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Post Office Network

Volume 517: debated on Tuesday 2 November 2010

It is a pleasure to serve under your chairmanship, Mr Caton, and I thank you and Mr Speaker for giving the House the opportunity to debate this important subject. Although it may not be quite as lively as the previous debate, it nevertheless affects constituents throughout the United Kingdom. I therefore hope that many Members will be able to take part. I welcome the Minister to his seat. He is extremely welcome, and I am sure that he will consider my proposals with great sympathy.

This subject was more broadly debated in the main Chamber during the Second Reading of the Postal Services Bill last Wednesday. I start by offering my overwhelming support for the proposals put forward by the Government in their effort to protect the future of Royal Mail and the post office network. Unlike the previous Administration, which for more than 13 years chose to manage its decline, the Government have taken decisive action within their first few months.

The Secretary of State noted on Second Reading:

“The previous Government’s closure programme shut 5,000 post offices.”—[Official Report, 27 October 2010; Vol. 517, c. 352.]

Once and for all, the Bill reverses the decline of Royal Mail by tackling the £8 billion pension deficit; in terms of today’s debate, it provides a new vision for the future of the Post Office and guarantees the universal service obligation to the 28 million addresses in the UK. It is an assurance that the days of wholesale closure are over. I wholly support the Business Secretary.

I welcome the fact that the hon. Gentleman has managed to secure this debate. He is precise in what he said about the previous Government, but would he care to tell the House how many post office closures took place in the five years prior to Labour taking power in 1997?

If the hon. Gentleman looks at the figures, he will find that there were more closures during the 13 years of Labour Government than under the previous Conservative Government. He should be careful when considering the figures.

One problem is that the Post Office has to be so heavily subsidised that it classifies as state aid, and there are difficulties with the state aid rules. If we start to lever more private finance into Royal Mail and the Post Office, those difficulties will, I hope, not pertain. That will give the Post Office greater freedom to run post offices wherever it wants.

I am grateful to my hon. Friend and constituency neighbour for that intervention. The Minister will need to use all his ingenuity to make the European rules flexible. My hon. Friend and I have taken part in many Post Office debates, and we urged the previous Government and then Post Office managers to allow greater flexibility in running post offices and to allow more private finance to allow a greater range of services—in short, to run post offices a little more as if Tesco were running them given its branch network.

I did not support my Government’s change in the closure programme, but the hon. Gentleman is right to point out that many post offices closed under both Conservative and Labour Governments. He is a reasonable man and will acknowledge that one reason for the speedy run-down of business in many post offices was the internet and new technology. Does he accept that we now have the opportunity to upgrade the post office network so that it can provide 21st-century services, something that was denied it during the previous two decades?

That is precisely the reason for today’s debate. We need a little innovative thinking and a forward-looking vision for the Post Office to ensure that the maximum amount of the network remains profitable and open to serve the communities in which post offices are placed. That is what I hope to hear from the Minister. I shall now make some progress.

The most important thing that the Secretary of State said last Wednesday was that

“the Post Office plays an essential social and economic role in our communities.”—[Official Report, 27 October 2010; Vol. 517, c. 351.]

All Members know that only too well. Probably the first person to hear about a problem in the community is the postmaster or postmistress. This is precisely why I fought so vehemently against the announced closure of 12 post offices in my constituency in 2008. The closure of the local post office can have a huge effect on the community, but none more so than those in rural parts of the country, which often have no public transport and have already witnessed a decline in such services as pubs, schools, local shops and other amenities.

I agree with the hon. Gentleman about the effect of closures on rural areas. He talks of reducing hours, but does he share my alarm that Post Office management seems to be retiring sub-postmasters in order to reduce the opening hours in rural areas of the sort that he and I represent? That is a worrying trend.

Yes. That was part of the dogma used to support the 5,000 post office closures that took place under the previous Government. We need to tailor post office services to meet the demand of the local population. That might mean more flexible hours, but not necessarily a reduction.

The post office is truly at the heart of the community, and I warmly welcome the steps that the Government are taking to keep it there and to diversify the services that it can offer. It was clear at the time of the closures two years ago that the Labour Government were insistent on pushing through their target of closing 5,000 post offices, irrespective of the viability of the individual branch. At times that meant that the will of the political masters was imposed against the better judgment of the Post Office, which knew that in certain circumstances, profitable branches were being closed. So badly thought out were some of the closures that a third of the last Prime Minister’s Cabinet actively campaigned against them.

I know that many Members will want to debate broader questions about the future of the post office network that they may believe were left unresolved after last Wednesday’s debate, but my comments are far more locally based. They centre on the prospects of a bright future for two branches that suffered during the 2008 cull. I quote the Business Secretary again. During last week’s debate he declared:

“I can today announce £1.34 billion of new funding for the Post Office over the spending review period.”

That is extremely welcome. He went on to state:

“The funding will be used to reform the current network, to change the underlying economics, and so reverse the years of decline and secure its long-term future.”—[Official Report, 27 October 2010; Vol. 517, c. 353.]

That is exactly the positive thinking that my hon. Friend the Minister and the coalition Government want to see.

That upbeat and optimistic statement will bring hope to many, including me. With that in mind, I present a ready-made solution to the Minister that I believe will fulfil all those goals. The best part about it is that it will barely cost a penny and will offer a high return. I hope that it will be music to the Minister’s ears, and will leave him singing like a postman. I come from Norfolk, Mr Caton, which has a song about singing postmen; but you will be glad to hear that I shall not sing it, even with a Norfolk accent, which I am perfectly capable of doing.

The two branches in question are in Stratton and the Beeches, both on the outskirts of the market town of Cirencester in my constituency. Both were closed in 2008, with no option for outreach. I vigorously campaigned against that decision because it was patently wrong. Although we are looking to the future this morning, I must go back to the past once more to highlight the ludicrous nature of those decisions.

I turn first to Stratton. There was a deep conviction in the community that the decision to close the branch was taken not on a financial basis, but simply because of its proximity to the Crown post office in Cirencester. The sub-postmaster, Mr John Lafford, reported that in January of that year the branch had a turnover of over £468,000, a point that I raised in this Chamber at the time. Such was the strength of Mr Lafford’s business case for that branch that he was willing to turn down a possible payment of £100,000 to keep the post office serving the community.

At the time of the closure, the branch also provided a far greater range of services than those that met purely postal needs. No other post office, including the Crown post office in Cirencester, had a lottery terminal, and Stratton was the only place where lottery cheques could be issued. That is the sort of innovative thinking and services that all post offices should be offering. By being placed in the local convenience store, the post office was truly at the heart of the community, as it is in so many towns and villages up and down the country.

The closure of the branch in the Beeches demonstrated a similar lack of forethought, given that there is a development in the vicinity that will see the building of approximately 650 new homes. That development would have provided even more trade for the current branch, if it had been kept open. However, it is when taken together that the closures become even more ridiculous, because of the collective number of people affected. Those two branches, being on the outskirts of Cirencester, took in trade from the outlying villages. When they closed, not only were 5,400 residents of Stratton and 12,000 people within a mile of the Beeches forced to use the one already unsuitable branch in Cirencester, so too were the residents of 19 villages covering 100 square miles.

The Cirencester branch was already blighted by long queues. It did not have suitable parking facilities, making it extremely difficult for people with large parcels to use the service. That is an important service for businesses, in particular in light of the growth of online marketplaces, of which there are many such businesses in Cirencester. It was also inaccessible to elderly and disabled people. The Post Office’s own figures show that over a fifth of those residents within a mile of the Stratton branch and nearly a third of those within a mile of the Beeches were retired. For many elderly people who wrote to me at the time, the concept of a walk to a bus stop—if it indeed existed—a bus ride, a walk to the post office, then a long queue before being served, in no way met the Post Office’s accessibility criteria.

