§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
§ Mr. Paddy Ashdown (Yeovil)I am grateful for the opportunity to raise the problems of the sub-post office network in Great Britain. I am grateful to the Minister for Information Technology, who has come to reply to the debate. I hope that we can take some comfort from the fact that the Minister's responsibilities are primarily to do with new technologies. Perhaps he will have something to say about the application of new technologies to the sub-post office network in Great Britain.
There are in Britain today some 20,000 sub-post offices, a little less than half of which are in towns, and the remainder in rural areas. They comprise an essential part of the social fabric of Britain. They are also a part of our small business network, the network which the Government seek to encourage, since many employ people in their own right. All of them represent the livelihood of at least one family, frequently a couple in middle age who have sunk their life savings into the enterprise.
More importantly, every sub-post office in Britain is an essential part of the community in which it exists. For many, especially the poorer in our society who do not have cars, the local sub-post office is also the local shop upon which they rely for their groceries and essentials.
Sub-post offices are also an essential part of the system of government in Britain. They are responsible, among other things, for 70 per cent. of all Department of Health and Social Security payments. That bald figure does not express their true worth in the welfare system. For many, the local sub-postmaster provides the human face for what is otherwise a cold and insensitive bureaucratic welfare system. As we saw during the Post Office's recent programme to close down some town sub-post offices, many people regard their local sub-post office as an essential element of their community, at least as important and valuable as the local pub, church or school.
The value of sub-post offices in not to be measured just in their contribution to Britain's social fabric. As the chairman of the Post Office, Sir Ronald Dearing, recently admitted to me in a letter commenting on the Post Office's profit last year of £133.7 million—incidentally, up 15 per cent. on the previous year's figure—the contribution made by sub-post offices to the corporation's profits is actually greater than that which derives from the main Crown offices of the Post Office Corporation. In short, the sub-postmaster and the office he runs are not only socially invaluable but also, apparently from the figures which the Post Office has collected, highly efficient.
Yet this invaluable network, this national asset, is now under threat from the Government, like so many of our other national assets. In the last three years, no fewer than 624 sub-post offices have closed and gone out of business. The number of vacancies for sub-postmasters advertised by the Post Office for which no applications have been received has risen by almost 20 per cent. in the last year alone. That is an increase of one fifth in the number of people who do not think it worth while to apply for subpostmaster vacancies.
Clearly, something is wrong. In blunt terms, running a sub-post office has recently become increasingly 649 difficult and for many downright impossible. Being a sub-postmaster was never an easy job. It requires a degree of social concern, long hours of work, a desire to serve the public and a great deal of commitment. However, the recent changes in the remuneration offered to the sub-postmaster, together with a squeeze on costs and Government threats about the withdrawal of business, are now seriously undermining the economic viability of much of our sub-post office network. For instance, between 1982 and 1985, whilst the work of sub-post offices has increased, according to the Post Office's calculations, by nearly 4 per cent. Sub-postmasters' pay has not even kept pace with the rate of inflation. I shall explain those figures in more detail later.
I shall give a few facts about sub-postmasters' pay and conditions. Sub-postmasters are not employed in the accepted sense of the word. They are contracted by the Post Office to provide a service. They have no right to annual leave, although they receive a limited substitution allowance. They do not receive sick pay, although, again, there are limited substitution provisions. They have no right of access to ACAS in the event of a dispute with the Post Office, such as is now occurring, and no arbitration agreement with the Post Office on matters directly related to pay and conditions.
In addition, sub-postmasters are required to meet the full cost of their premises and staff out of their own pockets. That last point is important, because it accounts for one of the pay anomalies which has allowed the Post Office to pretend that it is providing more remuneration to the sub-postmasters than is the case. The Post Office claims that sub-postmasters have a further income from their private business. That is correct, but such private business as they conduct shares the cost of the premises with the post office section and so saves the corporation money by reducing the costs of its element of that service.
