HC Deb 09 December 1999 vol 340 cc980-2
9. Ms Helen Southworth (Warrington, South)

If he will make a statement about the use of post offices to enable access to banking services for people with low incomes. [100533]

The Minister for Competitiveness (Mr. Alan Johnson)

The Post Office already has arrangements with the Alliance and Leicester Giro bank, the Co-operative bank and Lloyds TSB, enabling customers of those banks to undertake a range of transactions at post offices. It is intended that the Post Office will extend its commercial arrangements with banks; and the automated Horizon system, which is to be installed at all post offices, will have suitable banking technology to enable all Post Office customers to have access to banking services at post office counters.

Ms Southworth

I thank my hon. Friend for that welcome reply. Does my hon. Friend agree that, while high street banks are closing all over the place, denying people access to local banking services, the Post Office network is ideally situated to fill that gap? Will he ensure that the investment is available, automation takes place quickly, and Government Departments work positively together; and that business opportunities are made available so that every post office is economically viable and can provide locally those new services that people want locally?

Mr. Johnson

My hon. Friend is absolutely right. Over the past 20 years, there has been a decline of about 20 per cent. in the Post Office network. Sixty per cent. of villages have a post office, while only 5 per cent. have a bank. By automating the network, by bringing it on line, we can bring network banking back to deprived urban areas as well as rural areas. Further to a previous question, if the major high street banks start charging to withdraw cash from cash machines, that will provide an even greater opportunity for the Post Office, which is ubiquitous with a capital U, to take advantage of those circumstances.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

Will the Minister's Department reconsider the damaging policy of compulsory automatic credit transfer being introduced in 2003? Unfortunately, it will mean closing at least 50 per cent. of post offices and small shops in rural Wales, in addition to the one in every 18 that has closed since the Government took power. It is a serious position. Yesterday, the Prime Minister acknowledged that there are problems in rural areas. I wonder how the Government's policy will assist those problems. In particular, what will be the view of the social exclusion unit?

Mr. Johnson

Social exclusion is crucial to all these matters. Financial exclusion is both a cause and an effect of social exclusion. Ensuring that people have access to bank accounts is an important principle that has been highlighted by the social exclusion report. If we sit back and do nothing, the gradual migration of customers to automatic credit transfer will mean a decline in the Post Office network. Introducing the automation of the network, setting up the performance and innovation unit study that will report to my right hon. Friend the Prime Minister early in the new year and guaranteeing that, whatever happens after 2003, customers will still be able to draw their benefits in cash across a post office counter, are important developments and assurances. We either do something about the gradual erosion of our Post Office network or we sit back and do nothing. We are taking the option of protecting the network. This is an opportunity for the Post Office, not a threat.

Dr. Alan Whitehead (Southampton, Test)

I welcome the Government's stated commitment to the maintenance of a nationwide network of post offices. Does my hon. Friend agree that a sub-post office is often vital in keeping active a village community and urban district centres? Will he examine the way in which the Post Office maintains its franchises with sub-post offices to ensure that those post offices and district centres can remain open so that the Government's stated commitment to a nationwide service becomes a reality?

Mr. Johnson

My hon. Friend is right about the importance of the Post Office network to the social fabric of this country. As for the relationship between the Post Office and sub-postmasters, the Post Office makes every attempt to keep a post office service going, even in areas where it cannot attract staff to run a local post office. There are mobile post offices, post offices that are run from people's homes and others that are run from garden sheds just to keep the service going.

We are committed to maintaining a national network of post offices. We are committed to ending the decline. We are committed also to ensuring that, when people go to their local post office, they will have a greater range of services available to them as a result of putting the Post Office on line and through the Horizon platform, which will be completed by the spring of 2001.