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Post Office Network

Volume 453: debated on Thursday 30 November 2006

I apologise on behalf of my right hon. Friend the Secretary of State for Trade and Industry, who is not able to answer questions today because he is on a trade trip to China. He has notified colleagues on the Opposition Front Benches.

The Government have invested more than £2 billion since 1999 in the post office network, because we know that post offices are an important part of British life, particularly in rural and deprived urban areas. We will announce shortly our proposals to ensure a long-term stable footing for a continued national post office network.

The village post office is on the edge of an abyss. Some 80 per cent. of those 8,000 vital businesses would collapse without the annual Department of Trade and Industry support subsidy, due to end in 16 months, and the Post Office card account, which will expire in 2010. To survive, the rural network needs the lifelines of post office-based banking products, preference in the distribution of Government services and an early White Paper to spell out a clear future framework. Does my hon. Friend—who is the most astute of Ministers—think that he is doing enough to tackle that most acute of crises?

My hon. Friend will be able to make his own judgment shortly, because, as the Secretary of State has said, he will make an announcement before the Christmas recess. Because of my hon. Friend’s long family association with the Post Office, he knows that the current position is unsustainable, with losses of £100 million per year, expected to rise to £200 million per year. Investment from the Government since 1999 has been £2 billion, including £150 million for the rural network, which, as my hon. Friend says, will continue until 2008. We know that POCA must have a successor, and that Government assistance will be required to maintain a viable national network. My hon. Friend will shortly be able to see the outcome of all the Government’s efforts, particularly over the past six months.

The remaining sub-post offices in Upminster are mostly also convenience stores, in which sub-postmasters have expanded the range of services to make businesses viable. Those provide an important service, especially for elderly people who do not drive and cannot get to the main shopping areas. Will the Minister review his decision to abolish the post office card account and enable post offices to expand the range of services that they provide, rather than slowly strangling them?

The hon. Lady accords me status above my station by saying that I made the decision to abolish the post office card account. First, that would not be my decision. Secondly, no such decision has been taken. The Department for Work and Pensions is in negotiations with Post Office Ltd. and others about a successor to the Post Office card account, and we have given assurances to the House that there will be a successor, as, regardless of what happens, more than 1 million people will be dependent on that to receive their benefits. As we all know, the vast majority of sub-postmasters and sub-postmistresses are small business people, and they sometimes trade jointly and service communities with other products. We are doing what we can to assist them, and we know how important they are to communities. When the Secretary of State makes his announcement shortly, the hon. Lady will see that we have made provision to do the best we can for the whole network.

I welcome what the Minister has said today, because Bexley has lost nearly half its post offices or sub-post offices in the past five years. Will he reaffirm that the coming statement will also take into account the needs of the suburbs, which require local post offices or sub-post offices to be viable, sustainable communities? Such facilities need to be near where people live.

We fully acknowledge the role that post offices play in communities and the essential services that they provide for many. We have also been helping them to develop new products over the years. For example, the Post Office is now the biggest supplier of foreign currency and the biggest provider of independent travel insurance, and has launched new saver accounts this year. It is looking to expand its business. Equally, however, 800,000 private vehicle owners bought their tax discs online last year, and more than 3 million have already done so this year. We know that internet banking, mobile phone technology and the rest are changing people’s habits, and the Post Office must expand its range of services. We have a dual job: to support the network to be as wide as possible, and, equally, to expand its range of services and products for a securer financial footing.

Later today, Labour Members have a meeting with Postcomm and Postwatch to discuss these important matters. Can my hon. Friend assure me that Ministers are in discussion with Postcomm and Postwatch, in order to benefit from their expertise when making a plan of action for a future viable network?

I assure my hon. Friend that we are in discussion with all the appropriate agencies. Postcomm and Postwatch have produced reports that are being studied as part of our exercise to arrive at a statement, which will be announced before Christmas. We have been in intensive discussions with Post Office Ltd. A number of Adjournment debates have taken place, especially over the past six months, in which right hon. and hon. Members have expressed their points of view. The Department has received a voluminous amount of correspondence, and national newspapers have run campaigns on the subject. The Prime Minister has established the Ministerial Committee on the Post Office Network, MISC 33, which has met several times. There have also been a number of bilateral meetings between the Secretary of State and other Cabinet Members, and between me and other Ministers. We have been working intensively to ensure that the outcome of the difficult decisions that we shall have to make shortly will not be a result of lack of effort or research.

