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Mr. David Heath (Somerton and Frome): I am delighted to have the opportunity to raise this issue. I am slightly surprised to find that this is the first such opportunity in this Parliament, if only because in the last Parliament the topic seemed to recur with alarming regularity, and hardly surprisingly, because of the great anxiety felt by hon. Members of all parties about the potential loss of the sub-post office network.
We know that post office closures are not a new phenomenon and have been happening over a long period, but an acceleration followed the Government's ill-judged announcements on automated credit transfer, which had a significant effect on people's decisions about whether their businesses could remain viable.
During the last Parliament, about a year and a half ago, significant anxiety was expressed about the future of the post office network. In April 2000, the National Federation of SubPostmasters organised a fantastic rally, which I was happy to attend, just across the road, in Methodist Central Hall. The message from that meeting was how worried people were, to the point at which the Prime Minister himself realised that the game was up and something had to be done. Petitions were organised throughout the country. In my region, the Western Daily Press accumulated more than 1 million signatures to express people's anxiety at what was happening to the post office network.
The response was belated, but when it came it was welcome. It took the form of the performance and innovation unit report, which contained several proposals to maintain the post office network. One of the most important was the concept of a universal bank that would deal directly with social and financial exclusion and, it was hoped, provide a stream of revenue to enable smaller post offices to continue.
In addition to the universal bank, a measure of protection was introduced through the Postal Services Act 2000, and the past 12 months have brought the advent of new technology in our post offices, such as the Horizon system, which is now in place. That welcome raft of Government proposals did a great deal to allay the worst of people's fears about what was happening to the post office network. People took the proposals at face value and realised that if they all came to fruition there was the prospect of maintaining a viable network. It is no disparagement to the Minister responding to today's debate to note that many people were also persuaded by the transparent energy and enthusiasm of the previous Minister, now the Minister for Employment and the Regions, whose clear commitment to the Post Office was obvious in all his dealings with the matter.
What has disappointed many people, and certainly me, is that it has all gone very quiet since the election. There has been a paucity of announcements from the Government on the situation, and little progress has been made in terms of setting up the universal bank, which is supposed to be coming into operation in 2003. That is a clear deadline, but I detect no urgency on the part of Government, and there has been no substantive progressbut perhaps we will hear different when the Minister replies.
It is of even greater concern that despite all the assurances, and the framework that the Government have acclaimed, the problem remains: many sub-post offices are still being closed throughout the country. I heard with amazement the Minister of State, Scotland Office, saying yesterday that there were no closures in his constituency and everything was fine. That is all hunky-dory for his constituency, although it does not accord with the experience of many other hon. Members. Indeed, a parliamentary reply earlier this year showed that, in the financial year up to March 2001, no fewer than 547 post offices closed. That is a significant number, and it should be a matter of alarm.
That view was reinforced yesterday, as a pure happenstance, by the Countryside Agency report, with which I am sure the Minister will be familiar. It singles out post offices as the service in rural areas that is still showing decline, while in other areas there seems to have been a reversal of decline. In a press release to accompany the report, the deputy chairman of the Countryside Agency says:
What is the motor for those closures? Part of it is purely demographica continuation of what has happened previously. Much of it, however, is due to the uncertainty about the future of the universal bank and the post office network, which the Government have allowed to continue. When there is uncertainty, people cannot produce viable plans to take on new business or maintain their current business through bank borrowings or other means. Without the confidence of a guaranteed revenue stream in the future that will make businesses viable, closures will follow, irrespective of the good intentions of the Government or anyone else, and local communities will be damaged.
It will be not only rural communities that are damagedI represent a rural area and feel passionately about services in our villagesbut urban and suburban communities. Many of the losses in recent years have been on the edge of towns and in the poorer areas of towns and cities, which is equally worrying for those who depend on such post offices. The people about whom we should care most are those vulnerable individuals who may be dependent on benefits and pensions, and who rely on their local post office for the cash in their hand each week. Such people budget week to weekthis is something that Ministers sometimes forgetin terms not of a monthly cheque that goes into a bank account, but in terms of the cash that they have in their hand, which they need to spend to keep body and soul together. It is desperately important to them that they can continue to draw money over the post office counter, and that it is close and available to them in their local communities.
I wish to ask a series of questions. If the Minister is able to answer them, some of the concerns that have been expressed might melt away. First, who is running the show? That is a fundamental question for the Government to answer. I am unclear about who is responsible for establishing the universal bank and for maintaining the post office network. It is clear that the Minister's Department still has a role as the sponsoring Department. Indeed, I understand that the budget still
I seek clarification about the specific responsibilities of the Department for Work and Pensions, the Department of Trade and Industry and the Treasurywhich is the unseen force hereand about how their activities interact.
My second question is, when will the protracted negotiations to set up the universal bank reach a clear conclusion? Although 2003 is fast approaching, we do not yet know what form that bank will have, and we have not received detailed information about the services that it will provide. However, we have heard clear intentions about those services. Several clearing banks and other financial institutions have regularly entered the discussions about the project: sometimes they have expressed their determination to make it work, but at other times they have sounded distinctly lukewarm about it. We need to know when there will be clarity about the matter. When will the financial negotiations for setting up the bank conclude, and when will we learn of their outcome?
Thirdly, how will the universal bank work? That question raises a specific problem: if the bank is to do what many hon. Membersand postmasterswish, which is to provide over-the-counter services to the millions of people who take their benefits or pensions in cash, there will need to be a substantial commitment to the basic Post Office account, the third tier of financial transaction available in post offices. All of the surveys that have been conducted prove that those millions of customers will not be attracted by the offer of a basic bank account through the Post Office, or by using their post office to operate a bank account that has been opened elsewhere. The Post Office basic account is crucial to future operation. I have heard estimates that 5 or 6 million people ought to be using that form of transaction, yet we are also authoritatively informed that the Treasury believe that that figure should be no more than 2 million. The Minister will be able to tell me whether that is true.
