HC Deb 18 April 2000 vol 348 cc939-52

7. No transfer effected by virtue of section 61 shall give rise to any liability to stamp duty.'.—[Mr. Betts.]

Brought up, read the First and Second time, and added to the Bill.

Remaining Government amendments agreed to.

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

10.26 pm
Mr. Byers

I beg to move That the Bill be now read the Third time.

I am sure that all Members of the House would like to thank those Members who served on the Standing Committee that scrutinised the Bill's detail. In particular, we thank my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. Member for Bournemouth, West (Mr. Butterfill) who chaired the Committee's proceedings fairly and efficiently. I add my personal thanks to my hon. Friend the Minister for Competitiveness who was responsible for taking the Bill through Committee. It was the first time that he has taken a Bill through Committee, and I have been very pleased at the way that he was able to conduct business and take through Government proposals. I know that all members of the Committee enjoyed the opportunity of engaging in lively and, I hope, constructive debate.

The Bill is part of the Government's programme of modernisation and reform. As hon. Members will know from this evening's debates, it provides opportunities to preserve the national network of sub-post offices and to ensure that there will be a national network that can be supported, if necessary, through the scheme for providing a subsidy to which the House agreed this evening.

We will, through the access criteria, ensure that all people in all parts of the country have access to postal services. We will also be able to ensure that the post office network can plan for a future based on diversity and investment in computerisation and that it can ensure that post offices can meet not just the needs of postal services, but of the communities that they serve.

The Bill guarantees a publicly owned Post Office, but with the commercial freedoms that will be needed to meet the challenges of the 21st century. It will be able to compete and have the money to invest in the future. By reducing the cut that is taken by the Treasury, we will provide the Post Office, for the first time, with access to the funds that it will need for investment to ensure that it can develop its services.

In the past, under the previous Government, the Treasury, rather than the Post Office, was always treated as a priority. Under this Government, the Treasury is withdrawing from the control that it has over finance, and resources will be provided to the Post Office for the first time. That ensures that, when we talk about commercial freedoms, it is not just rhetoric; we are also providing resources to make the Post Office's commercial freedom a reality.

The Bill will lift the uncertainty under which the Post Office has had to live for far too long. It will provide a firm basis for competition in the postal services market and it will provide a better deal for consumers, including those who are socially disadvantaged. It will ensure a strong Post Office that is better able to serve all its customers in all parts of the country. I invite the House to support the Bill on Third Reading.

10.29 pm
Mr. Page

As the House knows, the Opposition moved a reasoned amendment to the Second Reading motion for the Bill because it introduces an unsatisfactory structure of ownership which falls short of granting full commercial freedom, introduces uncompetitive borrowing criteria and does not include provision for transparent accounting practices, imposes new burdens of regulation on private companies rather than encouraging competition and fails to introduce clear access criteria to protect the network of sub Post Offices.—[Official Report, 15 February 2000; Vol. 344, c. 815.] The House will be fully aware that we had a long debate on the last point under Government new clause 1, at the start of this evening's proceedings. That debate proved the depth of concern felt by so many hon. Members. Now that the Committee and Report stages have concluded, we look to the other place to introduce appropriate amendments to inject common sense into the Bill.

I echo the Secretary of State by congratulating the Minister for Competitiveness on the friendly, open way in which he has conducted affairs. I do not want to damage his career prospects, but I must point out that promotion in the Department of Trade and Industry seems a distinct possibility. I did not find him very accommodating with our amendments, but we cannot have too much at once.

When the Secretary of State told the House on 15 February, on Second Reading, that he knew how many amendments he would table, we little realised that he was not joking. Despite all the spin and gloss that he has just put on the Bill in his speech, saying that it will be marvellous, it is most unsatisfactory that, on Report, we should have been debating important issues that affect people's livelihoods, as we did in our discussion of new clause 1. That was bounced on the House without our having the opportunity to take a long, measured look at what it implies.

