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Post Office Review

Volume 460: debated on Thursday 17 May 2007

With permission, Mr. Speaker, I should like to make a statement on the Post Office. Last December, I published the Government’s proposals on the future of the post office network. We then consulted and received more than 2,500 responses. I am today publishing the Government’s final proposals and can now set out how we intend to proceed. Copies of the Government’s response to the consultation and our response to the Trade and Industry Select Committee’s report are available in the Vote Office.

Post offices play an important social and economic role in the communities they serve and the Government are determined to maintain a national post office network, allowing people to have reasonable access across the whole country. New technology, changing lifestyles and wider choice of ways of getting services mean that people are using post offices less. The network’s losses are now running at almost £4 million a week—double what it was two years ago—and that will increase further unless action is taken to make the network more sustainable. As the National Federation of SubPostmasters and others have recognised, the present network is unsustainable, which is why change is needed.

Without continuing public support, a purely commercial Post Office would see fewer than 4,000 branches. That cannot be allowed to happen, which is why the Government are providing substantial financial support to maintain a national network. Although the proposals I am confirming today will see the closure of about 2,500 branches, the remaining Post Office network will still be larger than all the UK’s banks and building societies put together. We want to maintain a national network, so we are putting in place rules that will provide for reasonable access across the whole country. We will give Post Office Ltd the ability to shape the network for the future with clearly defined access criteria to ensure that the right post offices are in the right place to maximise their business. The rules governing access are set out in detail in the response we are publishing today and will guarantee reasonable access in both urban and rural areas, with additional protection for more deprived urban areas and some of the more remote rural areas.

People were understandably concerned that these changes should be implemented in a sensible way. So, in addition to taking into account obvious obstacles such as rivers or motorways, the Post Office will also consider, in putting forward its proposals, the availability of public transport, alternative access to key post office services and the impact on local economies. It will have to demonstrate how those factors have been considered in each local consultation.

Most respondents welcomed the proposal to extend outreach arrangements to provide postal services to small and remote communities. The Government will therefore ensure that, building on the success of mobile post offices and postal services provided in village halls, community centres and even pubs, 500 new outreach locations will be provided. In some areas, it will be possible to deliver services to people’s homes. We also want to encourage community ownership. There are already some 150 thriving community-owned shops, many of which already incorporate post offices. It is clear in the comments received that there is widespread interest, so the Post Office will work with interested parties to encourage expansion. We also want the Post Office to work with credit unions to develop services further.

Key to ensuring the success of the Post Office, of course, is encouraging greater use of post offices. The Post Office will be given every opportunity to pursue Government business and the network changes will put it on a stronger footing to do so. We will encourage the Post Office to look at further scope for co-locating with other community services, including local government services. Councils will be involved in the proposed changes to the network and that should provide an opportunity to explore ways for them to play a greater role in future in deciding how best to provide post office services to the public.

In addition, the Post Office wants to expand its financial services. It is already the leading supplier of foreign currency exchange and has already increased the availability of its euro-on-demand service to 6,500 branches. It is the third largest provider of travel insurance; it insured one in 50 cars on the road last year; and one in every 25 credit cards were issued by the Post Office. The instant saver account, introduced in April last year, has 175,000 accounts with deposits totalling £1.8 billion. In addition, cash will be available through some 4,000 free-to-use ATMs being introduced at branches across the network. Paystation terminals are also now in 7,500 post offices. All those measures should encourage greater use of post offices.

The current Post Office card account contract ends in March 2010. As the House is aware, the Government have decided that a new account will succeed it after 2010. It will be available nationally and customers will be eligible for the account on the same basis as they are now. I can confirm that the Department for Work and Pensions will today invite tenders for a successor to the Post Office card account to be available nationally, and customers will be eligible for that account on the same basis as they are now. Customers using the successor product should be able to get their cash at ATMs, as well as across the counter. It is our aim that the opening of the new accounts will be streamlined and the process made simpler for customers. The Government remain committed to allowing people to get their pension or benefit in cash at the post office if they choose to do so, and there is a range of Post Office accounts available, including the Post Office card account, to make that possible.

The Post Office is determined to increase its range of products and business. I can tell the House today that the Post Office will be launching a broadband service later this year in partnership with BT. That will enable it to become a key player in the broadband-based services market, offering Post Office broadband services to the public.

The Government have invested £2 billion since 1999 to support the network. Subject to state aid approval, we will now provide a further £1.7 billion up to 2011, including support of up to £150 million a year for the social network. Beyond that, there will be a continued need for public funding of the social network. Where it makes sense, the Post Office will accommodate the wishes of those who want to leave, and the national federation has now come to an agreement over how the compensation package will be administered.

These measures are complemented by steps that the Post Office is taking to modernise the commercial network, returning Crown post offices to profitability and providing new products. As I told the House last year, of the 14,000 post offices in the UK, only the 458 Crown post offices are actually owned by the Post Office, which has to address the huge losses in this part of the network—£70 million last year alone. The network has always relied on other businesses to complement the postal business, so in order to keep open as many post offices as possible, it has entered into an agreement with WH Smith to transfer 70 Crown post offices into their shops. That will ensure that those post offices stay open.

The changes that I am outlining today will be implemented over an 18-month period from this summer. In order to manage the process, there will be around 50 to 60 area proposals based mostly on groupings of parliamentary constituencies, but the Post Office and Postwatch will be able to adopt different approaches where it would be better to do so. In developing its proposals for public consultation, the Post Office will develop plans together in consultation with Postwatch, sub-postmasters and local authorities.