I also want the Minister to tell me whether there is to be a cap on the number of Post Office basic accounts. If there is, how will it operate? Will the Government fund only up to 2 million accounts, beyond which the Post Office will be on its own in financing the transactions? That would put a huge financial burden on the Post Office and undermine the operation's purpose. Will the cap be on individual post offices, so that the number of transactions for which they will be reimbursed is limited? Again in that case, the burden and risk fall on individual post offices.
If neither of those mechanisms is used, how will the cap be applied? If there is to be a cap, how will that affect post offices that serve the least well-off areas? It is easy to see that once there is a universal bank in a more
My fourth question is: when will we see investment by the national post office network in information technology that is connected to the local Horizon IT in sub-post offices, so that it can be used to its full potential? Currently, we have the nonsense that the average post office has a wonderful piece of kit on its counter that could enable it to do much, but most of the operations cannot be done because the next tier up is not available; the Government have not clarified their intentions. When will we have the necessary investment that will repay the investment of local post offices to provide a wider range of services?
My fifth question is very easy and the Minister can place the answer in the Library this afternoon. Will he identify the network of rural post offices that the Government intend to save? I believehe can correct me if I am wrongthat that information is not yet available. The matter has been raised in parliamentary questions and Ministers have replied that there are 9,000 such post offices and therefore too many to list. It is not too many to list and many people would be interested to know the strategically important rural post offices that the Government intend to preserve. If we knew that, we would be in a better position to assist our constituents.
I turn to my sixth question. The Post Office has run an innovative pilot scheme in Leicestershire, the your guide scheme. That extends the concept of the general practitioner role of the Post Office. I do not come from Leicestershire, but I am told that the scheme has been well received and that people are keen on it. If that is so, why are we not quickly extending the pilot scheme to bring more post offices into its ambit? If a scheme is successful, we must share that success. It would send an excellent signal to people who are wrestling with business decisions about their individual post office. They would be shown that on its way was a lifeline that gave them an enhanced role.
That is precisely what we are looking for and the Minister could, if he wished, confirm that that is happening. What we need, but more importantly what the post office network and its customers need, is some clarity and commitment to build confidence that the things that are being discussed are actually happening.
The Government may feel that the issue is old and belongs to the previous Parliament. They may feel that it was a good issue before the general election but that they sorted it, all has gone quiet and they are on the home straight. I assure Ministers and anyone else who is listening that that is far from the case.
If the debate serves any purpose at all, I hope that it will get some answers from the Minister. It should act as a warning to the Government that the community of interests that supports our post office network is still there and is examining carefully the Government's actions. That community is as ready to exert whatever political influence it can muster during the months and years ahead as it ever was. It will not take much to rekindle the interest that was exhibited last year. We want our post office network to survive. We feel that it serves a necessary purpose in communities up and down the country and we are impatient that the Government seem to be taking so long to deliver effective action to make that a reality.
Hywel Williams (Caernarfon): I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on securing this debate and on his speech. I have a long-standing interest in the matter, arising not least from my work as an adviser to the Select Committee on Welsh Affairs during its major investigation into social exclusion in Wales, the results of which were published in a report last year.
I would like to speak briefly about the context in Wales. There are many negative features, such as the recently announced reduction in the number of collections in rural areas to one a day. In my constituency, the reduction in the hours of service provided to the public by local post offices is something that the organisation has refused to change its mind about. The centralisation of sorting in my part of rural Wales is a problem. For example, there is the ludicrous situation where a letter sent from Rhoshirwaun to Rhiw on the Llyn peninsula, a matter of a few miles, is taken to Chester to be sorted, sometimes taking many days to return, even with a first-class stamp. Another aspect, which has already been referred to, is the automated transfer of pensions and benefits.
Since my election in June, a number of further difficulties have emerged, such as the recruiting of sub-postmasters in my constituency. It is extremely difficult to recruit people who are ready to take on such work. In evidence given to the Welsh Affairs Committee on 4 July, the Post Office said that small rural post offices have an income of perhaps only £3,000 to £4,000 per annum, and that income is fixed. Small, full-time post offices in rural areas pay only £7,000 to £8,000 a year for a 40-hour week. As was confirmed to the Committee, that was roughly the minimum wage at the time. I do not think that that is enough for such responsible work and the National Federation of SubPostmasters agrees.
It was confirmed that, in three quarters of the Welsh constituencies, more than 50 per cent. of sub-post offices rely on benefit payments for a significant proportion of their business. Those sub-post offices are important to rural communities in Wales, but there have been closures, as the hon. Member for Somerton and Frome said. Between 1995 and 2000 there were 150 closures in Wales. In 1999 there were 10 closures. In 2000 there were 40the rate is accelerating.
Sub-post offices perform a variety of vital functions. They are sources of Government information and are a vital feature of rural Welsh community life. One of the first films made in Welsh, "Y Noson Lawen", featuring
Before we become too charmed by a rose cottage view of rural life, let me emphasise that Welsh rural communities are under threat from well-known sources. The crisis in agriculture, the lack of alternative job opportunities, the sky-high house pricesmy area has both low incomes and some of the highest house prices in Wales, much more than three times local average incomeand the closure of local facilities all lead to the migration of young, energetic and talented people. In that situation, sub-post offices are vital. Each is an indicator of the vitality of its local community and one of its chief supporters. People who need and can only afford basic financial services and those who cannot travel to larger population centres need their services.
