faced with the problem of passing on the franchise. To whom should that franchise go if it is not a very attractive commercial enterprise? Should the property be reaching the end of a lease and a rent review is due, the viability of the business will be under even greater threat. When the rent of the building goes up, regardless of the cost of the franchise, that is another burden that has to be borne by a potential successor.

Let us face it: very few modest post offices are run on a highly profitable basis—indeed, they have hardly ever been run on a highly profitable basis. The people who have been running these post offices have been providing an underpaid social service to the community for very many years. One cannot blame them if at the end of their lives, as it were, the providers of these

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services sell the property—if they are fortunate enough to own it—to whomever wants to buy it and for whatever purpose the building can be adapted.

It is not a simple matter of saying that if they have a few more benefits and more footfalls all these post offices will remain open. The anarchic system by which the franchises were allocated in the past has meant that we have overprovision in some areas and underprovision in others. The Post Office does not always have an opportunity to fill the gaps in the service. For example, if one looks at the way in which the franchises for the National Lottery were allocated, one sees the kind of model which the Post Office is now applying to the allocation of future franchises and the reorganisation of some of them. That process is rough and ready and mistakes are made—this is where I agree with the noble Baroness—so, if the process is to have any credibility whatever and for there to be a degree of justice, there has to be a far greater guarantee of time and transparency in the consultative process.

A point was made about diversification. A number of new services and new financial offerings have been made available, which sometimes are beyond the competence of some of the post offices that sell them. However, in the Crown post offices, the staff enjoy far better pay than most of those in small private post offices—they are paid a rate that is commensurate with the provision of financial services. I am not convinced that if WHSmith assumes responsibility for Crown post offices, that level of reward will still be made available to the staff.

This is a complex issue. The number of speakers and the short amount of time denies us the opportunity to develop themes as we might want to, but this matter will be with us for far longer than the two or three years to 2010 and beyond. However, there is some degree of hope. The National Federation of Sub-Postmasters has, nevertheless, agreed reluctantly to certain financial rewards, and the Government deserve credit for taking on the issue and trying to ensure that the Post Office is given a level of resource—never enough, obviously—to smooth the passage of transition involved in network reconstruction. For that reason, I am reluctant to go wholly down the road mentioned by the noble Baroness, although some concerns have to be addressed.

11.57 am

Lord Roberts of Llandudno: My Lords, I welcome the opportunity given to us by the noble Baroness to discuss once again the issue of post office closures. We know how important it is now and how people emphasise the need in our large cities to create communities where people live with respect and with a responsible attitude towards one another. That is one of the solutions to many of the problems that cities face. In order to build communities, perhaps we could look at cities as networks of villages. Often, because of the demise of services, our existing towns and villages lose their heart. A village can descend into a commuter area and so the heart goes out of that village and that community.



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The war, the Blitz and so on devastated so many of our cities and towns. People looked at the rundown roads and streets, the old communities, and decided to build skyscraper tower blocks. People were moved into those tower blocks and they were great. They had modern bathrooms, good kitchens and there was no damp. However, in moving from the old communities they lost the spirit of community. We need to reclaim and safeguard the communities and try to restore that feeling of community.

What makes a community? You need a church—a Methodist chapel, possibly—shops, a viable school, a bus service, perhaps a community centre or a village hall, a pub and a post office. The post office is often the gathering or meeting place for so many people. I see them in Llandudno on pension day; there is a queue of people outside—they are friends as they come every Tuesday or Friday. It is not only a place of business but a social place.

No one party can claim that it has safeguarded post offices over the years. I have figures showing that between March 2000 and September 2007 the net fall in the number of urban post offices was 2,653, and for rural post offices in the same seven years the figure was 1,622. A calculation off the top of my head suggests that when the Conservative Government were in office about 4,000 post offices were closed and under the Labour Government in the past few years about 4,000 post offices have closed

We know that a number of post offices in Wales are under threat. In my own patch we are still waiting for the list to be published. I am sorry that there has been a moratorium on that in the local election period because many people would vote a different way if they knew that their local post office was threatened with closure.

Facilities are eroded and the community as a separate entity collapses. This is the story of many rural places in particular. Young people who want a good career leave the countryside and it loses a lot of the necessary leadership. I can imagine a village in the Conwy valley when first the quarry closes, then the woollen mill, the bus service is reduced and mechanised farming needs fewer farm workers—the people who used to fill our pews on a Sunday are no longer there. The structure of the village changes. The local village shops are not viable if families are not there.

What of schools? I know that in parts of Wales—and possibly England as well—numerous schools are threatened with closure. We cannot always safeguard schools because we have to be realistic. The school is threatened, the chapel goes, the church goes, the library goes, and the village as a community collapses. The noble Baroness said that often it is the income from the post office that saves the adjoining village shop. They share the same premises. Once the television licence, car tax and ordinary pension business is taken away the post office loses so much of its necessary income to serve the community. We are a country of lost communities.