The Post Office lumps together the remuneration for sub-postmasters, the cost of employees and the sub-postmasters' expenses. The result is that, since 1983, sub-postmasters have been subjected to a reduced net pay improvement because they have had to supplement higher expenses. In the latest pay offer, for example, the Post Office claims to be offering a 5.5 per cent. gross improvement. In fact, that amounts to 4.5 per cent. in the sub-postmaster's pocket because of the inclusion of expenses in the overall sum. It is 4.5 per cent., when inflation was running a full percentage point higher last year. at 5.7 per cent. Once again, it is the sub-postmaster who ends up paying out of his own pocket to cover expenses which should properly be incurred by the Post Office.
That all adds up to the fact that many sub-postmasters find it impossible to survive. I shall quote the example of a sub-postmistress in my constituency. She receives gross pay of £410 per month. That is a great deal of money, but after she has paid her expenses she is left with £300 per month for a 44-hour week, which does not include the substantial extra hours that she has to spend on paperwork. Her hourly rate is thus substantially less than that of the cleaner she must employ to keep her premises in order.
I recently asked the chairman of the Post Office, Sir Ronald Dearing, to give me the figures for remuneration paid to sub-postmasters over the past three years. On the face of it, the figures that he supplied showed an 18 per cent pay increase. However, that figure does not take 650 account of the £60 million of additional business done by the sub-postmasters in 1984–85 as a result of the DHSS dispute.
As sub-postmasters are paid strictly according to the work they do, that sum must be accounted for separately, leaving a real increase over the three years of 16.22 per cent. —a full 3 per cent. below the prevailing rate of inflation, which measured 19.3 per cent. over the same period.
All that is happening at a time when sub-postmasters' work has increased overall by nearly 4 per cent, leaving individuals almost 7 per cent. below what they should have received merely to stand still over the same period.
That brings us to the position as it stands this year. The National Federation of Sub-Postmasters—the recognised body in these matters—has refused to accept the current offer on the grounds that I have explained. The Post Office is now free to, and probably will, impose that agreement on the sub-postmasters. There is no action no arbitration; sub-postmasters can do nothing—they can either like it or lump it. I have no doubt that the majority of them will accept it. It will place even further burdens upon them and undermine further their economic capacity to survive. It will threaten once again the overall integrity of a vital network.
At the same time, the Post Office has also imposed new conditions for pay review. As part of the last remuneration agreement, a new system of reviews of work was instituted —or rather, required. This system requires annual rather than triennial checks of work. Many sub-postmasters find this unfair. For nearly 80 years, while the volume of business has been steadily increasing through the sub-post offices, the Post Office has been content to have triennial reviews, taking advantage of the fact that the sub-postmaster remained largely unrewarded for increases in work in the periods in between. The future business of the sub-post office network will drop because of the withdrawal of Government work. The Post Office insists on having the opportunity to cut pay as frequently as possible.
Sub-postmasters face yet another threat. The Public Accounts Committee recently recommended that pensioners and others should be offered an inducement, possibly as much as £50, to go over to the automatic credit transfer system for the payment of their welfare and pension benefits. Thus, welfare payments will bypass the sub-post office and go straight into the banks—for those lucky enough to have a bank account.
If the Government decide to implement this bribe—I call it a bribe advisedly — it will have the most devastating effect on the whole sub-post office network. It will endanger the viability of literally thousands of sub-post offices, leaving those who do not have bank accounts without a local office from which to receive their benefits. No doubt, in cold economic terms, some money will be saved for the Government, but the cost will be more than paid for by those who are among the most disadvantaged in our society and who rely on the sub-post offices as a source for their shopping, as a point of human contact and as an essential ingredient in their own community.
This amounts to a serious attack on a vital part of Britain's social fabric. If the sub-post office network is further reduced, the number of our small retail outlets, already in serious decline, will be drastically reduced; the quality of life in many communities, especially the isolated ones, will be further diminished; the livelihood of 651 several thousand small businesses will be seriously endangered; an important and efficient contributor to the Post Offices profits will be threatened, and an important element of the British way of life in our towns and villages will be diminished.
I hope the Government will recognise the importance of what is at stake. I hope they will make it clear to the Post Office that they regard the sub-post office network as an important national asset which should not be further reduced. I hope the Minister for Information Technology will agree with me that, whatever the reasons for the Government placing a financial squeeze on the Post Office through increased external financing limits, the pressures that this creates should not simply be passed down the line for the sub-postmaster to carry. I hope that he will take this opportunity to state clearly that the Government recognises that the bribe proposed by the PAC would do terrible damage to the sub-post office network. I hope that he will, finally, make it clear that the sub-postmaster should be appropriately rewarded in this year's pay negotiations.