Right hon. and hon. Members will be given advance notice of area proposals in line with the arrangements made in relation to the urban programme three years ago. That will be followed by each plan being subject to a six-week public consultation, providing people with an opportunity to give their views. After the consultation, Postwatch will consider the responses and the specific issues raised. There is also provision for further discussions and review by the Post Office and Postwatch before final decisions are reached. Final closure decisions will be made by Post Office Ltd.

I said last year that we wanted to give local authorities and devolved Administrations a greater say in shaping the future network. We will therefore work with them to consider how we can best make that happen. The majority of people in this country want us to maintain a national network of post offices. I believe that the proposals set out today will do that and I commend them to the House.

I thank the Secretary of State for giving me advance sight of his statement. Nothing much seems to have changed since he outlined the proposals in December, and I am afraid that his statement confirms many people’s worst fears that our post office network is about to be decimated. Will he tell us how many of the 2,500 responses to his consultation actually supported his proposals?

This Government already hold the record for closing post offices faster than any other, and today’s announcement amounts to an acceleration of that rate of closure, shutting a further 2,500 branches over the next two years. By the time of the next election, this Government will have closed more than one third of the entire post office network. What is more, 2,500 is not even the upper limit. As the Minister confirmed last month, it is the lower limit. Will the Secretary of State confirm that 2,500 is the number of compensated closures, and that he is offering no guarantee that other post offices will not close as well, without compensation? What is his estimate of the highest number of closures that we will see by 2010?

This is a programme for compulsory closures. The design of the scheme means that even successful post offices might have to close just because of their geography. Successful sub-postmasters who have spent years building up their businesses might now be forced out by the Government. For some years, the Government have provided a subsidy to rural post offices. Today, they trumpet the continued subsidy, but it now goes to all post offices. It is therefore spread more thinly and will be far less focused on rural Britain. Is it not therefore the case that this statement signals the near-certain death of the village post office?

The Government dress the closures up as meeting their proposed access criteria. The truth, however, is that those criteria are not entirely beneficial. They are a wolf in sheep’s clothing. Of course we welcome the Government’s decision to include public transport considerations, but the access criteria still protect only about one third of the network, and the Government have rejected the very idea of access criteria in the past.

The Secretary of State announced 500 new outreach locations, but will he say a little more about how they will operate? Will they be anything more than just a van available for a couple of hours a week?

It is now five months since the Secretary of State’s original statement that 2,500 post offices were to close, yet the Government have still not told us which ones are for the chop. When will the list of closures be announced? Will he ensure that they are not carried out in such a way as to set post office against post office?

What the Government should be announcing today is a policy of giving sub-postmasters greater freedom to find new business opportunities, encouraging local councils to see what services they can provide through post offices, and making the Post Office card account, which is so vital to the future of the network, a more flexible financial tool with much greater scope. Will the Secretary of State explain to the House why the Government have rejected those options—[Hon. Members: “They have not.”] Yes, they have.

What this statement really means is the closure of more than one third of the post office network under this Government, countless villages losing their only shop, and millions of vulnerable people losing a service that they depend on. Little or no account will be taken of the needs of the elderly, the disabled or the most disadvantaged, and there is too little appreciation of the dedication of our sub-postmasters, who spend years building up their businesses and serving their communities. This announcement is a counsel of despair. This statement has no vision, and it signals the decimation of a network on which so many people depend.

The hon. Gentleman might have received my statement an hour or so ago, but he clearly did not read it. I hope that he got the formal response some time before that, but if he had read it, he would have seen that I agree with him that we should encourage councils to consider whether they can provide services through post offices. Because they will be involved in these proposals at an early stage, they will have ample opportunity to consider that.

I said last December, and I repeated today, that we want to see a successor to the Post Office card account. Indeed, my right hon. Friend the Secretary of State for Work and Pensions has published the public invitation to tender for that new card today. In relation to the other financial services, I mentioned foreign exchange, which is a hugely successful business in post offices. I also mentioned the announcement today between the Post Office and BT—I heard the hon. Gentleman scoffing at that before he stood up to speak—which will mean that the post office network will be able to sell access to a new product: Post Office broadband. That will give people another reason to go into post offices. BT recognises the value of having a shop-front up and down the country.

Those are examples of how the Post Office, whose new chief executive is determined to open up new opportunities, is going out to find new business. The value of having a national network is that there can be national agreements to provide travel insurance, broadband services and so on, which individual postmasters could never negotiate on their own. That is something that the National Federation of SubPostmasters supports.

As I said earlier, the Post Office will make roughly 50 to 60 area proposals. The whole objective is to ensure that the right post offices are in the right place for each area. At the moment, part of the problem is that two post offices can compete for a small amount of business in the same area. Any other business would organise itself so as to maximise opportunities for business, and that is what the Post Office will do.

Yes, it is five months since I published my proposals, but it is absolutely astonishing that, in that time, the hon. Gentleman has not come up with a coherent position on behalf of the Conservatives. He has no answers to the problems. Everyone knows that the Post Office has a problem as a result of people changing their habits, having their benefits paid into a bank or building society account, or renewing their tax discs online. Something had to be done about that. We are prepared to do it and, above all, we are prepared to make money available. The hon. Gentleman’s real problem is that he knows full well that he cannot promise any such additional expenditure, because the Conservatives’ economic policy would require him to cut public expenditure. That is why he cannot match what we are proposing today.