A pattern is emerging. We have had the shambles of the Utilities Bill, which has just completed its Committee stage and will be before us tomorrow. We have lost count of the hundreds of amendments that the Government have tabled. That is the hallmark of a Department that is out of control. The fact that new clause 1 was tabled at such a late stage shows that it is a panic measure, introduced simply to try to satisfy last Wednesday's mass lobby.

We have had several debates on the Post Office in this Chamber and in Westminster Hall, and they concentrated on the sub-post offices. That point was emphasised by two debates last Wednesday. Those debates and today's proceedings highlight the confusion and muddle in the Government and the apparent lack of leadership by the Secretary of State. I might be doing the right hon. Gentleman a disservice, but despite all his rhetoric, I think that he would have preferred privatisation to the fudged solution provided by the Bill. Perhaps even this new Labour Government, with their vast majority, still have no stomach for that.

We can get a little distant from the subject matter in our debates, and it is useful to remind ourselves of the sheer size of the postal services and their importance to our economy. There are four main operating arms: Royal Mail, Parcelforce, Post Office Counters Ltd. and the subscriptions services. The Post Office employs more than 190,000 people and has a turnover in excess of £6.7 billion. However, we have said again and again, including on Report a few moments ago, that there is increasingly serious competition from overseas rivals as well as pressures from fax and electronic mail services. With all that comes the prospect of greater liberalisation in the European Union.

It has been clear for some time that the present situation cannot be maintained indefinitely without the Post Office losing market share, notwithstanding the comments made by the previous Secretary of State in his announcement just before Christmas in 1998. A publicly owned and financed business subject to all the traditional constraints on pay and pricing, on acquisitions and borrowing, and on partnerships and joint ventures has become increasingly anachronistic.

Postal administrations in countries such as Denmark, Germany, the Netherlands, New Zealand and Switzerland are already benefiting from the greater commercial freedoms that they have achieved. We would do well to remember what some of them have done. Some years ago, the Dutch postal business KPN bought TNT for 2 billion Australian dollars—a huge sum. The German post office acquired more than 20 per cent. of the shares in DHL.

That is the size of the forces massing against us. In both of those countries and in France, the machinery and the rules of the European Union are being used to strengthen those postal organisations before they are fully or even partially privatised. That gives an idea of the market pressures that will be exerted on our own Post Office.

The Bill takes a faltering step down the path to the reality of the commercial world, but surely the Post Office, and in particular Royal Mail, must be set completely free through privatisation, if it is not to be a bit player on the world stage of postal matters. If, before the next general election, the Government want to take that extra step towards privatisation, they can rest assured that we would be only too willing to assist them in that task.

10.37 pm
Mr. Cotter

The atmosphere in Committee was good natured, and I congratulate the Minister, especially on accepting my amendments and introducing measures that we welcomed. [Interruption.] The unaccustomed support of my hon. Friends has somewhat put me off.

We are approaching the end of a long process to bring the Post Office into the 21st century. The previous Tory Government lost many valuable years while they hummed and hawed about whether to privatise or whether to do anything at all. In fact, they did nothing.

From 1992 to 1997 the Post Office was in limbo. In July 1992 the Tory Government announced a review of the structure and operations of the Post Office. In 1994 a consultation paper was issued. The confusion carried on, with the Tory President of the Board of Trade saying that he preferred privatisation as an option for the Post Office, but did not have parliamentary support.

In 1996 privatisation was back on the agenda, with a plan to break the Post Office up into 11 regional franchises, similar to the rail privatisation. It was reported that as part of the proposed measures, a 5p cut was possible in the rates for London postal deliveries, which would have had an impact elsewhere in the country.

The previous Government wasted much time in discussion. I recollect that in Committee, the spokesman for the Conservatives complained that we were rushing matters. However, the Government have addressed many of the issues that needed to be addressed. I am glad that they have recognised the need for a publicly owned service. The importance of the Post Office to communities is reflected by the extraordinary number of debates on it that we have had in recent months, as Ministers know. Only last week, there was a strong lobby.

We were pleased but muted in our response today when the Secretary of State introduced new clause 1 because, as the right hon. Gentleman will recognise, his opacity was very much to the fore. We want clarification. We want the new clause to be implemented, and we are pleased that the Government seem to have responded to pressure from the lobbies—

Mr. Don Foster (Bath)

And from you.

