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Session 2001- 02
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Delegated Legislation Committee Debates

Draft Sub-Post Office Start-Up Capital Subsidy Scheme Order 2001

Second Standing Committee on Delegated Legislation

Monday 9 July 2001

[Mr. Bill O'Brien in the Chair]

Draft Sub-Post Office Start-Up Capital Subsidy Scheme Order 2001

Mr. Tony Colman (Putney): On a point of order, Mr. O'Brien. I welcome you to the Chair. Is it in order for hon. Members to divest themselves of their jackets?

The Chairman: Indeed. Hon. Members may remove their jackets if they so wish.

4.30 pm

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): I beg to move,

    That the Committee has considered the draft Sub-Post Office Start-Up Capital Subsidy Scheme Order 2001.

It is a pleasure to be here to speak to the draft order, which was laid before the House on 22 June. I am particularly pleased that one of my first parliamentary duties as the Minister responsible for the Post Office Group—or Consignia as it is now known—is to speak to the draft order, which represents another important step in delivering a package of support for the post office network.

As Committee members will be aware, the network of sub-post offices plays a vital role in our society. Many vulnerable and elderly people rely on it to deliver services to them, and it is a convenient place for the whole community to access Government services, financial products and, of course, postal services. I have always been struck by how valued the network is. That has been brought home to me since I became a Minister. It is much more than just a retail outlet, especially in rural areas. A local sub-post office represents vital human contact for many customers. Sub-postmasters know their clients by name and are often first to raise the alarm if an elderly customer fails to collect his or her pension. They are a trusted point of contact with the Government. In addition, a post office is often the only place where a community can easily access cash. I am sure that hon. Members on both sides of the Committee will want to join me in placing on the record our thanks for the work undertaken by sub-postmasters.

The post office network has been built on the dedication of individuals, yet ironically that can also be one of its weaknesses. When a sub-postmaster decides to retire, Consignia must find another person to take on the business; a new sub-postmaster must be found. I am glad that Consignia has begun to make setting up as a sub-postmaster more attractive, for example, by dropping the initial payment that sub-postmasters were required to provide before taking on an office.

The Government are committed to ensuring that the network is a viable business and that running a sub-post office is and remains an attractive business proposition. For example, new life will be injected into the network through two new business streams identified following last year's performance and innovation unit report: universal banking services and the Government general practitioner scheme. The GGP will be piloted from this month in Leicestershire and Rutland. A further range of new services, including access to stakeholder pensions and entering the fast-growing market for e-retailing and home shopping, will be added to that.

The Government are recognising the transitional period faced by the network by introducing three support schemes to help post offices through that difficult time. One scheme will implement the PIU recommendation that there should be better, brighter offices in urban and suburban areas. Another will provide transitional funding to cover the gap between the payment of benefits direct to bank accounts—automated credit transfer—and new income streams coming fully on-line. The third scheme is the subject of the draft order.

It is not always the case that someone can be found to be a new sub-postmaster, and the existing premises used as the post office. Sometimes, although someone might be willing to become a sub-postmaster or a group of volunteers might want to preserve an important local service, the facility to do so might not be available. Retiring sub-postmasters may not wish to make their premises available. If they do, alterations may be required to separate living and retail accommodation. Alternative premises, such as a church or community hall, may be available, but may need to be made more suitable, for example, by upgrading security.

Post Office Counters Ltd. has an established team dedicated to preventing the closure of rural sub-post offices. It is often frustrated to see a worthwhile and well thought out community initiative to save a post office fall at the last hurdle for the sake of a relatively small amount of start-up capital funding. Perhaps a few thousand pounds is needed to improve security or access to the premises or to install a counter. Those small sums can seem like a mountain to climb to a small community seeking to raise funds voluntarily. The plans are put on hold and, ultimately, the community loses its post office.

The draft scheme deals with that problem. It will make funding available for the preservation of existing post offices in rural areas or for their replacements. The scheme was first announced by my hon. Friend the Member for Hull, West and Hessle (Alan Johnson) on 15 February 2001. Following the announcement, my Department wrote to all 12,000 parish and community councils throughout the country to draw their attention to the fact that we planned to make the funding available. The response has been very encouraging. We have received many expressions of interest, and a number of specific suggestions about how the money could be spent locally. Consignia has already signalled that it is prepared to fund two local schemes where the need was particularly urgent, on the understanding that the Government were bringing forward this draft order.

Before I give details about how the scheme will work, I think that it would be helpful to illustrate some situations in which communities may benefit from the fund. In Gwaelod-y-garth—I have been practising saying that all day—in Wales, the local sub-postmistress had wanted to close her business and retire, but no one was willing to continue it. The local community was concerned about that and, encouraged by them, the sub-postmistress offered to run the post office on a reduced basis as a community service. Consignia met the £2,000 cost that was necessary to adapt the office for that purpose, and the village has been able to keep its post office.