I thank the Secretary of State for giving me advance sight of his statement today. I regret that the consultation process has not led to a fundamental rethink. The Liberal Democrats have a fully funded rescue strategy for the Post Office—[Interruption.] It is most unfortunate that the consultation proposed by the Secretary of State remains brief and unwieldy. Will he at least agree to delay the abolition of Postwatch so that full and proper support can be available for constituents attempting to deal with the crisis that will confront them?

The Secretary of State has provided the number of voluntary closures, but will he confirm that I have read correctly that a post office that has closed voluntarily will not be re-opened unless it is required by the criteria? That would be incredibly bad news for many communities.

Government business is absolutely key to the survival of the Post Office. Can the Secretary of State give a commitment that no more Government business will be withdrawn from the Post Office? If not, what further losses does he estimate?

On new business, is my reading correct that Royal Mail’s restriction on other delivery companies working with the Post Office will continue and has the Secretary of State’s support? If not, that would remove many such new opportunities for post offices.

The Post Office card account—POCA—goes out to tender today, but will the Secretary of State confirm that there is no absolute certainty that the tender will be won by the Post Office? If it is not won by the Post Office, what contingency plan is in place?

Will the Secretary of State confirm that there is no consultation on the closure of Crown post offices and their transfer to WH Smith, but only on what type of facilities will be available in WH Smith? Does he agree that that is outrageous? Will he please use his influence to make sure that a consultation does take place?

How many small communities will lose their one remaining shop, which, essentially, survives only because of co-location with the post office? Has the Secretary of State done that work, and can he tell us the results?

What work is the Secretary of State doing with the Department for Communities and Local Government on attracting local council activity into post offices, given that, as I understand it, he has now abandoned the “Your Guide” pilot, which was his main thrust for ensuring that that process took place?

First, the hon. Lady criticised the Post Office’s decision to enter into a deal with WH Smith in relation to 70 Crown post offices, which means that those post offices will stay open. She contradicted herself a few moments later by saying that it was important that rural post offices had other businesses co-located with them, to get additional business. Surely we should do everything possible to get more people through the front door of post offices. I would have thought that the proposal for 70 Crown post offices to go into WH Smith would be welcomed, as more people are likely to use those post offices, and they will stay open.

On the hon. Lady’s point about access, which was also raised by the Conservative spokesman, the purpose of national criteria is to ensure that urban and rural areas have reasonable access to a post office. Therefore, if a post office closes, and the access criteria are no longer met, the Post Office will be required to open a new post office to take its place. I am trying to ensure that there is a coherent national network, which will have the opportunity to compete for Government or other business as well as providing services.

The hon. Lady asked me to promise not to abolish Postwatch and to delay its transfer into the National Consumer Council. I am happy to tell her that I will do everything to ensure that Postwatch can discharge the functions that I want it to discharge. She might, however, want to have a word with her predecessor as trade and industry spokesman, as he called for the abolition of Postwatch, because, he said, it was useless. Now she is calling for it to be maintained. I suppose that that typifies the Liberal Democrats’ problems.

We do have to put the Post Office card account out to tender—the hon. Lady and the Liberal Democrats are good Europeans, and they would surely agree with the European requirement that such things must be put out to tender. Neither I nor my right hon. Friend the Secretary of State for Work and Pensions can simply award the contract to the person we want. A fair competition must take place.

Lastly, whatever else the Liberal Democrats have, they do not have a coherent public spending programme that would allow them to finance the Post Office. It is disingenuous of the hon. Lady to suggest that she has such a programme.

Order. I have other important business to protect. Equally, I am aware that interest in this subject is widespread among hon. Members. May I therefore appeal for brevity in all hon. Members’ contributions?

If the proposals go through, many people will be concerned that if the same pressures continue on the post office network, we will back here in another five years considering the need for more public expenditure to meet the access criteria. Will my right hon. Friend guarantee that, should further pressures continue on the post office network, the access criteria laid out today will be kept, and additional public expenditure will be found to ensure that the network is maintained in the future?

First, the access criteria are important because they provide reasonable access, and I hope that those criteria will endure. Secondly, in relation to public expenditure, as I told the House, were there no public financing, about 4,000 post offices would be left. That is not likely to be acceptable to anyone in the House, so I made clear in my statement that the need for public support is likely to continue for some foreseeable time.

Although there are things to welcome in the Secretary of State’s statement today, especially the improved access criteria, does he understand the disappointment that will be felt by the Trade and Industry Select Committee, which I chair? He has effectively rejected the majority of our recommendations by offering only a patchy response to improved entrepreneurial innovation for the network, not clarifying the future of Postwatch, diluting the social network payment, offering no safeguards on unplanned closures, sticking to a very short consultation period for local plans, and not addressing the shortcomings of the Post Office card account. I suppose that I should at least welcome the downgrading of Crown post offices—such as Worcester’s Foregate street office, which will move to the first floor of WH Smith—because their total inaccessibility will mean that some offices in Worcester have a lot more custom.

I do not agree with the hon. Gentleman. I have attempted to deal with many of the suggestions in the Select Committee on Trade and Industry’s report, which was quite helpful. I know that the Committee wants a longer consultation period, but I am mindful of the fact that postmasters, who have had a period of uncertainty, want to know where they stand, and understandably so. I have set out a process that allows for those matters to be considered, even after the consultation process ends.

