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Post Offices

Volume 700: debated on Thursday 24 April 2008

rose to call attention to the role played by post offices in local communities and the public reaction to plans to close a portion of the network, and to the case for a review of the operations framework of the Royal Mail and post offices provided by the Post Office Act 2000; and to move for Papers.

The noble Baroness said: My Lords, the situation with regard to post offices is a shambolic mess. The Government have succeeded in uniting town and countryside in a roar of protest, backed by government Ministers, that comes from a sense of outrage. Three million people signed the petition in October last year. They feel, and rightly so, that post offices are an important part of everyday living, particularly for the less wealthy, old-age pensioners, single mums and dads and small businesses.

Let us start at the beginning. Sub-post offices used to be profitable. The Post Office had a savings account that was accessed through a book and carried no rights other than to put money into it over the counter and to take cash out of it. There was no automated payment, no overdraft facility, no credit card, debit card or cash card. Then the Government announced that giros, pension books and cheques would all have to go. The Post Office savings book was abolished and pressure was applied to each payee to accept their benefit payment into a bank account. The Post Office could not, apparently, use automated payments as there were no slots left in the bankers’ automated clearing system.

Millions of people who owned a bank account needed their benefits paying into the Post Office because they had an overdraft and did not want the bank to have first call on that money. Millions more who did not have a bank account were either unable to use one or did not have the documentation to open one. A surprising number of people have neither passport nor driving licence. Moreover, the banks made it very difficult for those on low incomes. The citizens advice bureaux fought for improvements but I understand that it is still not easy. The banks prefer to have as customers those of us from whom they can make a profit rather than those from whom they just cover costs.

Jeff Rooker—now the noble Lord, Lord Rooker, but then a Minister in the other place—stated in a Written Answer:

“As at August 1999, about 65 per cent. of all benefit recipients were receiving payment in cash by order book or girocheque”.—[Official Report, Commons, 26/10/99; col. 842.].

At that time 95 per cent of the population were within one mile of a post office and 60 per cent were within a mile of a bank, but most of those lived in town as only 9 per cent of villages had a bank.

At Second Reading of the Child Support, Pensions and Social Security Bill on 17 April 2000, the noble Baroness, Lady Hollis, said that 96 per cent of parents who were separated or divorced have care responsibilities for their children or adults and earn less than £100 a week. That statistic exemplifies the poverty of large numbers of people, even in this new century. It was into this situation that the exponents of joined-up government dropped the bombshell of automated payment. On 2 May 2000, the move was supported by the noble Lord, Lord Sainsbury, when he rejected the idea that post offices should go into the future with a paper-based system. He argued that the continuation would place the Post Office in a totally defensive and unacceptable position, particularly with regard to gaining new business. We argued against that. Had the Government allowed sub-post offices to diversify at that stage, we might not be in the situation that we face today.

At the time, there were many statements about financial losses in the Post Office, the cost to the Government of the existing systems and the amount by which the taxpayer would benefit after the changes had gone through. There was, for example, a quote of £140 million annual loss due to fraud. I wonder whether that was due to malpractice by certain members of the public between the point where the benefit reached the post office and was withdrawn by the payee, or whether it was due to incompetence in the department.

After the revelations of recent weeks, will the Minister confirm that none of that annual £140 million loss was caused by transfer errors between the Government and the Post Office? At that time, we were told that it would cost 1p per transaction for an automated payment as against 49p for a payment by an order book, 79p for a giro payment and 67p for a payment card. What costs were included in those figures? Will she confirm the current cost of automated payment and the basis on which the calculation is made? Exactly how much money was saved by the DWP, and where did that money go?

I have good reason for querying this figure, because at that time I was coming up to a certain significant birthday, and I decided that I wished my state pension to be paid into an account in the post office. This is what I encountered. I was contacted by the DWP, which asked me if I had a bank account, to which I said that I did not think it was really relevant, but I did have one. I was told that my payment would be made into that account. I said, “No, I do not wish it to be paid into that account; I wish it to be paid into the post office”. Had I got a post office account? No, so I needed to get one. I put the phone down and I went to my local post office. I asked the postmaster whether I could have the form to apply for an account. He said, “This is the form, but I cannot give it to you. You need a letter of invitation from the DWP before I can give it to you to fill in”.

I went back home and rang the DWP. Sure as anything, I did need a letter and a letter would be sent. Several days elapsed, and a letter eventually came. I returned to the post office, presented the letter, and the postmaster gave me the form. I filled it in, and I said, “Now can we open the account?”. He said, “Oh no, it has to go back to the DWP again”. It took another two goes before that account eventually came through. I am fairly tenacious and a bit bolshy, but think of the other people who do not have the time or the temerity to make that point. If I had not got my account there, that was one fewer person who would be using that post office for the purpose it was there to serve. I share that experience with noble Lords to share the frustration and the difficulty—nay, near bullying—that one is put through to be able to get an account in the Post Office.

Those who live in rural areas invariably have to have a car, because that is the only way that they can get from point A to point B. This is particularly true if they have a sickly child or an old person in their household, or have a job in town. Those who do not have a car have to rely on family members, friends and neighbours and a bus service that is at best infrequent, but often non-existent. Now they will have to cope with the reorganisation of the Post Office.

The Government have set a number of parameters which define how the service will look: 90 per cent of people nationally must live within a mile of a post office; in urban areas 95 per cent must live within one mile, and in deprived urban areas that rises to 99 per cent. However, in rural areas 95 per cent of the population must be within three miles of a post office, and in remote rural areas there will be a journey of six miles. How many of us who are fit would choose to walk six miles every week to draw a benefit, let alone those who are not well? What happens to those who are pushing young children in buggies when they have to go that distance? Often there are no pathways on rural roads.

The Government are planning to close post offices that have been newly opened and are owned by the community. Some are profitable or in areas earmarked for massive housebuilding. Has anyone mapped those offices which are making serious losses, calculated the effects of closing most of them and costed the funding necessary to support the remainder?

Back in 2000, the Minister—the noble Lord, Lord Sainsbury—described the then working methods as,

“an inefficient system involving a lot of work in post offices”.—[Official Report, 2/5/00; col. 984.]

I prefer a system that requires efforts on the part of its employees to one that puts pressure on millions of people as a result of the loss of their post offices and the advice freely given by sub-postmasters and sub-postmistresses, and destroys the local community cohesion. One of the greatest benefits of regular visits to the post office, particularly for older people is that they get out and about and meet other people.

I had taken with a pinch of salt reports on the consultation process. As one knows, it was cut from 12 weeks, which is the norm, to six weeks. In another place on 28 February, Mark Lancaster, MP for Milton Keynes North East, asked a Question on the consultation. Following the Oral Answer, he said:

“The consultation for post office closures in Milton Keynes is not due to start until July, but last November the Post Office inadvertently published on its website the five post offices that it has already earmarked for closure in Milton Keynes”.—[Official Report, Commons, 28/2/08; col. 1225.]

That is no consultation. That is a decision taken in advance. He went on to ask why the Government were insisting on the closure of these post offices when they were forcing expansion in the area.

The travails of the Post Office are mainly due to the Government, whose advertising stresses that people have a right to benefits. But it surely must also be the right of people to draw those benefits at a place convenient to them. The Government have said that the Post Office card account will continue until 2010. I suggest that it should be a universal account. It should, at the very least, be available to those who need small sums of money—particularly those of old age, single parents, the unemployed and children. There should not be a presumption against other members of the public from having an account, given that every time there is such a presumption, it decreases the footfall going into those post office branches.

In the past five parliamentary Sessions there have been 417 Written Questions in the Commons on Post Office closures. A number of those asked for data on the costs saved by the DWP, the costs incurred by the DWP, the costs incurred by the Post Office and the costs incurred by the Treasury. To the best of my belief none of those facts has been made public and I am wondering why. Simply dealing with that number of Written Questions has cost more than £250,000 and there have been several debates, which have cost valuable time and money. Surely we should have answers to those Questions. Can the Minister tell us whether anyone has analysed the extra time and travel that will be involved in people accessing their benefits? Has that been translated in any way into an increase in the amount of carbon emissions and fuel consumption?

I have doubts about the process of post office closures, particularly with regard to consultation. Why has the figure for closures, which remains at 2,500, not been looked at again since late 2006? Why is the number of outreach units set at 500? Will they all be in rural areas and is there a breakdown of that figure? Looking to the future, what research has been done into the possibility of those outreach units being in churches, which are usually everywhere within communities in both towns and rural areas, or in village halls or other places within the community? Is the Minister not concerned that those who are forced to withdraw several weeks’ money in one go because of the distances they will have to travel—they will not be able to go on a weekly basis—will run the risk of muggings?

Finally, I should like to borrow from Frank Field a comment that he made about the removal of the 10 per cent tax band, which I think applies equally well to the post office closure programme. I agree wholeheartedly with him that it is wrong that we should penalise the lowest-paid and that they should pay for the simplification. Post offices should be freed to seek new business opportunities, and both national and local government could aid this development.

I am deeply grateful to all who follow me in the debate and I greatly look forward to hearing their contributions. I beg to move for Papers.

My Lords, I am not sure that the noble Baroness, Lady Byford, will be that happy about what I have to say because I do not agree with everything that she said. There is sometimes a degree of forgetfulness in contributions on the Post Office and Royal Mail; the blame or credit can rarely be laid wholly at the door of one party or one Government. I notice that my noble friend Lady Vadera will be replying to this debate. I think that this will be her first contribution on the subject but it certainly will not be her last. It is the kind of issue that keeps coming; it is a dripping roast and, as we get near to elections, so the opportunists will swarm around and make local political advantage of it. If they have any claim to be politicians, they should be doing nothing else.

We have to recognise that the financial difficulties of Royal Mail are well known. There is almost a consensus on the reasons for them but there is never agreement on the significance of each factor’s contribution. That some £200 million is the cost attributed to Post Office Counters Ltd for the support of the Post Office branch network is not in dispute, but the level of subsidy varies. Where the service offered is, for example, combined with a local grocer’s shop or a filling station, it is probably part of quite a viable business. In other instances, where it is in a remote rural area and the number of beneficiaries for whatever reason has declined, so the footfall or viability of the business comes into question. Equally, where the people who run the post office are nearing retirement age, they are faced with the problem of passing on the franchise. To whom should that franchise go if it is not a very attractive commercial enterprise? Should the property be reaching the end of a lease and a rent review is due, the viability of the business will be under even greater threat. When the rent of the building goes up, regardless of the cost of the franchise, that is another burden that has to be borne by a potential successor.

Let us face it: very few modest post offices are run on a highly profitable basis—indeed, they have hardly ever been run on a highly profitable basis. The people who have been running these post offices have been providing an underpaid social service to the community for very many years. One cannot blame them if at the end of their lives, as it were, the providers of these services sell the property—if they are fortunate enough to own it—to whomever wants to buy it and for whatever purpose the building can be adapted.

It is not a simple matter of saying that if they have a few more benefits and more footfalls all these post offices will remain open. The anarchic system by which the franchises were allocated in the past has meant that we have overprovision in some areas and underprovision in others. The Post Office does not always have an opportunity to fill the gaps in the service. For example, if one looks at the way in which the franchises for the National Lottery were allocated, one sees the kind of model which the Post Office is now applying to the allocation of future franchises and the reorganisation of some of them. That process is rough and ready and mistakes are made—this is where I agree with the noble Baroness—so, if the process is to have any credibility whatever and for there to be a degree of justice, there has to be a far greater guarantee of time and transparency in the consultative process.

A point was made about diversification. A number of new services and new financial offerings have been made available, which sometimes are beyond the competence of some of the post offices that sell them. However, in the Crown post offices, the staff enjoy far better pay than most of those in small private post offices—they are paid a rate that is commensurate with the provision of financial services. I am not convinced that if WHSmith assumes responsibility for Crown post offices, that level of reward will still be made available to the staff.

This is a complex issue. The number of speakers and the short amount of time denies us the opportunity to develop themes as we might want to, but this matter will be with us for far longer than the two or three years to 2010 and beyond. However, there is some degree of hope. The National Federation of Sub-Postmasters has, nevertheless, agreed reluctantly to certain financial rewards, and the Government deserve credit for taking on the issue and trying to ensure that the Post Office is given a level of resource—never enough, obviously—to smooth the passage of transition involved in network reconstruction. For that reason, I am reluctant to go wholly down the road mentioned by the noble Baroness, although some concerns have to be addressed.