I shall not go into my party’s proposals. We have them to strengthen local post offices but I suggest that local authorities could possibly look at a village in a holistic way and choose some local community activists

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in the area to take special steps to safeguard the school, the travelling library and the post office. I hope that the Welsh Assembly can inject some money into Welsh communities for such a policy. The church authorities and the breweries could meet to discuss how to make the place a viable community. That policy could be a pilot for what could follow that would safeguard the very being of our communities. The post office is so essential that it is a pivot, and we can halt its decline in the big cities and in the smaller communities as well.

12.04 pm

Lord Dearing: My Lords, I declare an interest as a former chairman of the Post Office and as a member of the superannuation scheme. I congratulate the noble Baroness, Lady Byford, on the passion with which she spoke. It matched that of representations I received over the phone from someone who had marched with 400 others in wind and rain to save his post office and picketed it for four hours afterwards.

I am much concerned about the issue of the card account. The noble Baroness described the difficulty in opening one. I understand that the contract with the DWP prevents the Post Office promoting the card account in any way. It is now open to tender. I understand that tenders are in and that 4,000 cards are at risk. We know about the 2,500 post offices that are to close over the next few years. How many more will close if the card account goes elsewhere—1,000, 2,000 or 3,000? We know about the cost to the Exchequer of the present closures. The Secretary of State referred to a cost to the Exchequer of £2 billion and then to a cost of £1.7 billion between 2006-11 for the present closures. What would it cost if the card account is lost? What criteria were used in evaluating the tenders? How much weight will be given to service and convenience to the public alongside cost? Those are important issues.

If we need a network, we need volume business. The Post Office has done much to generate new business, but it needs volume such as only the Government and local authorities can generate to maintain a large service, which may be needed in times of emergency. We are going to hear a Statement on Grangemouth. Suppose we faced a wider issue. The state needs points at which to access the public.

I am especially grateful to the noble Baroness for raising the issue. I move on to Royal Mail itself. Royal Mail welcomed the opening of the mail to competition when it was announced, and it still welcomes the principle, but the Government's decision to appoint a committee to look into how things are working is indicative of the need to have a fresh look at how the Act is working in practice.

I have a few points to make in my allotted few minutes. First, in addition to maintaining the universal service, the Act prescribes that Postcomm, the regulator, should promote effective competition, as opposed to fair competition. Is that the right basis for the future? I can understand why the Government would want to push the provision in favour of competition to get it into action. That has been successful: 40 per cent of bulk mailings are now

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handled by others than the Post Office. It is right to suggest now that the basis of the Act should be reviewed.

Secondly, in the light of comments that Postcomm has been making about structures, I say as one who when chairman divided the Post Office into three separate businesses that I can think of nothing more likely to disrupt the efforts that the business needs to make to increase efficiency and competitiveness than to go further and split the business into two. I can think of nothing more likely to frustrate the outcome of the agreement with the unions negotiated with such difficulty last year than to disturb the whole structure and introduce the necessary changes branch by branch. Now is not the time to be thinking about that.

Thirdly, I should like to be assured that the policy will be to keep the obligation to maintain a universal service to all addresses Monday to Saturday, and that the income that the Royal Mail can derive from that is sufficient to cover its costs and remunerate the capital involved. That is an important service to the public that needs to be maintained.

There is the regulation system itself. Having looked at it over the years, it seems to me that perhaps it was necessary to have the present approach initially but, in the light of some years’ experience and given the extent to which competition has developed, it is time to consider a lighter touch rather than a muzzle-loading system that slows down the efforts of Royal Mail to compete. Perhaps Postcomm should be part of a larger structure of regulatory bodies. It is unusual to have one regulator, one concern.

When the Government opened the Royal Mail to competition, they could not have chosen a time of greater weakness through underinvestment in the past. This is in great distinction from Germany and France, which allowed and enabled through prices their industries to invest heavily. The Royal Mail was grossly underinvested in, and as a result operates well below its desired efficiency.

Do you notice that the Germans, in opening the Bundespost to competition and mindful of their balance of payments, have prescribed that the wages of competitors must not be less than those of the Bundespost, and that the French, in opening their business, are prescribing that the competitors will contribute to the maintenance of the universal service? Our balance of payments deficiency is now £50 billion a year and rising. Perhaps we should be as wise as the French in looking at the public interest as well as other factors.

I said that I had an interest. I ask that my remarks be judged to be in the public interest.

12.10 pm

The Lord Bishop of Newcastle: My Lords, I too thank the noble Baroness, Lady Byford, for giving us the opportunity to debate this really important matter today. I am fortunate to be bishop of one of the loveliest counties in England, but it is also one of the most sparsely populated, so the lack of provision of public services, including post offices, to people who

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live in areas such as rural Northumberland is of increasing concern. I shall speak about the impact of post office closures on rural people and rural communities.

When I asked one of my rural clergy the other day what she wanted to say about today’s debate, she said that we must be careful that we do not mutate into the post office conservation society. Some post offices have a footfall of less than 10 people a week and are simply unsustainable. They are not viable and we cannot keep them. Yet the fact remains that the most basic community service in villages is provided by the post office and shop along with the pub and the church.

