I want to use the debate to focus our attention on the change that will be coming to the post office network, particularly in rural areas. It is clear to anyone who has a pair of eyes in their head that change will come. When one hears the likes of Adam Crozier and Allan Leighton talk about substantial branch closures possibly being on the cards, it is clear that there will be some sort of change. My concern is that if that change is to come, the process of change should be shaped principally by the people who know best: the people who live in the communities and are most directly affected, and the postmasters and postmistresses who make their living from the provision of post office services in rural areas.
Between March 2000 and March 2006, the number of rural post offices in Scotland fell from 1,285 to 1,128, which represents a decrease of more than 12 per cent. According to a parliamentary answer that I received today, the total number of post offices in Scotland has fallen by 368 in the past eight years, to 1,688 in 2006. Almost one in five of Scotland’s post offices have shut since Labour came to power, and that is in the context of the Government, in recent years, giving substantial sums in direct assistance to the rural post office network. I acknowledge that, and like many rural MPs, I am grateful for that investment.
I am also sure that I am not the only one in the House who has seen the process of attrition at work. In the first instance, there is a cut in hours, which then affects the overall financial viability of the business. Another business opportunity then comes along for the sub-postmaster or sub-postmistress, or they reach retirement. They then move on and nobody can be found to take their place. Thereafter, there is a temporary notice of closure, which is temporary in name only because we know that it means that another post office has been shut and will never open again. Many of us fear that that process will speed up in the months and years ahead. It will do so not only because the Government have failed to provide a coherent long-term policy for the rural post office network, but because so many of their policies are undermining its viability.
It is currently estimated that only one in 10 rural post offices make a profit. In that context, it is astonishing that Ministers have failed to accept the huge damage that removing Post Office card accounts will do. In my constituency alone, 1,700 people choose to collect their benefits in that way. In Scotland, the figure is almost 200,000, and in the UK the corresponding figure is 4.5 million. According to the National Federation of Sub-Postmasters, the accounts bring in, on average, 10 per cent. of the sub-postmaster’s income. The card account contract for post offices from 2003 to 2010 is worth an estimated £1 billion to the network.
The loss of, first, pension books and now Post Office card accounts is not the only way in which Departments have removed business from post offices. Baroness Prosser told the other place that the Government’s plans to set up specialist high-street offices to vet passport applications will “dig into” the £12 million that the Post Office makes from processing passports. We are also seeing a concerted attempt to persuade people to pay their vehicle excise duty online.
Most recently, the Post Office has lost the BBC TV licence contract to PayPoint. Once again, that will mean that rural post offices will lose business. It also demonstrates a failure by the Government to think in a joined-up way. The situation in the Northern Isles particularly concerns me, because they have few PayPoint outlets. The outlets are all in Stromness, Kirkwall and Lerwick—the main towns. There are no outlets in the rural parishes or in the outlying islands. I realise that that is not directly the Minister’s responsibility, but it is germane to the debate.
I have been in correspondence with the BBC and was recently told by Pipa Doubtfire, a head of revenue management, which is a glorious title, that customers who currently save stamps but are unable to visit a PayPoint outlet will still be able to use their savings card—that is good news—although they will need to telephone TV Licensing and make payments by debit card.
It is clear that my constituents in the outer isles and the rural parishes will no longer have any means of paying over the counter in a savings scheme such as the one they have had with TV Licensing stamps. We were told that TV Licensing would be writing to those who have paid in that way. The letters were worth waiting for. Two of my constituents in Shetland received letters telling them that their nearest PayPoint outlets were in Tidworth in Wiltshire and in Whitchurch near Winchester. I have no doubt that they are admirable communities, but they lack the important quality of proximity to Shetland. In the interests of helpfulness, I shall send a map or an atlas to TV Licensing to show it exactly where Shetland is.
My point is in a similar vein. Letters have recently been sent to people both in my constituency and across the south-west by South West Water encouraging people not to pay their bills at the post office, but to find other easier, more efficient and more convenient ways to pay, such as through PayPoint. That again undermines the services that the Post Office provides, and although it is not the direct responsibility of the Minister, I hope that he will examine that problem.
My hon. Friend makes a good point. We must also be clear that part of the responsibility for the loss of the TV licensing contract was because of the Post Office itself and the manner in which it failed to compete properly for it.
The Government are always telling us that choice is a great driver and that competition is a great virtue. Why is it that we have simply replaced one monopoly provision with another? If the market and choice are as good as people say, why are not both PayPoint and the Post Office still available? It is clear that PayPoint is not able to cover the full range of services that are necessary.
I must declare an interest. I am from the fourth generation of a family that ran a post office in my village for most of the past century, but it has not done so in recent years. Does the hon. Gentleman agree with the following in respect of the problems in rural areas? At least urban areas had the urban reinvention programme and people knew where they stood. There was an opportunity to make submissions, although a third of the network was lost. If we are not careful, the benign neglect and under-the-counter approach, if I may pun in that way, will lose us a third of rural post offices and more. That will happen merely because of benign neglect and not standing up to the utility companies and others to ensure that there is adequate business for the post offices on which they can build a continued presence in the rural communities that they have served for a century and more.
Yes, we are talking about the loss of over-the-counter services, and under-the-counter neglect. That is a good metaphor, but we have probably taken it as far as possible. The hon. Gentleman makes a good point, and it is why I am hoping that the debate will be part of a process whereby we can talk about the issues and see the opportunities that exist. Despite all the gainsayers, I still think that there are tremendous opportunities for business in rural post offices. In many instances, a wee bit more flexibility and imagination is required.
It is necessary to have a bit more short to medium-term certainty in respect of the Post Office. Part of the long-term solution will have to be to establish what, if any, Government assistance will be given to the rural post office network. We know that the current annual £150 million for rural post offices will finish in 2008. My concern is that, not for the first time, the Government are refusing to let post offices know how much longer the vital funding will last. When will the announcement be made? What will the scale and duration of funding be beyond 2008? Will the Minister give us an indication of when we can expect an answer to that?
I congratulate the hon. Gentleman on securing the debate. Given the threat of the Post Office card accounts going in 2010, is it not the case that until the Government make an announcement on funding for rural post offices, every rural post office in the country will face the threat of closure within the next five years? The situation is as bad as that.
That is certainly the case and it was ever thus. These businesses have always operated on very tight margins in communities where there is often an expectation that businesses operate on low margins and that the people who operate them have made a lifestyle choice as much as an economic business choice. I agree that there is a need for clarity and strategic thinking in the Department of Trade and Industry about what has been missing and what I hope we will see from here on in.
I am aware of the number of hon. Members present and do not want to take up too much time, but I want to consider a few of the opportunities for changing, improving and expanding post office services. One of the greatest opportunities is in the financial services sector. Currently, only 4 per cent. of villages in the United Kingdom have a bank whereas 60 per cent. have a post office, but only 40 per cent. of current accounts can be accessed over post office counters. That is a particular problem in Scotland because neither HBOS—we still fondly call it the Bank of Scotland—nor the Royal Bank of Scotland offer access to their current accounts at post offices. What steps is the Minister taking on that? Is there still an ongoing dialogue between the Department of Trade and Industry and the clearing banks concerned?