My Lords, I welcome the opportunity given to us by the noble Baroness to discuss once again the issue of post office closures. We know how important it is now and how people emphasise the need in our large cities to create communities where people live with respect and with a responsible attitude towards one another. That is one of the solutions to many of the problems that cities face. In order to build communities, perhaps we could look at cities as networks of villages. Often, because of the demise of services, our existing towns and villages lose their heart. A village can descend into a commuter area and so the heart goes out of that village and that community.

The war, the Blitz and so on devastated so many of our cities and towns. People looked at the rundown roads and streets, the old communities, and decided to build skyscraper tower blocks. People were moved into those tower blocks and they were great. They had modern bathrooms, good kitchens and there was no damp. However, in moving from the old communities they lost the spirit of community. We need to reclaim and safeguard the communities and try to restore that feeling of community.

What makes a community? You need a church—a Methodist chapel, possibly—shops, a viable school, a bus service, perhaps a community centre or a village hall, a pub and a post office. The post office is often the gathering or meeting place for so many people. I see them in Llandudno on pension day; there is a queue of people outside—they are friends as they come every Tuesday or Friday. It is not only a place of business but a social place.

No one party can claim that it has safeguarded post offices over the years. I have figures showing that between March 2000 and September 2007 the net fall in the number of urban post offices was 2,653, and for rural post offices in the same seven years the figure was 1,622. A calculation off the top of my head suggests that when the Conservative Government were in office about 4,000 post offices were closed and under the Labour Government in the past few years about 4,000 post offices have closed

We know that a number of post offices in Wales are under threat. In my own patch we are still waiting for the list to be published. I am sorry that there has been a moratorium on that in the local election period because many people would vote a different way if they knew that their local post office was threatened with closure.

Facilities are eroded and the community as a separate entity collapses. This is the story of many rural places in particular. Young people who want a good career leave the countryside and it loses a lot of the necessary leadership. I can imagine a village in the Conwy valley when first the quarry closes, then the woollen mill, the bus service is reduced and mechanised farming needs fewer farm workers—the people who used to fill our pews on a Sunday are no longer there. The structure of the village changes. The local village shops are not viable if families are not there.

What of schools? I know that in parts of Wales—and possibly England as well—numerous schools are threatened with closure. We cannot always safeguard schools because we have to be realistic. The school is threatened, the chapel goes, the church goes, the library goes, and the village as a community collapses. The noble Baroness said that often it is the income from the post office that saves the adjoining village shop. They share the same premises. Once the television licence, car tax and ordinary pension business is taken away the post office loses so much of its necessary income to serve the community. We are a country of lost communities.

I shall not go into my party’s proposals. We have them to strengthen local post offices but I suggest that local authorities could possibly look at a village in a holistic way and choose some local community activists in the area to take special steps to safeguard the school, the travelling library and the post office. I hope that the Welsh Assembly can inject some money into Welsh communities for such a policy. The church authorities and the breweries could meet to discuss how to make the place a viable community. That policy could be a pilot for what could follow that would safeguard the very being of our communities. The post office is so essential that it is a pivot, and we can halt its decline in the big cities and in the smaller communities as well.

My Lords, I declare an interest as a former chairman of the Post Office and as a member of the superannuation scheme. I congratulate the noble Baroness, Lady Byford, on the passion with which she spoke. It matched that of representations I received over the phone from someone who had marched with 400 others in wind and rain to save his post office and picketed it for four hours afterwards.

I am much concerned about the issue of the card account. The noble Baroness described the difficulty in opening one. I understand that the contract with the DWP prevents the Post Office promoting the card account in any way. It is now open to tender. I understand that tenders are in and that 4,000 cards are at risk. We know about the 2,500 post offices that are to close over the next few years. How many more will close if the card account goes elsewhere—1,000, 2,000 or 3,000? We know about the cost to the Exchequer of the present closures. The Secretary of State referred to a cost to the Exchequer of £2 billion and then to a cost of £1.7 billion between 2006-11 for the present closures. What would it cost if the card account is lost? What criteria were used in evaluating the tenders? How much weight will be given to service and convenience to the public alongside cost? Those are important issues.

If we need a network, we need volume business. The Post Office has done much to generate new business, but it needs volume such as only the Government and local authorities can generate to maintain a large service, which may be needed in times of emergency. We are going to hear a Statement on Grangemouth. Suppose we faced a wider issue. The state needs points at which to access the public.

I am especially grateful to the noble Baroness for raising the issue. I move on to Royal Mail itself. Royal Mail welcomed the opening of the mail to competition when it was announced, and it still welcomes the principle, but the Government's decision to appoint a committee to look into how things are working is indicative of the need to have a fresh look at how the Act is working in practice.

I have a few points to make in my allotted few minutes. First, in addition to maintaining the universal service, the Act prescribes that Postcomm, the regulator, should promote effective competition, as opposed to fair competition. Is that the right basis for the future? I can understand why the Government would want to push the provision in favour of competition to get it into action. That has been successful: 40 per cent of bulk mailings are now handled by others than the Post Office. It is right to suggest now that the basis of the Act should be reviewed.

Secondly, in the light of comments that Postcomm has been making about structures, I say as one who when chairman divided the Post Office into three separate businesses that I can think of nothing more likely to disrupt the efforts that the business needs to make to increase efficiency and competitiveness than to go further and split the business into two. I can think of nothing more likely to frustrate the outcome of the agreement with the unions negotiated with such difficulty last year than to disturb the whole structure and introduce the necessary changes branch by branch. Now is not the time to be thinking about that.

Thirdly, I should like to be assured that the policy will be to keep the obligation to maintain a universal service to all addresses Monday to Saturday, and that the income that the Royal Mail can derive from that is sufficient to cover its costs and remunerate the capital involved. That is an important service to the public that needs to be maintained.

There is the regulation system itself. Having looked at it over the years, it seems to me that perhaps it was necessary to have the present approach initially but, in the light of some years’ experience and given the extent to which competition has developed, it is time to consider a lighter touch rather than a muzzle-loading system that slows down the efforts of Royal Mail to compete. Perhaps Postcomm should be part of a larger structure of regulatory bodies. It is unusual to have one regulator, one concern.

When the Government opened the Royal Mail to competition, they could not have chosen a time of greater weakness through underinvestment in the past. This is in great distinction from Germany and France, which allowed and enabled through prices their industries to invest heavily. The Royal Mail was grossly underinvested in, and as a result operates well below its desired efficiency.

Do you notice that the Germans, in opening the Bundespost to competition and mindful of their balance of payments, have prescribed that the wages of competitors must not be less than those of the Bundespost, and that the French, in opening their business, are prescribing that the competitors will contribute to the maintenance of the universal service? Our balance of payments deficiency is now £50 billion a year and rising. Perhaps we should be as wise as the French in looking at the public interest as well as other factors.

I said that I had an interest. I ask that my remarks be judged to be in the public interest.

My Lords, I too thank the noble Baroness, Lady Byford, for giving us the opportunity to debate this really important matter today. I am fortunate to be bishop of one of the loveliest counties in England, but it is also one of the most sparsely populated, so the lack of provision of public services, including post offices, to people who live in areas such as rural Northumberland is of increasing concern. I shall speak about the impact of post office closures on rural people and rural communities.

When I asked one of my rural clergy the other day what she wanted to say about today’s debate, she said that we must be careful that we do not mutate into the post office conservation society. Some post offices have a footfall of less than 10 people a week and are simply unsustainable. They are not viable and we cannot keep them. Yet the fact remains that the most basic community service in villages is provided by the post office and shop along with the pub and the church.

The reorganisation of the post office network is not easy to achieve, and I for one certainly wish for far smaller numbers of closures, but the change programme is being implemented in a pretty flawed way. The consultation timetable has been far too tight, and communities have felt disenfranchised from the process. Local churches have not been included in the stakeholder information network, which is a serious omission because rural churches and chapels can provide the venue for a post office outreach service. The Church of England, the Methodist Church and United Reformed Church are exploring possibilities for church buildings to host such post offices in order to maintain a presence for these vital services in isolated rural communities. To my knowledge, there are already 10 such post offices in churches and chapels, and there are more on the way.

From the Lake District to the Isle of Wight, the Midlands and Yorkshire, a good number of examples of hosted post offices in churches are already enhancing community life. In a Methodist church in Rutland—the noble Baroness, Lady Byford, may well know of it—the post office appears once a week, refreshments are provided, Fairtrade products are sold, and the community comes together and has a sociable and companionable afternoon. We could do with lots more such examples, because as always the closure of rural post offices will be felt most by some of the most vulnerable people in our society. The elderly and those without transport are left stuck without choices, options and services. If the post office closes, where does an elderly person who needs meals on wheels get the small amount of cash that is needed to pay for the meal when it is delivered?

We all know that post offices are closing because they do not have enough customers, partly because of rural depopulation, the rise of second-home ownership, and people using the internet and the telephone far more than they have ever done for their services. That leads me to my final point on the changing nature of the countryside and the serious decline in agriculture. Tenant farms in my part of the world can no longer sustain a family, so the call has been to diversify to set up new small businesses in rural areas. To do that, you need some kind of basic infrastructure, not least the ready availability of a post office.

As the number of microbusinesses increases, there is a danger that closing village post offices will do them harm and simply stop them in their tracks. The internet cannot replace the post office for the sending and the receiving of goods. That is certainly true for the village of Kirkwelpington in Northumberland. People in the village with a mail order business at home need an available post office. In one of the best and most creative forms of small-scale rural generation, farm buildings at Kirkharle have been turned into a showcase for local crafts people to sell their goods and display their skills. It is a place for small, rural businesses with a coffee shop and the like. At least one of those businesses just newly started runs a mail order element. It needs an accessible post office, let alone banking facilities, and there is no bank and post office for about 15 miles.

I cannot help thinking that the mark of a civilised society is the way that those at the margins are kept in the mainstream. Isolated and dispersed deprivation is very difficult to address, but the churches stand ready with buildings in almost every village community to play our part wherever we can to save some of the most basic services for our people. Post offices are an essential part of rural community life. It is in the end, for me, a matter of justice that the most vulnerable members of our communities are able to gain adequate access to their post office.

My Lords, I should like to congratulate my noble friend on initiating this debate in her usual inimitable and passionate style. I wish that I had time to refer to the speakers who preceded me. I merely say that if the noble Lord, Lord O’Neill, were in charge of the handling of all of this, I do not think that we should be having the uproar around the country that we have had.

There is clear understanding across the Chamber—and I imagine that more will be demonstrated—that accelerating change in communications is costing the post office network some £4 million a week, thus forcing change in the system which would have to be dealt with by whatever Government were in power. Post office closures, because they affect communities at their most basic level, are a highly emotional issue. It is for that reason that they need to be handled with care and sensitivity to local circumstances, and in a way that responds to and does not ignore the consultative process. Sadly, so far, none of those conditions have been met by the handling of the current round, leading a Norfolk MP, Charles Clarke, to describe that handling as “insensitive and over-bureaucratic”. At local level, I would say that the handling also appears ill informed and unco-ordinated.

In 2007, the Government announced the intended closure of 2,500 post offices; that is, the most swingeing round of cuts in the history of the post office. No rationale has been given for that number. I imagine that the Minister will want to give it in her closing remarks. Consultation periods of six weeks—much shorter than the period recommended in Cabinet Office guidelines—have been set in 41 areas. However, those consultations have been suspended since November last because, as a letter to sub-postmasters published in the Guardian states,

“the closure of any post office can be highly sensitive and can potentially become a local political issue”.

Well, you can say that again.

The Government have asked the Post Office to have regard to access criteria, as my noble friend said, requiring in rural areas that 99 per cent of people should live within three miles of a post office. This is in fact a reversal of the Government’s 2000 policy, which was that:

“It was impossible to formulate numerical access criteria which met the Government’s aim of maintaining the rural network”.

I do not think that this smacks of an orderly process.

I wish to concentrate on rural areas. Stuart Burgess, the Government’s rural tsar, has described people in rural parts of England as forming,

“a forgotten city of disadvantage”.

