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Post Office Closures

Volume 406: debated on Thursday 5 June 2003

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What recent discussions she has had with the National Federation of Sub-Postmasters on post office closures. [116505]

Department of Trade and Industry Ministers and officials are in regular discussions with the National Federation of Sub-Postmasters about a wide range of post office network issues, including closures.

I thank the Minister for his response. Has he had a meeting with the federation since Colin Baker, its general secretary, described the switch from benefit and pension books to direct payments as confusion and shambles, and referred to the possibility of civil disobedience? Does he agree that that shambles, combined with the restrictions that are placed on the distribution of literature about Post Office card accounts, threatens the future of many thousands of sub-post offices around the country?

I do not agree with those remarks. The important thing for everyone concerned about the Post Office—in the House, the National Federation of Sub-Postmasters and elsewhere—is to focus on securing a commercially successful future for the network. Thanks to the £500 million investment that we have made in universal banking, the fact that there are now 11 million current account holders who can go to any post office in the country and obtain cash free over the counter with their ATM card, and the fact that the £150 million a year funding support for the rural network was recently approved by the European Commission, the prospects for that commercially successful future are now very good, as long as we work together to ensure that we realise it.

Does my hon. Friend accept the concerns of sub-postmasters that if the footfall in our post offices falls, many of them will have to decide whether their businesses are viable? Why has Post Office Ltd been prevented from promoting the Post Office card account as a product in its own right?

I completely agree with my hon. Friend about the importance of footfall. That is why it is so important that we now have 11 million current account holders, many of whom will, for the first time, have a compelling reason to go into their local post office to obtain cash with their ATM card. The Post Office wants to increase that number, and a successful banking business is the key to a successful post office network. I have seen a variety of quite bright and attractive literature from the Post Office about direct payment, in which the Post Office card account features clearly. The important thing is that everybody has access to clear, accurate information, and I believe that that information is now being provided.

Will the Minister tell us what the average rural post office will lose in revenue in this coming year as a result of the ill-thought-out changeover to automated credit transfer?

What I can say to the hon. Gentleman is that there has been a very sharp reduction in rural post office closures—115 in the last financial year, which is the lowest for eight years. That is the result of our commitment to prevent avoidable closures—which is now backed up by the £150 million this year, next year and the year after—to safeguard the rural network and the incomes of rural postmasters, and to ensure that there continues to be wide access to post office services throughout the rural parts of the country.

Is my hon. Friend aware that, following a vigorous campaign by Labour councillors in Arbury ward in Cambridge, the Post Office has decided to delay the closure of Victoria road post office? Will he ensure that the Post Office remains sensitive to the needs of its customers and listens carefully to their views?

I congratulate my hon. Friend on the campaign for Victoria road, in which she has been very active. I am aware of the progress that has been made in that case. We have provided specific funding to enable Postwatch to scrutinise each of the urban closure proposals, and it has put very thorough procedures in place. I am very pleased with the evidence that those procedures are working.

The Minister will be aware that many small village retail outlets are viable only because they have income from the Post Office. He has told us this morning how many million accounts have now been opened. Will he tell us how many people still have neither a bank account nor a Post Office card account? What further encouragement will be given during the transition, and will people—especially the very elderly—still be able to hold on to their pension books?

The hon. Gentleman asks an important question, and I can give him the figure. There are 3.5 million people across the whole country who do not have a bank account or a Post Office card account—the latter, of course, is very new. Our view has always been that it is important to give those people the opportunity to open a bank account because there are many benefits available to them if they do so. The Department for Work and Pensions has made it clear that, at the end of the two-year transition to direct payment, there will be what it describes as an exceptions service available for those few people who have difficulties with the arrangements that will be in place by that time. Their interests will certainly be safeguarded. This is an important commercial opportunity for rural post offices, and an opportunity to promote financial inclusion by extending bank accounts to many more people who, in the past, have just not been able to get them.

Is the Minister aware that more than three quarters of the people who claim benefits in the Jarrow constituency use their local post office? What is the logic in the Post Office's decision to close branches in Hedgley road and Bede Burn road in Jarrow? Will he use his offices to ensure that Post Office Ltd., which is on a different planet from Members of the House according to what we have heard today, resists any closures in areas of high dependency?

I am not familiar with the cases in my hon. Friend's constituency, although I will certainly have a look at them. If he has not already done so, I would encourage him to raise his concerns with Postwatch. Of course, all those people who use the post office to obtain benefits will continue to be able to do so under the new arrangements, through either a bank account or the Post Office card account.

In addition, people who do not use the post office, but who have ordinary current accounts, will be able to go to their local post office to obtain cash. The post office will receive a payment for that, and there will be the benefits of extra footfall as people use it to buy additional items. It is widely agreed that the number of urban post offices needs to be reduced because the network is very dense, but, beyond that, the prospects are very good.

Why did the Minister duck the question from my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley)? Is it because the Government are against small post offices and do not care how hard they make it for vulnerable old people to continue to collect their pensions in cash? Will the Minister confirm that Post Office management are rewarded if they speed up post office closures? That policy, coupled with the obstacles that he is constantly putting in the way of people who want to open Post Office card accounts, is leading directly to more post office closures and more problems for vulnerable old people.

The hon. Gentleman should welcome the fact that the number of rural post office closures has declined so sharply. The number last year was significantly fewer than that when the Government he supported left office. We are making a great deal of progress. We have made the commitment to ensure that there should be no avoidable rural post office closures and we have provided the funding to make a reality of that commitment. That is widely welcomed in rural areas, and he should congratulate the Government on the progress that we have made compared with the failure of the Government he supported. His points about incentives for Post Office managers are simply not correct.