The Minister will be aware of research published by Citizens Advice in January this year which shows that many people find it difficult to open the basic bank accounts that are offered at post offices. Has the Minister seen that report and, if so, what action will be taken to help to increase the uptake of those accounts? Citizens Advice recommends that people should be able to open basic bank accounts at post office branches and that all current account holders should be able to withdraw cash over the counter at post offices. Until now, the sticking point has always been the unwillingness of clearing banks to co-operate. Does the Minister agree that if banks are unwilling to reach agreement with Post Office Ltd to allow their customers to withdraw cash from the post office network, Post Office Ltd should consider becoming a member of the Link network, which would allow that to happen? The income generated from that venture could make a significant contribution to sustaining the network of rural post offices, which are a valuable community resource.
Branches could also generate business by acting as mini-depots for parcels that recipients are unable to take delivery of from couriers and delivery companies, of which there is a substantial number outwith the Royal Mail. We all thought that the internet and e-mail would be the death of post offices, but in fact they have had unforeseen and beneficial consequences with the growth of phenomena such as eBay, Amazon and other internet-based companies. In my constituency, a number of mail order companies are operating out of Orkney and Shetland.
The volume of goods bought over the internet is increasing exponentially. It currently accounts for £18 billion of spending in the United Kingdom, or 2.5 per cent. of all household spending. That offers great potential both for Royal Mail in terms of increased deliveries and for post offices if they could act as collection points, interacting with private companies as they have always done hitherto with Royal Mail.
I presume that the hon. Gentleman is coming to the Liberal Democrats’ key policy to part-privatise Royal Mail. Given the success of such privatisations of public services in Scotland, what is the prospect of success with Royal Mail?
Part-privatisation is an exciting and innovative scheme. It would involve a substantial element of employee share ownership, which is something that the hon. Gentleman has supported. I am surprised if he thinks that Royal Mail should be treated differently. It is a policy that I would not have countenanced a few years ago, but with the opening up the letter post market to liberalisation—that was done without proper consideration for the protection of the universal service obligation—it is essential and the only way in which we can ensure that the Royal Mail maintains its market position as things stand.
The Government must be prepared to bring the experts into the process. I do not mean the clever people in suits at the Department of Trade and Industry; I mean the sub-postmasters and sub-postmistresses. At the moment, it strikes me that the Government are willing to listen to Postcomm, but the people in the front line and at the sharp end of the process are often not heard or, if they are heard, they are ignored. Sub-postmasters and sub-postmistresses know better than anyone the challenges facing the rural network today. They have many interesting and exciting examples of things they have done in their own businesses to try to arrest the decline. That should be looked at, and where there is good practice it should be worked into the remainder of the network.
Tomorrow I host a seminar in Orkney, which I hope will be attended by local sub-postmasters and sub-postmistresses, as well as representatives from Postwatch and local people. I shall host a similar event in Shetland the next day. I am sorry that the Department of Trade and Industry was unable to send anyone. It said that we were not part of a process and that it would let us know when it decided what it was going to do. I think that my approach has something to commend it and I will ensure that the Minister is well informed of the outcome of the seminars. I particularly regret that Postcomm declined to send anyone to the seminars. As I told the Minister last week in the Chamber, its attitude is that it finds out all it needs to know about Orkney and Shetland by sending someone to Edinburgh, Dundee and Perth. That frankly demonstrates a particular lack of understanding. If TV Licensing finishes with the map and feels that it does not need it any more, it could pass it on to the chief executive of Postcomm.
How will the Government ensure that the voices of local sub-postmasters and sub-postmistresses are heard? They will be crucial in shaping the future of the Post Office. Can the Minister tell me that he has some thoughts about how to ensure that their voices and ideas become part of the future shape of the post office network?
I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate. He may be wondering why on earth the hon. Member for Rhondda is speaking in a debate on the rural post office network—[Interruption.] That has not occurred to him, so the first part of my speech was unnecessary.
An interesting issue that is rarely commented on is that we tend to divide the rural post office network from the urban network, when many of us live in areas that are semi-rural or semi-urban. My constituency is not geographically large. Many people live in small villages where the only public service may be a pub or a post office, yet because the population density is relatively high in the area, it counts as an urban area, although communications may be difficult. The truth is that nearly everyone in the Rhondda lives within 150 m of a farm and we still occasionally have sheep coming down the street, so I think I am qualified to speak in the debate.
The significance of post offices in any community is dramatic. The hon. Gentleman referred to tax discs. Historically, people got their new tax disc from a post office but had to find the right sort of post office because not every post office in urban areas provided that service. People had to drive around trying to find the right one. It is difficult to find out online which post office to go to. However, it is much easier to buy a tax disc online. Thanks to a great recent innovation from the Department for Transport, we can do that now because the problem of checking whether a car is insured has been overcome—it can now be done electronically. It is a fine system and that is how I bought my tax disc earlier this year.
Many people use post offices to obtain or renew their passport—to get the forms and so on. In Britain, 86 per cent. of people have passports. I understand that that figure is the highest of any country in the world. Again, therefore, the passport plays an important role—but not as significant as it once did. Many people now get in touch directly by telephone or get the forms online, and the Post Office has thus lost an element of its business.
The hon. Gentleman referred to the BBC licence fee. Many people now pay that, and have for many years, either online or through direct debit. They never go through the process of buying a licence. However, many of my constituents do buy it. They save up stamps or money and when they know that the licence fee is due they have enough money to pay it. I entirely share the hon. Gentleman’s worries—the BBC needs to attend to the issue—about what happens in areas where there is still a large cash economy, where many people do not have the ability to write a cheque for £130 or whatever it is now, and where those people still expect to pay by cash but will not be able to, because there is no PayPoint outlet available locally. I do not see why, in those areas, the Post Office cannot find a means to fill in the gaps. The areas must be readily identifiable, and the contract must already have specified them, so I do not see why we cannot move forward in that way.
The main reason, however, why my constituents use the post office is to collect their pension and other benefits. In the hon. Gentleman’s constituency of Orkney and Shetland, 3,000 people use Post Office card accounts for the collection of their benefits or state pension. In all four of the constituencies of the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), 6,700 people do so, but in my constituency 16,300 do so. Nearly a quarter of my electorate use the Post Office card account system to collect their benefits. The Minister may think that the issue is one that Opposition parties talk about a lot. Actually, in the main, it is one that dramatically affects Labour constituencies. In former mining constituencies and places where there used to be large shipbuilding industry, where many people are on incapacity and other benefits, the issue is of dramatic significance.
Another small but significant matter affects my constituency. The traditional postal service of sending a letter or parcel is particularly significant in areas where many people are in the armed forces. The people running most of the post offices in my constituency say that every week they send fairly large numbers of parcels to troops in Afghanistan, Iraq or other places. In most former mining constituencies, joining the armed forces is still the preferred career choice for a 15-year-old or 16-year-old. I am aware that for those families their post office is thus a particularly important resource.
New services have of course been introduced and the hon. Member for Orkney and Shetland referred to some of them. One is withdrawing cash. I tried to withdraw cash the other day from a post office but I was unable to do so; I bank with the Royal Bank of Scotland, despite the fact that it lent money for many years to the Conservative party.
Many of my constituents also choose to organise their travel money through the local post office, although that service is poorly advertised. Many people think that if they live in Blaencwm they must go all the way to a bank in Treorchy or Tonypandy to organise money. Actually they can do it perfectly easily from one of the post offices that are much closer to them.
My hon. Friend makes his points powerfully. Is he not illustrating the fact that the problem in the sub-post office network in Wales, England and elsewhere is not necessarily lack of initiative on the part of individual sub-postmasters and sub-postmistresses, but the fact that there has been poor leadership in the top management of the Post Office? That was evident from the framework for a pilot computer system in Leicestershire to see how well it would operate nationwide. The framework was very weak indeed; this was perhaps before my hon. Friend came to the House. Is not the top management in the Post Office the problem?
