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Newcraighall Post Office

Volume 405: debated on Wednesday 21 May 2003

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3.32 pm

I am pleased to have the opportunity to introduce a debate on the future of Newcraighall post office. The provision of a sustainable and vibrant post office network servicing communities in both urban and rural areas is something that I am sure that everyone supports. I recognise that, to keep up with the times, the network has to adjust to the challenges of an increasingly cashless society, changes in retail habits and the resulting reduction in footfall at local post offices. The closure of Newcraighall post office is being proposed as part of the urban network reinvention programme. I therefore want to focus on that programme this afternoon.

The starting point to a debate on the future of the post office network must surely be the performance and innovation unit report entitled "Counter Revolution— Modernising the Post Office Network". The report, published in June 2000 by the Cabinet Office, set out 24 recommendations that the Government accepted and have since been working to implement. The first eight recommendations in the report set out the steps for retaining the rural post office network. The Government are affording very substantial protection to the rural post office network. Indeed, they have given a commitment that states explicitly that there should be "no avoidable closures".

In order to produce a viable and sustainable network, the PIU, in its recommendations, concentrated on the need for the Post Office to develop its range of services. It rightly stated that the Post Office as a brand was in a unique position to do that. Public trust and awareness of the Post Office as a reliable public institution remains high, and the reach of the network is unique in that every citizen currently has easy access to a post office.

The universal bank, discussed in recommendations 14 to 17, formed the cornerstone of the idea of developing Post Office services, The universal bank had strong support from sub-postmasters and sub-postmistresses in the Edinburgh area. The PIU stated:
"The Government should positively support the Universal Bank viewing it as the best means to ensure that benefit recipients can continue to access their entitlements in cash at Post Offices".
It is almost three years since June 2000, when I asked the then Secretary of State for Trade and Industry, my right hon. Friend the Member for Tyneside, North (Mr. Byers) whether it would be possible for an individual such as myself to open an account with the universal bank. He informed me:
"People who already have bank accounts will be perfectly entitled to join the universal bank and they will be offered the whole range of financial services that the banking sector provides."—[Official Report, 28 June 2000; Vol. 352, c. 918.]
Following discussions with the major high street banks, the universal bank has metamorphosed into the Post Office card account, and difficulties are being encountered by those attempting to open such an account.

My hon. Friend the Minister will have seen early-day motion 572, which has more than 200 signatures, showing that perhaps many hon. Members feel that the option of collecting benefits in cash at the post office has not received the wholehearted support of the agencies involved, which in the main are Government agencies. My hon. Friend may wish to comment on that in the debate.

The second area in which the PIU believed that the Post Office could develop the range of services it provided was in acting as Government general practitioners and internet learning and access points, coupled with the idea that post offices could provide information and low-level advice on government issues and become one-stop shops for local and national government. The PIU recognised that the Post Office has the advantages of reach, trust and staff experience to develop that role and many would agree that that is the case. It recommended a series of pilots throughout the UK involving local government and devolved Administrations, which resulted in the "Your Guide" pilot that took place in Leicestershire. The pilot ran from 16 July 2001 to 1 March 2002 and resulted in the publication of a report by the "Your Guide" pilot evaluation team entitled "Evaluation of the pilot of the 'Your Guide' service of post offices as Government general practitioners".

The purpose of the pilot was to develop a role for post offices as Government general practitioners and to contribute to the broad objectives of improving the uptake and accessibility of central and local government information and services; encouraging the uptake of electronic Government information and services; and maintaining the commercial viability of the post office network. The report concluded that
"the pilot yielded little hard evidence that Your Guide would significantly increase the footfall in post offices in a way which would impact positively on existing business".
However, there were some positive findings that were not championed as such. For example, the overall customer satisfaction level was 92 per cent, rating the services as useful or fairly useful and saying that "Your Guide" services had the potential to help the Government to reach some of their target audiences of disadvantaged groups. I was disappointed that a "Your Guide" pilot was not attempted in Scotland.

The "Your Guide" report also documented difficulties in obtaining accurate information regarding customer participation in the scheme due to poor communication between sub-postmasters and the content providers, which in the main are Government agencies. In conclusion, the National Federation of Sub-Postmasters described the "Your Guide" project as "brilliant."

In October last year, my hon. Friend the Minister moved a motion in the House to authorise funding for the urban post office network reinvention programme. He stated in that debate that a key recommendation of the PIU report was that, if the Post Office decided that fewer post offices were needed in some urban areas, the Government should consider providing financial support to the Post Office to ensure that sub-postmasters were adequately compensated for the loss of value of their business.