The members of the Welsh Affairs Committee were concerned about the lack of understanding of the geography of rural Wales. One of the banks giving evidence said that it was closing a branch but that it had another only four miles away. However, that was as the crow flies. On the ground, it was up and down several mountains and valleysthe journey would, apparently, have taken all day. When the Post Office was asked about its system of measuring distances between sub-post offices, it confirmed that that, too, was as the crow flies. Crows are crows and people are people, and people cannot fly. Sub-post offices need the certainty of a secure and prosperous future. They need to become one-stop shops for many services including, as the hon. Member for Somerton and Frome said, the universal bank.
Some sub-post offices in rural Wales are community co-operatives. Some of them do well enough, but they do so thanks to the intense support and effort of the local community. Others are small businesses run by hard-working couples. They are finding it difficult. There are particular circumstances in Wales, and those circumstances are best addressed in Wales. In a debate on sub-post offices in the National Assembly for Wales on 24 May 2000, Peter Law, then the Labour Local Government Secretary, said, rather despairingly:
Mr. Nigel Evans (Ribble Valley): This is an important matter and I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on securing the debate. I am grateful for the opportunity to participate. I also congratulate the hon. Member for Caernarfon (Hywel Williams) on his contribution. I was interested in what he said about the Post Office's guidance on closures and the fact that it measures distance as the crow flies. I thought that perhaps there was to be a back-door reintroduction of the pigeon post. However, crows are crows, pigeons are pigeons and people are people.
I have been a Member of Parliament since 1992 and have participated in a number of debates on the Post Office. There were closures soon after I was elected. I remember the chorus from the then Labour Opposition, saying that that was despicable, that post
I imagine that the job description would put people off going into the business. It would refer to long or, indeed, very short hours. Irrespective of that, it would offer low pay and enormous responsibility, yet require the ability to risk one's own money in the venture with the possibility of only a small profit at the end. Running a sub-post office, particularly in a rural area, is a vocation more than a job, and some people will do it irrespective of the returns. The challenge for the Government is to make it more attractive so that more people will want to do it. Many post offices are marginal businesses: they run at small rates of profit and would make no money at all but for the fact that they are usually allied to another business of sorts, such as a grocery business. One postmaster told me that the Post Office salary used to subsidise the other business, and it is incredibly worrying that the situation is now the other way round.
There have been post office closures in my constituency, which is very rural. There are more than 30 villages, most of which had post offices. The Post Office said that it would have kept the Stonyhurst post office open, but that no one could be found to run it. That is part of the problem: who would sacrifice their money and time given that job description? People must also invest in the building, and, as the hon. Member for Caernarfon said, the cost in some villages is disproportionate. Any sane person who had worked out the mathematics before interest rates became what they are would have found that they could earn more by investing their money in the bank than by buying a building and operating a business from it.
The suburban Barracks post office in Fulwood recently closed. I was told that it was difficult to find anyone to buy the building and open it as a business, but that people could goalthough not quite as the crow fliesto a supermarket nearby. Many elderly people who rely on post offices in their villages and communities do not find it easy to get around. It is easy for those who have a car to go to out-of-town shopping centres or to large shopping centres in towns, but those who do not will have enormous difficulties if public transport is poor, as it tends to be in many rural areas.
Post offices in rural areas are a social service and a lifeline for many elderly people. One postmaster gives out pensions on a certain day, but will knock on the doors of pensioners who do not come to collect theirs to make sure that things are okay. What other business does that? The postmaster and postmistress in many rural post offices are a husband-and-wife team and very much part of their community, which they love.
The presence of the post office means that a village is alivethere is lifeblood and a centre of activity. If it closes, there is the risk of the village dying, as we have seen with the disappearance of village schools and shops. For many reasons, the village post office tends to be the last shop to survive, but it is under threat.
Every year, I make a summer tour of my constituency, visiting every village in a week. I always take the time to go to the post offices and speak to the postmaster and postmistress. They know everything that goes on and can tell me if there are problems and suggest what approach we should be taking in Parliament. I spoke with three such people this morning. They provided three short histories of an aspect of the problem.
A lady called Olga Leach runs the Bolton-by-Bowland post officeand will do until the end of the week. She has been a postmistress for 19 and a half years and is retiring. I suspect that if it were not for the fact that the job is not as attractive as it used to be, Olga would carry on. The village is lovely and she will stay there, but she is getting out of the post office business. She found it difficult to sell the business, but has managed it now. One of her great concerns was that the job was poorly paid. That is certainly the case in some small rural areas, which means that the work is not attractive. Often Olga would pay out more in one social security payment than she received for running the post office that week. I think that in that position I might find my morale was sapped.
Olga also runs a cafe, and, of course, in a rural area, such businesses have been kicked by foot and mouth, because tourism has dried up. That is a double agony for rural post offices that have relied on tourism. She sells groceries and newspapers as well. She has no complaints about the extent to which the villagers use the post office. She is grateful for the support that she gets, but she believes that the Government should re-examine the matter of advertising. An advertising campaign could educate people about the advantages of shopping at the post office where there is other business. That would ensure that the post office was profitable and could survive.
If the post office were to be lost and turned into a houselike, no doubt, many in the past 10 yearspeople would have to travel, and the elderly would be placed at a disadvantage. Running a post office entails enormous responsibility. I imagine that it is only when the shop door closes that some of the real work beginsthe paperwork that is essential to its efficient running.