Mr. Cotter

And from me, as my colleague says. Anyway, the Government seem to have responded to pressure with their proposal for a subsidy, but, as I have said, we await clarification.

Mr. Hancock

Does my hon. Friend agree that a cloud of doubt and uncertainty still hangs over the sub-post office network, and that, despite the promise that they gave earlier this evening, the Government have not done enough to give credibility to their claim that it is safe in their hands?

Mr. Cotter

I agree. So many issues are involved that I could wax on indefinitely—[Interruption.] I assure you that I will not, Mr. Deputy Speaker, but let me deal with just one of those issues.

We are concerned about sub-post offices, and about the closure of banks. We have had an assurance from the Government; when I had a meeting with a top manager just the other day, he said that he was in touch with 12 banks with the aim of getting a service operating. That is welcome, but we still have the problem of the lack of clarity. There is still the question of whether the Horizon project will work well with the software that needs to be designed. Will it be able to offer a real banking service?

As my hon. Friend the Member for Portsmouth, South (Mr. Hancock) pointed out, there are many other issues to be dealt with, but I shall not deal with them at this time of night. [HON. MEMBERS: "Keep going!"] I shall finish while I am ahead.

We are keen to see what will happen, especially to sub-post offices. We shall wait to see how words translate into action, and, in that sense, I look forward to future moves by the Government.

10.42 pm
Mr. Edward Leigh (Gainsborough)

The Bill proves that, however often things seem to change, they never change. It is much the same Bill that officials brought to us in April or May 1992, when we had won a general election. We rejected that partial approach on the basis that it was muddled and half-hearted, and would not deliver the first-class postal system that the country needs and deserves.

I suppose the Government will argue that the Bill represents a sensible and non-ideological point of view. In fact, a sensible way of proceeding would be to recognise that Royal Mail is a successful, profit-making international company, at least potentially, and that, as such, it simply must be allowed to compete. It must be allowed to make acquisitions; it must be able to beat off the challenges of the technological age, and, above all, to beat off fierce competition from its German and Dutch rivals. As long as it is under state control, it will never be able to be the highly successful company that it could be.

That is Royal Mail, and that is the future of Royal Mail. That is what Royal Mail will become in the long term. If only Ministers like the Secretary of State, who believe in the vision that I have described, had had the courage of their convictions, we would not now be discussing the privatisation of Royal Mail.

Mr. Derek Wyatt (Sittingbourne and Sheppey)

Does the hon. Gentleman accept that, if we took just that line, many sub-post offices would close?

Mr. Leigh

That is the point of view—the untruth, in a sense—that the Opposition always present. They try to muddle up two issues. [HON. MEMBERS: "The Opposition?"] The opposition to what I have been saying, that is.

Two businesses are involved. There is Royal Mail, which is a competitive, profitable business that can be privatised; and there is Post Office Counters Ltd, an overall national structure which, I agree, cannot be privatised. We made that clear—[Interruption.] The national structure—Post Office Counters—is owned by the state. We made it clear when we were hoping to privatise Royal Mail that Post Office Counters would be retained in the public sector to ensure an income stream to the privatised sub-post offices. [Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. It is extremely unfair to the hon. Gentleman that so many conversations are taking place. The House must come to order.

Mr. Leigh

The Government constantly repeat that the Conservative party wants to privatise the Post Office, yet we intended to privatise only Royal Mail. We never intended to privatise Post Office Counters. Despite our determination to privatise Royal Mail, we would have maintained the universal tariff and universal delivery. [HON. MEMBERS: "How?"] Through the Post Office regulator. The Bill, which we would have brought before Parliament—and we shall introduce it one day—[Interruption.] What will happen is inevitable. The Government will find that they simply cannot allow the Post Office to be a strange creature, half public, half private, owned by the state yet allowed to compete in the private sector. That is unfair and uncompetitive, and it will not happen.

Labour Back Benchers must know that the Government' s secret agenda is full privatisation. That is the logical conclusion of their proposals. Why not be honest about it and privatise Royal Mail, but with the protections that I described to ensure a universal tariff and universal delivery? That could be achieved.