Although it is true that the closure of the two branches was compliant with the accessibility criteria, it was no way in the spirit of them. It gives me no pleasure to report that my concerns, raised at the time, have been proved absolutely correct, particularly about the lack of suitability of the Cirencester Crown branch to cope with the influx of new customers. Indeed, research from Consumer Focus notes that since the 5,000 post office closures, average queue times have got significantly longer. The local impact is reflected in a letter from my constituent Valerie King, who wrote to me on 2 July this year with regard to the Cirencester Crown branch, where she noted:

“On many occasions I have been in a long queue, sometimes stretching outside....the elderly are particularly affected as there is nowhere for them to sit and the wait can be quite long. Invariably there are never more than three windows open which at busy times can be infuriating.”

The hon. Gentleman clearly sets out some of the problems that have arisen from closures. I was pleased that in my constituency we were able to get the reprieve of two post offices, one in Brecon and one in Llandrindod Wells. Some of the others have to make do with the services of a mobile facility. I do not know if it is the experience of the hon. Gentleman but, for us, it is a very second-rate service, compared with the previous service, or even when a post office is situated in a local shop, pub or other facility.

I am grateful to the hon. Gentleman for that intervention. I believe an outreach service can work very well, and I am going to go on to suggest a solution on those lines. It is variable; I have a lot of outreaches in my constituency, relating to the 12 post offices that were closed. Some work well, some not so well. It is up to all of us to try to see how we can rejig the services and the hours, working with the Post Office—I hope the Minister might be able to say something about that today—and, with a little bit more flexibility from the Post Office, to see how in the individual localities they can be made to work a little better.

The building of new houses in the Beeches has begun and, secondly, the Cirencester branch has been moved. Far from easing the problem, that has added to the car parking difficulty, forcing the parcel and other business into the hands of the courier operation and, as has already been said by the hon. Member for Ynys Môn (Albert Owen), into the internet business and so on as well.

I would like to offer my brief vision of the future to the Minister. I use “my” very loosely, as credit for this must go to Gary Kirkman, the postmaster of Bourton-on-the-Water and John Lafford, the former postmaster for Stratton, for framing the technical realities of the approach, to Councillors John Burgess and Peter Braidwood in Cirencester for their on-the-ground know-how, and to Lee Cox, the former postmaster of the Beeches. At the time of the closures, I suggested in my response to the consultation that at the very least an outreach service should be provided at Stratton and the Beeches, but that was not heeded. I have been monitoring the progress of outreach services elsewhere in the Cotswolds, as I have said. Although it is not always the full-time postal service that customers were previously used to, people work around the outreach hours, albeit sometimes reluctantly, and the postmasters are committed to an excellent service delivery.

It was in an approach to me by Gary Kirkman, the postmaster at Bourton-on-the-Water, who also provides outreach services in my constituency to the villages of Longborough, Guiting Power, Sherborne, Aldsworth, Temple Guiting and Stanway—so he has a track record of managing these outreach services—that I discovered that not only were his outreach services functioning well, but he has the capacity and will to take on more branches, such as the Beeches and Stratton. Discussions with the former postmasters John Lafford and Lee Cox in Stratton and the Beeches have proved that they continue to recognise the importance of the post office both to the community and to their businesses, and they both see a future for this proposal.

The Minister will no doubt be aware of my letter to Mr David Smith, the managing director of the Post Office, of which he received a copy, outlining these proposals. They bear repeating. It would be a hosted outreach branch with a location within Stratton and the Beeches, with the core post office in Bourton-on-the-Water acting as the service provider. Customers would be able to drop off parcels during these hours, and these would be taken to Bourton or Cirencester at the end of the day. I can report that since that letter was sent, I have received a letter dated 28 October from Mr Mark Wright, the network change development manager at the Post Office, stating:

“The post offices nationwide network is kept under constant review so that we continue to meet the changing needs of our customers whilst at the same time working to protect the financial stability of our network.”

That is beginning to show the sort of flexibility that I would expect from the Post Office. Mr Wright goes on to say that, as a consequence of my letter, he will be conducting a review of the proposals and has offered to meet me to discuss this further. Of course, I will take up that offer and use the opportunity to highlight the benefits of these proposals, and I will take the time I have left to remind the Minister of them.

The outreach services will provide a welcome alternative to the overworked, inaccessible Cirencester post office, without significantly affecting its profitability. Indeed, with the current difficulties of accessing this Crown branch people are choosing not to use it at all. As reported by Consumer Focus, Crown branches across the UK continue to lose approximately £60 million a year, almost one third of the Government’s subsidy of £180 million committed in 2011-12. Rather than taking business from the Cirencester branch, these proposals would provide scope for recovering business lost since the closure of the branches in Stratton and the Beeches. The really good news is that the proposal only has minimal variable costs which can be more than covered or reduced through alteration to the opening hours to match demand, and requires the purchase of very limited new equipment—limited to just a computer and a security box, I am informed. At a time when localism is high on the agenda, when carbon footprints and green issues are at the forefront of Government policy, this is a clear opportunity to return services to the locality where they are needed, thus saving unnecessary car journeys and reducing congestion in the town of Cirencester.

Finally, and perhaps most significantly, I believe the proposal, if seen through, would send a clear message that the post office network under this Government is not just about closure, but is about providing a service in the location and at times that people really want to use it. That in turn will help profitability, underlining the fact that outreaches could in part be the saviour of the post office network. The Secretary of State for Business, Innovation and Skills made clear last Wednesday:

“There will be no programme of closures under this Government.”—[Official Report, 27 October 2010; Vol. 517, c. 353.]

Although there may be no programme of closures, the Secretary of State and the Minister today will be aware that changes to the business environment still mean that sub-post offices are continually being closed due to non-profitability and retirement of postmasters. Although I have chosen to present the case for Stratton and the Beeches, I believe that this idea could be implemented nationwide, first, by seeing if outreach could be provided by a nearby branch when a full-time post office becomes unviable and closes. That would maintain postal services by replacing an unprofitable branch with a profitable outreach service, which in turn would strengthen the business case of the core provider.

Tackling the problem of branch closures while trying to maintain the number of post offices, through replacing a closed branch with a new business model of outreaches that would have a variable cost to meet demand, avoids the need to maintain the existing model, which has a high fixed-cost base and an uncertain viability in certain locations. Although an outreach is not a full-time post service, as I said to my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) when he intervened, it can provide all those services offered by a Crown post office, such as the purchase of bonds, foreign currency, insurance and so on, which sub-branches cannot always offer.

As the Government look to extend the range of services offered by post offices, each outreach provider could do the same. That may be of even greater importance as proposals for the Royal Mail are moved forward. With many postmasters deriving some of their income from running a sorting office for Royal Mail, if they were to lose that part of their business they would need to find a way to make up the difference. Taking on additional outreach is a simple and beneficial solution all round. I am confident that the proposals that I have for Stratton and the Beeches, by meeting demand, will be profitable for both the outreach provider and the Post Office. In addition, they would set a precedent nationwide if those conditions can be met.

Although I am sure that many right hon. and hon. Members will talk about the wider picture of the post office network today—an issue that the Minister will also want to address—I ask the Minister for his reassurance that he will use his political influence to work with the Post Office to see these innovative proposals through. Previous Ministers used their political influence incorrectly on the Post Office in 2008. He has the opportunity to use his ministerial responsibility to help to correct that wrong and to demonstrate this Government’s commitment to protecting and growing the post office network nationwide. The message that the Government need to give to the Post Office is not “closure, closure, closure” but “opportunity, opportunity, opportunity”.

