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Dr. Cable: I agree that we should put conspiracies behind us. Do I take the Minister's endorsement as an indication that the Leicester pilot study will now be rolled out across the country?

Mr. Alexander: I make it clear to the House that, consistent with remarks I made in the Adjournment debate on 18 December 2001, the evaluation will be completed by June. Given all the complaints that I have heard from Liberal Democrats today about the need for effective project management, it would be irresponsible to prejudge exactly the kind of evaluation that was absent from the horizon project for all those years, causing such profound and real problems. A full and robust evaluation of the pilot outcomes is necessary to inform future planning for the network. Given that a range of departments and organisations are involved, and that they would pay for the national service, the decision must, by definition, be made collectively. Unlike the Liberal Democrats, I would argue that full evaluation in line with best practice, project management and public procurement cannot be rushed. There are rules to which we must adhere for any major project of this kind.

Let me deal now with the points raised by the hon. Member for Twickenham and set out how the management of Post Office Ltd. will drive forward innovations necessary for the network. The hon. Gentleman spoke at some length about banking. Universal banking services, together with the Post Office's plans for an expansion of network banking—the provision of counter services for ordinary current accounts—should lead to a substantial increase in the range and volume of banking at post offices, tapping into a much larger customer base than benefit recipients alone. David Mills' long experience in the banking sector equips him well to lead those developments.

The trend for existing network banking already shows strong growth. Excluding Alliance and Leicester's post office business, the average daily number of transactions grew from under 20,000 in April 2000 to more than 40,000 at the end of 2001–02.

Mr. Weir: Will the Minister give way?

Mr. Alexander: I am keen to make some progress.

Management is also keen to provide new financial services, such as household insurance, which proved a huge success in a recent pilot project. The Post Office management sees this as only the start and is in discussions with all the major banks to expand and improve the network banking services.

On the specific issue of universal banking services, progress is being made and the work is being taken forward for their introduction next year when the migration of benefit payments to ACT is scheduled to begin. The Department for Work and Pensions, given its key role in delivering pensions and benefits, is co-ordinating the work to modernise the payment of

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pensions and benefits along with the introduction of banking services through post offices. The Department of Trade and Industry continues to be responsible for progressing the universal bank project in relation to the post office network and the DWP for the benefits being paid efficiently.

The Department for Work and Pensions, together with the Inland Revenue and the Northern Ireland Social Security Agency, is now finalising contractual terms with the Post Office for provision of the post office card account. All the major banks have agreed to make their own basic bank accounts accessible at post offices. Of course, that agreement is now subject to detailed commercial negotiations between the Post Office Ltd. and the banks about wider access to their bank accounts.

The hon. Member for Twickenham mentioned yesterday's Treasury Committee hearing. It is at least worthy of note that the chief executives of the big four banks—Matthew Barratt of Barclays, Bill Doulton of HSBC, Peter Ellwood of Lloyds TSB and Fred Goodwin of the Royal Bank of Scotland, who hails from my part of the world in Paisley—gave evidence to the Committee. According to press reports, their evidence affirmed those banks' commitment to offering basic bank accounts and providing funding for universal banking services. With respect, I suggest that the hon. Gentleman read the transcript when it becomes available, given the anxiety that he has expressed about the banks' commitment to the project.

Mr. Waterson: I thank the Minister for giving way; he has been generous in doing so. Will he confirm that his Department now has a policy of so-called actively managed choice? What does that mean?

Mr. Alexander: The hon. Gentleman anticipates the point that I was about to make. Simultaneously with the commercial negotiations that are being taken forward with the major banks, the Government are now developing a detailed migration and marketing strategy for the transition to ACT. The emphasis of the ACT migration and marketing strategy will be to ensure that each customer has the best account for his or her circumstances. Conventional and basic bank accounts offer more services and do not have the limitations of a post office card account, so they are likely to be the best option for certain people.

Our operational assumption as we progress universal banking services—the hon. Member for Twickenham alluded to this point—is that about 3 million benefit and tax credit recipients will open a post office card account, but I reiterate that there will be no cap on numbers or eligibility criteria for such an account. The choice of 3 million people as our operating assumption reflects the fact that that is broadly the number of current benefit claimants who are without a bank account that is capable of receiving payments by ACT. I know that a number of points have been made about that issue, but it is worth pointing out that, in accordance with our desire to advance social inclusion, we are keen for people to move from a sector that is unbanked and into the banking sector so that they can enjoy the other benefits that currently fall only to people in that sector.

I regret that the hon. Member for Twickenham talked down the urban post office network. In preparing for this debate, I noted that he was quoted on 17 December in

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The Birmingham Post as asserting without any apparent evidence that there was a serious threat to basic services such as house-to-house delivery, the uniform tariff throughout the UK and the network of sub-post offices. Those remarks strike a very clear contrast with the words of Colin Baker, general secretary of the National Federation of Sub-Postmasters, who dismissed as "rubbish" recent newspaper reports of mass post office closures. Regrettably, such newspaper reports appear to be precisely those on which the hon. Gentleman relied for his speech.