Post Office Counters is a different operation. Sub-post offices are already in private hands. They are run by business men and women, who want not subsidies, but an income stream. Post Office Counters must be kept in the public sector and the income stream must be guaranteed. The Bill will not achieve that. The measure gives the Government only the power to provide subsidies.

The Government's approach to the Post Office Counters network is wrong. Instead of forcing pensioners to accept their pensions through a bank account, we should mechanise sub-post offices and ensure that every sub-post office has the ability to develop modern post office and banking services. Pensioners could thus take their pensions from sub-post offices. The Government claim that they are providing for that. Their constant refrain is that a pension costs only 1p to deliver through the bank, but 48p through the Post Office. However, they do not admit that although it costs 1p to transfer the money from the bank to local distribution centres, it costs much more to pass the money over the counter.

Today we read that Lloyds bank will charge its customers 50p to use the cash machines. The Government must come clean; there is no way out. Once one forces pensioners to accept their pensions through a bank account, they will be subject to hidden charges. Nobody has explained how those costs will be paid. Banks are not charitable organisations; they will insist on their costs being met. The public purse or pensioners will ultimately have to pay. That is why the Government's approach is wrong.

The Government could have introduced a Bill that ensured that Royal Mail was competitive, profitable and independent. They could have retained Post Office Counters in the public sector and guaranteed an income stream for sub-post offices. They could have helped sub-post offices to mechanise and prepare for the future. That would have been an exciting, worthwhile and right measure. The Bill simply represents the Secretary of State putting a toe in the water. It is a pity that he cannot have the courage of his convictions and introduce a Bill that we all support.

10.49 pm
Mr. Baldry

I promise not to detain the House long, but, having sat through proceedings on a number of Select Committee reports on the Post Office and most of the debates in Committee, I want to make a few comments.

On Third Reading, the Bill is a muddled halfway house and the Government have failed to give the Post Office the freedom that it needs to compete against its international rivals. Without full commercial freedom, it cannot take advantage of being the most efficient postal service in the world. Curiously, new clause 1, which proposed some subsidies, was introduced on Report. All Conservative Members, along with the National Federation of Sub-Postmasters, wish that not an opaque subsidy, but a real income stream, had been introduced to support the post office network. The proposal was needed only because the Government are proceeding with the disastrous policy of switching to automated credit transfer, which threatens the survival of thousands of sub-post offices across Britain.

In months to come, Conservative Members will look for transparency in the accounting structures to ensure that there is no undue or hidden cross-subsidy from monopoly to non-monopoly areas in the Post Office. We have welcomed the decision to grant plc status, but there is no support for the 100 per cent. retention of public ownership. The Government should have sold at least 51 per cent. of the shares, which would have enabled the Post Office to compete on a level playing field, particularly with Dutch and German post offices. We all know why the Government held back and this evening we heard examples of how they are beholden to the trade unions. The Minister said that Post Office Bills come around only once every decade and it will be interesting to see how long this one endures. Back-tracking on plans to reduce the Post Office's legal monopoly over deliveries from £1 to 50p, which followed strong trade union opposition, is another example of how the Government are in thrall to the unions.

Without full commercial freedom, the Post Office cannot take advantage of being the most efficient postal service in the world, so there is real doubt as to whether the Bill will succeed in its aim of providing greater commercial freedoms. It offers little comfort to those threatened with the loss of their livelihood following the Treasury-led decision to switch benefit payments to ACT and the future of a third of the 18,5000 sub-post offices is at risk.

Although the Bill puts in place the mechanism for setting out access criteria for the post office network, details will not be forthcoming until after the performance and innovation unit has reported. Again, that is a bizarre way to implement legislation. However, nothing surprises me about a Government who managed to introduce what they admit to be the most important measure in the Bill not on Second Reading or in Committee, but on Report. That is perhaps their hallmark; it is certainly the hallmark of the Department of Trade and Industry. They create huge problems and spend a considerable time struggling to solve them. That is apparent in automotive industry policy, energy policy—yesterday's statement to the House made it clear—and postal services policy.