My hon. Friend makes an important point about leadership, which I think extends much further than the example he gave. How are ordinary postmasters or sub-postmasters served by the leadership generally? They need some confidence about the direction in which their business might go in the next three, five or 10 years, but they also need confidence that the services that they can offer will be well advertised not just for their own little business but for the whole network in the region and the country. From my experience, I do not think that the services are well advertised.
One further area that is relevant to potential new business is financial services. In communities such as mine, financial services from an honest broker such as the Post Office could be particularly valuable, especially in areas with high debt and with many people, including loan sharks, trying to force people into debts that they cannot afford. Of course, state aid is a difficulty. The Post Office receives direct financial support from the Government, which puts it in a difficult position in relation to other financial institutions, which would say, “You can’t steal our business on the back of a subsidy from the Government.” However, I think that we could be cleverer about it. There are communities in which we should be able to extend the relevant financial services much more significantly, perhaps in co-operation with credit unions and similar organisations. I wonder whether the leadership, both in Government and in the Post Office, could look at such matters more intelligently and acutely.
Does the hon. Gentleman agree that the issue of state aid would be better illuminated were the aid to be more transparent? At the moment, state aid for the rural post office network goes into the Post Office at the top level, filters down who knows where and ends up who knows where, benefiting who knows whom. If the aid were to purchase a particular service in an area of need, it would be easier to defend, and the rest of the network would clearly be free of that state aid.
The hon. Gentleman makes a pretty good point. I think that the hinge to the matter is proving the market failure. The market clearly fails in certain parts of the country, so it should not be difficult to advance a decent argument in favour of subsidy to enable the Post Office to interact in the market more effectively than it has so far. Therefore, I agree with the hon. Gentleman.
I am conscious of the time, and many other hon. Members want to speak. I want to finish by talking about the Post Office card account. I have already mentioned that 16,300 of my constituents use it weekly, fortnightly or monthly as their means of access to their benefits—their income. Those people feel deeply troubled by the current state of play. They worry that the Government are reneging on a commitment to them. They are worried that they will not be able to withdraw cash locally. That is the issue for them—whether they can do it locally. They do not particularly mind whether it is at a post office or somewhere else. They just want access to the money that they are entitled to.
That is why I hope that the Minister will be able to push us a little further forward in the debate by explaining what guarantee the Government will make that people will be able to access their benefits locally. One of the many petitions that my constituents have put together is from Tonpentre post office. I should happily welcome the Minister if he wanted to visit Tonpentre some time. Since the Rhondda is the area with the highest use of the Post Office card account in Wales, and the fourth highest in the country, he might consider that a valuable exercise.
Has the hon. Gentleman any examples from his constituency of the Post Office card account being undermined in a rather underhand way? A constituent who made a pension credit claim wrote to me recently. He was informed as he was sorting out his claim on the telephone that only his first payments of the pension credit could be paid into his Post Office account and that all subsequent payments would have to be paid into a bank account. When he queried that and said that he understood that that was not Government policy, the person at the other end of the telephone told him that they were just a messenger. If that is indeed a message coming from the Minister, does the hon. Gentleman agree that at least the commitment to sustain the arrangement until 2010 should be continued, and not undermined in such a way?
I have come across a similar incident, but I was a bit more aggressive in pursuing it, and my constituent’s problem was sorted out by the following week. Clearly, some officials need better training on precisely what the rules and regulations are, and perhaps the Minister will have an opportunity to say something about that later.
The important issue for my constituents is that they should be able to transact their pensions and other benefits in a way that is as efficient as possible for them, rather than for the Post Office and the Government. This is about their rights, as much as it is about the Government’s drive for efficiency.
I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on raising this important issue for public debate. Although we disagree on some areas of public policy, I think that we are as one on this important issue.
I have a rural constituency—I shall try not to repeat too many of the comments that I have made on numerous occasions on this issue—and on a hot August day two years ago, I drove around it and visited 28 of my 32 rural post offices, and I have been on the case pretty well ever since. On that day, I established just how important benefit payments are—they are the core function of those post offices, some of whose turnovers include as much as 40, 50, 60 or 70 per cent. from pensions and benefit payments. That leads to a whole series of other activities. There is the sale of Post Office products, such as stamps, and of things related to postal activities, such as stationery, glue and pens. The vast majority of my post offices sell dried and frozen food, and there are also off-licences. The key element is that, in most cases, the post office is the information centre. The village notice board is usually located in the post office, and that is the place to advertise jobs. The post office is the centre of activity.
I took one of my most active postmasters to see the then Minister with responsibility for post offices, who is now the Chief Secretary to the Treasury, and I want to give hon. Members this memorable quote from my constituent:
“If the post office goes, the shop goes; if the shop goes, the village goes.”
The post office has a serious social function, because those who visit it often live alone and may be elderly. If they do not turn up for their payment or their pint of milk, that will be brought to people’s attention. That has an incalculable social benefit that none of us can put a finger on, but which is very tangible. That is the first message: post offices have a function way beyond the mechanics of delivering benefits and other Government products efficiently.
I am afraid that the Government have massively mishandled the issue, because it touches a whole number of Departments, but there is absolutely no coherent view of it. We saw that in how benefits cards were brought in. The previous Government were going to introduce swipe cards, which would have cut out fraud, been efficient and kept benefits and payments going through the post offices, at an income of roughly £400 million. This Government came to power, swept aside that approach and introduced the card account without telling anyone that it would be a temporary measure.
It was only in a debate such as this that the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), announced that the card was always intended to be temporary. He read partially from a Government document, and I am grateful to the Speaker, because I put a point of order to him, and he insisted that that document was placed in the Library. To the astonishment of everyone involved—no one in the Post Office knew anything about this—it was revealed that the contract between the Government and post offices had made this statement all along:
“The POCA is intended to be an interim step for Account Holders”—[Official Report, Westminster Hall, 15 February 2006; Vol. 442, c. 495WH.]
None of us knew that—an enormous deception and fraud was perpetrated on millions of benefit recipients.
Several trials have now been imposed at very short notice, and some 40,000 card holders have been forced into taking direct payments from February to March. There has not been much debate about that. I have had correspondence showing that people received letters in February that bluntly told them:
“I am writing to advise you that I am arranging to pay your Pension Credit into the same account as your Carer’s Allowance. This means that your Pension Credit will no longer be paid in to your Post Office card account…You do not have to do anything at the moment as we will make the changes for you…Once we start to pay your Pension Credit into your bank account, you will need to close your Post Office card account. You will need to get an account closure form from any Post Office”.
That is not exactly consultation; it is a central Government diktat, with no right of appeal. The issue was not properly debated on the Floor of the House, although Back Benchers have brought it up in this Chamber. In one fell swoop, however, we shall absolutely hammer the groundwork that forms the basis of the post office network.
I have the great honour to be the secretary of the all-party group on sub-post offices, on which I serve under the chairmanship of the hon. Member for Vauxhall (Kate Hoey), who sadly cannot be here today. [Interruption.] I am sure that the hon. Member for Rhondda (Chris Bryant), wearing his semi-rural hat, ably deputises for her. Adam Crozier, the chief executive of the Post Office, came to one of the group’s meetings at the end of February or perhaps in March. He revealed that his task—he is under the cosh and under great public scrutiny—is to make the Post Office efficient. He currently has 14,400 branches, but he said that he needed only 4,000 to deliver an efficient physical post service. He has had some unjustified flak for asking, quite publicly, what he is supposed to do with the balance of post offices above the 4,000 that he needs to run the Post Office efficiently if the rug is pulled out from under them and there is no Government justification for them and no Government view on them.