I congratulate the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) on securing this important debate.

I have been debating the issue of post offices in all the time I have been in the House, and throughout that time there has been a continual decline in their number. Just before the general election of 2001, there were 1,933 post offices in Scotland. By March of this year, the figure had declined to just 1,446. In many areas of Scotland, the decline has been worse than in others.

In my own constituency of Angus, we have lost a number of post offices despite vigorous opposition to their closure. I am pleased to say that, in the last closure programme, we managed to save three post offices through local campaigns in the constituency. However, there remains a problem with many post offices, as alluded to by the hon. Member for The Cotswolds. Some are now in insufficient premises. Three of the large towns in my constituency—Forfar, Kirriemuir and Montrose—are now down to one post office that serves the entire town. Often, there are large queues at those post offices, which causes great frustration for customers.

I note that the Government have said that there will be no more closure programmes, but as the hon. Gentleman rightly said, that does not necessarily mean that there will be no more closures, because many sub-post offices are still facing financial challenges, particularly in these difficult times. I suspect that there will continue to be closures for other reasons.

I do not want to get involved in a sterile argument about who is to blame for the most post office closures—whether it was the last Government or the Tory Government before that. The truth is that post offices have been closing for a number of years, and we should look at how we move post offices forward and prevent closures in the future.

It should be borne in mind that many of the remaining sub-post offices are not stand-alone post offices but are coupled with a shop, which is often the only shop left in the local community. Indeed, I can think of only two post offices in my constituency that are not part of another business. It seems to me that in the last few years, the Post Office has deliberately gone out of its way to get rid of stand-alone post offices and get postmasters to take post offices on as part of another business, which is an interesting development to note.

The post office business itself does not provide a living for those running the business, but it is an important part of the business—the two elements cross-subsidise each other. The loss of the post office business or any other part of the business could bring the whole business down. In my view, we need to find ways of ensuring that the whole business is more viable.

I point out to the Minister the example of what has happened in Scotland. The Scottish Government have introduced a business bonus scheme that provides relief to businesses with properties in Scotland with a combined rateable value of £18,000 or less. The scheme has now been expanded, and where the cumulative rateable value of the properties of a business falls between £18,000 and £25,000, the scheme will offer some relief—up to 25%—to individual properties. As a result, all properties with a rateable value of up to £10,000 pay no business rates; those properties with a rateable value of between £10,000 and £12,000 get relief of 50%; those properties between £12,000 and £18,000 get relief of 25%; and, as I explained, if the cumulative values of the properties of a business are up to £25,000, the business can also get 25% relief on individual properties.

That scheme has been a huge boost to small businesses in constituencies such as mine, where many were struggling with the rates, which is one of small businesses’ major costs. It has obviously helped small post offices in villages and towns throughout Scotland.

In addition, the Scottish Government have launched a post office diversification fund, which has recently made awards totalling £1 million to help post offices to diversify and launch new business activities, in order to strengthen the vital role that they play in our local communities. The fund opened in July, with 49 post offices in 22 areas bidding successfully and receiving awards of up to £25,000. Examples of the diversification schemes that were approved include setting up an internet café, which the hon. Member for Ynys Môn (Albert Owen) was talking about earlier, and selling local produce. Indeed, I believe that one of the successful schemes involved setting up a post office in a fish and chip shop. That shows that those who run post offices are really thinking about how to meet the challenge of the future. The Welsh Assembly has, I believe, taken similar measures to boost post offices.

Those are concrete examples of how relatively small sums of money can be utilised—

The hon. Gentleman is making a very strong argument about rural post offices and indeed about some post offices in urban areas, including small towns. As he said, the diversification programme gives grants, but one of the drawbacks is that if a business suffers and has to close or change, it loses that grant. Is there not an issue with mutualisation? I hope that the Minister will refer to it in his winding-up speech. Businesses are uncertain about which part will be mutual and what assets actually belong to the postmaster and can be held on to by them.

The hon. Gentleman makes a good point and I was going to come on to the question of mutualisation in a moment.

As I was saying, the examples I have just given are concrete examples of how relatively small sums of money can be utilised to help to strengthen the post office network and hopefully put it on a more secure financial footing, thus helping to boost economic growth in many rural communities where there is often little other economic activity.

Indeed, Mervyn Jones, the commercial director of the National Federation of SubPostmasters, commented on the Scottish scheme:

“This announcement of successful applicants by the Scottish Government is most welcome. It means that many sub-postmasters can now invest in their businesses which will help them make their post offices more viable. The success of this scheme demonstrates the commitment that both the Scottish Government and our sub-postmasters have in maintaining this vital community service.”

I also note that, in a briefing for this debate, the National Federation of SubPostmasters says:

“Local and devolved government should offer full, automatic small business rates relief to support post offices; and provide grant funding to enable improvements in post offices and their retail businesses.”

That is what the Scottish Government and the Welsh Assembly are already doing, so perhaps the Minister should consider doing it in the parts of England that could also benefit from such schemes.

However much help is given to sub-post offices, it will not assist them if the basic business is allowed to atrophy. We had a lively debate on the Postal Services Bill last week. The Minister will not be surprised to learn that I still oppose the privatisation of Royal Mail, but I am interested in some of the possibilities for the post office network that are contained in the Bill, and I would like to explore his intentions with regard to those possibilities.

In that debate on the Postal Services Bill, I asked if there was any international equivalent of what is being proposed in the Bill, whereby there would be a division between the mail carrier and the post offices. I did not get a response to that question; indeed, it is a question that the National Federation of SubPostmasters has also asked. I wonder whether the Minister can let us know today if such an example exists that we can look at, to see how the proposed system might operate.

Clearly, that matter is of some importance because much of the work of the existing network comes through the inter-business agreement between the two companies in the network. Once again, the National Federation of SubPostmasters has raised concerns that that agreement might not be continued after privatisation. I know that the Minister’s view is that the brand identities of Royal Mail and Post Office are so interlinked that it would be in their interests to continue, but I am not so sure, once commercial profit becomes the overriding motive of the privatised delivery service, that it will necessarily continue with that link rather than considering other links as ways of delivering services. The future of post offices, particularly those outside major urban centres, remains in danger.

I turn to the point raised by the hon. Member for Ynys Môn about the mutualisation of the Post Office. I am a huge supporter of mutuals, and the idea is interesting. I would genuinely like to know more from the Minister and the coalition Government about how they propose to take it forward and how it would work. As I said earlier, all but two of the post offices in my constituency form part of another business. In other areas, many are situated in branches of WH Smith, for example, or a local supermarket. The structure is diverse, and it is difficult to see how it might work as a mutual organisation. I am not saying that that is impossible, but I wish that he would give us more detail so we can consider it, especially before the Bill is debated in Committee. I think that many Members would be interested in supporting the concept of a mutual structure, but we need to know the detail of how it will work. There is a great reluctance simply to accept the concept without knowing exactly what is being proposed.

Many post offices are integrated with other parts of a business, so individual sub-postmasters are concerned to know how that will work in a mutual structure. As the hon. Member for Ynys Môn asked, will the post office or the whole business be part of the mutual? How will the mutual interrelate with the rest of the business? If the Minister can convince many of us that there is a way forward, I think he will be able to gain support for the mutualisation rather than the privatisation of Royal Mail.

The post office network continues to play a vital part in the life of local communities, even in its slimmed-down state, and I hope that it will continue to do so for many years to come. I also hope that the Minister is right in saying that the days of mass closures are behind us, but it seems to me that a great deal of uncertainty remains about the future of the post office network, given the privatisation of the mail carrier and the woolly nature of the privatisation proposals. He needs urgently to flesh out Government policy on mutualisation.