We all hope that the Post Office will be able to compete against international competition, but I fear that this muddled, halfway house of a Bill is a disservice to the Post Office and to United Kingdom consumers.

10.53 pm
Mr. Burns

As my hon. Friend the Member for Banbury (Mr. Baldry) said, the Bill is a muddled halfway house. It represents a group of issues that have been lumped together in a Post Office Bill because they relate to post offices. However, for people outside the House who are not aficionados of the minutiae of the problems facing the Post Office in respect of its ability to compete, the outstanding concern is the future of the post office and sub-post office network throughout this country.

As the Secretary of State candidly admitted in a somewhat cavalier fashion, his thinking and decision making were affected not by the relevance of last Wednesday's debates in Westminster Hall and in the Chamber, but—his words show how the Government treat the House with utter contempt—the 3 million signatures on the petition from sub-post offices. That is what most influenced his decision to try to allay public fears.

The thing that worries me about the Bill is that all of us, regardless of which side of the House we are on, have in the past six months or so seen the concerns and anger of pensioners and others in receipt of benefits who use either their rural sub-post office or their suburban post office to collect those benefits. We have seen the concerns and anger of postmasters and postmistresses, whose livelihoods have depended on the structure and business as currently constituted. That anger has been caused by the Treasury's decision, aided and abetted by the Secretary of State for Social Security, to change the way in which benefits will be paid.

Figures have been bandied about over a number of weeks and months, both on the Floor of the House and in Committee—there has been the threat of possibly a third of sub-post offices being closed. That is what has generated tremendous fear among those who use sub-post offices and those who operate them, for whom it is their livelihood.

It has brought fear to a number of Labour Members, who have witnessed the pressures felt by their constituents who have been so concerned about the implications of the Treasury-driven policies. One only has to read regional newspapers to realise that Labour Members are queueing up to have their photographs appear in them, claiming their support for sub-post offices and for the rights of their constituents to continue to collect their benefits as they always have. However, it is interesting that few Labour Members have today echoed the concerns that they expressed in local newspapers.

The Deputy Chief Whip, the hon. Member for Manchester, Withington (Mr. Bradley), has been sitting in his place listening to the debate. No doubt the serried ranks behind him have been aware of it. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) described the Secretary of State as the Corporal Jones of the scenario. The Deputy Chief Whip's colleagues behind him know that Herr Flick is keeping an eye on the cohorts of the Labour Benches to ensure that no one gets up and causes any problems for the Government.

The problem is new clause 1, which the Secretary of State introduced today. I do not believe that its inclusion in the Bill, to which presumably we will give a Third Reading in the not too distant future, enhances the Bill. I do not believe that it addresses the problems that the Secretary of State has sought to convince the House it does.

The new clause seeks to introduce a subsidy system. The trouble is that it is so vague. There are so many ifs, buts, mays and shalls in it that there are many escape routes that allow the Government not to bring in a scheme if they decide at a later date either that they can get away with not doing so, or, as my hon. Friend the Member for West Dorset (Mr. Letwin) said, that they do not want to open up a bottomless pit of public subsidies ad infinitum.

As was said earlier, subsection (6) of the new clause even has a provision to ensure that the power to make a scheme under the new clause shall not be exercised without the consent of the Treasury.

As I reminded the Secretary of State for Trade and Industry in an intervention—which he did not deal with specifically—he has been a Chief Secretary to the Treasury; and, as any Chief Secretary will know, the Treasury's workings are supreme within Government. The Treasury's consent for any scheme involving the expenditure of public money is the paramount factor.

It will be interesting to see whether the Secretary of State is sufficiently candid to tell the House before the Bill is passed whether the Treasury and the Department of Trade and Industry have calculated the subsidy's cost; whether the Treasury has told him that it has placed a ceiling on the amount of public money it is prepared to spend, thereby possibly restricting the scheme's effectiveness; and whether the scheme is time limited or open ended.