In relation to unplanned closures, nobody can legislate against a postmaster or postmistress giving up their business. We should remember that the vast bulk of such shops are owned as private businesses. The access criteria mean, however, that if a post office closed, and the criteria were no longer fulfilled, the Post Office would have to open a new post office in its place. That is the assurance that the hon. Gentleman and his Committee sought.

In relation to other measures, such as the Post Office card account, people were understandably concerned a few months ago that we were not going to replace it. We have done so, and as I explained to the House today, there are signs that the Post Office will now aggressively pursue business, which I wish that it had done in years gone by. That is the best protection for the future.

Given my right hon. Friend’s announcement, this is a very sad day for post office users. He ought to realise the deep concern across the United Kingdom about the announcement. On average, four post offices across each constituency will close. That is bad, because the post office network is a lifeline to many pensioners. The language that he uses is about allowing the Post Office to pursue further work. Cannot we instruct and persuade Government Departments and even the BBC to use the Post Office rather than other shops? Chorley building society is meeting the Post Office tomorrow to see how it can help, and whether it can franchise the building society into post offices, to keep the post office network going in Chorley. Can he use that as a good example?

That illustrates how, with a suitable degree of enterprise, the Post Office can attract new business. I ask my hon. Friend to reflect, when he has the opportunity to do so, on the problem that the Post Office has been losing business for a long time. It is not open to a Government to say to people, for example, “No, you can’t have your pension paid into your current account,” or, “No, you can’t renew your licence from the comfort of your own home.” As with so much else in the world, things are moving, and we must respond to that. The option of doing nothing makes no sense whatever.

I welcome the decision of the Post office to retain the Crown post office in Haywards Heath. First, in examining proposals, will the Secretary of State consider adding to the demands on the Post Office those of demography? In my constituency, the age profile is getting older and older, and post offices are greatly valued by elderly people, and young families. Secondly, as the Government dismantle the social infrastructure in the south-east, such as accident and emergency departments, while imposing bigger and bigger unwanted developments in places such as East Grinstead, will they make sure that there are sufficient post offices to cope with the demands of young families and elderly people in the future?

As I have said, the Post Office needs to show a degree of flexibility, and to give reasons for its decisions to show that it has considered the issues. One issue that it will consider is how often post offices are used, which is a problem not just in the hon. Gentleman’s constituency but elsewhere. I want to encourage people to use their local post offices, but, as the hon. Gentleman knows, eight out of 10 pensioners are now having their money paid into bank and building society accounts. I hope that other factors will encourage people to visit their local post offices, because that will help to keep them open.

People in my own city will strongly welcome the commitment to a role for the local authority. The Post Office does not have a good reputation for dealing properly with groups such as local authorities. In Manchester we have tried to engage in meaningful dialogue with the aim of keeping viable businesses open while also ensuring that post offices are part of the regeneration and community infrastructure of the city, but the Post Office has not been a good partner so far. Will the Secretary of State guarantee that, in the course of consultation, it will now act as that good partner?

I understand my hon. Friend’s point. I know that Alan Cook, the chief executive of the Post Office, is mindful of the fact that in some parts of the country there could be much more co-operation, and I will draw his attention to what my hon. Friend has said about Manchester.

I agree with the hon. Member for Crawley that this is a very sad day for our constituents across the country. [Hon. Members: “Chorley?” “Mid-Sussex?”] It is a sad day for both Crawley and Chorley, but I apologise to the hon. Member for Chorley (Mr. Hoyle). In any event, we all agree that this is a sad day for our constituents.

The consultation period is very short. Will the Secretary of State have another look at what the Select Committee says about how long it should be? Will he also ensure that when negotiations on the closure of sub-post offices take place, sub-postmasters are not gagged as they were last time? On that occasion a penalty clause prevented them from defending the post offices they represented, because if they had done so they would have lost their money.

The hon. Gentleman asked about the consultation period. As I said earlier, the National Federation of SubPostmasters has itself pointed out that the longer uncertainty continues the more difficult things become for their businesses, and I must take account of that.

It is very easy to say “This is all too difficult: let us do nothing”, but I do not think that is an option. Whichever party is in government, we must deal with a real problem. We must ensure that we put the national framework for the Post Office on a proper footing. But—as I told the Conservative spokesman, the hon. Member for Rutland and Melton (Alan Duncan)—the difference is that this Labour Government have, and are prepared to make available, the money to support that framework.

Companies such as BT and Severn Trent impose a surcharge of £4.50 a quarter on those who make payments through post offices rather than by direct debit. Is that not a real disincentive, particularly for elderly people who would otherwise be reluctant to pay by direct debit? What can the Secretary of State do to encourage such companies to reverse their decisions, and increase business at local post offices rather than reducing it?

I take my hon. Friend’s point, but those are commercial arrangements between companies and the Post Office. It is not open to the Government to tell power companies, for example, what rates they should charge. However, we are all acutely aware that, especially in the case of people on low incomes, every penny matters. I shall have more to say about that when I announce the White Paper on energy next week.

Many of my constituents are deeply concerned about the plan to move Kirkintilloch post office to WH Smith. Given that communities have lost out in the past when Tesco and Morrisons suddenly decided to close many post offices in their stores, would it not be far better to invest in a post office network that would increase the profitability of branches than to hive them off to a large chain where the threat of mass closures will always hang over them?

