I am most grateful for this opportunity to highlight the impact of proposed post office closures in Shropshire to the House and, hopefully, to the Minister responsible. I speak as secretary of the all-party group on post offices. I had thought that that association—[Interruption.]

Order. Will Members please leave the Chamber in silence? Members of the public should also leave in silence.

Thank you, Mr. Cummings. I had thought that my being an officer of the all-party group might help my campaign on behalf of my constituents, but as I shall explain, the Post Office has shown me no favours whatever for that relationship, as it seems to have singled out the constituency of Ludlow for the harshest treatment of all in its review of Shropshire and Staffordshire. I am pleased that this debate is supported by my parliamentary colleague from Shropshire, my hon. Friend the Member for The Wrekin (Mark Pritchard). With your permission, Mr. Cummings, I shall try to give him the opportunity to contribute to this short debate.

I sought today’s debate in order to give the Minister a last chance to explain to the people of Shropshire why he is forcing through so many post office closures. It is ironic that he seeks to slash the post office network by 2,500 post offices across the country without the support of 89 of his parliamentary colleagues, including several Ministers—the Home Secretary and the Justice Secretary, to name but two—who have campaigned actively against closures in their constituencies.

Before I get into the specifics of the closure programme in Shropshire, I have a question that I hope the Minister will address in his response, as it would clarify a point put to me by many of my constituents. The Government have decided to limit the subsidy that they provide to Post Office Ltd to maintain the rural post office network. The subsidy of £150 million has been fixed at that level for the next three years, as the comprehensive spending review confirms. Quite properly, under EU regulations, that state subsidy required confirmation by EU authorities under state aid rules. Did the Government have any discretion over the amount of the subsidy subjected to the EU approval process? Was the £150 million limit set by the EU or the Government?

As of today, 810 post offices have been confirmed for closure in areas where plans have been concluded. Only 43 had been saved as of last night, yet they have been saved at the expense of a further 23 that were not originally identified for closure. A net of 20 saved out of 810 is a mere 2.5 per cent. It shows why communities up and down the country feel that the consultation process is but a sham.

Post Office Ltd decided to review the counties of Shropshire and Staffordshire together, as a single area. That decision introduces an urban bias into the review process, as combining the sparsely populated rural county of Shropshire with the much more densely populated county of Staffordshire allows the overall access criteria to be met more readily than if the exercise had been undertaken county by county. According to Post Office Ltd, the combined population is 1.48 million, which allows the Post Office to claim in its area plan that

“98.3% of the population will see no change to the branch that they currently use or will remain within one mile of an alternative outlet”.

Shropshire has a population of only 286,300, according to the county council. That is less than 20 per cent. of the total population of the area covered by the plan, yet it is to bear the brunt of the closures. Post Office Ltd claims that it proposes to close 53 existing branches in both counties, an area that includes the unitary authority of Telford, which is represented in part by my hon. Friend the Member for The Wrekin.

Post Office Ltd also claims that it will establish 12 outreach service points. That is little short of double-speak. In order for an outreach to be established, a post office must close, so we are in fact facing 65 closures, 28 of which will be in Shropshire, including one in Telford. Half of those, 14, are in Ludlow constituency alone. Out of 17 constituencies subject to review, 21.5 per cent of the total number of post offices to be closed are in one constituency where less than 6 per cent. of the population live, assuming that the constituencies are all of comparable size. Not for the first time under this Government, a disproportionate burden will fall on the rural population. In winding up this debate, will the Minister explain why?

The consultation for our area ended on 9 June. Post Office managers are due to make their final decisions by the end of this month and to announce closures on 1 July. I hope that they will take into account the serious comments and considerable effort put into representations made by many of the communities affected. I have made my own comments and, the Minister will be relieved to hear, will not go into the details of the case for each individual post office. The plans have met with considerable opposition. On the evening that the consultation closed, I presented a petition to the House in which, including the e-mail petition, more than 2,500 signatories objected to the individual closures planned in my constituency.

I have some general observations that I would like the Minister to address. First, the access criteria were meant to be framed by the Government so that

“no particular part of the network and no particular group of people should be significantly more adversely affected by closures”.