A further candidate for funding is Capel le Ferne in Kent, where the community wants to re-establish its post office in the village hall. Modifications are planned to improve access and security and to extend the hall, and the villagers have raised £3,000 towards those costs with a buy a brick campaign. The local authority has also promised to give assistance. However, a gap remains that the scheme should be able to fill.

Aside from those two examples, we have received hundreds of expressions of interest from parish councils and local communities throughout the country. Villagers in Pershore in Worcestershire want to run a post office from the community hall and have raised funds for the building work, although they need more for security. On the Isle of Skye, a shop keeper is willing to take on a retiring sub-postmaster's role, but will need to modify his premises. In Barrow Gurney in Somerset, a community action group has obtained the use of a local hall, but needs funds to make that suitable as a post office. Clearly, such proposals must be evaluated against the criteria of the scheme, but they illustrate the need for the support that the order will provide.

I turn to the detail of the scheme. It is established under section 103 of the Postal Services Act 2000, which allows the Secretary of State to make a scheme for the making of payments for the purpose of

    ``assisting in the provision of public post offices''.

The scheme will establish a £2 million fund to make subsidy available in respect of the costs of establishing a sub-post office in settlements with fewer than 10,000 inhabitants where an existing sub-post office has recently closed or is likely to close. We used the Countryside Agency's definition of a rural settlement, which was also used by the PIU last year. We have deliberately targeted rural settlements because the loss of a sub-post office in those settlements has the greatest impact on the community, and it is where a convenient alternative is often unavailable. The new commitment underpins the PIU's conclusion that the Government should place a formal requirement on the Post Office to maintain the rural network. We have done that, and the scheme backs up that policy with carefully targeted capital funding.

We have worked closely with Post Office Counters Ltd., the National Federation of Sub-Postmasters, Postcomm, and Postwatch, and the devolved Administrations have been involved in the development of the proposals to ensure that the scheme effectively targets deserving cases.

The scheme provides for a subsidy of up to £20,000 to be paid for any particular case. The Post Office advises us that, in many cases, the amount needed to save a post office is very small. We expect that the fund will help to secure the future of up to 2,000 community-based sub-post offices. It is not intended to be an on-going source of funding. It is part of a package to assist the network until the longer-term finances of the network are in place, with new income from universal banking services, the Government general practitioner scheme, other income streams and a framework for Government funding of the rural network. It is essential that the scheme dovetails with existing arrangements within Post Office Counters Ltd. to preserve the rural network. The business has appointed a senior manager to oversee the work and has established a dedicated team of rural transfer advisers. That is why we have proposed that Post Office Counters Ltd. should administer the scheme on our behalf. Subject to the agreement of the Committee and another place to establish the scheme, the Secretary of State will write to Post Office Counters Ltd. to appoint the company to operate the scheme and to set out in detail how the scheme is to be run.

Post Office procedures for seeking a replacement sub-postmaster are well established and documented in a code of practice agreed with the postal services consumer council, Postwatch. The scheme before the Committee integrates with those processes, so potential new sub-postmasters will be able to liase with a single unit in the company, rather than be passed around between the company and Government.

The company seeks first to find a commercial solution, advertising the post office business widely. If no candidates come forward, local authorities and community organisations are approached to see whether a community-based solution can be found. Many communities succeed not only in devising a means of saving their local post office, but in securing funding from local sources. It is important not to stifle such initiatives, so the scheme is designed as a top-up, either to make good a shortfall in funds raised from other sources or, if it is clear that the community has tried to raise funds but has not been successful, to fund the full cost of the work.

The Committee might notice that the scheme avoids pinning down in great detail the circumstances in which a payment may be made. That is intentional. Paragraph 4 sets out the circumstances that the scheme is intended to cover, but we are conscious that every case for funding will be different, and have sought to avoid a scheme that inadvertently rules out a payment for a good case just because we had not thought of that particular solution in advance. Therefore, some discretion is built into the scheme in paragraph 6. It will allow those on the ground to reach sensible decisions about funding on a case-by-case basis. The Post Office Counters Ltd. team that evaluates the applications will take into account attempts to raise funding from other sources, value for money and the proximity and convenience of alternative post office facilities.

The scheme is a key element in our strategy to support the network of rural sub-post offices through a transitional period and to help it thrive. Rural communities will be able to save their local post offices or make alternative arrangements. More than that, the scheme recognises the vital role that the network of sub-post offices plays in communities throughout the country.

Therefore, I commend the draft order to the Committee. In doing so, I understand that it is the practice for a Minister inviting Parliament to approve a draft statutory instrument to volunteer a view regarding its compatibility with the convention rights as defined in section 1 of the Human Rights Act 1998. In my view, the provisions of the draft order are compatible with the convention rights.

I hope that all members of the Committee will give the draft order and post offices in rural communities across the country their support.

4.42 pm


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Prepared 9 July 2001