The Post Office is entering into a long-term commitment with WH Smith. I know that there was great concern when Morrisons, in particular, abandoned the policy pursued by Safeway and effectively evicted the post offices, but WH Smith sees their services as complementary to the goods that it sells. The main objective must surely be to keep as many post offices open as possible. As I said earlier, the Crown post offices lost £70 million last year alone, and the Post Office must do something about that.

The Liberal Democrats—who do the same in other contexts—cannot say that they want more to be done to persuade people to walk through the front door of the post office, and then object every time a proposal comes along that would cause more customers to walk through that front door. To my mind, joint ventures and collaboration that make more people go into post offices must be a good thing.

I too am deeply concerned about the proposal of Post Office Ltd to close 70 Crown post offices and replace them with inadequate alternatives—in Leicester’s case, in the basement of a nearby newsagent, which makes the branch far less accessible and is wholly inappropriate for such an important public service in a major city. I hope the Secretary of State will encourage Post Office Ltd not just to discuss the details of the move, but to engage in proper discussions with the local council and local people about the principle of the serious erosion of an important local service.

I understand that most of the pilots conducted with WH Smith have been warmly welcomed. Of course in some cases the service on offer will need to be improved, and if that is a particular problem in Leicester it will need to be examined. However, as I have said a number of times today, in the face of the problem that the Post Office has been losing business, any opportunity to secure new business and persuade more people to visit post offices must be a good thing. I think it odd that people are turning their backs on that opportunity, because I do not see how we can keep those 70 post office branches open otherwise. Collaboration and joint ventures must be a good way of securing additional business.

This is a bleak day, not just for the post office network but for rural villages up and down the country. The hon. Member for Chorley (Mr. Hoyle) said that an average of four post offices were closing in each constituency. If that were the case, we would at least know roughly where we stood, but I suspect that some constituencies will be left untouched while post offices in rural villages are attacked. The closures seem to be taking place on a cost basis, because the post offices are losing £4 million a week. How much money does the Secretary of State expect to save at the end of the exercise, and what protection will rural post offices be given?

I realise that the hon. Gentleman will not have had an opportunity to read the Government’s final proposals—although, having heard his question, I suspect that he would probably say the same if he had read them. The proposals set out access criteria for rural and urban areas that will safeguard post offices. Safeguards have been added, partly at the suggestion of the Trade and Industry Committee, to ensure that areas are not disadvantaged. In some parts of the country—I do not think they include the hon. Gentleman’s constituency—there are so few branches that the Post Office may have to open new ones to ensure that the national criteria are met. I believe that those criteria are the best way in which to guarantee access.

My right hon. Friend has emphasised the importance of access criteria to ensuring that the Post Office has the right post offices in the right places to maximise business. In Woolwich, we have a Crown post office that is incredibly well located and extremely busy at almost all times of the day. It is difficult to envisage even a half-competent management not being able to run that post office successfully and profitably, yet out of the blue, with no prior consultation with local people, comes a proposal to move it to a far less well-located WH Smith branch that is already very crowded. The consultation proposals seem derisory to me. Will my right hon. Friend please instruct the Post Office, as part of the access criteria, not to move needlessly post offices that can operate profitably in their existing locations?

As my right hon. Friend says, the decision was made by the Post Office. As he has raised the matter, I will see whether it is possible for him to sit down with Post Office representatives and discuss the logic and the rationale behind the move, but, as the House will appreciate, I am not in a position to make detailed comments about that particular branch.

I share the deep cynicism of my constituents about any public consultation these days, believing that it rarely results in any change at all. Post offices are the social glue that holds our communities together. They offer an essential lifeline to many people and their presence keeps open many parades of small businesses. Is the Secretary of State aware that there will be devastating consequences if these proposals go ahead? Is he aware that my constituents in Guildford and Cranleigh do not believe that the public consultation will have any impact at all?

The facts that led me to come to the House to make these proposals have not changed: the Post Office is still losing £4 million a week, double what it was losing two years ago. As I have said, the option of sitting back and doing nothing is not sensible, and the National Federation of SubPostmasters has said explicitly that the present situation is unsustainable. That is why we need to do something. On consultation, many points were made, especially in relation to the criteria, on which we have strengthened the position. I hope that that will protect people in both urban and rural areas. Frankly, it is disingenuous for people to say that somehow we do not have to make any changes, and that everything will be all right. It will not.

I welcome what the Secretary of State has said about the future of the Post Office card account, but the concern of many small businesses in the Lanes and North Laine area of my constituency—the main customers of the Crown office, currently in Ship street—is that its transfer to a WH Smith branch some distance away will make it less rather than more accessible for them. I believe that they are right. They are also concerned that consultation will not take place until July, on a decision that clearly has already been made.

Perhaps I should make the same offer to my hon. Friend as I made to my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford). I have probably made this point on a number of occasions but it bears repeating: the Crown office network is losing £70 million a year. We have to do something about that. If there are opportunities to get more people into the post office building, that must be good for the post office; above all, that will keep it open.

I sincerely hope that the proposed consultation will be more transparent than the one on which the Secretary of State has reported today. In Wales, as well as consulting local authorities and right hon. and hon. Members, will he involve Assembly Members and the National Assembly for Wales?