From a rural perspective, it feels as if we have been singled out for a programme of community hospital closures and closures of pubs, schools and now GPs’ surgeries as a result of the polyclinic programme. An Oxford University report published rather quietly last month on the DCLG website disclosed that, in the past four years, half of such communities have lost shops, post offices, schools and surgeries. As has already been said, rural communities have disproportionately to bear the spiralling cost of fuel. They have been told by Margaret Beckett that there is no need for their primary industry, agriculture, because,

“the world is awash with food for us to import”.

That may be undergoing a bit of a rethink at the moment. Rural communities are having imposed on them a costly reorganisation of local government that no one wants. And in Norfolk, to complete the impression of government disinterest, the Environment Agency has announced that a number of coastal and broads villages may well be left to invasion by the sea, reinforcing the view of rural people that they just do not matter very much.

We have now been told that we are to lose 69 post offices. If one is saved, another will be closed. The access criteria take no account of the conditions of the three miles to be travelled, such as the availability of public transport, road conditions or even, in the fens and broads, the existence of water. No account has been taken of housing development either taking place or planned, with the result that post offices are to close precisely in the towns and villages scheduled to grow. Indeed, so random has been the process that no one will be surprised to hear that post offices are to be retained in the communities which the Environment Agency plans to abandon to the sea. Not a moment’s thought has been given to how poor, elderly and disadvantaged people with no transport can possibly access a post office three miles away.

It is obvious that change in the network is necessary; any Government, as I said, would have to deal with this problem. But I imagine that the Government will have noted that in the post office debate in another place, not one speaker supported the closure programme. They will also have noticed that half the Cabinet is campaigning against these closures. Practical measures such as the involvement of local authorities—and I imagine that my noble friend Lord Hanningfield will talk about the measures planned for Essex—the introduction of new business, the use of post offices as hubs for community activities, in short a vision for the future of this much loved and valued service, is what is required from the Government. I hope that we shall hear from the noble Baroness today that such vision is in the Government’s mind.

My Lords, I immediately declare an interest as the chair of the new National Consumer Council, which in a few months’ time will be merging with Postwatch and take on the onerous statutory responsibilities of dealing with the public consultation in relation to post office closures. There are several other issues we could debate about the Post Office—the noble Lord, Lord Dearing, touched on some of them—such as the Post Office card, the future of the universal service obligation and many other activities associated with collections and deliveries, but most public concern at the moment is about the closures on the network. My central contention is that we can blame all sorts of things—social change; technological speed-up; inept management of the Post Office at various stages in its career, and I would do that; the wooden regulatory framework, and Postcomm’s role in that needs some querying; and, lastly, we can blame the people because they do not use the Post Office that much. However, I say gently to the Minister that the central failure here is a failure of imagination and of joined-up government.

The noble Baroness, Lady Byford, will recall debates on rural business when I was sitting on the Front Bench. At a time when we were lamenting, post the foot and mouth epidemic, that we did not have support for rural business as a whole and that the kind of measures that the Government were allowed to bring forward were relatively limited for rural business as a whole, a large sum of money was still going to rural post offices. It would have been better if we had been able to use that money—£400 million over three years at one point—to stimulate rural business as a whole, to maintain rural services in one place in each village and to ensure the kind of holistic approach to which the noble Lord, Lord Roberts, referred, rather than to aggravate the problem by putting all the money into the current structure of post offices without improving their efficiency or allowing them to diversify, and indeed by taking government services away from them.

Much has been said about rural areas. The National Consumer Council carried out a survey of the effects of the most recent rounds of post office closures from 2002 to 2006. It was clear that, contrary to the conclusions drawn by Postcomm, the worst-hit areas were the low-income areas of central London, the outer suburbs of many English provincial towns, particularly those dominated by social housing, and the more disadvantaged villages and towns in rural areas which underwent a loss of transport and access to public and private services. It was not so much urban versus rural; it affected disadvantaged people who were most likely to need post office services. These people should at least have somewhere to go where they can engage with government services generally. It could be where they buy their petrol, or in the pub, or, as the right reverend prelate said, in the churches, any of which could at the same time provide the kind of services that post offices used to provide. Somewhere in those communities we need a focus for all the services that our outer suburbs and many of our rural areas have lost so tragically over the past couple of decades.

The present round is about 2,500 post offices. The number has already been decided. Postwatch is diligently and in great detail going through the proposals area by area and carrying out the kind of community engagement that one could argue the Post Office itself should have done at an earlier stage. But however effective those representations, 2,500 post offices will be closed. It is only a question of which post office will close. That is an unnecessarily narrow choice.

The whole range of government needs to be engaged in this. The only bit of joined-up government on post offices that I remember—if I can blow my own trumpet—is when I was roads Minister and I and Ian McCartney, then the Post Office Minister, decided that we were not going to take the DVLA contract away from the Post Office. Dare I say gently to the Minister that we resisted Treasury pressure that time round? Five years later, however, the Treasury got its way and the Post Office lost that contract.

This is not joined-up government. I am rather on the same page as the noble Lord, Lord Roberts, here. We need to take a holistic approach especially to our more deprived rural and urban areas and see what kind of services and government support they need. We should look at it not simply through the tunnel of Post Office finances and subsidy but in terms of what the community itself really needs. It is possible to do that. Services in large villages in France and Germany are provided through the mairie, the pharmacy or the post office. There is a place in such towns, and sometimes in their outer suburbs as well, that fills the role that the post office has historically filled in many of our communities.

We need to move this issue away from a focus on Post Office finances and operational management and away from the kind of constrained choices that this round of closures is focused on. We should look for a more detailed and local solution based on the services that people need. I have no doubt that the noble Lord, Lord Hanningfield, will shortly be giving us a few good examples of that. It is important that local authorities as well as central government play a major role in this issue. Central government need to raise their sights and consider what the people in the communities which have lost or are about to lose their post offices really need. They should not see the issue from such a narrow perspective.

My Lords, I join other noble Lords in thanking my noble friend Lady Byford for this debate. The number of speakers who have put their names down is surely an indication of the interest in, and concern about, this issue. I think that we would all agree that the village post office provides much more than just a place to buy stamps and to post letters. The Countryside Alliance has rightly stated:

“Rural services, in particular the local post office, are the life blood of rural communities”.

They provide a vital focus of social and economic benefits to isolated communities across the whole country. When a village post office is closed down, it is the elderly and those who are unable to move around freely who are affected. They may not have access to a car; their bus services may be minimal; and taxi services often represent a substantial financial outlay for what might be a very minor transaction.

Let me give your Lordships an example. When mail with deficient postage is sent, a little note is delivered saying, “This can be retrieved at the local post office by payment of the excess mail charge plus a fee of £1”. It may take a whole day for an elderly person to get to the local post office where that package or letter awaits them. In my village, the post office closed down three years ago, leaving nowhere to purchase minor items, quite apart from post office things such as stamps, mail and so on. Everyday necessities such as greetings cards are no longer available in the village. The only retail outlet is the pub, which does a roaring business but does not help with the mail situation. It has been mentioned in this debate that public houses may well serve as sub-post offices. That is an excellent idea, because they can enjoy a roaring trade; they are open every day for the majority of the day.

The nearest post office to me is two miles away. Although I can drive a car, other people do not have such a facility. The role played by post offices in rural communities has been highlighted by the Business and Enterprise Committee, which concluded that,

“pure commercial logic cannot be the overriding factor here; the Post Office performs a social function”.

It said:

“We believe that there should be a presumption against closing a post office where this is the last shop in the village”.

Mention has been made of the Post Office card account, the POCA, which, as noble Lords have said, is a bank account offered by the Post Office. It is designated for benefits, pensions and tax credits with direct payment into the account. Some 4.2 million customers regularly use those accounts. The decision of the Department for Work and Pensions not to renew the POCA beyond 2010 is short-sighted and will have a further negative effect on the Post Office. The Post Office card account has provided many people in rural areas, and indeed in urban communities, with access to their benefits. The village post office supplants the branch of a national bank. The national banks, too, are removing their premises from local village communities, so that elderly people have nowhere to go to deposit their funds or to use the facilities that the Post Office card account provides.

Much of the thinking about the future of village post offices is based on financial considerations, but there seems to be little consideration of the rural services that are the glue holding local rural communities together. One is reminded of the phrase, “knowing the cost of everything but the value of nothing”. Noble Lords will be aware of the independent review panel of the post services to be chaired by Richard Hooper, which was announced by John Hutton last December. It is understood that the panel has consulted widely. Discussion on this evidence will take place at the meeting in May this year. That is too late for the debate that we are having today, but we hope that many of the issues that have been raised will be addressed both sympathetically and accurately.

My Lords, many communities across our country will be grateful to the noble Baroness for giving us an opportunity to give a public airing to an issue that is of concern to a lot of people in many communities across Britain. The House has already been made aware of the excellent proposals being pursued in Essex through the county council; I, too, am looking forward to the contribution of the noble Lord, Lord Hanningfield, on all this. I understand that in our county we have already lost more than 30 post offices, a number of which the county council want to engage in business relationships. They are now shut and awaiting the outcome of those negotiations. I simply ask: what needs to be done to get a sense of urgency into the process of consultation so that we might get on with it and find out whether this is a model that can be made to work, not only in Essex but elsewhere? I understand that lots of local authorities are interested in this model.

In Little Hallingbury in Essex, for example, the post office is closed. The closure was delayed because of the county council negotiations. The community is waiting and in the mean time people have to go to Bishop’s Stortford and Hatfield Heath for services, neither of which places have excellent parking or ease of access for people. These things need sorting out.

We are seeing, at a time when the Post Office is under both financial and organisational challenge, the weakest and most vulnerable services in some of our smallest and often very vulnerable communities being cut. The outcome of our collective failure, whoever is responsible, to ensure that the Post Office is on the front line of contemporary communications systems and development is that the weakest go to the wall.

I am bound to ask two questions, following up the question asked by the noble Lord, Lord Dearing, earlier. Is there a duty any more to offer good postal services across the whole community? If there is such a duty, how is it imagined that in the contemporary world it will be fulfilled, or are we now the victims of market forces? The Church of England, as the established church in this land, has a duty to ensure that ministry is provided in every community. I cannot look at Essex and east London and move the church to where I think the business is best. We all have to face change and we have to manage it in a way that holds on to our fundamental duty and responsibility—that is, to maintain a level of service across the whole community. I say to the noble Lord, Lord Roberts, that I am afraid that in my county the Church of England is the only institution left in vast numbers of communities. It is, I hope, open and welcoming to Christians of all traditions and to the whole community. My first question is: where is this universal obligation and how are we going to meet it today?

My second question is: what is being done to bring the Post Office into the 21st century so that it is able, imaginatively and flexibly, to ensure that all have good and easy access to necessary services? The noble Lord, Lord Dearing, mentioned what is going on in France and Germany. I gather that in the United States of America the equivalent service is right out in front regarding modern communication systems, offering important contemporary services to corporate enterprises and developing new ways of developing services on the basis of its history and skill. That provides the basis for improving contributions in small communities. If the development of modern communication systems means the destruction of the small and the local, something has gone badly wrong and we need to resist it. Modern communication systems do not require us to centralise and pull everything out of the small; they provide exactly the context in which imaginative new services can be provided. It is time collectively and with joined-up government for us to put our minds to establishing how that is to happen.

We all know that we have to face change but we ought not to endure the gradual deterioration of vital public services. Parliament has a responsibility to be resistant to that process. At present, we are facing change through retreat. That is bad news for thousands of small rural communities and, as has been said, urban communities across our country. I hope that today we might hear from the Government of steps being taken to pursue a more creative, comprehensive and joined-up set of policies that will ensure the delivery of necessary services to our people in the 21st century.

My Lords, I join other noble Lords in congratulating the noble Baroness, Lady Byford, on introducing and initiating this debate. There is no doubt that the programme of closures of sub-post offices in rural areas and small towns is causing great distress. The right reverend Prelate the Bishop of Newcastle rightly said that we are not here as a post office preservation society; I am not in favour of simply providing taxpayers’ or council tax payers’ money arbitrarily to protect post offices that are not profitable. At the same time, I join the right reverend Prelate the Bishop of Chelmsford in insisting that we are entitled as shareholders in the Royal Mail to ask it to behave like a proper, responsible public authority. That it is not doing so is the crux of the problem.