If we are to deal with the concerns of the general public and of those who run sub-post offices, we need answers to those questions. Sub-postmasters need to know whether they will be helped, or whether the scheme is simply spin. They need to know whether—once the Bill is passed by both Houses and Parliament can no longer try to amend it, and if the Government will not implement the scheme that the Secretary of State has unveiled today—they will be left to hang out to dry.

As half a fish is better than none, I do not oppose new clause 1. However, it is seriously flawed by its vagueness and by the sparsity of detail on it provided to the House. I hope that the Minister who replies to the debate will address those issues. [Interruption.] The Deputy Chief Whip disappoints me by shaking his head. He seems to be suggesting that no Minister will bother to reply to the debate. That is unfortunate because this is an important Third Reading debate on an important Bill. We should have had that information before Third Reading.

11.2 pm

Mr. Tim Collins (Westmorland and Lonsdale)

As has been said often in the debate, the Bill is somewhat disappointing. I give the Government half marks for recognising that the Post Office needs greater commercial freedom, and also for recognising that their own decision making has threatened the future of the rural post office network and that they need to be responsible for providing financial support.

I cannot, however, give them credit for the half-hearted way in which they have introduced a half-thought-through privatisation scheme; the way in which they have not properly considered the implications of the commercial freedoms that they are introducing in the Post Office; and—as my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said—the way in which they have clearly inadequately considered the example of similar events elsewhere in Europe and in the rest of the world.

As for the hon. Member for Weston-super-Mare (Mr. Cotter), who spoke on behalf of the Liberal Democrats, I give him credit for making a speech that, in many ways, was a typical Liberal Democrat speech. He was half on the Government's side and half against the Government. He therefore spent most of his speech attacking the official Opposition. He certainly gave no justification—no justification can be given—for Liberal Democrat Members' decision last week to vote with the Government against the official Opposition on a motion to save the rural post office network by scrapping the Government's plans.

Mr. Edward Davey (Kingston and Surbiton)

Will the hon. Gentleman give way?

Mr. Collins

I have no intention of giving way to the hon. Gentleman; we have heard quite enough from the Liberal Democrats on these matters.

It is deeply disappointing to hear from the Government that they believe that new clause 1 will provide the solution to the difficulty that they themselves have created. I agree with my hon. Friend the Member for West Chelmsford (Mr. Burns) that the Secretary of State is increasingly resorting to short-term temporary subsidies to get himself out of short-term political difficulties. This week, the consensus in the national newspapers has been that the Secretary of State's announcement on a subsidy scheme for the coal industry was designed simply to keep minds open until after polling day in the general election.

Mr. Deputy Speaker

Order. We are debating the Bill's Third Reading, not what is happening in the coal industry.

Mr. Collins

The suspicion, Mr. Deputy Speaker, is that the subsidy in this Bill has precisely the same short-term purpose—merely to keep post offices open until after polling day, after which the Secretary of State will not be interested.

If rural post offices are dependent on Treasury funding, they will be mindful of the fact that Treasury funding under this Government has not been sufficient to keep our police stations open or our roads and village schools maintained. The same Treasury, with the same Ministers providing the same funding formula, will supposedly keep open our local post offices. The result, once again, will be a betrayal by the Government.

In last week's debate, I asked the Secretary of State whether he could guarantee to match the one third of income to be lost by Mrs. Hilary Pavitt, the postmistress at Kent's Bank post office at Grange-over-Sands. He refused to give that guarantee then. Nothing that he has said today leaves me with any greater indication that she will get the resources that she needs. The Bill is a short-term political fix from a Secretary of State who is in a lot of short-term political fixes at the moment.

11.6 pm

Mr. Edward Davey (Kingston and Surbiton)

It is shocking that the hon. Member for Westmorland and Lonsdale (Mr. Collins) criticised the Liberal Democrats for not supporting a Conservative motion which asked this House to applaud the record of the last Conservative Government. Under that Government, approximately 3,000 post offices in the network closed. There was no way this party would support such a motion, because it was hypocritical and did a lot of damage to the current campaign to persuade the Government to change their mind and defend the post office network. The Conservatives do pensioners no favours with their hypocrisies, and we will not support such statements. Before coming to this House, I was a management consultant for a company called Omega Partners, which did a lot of work in the postal service industry. I visited 40 postal administrations and worked for 12 of them. I wrote a paper, co-authored with a company called Pricewaterhouse, for the US Congress on how one could commercialise, deregulate and liberalise postal markets.