This is where I would be very critical of the Government, because there is absolutely no clear overview and no co-ordination. We saw a classic example recently when the BBC decided to switch its TV licences from the Post Office to PayPoint. I wrote to Michael Grade, the chairman of the BBC, who wrote me a sensible letter dated 5 June. He explained that there were serious commercial gains to the BBC from switching from the Post Office, that the arrangement accounted for only 2.11 per cent. of the turnover of Post Office Ltd and that, as far as the BBC was concerned, it was a straight commercial decision. That is fair enough for the BBC, given that it spends very large sums of public money, and that some of us can be critical of how it does so. In this case, I would not criticise what it is doing, because it is being careful and going for a sensible business decision, but I would criticise the Government for not co-ordinating things. I specifically asked what discussions the BBC had had with Ministers, and its chairman said:
“Regarding your query about what discussions have been held with Government Ministers in relation to the contract with the Post Office, the Department for Culture, Media and Sport was kept informed by BBC management of the decision to put the contract out to tender and, once a decision had been made by the Board, about the announcement and timing. There were no discussions about the decision itself, as this was a matter for the BBC.”
What is happening is that each Department that uses, or did use, the services of the Post Office branches is allowed to go off on its own, and there is absolutely none of the joined-up government that we were all told about back in 1997; there is no co-ordination at the centre. I should like the Minister to tell us clearly who actually makes the decisions. Is it the Department of Trade and Industry or the Department for Work and Pensions? Why was the issue not discussed beyond the Department for Culture, Media and Sport? For the BBC, it was a sensible commercial decision, but for a large number of post offices, it is yet another slice of income and another step nearer the grave.
At some stage, someone will have to make a grown-up decision, because no decision is being made at the moment. We have not yet had a debate on the Floor of the House. We have debates only in Westminster Hall, thanks to energetic Back Benchers who bring the issue up at fairly regular intervals.
I agree with the case that the hon. Gentleman is making. Does he agree that the BBC should have a duty to make available to people in rural areas and on islands points where they can renew their licence? There are several islands in my constituency, just as there are in Orkney and Shetland, and there is no pay point on them. The BBC should not have awarded the contract to PayPoint, whose computer tells people where the nearest pay point is as the crow flies. In my constituency, that means that people would often have to swim across two or three miles of water.
That is a valid point. It is not relevant to landlocked North Shropshire, although we have a few meres, but it is a good point, and perhaps the hon. Gentleman should take it up with the chairman of the BBC. It is a clear example of how an agent of Government activity such as the BBC, which takes large amounts of taxpayers’ money, makes a decision on its own because it makes sense from its point of view in terms of spending its pot of public money.
The point that I am trying to make is that there is absolutely no co-ordination. Someone will have to make a grown-up decision on how that Government money is spent—and to keep the network going, Government money will have to be spent. Instead, the Department for Work and Pensions goes off on its own, without any consultation, imposing trials in a brutal manner. I would like confirmation that the result of the trials will be revealed to Parliament, that we will have a chance to debate them before the matter is taken further and that we will not get any more dictatorial letters basically bludgeoning vulnerable, nervous pensioners into taking their payments direct when they do not want to do so. That is one thing on which we really need a promise—a promise that there will be a proper statement to Parliament on the results of the trials, and that we will afterwards debate the subject properly on the Floor of the House.
I also want a complete guarantee that someone in Government will then stand up and say, “Yes, I am the Minister in charge of these various activities. I will co-ordinate things, and here is our strategic view for the future,” because, bluntly, we just do not have one. The subject affects too many people. I shall quickly give the figures to remind the Minister just how big the issue is. According to the National Federation of Sub-Postmasters, there are 7,854 rural post offices and 12 million customers a week. Some 84 per cent. of the rural population live within 1 mile of the post office, 75 per cent. of rural post offices have a shop attached and 58 per cent. of rural residents use the attached shop once a week or more. Frequently, the post office is the only place where one can withdraw cash, because only 4 per cent. of villages have a bank, but 60 per cent. have a post office.
I shall end on the universal bank. I went to see the Chief Secretary to the Treasury, and was told, “Don’t worry, there will be changes; we will bring the Post Office into the commercial world, but you will pick up new business. You will get the universal bank.” However, from parliamentary questions that I have asked, we now know that some substantial banks are still not part of the scheme, including HSBC, Halifax, Bank of Scotland, the Royal Bank of Scotland and Abbey.
My final question is: what steps are the Government taking to bring in banks that are not part of the scheme? It is no good closing down some of the Government areas of activity and promising that the private sector will pick them up if that is not being done. However, the question to which I really want to know the answer—this is probably the third time I have asked it—is who will get a grip on the problem, and who will come up with a coherent, clear strategy for the 14,400 post offices? At the moment, we do not have such a strategy, and post offices are suffering death by 1,000 cuts. Very large numbers of post offices will go unless the Government wake up.
It is a real pleasure to speak under your chairmanship, Mr. Williams. I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on raising this important issue.
All of us who represent rural constituencies understand the value of the post office to our constituents. We also understand the adverse impact on communities when post offices are lost. When I travel around my constituency, I observe that there is almost a constant assault on the infrastructure of our small villages and towns. If it is not the post office, it is the local bank; if it is not the bank, it is other community facilities in the constituency. When I look round my small villages and towns, I observe that there are three things that define a community. One, obviously, is a post office; the second is a local school; and the third is a local pub. It is those things that give a set of houses a character that defines them as a community, and it is these things that we really need to fight to maintain in order to ensure that our villages and small towns continue to be viable.
The term “post office” is a complete misnomer; it gives no suggestion of the full range of activities that they undertake, or of the myriad functions that they provide. As well as selling stamps and all the rest of it, they are now probably the only part of the retail sector in some small towns and villages. There are a couple of post offices in my constituency where people can buy their petrol, for example. There is also a place where local arts and crafts can be bought and are used as a means to entice tourists, show them what is available in the locality, and encourage them to spend some time in these wonderful rural areas.
The point has also been made that post offices serve a key local function, providing local information to people. It is, on occasion, where people meet to go to other community events, and they provide a great social hub. Some of these places are more like community centres than just post offices, and on that basis are worth maintaining. We call the people who look after such places sub-postmasters, but they are much more than that. They are almost part social workers, part care attendants, and on some occasions provide an almost pastoral role; they might say, “Wee Jeanie is far too late; she’s not turned up at her usual time this week.” They can sound a gentle alarm bell, asking, “Is she okay? Is everything all right?” They provide that sort of role. Some are almost like lifestyle gurus and personal advisers, and we can see their impact on their community.
That is why I believe that the threat to our rural post office network has disastrous consequences for our villages and small towns. When a post office closes, it means that people have to travel much further to access some services. That affects even the more active members of the community. Around half the people who use post offices walk to them. If that post office is closed, it means that a car journey is involved, and then the health benefits are lost and the environmental impact of that is brought into play.
For some more elderly, frail members of our community, and groups such as disabled people, the post office is a lifeline; they require post offices in order to access all the critical services that they need daily. Postwatch showed us that when post offices close, the business does not automatically transfer to the post office in the next town, because as a car journey is involved, going there is more of a hassle, and probably people will go to a larger town in order to access those services, so there is a net loss in business for such post offices. We can see that there is an impact, in terms of those businesses continuing to be sustainable.