I spoke next to the postmaster at Chatburn, who has run his post office for six years. He believes that the post office side of the business should be expanded, enabling all post offices, wherever they are, to offer all services, including providing car tax discs. Some rural post offices would like that opportunity.
The postmaster also wanted more advice and support on the business side. I know that the Countryside Agency gives some support. Small sums are involved, but the business in question is supposed to find 50 per cent., and it is difficult for a marginal business that does not make much money to find £5,000. Banks will not lend to a business that is not making a profit, with no
Chipping is another village in my constituency. I spoke to Andrea Cawley today, who, with her husband, has run the post office there for 18 months. They are new to the business and very young. David is about to go on a 460 km bike ride in Vietnam on behalf of MIND. I think that that is typical of people who run post offices: they tend to be enormously charitable with their time. They are community-based people. To do that on behalf of a local charity is superb and I wish him well. Andrea meanwhile will carry on running the post office when he is awayI will not say away enjoying himself. When I asked her what the one thing was that she wanted the Government to do to help her business, she said that she would like a grant to do up the post office and make it more attractive to customers. She mentioned the security aspect too, and said that if she had to upgrade the security in her post office, she was expected to pay. In this day and age, sadly, we must ensure that post offices even in small villages are properly secure and that the people who work in them feel safe.
Will the Minister consider ways in which we can sell post offices more readily? In Pendleton, my own village, the Swan with Two Necks pub acts as the post office and opens in the morning on certain days. Christine, the postmistress, serves the customers with pensions and stamps and is dedicated to the service of the village. If that service were taken away, people would have to travel to Clitheroe, which may not sound a long distance but would be an enormous burden for some elderly people.
Another example is the village of Slaidburn, where the post office closed because it could not make any money, when the postmaster's wife died and he decided that he wanted to retire. It is difficult to find someone to come to a place like Slaidburn to open a post office as a going concerna traditional post office with a few goods on the side. The village shop was not making much money either, so the two businesses have combined and one hopes that now, with the support of the community, that shop and post office will make a go of it.
Some things became clear from my discussions with postmasters and postmistresses: the long hours that they work, the marginal nature of the shops and the fact that they love their job. In the main, they want to continue doing that job, if they can. The introduction of the odd internet machine in some village post offices will not be the answer, although those post offices that could provide a lottery service might receive a boost.
I will listen with great interest to what the Minister has to say about the universal bank and how he believes it will support village post offices. He has heard several questions from hon. Members about how we might make post offices a more attractive proposition. Soothing words cannot be bankedhe must come up
Post offices, as previous speakers have said, are an integral part of our rural communities. I echo the comment made by the hon. Member for Caernarfon (Hywel Williams) about how long it takes for a letter posted in a remote rural village to get to a house in the same village. It may take several days to arrive. We need to go back to the days of the GPO, when the delivery and collection part of the business and the counters part were integrated. I do not see why a letter posted in a remote village for delivery in the same village or in another village a few miles up the road must be taken hundreds of miles to a big city to be sorted and sent back. Why cannot mail posted on an island, for example, be taken to a local sub-post office on the island and sorted into two batchesone for delivery on the island and the other for the mainland? The mail posted on the island for delivery on the island could be delivered the next day instead of in three or four days, as at present.
I give an example from Ross of Mull, a part of the country that the Minister knows well. If a letter is posted in Fionnphort with a first-class stamp to go to Bunessan, which is only a few miles up the road, the letter is put in the post office van and driven through Bunessan, possibly past the very house to which it is to be delivered. It is taken to the ferry at Craignure and crosses to Oban, whence it is carried 100 or so miles to Glasgow where it is sorted before it does the return journey to be delivered in Bunessan. Even with a first-class stamp, that takes three days. Many local businesses have important business to be transacted and legal requirements for mail to be delivered the next day. Why cannot the mail posted in Fionnphort be taken to the local sub-post office and sorted, and that which has been mailed for elsewhere on Mull collected separately and delivered the next day on Mull?
Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): I congratulate my hon. Friend the Member for Somerton and Frome (Mr. Heath) on securing an important debate. He observed that it might be the first time that we had debated the subject since the election, which is slightly alarming, as is the complete lack of any interest from Labour Members. None of them has sought to speak in the debate. They must either think that the problem has been sortedif so we wait for the Minister to tell us what he has told themor be too scared to try to defend the situation.
The hon. Member for Ribble Valley (Mr. Evans) was generous and graceful enough to concede that post offices had been a mess for some time, and that the problem had not happened since 1997. The uncertainty and worries about the future of post offices have not been resolved in the past four and a half years.
Many businesses feel extremely insecure. The balance has swung from people using their income from the post office side of the business to subsidise the rest of it to the other way round. People may have diversified into other businessesgifts and cards, for examplebut tourism has declined seriously during the past couple of years. I will not blame the Government for that, but it adds extra stresses and strains to those businesses. It means not only that continuing business security is unknown, but that the retirement of many who work in such post offices is blighted. Many who expected to have a business that they could sell on, and who live literally above the shop, now do not know whether they have a business asset or a wasting asset that they will not be able to pass on.
In July, the Minister was kind enough to meet my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and me to discuss some of our concerns. My hon. Friend was briefly in the Chamber, but has had to attend to other business. He recently received a letter from Mervyn Jones, a gentleman who is a constituent of mine but whose business is in my hon. Friend's constituency. He is the local organiser for the National Federation of SubPostmasters. His letter states that
We are talking not about the world's greediest entrepreneurs, but about people who want to make a decent return on their business and to be able to continue to provide the social services that are informally expected of them. Examples have already been given. In my home town, Innerleithen, Douglas and Ann Coulter, the local sub-postmaster and his wife, are experts in helping old people, and anyone else who comes in, to fill out difficult Government forms. They do not get paid for that, and do not expect to, but they provide a vital additional service that no one else in a rural area can.