I say in response to a comment of my noble friend Lord O’Neill that I believe that there is a difference between village post offices and urban post offices. The noble Lord, Lord Roberts, brought in Llandudno; I shall bring in Llandrindod Wells, because when I am at my Welsh home I happen to visit a sub-post office daily that has been marked for closure.

The Tremont Road post office will serve as a paradigm for many small urban area—not village—post offices. It is in the north ward of Llandrindod, which is the third most deprived ward in the county of Powys. There is almost no public transport worth the name. The town will expand to the north of the post office. There are plans for a new, multiservice centre with ambulance bay, fire service, police, a new court and possibly the Probation Service. Around 25 per cent of residents do not have a car; 34 per cent of property is rented; 13 per cent of residents are lone parents; and 20 per cent are long-term ill. This is a seriously deprived ward and this service is going to be lost.

The consultation took place. I cannot say that it was a true consultation for the simple reason that the figures that the Post Office should have brought out to justify closure were simply not available; we were told that they were commercially confidential. That does not seem to be the action of a responsible body. The Post Office should have said to the sub-postmistress and master, Mr and Mrs Hodges—Mr Hodges is a town councillor who is standing for election to the county council in the Conservative cause—“Let us sit down together and see whether we can make this post office profitable”. There may be many ways of doing that. It is linked to a shop that has been there for 100 years, in the same family. Mrs Hodges works a 60-hour week for something less than the minimum wage. Many people would be prepared to buy or lease the equipment, which is Post Office owned. Plenty of solutions might have been put on the table, but none was mooted by the Post Office, which simply said: “You are going to be closed”. First, you get a telephone call saying that you are going to be closed; then you get a letter. That is not a serious way to conduct business.

Will my noble friend the Minister instruct the Post Office to look again at this type of post office—the urban area post office—which has the potential to be profitable if the local authority were allowed to intervene and the Post Office were to introduce new services? All sorts of things might make that post office profitable. If at the end of the day it turns out that it cannot be made profitable, at least we would all know that the best efforts had been made to see whether we could keep it going. I ask my noble friend to ensure that, in this instance at least, the Post Office will play it fair.

My Lords, I, too, thank the noble Baroness, Lady Byford, for introducing this debate, because post offices are an essential part of many rural communities. They are a trusted source of a whole range of services, such as cash and banking for those who are financially excluded or those who still depend on a post office for their child benefit or pension payments. They also produce a significant economic boost to their community. A shop attached to a post office can expect a 25 per cent higher turnover than one without. A shop near a post office can expect a 15 per cent higher turnover thanks to the footfall created by the post office.

Post offices do more than that. As has been said, they often represent the only focal point in day-to-day intercourse within a community. The church and the village hall are slightly narrower in their approach. They provide discos for the young and perhaps whist drives for the elderly. But it is only in the local post office and shop that old Mrs Smith can meet and chat to young Master Jones in an unstructured but secure setting.

That is the USP of our rural post offices and the reason why I in my capacity as chairman of the late-lamented Countryside Agency worked with others on trying to persuade the Government to keep rural post offices open. The Government provided £150 million a year—an amount that amazed me, although I did not say so at the time. However, it could only ever be a stopgap. Even with the most favourable costing of the value of their social benefits, many rural post offices still present a negative balance sheet, so, for them, closure at some point is inevitable.

However, the potential to promote a valuable role for post offices through the delivery of financial services still exists. There are still more post offices in the countryside than all the banks put together. Using rural post offices for financial services has proven very effective in both New Zealand and Germany in keeping the rural network open. However, as we heard from the noble Baroness, Lady Byford, the Government have made—and still are making—a real Horlicks of introducing the card account. It is all very Terminal 5-ish. The Government seemed determined that this idea should fail and not present any real competition to the other banks, which I suspect was the deal that was done. Why is the DWP still determined to shut down the card account? It could still be worth as much as £1 billion per annum to Post Office Ltd and represents a good chunk of rural sub-postmasters’ income. Why not build on it, improve it and, above all, promote it, rather than cause more closures come 2010?

Meanwhile, I must praise Post Office Ltd for its imaginative use of its window of opportunity. It has experimented with core and outreach schemes and with mobile post offices; it has combined with others such as the police and Business Link to share facilities; it has worked out of hotels, pubs, churches, libraries, tearooms and even an optician’s, and long may that continue. Many of these schemes are being included in the outreach alternatives being offered to some communities under the current consultation. I make a brief plea on that consultation: where the post office is part of the last shop or retail outlet in a village, I ask that it receives special consideration, because the departure of the post office would undoubtedly kill that last shop.

My final comments are on local communities and local authorities. As I said in my opening words, post offices provide many valuable services, particularly for the elderly or less able. Many of these services are now available online. Perhaps, instead of subsidising local post offices, local authorities and others can think laterally and provide facilities and training in IT for these people. In the Countryside Agency, we used to have lots of buses full of computers and trainers to go round the countryside to villages, training pupils who were virtually all over 65. Some of them were even over 90—and very successful they were, too. As for accessing other services lost with post offices, the spread of ATM cash machines would be good for rural areas. Local government support for the formation of parish car clubs would be as good a solution as any towards ensuring that the rural elderly get access to modern services and company.

That brings me to the loss of the social benefits of post offices. Parish councils, PCCs, village hall committees and other voluntary organisations should think hard about other ways in which to achieve the benefits that are being lost with the post office, if they are losing their post office. How can they help old Mrs Smith and young Master Jones to meet as often as possible in circumstances comfortable for them both?

I am as great a supporter as anyone of our village post offices and have worked hard over the years to devise ways of retaining them, but I am afraid that in many cases the milk is now spilt. I agree with the noble Lord, Lord Whitty, that we now have to be imaginative about keeping the benefits of a village post office, rather than the post office itself. I hope as many as possible of our rural post offices survive but, for many villages, I am afraid that it is time to move on.

My Lords, I thank my noble friend Lady Byford for raising this issue today. I shall speak as much as leader of Essex County Council as I shall as a Member of this House—and fortunate to be able to speak here as a member of it.

I hope that I can live up to my billing. Several noble Lords have referred to what we are trying to do in Essex, and I shall try to explain it. I feel a bit like Mary Tudor, in that she said that she would die with “Calais” engraved on her heart; I think that I shall probably die with “post offices” engraved on my heart. It is an issue that has dominated my work and thinking in the past few months.

In Essex, we have lost a lot of post offices over the years—admittedly, under both Conservative and Labour Governments—and 300,000 people have seen the closure of a branch within one mile of their home in the past few years. So when it was announced before Christmas that we would have the first tranche of another 30 post offices closed and that there was the possibility—as will be announced later this year—of another 30 or 40 branches being closed, in Essex County Council we began to think, “Enough is enough”.

In Essex we spend nearly £500 million a year on care for the elderly. A lot of that work is done in a preventive way, in day centres and community centres. All sorts of things are done to keep elderly people more active and involved in the community. What keeps them more involved in a community very often is a post office, where they can go and spend a bit of money but also talk to colleagues and other people in the community. I have lost both my parents in the past few years, but I know that in their last few years they went out shopping every single day, to do something. They did not want to sit at home getting things from the internet; they wanted to go out and about. That is what a lot of elderly people want.

In a post office, we have a community asset. It is something like a library or a community centre. In Essex when these potential closures were announced at the end of last year, we thought that we had to do something different about it. As I say, we spend £500 million a year on the elderly. Spending a very small fraction of that—about £500,000 a year—on the retention of post offices in our county seems a very worthwhile social thing to do.

Over the past few months, we have examined how we might do this. I have spent a lot of time on it personally but, obviously, we have used offices of the county council to understand more and see how this might happen. We have had ups and downs in working with Post Office Ltd. We had a lot of help initially but, months after we were supposed to get it, we have not had the financial information about the post offices that we were promised, even after signing a non-disclosure document saying that we would not release any of that information. Furthermore, we still do not really understand the rationale behind the closure of the offices. It seems often to have been done on a geographical basis rather than on the economics of a particular post office. Now that I know quite a lot about it, it seems that the Post Office has decided that it wants to close so many offices and that it does not really have detailed information about particular ones. The losses are often not taking place in those post offices; it is the overheads of the national network that are the problem, not the individual offices. I believe that a lot of those offices could be saved and retained with very little expenditure. Often they are a small shop and they could carry on with very small subsidies. It would not cost a lot to keep some of these post offices going.

I am disappointed, because although I have discussed the matter with the Minister—the Secretary of State himself originates from Essex—and I have had quite a lot of co-operation from the Government on this they just have not moved fast enough. I am disappointed that the Post Office board discussed the issue only this week, four months after we raised it. We have been inundated by requests from other local authorities asking advice on how they might do it; the Welsh Assembly contacted us and asked how it could be done in Wales. I was speaking to a very senior official at the Post Office last week, who told me that it now had 200 local authorities following Essex’s example and wanting to get involved in supporting post offices in local communities. We have set an example that others might follow.

I now just want it to happen. For example, there is a branch in West Clacton, in Essex. Some 20,000 people live in West Clacton—it is a profitable branch, in a town, but it is being closed because there is a bus stop there and it has been said that people can get on a bus and go to another place. But the community is fairly elderly, and I want to see that branch reopen again in the next few weeks.

I have talked to the Post Office, which said that Essex County Council might sign a contract with it to provide postal services in our county. I hope, with the co-operation of the Post Office, that I can in the next few weeks reopen that West Clacton branch and the Little Hallingbury branch. I should like to make certain that in the next few months we reopen around 20 or more of the branches that have been closed and prevent other branches being closed in future. There is a real future for local post offices, but I believe that they will be—and probably should be—part of a local government network of services. We will do what we can in our community.

My Lords, I join all those who have complimented the noble Baroness, Lady Byford, on obtaining this debate. In the past eight years she and I have shared a number of criticisms of the Post Office—and I honestly wish that we had such a champion on this side of the House supporting the Post Office as she is on the other side, as she demonstrates every time she speaks on the subject.

It is timely that we have had this debate. The citizens of our country have witnessed the deterioration over a number of years of the postal service, certainly since the ill conceived and destructive Postal Services Act 2000. This debate could be of great value to those who will be conducting the independent review of postal competition. The announcement has been made that the review has been welcomed by the Post Office and the unions within the postal industry. I have no doubt that in some parts of the United Kingdom people still enjoy the reliable service that was once the norm in all parts of the country. It is very hard to find such people, but I am sure that they exist somewhere.

The call for a review of the Royal Mail and the Post Office as contained in this Motion is necessary, and we should take the opportunity today to expose what has gone wrong. Perhaps for once the Government will listen. I declare my usual interest, although I shall not go through it all because I would use up the six minutes that I am allowed. I started with the Post Office this month 62 years ago, at the age of 14. Through that period I have served in many ways in the Post Office, through public service, in my union and latterly as a trustee of postal pension funds. I hasten to add that in those days they were in surplus—a very large surplus.

I hope that noble Lords will understand that speaking like this is a painful experience. As a lifelong supporter of my party and socialism, I find it very difficult to publicly criticise those who were elected to do what I thought was our duty. Unless we do something, it is going to go further downhill, so we have to speak out.

The White Paper contains the objectives of the Government. Six minutes does not allow me to go through them all. I am sure that noble Lords will understand when I say that the objectives make very sad reading today. No. 1 is:

“To improve postal services for business and domestic customers through greater choice, better quality and falling real prices”.

Does anybody believe that that has happened? Does anybody believe that our Government have provided that in this period of eight years? Another is:

“To establish clear and accountable relationships between the Government, the Post Office, the Regulator and POUNC”,

which has now been replaced by another innocuous group called Postwatch. I welcome the comments of my noble friend Lord Whitty about absorbing that into his area of responsibility, because in my view Postwatch does not represent anybody except the nice people who sit around the table.