In the debate my hon. Friend set out the reasons why the Government believe the post office network needs restructuring. He wants the Post Office to end up with an urban network that provides for greater profitability, but does he agree that we need to ensure that such a network does not consist of sub-post offices that are based exclusively in relatively affluent areas? Judging by what I have seen in Edinburgh, there is a danger that a disproportionate number of sub-post offices will close in deprived areas. Some of those post offices have been hardest hit by the move to pay benefits directly into bank accounts rather than in cash.

On 22 April, Sandy Stephen, who heads the Scottish area of Post Office Ltd., wrote to me as the local Member of Parliament to say that the Post Office was proposing to close its Newcraighall branch. I am surprised and disappointed that Newcraighall is being considered for closure, for reasons that I shall explain. There is a consultation period, which ends on 27 May. The announcement that Newcraighall was being considered for closure came during the Scottish election campaign. Some of the candidates expressed the view that closure was inevitable and that the consultation was a sham. I do not believe that to be true. I have met Mr. Stephen and I am confident that he takes the consultation process seriously, and my hon. Friend the Minister has made it very clear that the Government's view is that the consultation should be taken very seriously by all concerned.

Referring to the consultation process during a debate in the House, my hon. Friend said that to
"ensure that the needs of all customers have been properly considered—the elderly, disabled people, those on low incomes and others—Post Office Ltd. will, in developing its proposals, take account of factors such as the accessibility and viability of the remaining post offices, transport links, opening hours and numbers of counter positions."—[Official Report, 15 October 2002; Vol. 390, c. 233.]
I believe that we would all support that, and I am sure that that is the objective of the Government and my hon. Friend the Minister.

I now turn to the case for Newcraighall sub-post office, which I believe is a special and compelling one. Newcraighall is a former mining village, as you know very well, Mr. Deputy Speaker, on the eastern edge of Edinburgh. In recent years, major new roads have been built linking up with the Edinburgh city bypass. Those roads have hemmed in the village to some extent and made it relatively more isolated from the adjacent Niddrie and Craigmillar areas of Edinburgh.

It is true that people with access to cars have several shopping areas within easy reach, but many of the elderly, in particular, do not have access to a car. There are bus services to other parts of Edinburgh and to Musselburgh, but they have been chopped and changed in the past year and are a source of continuing local concern.

Newcraighall is in the Craigmillar social inclusion partnership area, where two post office branches in Bingham and Greendykes have already closed under the urban post office network reinvention programme. In the consultation letter, the Post Office named two alternative branches that would be suitable for Newcraighall residents if the local post office were closed. Neither is an easy walk—indeed, I cannot imagine any elderly person choosing to walk to either of them. It is accurate to say that the post office in the Jewel Asda superstore is within one mile—just—but the other is 1.4 miles away on foot.

The post office in the Jewel Asda is closer, but the route on foot involves crossing two major roundabouts that lead on to the slip road of the A1, which is a very dangerous crossing for anyone; passing under a subway below the motorway; crossing the car park of a major retail park; travelling over an unpaved and overgrown footbridge over a goods railway line; and negotiating a set of steep and winding steps that have no hand rail and that lead to a further large car park that one must cross to reach the Asda superstore that houses the sub-post office. As I said, I cannot imagine anyone, certainly not a pensioner or a young mother with children, choosing to walk to what would be their nearest post office if the Newcraighall post office were to close.

A crucial point in the case for keeping the Newcraighall sub-post office open is that it is the only shop in the village. If the post office closes, the shop will close. The village shop issue, combined with Newcraighall's relative isolation, make the post office there comparable to a rural post office. The considerations that have persuaded the Government to prevent avoidable closures of rural post offices should apply in this case. There is a question as to whether, for sub-post office network purposes, Newcraighall village should be treated as a community detached from Edinburgh's population and classified as a rural post office.

Just before I conclude my remarks, I should like to quote Age Concern, which said:
"For many older people the local Post Office is an important lifeline providing a point of access to pensions, benefits as well as other financial services, a general store and a source of information and advice."
That is what we have in Newcraighal

Newcraighall is a small community with a number of elderly people who depend on the local post office not just as a post office but as a local shop. It is open seven days a week, and pensioners go each day for such things as milk and newspapers. The local postmaster, Jim Stewart and his staff provide what is, in practice, a social service. It would be a severe blow if the post office and shop were to close. The community is united in its determination to retain this important amenity. I hope that the Post Office will give careful consideration to the representations that are being made, and I am sure that that is also the wish of my hon. Friend the Minister.