I understand that the contractual deadline for the universal bank is the end of this year. Perhaps the Minister can update us on that, and focus on the issue raised by my hon. Friend the Member for Somerton and
The situation must be sorted out, and we need clear signposts about what is going on. The Government cannot suggest that they have not been repeatedly warned. Earlier this year, Postcom carried out a useful survey, to which I and my hon. Friends contributed, about the nature of sub-post offices around the country. Postcom paid its first visit to Scotland when it came to my constituency and that of my hon. Friend the Member for Roxburgh and Berwickshire.
Postcom's report makes it clear that the worries expressed in our part of south-east Scotland were repeated up and down the country. Time is running out. The times are desperate for sub-post offices. Sub-postmasters are not naturally demonstrative and the rally 18 months ago was a very big event for them. They do not want to have to get on to coaches and trains again and return to London, but if the Minister is unable to remove uncertainty for them, I fear that that will happen.
Sir Robert Smith (West Aberdeenshire and Kincardine): I congratulate my hon. Friend the Member for Somerton and Frome (Mr. Heath) on giving profile to this matter. I share the concern of some of my colleagues that the Government got through their first Parliament in the normal way: being seen to be active, but not yet delivering. If they do not deliver in this Parliament, they will create much cynicism and disappointment in rural areas and areas where sub-post offices are getting desperate.
I will sit down soon so that the Minister will have longer to wind up the debate, but I press him to comment on the progress that has been made on the grants scheme introduced in the summer, and how much of that money has already been allocated. Some of us are worried that the scheme is reaching its limit and needs more money to achieve its goals, as it deals with problems such as start-up costs.
I reinforce a point about which the Scotland Office showed complete complacency during yesterday's Scottish questions. I hope that that was an aberration that does not reflect collective Government responsibility, and that this Minister still has serious concerns. Ministers' reassurances, which sound great, that people will still be able to use their sub-post office to collect their benefit will be meaningless if their sub-post office is closed.
Dr. Vincent Cable (Twickenham): I echo the congratulations that have been offered to my hon. Friend the Member for Somerton and Frome (Mr. Heath) and add to his my appreciation of the Minister's predecessor, now the Minister for Employment and the Regions. He always gave the
It will be useful to reflect on the basic statistics on closures. I tabled a parliamentary question to the Minister a couple of weeks ago and he has helpfully provided the up-to-date position on the number of closures, which have steadily increased in the past five years. There were 175 in the mid-1990s, 163 in the financial year ending March 1997, when the Government took office, and 547 in the financial year ending March 2001. That is much larger than the figure recorded for any other financial year. The only figure that approaches it is 473 during the 1991-92 recession.
Why has the rate of closures accelerated? Post offices close for many reasons, including personal circumstances of the owners, such as ageing. They may want to convert their businesses to domestic use and so on. We must find the reason for the trend and why it is so heavily upward. In the early 1990s, the explanation could have been the recession and falling demand, but in the past few years the economy has been doing relatively well. The only possible explanation is the loss of confidence in the post office network resulting from the expectation that income would fall drastically in 2003 and thereafter. I can think of no other explanation, but if the Minister has one, it would be useful to know it.
The comments of my hon. Friend the Member for Argyll and Bute (Mr. Reid) prompted the thought that the problems for rural areas will not be limited to those of the post office network. Anyone who follows closely the debate on Consignia finances knows that it is in deep financial trouble. Its senior executives are openly touting the idea that they may have to cut back on the universal service obligation. If that happens, rural communities will lose not only their local sub-post offices, but access to the national service of post distribution. That would be a major crisis for rural areas, but is a subject for another debate.
I want to focus specifically on the financing of the post office network. The basic sums are that the post office network will lose around £430 million of income when ACT is introduced, plus the footfall income from that, and we must focus on how that loss will be compensated, if it is. There are three elements to the story. The first is the specific provisions that the Government proposed to help post offices on the margin that are faced with closure. I understand that a very small fund has been set aside for that purposeI believe that it is £2 million a year. Will that be increased when the system comes into operation in 2003, or is it a fixed annual sum? What will be the scale of operation of the subsidy? Can the Minister give us clearer guidelines on how it will operate? Members of Parliament will be part of the system, so it will be useful to know exactly how it will work. However, we are talking about small amounts of money.
In addition, the Government are putting approximately £15 million into inner-city refurbishment over three years, which, again, is useful but small. What will happen to those sub-post officesthey are the majorityin neither inner cities nor rural areas? For most of us who live elsewhere, sub-post offices are a critical part of the community. The message that I receive from Post Office Counters is that there will be large-scale consolidation of many suburban and urban
Potential subsidisation of the network is one component. The second is new business and there have been some imaginative and positive developments. There have been pilot schemes for Government services for general practitioners, the internet and so on. Those are valuable and innovative and I have no criticism, except to question how much additional income they will bring in. I understand that current estimates are £35 million over three years or just over £10 million a year. There is vast disparity between the £430 million that the post office network will lose and the £10 million to £15 million a year that it will receive from the two additional sources of funding.
The third and most important component is the universal bank, about which there are many unanswered questions. Whenever I ask parliamentary questions, I receive answers that are full of references to commercial confidentialityin other words, we cannot be told what is going on. That is understandable to some degree, but means that there is virtually no accountability in the process.