The devolved Administrations are doing much to help keep existing post offices open, but we need a clear path for the future of the whole network and the confidence for sub-postmasters to continue investing in their businesses. If mutualisation is to work, they need a much stronger say in how those businesses are run, but there must still be a link to the main carrier, Royal Mail.

I would like to start the winding-up speeches at 10 past 12. As you can see, a large number of Members have indicated that they want to contribute to the debate. More brevity means more speakers.

I thank my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) for securing this debate on what is clearly an important issue; hence the number of Members here. I also reinforce his comments. Post offices are the lifeline of our local communities. They provide advice and community cohesion. Indeed, one very small post office in Kingskerswell in my constituency provides a local newsletter, which is fantastic. It is absolutely right that the value of post offices cannot be judged only in economic terms. I endorse my hon. Friend’s comments regarding the £1.3 billion investment, which I welcome, being offered by the Government over the next four years to prevent closures and assist with refits.

A decade of closures has hit my part of the world particularly hard. The south-west has had the largest decline of any region in the number of post offices. During that period, we lost 214 through Labour’s urban reinvention programme and 277 through the network closure programme. As a result, the south-west has only 1,303 post offices left, which is not very many given the rural spread and nature of its communities.

Survival in my part of the world and in my constituency has, in many cases, been driven by local support. Broadhempston, one of the smallest villages in my constituency, is a good example of the big society in action. It would not have survived without the support of local volunteers. The securing of premises, fundraising and manpower have been locally driven; the only paid individual is one part-time manager. It is a tribute to what that community, and communities in general, can achieve. The post office opening hours in that small village are Monday to Friday, 9 to 12. That is the beginning of a good service, but a number of problems remain that I feel the Government can help us address.

We need to enable small post offices to offer more services. Many of the last decade’s closures occurred because the ability to provide services such as TV licences or payment of car tax were either rationed to one post office in a group of four or five, or removed altogether and offered on the internet instead. I urge the Government to consider what we can do about that.

I also ask the Government to be sensitive to local needs. Broadhempston provides services in the morning, but not in the afternoons or on Saturdays. At the moment, the Post Office is refusing to pay the postmaster to work those additional hours, which are crucial. Broadhempston has no broadband, so our businesses depend absolutely on the post office. The Government should be locally sensitive in deciding where to agree to fund extra services. I would like some of that £1.3 billion to go not just to refits but to service provision. Afternoon services will also benefit an elderly population and small businesses; across the country, 19% of small businesses visit the post office daily, and 47% visit twice a week.

My third point has already been mentioned. How can we provide financial support? I welcome the concept of mutualisation and, like many Members, want more information about how it will work, but I would also like us to support those who are already helping themselves. Individuals have invested a lot locally, both in bricks and mortar and through volunteer support. I would like those who have put themselves and their financial assets forward to be helped with match funding or other financial assistance, because many of them have entered into extremely long-term commitments.

In closing—I have made my contribution short—I ask the Minister to consider carefully the specific needs of the south-west. Geographically, we are spread out, and we need support on the ground for our small rural post offices.

I am pleased to be called in this debate, and I thank the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) for raising the issue yet again. As he said, he has a good and honourable history on the matter.

I am pleased to continue the debate that we started last Wednesday, when we had only limited time. As the Minister knows, I have serious concerns about the plan to break up the Post Office and Royal Mail. I have been the secretary of the Communication Workers Union liaison group in this place for more than a decade, and have worked with sub-postmasters and sub-postmistresses on every campaign to oppose the closures that have been deeply damaging to many communities in all our constituencies, particularly in rural areas, as has been pointed out.

My concern about the announcement is what the detail will be. I do not remember Hooper recommending such measures as necessary to save Royal Mail. All the things that Hooper 1 and 2 focused on did not result in a recommendation to break up the two organisations. As has been said, there are substantial synergies. One third of Post Office’s income comes from the synergies and the services it delivers for Royal Mail.

I have three concerns for the Minister to address. What will the announced subsidy of £1.34 billion be spent on? What back-of-a-fag-packet calculations has he done? He has put none in the public domain so far. Will that £1.34 billion come on top of the currently planned subsidy of £180 million a year from 2011, or will it include that sum? On the cost of breaking up Post Office Ltd, how much is it calculated will be required to set up a parallel structure removing it from Royal Mail? It is currently a subsidiary of Royal Mail to whose new chief executive it is answerable through another chief executive.

The second problem relates to the historical business model of Royal Mail versus the promises that there will be continuing synergies. It is easy to make promises that that will happen—I heard the new chief executive say that it will—but, in reality, when it comes down to the wire will that be the case? For example, when Royal Mail at the centre was asking too much for the right to issue TV licences, it transferred that business out and would not take it. My local post office could not get that business because Royal Mail at the centre was asking for a fee that there was no willingness to pay. In fact, we started to get that service from PayPal at a service station at the bottom of my village.

That very point was also raised by the hon. Member for Newton Abbot (Anne Marie Morris); the saving was £100 million for TV Licensing. It was a commercial contract for which the Post Office, frankly, was not even in the ballpark.

I recall the detail well, but to me it was an example of a centralised organisation not having in mind the interests of the peripheral parts of the organisation, particularly small businesses. That is why although I am a Co-op party member, I have serious concerns about a mutual taking over all of Post Office Ltd, because it will become another central organisation, with its own raison d'être that is not necessarily the same as that of people in sub-post offices. I have some serious concerns about how the detail of the proposal will work.

I see the Minister smiling. The other issue is that this is another Lib Dem promise. We know that their promises are worth absolutely nothing, particularly to those who voted for them. That is similarly the case with regards the question raised by the hon. Member for Angus (Mr Weir). To say that there will be no closure programme is the stupidest thing I have ever heard. It is like saying, “The world will stand still because we have done this in the Postal Services Bill.” The world will not stand still; changes will be required. Again, that was mentioned in a Lib Dem promise. It is easy to make promises, but unfortunately the hon. Member for Kingston and Surbiton (Mr Davey) is actually a Minister now; he is in government and he must back up such promises with facts. Is he saying that regardless of how far the income of every single sub-post office in every village or urban community declines, the Government will continue to pile in subsidy? As I said in the debate last week, my calculation is that it would take £270 million a year to guarantee that.

We have heard many opinions so far and my hon. Friend is making a very important point, but there is a way to boil things down. Most countries have specific provisions in legislation to protect post office numbers but, as it stands, the Postal Services Bill does not.

My hon. Friend has made a factual statement and it will be recorded in Hansard. There is, in fact, a duty on the Post Office in Germany to provide post offices for towns and communities of a certain size; it has to do that as part of its duty. Under the Postal Services Act 2000, that should have been part of our duty. That legislation said that we could have freedom, but the freedom should have been constrained by discipline, which would have saved post offices in small communities. We should have looked at the business case in such communities and guaranteed that the subsidy would go in.

Of course, the hon. Gentleman is right. Nothing stands still in business. There is a cleansing effect and businesses going to the wall are part of that. However, does he recognise that the stage before that, which is within management control, is to help people in small businesses run their business better? That has not been done effectively by the Post Office to date.

The hon. Gentleman is slightly over-egging the pudding. I think that the National Federation of SubPostmasters has tried such an approach. It is not as though that organisation has been standing still; it has been talking to its members about innovation and getting more footfall, as the footfall declines. Let us be frank. Many of us are now semi-urban dwellers who travel to large centres to do our shopping—we drive past our post office, regardless of the service it provides. I am and always have been a post office user, but my local postmasters and postmistresses tell me that very few people from the big estates in my village use the post office there; they drive to the centre of the town, where there is a big supermarket and post office.

I shall not give way, because I am conscious of the time. I hope that the hon. Gentleman does not mind, but I think that other hon. Members want to speak.