We rejoiced when it was announced that at last we were going to get commercial freedom. It would be the end of external finance limits; we were going to be allowed to borrow, to invest and to have joint ventures with other organisations. We were all very happy about it, but some of us had a little suspicion that things were not going to be all that they said they were. I do not have time to read out those things, but does anybody think that it has got better? How many of you go to a pillar box and see that there is no tablet showing when the next collection will be or when the last collection was? The chief executive of the Royal Mail assured me almost two years ago that all the tablets would be replaced in pillar boxes. He should have a look around St Albans and various other parts to see that people have no idea whether the box has been emptied. It is a simple thing; it is a management thing; and it is time that it was done.

The chairman of the Post Office is called Leighton. On Monday of this week he was appointed as full-time chairman of Loblaw. The press release accurately describes him as having a reputation as a union tamer and says how he can go around unions and go straight to the workforce. He has developed this reputation for forging direct relationships with postal workers. The press release makes an interesting point. It states:

“Allan Leighton will now devote [approximately] 100 per cent of his time to [the company], which we view to be positive”.

If he is going to spend 100 per cent of his time with Loblaw, what is he going to do for the Post Office? My direct question to the Minister is: is he going to be given his P45 and got rid of now? It will not affect him very much because as vice-chairman of Loblaw he was paid $1 million last year and has options on 371,839 shares. Mr Leighton does not need our or the Government’s charity. But we need a person who will come in and have the Post Office and public service at heart, and we want somebody who will discover what is needed.

A lot of comments have been made about the various initiatives we have had. I support them and I wish the noble Lord, Lord Hanningfield, every success in trying to maintain the service that he is valiantly trying to get through his county council. I hope that it can be replicated. There will be problems with it. That is why I say that we must use this period of consultation to get the best for the future.

I am sorry that has been a disjointed speech. I spent about three hours on it last night, but six minutes is not enough. I end by thanking the noble Baroness, Lady Byford, for giving us this opportunity and by asking your Lordships to be firm and to tell this Government of ours that they have a public duty to provide an efficient postal service.

My Lords, it is a great privilege to be able to follow somebody who speaks on post offices with the passion and experience of the noble Lord, Lord Clarke of Hampstead. I thank my noble friend Lady Byford for providing us with the opportunity to look at the subject which is vital to so many of our communities.

Those of us who live in rural situations have particular cause to be grateful to the efforts of the Post Office to maintain a universal service. That has become more and more essential, as the right reverend Prelate the Bishop of Newcastle pointed out, as the drive continues for the diversification of rural businesses and alternative uses for redundant buildings. I declare an interest as a farmer and as an operator of a couple of rural-based industries.

We have all been made aware of the huge financial shortfall that the present operation engenders. Obviously that must be examined regularly. I wonder whether the Government ever envisaged that the future operation of a universal service would be totally economic. What level of savings is anticipated if the current network change is carried out in full?

We are obviously entering a new age in which the Government are increasingly hoping to communicate and to deal with their population by internet means. They have enthusiastically switched the main issue of state payments and benefits and the issue of TV licences and road vehicle licences to an online basis, happily calculating to themselves the great savings in expense and administration. But that does not come without cost. As the Countryside Alliance has informed us, it has meant the withdrawal of £168 million of government services from the Post Office in 2006 alone.

The Government take some recognition of their responsibility, as mentioned by my kinsman, the noble Lord, Lord Cameron, by providing £150 million a year to their social network payment but appear not to recognise that this was directed only at the rural network to compensate for the losses brought about in 2006 and will now have to cover the urban deprived network and the urban non-commercial post offices. Do the Government have in place a plan to review this subvention in view of the increased coverage that will be demanded?

Over and above the role of the Post Office in providing a community focus—I speak as a farmer—access to a secure postal service is very important. Many of the levels of interchange with government take place online, but I wonder whether Members of the House are aware of the paperwork that is still involved in applying for government support? Critical deadlines are imposed and very serious penalties are attached to a failure to meet these, and if you do not drive the 50 or 60 miles to your local government office, the only acceptable valid proof is sending the items by registered post. I do not know if this is a realistic charge, but at £4 to £5 a time, it is quite an imposition.

Furthermore, the EU and the British Government are now insisting on detailed traceability for livestock. That involves an immense amount of physical records. Every four-legged bovine that you see in the country has been registered and has received a passport, which has to be done within a strict time limit. This passport has almost as much detail on it as the one that you or I possess, but without a photograph. Every movement is then registered, and at the end of its life the passport has to be sent back to the British Cattle Movement Service. Every movement of sheep has to be accompanied by a document which eventually has to be submitted to the sheep traceability office. Sooner or later somebody comes around—I have had such an experience—to check that every piece of paper is in its proper place and that it has been fully complied with.

The Post Office is a national service, but, very properly, Scotland has been allowed to administer the review in its own way. The consultation and closure process has been divided into six regions. Three of these have already completed the process. Ninety closures are now firmly identified, with more to come. The criteria employed make some allowance for sparsity but, in the Scottish context, to measure provision by the criteria of three miles as the crow flies can be hugely misleading. I hope that when considering individual closures, the distance on the ground will be the vital measure. I gather that some consideration is being given to this in the Western Isles because of the dispersed nature of their settlements.

Finally, I return to the finances of the Post Office. I am much of a novice in looking at this issue, but I gather that one of the burdens carried by the Post Office is the shortfall in its pensions. I would be interested to hear from the Minister whether some of that shortfall can be attributed to the period before the break-up of the original Post Office and whether the current body is actually trying to cope with a millstone that has been around its neck for rather a long time. That is an element of the burdens that the Post Office carries that does not, at present, help to reach out to the population as a whole.

My Lords, like other noble Lords, I thank the noble Baroness, Lady Byford, for this debate. It is essential that we have it. So much has been said about the Post Office, rural post offices and the closures. It is true that the post office is very often the fabric of the society in a village. However, I go along with my noble friend Lord Whitty in saying that we are very often not looking at the wider aspects of the village and village life. There is certainly a need for joined-up government. There is a catalogue of services that have been removed from rural post offices. In 2005-06, government business worth £168 million was removed from the Post Office system.

We must also recognise that the viability of many rural post offices is difficult. It would be wrong if we did not face that: 56 per cent of them are just not viable. The question is how we begin to make them viable. Many of them serve fewer than 70 customers per week; 800 of them serve only five customers a day. Those communities deserve a decent service, and we must look at ways of providing it if it is not there. I welcome the remarks about using churches, church halls and, in particular, pubs, as well as having mobile vans in communities at certain times for people to have access to the service. We must move forward. At the same time, we must ensure that post offices are not deprived of services. I have never understood why we are talking about taking the card service away from the Post Office. We should instead be developing the Post Office as a bank. That is one way of moving forward.

I shall join the noble Lord, Lord Dearing, and other noble Lords in talking about the universal postal service. It would be wrong if we did not mention this now because it is under threat and if we are not very careful it will be the subject of our next debate. The universal postal service is the fabric of our society. The fact that the Post Office delivers to 20 million addresses is part and parcel of it. Although we are rightly debating the closures, we must debate that as well. The noble Lord, Lord Dearing, picked on the real reason, which is that companies have been allowed to cherry-pick the bulk business, the profitable side; 40 per cent of it has gone and that amount is increasing. In this country, we have introduced competition faster than anywhere else in Europe. Our major competitors are from Europe where they are more relaxed and competition is not even beginning to bite; for instance, in the Netherlands and in Germany.

What is the problem? The real problem is Postcomm and the restrictions it places on the Post Office. Let us talk about access headroom—I know it is a technical term, but it is easy to understand. It means that the Post Office must have a set margin between the price it charges its retail customers and the amount it charges its competitors. It is obvious that that is nonsense and cannot continue. I turn to my noble friend as I have to declare an interest as a member of Unite, which represents managers in the Post Office. We suffered redundancies. Cuts worth £1.5 billion have taken place in the Post Office, which led to 50,000 redundancies, and we know that there are cuts worth another £1.5 billion yet to come, with further losses at the Post Office. However, that will not put it back on track.

Postcomm is the problem. It has two obligations: the first is to promote competition, which it is doing, as the noble Lord, Lord Dearing, pointed out; its second and primary obligation is to ensure that the universal service continues. That is what it is failing to do. It is failing to do it because of the restrictions that have been placed on the Post Office. They benefit its competitors, but we know what is happening to society. We are talking about post office closures now, but in future we will not be talking about them but about the universal service and our ability to post a letter and have it delivered. Even though some of the efficiency has gone, 94 per cent of letters are still delivered the next day, and even in remote parts of the island delivery is guaranteed in a minimum of three days. All that will be lost to us unless something is done. I ask my noble friend to pay some attention to that when she replies. I hope we will get some answers from her about what may happen.

The big thing is that an independent review is taking place. Representations have been made not only by the Royal Mail but also by the unions. Unless what we are saying today is listened to, the next debate will be not about post office closures but about the universal service, which we cannot afford to lose.

My Lords, I commend the Conservative Front Bench for allocating its time to this important question. I am particularly grateful to it for agreeing to broaden the scope of its Motion to encompass the Question for Short Debate that I tabled. The fact that this debate has attracted so many speakers is proof, if proof were needed, of the level of concern, the urgency of the matter and the timeliness of the debate.

Before I come to the matters I had in mind for my debate, I must say a word about post office closures. After all we have heard, noble Lords hardly need me to underline the impact of further closures on elderly, vulnerable and disabled people and on communities. Let me give an example: the criteria for closure have to do with the proportion of the population who are within a mile of the nearest post office, but for many older people a mile is simply too far to walk. Many blind people receive their library books by post. A book may comprise several large volumes. Let us take the Companion to the Standing Orders. It is a slim volume weighing about 12.5 ounces that we all know well. In Braille, it occupies five large volumes weighing 4.5 pounds each. Imagine staggering to the post with that lot. If these closures go ahead, it will be essential to develop alternative outreach services to enable people to access the post.

If not only the access but also the sense of community that the post office provides is not to be further eroded and perhaps lost for ever, we need to think creatively about locating post office counters in what community facilities remain, such as the local library or the village hall. My plea to the Government is to have more regard for the social consequences of policy decisions and not just for the opportunities to cut costs by whatever means possible.

In my maiden speech I referred to Henry Fawcett, the blind Postmaster-General who was MP for Hackney, where I live, and introduced the parcel post in the last quarter of the 19th century, reduced the cost of telegrams and postal orders, improved facilities for small savers and investors in the Post Office Savings Bank and opened a number of positions in the Post Office to women. So he presided over a universal service but was clearly prepared to act entrepreneurially.

The universal service provided by the Royal Mail is part of the fabric of British society which it behoves us to treat with care. Yet it is under tremendous pressure, much of it, as we heard, stemming from the system of regulation we have in place. The volume of mail is declining by 2 per cent to 3 per cent a year, and that is accelerating due to alternative modes of communication. Competition is being allowed to develop more rapidly here than elsewhere. Royal Mail’s competitors now have 40 per cent of the bulk mail market. Postcomm says that Royal Mail needs to become more efficient, but the latter has done a lot to increase efficiency. As we heard, since 2002, it has taken £1.5 billion out in costs and reduced the head count by 50,000, and further cost reductions of £1.5 billion are planned. Yet Royal Mail’s competitors are still given a built-in advantage—some might call it an unfair advantage—by the system of regulation we have in the so-called access headroom rule, which means that Royal Mail can never be competitive, however much it increases its efficiency.

The regulator Postcomm imposes a particular business model on Royal Mail. Eighty-eight per cent of its revenues come under Postcomm’s price control, far exceeding the requirements of the European Union’s postal services directive and far exceeding the proportion of business regulated in other European countries. Yet Postcomm’s business model is flawed. It estimated that Royal Mail would make a profit of £779 million on its regulated business in 2006-07, whereas, for the reasons I indicated, it actually made a loss of £29 million despite meeting the regulator’s efficiency targets and keeping within the price control. Postcomm sees the future for Royal Mail as either a better deal for the customer through increased efficiency, greater liberalisation and more competition, or a scenario of managed decline. But as we have seen, the present Royal Mail management is doing much to increase efficiency. It welcomes competition, but not on terms which give competitors, some of them coming from Europe where they have a much more protected domestic base, an unfair advantage.