It has been recognised by everyone who has spoken that a subsidy is required if post offices are to continue to operate. They are loss-makers. Someone mentioned that 90 per cent. of all post offices are unprofitable and require some sort of support. In order even to start to be self-financing, or even approach profitability, they need a unique selling point, and traditionally, they have had that; it was the range of products that they could sell. So it is almost perverse that post offices are losing business, but are, at the same time, being deprived of essential services by Government. The Post Office card account has been mentioned several times already today; it is of crucial importance to the post offices being able to process benefits, including child benefit and unemployment benefit. All those things are essential as part of their core business, but they are being deprived of that. They are asked to be sustainable, while they are being deprived of those essential services.
Perhaps we could go to the post office in future to get our ID cards; perhaps that could be a means to try to resurrect some sort of business for local post offices. It is unfortunate and unfair that we have identified that post offices have a profitability issue, but we are not giving them support; in fact, we have taken away from them the very things that could make them profitable and self-sustaining.
My gut suspicion is that the Government want out of the whole business of post offices; that is what I really believe. I read with great alarm the remarks by Adam Crozier, who spoke of an “imperative” need for a “radical transformation” of the networks as a result of the collapse of Government work, such as benefits and pensions payments. He reckoned that such payments have fallen from 60 per cent. of the work that post offices do to 10 per cent. He said that it is simply not sustainable to have 1,000 offices with fewer than six customers each. When I read such remarks, it gives me the clear impression that the Government do not want anything to do with the businesses, which they view as more of a millstone than a real service.
I look around the Chamber and recognise the people here; I observe that there are lots of Scottish Members here, and I think that we are all in the 10 largest rural constituencies in the whole United Kingdom.
That is the point; it is unfortunate that there is only one Labour Back Bencher here. I am grateful to the hon. Member for Rhondda (Chris Bryant) for contributing, but where are the others? We really need to engage in this debate. We need to tell others what it is like in rural communities, and how important post offices are.
For the reasons that I gave, I believe that the Post Office should remain in the public sector; a public sector ethos is required for the Post Office to survive. It is imperative that it be given a subsidy, given the centrality of its functions in rural communities. I have to say that I look with alarm at some of the proposals brought forward by the Liberal Democrats, including part-privatisation. I have observed part-privatisation in other public sectors in Scotland, and the disastrous consequences.
It is estimated that the Post Office network—never mind the Royal Mail—requires something in the region of £2 billion of extra investment over and above that already put in. If that is not to come from our proposals, where does the hon. Gentleman suggest it should come from?
I am grateful to the hon. Gentleman for mentioning that. It is obviously a UK figure and, with great respect, it is the Scottish element that concerns me. The Liberal Democrats boast about their partnership arrangements in the Executive in Scotland and money was found for what they call the abolition of tuition fees, and for free personal care. This issue is so important to the centrality of communities that the money has to be found. Clearly, money was found for those pet projects of the Liberal Democrats, which we supported, so we should be able to find the money in the public sector to do that. I have real concerns that if we go down the part-privatisation route, the situation could be made worse. I caution communities and sub-postmasters to look carefully at the Liberal Democrat proposals and see the dangers inherent within them.
I will conclude because I have taken eight minutes. Rural post offices have to be maintained. A public sector ethos must be attached to them and a subsidy must be maintained in order to do this. They are central to our communities, they are worth fighting for and I hope that the Minister listens to us very carefully—and I hope that the next time we have one of these debates, he brings some Labour Back Benchers with him.
I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing the debate. I shall be as quick as I possibly can in the hope that someone will be able to follow me.
I represent the district of Torridge and the borough of West Devon, which together form my large constituency. I can tell the hon. Member for Perth and North Perthshire (Pete Wishart) that it is the second largest in England. It is a remote and sparsely populated constituency that shares many of the problems that rural constituencies experience. I imagine they are very familiar to those around the Chamber. I am delighted to be one of two representing the south-west of England—the other is the hon. Member for Falmouth and Camborne (Julia Goldsworthy).
Our communities share the following characteristics: we have a fragile rural economy; a dearth of affordable housing; an ageing population; social and health services in deficit struggling to reach isolated communities; and a lack of investment and employment opportunities. Those are exacerbated by the threadbare public transport network, and there is a sense that our communities are under strain.
This week’s report from the Commission for Rural Communities surprised no one—except perhaps the Government—in its portrayal of the reality of rural disadvantage and poverty. At the same time, the countryside—certainly the south-west of England—is undergoing a major, painful change. The state of livestock agriculture is a subject on which many hon. Members have spoken many times. I do not wish to paint an exclusively pessimistic and gloomy picture, but there is no doubt that the blow after blow sustained by the industry has driven it nearly to the edge of extinction.
When we see countryside communities in the midst of such turmoil and change, familiar institutions provide the confidence that small communities need that there will be continuity and that there will be a future for them. Par excellence, the institution that most gives comfort to rural communities, which sends the message that their definable identity and character will survive the changes through which they are going, is the rural post office.
Familiar institutions assume great importance in the circumstances of rural communities at the moment, and the post office is an outstanding example. As other hon. Members said, it is at the very heart of the identity and character of a village. It is a centre of social life, which reassures people that the community to which they belong is remembered and recognised by the outside world.
A sub-postmaster in a small village in the countryside does not enter his occupation seeking monetary reward. Many of them have spoken to me of the gratification it gives them to feel that they are central to the community in which they live. They can engage in friendly conversation with an elderly resident who lives alone, for whom that visit is the one recreation of the day, and they miss them and ask after them if they do not come, as the hon. Member for Perth and North Perthshire said. That is a vital social function.
I recently completed a survey of every post office in my constituency. Benefits and pensions are collected through the Post Office card account by 9,000 people. There are about 60 post offices in my constituency and well over 90 per cent. replied to my request for information, for which I am grateful to the postmasters and postmistresses. Of those 60 post offices, 79 per cent. are more than 2 miles from another post office and 46 per cent. are more than 5 miles. The Post Office card account is relied on by 58 per cent. of them for more than half their income and by a further 23 per cent. for over a quarter of their income. How do the Government believe that they can survive if the card account is withdrawn?
Of those post offices, 77 per cent. said that their business would be in jeopardy if the card was not continued or replaced by something similar, and 66 per cent. would have to lay off part-time or full-time staff. Other services are provided by 90 per cent. of them, such as the village shop or newsagent. Where will people go, how will the services be delivered and where will the residents, many of them elderly and without transport, go to conduct the business they need?
It is vital that the Government plainly and unequivocally commit themselves to the future of rural post offices. They must confirm that they will develop a replacement for the Post Office card account and that they will continue to recognise the important social function fulfilled by post offices. They should, without delay, announce that they will work with Post Office Counters Ltd to develop new services and that they will not divert card account holders to bank accounts in the meantime.
Steadily and relentlessly, the foundation of the rural post office network is being eroded. The hon. Member for Falmouth and Camborne mentioned South West Water’s disgraceful letter, in which it encourages people to use PayPoint, which does not exist in half the villages in my constituency, to pay for water. One might mention SWEB Energy key recharging—another function that has gone.
When the Government offered the lifeline of the card account, sub-postmasters embraced it and made it a success. Despite the discouragement of six or seven different forms and the cold welcome given by Department for Work and Pensions officials to prospective card holders, 4.5 million signed up, many just to support their local office. Despite the subsidy and the as yet unrenewed commitment to preventing avoidable closures, it is no wonder that so many who spend their lives in small rural post offices distrust the Government’s word.