How does he square that with the impact on my constituency, which has a significantly higher proportion of elderly people than the national average? Some 24 per cent. of the population in south Shropshire is over 65, compared with 17 per cent. nationally. Those people, who include many of the most vulnerable in local communities, rely heavily on their local post offices for access to cash—there are no banks in villages in my constituency—and indeed for much of their social interaction. How do the Government square that with their approach to financial inclusion?

Secondly, many of the data used by the Post Office to make its closure case have been incomplete or inaccurate. Local population statistics have been wrong. Geographic circumstances were meant to be recognised as part of the consultation, but as I illustrated graphically to Post Office managers when they visited my constituency in areas representing each of the communities affected, an 800 ft vertical rise above sea level within a couple of miles from one post office to another does not make for a credible, realistic alternative outlet, although it might appear to when viewed on a two-dimensional map.

Thirdly, economic impact assessments have focused almost entirely on the impact on Post Office Ltd rather than on the local economy. Are not the Government under an obligation to undertake a meaningful impact assessment? If so, why have they failed to require that for an exercise so vital to local communities? Post offices—particularly when they are the last shop in the village, as nine out of the 14 post offices at stake in my constituency are—provide a vital economic lifeline. Once closed, they are most unlikely to reopen. Why has no meaningful economic impact assessment been undertaken of the impact of closures on those communities?

Fourthly, no account has been taken of rural deprivation. Why not? Deprivation is not confined to urban areas. Other Departments recognise pockets of deprivation in all rural areas, yet no attempt has been made to dovetail the network of continuing post office provision with maps of rural deprivation. Why not?

I turn briefly to some of the specific issues relating to the post offices subject to closure in my area. My constituency contains two towns of 10,000 people: Bridgnorth, which I am pleased to say has three post offices, none of which are proposed for closure, and Ludlow, which is extremely similar in size and has two post offices, one of which is due for closure. Why are towns of similar size and social characteristics given such widely differing post office provision?

My hon. Friend makes a very strong case for why those post offices should remain open. Like them, the King street post office in Wellington, in my constituency, which has been used by all age groups over many years, is due to close. The Government need to think very seriously about the impact of the closures on rural life and communities.

I am very grateful for that powerful intervention. No account seems to have been taken of the impact on those communities, other than the fig leaf of the outreach service, to which I shall come in a moment, and behind which the Government seem to be seeking to hide when they talk about continued provision in rural areas.

What is my hon. Friend’s view of the Post Office card account? That is a very important lifeline, and those who have survived the current closure round will remain under threat if the Government withdraw it in 2010.

I thank my hon. Friend for anticipating something that I was going to raise in my speech. I hope that the Minister will respond to the allegation made by the National Federation of SubPostmasters, which has calculated that if Post Office Ltd does not resecure the contract for the card account, and if it is given to a competing company, up to 4,000 further post offices could face closure. The Post Office card account is vital, particularly in rural areas, because, given the lack of alternative access to cash and other financial services, the post office is for many people the only place where they can access cash.

Furthermore, the more elderly customers, in particular, of the Post Office tended to subscribe to the card account when it was introduced. Originally there were more than 4 million card account users, but that number has declined as the Post Office has been unable to invest in the product pending its resubmission. Indeed, the whole viability of the account was cast into doubt more than a year ago, so it has not been possible for it truly to compete with other products available more widely. Usage has therefore been declining. It is vital that the account be retained by Royal Mail, and it would be helpful if the Minister indicated the timing and likelihood of it being retained.

The other threat to the overall number of post offices comes from those currently closed, but not being counted as closures. The Government have set this arbitrary figure of 2,500, and I have referred to the potential loss of a further 4,000 if the card account is not secured. In addition, however, a number of post offices are currently closed, but for the purposes of the review are recorded as open. There are two such post offices in my constituency: one is in the village of Middleton Scriven—I am willing to name it because it has been closed for the past 18 months. There are 22 households in the parish, and for a long time the post office was run from the front room of a local resident’s house. That person passed away, and it was taken on by a retired gentleman after a lifetime working in the financial services industry. He wrote to me in January of last year saying that he was willing to provide the service for as long as he could, but that, given that he had only two customers a week, he did not anticipate a rush of willing volunteers to take over his role when he came to give up, which he subsequently did.