There are two aspects of the universal bank. First, there are basic bank accounts. I do not understand how they will work and I should be grateful if the Minister would explain that. Secondly, there are brand accounts, about which there has been controversy. Will it be possible for a Barclays bank account-holder in a market town to open a Barclays account at the local post office? If someone wants to open a Barclays basic account in a local village and has not previously had a bank account, will it be able to be used in the Barclays network, or will it be more circumscribed? What functions will it have? Will direct billing be available through this network because it will be crucial to obtain discounts from utilities?
What are the banks putting into this? The banks have said that they are contributing £180 million over five years, which sounds like a lot of money. However, there is a lot at stake. As the Government know, the banks are negotiating hard on the terms of their regulation under the new Paycom system, and £180 million would be a small price to pay for an easier regulatory regime. Some of us are suspicious of how much the banks are doing.
Mr. Evans : Will pensioners be able to access money free of charge through automated teller machines? There has been a recent culture of banks trying to charge as much as they possibly can for the withdrawal of money, and pensioners on limited incomes will find those charges disproportionate.
Dr. Cable : That matter is shrouded in a fog of obscurity, but I believe that the basic bank accounts will not have charges. There will also be no charge to use the Post Office card account, which I shall discuss in a moment. It would be helpful if the Minister put everyone out of their misery by confirming that there will be no charges.
The scale of the operation is important to its funding. The assumption on which some of us have been working is that the Government will put £100 million into the system, which would be welcome new income for the post office network. However, that figure is predicated on the assumption of 2 million card accounts. If the Government put in three or four times that amount, it would fully compensate the network for the loss of its automated credit transfer income. The scale is crucial, and I hope that the Minister will explain it precisely. We could be discussing a minimal, token gesture or a fully fledged, highly comprehensive and extremely valuable replacement for ACT. It is unclear where we are on that spectrum.
The post office network has been dealt a deep wound to which there have been various attempts to apply tourniquets and Elastoplast over the past few months. We must know whether the flow of blood will be stemmed by the various initiatives that the Government are proposing.
I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on securing this debate, which provides a valuable opportunity to question the Minister on an issue that is of considerable concern to many of us. He mentioned his surprise that this is the first time that the issue has been debated in this Parliament. All of us would stress that that should not be taken to indicate any lessening in the concern about the future of the sub-post office network. He also mentioned that the issue was raised regularly throughout the previous Parliament following the Government's announcement about ACT in May 1999. About 18 months ago, we had a rally in Methodist Central Hall of about 2,000 sub-postmasters, who came here to demonstrate how important they felt the matter to be. On that occasion, we devoted our Opposition day debate on the Floor of the House to the future of post offices. During that debate, the then Secretary of State for Trade and Industry, now Secretary of State for Transport, Local Government and the Regions, in response to concerns raised by Members on both sides of the House stated:
Even then, many hon. Members were shocked by that staggering complacency, but in the 18 months that have followed, the rate of sub-post office closures has accelerated severely. The hon. Member for Twickenham (Dr. Cable) cited the figure for the number of closures to the year ending March 2001547which was far higher than in any previous year. We have even more up-to-date figures. Six days ago, the Minister gave an answer to a question tabled by my hon. Friend the Member for Eastbourne (Mr. Waterson), revealing that another 119 post offices closed in April to June 2001the first quarter of this financial year. There is no sign of the trend being reversed.
Why does it matter? Obviously, it is sad to lose any business, but sub-post offices are absolutely vital. The 17,500 that exist are roughly divided between the rural and the urban, although, as the hon. Member for Twickenham said, several fall somewhere in between. Each one plays a vital part in its local community, and its loss would substantially deprive that community of vital services.
Like most hon. Members who have spoken, I represent a rural community, so I am familiar with the enormously important central role that is played by village post offices in remote rural areas. My constituency contains a large area consisting of remote, scattered villages with poor public transport facilities. In villages such as Bradwell and TillinghamI am not going to take hon. Members on a tour of my constituency, as my hon. Friend the Member for Ribble Valley (Mr. Evans) did, although I feel much better informed about it as a resultthe loss of the post office often removes the life of the village, because it represents not only a place of business where people go to deal with mail or receive benefits, but the centre of village life. It may provide a meeting place for elderly people who cannot get out of the village, or its postmistress may supply advice. It is such a crucial part of life that many villages struggle to survive its loss.
Eighteen months ago, I was given the opportunity to open a village sub-post officea replacement for one that had closed three years previouslyin Great Totham in my constituency. Businesses are still opening, which is welcome, but the net loss each year is leading to a gradual decline in the overall number. Even if the Government create new opportunities for sub-post offices, too many may already have been lost to take advantage of them.
The hon. Member for Twickenham mentioned the survey published yesterday by the Countryside Agency, which stated that as a result of the closures nearly 400,000 people in the countryside live more than one and a half miles from a sub-post office. That will create particular problems for elderly people, who will find it difficult to access their benefit payments.
The reasons why sub-post offices are closing have already been touched on. It is partly because they are experiencing the pressures that all small business now face. They are businesses like any other, and must cope with red tape, regulations and various other burdens, but the major reason for closures is the switch to ACT
I was delighted to hear from my hon. Friend the Member for Ribble Valley that his constituent, who is about to retire, has found someone to take over the business, but in many cases that proves impossible. In my own constituency, for example, a sub-post office closed but no one was willing to take it on. To some extent, the problem is caused by banks advising that such businesses are no longer viable. Given the uncertainty about the future, banks are reluctant to lend money to those who want to take on sub-post offices. That creates huge problems for those who are currently running them, many of whom may have invested their life savings in the business.