My third concern relates to the structure of the Post Office itself. There are two types of post office: Crown offices, whose closure causes the most damage in terms of people’s perception of what they get from the post office, and privately owned, subsidised sub-post offices. The plan was that in 2011 we would need £180 million to maintain the subsidy. Many such post offices are rural; very few are in urban areas.

There was an early Crown post office closure model in my area; a sorting office was kept in Grangemouth in my main town, and a Crown office was retained and rented out to a former post office manager. He has a wonderful shop there. However, the Government are now talking about restructuring in such a way that they will take the sorting office and delivery office away, and it will become completely unviable for an individual to rent such a unit.

In Linlithgow, which used to be the county town, the sorting office went first and then the Post Office said it was unviable to keep the front shop so the post office was moved into a large sweet shop—everyone will know the name, but I will not give it any publicity. Every Monday, it is overcrowded and people cannot get in when it is bucketing down with rain outside. That post office is at the far east of the town. Anyone who knows the geography of Scotland will know that from South Queensferry at the bridges there is no post office until that one in the east of Linlithgow. After that, there are no post offices until Polmont in Falkirk. Post office provision has been unbelievably stripped back.

That is what happens when delivery and sorting are taken away. The same thing happened in Bathgate, where the post office is at the back of a supermarket. If there is a market model, the structure of the Crown offices, which will be given over to Post Office Ltd, will mean there is temptation to do the sensible thing—under a market model—and move away from retaining such buildings in the centre of towns and put them in easier areas outside the town, such as industrial estates. That will be a real threat to Crown offices, which are fundamental to the viability and perception of post offices.

The final problem I shall mention is PayPal. Someone who now works for the Communication Workers Union used to work for PayPal at quite a senior level. They left PayPal and eventually came to the CWU. They said that the board of PayPal would take a loss-leading position to strip out the Post Office monopoly on the things it does now with Royal Mail. That is its aim. PayPal also wants to do cash deliveries. At the moment, there is a system of secure cash deliveries to post offices. PayPal wants to do that. It also wants to pay out benefits—it wants to do everything. PayPal will undertake a campaign to undermine Post Office Ltd, regardless of whether it is a mutual.

The Government are throwing Post Office Ltd to the wolves. The subsidies will not continue, or they will have to grow exponentially. Will the Government explain what safeguards there will be? As my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) suggested, will they write in a guarantee that every community of a certain size will have a post office and that the Government will subsidise it? If not, they are sending Post Office Ltd to destruction.

I congratulate my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) on securing this Westminster Hall debate. I thank the Minister for being here and for producing various briefings on the Postal Services Bill for my colleagues. The future of the post office network is close to my heart, not only because I am one of the vice-chairs of the all-party group on post offices, but because my rural constituents of Colne Valley, west Yorkshire, have suffered many post office closures in recent years. In fact, my parents lost their local branch in Holmbridge in the past couple of years.

We all know the crucial role post offices play in our local communities. It is sometimes only when they have gone that we really appreciate what they offered our communities. The role of the Meltham post office in my patch has become all the more important because the last bank branch has closed there this month, with Lloyds TSB pulling out. That leaves the post office branch with the only town centre cash machine, which is crucial.

I am very lucky because I live just a couple of hundred yards from a fabulous community post office in my village of Honley. I can tax my car there, get foreign currency, get my dry cleaning done, and I can even get tasty fresh olive bread—yes, even in west Yorkshire we get such lovely goodies. However, as we heard earlier, we cannot get everything done there. I cannot renew my TV licence and, although I can pay my Yorkshire Water bill, I would be penalised £2.50 for the transaction. The branch is also doing Santander bank work. It is handling bags full of coins and change from businesses and charities, which is a good service. However, for an hour’s coin handling, the sub-postmaster tells me that they receive only about £1. That is hardly the basis for a stable business, so all is not well.

What can be done? The National Federation of SubPostmasters has identified several measures that could enhance the network. We heard about many such measures during the debate, and we will hear some more in the next 40 minutes. However, I will end my contribution with the thoughts of my local sub-postmaster, Brenda, who has been running the Honley branch for four and a half years. I called her last night while jotting down some notes. Please remember that it is her business and her family’s livelihood.

She made three points. First, Government Departments, central and local, and including the Department for Work and Pensions, must make the Post Office their No. 1 facilitator of services—a point we heard earlier—and prioritise it ahead of telephone and online provision. Secondly, we must understand that post offices need to deliver more work to flourish. They are ideally placed to be the focal point of the big society. Thirdly, we must speculate to accumulate; we have already heard about the £1.3 billion of investment, which Brenda welcomes, but we need to invest now if we are to have a network for decades to come. Money from Royal Mail needs to be invested to bring the branches into the 21st century. Brenda highlighted the fact that that means basic equipment, such as proper scales, which they struggle without. We need to invest in that if we are to have an accessible network that makes sub-postmasters proud, so that in 10 years’ time we will not need to put in the rural subsidy.

I am afraid that I have almost finished. In summary, the Postal Services Bill signals a crossroads for the post office network. It is a great opportunity, and I hope that my colleagues in all parts of the Chamber will join me in fighting for a sustainable, long-term future for our post office network.

I apologise for having to leave during the previous speaker’s contribution, Mr Caton—it was probably the excitement of the previous debate. I congratulate the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) on securing this important and timely debate, which follows the Government’s announcement last week.

I want to start by saying that I support the post office network, and I do so as a customer; I ensure that I pay all my bills across the counter at my local town post office. In doing so, I hope to set an example. As a Member, I ensure that all my office transactions are done in local post offices. As has been mentioned, it is wrong for Members to drive past post offices that are closing down and say, “Isn’t it a crying shame?”, before going to other outlets. We must lead by example in our communities if we are to keep our post offices.

The important business for post offices is not only from individuals, but from Government Departments and local government. The hon. Member for The Cotswolds rightly said that we need innovative business. One simple business transaction that local government could encourage council tax payers to undertake would be to pay their bills in local post offices. During the network change programme, I suggested that to my local council, because it was outraged that central Government were closing post offices. I challenged it simply to state on the notice that it sent to each household in my constituency that that service was available in post offices, but it refused to do so. Worse still, the chief executive said categorically that the council could save a lot of money by having people pay the bills electronically or in one-off payments.

I think that we are all in this together. We talk about the big society, and my Anglesey community has a big heart, but we do not need lectures on that from anyone. There needs to be interdependency and help from the public, private and third sectors, a point I will come to later. I opposed the network change programme’s closures because it was too rigid and came from the centre. I wish that the Conservative Opposition at the time had said that they would put money into that, but they did not commit themselves in the last Parliament to put in the subsidy, which is why I did not support the Conservative motion. I abstained, and people who know me know that I do not do that very often; if I think something is right I will vote for it, and if I think something is wrong I will vote against it. It was wrong of the Conservatives not to commit themselves to the subsidy, but the new Government have said that they will commit additional money to help the post office network, and I support that. It would be churlish not to do so. I think that that is important and must be sustained.

Echoing the comments of the hon. Member for Angus (Mr Weir), I am confused about the mutualisation programme. I support mutualisation. Indeed, I told the previous Secretary of State and the Minister responsible for the Post Office at the time that Royal Mail should be mutualised, because I believe that it is so special in the fabric of British society that it must be treated differently. It should be neither left to the laissez-faire approach and the free-for-all of the market, nor cushioned as it had been under previous management and Governments. I was told that mutualisation was the wrong model, but I do not think that Hooper looked at that model carefully enough. Welsh Water, for example, which operates in my constituency, is a not-for-profit organisation. It provides a universal, quality service in Wales, and all its profits are reinvested in the company for the benefit of the customers. That is the kind of model we need for Royal Mail. I hope that the Minister will give some details on the mutualisation for the post office network.