Royal Mail wants to operate commercially in a commercial environment but it cannot do this if the weight of regulation—as to 88 per cent of its revenues—means that it is trying to operate commercially with one hand tied behind its back. Postal services clearly need to be regulated but if we want Royal Mail to behave entrepreneurially, regulation must be light touch, leaving it scope to act entrepreneurially, to innovate, diversify and seize commercial opportunities. If we are not prepared to do this, I fear that the future is managed decline, and that inevitably means progressive erosion and ultimate destruction of the one-price-goes-anywhere universal service.

Whatever we think of Royal Mail—and we all have our grumbles—this is not something we should contemplate. The universal postal service is a priceless asset, truly part of the fabric of British society, still part of the steadily declining heritage of public service in our country, and we destroy it at our peril.

The Government have set up an independent review of the postal market. I fervently hope that the review panel will weigh these considerations carefully and fairly. If it does not, I fear that Henry Fawcett will be turning in his grave.

My Lords, I, too, am grateful to the noble Baroness, Lady Byford, for giving us the opportunity to have this debate and to look for better prospects for the post office network. It is also a privilege to follow the noble Lord, Lord Low of Dalston, many of whose views I share. Like my noble friend Lord O’Neill of Clackmannan, I want to mention a few difficult facts rather than offer more tea and sympathy so that we can get a better balanced debate, which I believe is in the best interests of all the British public.

As the noble Baroness, Lady Shephard of Northwold, stated, the Opposition know that the post office network is losing half a million pounds every day, between £3 million and £4 million every week of the year, and that is increasing. As the Opposition also know, there are now 4 million fewer post office customers than there used to be. I see little benefit in going back over the history of why we have got to that position; it is a fact of life that confronts us. More and more people now use alternative technological services which have become increasingly available and of which there will be more in the future. Many of us, even elderly people such as myself, no longer queue at the post office with all the relevant pieces of paper to get their road fund licence. Instead I use the new brilliant system available from the DVLA. I say to my noble friend Lord Whitty that, had this system been left with the Post Office, I do not believe that it would have delivered it in the way that the DVLA does. The change is absolutely phenomenal. The system is available seven days a week, 24 hours a day and 52 weeks of the year. It is interesting to note that 50 per cent of the people using it do so at hours when post offices are not open. I understand that a million people a month are using it. That is a remarkable change and it is happening in other areas too, which we should not disregard. Technology will have an even bigger impact in a whole variety of ways.

Changing lifestyles are also having a big impact on the post office network. The people using the post office are increasingly an ageing group. We must do everything we can to protect them but we must also take into account the fact that a change is taking place. There is no point in building for the future if you will not have customers going into post offices. I say to the right reverend Prelate that if customers are determined to act on a personal basis, this matter will not be tackled on a community basis. That is what we are seeing all the time with computers and online systems. People do not want to go to the post office, they want to access services from home and they will do so more and more in the future. That presents great challenges for us in a whole variety of ways but we cannot ignore that it is happening. In addition, post offices face more and more competition for their traditional business from organisations such as the banks. As the noble Lord, Lord Dearing, pointed out, a major threat is facing us as regards where the Post Office account will go in the future.

Post offices are part of the social network. I support them and want them to continue to be part of that network. They are the glue that holds communities together. I speak as someone from an urban area where these changes are having an equal, if not greater, impact on certain parts of the community than in rural areas, as my noble friend Lord Whitty pointed out. I support a subsidy for the post office network but we should acknowledge that the Government have provided much support, which has hardly been mentioned—£2 billion of support was given overall between 1997 and 2006 and another £1.7 billion is guaranteed up to 2011. It is estimated that without this, if the network operated solely on a commercial basis, it would be down to only 4,000 offices around the UK. None of us wants to see that. We need to see the network operate on a sustainable basis. But should there be unlimited subsidies? I do not believe that there should and I do not believe that, ultimately, the public want that either.

Having followed what our friends in the Opposition have been saying in their “Save our post offices” campaign, I have been trying to establish where they stand. I should be grateful if when they respond they could give us a few straight answers on some of those points. Speaking in the Opposition Day Debate, Alan Duncan said:

“Let me make it clear that we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close, because such a guarantee is not ours to give”.—[Official Report, Commons, 19/3/08; col. 947.]

Later, when he was asked how much subsidy he would offer to post offices to stay open, his response was right to the point:

“The same as is proposed”.—[Official Report, Commons, 19/3/08; col. 956.]

That is, proposed by the present Government. We have to have some openness and frankness about finding a policy that takes us forward. If everyone accepts that we need a subsidy, we ought to try to reach an agreement on what kind of subsidy, and we should endeavour to reach agreement on how many post offices there will be and what size the network will be, rather than pretending that it will continue as it is at the moment without any further changes.

Some very useful suggestions have been made in this debate and, like others, I look forward to listening to what the Minister says in response to the vision that has been proposed by many noble Lords. Equally, I emphasise that I should like to hear from the Opposition on where they stand on subsidies and the size of the network.

My Lords, my noble friend Lady Byford has the ability to choose the right topic at the right time and to present it in the right way. Somehow, she managed to gather around her a group of cockerels and hens who say the right things. There is always a unity on such subjects between the political parties. I do not know when noble Lords do their thinking; I do mine late at night and sometimes, according to my wife, I mutter in the middle of the night, “my Lords” this or that. I think in the early morning. I have a very expensive coffee machine. As noble Lords know, coffee is the second biggest commodity in the world. I sit with my coffee under a framed sort of charter, which says, “We, trusting in the fidelity and wisdom of our most trusty and well-beloved Sir William Mitchell-Thomson, hereby give tremendous powers”. That is one of the reasons why I am in your Lordships’ House; he was my grandfather, who was Postmaster General.

Noble Lords will recall that the first master of post was in 1510. He was one of the Tuke family, I think it was Sir Brian Tuke. He was probably from Norfolk or the rich parts of the world. The first Postmaster General came in about 1630, I think it was Sir Henry Bishop. In 1880 to 1884, I think we had Mr Henry Fawcett. My grandfather was from 1924 to 1929. He had to be in charge, as chief civil commissioner, of the general strike in 1926 to force people to go back to work. Somehow, sitting in front of that charter makes me think every morning of post.

I have certain hatreds. At the moment, I measure my waste, because I am trying to be good with that pink bag. Some 85 per cent of that waste is complete and utter coloured junk delivered by direct mail. That is wrong, because of the cost of putting it away, and because I value my privacy. Then there are people who advise burglars that you are not there, because they chuck post or other things on your doorstep and you cannot get rid of it. My first suggestion is to say that the Post Office is pre-eminent; so let us increase the costs and the legislation that affects those people who send unwanted junk to so many people. The savings to the environment—if you are Conservative or Labour—will be enormous.

What is the reason for communication? After my grandfather, there were certain other successful Postmasters General, the latest being Tony Benn, who writes about it. I do not agree with him on many things, but I agree with his comments about the Post Office. There was also Clement Attlee. There were many great men, and it was a great post. Then in 1969 we got rid of it, and we had the Minister of Posts and Telecommunications. Yesterday, at 2.35 pm, I went on to the government website to find out who the Minister is for Posts and Telecommunications or who is responsible for it. The answer is “nil”. We do not have one on the official government website. Therefore, we should reinstitute the post of Minister or Postmaster General. I do not know what government department is involved.

I am also worried because I do not trust the post any more. I have to have one of those machines that chop up your bits of paper. You wonder who will pilfer your address and your postcode. Postcodes are extraordinary things. No one bothers to research the fact that alphanumeric numbers are very difficult. People can remember the alpha and the number, and everyone in the world can remember their service number; PJ963040 Pompey Rating.

My Lords, I knew that the noble Lord would do that.

I sometimes cannot remember postcodes. Who owns the intellectual property of my address? Is it me? I used to have the right to deny other people to know what it was. I know that I can go into British Telecom to find out where I live and find out how rapidly a burglar from Chepstow can get to my house. I have lost my security and I have lost my identity. I tear things up and realise that I have to burn them, because I realise that someone who has sent me unwanted post may have got my postcode on it. I go into a shop, and I do not have an account there, but they can look me up because someone sent me a present once, which had the postcode on it. I do not want my postcode any more; I want to get rid of it.

I am being light hearted, but I have some suggestions to make, and I have been writing things to myself. I think again of my grandfather. I would have been Sir Malcolm McEacharn Mitchell-Thomson, Baronet of Clackmannan, had they not chosen Polmood instead. My grandfather was an MP for Glasgow, for North Down and for England but never for Wales. The reason he ceased to be Postmaster General was that in 1929 he obviously did something wrong. A certain postmaster Crick was appointed to a town in Wales. He was an Englishman. He was not very good at the Welsh language, and he did not understand postcodes. There was one problem; he did not know where to deliver the post, so he resigned and joined the Navy.

That postcode was quite a difficult one; it had 58 alphabetic letters. I thought because it was a Welsh name, I would try to learn it, and Eleanor in security downstairs, who speaks fluent Welsh, gave me a training lesson, and I started to do it. I realise that there is another one who has the same sort of name, who spoke earlier today. This postcode, in English, is the Church of Saint Mary in a hollow of white hazel near to the rapid whirlpool by a red cave. I wonder whether I could have some help?

My Lords, let me jump in to help our colleague. The town was Llanfairpwllgwyngyllgogerychwryndrobwlllantysiliog ogogoch.

My Lords, these Llans! I have a feeling that the noble Lord may well have wished to choose that as his title. I finish on that happy thing.

My Lords, it is a pleasure to take part in this debate. Like other colleagues, I warmly thank the noble Baroness, Lady Byford, for, as always, championing the cause of those who live in rural areas in their present indictment.

The noble Lord, Lord Selsdon, tempted me to give my Royal Marine number. There is another number in the minds of most people, at least on this side, which is their Mam’s Co-op share number. I can give mine; I wonder whether the noble Lord can give his. Mine is 65539 in the Newcastle Co-op. I have heard that number, and many others, quoted in many other places.

This is not a happy debate because, quite frankly, there is no solution with a large “S”. The value of the debate is to bear down on the Minister and her colleagues with noble Lords’ anxieties for the plight of those who live in the circumstances outlined. My take on the situation is this. As noble Lords can see, I wear a tie on which is written the word “Co-op”. My background in this debate, as in many others, is with the Co-op. Its history, as I know it, is that in many a small town and village there was a butcher, a baker, a candlestick maker and all sorts of shops, including a Co-op. Over a period, by the will of the people who once patronised those shops, and with the creation of what we call the car-borne shopper, those customers decided to take their trade elsewhere until eventually there was only one struggling shop left: the Co-op. It remained because it had a responsibility to the wider membership of the community. The Co-op shops kept going in many small places for a long time until eventually the imperative of economic logic drove them out.

I live in Loughton, in the middle of Epping Forest. It is a lovely place. When I moved there 15 years ago, there was a Crown post office, which was then closed. But it reopened inside the Co-op. It had a life. Eventually the Co-op left that place and the post office was re-established inside a chemist shop in Loughton. As far as I am concerned, it is successful in providing what the populace need.

During the war I was wounded, and so I receive a small pension for that. For years I went happily along, weekly or monthly, to the post office in Chase Side, Enfield to draw my pension until it was suggested to me that it would be more convenient all round if I had it paid into my bank account, which I now do. That was a service to me, and I was glad to take it. The consequences of the service remain to be seen, of course. I also have my old-age pension paid that way, not by queuing as I saw people do all my life as the constituency MP. The figures have already been given. Some 80 per cent of old-age pensioners have opted by one means or another not to use the post office facility. The Government’s dilemma is to match the changing mood and pattern of the people of this country, which is referred to as their lifestyle. I do not envy the Government in having to come up with a solution.

In an adjournment debate in the Commons in 1975, when I was the MP for Edmonton, I made a successful plea to the then Minister, Gregor Mackenzie, for the post office at 101 Silver Street, Edmonton, not to be closed. It was not. The issue came up again when a local library was threatened nearby. Among those who protested was the postmaster, who still resides at 101 Silver Street. You pays your money and you takes your choice. I believe in the initiative proposed by Essex County Council, which says that we need to look much more at outreach services and we need to be flexible, because other people are taking advantage and applying their commercial expertise. Others are finding gaps in services and taking advantage of them.