3.44 pm

I congratulate my right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) on securing a debate on the future of the Newcraighall post office branch. He has, for a long time, shown a close interest in the issues and challenges facing the post office network. He has shown that again this afternoon and I welcome the opportunity to respond to his points.

First, I shall comment on some of the general points that my right hon. Friend made at the start of the debate. He rightly went to the PIU report as the basis for the Government's policy on the post office network. At one point, he said that the concept of the universal bank has become the Post Office card account. That is not quite right. The universal bank, which is an important development and good news for the Post Office, can be accessed in one of three ways, not only through the Post Office card account. That account is one form of access. The second is the bank or building society basic account, now offered by every high street bank and the Nationwide building society. It is for those who are new to banking, who just want to pay money in and get cash out, and perhaps pay bills automatically.

The third way of accessing universal banking services is through an ordinary current account. A very significant development in the past few weeks is that anyone who has an ordinary current account with the Alliance and Leicester building society or Barclays bank—between them, that is about 11 million people—can now get their money using their ordinary cashpoint card over a post office counter. That will be a compelling reason for many people to go into their local post office, which they have not had in the past.

My right hon. Friend mentioned "Your Guide". Very few of the sub-postmasters involved in the pilot reported any increase in sales from the additional footfall generated by "Your Guide". As that was what it was intended to be about, we concluded from our evaluation that it would not represent value for money to roll it out nationally. However, the pilot highlighted a number of ways in which Government Departments might deliver services through post offices in future. We are exploring those. There are also potential alternative commercial options. There is much commercial interest at the moment in placing kiosks in post offices. A commercial kiosk service, including some post offices, has just begun to be piloted in Cornwall. It will be interesting to see what comes of that. The "Your Guide" pilot has helped the Post Office to understand better how it can serve members of the public, and we may well see more on the kiosk idea in future.

I assure my right hon. Friend that the Government are committed, as he commented, to maintaining a viable network of pest offices across the country. He is absolutely right about the importance of sub-post offices as a focal point for local communities, particularly for the elderly and the less mobile. I agree with the point on which he quoted Age Concern. The post office network serves 24 million people every week. It is the largest retail network in Europe and includes half as many branches again as all the banks and building societies put together.

The question is how we take that network forward, given the changes that we have seen in customers' buying habits during the past few years. Some of the reasons for those changes date back more than 20 years. Past under-investment has certainly been a factor in what is now happening, but greater mobility and changes in shopping and financial habits mean that people are simply not using post offices as often as they used to. Customer numbers, as my right hon. Friend acknowledged, have fallen sharply.

The aim of the urban reinvention programme to which my right hon. Friend referred, under which the closure of Newcraighall post office has been proposed, is to restore the urban network to commercial viability, restoring the confidence of sub-postmasters, which we think is very important, and making it possible to attract new investment so that customers can continue to enjoy access to the full range of post office services.

My right hon. Friend is aware of the role of Postwatch—the consumer watchdog for postal services—in the process. It has an important role in the implementation of the programme, and it is examining every proposal that has been made. In each case for which Post Office Ltd. makes a closure proposal, it carries out a formal public consultation process, in accordance with the code of practice that has been agreed with Postwatch on branch closures. Post Office Ltd. actively seeks the views of those affected by its proposals, as well as the views of interest groups, councillors and MPs. I have been assured that the company will fully consider all representations before reaching a decision. I emphasise the importance of the role of Postwatch as an independent consumer watchdog.

My right hon. Friend mentioned that the proposal to close Newcraighall sub-post office was made on 23 April, and that the closing date for consultation responses is 27 May. Postwatch Scotland has issued a press release asking for comments on the Newcraighall proposal, so that they can be reflected in its response. Comments to Postwatch Scotland may be sent in writing or made by telephone at a local call rate.

I listened to the points made by my right hon. Friend about whether Newcraighall sub-post office should be regarded as being located in a rural area—or, at least, an area having some of the characteristics of a rural area. Post Office Ltd. has a process of which my right hon. Friend will be aware for determining which branches are urban and which are rural. That determination is made on the basis of whether the post office branch is located in a community of more or less than 10,000 inhabitants. That analysis has been revisited in this case, given the concerns that have been raised. Post Office Ltd. has reached the conclusion that the office is rightly classed as urban. If there are local issues that make that branch particularly important in the local community and alternatives are, for example, difficult to access, that is a consideration that needs to be weighed in considering how to take forward the proposal. Post Office Ltd. will weigh those factors seriously, as will Postwatch.