Yes. The National Assembly and the devolved Administrations in Northern Ireland and Scotland will be consulted.

First, I am pleased and relieved that the two Crown post offices in my constituency—in Denbigh and Rhyl—will remain open. I concur with my right hon. Friend that the challenge is to get more footfall in through the door. To this end, Welsh Labour MPs have convened a meeting next Thursday with the high street banks, the Treasury, the Wales Office and the Minister with responsibility for the Post Office, along with the Post Office and the National Federation of SubPostmasters, to see whether we can look at best practice within the industry and spread it to increase the footfall, especially in rural areas and areas of financial exclusion.

That sounds like a worthwhile initiative, and I know that the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick) will attend that meeting.

The Department for Work and Pensions informed me yesterday that two of three jobcentres in my constituency were closing, so it has not been a good week for Government announcements of closures. However, there is a little bit of good news. On Monday, after a long period without post office services, a new post office counter opened in the village of Hazelbury Bryan in my constituency. I hope that the announcement today will not be taken with a degree of irony by the residents of Hazelbury Bryan. Will the Secretary of State assure me that the kind of innovation that brought that post office counter to the village, involving a neighbouring sub-postmaster providing the service, could be used to save all 45 post offices in my constituency?

There are many examples of innovation that have meant that post offices will build their business and maintain branches, if not open new ones. On jobcentres, I am very much aware that that network is being reduced as well. However, I think that I am right in saying that at the last election, the hon. Gentleman stood on a platform involving the wholesale closure of jobcentres.

Perhaps the Secretary of State will turn to his ministerial colleague and warn him of the unrelenting diet of Adjournment debates that he is likely to face on this subject once the lists are announced. When will the Post Office be advised either to produce a sensible transaction offer that is competitive and would win business such as BBC licences, or to give sub-postmasters the opportunity to join the Paypoint network.

A number of branches have Paypoint. Also, the changes that I am proposing will cut some of the Post Office’s costs, so it will be better placed to win contracts. The Post Office lost the BBC contract because the BBC was able to save substantial sums and, understandably, decided that it wanted to spend that money on programmes rather than transaction costs. That is one of the reasons why we need to make these changes.

Plaid Cymru welcomes the intention to give the devolved Administrations a greater say in shaping the network into the future. I am sure that the Secretary of State is relishing the prospect of working with the excellent new Government established in Edinburgh yesterday. Turning to Wales, what regard will be given to the particular needs of the objective 1 areas, which have been defined objectively as areas requiring particular help in terms of economic and social needs? Will the Secretary of State work with the Administration in Cardiff to that end?

Of course the Government will work with the devolved Administrations, and as I said a few moments ago, the Post Office will do that as well, as part of the programme. I indicated earlier that there are two degrees of protection that will help Wales; one is the additional protection for people living in deprived urban areas as a result of the consultation, and the other is additional protection for the more rural areas. The hon. Gentleman is sitting next to the hon. Member for Angus (Mr. Weir)—the sole Member representing the SNP in the Chamber today—who raised this at the Select Committee, and he will be pleased to hear that in his constituency and in areas in the Highlands and Islands, there is the possibility not only of having no closures but of gaining additional post offices.

There are 15 Crown post offices where a franchise partner is being sought but has not yet been identified, one of which is Maida Hill in the Harrow road in my constituency. This is not only an area of extreme urban deprivation, but a struggling urban high street that the local urban regeneration agencies have been working to try to turn round. Will the Secretary of State assure me that the Post Office and the Department will work with those urban regeneration partners to make sure they are fully involved in the consultation? What factors will determine whether areas of high urban deprivation face losing any of their service?

I understand my hon. Friend’s point perfectly; she has already raised the matter with me. This is perhaps the other side of franchising; in this case the Post Office is having difficulty finding somebody to go into a joint venture. On her general point, it is often the case that when a post office has difficulties, the surrounding shops have difficulties too. That is something that the Post Office, the council and other agencies need to look into.

May I draw the Secretary of State’s attention to today’s written ministerial statement from the Department for Work and Pensions, which says that the Post Office card account will be available at personal teller outlets located throughout the UK? Could we have much more strictly defined criteria that will ensure that people can collect their pensions throughout the Highlands and Islands? When the Government gave the television licence contract to Paypoint, it meant that although there were still outlets available to my constituents, large parts of my constituency—the rural parts and the islands—lost the ability to buy a television licence over the counter. Will the POCA tender contain strict access criteria concerning the rural parts of the Highlands and Islands?

Yes, the Post Office card account will be used across post office counters, but we also want to make it usable in automated teller machines to give the card account holders more flexibility. As for the BBC licence fee, that decision was taken by the BBC. The Government do not control the BBC, as we know only too well; every morning when I get up and tune in to the “Today” programme it is pretty evident that the Government most certainly do not control the BBC. The BBC took that decision because it saw that it could save substantial sums. As my hon. Friend the Member for South Derbyshire (Mr. Todd) said a few moments ago, we must encourage the Post Office to get into a position where it can win more business, not only from the BBC but from others as well.

The Secretary of State keeps repeating the obvious: that he cannot force people to use postal services. However, does he not understand that he can ensure that Departments do everything they can to put business the Post Office’s way? The public cannot understand why on one hand we are putting in investment to keep the rural network going, while on the other hand we are taking away services, which is losing the Post Office money.