The Post Office has twice readvertised for someone to provide that service to the community of Middleton Scriven, but unsurprisingly there have been no takers. And yet, under this review, such a post office ought naturally to be considered for closure. The local community has already become used to the fact that no facility is available, but owing to the arbitrary access criteria, the Government have made it difficult for the Post Office to recognise it as a closure or to count it as one of the post offices to be closed. It would be very helpful if the Minister commented on the credibility of that programme, given that he is leaving open post offices that have already closed. That would be very welcome in Shropshire.

Another category of very small post offices currently provided for demonstrates—again—a complete lack of logic in the Government’s approach. Of the 45 post offices in my constituency, six are provided through short-term arrangements at village halls. In a sense, they represent a precursor to the outreach planned under the current arrangements. In some of those facilities, no indication is given on the outside of the building that any post office activity is taking place inside. That might be done for sensible security reasons—so that there is no open invitation to break in to those who might think that cash is stored on the premises. That might be a wise precaution, but it means that only the immediate users in the village know when the post office is functioning. The number of users will decline pretty rapidly, therefore, when a post office closes and outreach provision is put in place in an anonymous village hall.

One such facility continues to operate in my constituency, within a mile and a half of a post office run from the premises of a garage forecourt. That village hall provision is available for two hours a week, but the hours have changed in the past two years, and I myself have not managed to go when it has been open. That outreach service is provided by someone whose equipment has not been working recently, so in recent months he has been driving its two or three customers to the post office a mile and a half away to conduct their transactions and driving them back again. Yet the Government and the Post Office have proposed that the village hall service should continue, and that the much more used—albeit it is not used much because it is a relatively small village—post office shop facility should close. That is illogical, and I have made representations to the Post Office urging it to reconsider.

I shall turn to some of the other outreach proposals. It seems nonsensical for the Government to insist on the closure of a post office being run from a shop’s premises and then to prevent a continuing outreach service—a service that Post Office Ltd has agreed should be provided to a community given its geographic isolation—from being provided on the same premises. There is a very urban approach to competition, and it is feared that if such a shop continues to be recognised as the local post office, business would be driven away from neighbouring post offices. Inevitably, if an outreach facility is set up to provide a service for a few hours a week, from a mobile van parked up outside a village hall or a pub someplace distant from the previous shop post office, usage will decline relatively rapidly, as I described earlier. Why not try to help local communities being harmed anyway by post office closures by allowing the service to continue to be provided either from the premises, or from the car park or adjacent area of the existing shop? Why does the Minister think that communities will get a better service from such a mobile facility located remotely?

In conclusion, I urge the Minister and, through him, Post Office Ltd to take account of representations made by many constituents—not just the 2,500 signed petitions, but the extensive written submissions presented on behalf of many of the communities affected. Worthen has made a particularly powerful case, as have the villages of Marton and East Hamlet, in Ludlow, where more than a thousand people have participated in attempts to retain a post office. I have also had representations from the community of Lydbury North, which is suffering the possible loss of not only its post office but its school. That post office is within a community shop that is manned by volunteers, which means that it can provide an extremely cost-effective service as the existing shop is already being supplied to the community at virtually no cost.

Let me start in the usual way by congratulating the hon. Member for Ludlow (Mr. Dunne) on securing the debate. My hon. Friend the Minister for Employment Relations and Postal Affairs is unable to attend the debate due to business in another part of the House. Neither my hon. Friend nor I have a role in deciding which post offices should close. That is a matter for Post Office Ltd following a consultation involving Postwatch, local people, Members of Parliament and others.

The proposed closures in Shropshire are part of the wider programme announced last year by the then Secretary of State to reduce the network by up to 2,500 post offices, thus taking the number of branches to about 11,500. The background to that difficult decision is that the network is losing about £500,000 a day. It has 4 million fewer customers a week than it had three years ago and 75 per cent. of branches are unprofitable. If it were run as a commercial network, it would probably have only about 4,000 branches. In some rural branches, the cost per transaction is £17. That decline is the result of a combination of lifestyle changes, new technology and increased competition. Eight out of 10 pensioners have their pensions paid directly into the bank and 1 million customers a month renew their car tax online, compared with 500,000 a year ago. The Post Office now faces competition from companies such as PayPoint, which won the contract for the TV licence. I add that the Government played no part in that decision.