That study looked at the experience of post offices internationally and how they could commercialise and gain commercial freedoms, as the Bill seeks to provide for the British Post Office. It was clear that post offices had managed to enter the modern world, take on modern management theory and develop and modernise their postal services while remaining in the public sector. To that extent, I welcome the Bill, which retains the UK Post Office in the public sector.

However, the commercial freedoms that are being given to the Post Office in the Bill are limited. Countries such as New Zealand, Finland and Sweden have enabled the management of their post offices to invest, develop modern technology, have freedoms to manage their work forces more effectively and provide the consumer with a better-quality service at a lower price. They have been able to do that far more ambitiously than this rather timid Bill proposes.

When the New Zealand post office was given its commercial freedom, it was allowed four long-term lines of credit with private sector banks. These were not guaranteed by the state; therefore, they did not score in what used to be called the public sector borrowing requirement.

Mr. Alan Johnson

I just wondered whether the hon. Gentleman had noticed in the course of his investigations that New Zealand Post no longer delivers to the door in rural areas; and that, despite paying a charge of $80 a year, rural customers still have to collect their mail from the nearest post office.

Mr. Davey

I am well aware of that, but the Minister does not give the full story. He may not know that I have visited New Zealand Post twice and I have spoken to the former chief executive, a Mr. Elmar Toime, who is actually a citizen of Australia. He explained that situation when I questioned him on that very point. He said that those circumstances affected a small handful of farms on the south island of New Zealand that were hundreds of miles from the postal network. In other words, New Zealand Post faces totally different geographical and topographical conditions.

Mr. Deputy Speaker

Order. It is very interesting hearing about New Zealand. I have relatives there and it is nice to hear how they are getting on. However, on Third Reading we should perhaps not be going into such detail. It is necessary to mention only that there are good things and bad things about New Zealand and then move on.

Mr. Davey

I totally agree with you, Mr. Deputy Speaker; I am in danger of being a post office anorak. However, my point was about capital investment, which goes to the heart of the Bill. The experience of other countries, such as New Zealand, shows that long-term lines of credit that have not been guaranteed by the state have enabled other postal administrations to develop real commercial freedoms to invest significantly and develop their services.

Those postal services have blossomed, and the only reason we have not taken that route in this country has nothing to do with a tiny number of very remote farms having to collect their post at the end of long lanes, but is connected with Treasury rules that are constraining the development of a potential new type of corporation. New Labour's modernisation programme has not seen fit to modernise the Treasury. The prehistoric, dinosaur thinking of the Treasury has not changed one bit to enable the sort of development that has taken place in other western democracies and allowed them to modernise their public services. That is why the Bill has not lived up to the billing that the Government gave it, and that is a great shame. If the Government had given the Post Office those unguaranteed long-term lines of credit, with no bail-out from the state, it would have enabled the development of a real entrepreneurship within public sector ownership. It is a shame that the Government have not taken that approach.

Subsidies have been an issue in the debate tonight. In many ways, total nonsense has been talked about subsidy, because there have always been subsidies in the Post Office. The whole system of uniform pricing and uniform tariffs incorporates subsidy, and the idea that there was no subsidy under the Conservatives is nonsense. There were vast subsidies paid between one post office network system and another, between delivery in one city and delivery in another, and between delivery in urban areas and delivery in rural areas. Of course those subsidies existed. The Bill means that they will continue, but in a different form.

The question is not whether subsidies are paid to maintain a universal postal service in the country—I am sure that all hon. Members would agree that such subsidies are needed; the question is one of transparency. Under the Conservative Government, the subsidies were totally opaque. New clause 1 has brought a degree of increased transparency, although I wish that it made matters clearer. As my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) said, the question of subsidies is still far too opaque, but at least it is clearer than it was under the ancien regime of the former Conservative Government.