The Minister rightly observed that the Post Office faces changing commercial challenges as the market develops, but as the Trade and Industry Committee concluded in its recent report, the problem is that the Government have accelerated the process with their own policies, as identified by the hon. Member for North-West Leicestershire (David Taylor). Will he reassure us that the proposals in the forthcoming statement will enable sub-postmasters and sub-postmistresses to enter into contracts with the Post Office so that they can compete by using their entrepreneurial flair in their own shops, and will also encourage the Post Office to produce a range of innovative products so that it can compete more effectively with the banking sector?

I apologise to the hon. Gentleman for having omitted to say that the Select Committee, which he chairs so ably, has submitted a report to the Secretary of State, which we will also be considering. The Secretary of State’s statement will refer to the ability of sub-postmasters and sub-postmistresses to offer better services to their customers. There are conflicts in respect of their ability to perform some of the functions that they have requested, but I assure the hon. Gentleman that all the options are being considered, and that there will be a full opportunity for further consideration when the Secretary of State makes his statement.

Is not some change inevitable, when 98 per cent. of new pensioners choose to take their pensions through the banks, and the 200 smallest post offices have fewer than 20 customers a week? Will the Minister ensure that maximum effort goes into maintaining as much of the post office network as possible?

My hon. Friend paints an accurate picture of the statistics showing the changing face of even the benefits business. Seventy-five per cent. of benefit recipients have bank accounts, and, as my hon. Friend says, 98 per cent. of new pensioners are choosing to have their benefits paid into a bank account. The way in which benefits are received is changing, but as I said earlier, at least 1 million people will still depend fully on the post office for their benefits. We know that we must provide for the most vulnerable, whether they are in the rural communities, the suburbs or deprived urban areas, and that will be a key consideration for the purposes of the Secretary of State’s statement.

When the Secretary of State eventually makes his statement, will he also explain why he wants to scrap Postwatch, the consumer watchdog that has helped to fight so many rural post office closures? Is it mere coincidence that Ministers are trying to muzzle an independent specialist watchdog and merge it with another body at the same time as proposing to cull rural post offices—or is it all part of the same plan?

As I have experience of misquotations by the hon. Gentleman from our last meeting on a public platform, he will forgive me if I do not acknowledge the accuracy of what he has said. We are in the business of strengthening consumer protection, as will become plain in due course as the new arrangements are introduced.

I am grateful to the Secretary of State for his courtesy in informing us in advance of his absence—but meanwhile, the Minister seems to be doing extremely well. Can he tell us how many post offices will close as a direct result of the withdrawal of the Post Office card account? Does he accept that a post office card account II that looks after only 1 million of the 4.5 million customers will not be enough to save many small post offices? Last week Postwatch said:

“the government, the regulator and other relevant stakeholders need to form a common strategic view of what social outcomes are desired from the post office network”.

Will the Minister assure us that when the Government statement is made later this month, it will address ways in which post offices can work with carriers other than Royal Mail, and also Royal Mail’s anti-competitive activity in poaching business from sub-post offices?

When the hon. Gentleman rises and makes such generous comments, I automatically smell a trap—but they were generous remarks, and I am grateful for them. He asked a very serious question, and he can, I think, be reassured that the Secretary of State’s statement will cover all the elements that he referred to. I must correct an impression that I might have given: when I said that the Post Office card account successor will have to look after 1 million people, what I meant to say was that 1 million people will be dependent on it. There will be others who choose to continue with the POCA regardless of the fact that other products will give them better service—for example, because they will be able to get interest on the money left in the account, which is the situation for more than another 1 million people. The POCA will not be restricted only to the people whom I have mentioned; there will be a successor that people can make a decision on. Issues to do with competitiveness will be covered in the Secretary of State’s statement.

My question must be set against the background of the situation being difficult. In rural communities, such as my Bolsover constituency, which is 25 to 30 miles long, most rural post offices have survived—with help—but in some cases people do not want to run the post office because they cannot make a profit. We did things about that: one of the things we did was to manage to get one set up in the miners’ welfare, and it is still there. When the Minister discusses great and grandiose plans, will he take into account the fact that imaginative ideas such as that should be continued with, because we can save quite a lot of post offices if people only put their minds to it?

My hon. Friend makes a very important point. The Department of Trade and Industry, Royal Mail Group and Post Office Ltd have spent £25 million on pilots over 18 months, examining operations such as personal banking, virtual banking, mobiles and hosting operations, and they have been enormously successful. In fact, we have returned post office services to some communities that lost them years ago. The Post Office has to be imaginative. There will be an opportunity for communities to examine the Secretary of State’s proposals and to see whether they fit with their profile, and for them to come up with their own ideas on how best to protect their network, which we want to make sure will be provided nationally. So the points made by my hon. Friend are very relevant to many communities.