Faced with those challenges, the Government have taken the necessary difficult decisions to put the network on a stable footing. The challenges have been recognised by the National Federation of SubPostmasters whose general secretary said at the start of the programme:

“Although regrettable we believe that closures are necessary to ensure the remaining post offices are able to thrive in the future”.

Even the shadow Secretary of State for Business, Enterprise and Regulatory Reform, the hon. Member for Rutland and Melton (Alan Duncan), has said in a debate on the post office network that

“we have to face the facts about the future of postal services in this country...we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close”.—[Official Report, 19 March 2008; Vol. 473, c. 947.]

I understand the fundamental premise that no one wants their local post office to close, but it is important to see the changes in their proper context. Even after the programme, the network will still be larger than the major high street banks combined.

Will the Minister give way?

Not with the time that is available, as I want to answer the questions of the hon. Member for Ludlow.

As the hon. Member for Ludlow has indicated, at least 500 new outreach services will be introduced, mainly in rural areas, including seven mobile services in his constituency. They are a cost-effective means of ensuring continued access to post office services in rural areas, and research shows that customer satisfaction levels for them are comparable to those for traditional post offices. The Government have also committed additional funding of £1.7 billion up to 2011, including £150 million per year to support non-commercial post offices. The hon. Gentleman asked whether the European Commission was dictating how many post offices should close or how much subsidy should be provided. Let me make it clear that a maximum level of state aid to subsidise post offices is not included, for example, in the European postal services directive, which has been one concern. Decisions about the level of subsidy were not part of some sort of price agreed with the Commission about the number of closures. Those decisions remain very much the preserve of the UK Government.

The access criteria laid down by the Government are designed to ensure a national network with reasonable access to post office services throughout the country. Broadly speaking, most people should be within one mile of a post office outlet in urban areas and within three miles in rural communities. Without the access criteria, many more rural communities would be left without access to post office services, as only the least used branches are closed.

Before change proposals are published, Post Office Ltd discusses them with local authorities and sub-postmasters. On average, 12.5 per cent. of proposals have been changed as a result of detailed input from key stakeholders such as Postwatch before the local public consultation. As the hon. Gentleman indicated, a number of closure decisions have been withdrawn, but I accept that some, though not as many, additional branches have been proposed for closure.

There has been much discussion about the closure of allegedly profitable branches, but people should be cautious when talking about what is profitable. When one takes into account the remuneration that must be paid to the sub-postmaster, as well as the Post Office’s central support costs, three out of four post offices lose money. The Government have encouraged the Post Office to explore fully any serious proposal from a local authority to maintain a service where a branch is scheduled to close, although it would want to ensure that its costs would be met in full and that there would be some certainty for the future. Such arrangements would also need to be state aid compatible.

The example of Essex county council has received much attention in the media recently. Will the Minister confirm that local authorities are being provided with no additional subsidy from the Government, and that local authorities offering to take on post offices are therefore proposing to replace the subsidy that the Government provide?

I can confirm that no additional subsidy is being made available by the Government to the local authorities concerned. Such decisions to get involved are very much for them to take.

The hon. Gentleman also asked about the card account, and I recognise that there are concerns about that. He might know that the Department for Work and Pensions is managing the tender process for the new card account. Clearly, it would not be appropriate for me to comment on the outcome of that process, but we expect that there will be an announcement on the successful bidder in the coming months, in accordance with the usual procurement rules.

Looking to the future, the Post Office needs to keep developing new products and new reasons for customers to come through the door. There has been progress in that direction, with the Post Office emerging as the largest foreign currency dealer in the country, developing car and household insurance products and providing broadband in association with British Telecom. It is also actively exploring a range of new business opportunities, and is developing and trialling new approaches to providing and delivering services to local authorities.

The future of the network cannot be about turning back the clock; it must be about developing new products and new reasons for customers to use post offices. As I said at the outset, the process is not easy and there will inevitably be considerable concerns in communities faced with the prospect of local branch closures. However, doing nothing in the face of declining business and mounting losses simply is not an option.