Ultimately, post offices are private businesses in the main. They are run by individuals who have invested their own hard cash, time and effort to provide a public service. They are private means. There are also the private subsidies from Government and, in the case of Wales and Scotland, a special diversification programme to help keep the businesses open, so there are three streams of investment to the post office business.

I wonder how the mutualisation will work and, if there is difficulty, how post offices will get help. There will be difficulty, because business is dropping as the pattern continues of people using mechanisation and electronic mail, which is taking over. There are big concerns, which I am sure the Minister will try to address, because it is important that people know now what will happen. I have friends who are postmen, sub-postmasters and in management, whom I work with, and they are all confused about that. We need clarity on that matter

I want to add to something my hon. Friend has said. Our understanding from Post Office Ltd is that only about 4,000 of the 11,500 post offices now open are profitable. In addition to the public subsidy, Post Office Ltd cross-subsidises the loss-making post offices to the tune of £400 million. The Government subsidy is welcome, but we have to be clear that it really is an uphill task. Mutualisation will have to be tremendously successful to make up the shortfall for those 7,500 post offices.

My hon. Friend is absolutely right, although it is not for me to answer on the Government’s proposals. I would like to see something developed along the lines of the people’s bank. I would like to see credit union activities in local communities, in which people will have a real say on what goes on.

I thank my hon. Friend for mentioning credit unions. Does he agree with me that one of the useful things that the Government could do with the subsidy they propose to put into post offices is support the back office integration that needs to happen and the technology that would allow post offices and credit unions to work together?

I absolutely agree, and I think that a mutual, with its ethics, could do that. There is a way forward, but I am unsure of the detail at present, so I will not commit that that can be done in the proposals we have seen and in the form they have been given.

Other Members wish to speak, so I will conclude my remarks by referring to another issue that the National Federation of SubPostmasters has raised: the separation of the Post Office from Royal Mail, and the inter-business agreement. The hon. Member for Angus asked whether there is an international model that the Minister has in mind that is successful, and I would be grateful if the Minister responded. If we do away with a third of the business or privatise it, there is a risk that it will look at its shareholders as its main priority, rather than the post office network. Those are my concerns, and I am sure that the Minister will look to address them.

[Mr Philip Hollobone in the Chair]

I will make a short contribution, as I know that many Members wish to speak. I congratulate my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) on securing the debate on an issue that is important for all our constituents. The two counties represented in my constituency were badly affected by the most recent round of post office closures. In the Yorkshire part, we lost post offices in Airmyn, Pollington and on Westfield avenue in Goole. Over in Lincolnshire, we lost them at Wrawby, West Butterwick and Eastoft. When my village of Airmyn lost its post office, we sadly also lost our village shop, so we are left with only our pub.

Justin Tomlinson (North Swindon): Does my hon. Friend agree that rural pubs offer an opportunity to protect and enhance the post office network? The Red Lion pub in my constituency recently submitted an application to offer the post office service, which I support, as it is probably a good opportunity to protect our service.

I do. As it happens, I was in a different Red Lion this past weekend, in Epworth—it is wonderful. There is an opportunity for pubs and other organisations to be used for outreach services. In fact, I was planning to speak about outreach in a couple of minutes.

The impact of post office closures, particularly on rural communities, cannot be overestimated. I do not believe that the previous Government fully appreciated the impact of losing services such as the village post office and shop.

My hon. Friend makes a good point about losing the local post office and shop. We had a similar case in Fulford in my constituency: the post office and shop were not viable, but together they are a viable concern and an important community facility. Once the post office goes, the local shop goes, and that is something that we have to remember.

I absolutely agree. I remember reading in local newspapers that my hon. Friend ran a campaign for the Fulford post office and delivered a petition to No. 10 Downing street. I know that he worked incredibly hard on that.

I want to say a couple of things about what local authorities can do to support the post office network. The hon. Member for Ynys Môn (Albert Owen) made a point about that. One of my local councils in north Lincolnshire attempted two or three years ago to put into the council budget and local council policy the establishment of council terminals in every sub-post office so that residents could pay their bills and access council services and essential advice. All of that was costed and put into the budget proposals but, sadly, it was rejected by the Labour-run council, which missed a huge opportunity. I am sure there are plenty of examples around the country of missed opportunities to engage local authorities in doing what they should be doing, which is standing up for their rural areas as much as their urban areas, and supporting what we all accept is important. Everyone has fine words. They say that they support post offices, but actually doing something is a little harder sometimes.

Another point that I want to pick up on is rural broadband, where post offices could have a role. Several of my villages have no access to broadband and are unlikely to get it any time soon. I welcome the announcement about the additional funding that will be coming our way. There is the potential in some of our villages for post offices to help roll out a mobile broadband or satellite broadband network, but there must be structures in place to manage a local solution such as that. Perhaps the Government could give some consideration to it.

Is my hon. Friend as concerned as I am about the back-door closure of post offices, which I raised in a debate last week? I am enormously grateful to the Minister for recognising the problem. He may be interested to know that, of the 2,406 audits that were done in 2009, 265 suspensions were held, and there were only two reinstatements after appeal. That very much reinforces the picture that suspensions are being used as a means of closing post offices, which I am sure we would all deprecate.

I absolutely agree. I join my hon. Friend in condemning that, and I am sure that the Minister will respond to his comments.

The additional funding is extremely welcome. In fact, it was publicised in my local paper just last weekend. I was out door-knocking this weekend in several villages, and quite a few people who had seen the article told me how grateful they are that the Government have finally committed to the post office network.

Will there be additional funding to extend outreach services where we have lost post offices? We lost several post offices, which were replaced with outreach. Unfortunately, the outreach services are often available for only two or three hours a week during the middle of the working day. For people such as myself in my village, it is utterly impossible to use those services. Perhaps we could have a bit more information on whether outreach services will benefit from the subsidy.

We all have a responsibility to support the post office network and Royal Mail in general. During my four years of campaigning, I used Royal Mail for all my deliveries—my opponent sadly did not. When we tax our cars, we can lead by example; we can use Royal Mail and support our post offices. As I said, words are easy but actions are sometimes a little harder, but we all have a role to play in our communities.

Order. The previous Chairman indicated that the winding-up speeches would start at 10 past 12. Realistically, we will have time for only two more speakers, so I intend to call Gregg McClymont followed by Lorely Burt. I ask that they each speak for three minutes.

Thank you, Mr Hollobone. I shall speak even more briefly than that.

I spoke on Second Reading and have had conversations and briefings with the Minister. All politics is local, so it is understandable that we have heard a great deal today about local post office branches; in villages, in particular, they are a lifeline. However, I want to raise the broader picture and speak a little about how the Postal Services Bill is drafted.

I said in an intervention that statutory provision for post offices should be written into the Bill. At the moment, it is unclear what mutualisation actually means, but however well it proceeds we have a big problem, because 7,500 post offices do not make a profit. The two most successful mail services in the world are the German and Dutch services. In both those countries, provision for post office services is written into statute. I reiterate the point that however worthy the good intentions of the Government and Members on both sides of the House in respect of the Bill, unless we make provision in it for post office numbers, given the economics of Royal Mail and the Post Office, we are looking at significant closures down the line.

The hon. Member for Northampton South (Mr Binley) made a valid point about allowing managers to manage, but given the economics of the Royal Mail and post offices, even wonderful managers will have a difficult task protecting the 7,500 post offices that do not make a profit.

Recognising that most of our small post offices are private businesses, is the hon. Gentleman willing to subsidise private businesses and, if so, to what extent?