Mr. Heath : It is worth stressing that point: it is difficult to establish the business case for investing in a sub-post office while such uncertainty remains. However, does the hon. Gentleman share my concern that the banks that are turning down loan applications are the very banks that are supposedly committed to the principle of the universal bankthe alleged saviour of such businesses? There seems to be a dichotomy in the thinking of clearing banks.
Mr. Whittingdale : That is a good point. Although high street clearing banks have now signed up to the concept of the universal bank, they have shown a lack of enthusiasm for it ever since it was mooted. As the hon. Gentleman suggests, they appear not to be giving the concept the 100 per cent. support that it needs if it is to succeed.
On retirement, many of those who have devoted their lives to their sub-post offices will be unable to realise the value of the asset into which they have put all their money throughout their working lives.
I want to touch briefly on the very good report commissioned by the PIU, which outlined a number of opportunities for sub-post offices, such as the potential for e-commerce and internet sites. All such suggestions are welcome and I hope that they will be developed.
Mr. Adrian Flook (Taunton): I apologise for not being here sooner, Mr. Amess. The explanation, in part, is that I am acting as host to Miss Alex Lawrence, who is here from Somerset as part of a "teenager at work" day.
The debate is not just about inclusivity in a village context. Although Taunton is a very rural constituency, the town itself is also suffering through the closure of sub-post offices. Does my hon. Friend agree that the problem affects not only rural but urban areas, andmore importantlythat young children and teenagers will also find it difficult to access the services if the sub-post offices no longer exist?
I do not want to speak for too long, as I am anxious to give the Minister the maximum opportunity to respond to the questions raised so far. However, I want briefly to discuss new opportunities for sub-post offices to win businessa matter touched on earlier. My hon. Friend the Member for Ribble Valley mentioned road tax licences. I asked at my local sub-post office what the Government could do to make life easier and was immediately told that every week several people who came in to renew their road tax had to be turned away. That is a specific suggestion.
The Government must address questions about the future of the universal bank, which could offer salvation to sub-post offices. The hon. Member for Somerton and Frome said that everything had gone quiet since the election. That is not entirely true: comment in the newspapers has, if anything, increased our concern. About six weeks ago, The Sunday Telegraph ran a piece headed "Universal Bank in doubt". It said:
We learned a couple of weeks ago that responsibility for the universal bank had been switched from the Department of Trade and Industry to the Department for Work and Pensions, which gave rise to the headline, "Darling sent in to save plan for Universal Bank".
I hope that the Minister will address these serious questions. Will he give us a guarantee that the universal bank proposal is still on track and will go ahead? When will it be in place? It is important to sort that out. It is not enough to wait until 2003 when the switch to ACT takes place. We need reassurance now, and we must have the arrangement in place as soon as possible.
A concern that has already been mentioned is that a limit may be placed on the number of eligible users of the Post Office card account. Clearly, any restriction of that kind would represent a huge threat to the potential income of sub-postmasters. Can the Minister guarantee that there will be no limit and that all those who are eligible to use the card accounts will be able to do so? Will he also tell us something about the remuneration terms for sub-postmasters who carry out universal bank transactions? I understand that some matters are still under negotiation, but it is not good enough for him to continue to answer by simply saying that all this is commercially confidential. We need information soon.
Can the Minister give us an estimate of how much the overall package will be worth to sub-postmasters? To what extent will it restore the enormous financial loss that the switch to ACT will cause? Finally, if there is a delay in getting the proposals up and running, is he prepared to delay the switch to ACT until the problems have been sorted out? The clock is ticking. Sub-post offices are closing every day. I know that hon. Members want to listen to the Minister, so I hand over to him to reply.
The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander) : I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on securing this debate on the future of sub-post offices. I also congratulate the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) on his appointment to the Conservative Front Bench. I will
This is the second Adjournment debate secured by the hon. Member for Somerton and Frome to which I have had the pleasure of replying. I wish to place on record my tribute to the work that he does on behalf of his constituents. I thank him for his kind remarks about my predecessor, my hon. Friend the Minister for Employment and the Regions, and join in paying tribute to his endeavours.
I listened carefully to the speeches and welcome the opportunity to respond to as many questions as possible. The concerns of the hon. Member for Somerton and Frome centre on the need to maintain the sub-post office network and to ensure a viable, long-term future for it. His comments reflected the concerns of not only his constituents but all those who live in the more rural areas of the United Kingdom, for whom the local post office is a focal point in the community. As all hon. Members are aware, the sub-post office network plays a vital role in every region of the United Kingdom.
I disagree with the substantive point raised by the hon. Member for Caernarfon (Hywel Williams). The sub-post office network would not be better dealt with by the devolved Administrations. I think that, if anything, the network argues for the level of integration that is possible in the United Kingdom. There is simply a philosophical divide on that issue between me and Plaid Cymru.
I pay tribute to the work by the hon. Member for Ribble Valley (Mr. Evans). He missed no opportunity to talk about the important work of sub-postmasters in his constituency. I shall make a brief diversion from the substantive issues by also paying tribute to the charitable work of his constituent who is travelling to Vietnam. Having cycled in that country, I simply advise him to ensure that he has a good saddle.
We all agree that sub-post offices have a key role. As hon. Members know, post offices serve 28 million people every week. All those who have spoken, the Government, Post Office Ltd., sub-postmasters and post office customers are committed to the network's survival. Let us be clear that we face substantive challenges but the Government remain as committed as they were in the last Parliament to a sustainable network of post offices throughout the UK.
The network must be able to adapt and take account of the changes that some hon. Members have mentioned, not least changes in lifestyle, customer preferences and new ways of doing business. The traditional business of post offices needs to respond to those changing requirements, changes in society and the challenge of new opportunities as a result of changes in technology.