Mr. Paul Marsden (Shrewsbury and Atcham): A terrible smell is emanating from the Labour Front Bench this afternoon—that of hypocrisy. Back in 1997, the Minister and I campaigned to prevent the Tories' proposed privatisation from going ahead. Some 4,000 post offices had closed. Under Labour, 1,405 post offices have already closed in five years and there are 3,000 more to go. How on earth can he justify that? He should intercede and start to bat for rural communities and the post offices that are closing all the time.

Mr. Alexander: As the hon. Gentleman's Front-Bench colleague was generous enough to recognise, we took specific steps that were consistent with the PIU report to advance the sustainability of the rural network. That is why rural transfer advisers are working throughout the country where there is a threat to such a post office. It is also exactly why we have established the £2 million fund that I shall happily talk about later and strengthened the management as necessary to provide exactly the retailing opportunities that we need. I give greater credence to the further remarks of Colin Baker, who said:

He went on to say:

I fear that that is exactly the sort of panic that the Liberals seek to stimulate. There may be mergers or relocations of branches as a result of the progress that is being made—that will allow sub-postmasters to invest in exactly the kind of improved services for urban areas that I mentioned—but only in urban and suburban areas that are densely populated with post offices and are experiencing duplication of services. In fact, as a serious contribution to the debate, the PIU strategy identified particular needs of the network in both rural and urban areas.

The rural post office network had been slowly contracting for the previous 20 years. The Government are committed to ensuring that it is maintained. The importance of rural post offices cannot be underestimated. Often, they are the last remaining local shop, providing a vital service and acting as a focal point for the local community, as I said in response to the remarks made by the hon. Member for Southwark, North and Bermondsey (Simon Hughes). To protect rural post offices, the Government placed a formal requirement on the Post Office to maintain the rural network and to prevent any avoidable closures of rural post offices. However, despite their best endeavours—it is important to be clear about this with the House—neither the Government nor the Post Office can guarantee that no post offices will ever close.

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Even the Liberal Democrats would think twice before making such a commitment. It very much depends on the local community that is using the facility and the willingness of a sub-postmaster to continue to run the business or to achieve its sale on the basis of its being a going concern.

The hon. Member for Twickenham asked about the £2 million fund to support volunteer or community initiatives, and I am happy to give him the information he seeks. I have to say that the thinking behind that scheme gave me concern, on the basis of the point raised by the hon. Member for Southwark, North and Bermondsey. The fund was established to maintain or reopen rural post office facilities. Let me give the latest figures. At the end of April this year, 88 applications had been submitted. Of those, 46 grants to a total value of £390,000 have been approved. The fund is expected to provide the impetus for maintaining or reopening up to 200 offices nationwide over a two-year period.

I point out to hon. Members that, in direct contrast to the uniformly bleak picture painted by the Liberal Democrats, over the last financial year from March 2001–02 there has been a significant and welcome reduction in the number of closures. In the year to the end of March 2002, there were 262 net closures, compared with 547 in the previous year.

The Government recognise that it is not just in rural areas that post offices play an important community role. We want to maintain convenient access and to improve the quality of post offices in our towns and cities, as well as in the countryside. Under pressure from the changes in the pattern of retailing that I described, the quality of many post offices and associated retail businesses has declined in urban areas over recent years. I am sure that that point will be well taken by many hon. Members in relation to their experience in their constituencies. We believe that the best way to address that is for the Post Office to work closely with the National Federation of Sub-Postmasters to reverse the years of underinvestment, as the PIU recommended.

The hon. Member for Twickenham asked about the urban reinvention programme. The purpose of that programme is to ensure that there are post offices equipped to offer the quality of services that customers need in the right locations to serve urban communities, where at present some two thirds of the population live within half a mile of two or more post offices. Indeed, in some areas there can be up to eight to 10 post offices within a single square mile, some located within a few hundred yards of each other.

I first inform the hon. Gentleman that the programme has not yet started. Decisions on individual offices will be based on detailed, local studies, the preferences of the sub-postmasters concerned and the outcome of consultation with Postwatch and those sub-postmasters. I should add that the programme will be carefully tailored to the circumstances of each locality to ensure that post offices meet the high expectations of customers and that they are in the right locations for their communities. Special provision to sustain and improve vulnerable offices in deprived urban areas is being made under a separate fund operated by the Department for Transport, Local Government and the Regions. Funding for the programme is subject to approval under European state

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aid rules and scrutiny by Parliament. Indeed, before the programme starts there will be the opportunity for Parliament to debate it.

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