I do not envy the Post Office management; they are closer to the issue of how to find a solution than I am or Ministers are. But do not think that the issue has been visited on us out of the blue. I remember the noble Baroness, Lady Byford, talking about the lack of affordable rural housing. As I reminded her, most of the village council housing she described is no longer public because of a Bill that was passed in 1982 which gave every council tenant the right to buy their house. It was a great thing at the time to own your own house, but the consequences down the line have had to be picked up by others. You pays your money and you takes your choice.

My Lords, I thank the noble Baroness, Lady Byford, for this timely debate. I particularly thank the noble Lords, Lord Selsdon and Lord Graham. I did my national service and it worries me that I cannot remember my Army number.

We have had a very well supported debate in terms of speakers, with a wide range of views expressed. But it is a great pity that we are discussing post offices today. I say that because it is a long saga going back to many debates that I and many others attended in the other place and, I am sure, in this Chamber. That is what I mean by a great pity. My hope, and the hope of others, was that this matter would have been resolved favourably long ago, because our local post offices are an essential part of our communities. In calling for local community action areas, my noble friend Lord Roberts of Llandudno covered that concern very well, as did other noble Lords.

The battle has gone on for a long time. I cast my mind back to the early days when notices put up in post offices and letters sent to benefit and pension recipients implied that payments would no longer be available over the counter. Many people were confused, concerned and wrongly informed. The noble Baroness, Lady Byford, has produced a clear example of her own experience in that regard.

The government approach is to manage the decline of our post office network rather than take long-term strategic decisions that will secure its future. The Government have increased the losses by undermining the Post Office account and withdrawing vehicle licensing, to which the noble Lord, Lord Whitty, rightly referred. The noble Lord also spoke of a lack of imagination. Some 2.1 per cent of Post Office income was derived from over-the-counter sales of TV licences. In rural areas alone, more than 300,000 such purchases were made annually. Passport reviews have also been taken away from post offices. Those are actions of the Government.

The post office could easily be a real arm of local and national government. It could be an information centre and continue to be a local focus. Help the Aged, for example, says that 99 per cent of older people in rural areas consider their local post office a lifeline, a point which many speakers have made. In 2006 alone, the Government withdrew £168 million-worth of government services from the Post Office. In rural areas and many urban areas post offices are the lifeblood of the community. As the Countryside Alliance and other speakers in this debate have clearly said, post offices provide a vital service. The overall impact of the reduced footfall is badly affecting small shops and town shopping areas.

Earlier I mentioned community, a word which, back in the 1980s and 1990s, the Prime Minister of the day, Mrs Thatcher, rejected as meaningless. We must not forget that 3,500 post offices were closed under that Conservative Government.

My Lords, there were 3,500 closures, and possibly a few more. It shows that the current process was started by the Conservatives. Perhaps the official Opposition should in all modesty be a bit more realistic about these closures, about which they are complaining so loudly across the country.

We on these Benches believe in community. We believe that post office closures are damaging and that they will increasingly damage people: the old, the young, the disabled, those without transport, those who are sometimes lonely, those who need a local facility close to them—the noble Lord, Lord Soulsby, rightly spoke about these issues earlier, as did many other speakers—and, indeed, those with young families. Many of those people need a service near by but that is not likely to happen with the distances that are being talked about. I know that in practical terms the distance that many people can walk is quite restricted.

Of course, it is not right to deplore a situation without having a solution. That is why I am glad that our Liberal Democrat policy will produce £2 billion to reinvest in post offices. I know that, for example, in Weston-super-Mare—my part of the country—the planned closures will have a destructive impact. We need small shops, many of which need to be post offices.

Along with others, I feel that the closure process is affecting our neighbourhood shops. When the small shops go, they are sometimes replaced by mini-supermarkets but, sadly, often the supermarket chains do not want to include a post office within the mini-supermarket. In fact, just such a circumstance arose in Weston-super-Mare, and only pressure from the public ensured that a mini-supermarket included a post office. But, of course, in years to come, who knows whether it will still be there.

There is great support from the communities for small shops. A recent survey by the Federation of Small Businesses found that 97 per cent of its members said that the post office had a role to play in local communities, and 82 per cent thought that the closure of a local post office near to them would have a significant impact on their business. That concern is widespread and, as has been mentioned, is found not only in local communities throughout the country. In fact, people may be surprised to learn the importance that the City of London attaches to post offices. In 1980, there were 12 post offices in the square mile; now there are just four. London is also affected because one more post office within the City area is now at risk, despite the fact that in the coming years the number of residents in the City will increase, as will the number of businesses. I believe that the post office concerned is in the Ludgate area.

Again, I thank the noble Baroness for this debate, as I am sure we all do. Many points have been drawn out and it is clear that there is much to be concerned about. More time should be allowed for this process. In many areas, the amount of time given to the consultation was not adequate, with allowance not being made for weekends or bank holidays and so on. This matter is too important to be rushed but, in fact, the process has been rushed in all respects. Many ideas are emerging—in particular, the noble Lord, Lord Hanningfield, mentioned what is happening in Essex—and time is needed for these possible measures to be implemented. It is very encouraging to hear how the churches are willing to play their part, and mention was made of a universal service, which is very important. Therefore, I ask that communities be given more time so that the ideas that have been put forward in this debate have a chance to be implemented.

My Lords, I thank my noble friend Lady Byford for choosing this as her subject for debate and for giving us all the opportunity today not only to say what we think but to listen to what others think. I am amazed at how much common cause we seem to have heard around the Chamber. I am supposed to stand here and speak for my party—not stand at the back and speak only about what I think. I shall try not to speak for too long. I shall try not to repeat what has already been said, and I shall try not to sound as though I am reading from a script that someone else has given me.

I start by saying that, yet again, our Minister of State, the noble Lord, Lord Jones, is not here. He is doing what he likes doing best and what he thinks is most important—he is banging the drum for Britain. However, over these past few weeks I am only too delighted to have welcomed to the government Front Bench the noble Baroness, Lady Vadera, who I hope will bang the drum for our communities and local businesses. I particularly hope that when she replies to the debate we will hear her pick up on a lot of the things that we have heard today. Many of them are new to us and have come from those whom we did not expect them to come from, which is always much more refreshing. I am delighted to see the noble Lord, Lord Whitty, taking part in the debate. When I became chairman of the National Consumer Council, everyone said, “Be very careful, Judith. You could easily go native”. I am delighted to see that now that the noble Lord is chairman of that council, he too is going native.

I have wasted all that time when I should have been saying how wrong the Government have got it. However, as we all know, we had the Post Office brief a long time ago and this has all been going on for a long time. The trouble is that we expect some things to last for ever. We take our eye off them; we do not invest in the way that perhaps we should have done; and, when it comes to the point where things start to go wrong, the Prime Minister of the day uses his clunking fist and, in this case, his clunking fist comes down on the weakest.

The target for closures seems to have been arbitrary and, some say, illogical, taking no account of whether a post office that is marked out for closure is profitable. We have heard that communities are being pitted against each other because of the dog-eat-dog closure programme. If one community campaigns successfully against a closure, a neighbouring branch will shut down. I can tell noble Lords that I know what that feels like. I live on the Roseland peninsula in Cornwall and it is absolute war down there. Two months ago, we held a joint carnival with a village which has been our friend, but we can hardly speak to any of those neighbours now. We realise that if we win the battle for our post office in St Mawes, it will mean that Veryan is likely to lose its post office. An awful lot of friends and families are at war down there, and I imagine that everyone around the Chamber today can say the same thing.

Most people have brought out the key facts in this issue, and I see no point in going over the subject of post office card accounts again—we have heard it all. With regard to the access criteria, the Government’s subsidy to support the post office network was due to finish in 2008, but they have announced that it will remain in place and that compensatory payments will be made to sub-postmasters whose branches are to close. That is also a sadness because it means that some older people who run post offices have accepted the payments very quickly, without a fight, because they felt that at least that was a form of pension for them. It is different for the younger, more vigorous people who have moved into post offices and given up careers in other areas to start a new life or to take themselves forward. Julie Plomer and Andy Forham, a dynamic couple, have come to St Mawes and are doing wondrous things. They have both given up careers in marketing in London to take on a completely new life which they are absolutely embracing.

My goddaughter, Tamsin, living in Eggbuckland, a suburb of Plymouth, is combining a nursery school with her post office. Some wonderful initiatives are taking place, but unfortunately if people take the money because they need it, what can one expect? The money is only a fleabite when one compares it with the amount of money that has gone to Northern Rock or the amount of money that has gone to the banks. We are talking about a service that covers the whole country and it really is a tiny amount of money. I know that the noble Baroness, Lady Vadera, is listening to me and taking it all on board.

In the few moments I have left, I want to break a rule and tell the Minister that we in the Conservative Party have a Post Office action plan. I am delighted to share that with her. I will happily share with her the fact that we want to free up sub-postmasters; we want to allow them to provide a greater range of products, and so on. I am happy for anyone to take notes on what I am saying now. We want to use post offices for government GP services. We think it would be a very good idea to have a government GP person working there who can explain many of the forms that one has to fill in if you want a disabled parking badge, and so on. We could campaign on the Post Office card account and encourage local councils to see what services they could provide through post offices and whether they could use the Post Office network in their area to engage better with local residents. We have heard what Essex County Council has in mind.

This matter is so important; it goes beyond me standing here saying that the Conservatives would do it better and others standing up and saying that we did it worse and the Liberal Democrats wasting their time saying that we did it wrong a long time ago. We should all get together to see what we can to do. Once again, I very much look forward to hearing the response of the noble Baroness, Lady Vadera.

My noble friend Lady Byford always puts life into matters and she talked about the Post Office savings account. I remember my son aged five, having been told by me that he had to save half of everything that he was given, going into the post office with half of half a crown—half of 20p or whatever. One day he stood beside me, looked over the counter as best he could and said to the woman behind the counter, “Please may I see my money?”. The woman looked at me and over the top of his head she whispered to me, “How much is it?”. I said whatever it was—“£1.52”. She said, “One moment”. She picked up a bag from under the counter, put a few bits in it, brought it up and said, “I think this one’s yours”. My son was so thrilled that his confidence in the post office from that day on went up and stayed up. He always says, “Do not mention me, mummy; I am a 43-year-old barrister and I don't want to be embarrassed by you again”. For all I know, he may still have that Post Office book.

It is not too late to stop the destruction of a cherished service to our local communities, to everyday people in town and country. Sixty million people manage to live in relative harmony in these crowded islands. More flock here every day from all over the world and one has to ask why. It is that kind of consistency and constancy, that duty of quiet service which stems from our monarch and goes right down to our sub-postmasters and sub-postmistresses, which gives us the confidence for the big changes that we have to endure. We destroy that at our peril.

My Lords, I am very grateful to the noble Baroness, Lady Byford, for calling this very timely and welcome debate, particularly given the strength of feeling that it has aroused. Despite the depth of feeling, I am very grateful, as my noble friend Lord Whitty said, that noble Lords have all been relatively gentle with me. I shall address as many points as I can during the time available and if I am not able to cover them all, I promise I shall write to noble Lords.

I recognise and fully endorse the views expressed by all noble Lords on the social and economic importance of post offices in local communities, especially for the elderly and vulnerable. In response to the right reverend Prelate the Bishop of Chelmsford’s point, echoed by many others, we do not see the Post Office as a purely commercial concern. That is why we have made quite an unprecedented financial commitment to the network. My noble friend Lord Brooke very kindly reminded us that we have put in £2 billion between 1999 and 2005 to help the Post Office to adapt to market changes and we have committed a further £1.7 billion up to 2011 to protect the social role of the network. It is quite an interesting view of financial management to consider £3.7 billion a flea-bite, particularly when one understands that it is a cost that we do not recoup in any other way—we consider it a service.

This is the first time that a Government have taken and funded a planned and strategic view of the Post Office network. My noble friend Lord O'Neill indicated that there are a number of very complex issues here. I completely agree. In modernising the network we have attempted to take all those into account to meet today's economic and social needs. The decline of the Post Office network is, as someone commented, not new; it has been falling since the 1960s. As the noble Lord, Lord Cotter, has already said, 3,542 post offices closed between 1979 and 1997 and they were all unplanned and uncompensated. Therefore, I say to the noble Baroness, Lady Wilcox, they were arbitrary, which is essentially the reason we have now taken a planned look at the network. Without this planned review and without this funding, 10,000 post offices would close rather than the 2,500 that we are currently planning to close in this programme.