What we need is a positive policy to retain our vital sub-post office network. At the very least, this must include a requirement on the Post Office to make good the deficiencies in sub-postmasters' pay, rather than seeking to use their muscle to impose another inadequate pay deal on those who have served the Post Office and our society so well.
§ The Minister for Information Technology (Mr. Geoffrey Pattie)I am pleased to be able to reply to this debate and I welcome the opportunity to reassure the House, and the hon. Member for Yeovil (Mr. Ashdown) in particular, about the Government's policy towards the sub-post office network. I am sure that he can distinguish between matters properly within the purview of the Government and matters belonging to the Post Office in its capacity as a manager.
I can well understand that the combination of a number of developments in recent years has given rise to concern among many sub-postmasters about their future in the counters business. The developments are first the urban closure programme, secondly the advent of changes in the method of paying social security benefits, and thirdly the Post Office's current intention to move to annual revision of sub-postmasters' remuneration. I recognise the understandable fears of sub-postmasters about the implications of those developments, and I want to take this opportunity to reassure them that the Government appreciate their concern, and to explain why it is important to keep the developments in perspective.
First, the House will recollect that the urban closure programme was debated at length in January last year. For that reason I do not propose to take time this afternoon to go over the same ground again. Suffice it to say that the Post Office was implementing a programme to reduce the size of the urban network by closing offices that were in excess of the long-standing criterion of providing offices at intervals of not less than a mile in towns. The programme was decided on for good commercial reasons, and the Government were satisfied that the proposed closures were not inconsistent with our commitment to the maintenance of an adequate post office network, or with 652 the Post Office's statutory duty to have regard both to economy, efficiency and the social needs of the United Kingdom.
Although the debate last year was focused on the urban network, the hon. Gentleman took an active part in it, and he may recall the comments that I made on that occasion about rural post offices. In particular, I explained that the Post Office did not have any plans to reduce the size of the rural network. That is not to say that some rural post offices do not close, and will not close in the future. I understand that there is a net loss of between 80 and 90 rural offices each year because, although new offices may open in rural areas, their number is exceeded by cases where a sub-postmaster retires or resigns and the Post Office cannot find a suitable replacement to take on the office. That has been the position for many years, and I have no reason to suppose that it will not continue.
The Post Office is well aware of the impact that the loss of a village sub-post office can have on rural communities, and is always ready to consider the possibility of arrangements to retain a post office facility in a village, albeit on a limited basis. The scope for doing so increased last year when, as part of its efforts to preserve the rural network, the Post Office agreed with the National Federation of Sub-Postmasters that some post offices could move to part-time opening.
The second development in recent years which I believe has given sub-postmasters a sense of concern has been the advent of changes in the payment of social security benefits. These included the option for people to have their benefits paid direct into their bank or building society account by automated credit transfer, or ACT, rather than collect them every week at their local post office. More recently, concern has been aroused by the suggestion that inducements should be offered to people to switch to ACT. Indeed, I regret that, whether by accident or design, the position with regard to the payment of social security payments by automated credit transfer seems to be the subject of rather widespread misapprehension. To judge from letters that I have received that topic has prompted undue and unnecessary concern among many subpostmasters and their customers. To the extent that that is the result of genuine misunderstanding, it is unfortunate. But in a small number of cases it seems to me likely that pensioners and others using sub-post offices have been deliberately misinformed and caused to worry quite unnecessarily. If that has indeed been the case, it is most irresponsible. Therefore, I welcome the opportunity today to make the position clear.
As the hon. Gentleman will be aware, the origin of the matter is the scrutiny that a team, reporting to my noble Friend Lord Rayner, then Sir Derek Rayner, undertook in 1979 on the arrangements for paying social security benefits. The scrutiny team recommended, among other things, the introduction of direct crediting and a reduction in the frequency of benefit payments. Those measures, together with the simplification of administration, were forecast to produce significant savings in DHSS costs.