They will be looking with anxious expectancy upon today’s proceedings and listening intently to what the Minister has to say. It is essential that the Government do not let them down. They should provide a raft and lifebelt to this vital social function, which these people, who are so important to the lives of rural communities, genuinely deserve.
I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this excellent debate, and I agree with many of the points made. I want to make three quick points, but before I do so, I want to say that I regret that the Government report from the DWP, which they told the Select Committee on Monday would be available the night before this debate, will not be available until next week. We have not had the benefit of seeing that report before this important debate. That is a good reason to endorse the comments made by my hon. Friend the Member for North Shropshire (Mr. Paterson) that we must have a proper debate with full information.
On the threat to our post offices, I endorse the comments of my hon. Friend the Member for Torridge and West Devon (Mr. Cox). I, too, have undertaken a survey and visited virtually all the post offices in my constituency. Of those, 86 per cent. said that the withdrawal of the Post Office card account would jeopardise their business, and 14 per cent. said that it might jeopardise the future viability of their business. That is the response from all the post offices in my constituency. It is the eighth largest in England and shares a lot of features with those constituencies represented by other hon. Members in the Chamber.
The DWP undertook three pilot studies of alternatives to the POCA. It transpires—not transparently, but as a result of problems raised by my constituents—that one of the pilot areas for the second scheme happens to be in Shropshire. I give the Minister the example of Mrs. Janet Price, who received a number of letters requesting her to cancel her account. She ignored the letters because she did not want to cancel it, and she eventually received a threatening telephone call on a Saturday afternoon from a member of the agency’s staff. When I first heard about that, I found it hard to believe, but it clearly was the case. I have had a letter of apology from the chief executive of the Pension Service, and a letter from the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt).
I raise this issue because I have been accused, as have other hon. Members, of employing scare tactics to claim that post offices are under threat when they are not. That is absolutely not the case. In the letter, which I received last month, the Under-Secretary said:
“Undue pessimism and scare stories, suggesting that thousands of post offices will close and that customers will no longer be able to collect their benefit or pension at the post office, are not totally misleading, but, by spreading unfounded fears, are not in Post Office Ltd’s interests.”
We have just heard that 2,630 post offices closed in the two years to March 2005. Where is the evidence-base for claims like that? These are not scare stories. The Minister has heard evidence from hon. Members on both sides of the Chamber, and I hope that he will take cognisance of those genuine concerns in his response. I hope also that we will be allowed to have a proper debate on the Floor of the House.
I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on securing the debate. He rightly made it clear that the future of the rural post office network is vital to communities across the length and breadth of the United Kingdom, not least those in the highlands and islands of Scotland, which he and I both represent.
I welcome the Minister to his place. I secured a debate on the future of the rural post office network in this Chamber on 11 January, in which his predecessor described the rural post office network as an “inefficient physical structure”. He showed a lack of commitment to the post office network and a pretty crude financial approach. I very much hope that the Minister will do somewhat better in his response.
Rural post offices are at the heart of our rural communities. As we heard, there were 7,854 of them at the end of March. More than two thirds of villages with a population of 500 to 1,000 people have a post office, and those communities have enormously strong support for their post offices. In the village of Drumnadrochit in my constituency, which has a population of about 1,000, more than 500 people signed a petition to support their local post office. That is half the population of the village.
My hon. Friend set out some constructive ideas for the Post Office, to which I hope the Minister will respond in similarly positive terms. His ideas shed light on two key questions that the Government must answer: what is their vision for the Post Office, and how will government be joined up to achieve that vision?
Does my hon. Friend appreciate—I am sure that he does—that there are great concerns about funding the rural network post-2008, not least in Wales, where the National Assembly Government are waiting to hear what the Minister has to say? His reluctance to give a statement on future funding is jeopardising the position of many post offices in Wales, not least in my constituency, where we have lost three in the past six months.
I am grateful to my hon. Friend for making that point, because I want to discuss that. Ministers have been reluctant to set out their visions for the future. Last week, in response to my question in Prime Minister’s questions, the Prime Minister talked about hundreds of millions of pounds of subsidy and the need to
“make ends meet within the public finances while providing rational and logical support to post offices.”—[Official Report, 7 June 2006; Vol. 447, c. 250.]
Yet again he failed to take the opportunity to express his support for post offices and the vital social and economic role that they play. It is that kind of talk that sends a shiver down the spine of rural communities. There are real fears that the Government's vision of rural post offices is of closures, not big improvements. Indeed, the record of recent years is not inspiring. We have heard that the social network payment runs out in 2008. Will the Minister give us a clear indication of when an announcement will be made about that? Post Office Ltd is currently required to prevent unavoidable closures, but that commitment runs out this autumn? What will happen after that?
As we heard, Ministers did not lift a finger to prevent the BBC from taking TV licences away from post offices; likewise, the contract for the new passport offices. A number of hon. Members talked about the Post Office card account being removed in 2010 and gave worrying reports that new customers are already being denied access to them. So the Post Office is not even waiting until 2010 to implement what is a disastrous policy. Will the Minister give us an assurance that guidance will be issued within the DWP to ensure that there are no more incidents such as those quoted by my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) and the hon. Member for Rhondda (Chris Bryant)? Will he tell us what progress has been made through work with the Post Office to develop what might be called a post office card account-plus for 2010 onwards? I hope that all POCA customers can be migrated to such an account automatically, without the hassle of changing accounts and the pressure that the Government have previously applied to people to opt out of post office-based systems.
The DVLA and the supply of vehicle licences in post offices have been mentioned. I understand that the contract for that service is up for renegotiation next year. Will the Minister ensure that the interests of rural communities in having such services delivered by post offices are taken into account when that is considered, as they were not taken into account when decisions were made on the TV licence and the POCA? In such cases, each Department behaves as if the involvement of the Post Office is some sort of problem. The case for the use of the post office network to deliver public services should be decided on a cross-Government basis, not piecemeal by Department.
Perhaps the Minister could reflect on the wider social and economic benefits that post offices offer to rural communities. He might be aware of research that shows that for every £1 that the Government spend on rural post offices, £4-worth of benefit is delivered to the rural economy. Supporting rural post offices should be seen as an investment in our rural communities, not derisively referred to as a subsidy, as the Prime Minister did. What estimates has the Minister made about the overall social and economic value of the rural post office network?
To pick up on a point raised by my hon. Friend the Member for Orkney and Shetland, what discussions is the Minister having with the banks to ensure that more bank accounts can be accessed in post offices? Will he press for the Post Office to be allowed to join the Link network, thereby enabling it to offer cash withdrawal services to the entire community? I know that there have been negotiations on this subject for some time, and that there is some resistance within the Link network to allowing the Post Office to join. It is important that the weight of the Government’s efforts are put behind the Post Office in ensuring access to the Link network. That would ensure that when the hon. Member for Rhondda visits the post office and uses his Royal Bank of Scotland card, as I would do myself—I am perhaps ashamed to say that that is my bank, in the context of this debate—we can access cash at the post office rather than being turned away, thereby opening them up to a much wider range of business.
Will the Minister also look imaginatively for new Government services that can be delivered by the post office network? In Fife, documents can be checked for the police in post offices—that has been piloted very successfully—and the idea of post offices providing transport services and selling tickets has been suggested. The Minister will also be aware—indeed, it has been mentioned today—that a number of private companies are following the Government’s lead and taking services away from post offices. South West Water has been mentioned in that respect. I can also report that First Group has decided to withdraw the facility to purchase season tickets for its rail services from post offices as of May this year.