The reorganisation of the post office network is not easy to achieve, and I for one certainly wish for far smaller numbers of closures, but the change programme is being implemented in a pretty flawed way. The consultation timetable has been far too tight, and communities have felt disenfranchised from the process. Local churches have not been included in the stakeholder information network, which is a serious omission because rural churches and chapels can provide the venue for a post office outreach service. The Church of England, the Methodist Church and United Reformed Church are exploring possibilities for church buildings to host such post offices in order to maintain a presence for these vital services in isolated rural communities. To my knowledge, there are already 10 such post offices in churches and chapels, and there are more on the way.

From the Lake District to the Isle of Wight, the Midlands and Yorkshire, a good number of examples of hosted post offices in churches are already enhancing community life. In a Methodist church in Rutland—the noble Baroness, Lady Byford, may well know of it—the post office appears once a week, refreshments are provided, Fairtrade products are sold, and the community comes together and has a sociable and companionable afternoon. We could do with lots more such examples, because as always the closure of rural post offices will be felt most by some of the most vulnerable people in our society. The elderly and those without transport are left stuck without choices, options and services. If the post office closes, where does an elderly person who needs meals on wheels get the small amount of cash that is needed to pay for the meal when it is delivered?

We all know that post offices are closing because they do not have enough customers, partly because of rural depopulation, the rise of second-home ownership, and people using the internet and the telephone far more than they have ever done for their services. That leads me to my final point on the changing nature of the countryside and the serious decline in agriculture. Tenant farms in my part of the world can no longer sustain a family, so the call has been to diversify to set up new small businesses in rural areas. To do that, you need some kind of basic infrastructure, not least the ready availability of a post office.

As the number of microbusinesses increases, there is a danger that closing village post offices will do them harm and simply stop them in their tracks. The internet cannot replace the post office for the sending

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and the receiving of goods. That is certainly true for the village of Kirkwelpington in Northumberland. People in the village with a mail order business at home need an available post office. In one of the best and most creative forms of small-scale rural generation, farm buildings at Kirkharle have been turned into a showcase for local crafts people to sell their goods and display their skills. It is a place for small, rural businesses with a coffee shop and the like. At least one of those businesses just newly started runs a mail order element. It needs an accessible post office, let alone banking facilities, and there is no bank and post office for about 15 miles.

I cannot help thinking that the mark of a civilised society is the way that those at the margins are kept in the mainstream. Isolated and dispersed deprivation is very difficult to address, but the churches stand ready with buildings in almost every village community to play our part wherever we can to save some of the most basic services for our people. Post offices are an essential part of rural community life. It is in the end, for me, a matter of justice that the most vulnerable members of our communities are able to gain adequate access to their post office.

12.16 pm

Baroness Shephard of Northwold: My Lords, I should like to congratulate my noble friend on initiating this debate in her usual inimitable and passionate style. I wish that I had time to refer to the speakers who preceded me. I merely say that if the noble Lord, Lord O’Neill, were in charge of the handling of all of this, I do not think that we should be having the uproar around the country that we have had.

There is clear understanding across the Chamber—and I imagine that more will be demonstrated—that accelerating change in communications is costing the post office network some £4 million a week, thus forcing change in the system which would have to be dealt with by whatever Government were in power. Post office closures, because they affect communities at their most basic level, are a highly emotional issue. It is for that reason that they need to be handled with care and sensitivity to local circumstances, and in a way that responds to and does not ignore the consultative process. Sadly, so far, none of those conditions have been met by the handling of the current round, leading a Norfolk MP, Charles Clarke, to describe that handling as “insensitive and over-bureaucratic”. At local level, I would say that the handling also appears ill informed and unco-ordinated.

In 2007, the Government announced the intended closure of 2,500 post offices; that is, the most swingeing round of cuts in the history of the post office. No rationale has been given for that number. I imagine that the Minister will want to give it in her closing remarks. Consultation periods of six weeks—much shorter than the period recommended in Cabinet Office guidelines—have been set in 41 areas. However, those consultations have been suspended since November last because, as a letter to sub-postmasters published in the Guardian states,

Well, you can say that again.



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The Government have asked the Post Office to have regard to access criteria, as my noble friend said, requiring in rural areas that 99 per cent of people should live within three miles of a post office. This is in fact a reversal of the Government’s 2000 policy, which was that:

I do not think that this smacks of an orderly process.

I wish to concentrate on rural areas. Stuart Burgess, the Government’s rural tsar, has described people in rural parts of England as forming,

From a rural perspective, it feels as if we have been singled out for a programme of community hospital closures and closures of pubs, schools and now GPs’ surgeries as a result of the polyclinic programme. An Oxford University report published rather quietly last month on the DCLG website disclosed that, in the past four years, half of such communities have lost shops, post offices, schools and surgeries. As has already been said, rural communities have disproportionately to bear the spiralling cost of fuel. They have been told by Margaret Beckett that there is no need for their primary industry, agriculture, because,

That may be undergoing a bit of a rethink at the moment. Rural communities are having imposed on them a costly reorganisation of local government that no one wants. And in Norfolk, to complete the impression of government disinterest, the Environment Agency has announced that a number of coastal and broads villages may well be left to invasion by the sea, reinforcing the view of rural people that they just do not matter very much.


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