I am tempted to produce a line from the Leader of the Opposition: I understand that I ask the questions and the Government answer them. Does the hon. Gentleman agree that given the logic of the economics of the post office network and Royal Mail, it is difficult to see how to protect the 11,500 post offices we currently have unless we write into the Bill provision to protect them? That is the key point.

There is an easy way to do that: help post offices with marketing, a proper retailing policy and a wider range of services to sell. It is all there to do, but it has not been done effectively.

I admire the hon. Gentleman’s confidence and enthusiasm. We hear a great deal—understandably—from Government Members about the Labour Government closing 5,000 post offices, but that Government’s criteria meant that we have maintained 11,500 although only 4,000 are profitable. I say in all sincerity that unless we write into the Bill provision to protect the number of post offices we have now, we will see post office closures down the line, and that is something that everyone in the House would deprecate. I ask the Minister whether he will put that provision in the Bill.

My final point is about the universal service. I understand that the first universal service order that Ofcom will make as the regulator will not require parliamentary assent. When Ofcom makes its universal service order we will not be able to say that we do not accept it. That is important.

For the past 10 years, we watched the near desecration of the post office network under the Labour Government, who presided over a subsidised decline of the post office. Well, things will change radically. I very much look forward to the statement that I believe is coming tomorrow. There will be no closure programme under this Government.

No, I am sorry, but I have only two minutes.

There will be more services and more potential. I greatly welcome separation from the Royal Mail. It will give the Post Office much more say in its own affairs; it will no longer be a junior partner. Can we build into the Postal Services Bill provision for the Secretary of State to seek a review of the access criteria, subject to parliamentary approval? There is concern about that.

I would like to know a little more about what conditions need to be in place before mutualisation can happen.

No, I am sorry, but I have no time.

On funding, it is absolutely brilliant that we will have the £1.3 billion which, at last, will give the Post Office the boost that it needs. The most important thing is that it will enable the Post Office to move into the 21st century. We have already been told a little about essentials, and we are really looking forward to bringing down the barriers that have been created by previous Governments, so that we can open up the Post Office to the sort of thing that it is very capable of doing. Government work, new mail services—including local collection and drop-off—the Post Office bank, which was mentioned by Members earlier, access to all the major high street banks and benefit changes are all things that the Post Office is well equipped to do, and I look forward to my hon. Friend the Minister outlining in the statement tomorrow exactly what can be done.

I congratulate the hon. Member for the Cotswolds (Geoffrey Clifton-Brown) on securing the debate. It is clear from the turnout and the speeches that hon. Members on both sides of the House have high regard for the post office network.

Our post office network is much more than a network of businesses. Post offices are the lifeblood of our communities and an essential part of our social network. For many people, particularly those who do not have bank accounts or access to the internet, they are the only means of accessing services, withdrawing pensions and paying bills. We all know sub-postmasters who frequently go that extra mile, those who will notice that Mrs Jones has not turned up to collect her pension and will make discreet inquiries to see if anything is amiss.

When we were in government, we established access criteria for the first time, in recognition of the business and social importance of the post office network. The access criteria developed by the Labour Government ensured that 99% of people living in deprived urban areas, and 90% of people nationally, would be within one mile of a post office. That is extremely important, because it provides the access that some of the most vulnerable in our society need. We then put in money to keep open 11,500 post offices, whereas a purely commercial network would have been reduced to some 4,000. We put in £150 million per year up to 2011 to subsidise that network, with an increase to £180 million for 2011-12. We welcome the recent Government announcement that there will be continued support for post offices.

Anyone who runs a business knows that it is necessary to be constantly prepared to change and adapt. Post offices need to attract new customers, and offer new products to existing customers. Sub-postmasters retire and new people come in. When someone first decides to take over the running of a local post office, they need to know that their business will be viable. When sub-postmasters retire, they sometimes decide to keep the premises as their home. That means that newcomers have not only to identify premises and find the funds to start up, but also find the funds to install the counters and facilities to meet post office requirements. To make that sort of commitment they need the confidence that they can make a go of it, and absolutely fundamental to that confidence is the inter-business agreement with Royal Mail. That is why the National Federation of SubPostmasters wants the guarantee of a minimum 10-year agreement signed and sealed between Royal Mail and Post Office Ltd. Anything less would be a betrayal. It would be a death sentence hanging over all but the busiest of our post offices.

I share the hon. Lady’s concern about the impact on business start-ups and business innovation. I represent a very rural constituency, and one thing that we have seen over recent years is new businesses springing up and using the internet to sell goods further afield than the isolated rural areas in which they are based. I am very concerned that the loss both of the universal service commitment and of post offices is inhibiting business growth. That will absolutely undermine existing small businesses and disincentivise new ones, not only in the post office network but in the wider rural economy.

Indeed. The hon. Lady makes reference to the important role of post offices in rural communities, but those very post offices are the ones that would be most threatened if the inter-business agreement were not in place. It is absolutely vital, as the National Federation of Sub-postmasters suggests, that we have some sort of 10-year agreement to guarantee that business.

Proceeding to privatise Royal Mail without such guarantees for Post Office Ltd would also call into question the wisdom of investing considerable sums of taxpayers’ money in a business that had no chance of being viable—a bit like redecorating flood-prone properties without shoring up the flood defences. It is not sufficient for there to be vague assurances and assumptions that somehow Royal Mail would automatically choose Post Office Ltd for its counter services. No astute business person would be satisfied with anything less than protection through written contracts and legislation. The Postal Services Bill does not provide that protection, and the Opposition will be tabling amendments that would provide Post Office Ltd with the necessary certainty that a privatised Royal Mail will continue to use the post office network for its counter services.

It is very worrying to hear the National Federation of SubPostmasters report that the Government are very resistant to its requests for the guarantee of a 10-year agreement. That is no way to treat sub-postmasters who have invested considerable sums of their own money in the local post office network, and it will certainly not encourage new entrants to take over when sub-postmasters retire. That is one area in which the Government can, and should, take action to safeguard the third of Post Office income that derives from Royal Mail.

Furthermore, one in seven rural post offices provides premises, facilities and supervision for Royal Mail delivery staff. Sub-postmasters running the 900 mail-work post offices are paid according to the number of postmen and women they supervise. That pay is frequently about 25% of the income of such post offices. They need a guarantee that the income will continue. There is no guarantee that a privatised Royal Mail, quite possibly owned by foreign interests, would honour or renew the inter-business agreement, and without determined Government action in that respect post offices will lose their core business.

In addition, we need to know what other specific proposals the Government have to increase footfall in our post office network. As I have said, all businesses need to attract new customers and identify new services that will interest their customers. One notable success story is that post offices have become major suppliers of foreign currency.

: The hon. Lady is setting out a fantastic case as to why the post office network is vital, so will she briefly explain why her Government closed down 7,000 branches?

I have just explained why we put in money to ensure that 7,500 branches, in addition to the 4,000 commercially viable ones, were in fact kept open. The crucial issue we all have to address, and on which we need answers from the Minister, is how to make those post offices viable so that, in the words of some of the hon. Gentleman’s colleagues, the subsidy is not needed for ever and at the end of the day there is a viable business that can survive, and provide the network that we all want.

May I finish, please?

The Labour Government undertook to develop a successor to the Post Office card account, and the contract was awarded to the Post Office. We need specific details from this Government about their vision for such accounts and how their scope could be broadened. We also prepared the way for increasing the range of banking services to be made available through local post offices. Hon. Members might remember that we instigated a consultation, and they might have encouraged their constituents to take part in that last February, and to respond to a survey about the type of banking services they would like to be able to access at their local post office. How do the Government intend to take forward that work, and what specific plans do they have to extend and promote banking services through the post office network? It is not simply a question of making services available at post offices; we cannot turn the clocks back.