If the Government behave as though they have no responsibility to support the community network that the post office network serves, how can we be surprised if vastly profitable private companies follow their example? A Government vision for the Post Office is vital if it is to deliver services effectively in the future, but it is also vital that the public, particularly people living in rural areas, are directly involved in the debate. Will the Minister assure the House that the Government will engage in a full public consultation so that they have to listen to the views of the communities affected? He could learn a lesson from the direct public consultation that my hon. Friend the Member for Orkney and Shetland is undertaking tomorrow and the next day.
The vision can only be achieved if Ministers demonstrate considerably more joined-up Government than they have shown so far. I note that a new Cabinet Committee on Post Offices has been established, under the chairmanship of the Deputy Prime Minister. So, after a torrid few weeks, the Deputy Prime Minister has a chance to redeem himself. On the other hand, he could end up being known as “Two Jags; no post offices.” How often has the Committee met and what progress has it made in persuading individual Departments to recognise and support the wider role played by the rural post office network?
It has been reported that without the business from the POCA and support from the Government, 10,000 post office branches will have to close, most of which will be in rural areas. The Minister has an opportunity to show that the Government have a vision and an approach that can enhance and support this invaluable network for many years to come. I hope that he will do that, because the alternative for our rural communities is too awful to contemplate.
We have had an excellent debate. The passion of Government and Opposition Members and the clarity with which they have spoken have come across clearly, but, above that, there has been the sense of cross-party purpose. The issue affects rural areas in every part of the country, from the north of England to semi-rural Wales, south-west England and the south-east. I hope that the Minister will take that clear message away. I hope that he will talk to the business managers of the House and explain that there should be a debate on the issue in the Chamber, in Government time, so that many more Members have the chance to air their concerns.
Over a number of years, we have witnessed a worrying decline in the size of the post office network. In 1999, there were 18,374 post offices, and as we have heard, today there are 14,400. That is a loss of 20 per cent. of the post office network in just five years. Most of us think in terms of constituencies rather than nationally. In my constituency, we have gone from 43 post offices in 1999 to 28 today. That is a one-third reduction in the level of service. For each and every one of those closures, there is a story of human beings who have lost their businesses, and people who have lost a service and a lifeline in their local community.
However, we have not seen the end of the crisis. It is getting worse. The 7,800 rural post offices account for half the branches in the network, but only 10 per cent. of the business. From a parliamentary question earlier this year, we understand that, on average, each post office in the rural network is visited by 355 customers a week. However, we must recognise that 1,000 of those branches have fewer than 50 customers a week. Those branches are at or beyond the margin of survival, and the pressure on them is growing all the time, rather than easing.
This year, the post office network will lose £2 million, and that will double next year. The pressure is getting greater because of the policy changes that are coming through. We have heard from Government and Opposition Members about how those changes have been working out, but, with the difference in budget, post office income from Government contracts this year will be £168 million less than last year.
That will get worse with the withdrawal of the Post Office card account. I hope that the Minister agrees that the Department for Work and Pensions must clearly state that it will not, under any circumstances, put improper pressure on people to move from Post Office card accounts to bank accounts. We have heard too many examples for it to be something that is happening by accident. Ministers must confirm that they will send a message to every single agency stating that they should put no pressure on people to move away from the account if they do not wish to do so.
The problems will get worse again through the moves to put the DVLA online, set up a regional network of passport offices and administer the BBC licence fee online or through PayPoint. They are statements of fact, not blame, because as responsible people we all recognise that those organisations have a public duty to reduce the costs of delivering their benefits and services, and to do so as efficiently as possible. However, the Government’s lifeline of £150 million ends in March 2008, so the Minister will understand the huge air of uncertainty surrounding the issue.
The consequences of closure are so great, because as we have heard, in particular from my hon. Friend the Member for North Shropshire (Mr. Paterson), too often the post office is not just a stand-alone post office business, but the last shop in the village and the chemist. It provides a range of other services and many important facilities, and once they go, they are lost for ever.
We must recognise that the decisions that affect the closure of rural post offices are taken not necessarily by the Post Office centrally, but by individual sub-postmasters and sub-postmistresses. They find that they are subsidising a loss-making business, and they decide that they cannot go on doing so. When they consider the value of their property in the centre of a community, they recognise that they can get much more by selling it off as housing rather than by keeping it going as a business. They are human decisions, but they have a huge impact on the community.
A great deal has understandably been made of the comments by Adam Crozier, Post Office chief executive, that he needs only 4,000 post offices to meet his legal service obligations. We must accept that he is not saying what he wants or intends to do; he wants that network size in order to meet a legal obligation passed in an Act of Parliament. We should pay great tribute to the work that he, and Allan Leighton as chairman, have done in turning the Post Office around, but they need to know that, in making the decisions that are right for them as a business, they have the Government’s clear thinking behind them, too.
What has been lacking in this debate is a sense of the Government’s vision, and the Department of Trade and Industry is at the heart of that lack of vision. We are prepared to give the Minister a small exemption, because he is new to his post, but he must come up with some answers soon. We are watching the whole network crumble while Ministers simply wash their hands of responsibility for what is going on. We must know what size of post office network the Minister envisages as right for this country in the years to come, and what level of Government subsidy he proposes in order to deliver that network. Many of those businesses will continue to be marginal unless there is Government support.
As the Liberal Democrat spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), said, one of our key considerations must be how we can bring new business into the post office network, enabling it to expand its range of services, rather than watch them constantly shrink. Can post offices become the hub for the first-mile postal delivery services, whereby local businesses would bring their post for onward transmission, not necessarily through Royal Mail, but through other suppliers?
Can post offices become a place of storage for undelivered items? A majority of parcels cannot be delivered because the occupants are not at home at the time of delivery. Rather than returning parcels to a sorting office that is sometimes a long way from the communities to which they are delivered, why could not they go back to the post office? It could then be remunerated for providing that service.
The Government must also provide us with a vision for shops, not just post offices, because they go hand-in-hand. What more can be done to encourage the greater provision of more financial services through post offices? The Government must provide us with some wider thinking and some new ideas that explain how we can create greater opportunities, rather than letting the network slip away. If post offices are going to close, the Minister must also explain how the Government will encourage replacement services such as mobile post offices in our most rural communities.
Above all, what are Ministers doing to replace the Post Office card account? The Minister must communicate to his fellow Ministers in the Department for Work and Pensions that their saying that it is an issue for the Post Office alone is not good enough. Some 1 million of the 4.5 million people who hold the accounts have no other system of banking. They depend on the account, and the Government have an obligation to ensure that, rather than being driven to the banks, which for many is not an option, people who choose to bank in that way can continue to do so.
The Government must set out their vision. The Post Office is under better management than it has been for many years, but it needs to know where it is heading. We cannot wait until 2008 or even shortly before that to hear from Ministers how they intend to secure the network; we must know this year. Until that happens, more and more of our citizens will have to watch as a much-loved and vital community institution withers away.
It is a pleasure to see you in the Chair, Mr. Williams. I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate. We have had some excellent contributions, and it should be nothing other than clear that the Government have heard the message. Having listened to the hon. Gentleman spell out his views and to other colleagues spell out their concerns, I shall make some brief introductory comments and then try to respond to their points. If I do not get through them all, I shall write to hon. Members.