It is amazing that Conservative Members should criticise subsidies now. Subsidies existed under the previous Conservative Government, who were not prepared to acknowledge them. They wanted to try to hide them and pretend that they did not exist.

Mr. Leigh

Does not their acceptance of the universal service and universal tariff shout from the rooftops the fact that the previous Conservative Government, like every other Government, accepted the principle of cross-subsidy in the Post Office?

Mr. Davey

That was exactly my point, but the question is whether a Government are willing to make those subsidies more transparent. This Government are going down that road, and the previous Government did not. I think greater transparency in subsidies would assist public policy development.

Finally, I am worried that the Bill does not protect sufficiently the ordinary post offices in my constituency. Under the Conservative Government, post offices in Kingston, Tolworth and Surbiton were closed. The Bill will cause some of the retail outlets that took over some of those post offices' responsibilities to close as well.

That would be a great shame. People will be put out of business. Pensioners will have to take long bus journeys into town to collect their pensions. That will reduce the services available to my constituents, and I sincerely regret that the Government are going down this route.

The Government should be modernising by trying to assist the Post Office to take on contracts from the banks. The Bill does not do that, and it fails to give real commercial freedom to the Post Office. It is therefore a missed opportunity.

11.18 pm
Mr. McLoughlin

Having listened to the hon. Member for Kingston and Surbiton (Mr. Davey), I am glad that the Liberal Democrats are the Government's allies, and not the Opposition's. The hon. Gentleman said that he has studied the matter with great care and has examined what has gone on in New Zealand, but the Minister was able to point out some of the disparities between the universal service here and the service in New Zealand.

The hon. Member for Kingston and Surbiton answered that we should not worry about a few farmers scattered around the ends of the earth. That is an insult to farmers in my constituency of West Derbyshire—and to farmers in the Romsey constituency. I shall take every opportunity to make sure that they are aware of what the hon. Gentleman said.

I shall not make a long speech, unlike the hon. Member for Kingston and Surbiton, who took us on a world tour.

Mr. Edward Davey

The hon. Gentleman does not have a clue.

Mr. McLoughlin

The hon. Gentleman says that I do not have a clue, but if he spoke with a clue, I am glad that I speak without one.

I am sorry that the Secretary of State waited so long before bringing new clause 1 before the House. In so doing, he did not give us enough opportunity to study the new clause. Having seen it, I can understand why he did not want to give us long to study it. The new clause does not say that there will be a subsidy to village post offices, or what level of subsidy it will be. Let us be clear that we are talking about sub-post offices.

The hon. Member for Kingston and Surbiton talked about 3,000 post offices having closed during 18 years of Conservative Government. Post offices will close, given the very nature of their business. They are often run from people's homes, and when the people running them want to retire and sell their homes, that leads to closures. I accept that there were closures under the previous Government, yet over the past three years we have seen 1,000 closures. That is an escalation of post office closures on a massive scale, which is why the Government introduced their new clause. When the Bill was first conceived, the Government were not looking at supporting the sub-post office network. It is only as the Bill has progressed through the House that the new clause has been brought forward.

I have seen the number of post office closures in my constituency escalate dramatically. There have been closures in Cubley, Longford, Roston, Flagg, Lea Bridge, Tissington, Fenny Bentley and Taddington. Such a major escalation of closures is a cause of concern. It is partly due to the Government's insistence on the switch to automated credit transfer and the fear that that decision has struck into the sub-post office network. That is why, after much pressure on the Government, we have managed to drag out from them this new clause.

I hope that the new clause will do what the Government desire. We will be watching future closures very closely. The system of subsidy does not reflect the great difference in the rural network of sub-post offices. Some are open for two hours in the morning for four or five days a week, while others are full time. It will be interesting to see how the Government arrive at the formula to give subsidies to community post offices and to those that offer full services in rural areas.

We have not found out enough from the Government. I hope that when the Bill goes to another place, people there will tease out from the Government exactly what they are talking about in new clause 1. I hope that the other place will fulfil that role.

Question put and agreed to.

Bill accordingly read the Third time, and passed.