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The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

The hon. Member for Twickenham (Dr. Cable) has reminded the House that the Post Office and the post office network, in particular, are venerable institutions that have long played a central role in communities the length and breadth of the country. In that, at least, he is in agreement with the Government. The Post Office touches lives like no other industry. It has a turnover of more than £8 billion, it delivers 80 million items of post every day and, every week, 28 million customers visit their post office to take advantage of more than 170 different products and services.

I pay tribute to the men and women who work for the Post Office and the post office network. It is no exaggeration to say that the Post Office is one of the strands that helps to bind together our communities, whether urban or rural, across the United Kingdom.

The hon. Gentleman raised several points, and I shall endeavour to address them in my response. I shall try to cover the major issues that he raised in the order in which he raised them. I shall first focus on the network and touch on management, in particular, before addressing the implementation of the performance and innovation unit report. I shall then discuss "your guide", the universal bank and the urban network in particular.

No one doubts that the Post Office faces major challenges. Its tradition of work needs to respond to the challenging and changing requirements of customers, to changes in society and to the opportunities arising from new technology. The hon. Gentleman focused his remarks on the post office network so I shall try to set in context the programme of work that has been taken forward on that.

The Post Office is the largest retail network in Europe and more than nine out of 10 people in this country live within a mile of a post office. It has unrivalled coverage, with more than 17,500 branches the length and breadth of the country. Two thirds of people live within half a mile of two or more post offices. Yet although local post offices are still important to many people, as customers, they are not using them as often. In recent years, there has been a steady decline in the volume of transactions undertaken at post offices as a result of changing habits and lifestyles, changes in customer preferences and new ways of doing business. I have two examples of that. First, the number of telephone bills paid at the post office is down from 39 million in 1996–97 to 32 million in

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2000–01. Secondly, the number of postal orders issued is down from 37 million in 1996–97 to 32 million in 2000–01.

Mr. David Chidgey (Eastleigh): I note the Minister's comments on the decline in business. However, he will recall that that decline, especially in rural areas, spreads beyond the post office, particularly to banks. He may also recall that, a year or so ago, a strong attempt was made—and partly carried out—to get banks that were closing local branches to transfer over-the-counter services to local post offices. That was a great idea that we all applauded and encouraged. Does the Minister realise, however, that the charges made to local post offices for installing, supporting and filling automated teller machines are prohibitive, so that the arrangement costs them money and is falling apart? I asked questions on that in the House and received bland replies about the information being commercially confidential, but post offices are the business of us all, and not just a commercial interest of the Post Office.

Mr. Alexander: I am grateful to the hon. Gentleman for that. I am reminded of his contribution to the debate on the Postal Services Act 2000 in which he made it clear that he had long argued from Liberal Democrat Benches

It ill behoves the hon. Gentleman to suggest that it is inappropriate for Post Office Counters Ltd. and independent banks to engage in commercial negotiations on decisions about ATMs. I have some sympathy with his point, however.

More than 3,000 post offices closed between 1978 and 1997. During the 1990s, the number of post offices declined by 10 per cent. By way of comparison, banks and building societies declined in the same 10-year period by 25 per cent. and the number of petrol stations declined by 30 per cent. It was therefore vital after those decades when the Post Office was a neglected national resource to develop a strategy and an action plan to secure the future of the post office network, which I believe we all want to see. That is why, in October 1999, my right hon. Friend the Prime Minister asked the Cabinet Office performance and innovation unit to develop the strategy that we are discussing. The specific challenge for the report was to consider how best to harness the full potential of the network to ensure a viable and vibrant future for the network.

In response to the statement to the House on 28 June 2000 that marked the publication of the PIU report, the hon. Member for Twickenham was kind enough to welcome it, and he acknowledged:

The report made 24 recommendations and the Government accepted each of them. Working closely with the Post Office and the National Federation of Sub-Postmasters, we are implementing those measures as we advance our goal of ensuring the future of the national network.

Dr. John Pugh (Southport): I have an advantage because I have a Labour party briefing prepared by the

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Secretary of State for Trade and Industry, which says that it is the Government's desire to create bigger, better post offices. Does the Minister agree that there is some confusion in that statement? Bigger is not necessarily better because it may be more remote and anonymous with longer queues.

Mr. Alexander: The no doubt well-written briefing was making a serious point. Some urban post offices face a challenge fundamentally different from that facing rural post offices. The nature of the challenge in a rural community where the post office is perhaps the last retail outlet in a village is fundamentally different from the plethora of retail outlets available on an urban high street. It is therefore particularly important that we ensure that the retailing experience of people who visit post offices in the urban network is outstanding. Frankly, judging from many of our own constituency experiences, it would be fair to say that the urban network has not kept pace with many other retail networks in ensuring exactly such an experience.

Simon Hughes: I accept what the Minister says, and that is the experience of many of us and of our constituents. Will he therefore, after the debate, consider the example that I cited to my hon. Friend the Member for Twickenham (Dr. Cable)? The local community has proposed making a branch office into a sub-office, with a local business leading. Another community, the Latin American community, and other retail businesses would be involved. However, the Post Office will not tell the proponent and the community on what grounds it is rejecting her proposal to run the business. It would be an innovative business, it stems from a desire to regenerate, and it would be a flagship for the Post Office. Yet we are told that it is unacceptable, for no published reason. Will the Minister consider that matter, because the Post Office really must do better?

Mr. Alexander: Certainly I am concerned by the example that the hon. Gentleman cites. I will be more than happy to make representations directly to the Post Office management, if information that rightfully should be shared with the community is not being shared. Only yesterday, my right hon. Friend the Secretary of State made clear in a newspaper article our ambition to see exactly that kind of innovative solution being devised to address the needs of the modern network.

Perhaps I could focus the debate by moving it on from the issue of spending, which I shall return to when I deal with the specific points raised. Alongside the commitment of resources, £270 million, we have in recent months moved decisively to strengthen the management of Consignia. As is well known, in March, the Secretary of State announced that Allan Leighton had been appointed the new chair of Consignia. He is now responsible for driving forward the management strategy to meet the challenges of stemming the company's losses, reforming its industrial relations and developing its strategy to strengthen and sustain the network. As a former chief executive of Asda, Allan Leighton has the proven track record of success in business that I think will find favour with the Post Office. He has the determination, drive and energy needed to transform the management of the Post Office. As the interim chair and a non-executive director of the company, he has seen at first hand many of the challenges that it faces.

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In addition, last month we appointed David Mills to the newly created post of CEO of Post Office Counters Ltd., with a seat on the board of Consignia Holdings. He joins the network from HSBC, where he was general manager of personal banking. For far too long, the network's management failed fully to realise the commercial and retailing opportunities offered by the reach of the country's largest retail network.

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