My Lords, I do not want to try to make a tricky point, but we have heard evidence this afternoon that offices are destined to close in areas where housing, and so population, is destined to increase. I do not expect the Minister to address that point here and now, but she is claiming that the Government are doing this in a systematic way. When one looks at the issues, that is not how it feels on the ground. Perhaps, after the debate, she would be able to turn her mind to that point.

My Lords, I was planning to address the very point the noble Baroness makes on local terrain.

The Post Office network as it stands, despite the funding, faces some serious challenges. The volume of business has reduced significantly in recent years. Four million fewer people visit post offices a week compared with just two years ago, which is a drop of 20 per cent in two years; 800 of the least-used branches have fewer than 16 customers a week and it costs taxpayers £17 in subsidy every time one of those 16 customers walks in and undertakes a transaction; and about 1,000 urban sub-post offices compete for business with at least six other branches within a mile of them. I have heard comments about being innovative and making urban post offices profitable. I have some business experience and I defy anybody to find a way of competing in that kind of network.

We completely understand the depth of public concern about closures but we have to be mindful of the amount of funding that taxpayers can put into a service that is facing profound changes in terms of technology and how people choose to live their lives. The 20 per cent decline shows that consumers are fundamentally changing their lifestyle choices. Despite this public concern, like my noble friend Lord Graham, the public are voting with their feet.

My Lords, is it not true that once you withdraw, say, the ability to buy car tax or a television licence in the post office, naturally the number of people entering that post office will be reduced?

My Lords, the implication is that the Government removed the service, so usage declined. But I would argue that the usage declined, making it unprofitable, because people were voting with their feet. This is not precipitated by the Government; we are lagging behind consumers in their choice, like my noble friend Lord Graham. Eight out of 10 pensioners choose to have their pensions paid directly into their bank account, and among new retirees the number is nine out of 10. A million people a month choose to renew their car tax online, and half of them do so outside office hours. We are not precipitating the decline of the network by moving business to new channels but are following rather than creating the trend of lifestyle change.

The noble Baroness, Lady Byford and the noble Lord, Lord Dearing, asked about the cost of changing the method of social security payments. Each benefit or pension paid by girocheque costs £1.80 and a Post Office card account transaction costs 80p. Each pension paid into a bank costs the taxpayer 1p. Anyone can still elect to receive their pension or benefits through a Post Office card account; they can also receive such payments through a bank account of their choice. There are 17 basic bank accounts and nine current accounts available through the Post Office. People will continue to be able to choose the POCA or its successor—the government card account. Payments into bank accounts first became an option in the 1980s, so we are following a trend rather late.

The Government need to address the issue of financial inclusion. There are significant benefits in using bank accounts that we want everybody to be able to access, which they may be unable to do under a POCA. It has been noted that the changes have led to substantially increased Post Office Ltd losses—£174 million last year, which is almost £3.5 million a week. The noble Baroness, Lady Wilcox, suggests that we are closing profitable post offices. Indeed, usually the sub-post office is profitable but that does not mean that it is not loss-making to Post Office Ltd, which, at a cost, has to provide the service. A transaction can cost £17, which might make the sub-post office profitable but it does not make Post Office Ltd profitable—75 per cent of sub-post offices lose money for Post Office Ltd.

My Lords, the overheads of Post Office Ltd are not the responsibility of individual branches. Post Office Ltd has considerable overheads with empty offices, and so on, but surely that should not be put on to a profitable individual branch. That is not fair and it is not supporting the community.

My Lords, as part of the Government’s programme, overheads will reduce by about £200 million up to 2011, but I do not wish to get into a discussion on the economics of transfer pricing. If a service requires a centre that provides the service that is then transmitted through the distribution network, somebody has to pay for it. That is what we are paying for, and it is only fair and right that the true cost is transferred to the Post Office. We are transferring the cost and then choosing to subsidise it to the tune of £1.7 billion up to 2011. It cannot be said that that is costless. There is a central cost to create the service that is then transmitted on via the Post Office network.

Given that we are facing such deepening problems, doing nothing is not an option. I felt that there was consensus among noble Lords on that. Because we recognise the significant and economic role of the Post Office we have acted to ensure planned and consistent network provision across the country, first, by the funding I mentioned and, secondly, by stipulating minimum levels of geographic coverage. The access criteria are designed to protect the vulnerable, marginalised and rural in a way commented on by noble Lords, unlike unplanned closures would be. Nobody likes individual closures and everybody has a story, but let me say to the noble Baroness that there is nothing wrong with the Minister having a view on an individual closure, which is different from understanding the overall network’s design requirements.

For the first time we have criteria for a strategically planned network. I understand that there have been some criticisms on the access criteria, and the noble Baroness suggested that they are somewhat arbitrary. First, we are funding beyond the access criteria. A certain size of network will be provided and the funding we are supporting is greater than that. Secondly, access criteria, of which noble Lords are aware, are not the only issues. Others are taken into account, including the terrain or surrounding area, the location of the nearest public transport, provisions for disabled people and disabled parking, the impact on local economies, demographics and housing needs, and whether it is the last place to get cash. I appreciate completely that it may not feel quite like that when an individual post office is closing, but those are the access criteria created for the network.

I reassure the noble Duke, the Duke of Montrose, that measurements are made not as the crow flies but by road. We believe that the current programme will increase sustainability of the network through the migration of business from closing branches to those that remain to increase the profitability of the whole network. The need to rationalise the network has been recognised by many stakeholders. George Thomson, the general-secretary of the National Federation of Sub-Postmasters himself, has accepted that the closures are regrettable but necessary.

My Lords, while not wishing to drag out the time, I am a little concerned about those post offices that are also shops. If they take the compensation package by losing the part of their shop that is the post office service, are they are told that they cannot carry on providing certain services, such as the lottery, that are seen to be vaguely part of that service? That would be very unfair indeed.

My Lords, the compensation package is 28 months’ remuneration, which struck me as quite generous. It is compensation for loss of income from selling a service on behalf of the Post Office. If the sub-postmaster chooses to carry on providing that very service on behalf of a competitor, I am not sure that I see the logic of compensating someone for going to a competitor service. I can confirm this in writing, but from memory I believe that no more than 10 per cent could be deducted from the 28 months of remuneration if their income is compensated from using a competitor service.

My Lords, before my noble friend leaves this point, I must say that she has been very frank in opening up the criteria and explaining to us the considerations made. The only problem is that, as she does that, she is creating another problem because the review procedure and the right to be consulted become that much more important and complex. Will she undertake to monitor the length of time that the review procedure will take? As I said earlier, unless the public have a sense of ownership and trust in the review procedure, they will not readily accept what might not be quite what they want, but is a lot nearer to what they want than they originally anticipated.

My Lords, I will go on to discuss the issue of the consultation process and review procedure, and I say to the noble Lord, Lord Selsdon, that there is a Minister for Postal Services. Thankfully it is not me; it is Pat McFadden, and I will be passing comments on to him.

I thank the noble Lord, Lord Cameron, for his recognition that the post office network will inevitably be facing closures, and for his work in promoting outreach for a number of years. Those outreach services are specifically designed to help those who are insufficiently mobile—an express concern of the noble Lords, Lord Soulsby and Lord Low. We have provided funding for 500 new outreach services in rural communities. They include vans for those who are not mobile to visit, and local shops. I welcome all ideas from the noble Baroness, Lady Wilcox, about how we can use innovation to improve those outreach services. I also very much welcome the work of the churches. The right reverend Prelate the Bishop of Newcastle mentioned such work. That is exactly the kind of outreach service in church halls, churches and shops that is being tested. It has proven popular and customer satisfaction levels are comparable to levels enjoyed by post office branches themselves.

My noble friend Lord Williams suggested that we consider making urban offices that are closing more profitable by providing new services. Post Office Ltd announced on 9 April that it will now trial the outreach model for urban communities as well. If successful, that could mean a significant number of outreach branches over and above the 500 originally planned. That is an innovative trial to deliver services in a way that meets the changing needs of customers.

As I said, alongside that there is a plan to improve the profitability of the post office network, not just by reducing its overhead costs, but by introducing other products and services and ways of delivering them—perhaps using some of the imagination that my noble friend Lord Whitty suggested was lacking. For example, post offices will now be the UK’s largest provider of foreign exchange and car insurance.

I apologise to noble Lords, but I have been reminded that I am running out of time and will therefore not be able to answer the question on consultation. If I may, I will write to noble Lords.

Important questions were also raised about the regulatory framework of the Royal Mail. That is being considered by the Hooper review, so it would not be appropriate for me to comment. I simply point out that, in addition to the funding that we have provided to the network, we have provided investment—most recently in 2007—of more than £2 billion in the Royal Mail. So I do not agree with the assessment that we have not invested in the Royal Mail relative to, say, Deutsche Post or the Dutch post office.

My Lords, with respect to the Minister, I was referring to the situation when the decision was taken to introduce competition. That was five or six years ago. Now it is being put right five years too late.

My Lords, in 2003, we invested in Royal Mail to the tune of £1.3 billion, so we have in fact been investing in it, although I quite understand that it feels that it has faced significant competition.

My Lords, we mentioned the universal service. The review is taking place, but could we at least have an indication that the Government still believe in the universal service?

My Lords, perhaps I should quote the terms of reference of the review, which are,

“how to maintain the universal service obligation in the light of ... market developments”.

Noble Lords will note that I did not say “if”.

I conclude by saying that 99 per cent of the population will see no change or be within one mile by road of an alternative branch following the programme; 90 per cent will see no change at all. We are looking at a network that will provide underlying protection for all. Although this is difficult—we are making difficult long-term decisions—they are decisions that need to be made. This is hardly the wholescale destruction of the network or of local communities. As noble Lords have commented, it has cross-party consensus. In closing, I cite the Opposition spokesperson for business:

“I agree with what the Secretary of State has said on numerous occasions: we have to face the facts about the future of postal services in this country … We understand that the Post Office is haemorrhaging around £4 million a week ... and that in this difficult business climate, uncertain times lie ahead”.—[Official Report, Commons, 19/3/08; col. 947.]

My Lords, I respectfully ask my noble friend to follow up my point about her not wanting to give compensation to—

My Lords, we have three hours. How can my noble friend compare the logic that she applies to the compensation—

My Lords, I say to my noble friend that this is a timed debate. I have to take the feeling of the House. My noble friend was, rightly, interrupted a number of times and has now concluded her remarks.

Yes, my Lords, but I have to take into account the fact that most noble Lords kept to their allotted time. I am sure that they all wanted to say a lot more. Therefore it is right that the Minister keeps to her allotted time.

My Lords, I think that it then behoves me to stand up.

I am very grateful to everyone who has taken part in the debate. I did not envy the Minister in trying to respond to such knowledge as, she has realised, is around the Chamber today: people who have worked within the Post Office and people who have represented constituencies with which they clearly identify, who obviously bring particular issues. She was not able to answer virtually any of our questions—I do not mean that as a criticism; they were very wide. I would be grateful if the department would answer my question about the saving to the DWP. That department has saved a lot of money that has clearly not come back to the Post Office, so I suspect that it has gone back to the Treasury. I would be grateful for a response to that.

I thank all those who spoke. I tried to present the debate not as town against country—it is not that sort of issue; it is a community issue, whether that community is part of a suburb or of a town, or in a rural area. I am grateful for the contributions that have been made.

With regard to the outreaches, I think that I heard the Minister say that all of the 500 proposed are taking place in rural areas. She nods, so I assume that I was correct. I pick up on the point made from the Bishops’ Bench by saying that Sheepy Magna in Leicestershire—what a suitable rural parish—was one of the first to take up the challenge and take in post office facilities.

I shall not even attempt to pick up on what everyone has said, but the debate this afternoon will have given the Government a chance to pause to think about how we need to move things forward. That is what we are after. Most of us are after ways in which we can create greater innovation within the post offices so that, from being in the doldrums, as they have been for some time, they can look to new business. I was particularly grateful to hear about the example of what is happening in Essex and the interest that other counties are showing in how they can save a precious part of their communities. With that, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.