The future of the post office network is an issue of relevance to every Member, whether we represent rural or urban constituencies, or mixed constituencies of the sort that my hon. Friend the Member for Rhondda (Chris Bryant) mentioned. We all share concerns about the future provision of post office services in our constituencies. Most of us also recognise, even if we are not always willing publicly to acknowledge it, that there had been underinvestment in the business for decades until this Government reversed the decline with a sustained programme of investment since 1999. Some £500 million was injected to help fund the Horizon IT infrastructure, and in 2003 the Government committed £150 million a year up to 2008 to support the rural network. That was mentioned by many colleagues. On top of that, the Government put £210 million into the urban reinvention programme, including some £30 million of investment grants to improve and modernise the remaining branches. That represents an investment of some £1.4 billion of taxpayers’ money by this Government.
Nevertheless, advances in technology, greater mobility and changes in shopping and financial habits have resulted in a growing proportion of people simply not using post offices as they did in the past. Custom across the network has sharply reduced, creating the spectre of a spiral of decline. If the post office network is to survive and to have a sustainable future, it must adapt to the changing circumstances and environment in which it operates. The Government want a post office network that can prosper on the basis of current and future needs, not on those of 20 or 30 years ago. The way in which customers want services delivered is changing, and the huge increase in internet sales has hit many traditional sectors, including the post office.
We must face up to present reality. Major sectors of the network are losing substantial amounts. The rural network is making losses in the region of £150 million a year, and the directly managed Crown offices have been losing about £70 million annually. It is clear that the status quo is not sustainable. Several important steps to restructure and revitalise the Post Office have already been taken, but the future of the network rightly remains an issue of national debate. It is clear that there are still considerable challenges ahead. I shall try to address some of the points that hon. Members have made.
In response to the hon. Member for Wealden (Charles Hendry), let me say that there is clearly strength of feeling on the matter. It is a huge national issue. I am sure that there will be debates in due course when the Government arrive at conclusions. In the meantime, there are the usual channels for securing debates. There are also Opposition days and these opportunities in Westminster Hall.
I very much agree with the hon. Gentleman’s comments about commending Allan Leighton, Adam Crozier and the staff for the turnaround in Royal Mail’s fortunes, which has been quite spectacular in the past few years. Clearly, we want exactly the same for Post Office Ltd. I am grateful for the generosity of his remarks and for his giving me time, given my newness in the job. However, I do not believe that I will have very much time—this is far too important an issue.
The hon. Member for Orkney and Shetland opened the debate with comments about listening to sub-postmasters and sub-postmistresses. We have a good relationship with the National Federation of Sub-Postmasters, and I expect to meet Colin Baker, the general secretary, very soon. Indeed, officials of the Department of Trade and Industry and other ministries are directly in contact with that organisation.
On the BBC decision in favour of using PayPoint rather than the Post Office, I obviously regret that the Post Office was unsuccessful in re-tendering for the contract for over-the-counter TV licence sales, but I point out that the contract decision was a commercial matter for the BBC, which has a duty to licence holders to achieve value for money with its licence fee income, as the hon. Gentleman mentioned. To use both Post Office and PayPoint outlets would have been even more costly.
The hon. Gentleman also raised the question of why Post Office Ltd did not win the UK Passport Service authentication by interview tender. The decision was a commercial matter for the UK Passport Service, which set its tender specifications on bases that were considered necessary to provide the required levels of network coverage, security and physical suitability. Having reviewed what it could offer, Post Office Ltd made the commercial decision to withdraw from the tender process. However, the planned interview offices will not take any existing business away from post offices or offer any alternatives to the passport check-and-send service available from selected post offices.
The hon. Gentleman and several other hon. Members asked when the Government would make announcements about a subsidy beyond 2008. The Government are carefully considering options for the network beyond 2008. I am sorry, but at this point we are not working to a fixed timetable. There has already been extensive informal consultation with key stakeholders, and we expect to consult more widely in due course.
Finally, the hon. Gentleman asked why all banks do not have accounts available at post offices. He was correct in saying that there were some difficulties with some banks. However, all the banks have at least a basic bank account that can be accessed at a post office and many allow their customers to access their current accounts at a post office, but extension of those arrangements is a commercial matter for the Post Office and the banks. The Royal Bank of Scotland, HSBC and Halifax do not allow access to their current accounts. We are asking them to reconsider that, but clearly such a service is very much in their gift.
Discussions have taken place on the Post Office joining the Link network. It was not possible at a particular time, but discussions are ongoing. It is on my agenda to have meetings with Ministers in other Departments, including the Treasury, to consider what we can do to try to facilitate the process.
My hon. Friend the Member for Rhondda asked about state aid. As I said, we have been committing £150 million per annum since 2003. That support is provided directly to Post Office Ltd to maintain non-commercial branches that otherwise would close. The funding is used to meet the fixed element of sub-postmasters’ pay and the huge infrastructure costs incurred in running such a large network, including, for example, IT and cash distribution.
The hon. Member for Falmouth and Camborne (Julia Goldsworthy) and several other hon. Members asked about the Post Office card account. She referred to a letter received by a constituent. If she wishes to write to me or preferably to my colleague with responsibility at the Department for Work and Pensions, I am sure that the matter will be considered. I believe that it was also raised by the hon. Member for Ludlow (Mr. Dunne).
My hon. Friend went on to ask about other services that the Post Office might exploit. It is now the UK’s No. 1 provider of foreign exchange, with 12 million transactions last year. It continues to broaden its range of financial services with its instant saver account, which was launched in March, and it is the largest independent provider of travel insurance, with 1 million policies sold annually. I am sure he knows that the Government are a big supporter of credit unions.
My hon. Friend the Member for North-West Leicestershire (David Taylor) made a point, but as he is not in his place, I shall move on to the hon. Member for North Shropshire (Mr. Paterson). I understand that the DWP has committed itself to placing the trials documentation in the Library, but I am sorry that I do not know the date. As the hon. Member for Ludlow said, we expected that information earlier but it has not been provided yet.
The hon. Member for North Shropshire also asked about the BBC over-the-counter licence service. I have already mentioned the commercial decision. The Prime Minister made this a cross-cutting issue with the announcement that MISC33 has been set up under the stewardship of the Deputy Prime Minister. I know that that was not welcomed by some colleagues, but the fact that a formal Cabinet Sub-Committee will review the issue demonstrates that it has moved up among the Government’s priorities. The first meeting will be held shortly.
On the migration of services, if the hon. Gentleman will forgive my making a small partisan point, I may say that it was the Conservatives who introduced payment into a bank or building society as an option in the 1980s. Even before the migration from order books started in April 2003, customers were already choosing to adopt alternative methods of payment. Forty-three per cent. of DWP customers had already opted to receive all their benefits by direct payment.
The hon. Member for Perth and North Perthshire (Pete Wishart) asked about sub-postmasters. We have discussed the statistics on the few people who use the smaller number of sub-post offices. I had planned to quote, if I had time to do so, from The SubPostmaster, the magazine of the National Federation of Sub-Postmasters, a letter that was published last August. It demonstrates just how quiet some sub-post offices are, although I decided that I might be regarded by colleagues as flippant, which was not what I intended. I wanted to try to introduce balance and to say that some smaller branches simply are not viable in any way, shape or form. If they are kept open, they will require subsidy, and the Government are about balancing public accounts and achieving the best value for the taxpayer.
The hon. Member for Torridge and West Devon (Mr. Cox) asked about financial sustainability. I have made points about some of the technical changes in society. The hon. Member for Ludlow mentioned that there were 2,600 closures in the past three years, but the vast majority—more than 2,000—were related to the managed urban reinvention programme, to which we committed £210 million. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander)—