The Social Services Select Committee substantially endorsed the recommendations, with some modifications. Following careful consideration of their implications, and after widespread consultation, the Government accepted the modified proposals, but with some important changes. In particular, the Government considered the impact of changes in payment arrangements on the Post Office network and on beneficiaries. It should be noted that the 653 Government did not take up the Committee's recommendation that, as an incentive for beneficiaries to move to direct crediting, benefit payments should be paid two weeks in advance and two weeks in arrears.
In May 1981, my right hon. Friend, the Member for Wanstead and Woodford (Mr. Jenkin), the then Secretary of State for Social Services, announced that the Government had decided that most beneficiaries should have the option—I stress that this was an option, with no element of compulsion—to have their benefits paid direct into hank or other accounts. He also announced that it was the Government's intention to move to a position where, for mothers claiming child benefit for the first time, four-weekly payment would be the norm. Mothers already receiving child benefit would have the choice of switching to four-weekly rather than weekly payment.
It was recognised that those changes would lead to a fall in Department of Health and Social Security business over post office counters, but it was forecast that this would be more than compensated for by additional business from new and existing customers. It was also recognised that within this overall picture there would be variations and in order to provide a further safeguard it was announced that the Government would make available up to £2 million over five years to help smaller sub-post offices adversely affected if the new business did not grow at the same rate as DHSS business reduced. Following discussions with the Post Office and the National Federation of Sub-postmasters, agreement on the details of the fund was announced in May 1983.
It might be noted that, so far, payments from the fund have been far less than were expected. In part this reflects the effects of the industrial dispute at the DHSS computer centre in Newcastle in 1984 but in large measure it reflects the upward trend in the volume of counters business since the announcement in May 1981.
The forecasts of new business included the effect of provisions that were subsequently enacted in the British Telecommunications Act 1981 enabling the Post Office to provide counter services for a wider range of public sector customers. Within these provisions the Post Office has been able to win a range of business including the sale of bus and train tickets and cards, which has contributed to an overall increase in the volume of counters business since 1981. For example there was an increase of 3.5 per cent. in 1984–85.
A further factor has been the lower than expected take-up of the option of payment by ACT with, as a consequence, lower than forecast savings in DHSS costs. This point was noted in a report that the Comptroller and Auditor-General prepared and published in February last year, following an investigation by the National Audit Office. The report was subsequently considered by the Public Accounts Committee which, after examining the DHSS, published its conclusions and recommendations last June in its 20th report in the 1984–85 Session.
Among its recommendations, the Committee expressed its surprise that, when the shortfall in expected savings became apparent, the DHSS did not give fresh consideration to offering direct financial inducements. The Committee recommended that early consideration be given to targeting inducements towards those most likely to be receptive to the idea. I should stress that this is a recommendation made by the PAC, not a decision made 654 by the Government. The Committee also welcomed a survey being undertaken by the DHSS of public attitudes towards methods and frequency of payment of benefits.
Together with a number of other reports from the PAC the 20th report was debated in the House on 24 October. This was shortly after the Government had published their response to the report in a Treasury minute in which we noted that the DHSS would give further consideration to the issue of inducements to accept payments by ACT in the light of the survey of public attitudes.
In response to representations we have received about the PAC's recommendations on inducements, both I and my colleagues in the Department of Trade and Industry and the DHSS have made it clear that any consideration of the way in which benefits are to be paid will have regard to the effect that any changes will have on the post office network. My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) gave the hon. Gentleman that assurance when he wrote to him last September and I am happy to repeat it today.
My right hon. Friend the Secretary of State for Social Services is therefore considering the PAC's recommendations in the light of the outcome of the survey of public attitudes and the representations that have been received on this matter. I understand that my right hon. Friend is hoping to make an announcement on this subject shortly.
Although I cannot anticipate that announcement, I want to emphasise that the Government have always made it clear that payment by ACT is an option that is open to people to choose freely, without compulsion or coercion. We have no intention of depriving pensioners and others of the option to continue to collect their payments in cash from the local post office. We recognise that for many people, even those who have bank accounts, the weekly visit to the post office can be both an incentive to gel out of the house and a valued social occasion.