I understand that there are 12 post offices within a two-mile radius of the Newcraighall office, of which the nearest four are the Jewel—to which my right hon. Friend described a journey on foot—Magdalene drive, Hay drive and Joppa. The Jewel, at the Asda supermarket, has the benefit of being open seven days a week. The Jewel and Hay drive have regular and direct public transport links. A particular issue in this case is that the post office at Newcraighall has seen a 16 per cent, fall in business over the last three years, and the level of custom for the retail side of the business has also fallen significantly. There is a real problem for the sub-postmaster in seeing any viable future for the business. Clearly, the limited level of patronage from the local community is a significant factor in Post Office Ltd.'s proposal, as is the sub-postmaster's perception of the prospects for his business as a going concern. In the great majority of cases currently under consideration for closure under the programme, it is the choice of the sub-postmaster to accept compensation rather than continue with the business that has triggered the process.

The programme to restructure the urban post office network will run for three years. It started at the end of 2002, but there is no predetermined list or number of offices that will close, and no arithmetical formula is being applied to determine the number of closures in a given area. About 3,000 sub-postmasters have expressed an interest in closing under the terms of the programme, but those expressions of interest are not binding—not on Post Office Ltd. and not on the sub-postmaster.

We are confident that, even after the changes have been made, 95 per cent, of people in urban areas throughout the country will live within a mile of their nearest branch, and the majority within half a mile. Other than in exceptional circumstances, the scope of the programme will not extend to post offices in the 10 per cent, most deprived urban wards that are more than half a mile from the next post office.

My right hon. Friend expressed particular concern that sub-post offices in the least well-off areas would close. That is absolutely not the outcome that we want, but he was right to ask. That is why the Office of the Deputy Prime Minister have set aside funds to support post office services and the development of associated retail facilities in disadvantaged urban districts. The Scottish Executive have been apportioned funds for their equivalent of the English scheme. Similar funds have been made available in Wales and Northern Ireland.

I think that my right hon. Friend would agree that some form of properly managed urban reinvention programme is preferable to the alternative of unmanaged closures resulting from falling income. The consequence would be that more urban sub-postmasters would shut their businesses, causing much greater disruption and inconvenience to customers.

In the year to the end of March, there were 128 net urban closures outside the urban reinvention programme. If that pattern of unplanned closures continued, some serious gaps would open up in service provision in urban areas. The position is different in rural areas, but urban areas, where there are quite a lot of post offices, do not have the business to sustain so dense a network, given the changes that we have seen.

Much change is needed in the post office network. As my right hon. Friend said, the PIU report not only suggested that the Government should help if the Post Office should find that fewer offices were needed in urban areas, but recommended that we should support the introduction of universal banking. I said at the start that about 11 million current account holders with Barclays and the Alliance and Leicester can go to the post office, hand over their cash card, enter their PIN and obtain cash. I hope that more banks will open their current accounts to post office access in that way. In turn, we shall see many more people wanting and needing to visit the local post office, with consequent benefits to the other parts of the Post Office's business.

Implementation of the recommendation on the introduction of universal banking has been made possible because the Government have made the largest ever investment in the Post Office—£480 million on modern online computer systems for every post office in the country. They were switched on, on time, at the beginning of the present financial year. The ambition is to build on the uniquely trusted ground that the Post Office has—my right hon. Friend was right to point that out—in order to modernise and extend its commercial banking arrangements so that it can become the nation's leading provider of access to bank accounts. That is what the concept of a universal bank means, and that is how we see the future role of the post office network. All the high street banks have signed up to deliver their part of the plan, in Scotland as well as in England and Northern Ireland.

There are two strands to universal banking. The first is full access at post offices anywhere in the country lo the basic bank accounts of every major bank and building society. Between them, those institutions account for 99 per cent. of all current accounts in the country. They will offer new basic accounts that are fully accessible at any post office. The second strand is the Post Office card account, which will be solely for benefit recipients. They will be able to use it only at a post office. It will be a simple and problem-free way of obtaining cash for those who particularly want that.

We must restore the urban post office network lo commercial viability and restore the confidence of sub-postmasters. That is critical if we are to attract much-needed new investment to the network. We continue to work towards the implementation of the recommendations in the PIU report to help bring about the accomplishment of its goals, which my right hon. Friend described at the outset.