At the risk of irritating my hon. Friend by stating another obvious fact, let me say that Government Departments too must have regard to the costs that they incur in providing services. In some respects I would prefer the subsidy to be more transparent, so that people could see that we are putting money into the Post Office, rather than giving it a tacit subsidy through requiring Government Departments to do something that they would not otherwise do. However, the important thing is to ensure that, regardless of how that happens, the post office network is subsidised. As I said, unless it continues to receive a public subsidy the network will shrink drastically, which no one wants.

The Secretary of State said in his statement, “We also want to encourage community ownership. There are already some 150 thriving community-owned shops, many of which already incorporate post offices.” However, there are also hundreds of thriving privately owned shops that incorporate post offices. If the Secretary of State lauds community ownership—as I am sure that we all do—why does he want to undermine privately owned shops that incorporate post offices? Yesterday I presented to this House a petition signed by hundreds of my constituents who are concerned and want the post offices and sub-post offices in their villages and in Banbury and Bicester to remain open. Why does the Secretary of State want to undermine them?

The 13,000 post offices are private businesses. They are run by postmasters and postmistresses who either operate a post office as their exclusive business or, more usually, run one in conjunction with some other business activity. Only a tiny minority are community owned. When we last discussed these matters in December and then in the parliamentary debate in January, several Members pointed out that throughout the country there are a growing number of community businesses that are hugely successful. The point I made in my statement was that we ought to support them. We want to see if we can do more in that regard. The thrust of my statement was in support of the private sector. I am sure that the hon. Gentleman would agree that £1.7 billion is a significant amount of support.

The Secretary of State has made a serious attempt today to deal with this matter. We have a historical network and we also face a generational issue, in that lower percentages of young people are using post office services. Even if we are to have a new POCA run by the Post Office, can we be sure that sub-postmasters will be satisfied with the transaction amount that they receive, compared with the current situation? Also, when local consultation about a proposed closure takes place, if communities come forward with an alternative—as has happened through the rural postal pilots—will those alternatives be seriously considered by the Post Office?

The answer to that question is yes. I am aware that pilot projects have been carried out in my hon. Friend’s constituency, and if people have better ideas for providing services they should be encouraged. The transaction costs and the amount that postmasters receive is a matter for commercial negotiation between the Post Office and the postmasters and postmistresses. I think that that is negotiated from time to time.

Page 18 of the Government response says that about half of the closures will be in urban areas. How will that be done, as the 1-mile access criterion is the same as that used in the reinvention programme, under which one third of branches have already shut?

I am not sure whether the hon. Gentleman was present earlier when I made my statement. I said that the Post Office would come forward from the summer with area plans in which it would set out its proposals. At that stage it will be possible for the hon. Gentleman and other Members to see what is being proposed, and how the criteria have been applied. In the consultation document and the response document, we set out the national criteria and defined what an urban community is. I hope that it will become clear at that later stage that I mentioned how the criteria have been applied. It will then be open to the hon. Gentleman to make whatever representations he thinks are appropriate.

My right hon. Friend said that we would give Post Office Ltd the ability to shape the network. However, he will remember that last time we were in this situation, which was to do with urban renewal, the plan involved writing to every sub-postmaster, which in the town of Tamworth resulted in all six in the south taking the option to quit and the six in the north staying put. After many months of there being no plan and no consultation—no ability for the Post Office to shape things—it was only by means of an intervention from the chairman, Allan Leighton, that I managed to break the deadlock and get a good service provided for the south of Tamworth, through a Co-op superstore. Does the Secretary of State intend to improve the Post Office’s ability to co-operate and consult, or does he intend to have the chairperson—whether Allan Leighton or not—permanently on stand-by?

Lessons do need to be learned from the previous programme. It is important to ensure that consultations are carried out properly and that we get the best possible result, so that we have a post office network that is coherent and can maximise business.

I welcome the improvements to the access criteria for the most remote communities, but the statement will still cause profound uncertainty in the many communities across the north of Scotland that are not covered by that definition, especially if the POCA contract is not won by the Post Office. Can the Secretary of State confirm whether the new criteria concerning access to public transport mean that any community that does not have a regular, frequent, accessible public transport service will not have its post office closed?

I am glad that the hon. Gentleman welcomes the improved and strengthened criteria in relation to rural areas. The Highlands and Islands of Scotland will benefit from the proposals. In relation to the individual plans when they come forward, the Post Office has to take into account a variety of factors and most people would expect it to exercise a degree of common sense when coming up with proposals.

Several post offices have already closed in my constituency, leading to increases in queues with consequential reductions in business, because busy people are put off from using those that remain open. One of the closures was voluntary—in Wychall road, which is in a very deprived area. Do the measures proposed today mean that the Post Office will now have to look proactively at replacing that post office, which it previously refused to do? Will the Secretary of State also ensure that the definition of a deprived area does not exclude estates within an otherwise more affluent area?

The answer to my hon. Friend’s question is yes, if somebody decided to close their post office with the result that the national criteria were not met—for a deprived area, in the case that she mentions—the Post Office would have to look to replace it. That is the whole point of having criteria. That was not the approach adopted last time; a slightly different approach was taken then. Having national criteria means that when unplanned gaps appear in the network they need to be filled so that the national criteria are met.