§ Mr. AshdownI am grateful for those reassuring words. I may want to intervene again, so I will try to be brief. The Minister accused certain elements of irresponsibility. I think he must recognise that if there were to be a bribe, of whatever sum—if it is as high as £50 it makes the matter worse —it would have a devastating effect. If the Government are going through the process of making up their minds, bearing in mind the considerations the Minister has mentioned, I am sure that he must realise that those who have the best interests of the sub-post office network at heart will naturally want to mobilise public opinion to impress that fact upon the Government. That is in no sense irresponsible. It seems to me to be very responsible in the best interests of the network.
§ Mr. PattieI shall move to the third development which has, in my view, given rise to concern among sub-postmasters. This debate is on a very important subject and we have limited time so I shall press on.
I want to deal with the frequency with which sub-postmasters' remuneration is assessed. That is, of course, a matter between the Post Office and the National Federation of Sub-Postmasters, and the Government are not directly involved. But, given the importance that the Post Office attaches to this issue the Post Office chairman felt that I should be aware of the background and it may be helpful to the House if I describe this as he has explained it to me. The Post Office has, since last April, 655 been involved in negotiations with the National Federation of Sub-postmasters on the sub-postmasters' 1985 pay settlement. However, the main point at issue has not been directly one of pay, although it is related to pay. The pay offer itself that the Post Office made was in line with settlements the Post Office has secured with other pay groups within the corporation.
The issue in dispute is the frequency with which individual remuneration levels are assessed. A sub-postmaster is not an employee but an agent of the Post Office, engaged on a contract for services, and his remuneration is governed by the amount of business transacted at his office. Under the system currently in force —which dates back to 1908 —each office's business levels and hence remuneration are re-assessed every three years. If the new level of business is higher than the old, at least 12 months' arrears are paid to the sub-postmaster when his remuneration is increased, but there is no similar retrospective device for the Post Office if business declines. In addition, sub-postmasters have the opportunity to call for a special upward revision of their remuneration between triennial revisions if they feel that their business has increased by more than a small amount. But there is no similar opportunity for the Post Office to seek a reciprocal reduction when work falls.
The Post Office has therefore required, as part of the 1985 pay settlement, a change to a system of annual revisions. Although I understand that both sides have worked hard to try to reach a negotiated settlement there is no prospect of agreement on the sticking point of a change to annual revision. The Post Office has therefore informed the federation that it will introduce annual revision from next September and is now taking the measures necessary to put this into effect. I understand that the federation has reluctantly noted the position. The Post Office chairman has told me that compensation for the change of, on average, £90 will be paid to sub-postmasters.
Earlier in my speech I referred to the £2 million fund which was set up in 1983. I would like to tell the House 656 that Mr. Alban Morgan, the general secretary of the National Federation of Sub-Postmasters, has been in touch with my officials to inquire whether there is any possibility of extending the life of the fund beyond its present closing date of 30 April 1987. Mr. Morgan has been told that the Government would be willing to consider any proposals which the federation might wish to put to us. I am happy to have the opportunity today to confirm this.
The hon. Gentleman has rightly drawn attention to the importance of the sub-post office network in this country.
§ Mr. Ashdownrose
§ Mr. PattieWe are about to conclude and I would like to summarise.
There should be no doubt about the Government's recognition and appreciation of the important and valuable role that sub-post offices play in the communities they serve. This is true of the local post office in the town. In rural areas the village post office very often plays a key role in the quality of village life, and the Government wholeheartedly support the efforts the Post Office is making to arrest the erosion of the rural network. Indeed, the £2 million fund for sub-postmasters was tangible evidence of our genuine concern about the network, in particular the smaller sub-offices, many of which are of course in rural areas.
But the detailed operation of the counters business is the responsibility of the Post Office board and counter management—not the Government—and this includes negotiations with sub-postmasters on their remuneration and conditions. However, it remains the Government's policy to encourage and support the counters business in its efforts to increas the efficiency and effectiveness of its operations. It is through success in those efforts that the business can achieve success in the market place to ensure its long-term viability and preservation of the rural network.
§ Question put and agreed to.
§ Adjourned accordingly at four minutes past Three o' clock.