In some areas, as few as 7% of women over the age of 65 in lower-income groups have regular access to the internet, but that figure rises to almost 100% among younger men on middle and high incomes, many of whom want and expect to be able to access services online. They are likely, for example, to renew their driving licences at the click of a mouse, rather than in their local post office, even when they might physically call in to the shop that houses the post office to buy snacks or drinks, or to rent a DVD.

In terms of the sub-postmasters’ vision of an enhanced role for post offices as the front-line provider of an expanded range of Government services, what specific plans do the Government have to make that happen? Fine words and lofty aspirations are not enough. Even the straightforward availability of services might not in itself be sufficient. Even the plentiful good will towards post offices that exists in our communities is unlikely, on its own, to increase footfall. How exactly do the Government plan to turn that vision into a queue of real people choosing to carry out business transactions at post office counters?

Local councils can also play a role, but some councils have not always been supportive of the post office network. For example, a couple of years ago, we found hidden away in the small print on the back of council tax demands from my county council plans to cease accepting payments via the post office network. I persuaded councillors to allow representatives of local sub-postmasters to address the full council, and those plans were dropped.

To sum up, we want to hear specifics from the Minister. We want an explicit commitment to protect the inter-business agreement between Royal Mail and Post Office Ltd and to hear specific plans for increased Government use of post offices and developing more business for them. I look forward to hearing the Minister’s answers.

The debate has been extremely good; I counted at least 26 Members present during our discussion. We heard passionate defences of the services that many of our constituents enjoy up and down our country, and I want to reply to as much of the debate as possible, although I will be making a statement in the very near future—but not tomorrow; I apologise to my hon. Friend the Member for Solihull (Lorely Burt). We will publish our policy statement soon, and I hope that hon. Members will enjoy reading it and questioning me and other Ministers as we go through the Postal Services Bill over the next few weeks and, possibly, months.

I congratulate the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) on his exemplary speech. He started by praising the Government, which is always a good beginning. It would have been even better if, with a Norfolk accent, he had burst into song like the postman; nevertheless, he talked cogently about the issues in his constituency and showed what a fine constituency MP he is. He has campaigned for his constituents, particularly for the local post offices in Stratton and the Beeches, and, although they were closed, he is still campaigning and working with local sub-postmasters and councils on putting forward a report to Post Office Ltd. His remarks about the importance of outreach services and their potential were well made.

Even before the debate, the hon. Gentleman scored a major victory because he got a review for those post offices and the potential for reopening them. He is meeting Post Office Ltd management shortly, and I wish him luck. He will understand that through legislation and Government practice over time, Post Office Ltd and Royal Mail operate at arm’s length, so it would be wrong for a Minister to instruct Post Office Ltd to meet his demands in detail, but he has already made a powerful case. I am sure that he will be listened to closely.

The hon. Members for Angus (Mr Weir) and for Ynys Môn (Albert Owen), among others, raised our plans for mutualisation. There is a little confusion, so I am grateful for the opportunity to put it right. The proposals in the Bill focus on Post Office Ltd—the national organisation that holds everything from the intellectual property, to the brand, the contracts, the discipline codes and so on. We are proposing that it could become a mutualised organisation in due course, if the network became more financially viable through our other plans. Let us be clear: that would mean an organisation that could be owned and run by sub-postmasters, post office employees and communities.

How are we approaching that? Because we need a number of years for our policies to take effect, it will be some time before we can be sure that the post office network is completely viable, but I hope that in the lifetime of this Parliament we can move towards mutualisation. We want a real debate, so I welcome the contributions that we have had. We have already had a pamphlet from Mutuo discussing the possibilities of mutualisation. The Government have asked Co-operatives UK to consult widely, not only within post offices, but in the co-operative movement and other mutualised organisations with expertise in the area. We asked it to do that because Government do not run co-operative and mutual organisations. This is not about Government imposing a structure; if the process is to be successful, it must be organic, which is why we are keen for the first big consultation on it to be led from outside Government.

Of course, Government must take responsibility, and once we have had the response to the Co-operatives UK-led consultation, we will hold a national consultation, which I expect to start some time after the Postal Services Bill receives Royal Assent. Members of the wider public can then be involved in the consultation. That will prepare the ground and the details, so when we have a financially viable post office network, or a network that is on train to becoming financially viable, the mutualisation option will become real. That is not to say that individual post offices cannot be mutualised.

As hon. Members know, individual post offices are often single, sub-postmaster-run, privately owned businesses. Some are chains run by different agents—such as WH Smith —and some already operate on a mutual basis, either as community mutuals, and we have heard examples of those, or through mutual organisations such as Co-operatives UK. Mutualisation already exists locally, and I think that more than 1,000 post offices are already run in that way. We are talking about mutualising the national organisation, which will improve the incentive structure by aligning the incentives for local sub-postmasters at community level with the incentives of the national organisation.

I hope that is a full answer. I am grateful for the opportunity to put it on record.

There is a social enterprise in my constituency. That would be straightforward—a mutual could work with a mutual—but how would a private business that is investing retain its assets? Would that company have to go mutual to have a relationship with Post Office Ltd in its new form?

No, it would remain a private organisation, but it would have a share in the mutual organisation, which would give it contracts and so on. In no way would we take assets from individual private entrepreneurs who have set up post offices and run them for years. That would be wrong.

In the little time that the Minister has left, will he concentrate on how the £1.34 billion investment will be put into the Post Office network to strengthen branches? Will he give us a flavour of how many branches he envisages the post office having? I have been through the bruising process of losing 12 post offices. Having heard from hon. Members around the Chamber this morning what a terrible problem there is when a post office closes, what is his vision for the future and the number of branches?

I will disappoint my hon. Friend because to answer him would be getting ahead of the statement that we have to make. It will deal with how we want to spend the £1.34 billion and the detailed business case that Post Office Ltd developed. It was not done on the back of a fag packet, as the hon. Member for Linlithgow and East Falkirk (Michael Connarty) said. Given the amount of detail in the business plan for spending the £1.34 billion, it would have to be a very large fag packet. In the statement, we will also flesh out our vision for the future of the post office network.

I shall try to deal with some of the points made in the debate. The hon. Member for Linlithgow and East Falkirk was incredibly critical of the Government. He failed to point out that five post offices in his constituency closed during the previous Government’s closure programmes. If he had done that, we might have listened to him with a little more attention. He and the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) commented on the need to write into legislation the number of post offices there must be in Great Britain. I looked at the Postal Services Act 2000 and the previous Government’s 2009 Postal Services Bill, to see what their proposals were. Do you know what, Mr Hollobone? The previous Government made no such proposals at all. No sensible Government would tie down private business in knots of legislation, and we should remember that private businesses run 97% of post offices. Frankly, that sort of approach goes back to old socialist regulation and is not how to modernise the post office network and make it more commercially viable.

The Minister must realise that clause 3 of our Bill said that the organisation would be publicly owned. That is the difference. If Royal Mail is in majority public ownership, a great deal more can be done to control those details than if the entire business were sold into private—possibly foreign—hands. That is the key difference between our proposals and those in the current Postal Services Bill. I hope that the Minister can answer the sub-postmasters and sub-mistresses who are worried about the viability of their businesses because they cannot see an agreement in the legislation.

Again, the hon. Lady shows that her party does not understand business and certainly does not understand the post office network. The previous Government did not write the inter-business agreement between Royal Mail and Post Office Ltd, and nor should they have; it was an agreement between two separate organisations.

Order. That was an enjoyable debate. I ask all those who were taking part to leave quickly and quietly. We are now moving on to a debate on the education maintenance allowance.