Following the announcement today that the Government intend to close a further 2,500 post offices in addition to the 4,000 that have already closed, does the Secretary of State understand the great concern and depth of feeling throughout the country about this catastrophic proposal? Furthermore, does he not recognise that the difficulties faced by the post office network have in large part come about as a direct result of this Government’s policies, in particular taking business away, such as in the form of TV licences, passports, driving licences and the card account? Does he not accept the relationship between cause and effect?

I shall make just one point. Is the hon. Gentleman really suggesting that he should go to his constituents who are perhaps trying to renew their tax disc on line and say that they cannot do it? If he thinks for just a few minutes about what he has been saying, he will realise that there is nonsense in it.

This remains a bitter pill for some of us to swallow, in particular the potential conflation of the rural subsidy into the social network—but may I urge my right hon. Friend to support the Sustainable Communities Bill? It is good to see the Government taking this private Member’s measure through. Does my right hon. Friend now see the benefits of getting the Post Office to engage with local communities to see whether there are social answers to running these services, rather than pretending that the Post Office has all the answers?

I agree with my hon. Friend on that point. It is important that the Post Office should speak to councils and others so as to collaborate wherever possible. The object is to ensure that as many people as possible come in through the front door of post offices, because that is their best guarantee for the future.

I am grateful to Post Office Ltd for keeping the Crown post office in Macclesfield as part of its network. Having sat here throughout the whole statement, I should like to know when we shall see details of the approximately 2,500 sub-post offices that are being closed. When will the list be published? As a Conservative, may I exhort the Government to use their great influence and purchasing power to help the Post Office more, because it is such an essential public service?

I am grateful to the hon. Gentleman for his support—if that is what it was. As for the timetable, from this summer the Post Office will start to publish plans for about 50 to 60 areas across the country. It is best to deal with the proposals on a manageable basis so that people can understand all the issues. I think that the process will take about 18 months, and it will start this summer.

More post offices will close than new outreach services will open. In rural areas, what factors will determine which areas get an outreach service and which do not? Will they be more than just the access criteria?

The access criteria are there to ensure that there is reasonable access to post office services across the whole country. There will be areas, more likely rural than urban, where an equal or perhaps even a better service can be provided by outreach services using community halls, and in some cases delivering services directly to people’s homes. There are one or two examples of where services have been set up in pubs and seem to be working well. The object is to make post office services more flexible than they have been in the past, especially in areas where the population is spread more thinly, but equally needs access to post office services. What happens in each area will depend on the facts and circumstances of each area, so I cannot give the hon. Gentleman any specific assurances. When the Post Office publishes its proposals in respect of his area, I hope that he will look at the opportunities that there might be, and there will be ample opportunity for discussion with the Post Office to try to improve services as well as maintaining existing services.

May I invite the Secretary of State to expand more fully on the answer that he gave to my hon. Friend the Member for Argyll and Bute (Mr. Reid) about the new Post Office card account and its availability in island communities? Our recent experience with the removal of television licences has left hundreds of my constituents with no over-the-counter services available to them. Will the right hon. Gentleman fight the Post Office’s corner with the Department for Work and Pensions in this regard, and obtain a commitment that islands where people can currently use a Post Office card account will still have that service when the new card account is introduced?

It will be possible to use the Post Office card account, both now and with its successor, in post offices wherever they may be, whether in the Highlands and Islands or elsewhere. The hon. Gentleman and his hon. Friend the Member for Argyll and Bute (Mr. Reid) referred to the BBC decision in relation to Paypoint. It is true that the Paypoint network is not as widespread as the Post Office network. That is why we want to maintain a national post office network where people can use their Post Office card accounts.

Despite the welcome announcements on broadband, Credit Union and POCA, the bleak reality is that for hundreds of rural villages the cornerstone is being removed in the interests of saving the public purse about one twenty-fifth of one penny for every pound that is expended. My experience of sub-post offices is that those who run them are astute and creative business people, but there is a paucity of entrepreneurial flair in the upper echelons of the Post Office regional and national management. It is like putting vegetarians in charge of a butchery chain. Is my right hon. Friend confident that the right people and right structures are in place to ensure the network into the medium term?

I am not sure that the analogy is entirely appropriate. My hon. Friend is right to say that throughout the country postmasters and post mistresses show an extraordinary amount of flair and commitment. I mentioned the new chief executive of the Post Office, who is showing admirable flair and winning new business, such as broadband, to which I referred. There is always room for improvement in any organisation, and where that improvement is necessary I hope that someone will make sure that it takes place.

Does the Secretary of State understand the gloom that will descend on small rural communities throughout the south-west as a result of this announcement? What weight will be given to the availability of public transport? Most of the small post offices under threat in my constituency are in villages where the sight of a bus is as rare as a phoenix. Will that protect them? Or is that idea simply a token gesture to the isolation of those communities?

That is precisely why we strengthened the criteria as a result of the consultations carried out.

Much has rightly been said about rural post offices in this discussion, but Hesters Way in my constituency is described by the Government as one of the most deprived urban neighbourhoods in the country. It is losing its local post office, located in a branch of McColl’s, at almost no notice within a matter of weeks. Now we are told that Cheltenham’s modern, purpose-built Crown post office is to be relocated in WH Smith. What guarantees do we have that that will not suffer the same fate?

As I said earlier, I very much hope that the arrangement with WH Smith will encourage more people to visit the post office. Judging by the pilots carried out a short while ago, that has been successful. The key to the future of the Post Office is that the more people use it, the better—and the more reasons for using it, the greater the chance for success. That is why these proposals are being made.