The hon. Member for Twickenham (Dr. Cable) spoke about post office closures. It is indeed the case that net closures of sub-post offices in the year to 26 March 2001 totalled 547. Of those, 441 were rural and 106 were urban-based offices, according to the Post
Some of those closures cannot be avoided, but a significant portion are temporary, as designated by the Post Office. Indeed, 109 offices reopened between April 2000 and March 2001. Of the closures in the year, only four were designated permanent as a result of a Post Office decision. In all other cases, there is scope for reopening should a suitable applicant come forward within 12 to 18 months.
The hon. Members for Somerton and Frome, for Ribble Valley and for Maldon and East Chelmsford spoke about closures more generally. Net closures in the second quarter of the current year were 56, of which 47 were rural and nine urban offices. In the first quarter, there were 119 net closures, comprising 94 rural and 25 urban offices. That is a significant reduction, quarter on quarter. In addition, total net closures of 175 for the half-year are well below those for the corresponding period of last year, when 299 post offices closed. We should not read too much into any quarterly or half-yearly figure alone, but I hope that we can all welcome those reductions.
A range of new initiatives has been introduced, including the £2 million Government fund to support community volunteering initiatives to maintain and reopen post office facilities. I hope to return to that in responding to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). Other measures include the abolition by the Post Office from 1 April of the introductory payment of 25 per cent. of the first year's remuneration. That makes sub-post offices more attractive to prospective purchasers.
The Government are pressing forward with work to implement all the recommendations of the performance and innovation unit. I agree that the report was extremely worth while and I assure hon. Members that a great deal of expeditious work is being done to implement the recommendations to modernise the post office network. That is happening in close consultation with Consignia, the National Federation of SubPostmasters, the Postal Services Commission, the Consumer Council for Postal Services and other relevant bodies. The new products and services identified and the work that has been set in train provide a basis for reinventing the network and safeguarding its future.
The hon. Member for Argyll and Bute (Mr. Reid) is new to the House, but has clearly already learned how to grab the attention of the Minister responsible for postal services. I know very well the area that he mentioned. Indeed, I have experience of the postal service in the Ross of Mull, having received both my O-grade and highers results in that localitythat was in the days when highers results turned up. I will raise his concern with the Consignia management with great pleasure and take forward his specific point on postal services on the Isle of Mull.
The first question of the hon. Member for Somerton and Frome focused on the respective roles of Departments in advancing the universal bank project, and it may be helpful to give some clarity on programme management. The Secretary of State for Work and Pensions is responsible for delivery of universal banking services as part of the wider Government programme of benefit payment migration to automated credit transfer and ensuring that benefit payment recipients can continue to receive their cash at post offices. That has been stated before, and it remains the Government's policy. That is a new role for the Department for Work and Pensions, while the Department of Trade and Industry continues to have shareholder responsibility for Consignia and sponsorship of the post office network.
The development shows that we are moving in the correct direction on the universal bank and demonstrates the Government-wide commitment to the universal bank project, which will ensure that benefit claimants can continue to draw their benefits in cash at post offices when benefits are paid into bank accounts. I am happy to reiterate that assertion today. It is positive that DWP has now taken overall project management responsibility, given its locus as a particular client of the project. As Consignia shareholder, the DTI will continue to be responsible and take a keen interest in the project, ensuring that it can be implemented successfully through the network of sub-post offices.
Mr. Alexander : Those discussions are continuing between Departments, because different bodies are involved. It will interest the hon. Gentleman to know that working relationships are positive and close. I will meet the Secretary of State for Work and Pensions this afternoon, which is merely a reflection of a continuous series of constructive discussions.
It is important to recognise the significance of the universal bank project, particularly to the future of the sub-post office, and I pay tribute to hon. Members who have done so. It is a substantial, multi-strand project that will depend on many interlocking commercial relationships, not least between Post Office Ltd. and the individual banks. I am glad to see that the memorandum of understanding has been signed
Mr. Heath : I listened carefully to the Minister's reply, but he ducked the question about the target. Will he answer simply yes or no: will there be a cap to the number of Post Office basic accounts?
More generally as a preface, it was inevitable that the performance and innovation unit report would generate significant publicity. However, it would be deeply misguided to see that necessary and diligent work as a change of Government tone or policy. We have worked relentlessly to drive forward the policy, because we share the view that the universal bank has a critical role to play in the network's future.
However, the nature of the commercial relationships involved in the establishment of the universal bank means that many discussions cannot be conducted in public. If negotiations were conducted in public, it would not only imperil the project but delay it when we are determined to work to our target of 2003. I assure hon. Members that those many-faceted negotiations are being driven forward with urgency. Good progress is being made, and the project remains on track for implementation in time for the ACT change of 2003.
The hon. Member for Somerton and Frome asked about the universal bank's application. Those matters are being considered in the context of an overall migration and marketing strategy, on which much work is under way. It would be wrong to anticipate the outcome of those discussions, but it will remain our policy to encourage benefit recipients to use the accounts that best meet their needs.
On the new post office-based simple bank account and the PAT 14 basic accountsnamed for policy action team 14being developed by the banks, these are designed for everyday transactions, are accessible across post office counters and are free of charge to the user. Without post office access, those basic accounts will not achieve sufficient market penetration by themselves adequately to address the challenge of financial exclusion. The universal bank will provide a range of banking services that will cater for as wide a range of customers as possible. It will bring people currently outwith bank accounts into the financial mainstream by providing easier access to basic bank accounts.