Post Office

HC Deb 15 July 1999 vol 335 cc648-80

Question again proposed, That the amendment be made.

5.17 pm

Mr. Peter Lilley (Hitchin and Harpenden)

I congratulate my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) on securing a debate on an important matter and on effectively and forcefully drawing the attention of the House and the country to the risks that face our sub-post offices.

It is unusual on Opposition days for Opposition Members to praise hon. Members on the other side of the Chamber, but I offer one cheer to the Secretary of State for Trade and Industry for his White Paper on the Post Office. I applaud the White Paper because I believe that it will inexorably lead to full privatisation of the Royal Mail. That would benefit the Post Office, customers, employees, the taxpayer and the whole country. I offer only one cheer, however, because the Government stop short of privatisation; they pretend that what they are doing will not lead there; and they disguise the full import of their changes.

In his statement on the White Paper, the Secretary of State said: There have been suggestions from some quarters that this is part of a plan to privatise the Post Office by stealth. There are no such plans."—[Official Report, 8 July 1999; Vol. 334, c. 1176.] Those words seemed strangely familiar, and I remembered that when I was Secretary of State for Trade and Industry—or President of the Board of Trade as I now realise I then was—I had the task of weaning my party from a commitment to maintain the Royal Mail in public ownership. I used almost exactly the same words then to reassure those who were not in favour of moving rapidly in that direction. Labour Members should not be fooled; it is clear that Members on the Treasury Bench intend—probably before their pledge has expired—to move towards the sale of equity in the Post Office to the private sector. Conservative Members would welcome that, but Labour Members obviously would not relish it.

Those Members who are not enthusiastic about the privatisation of the Post Office may put some faith in the fact that the Government will retain 100 per cent. of the shares of the new company. They may think that that retains the essential features of nationalisation—that the organisation does not have to operate as a purely commercial entity, pursuing such dreadful objectives as the maximisation of profits, but that it can pursue political and social ends. They would be mistaken. Under company law, a limited company of the type that is to be established will have to behave commercially—as is made clear in the small print of the White Paper. Directors would not be able to pursue political objectives, even if asked to do so by their principal shareholders—the Government.

The Government can set social and political objectives through the regulator. It is right and proper that there should be a regulator governing the monopoly and the universal service obligation. However, it is not necessary to retain 100 per cent. ownership of the company for regulation to operate in that fashion. A private entity could be just as easily regulated as a publicly owned one. The only consequence of retaining 100 per cent. ownership is that the Government retain the conflict of interest between ownership and regulation. We would never allow the privately owned electricity companies to own the regulator; that would lead to a conflict of interest. Surely, it is sensible for the Government to get out of ownership and to stick to regulation. They should hand over ownership to the private sector in this case—as we did in other cases where there was a potential conflict between ownership and regulation.

The decision to retain 100 per cent. of the shares of the company in Government hands means that the Government forgo the most attractive benefits of privatisation. Above all, the company is not free to raise extra risk equity capital; nor is it able to make its 200,000 staff into employee owners by giving them shares in the company—as I hope that we shall do, if we are able to complete the process that the Government have begun. I can think of nothing better than for every employee of the Post Office to have a stake in the success of the company that they serve—most of them to the great satisfaction of the British people.

I have every confidence that the process unleashed by the Government will ultimately lead to the full privatisation of the publicly owned aspects of the Post Office—at least of the Royal Mail. However, an important part of the Post Office service is already in the private sector: the 18,000 sub-post offices are private businesses. They are privately managed, privately owned and privately run. Their future is in jeopardy as a result of the changes that the Government have made to the Horizon project.

Those sub-post offices are crucial. They are crucial not just to the elderly, to disabled people or to young mothers, who have to collect their benefits from them, but to the whole community which they serve in the other ways that their function makes possible. They are now vulnerable; one third of their business comes directly from the contract with the Department of Social Security. In addition, a substantial chunk of their business comes from footfall—people who come in with no money, cash their benefit order, and then spend some of the money in the shop. That happens in few other shops or enterprises.

Mr. Lindsay Hoyle (Chorley)

The right hon. Gentleman seems to have a problem with his memory. Is he aware that most closures of rural post offices took place under the previous Government?

Mr. Lilley

As far as I know, rural post offices have been closing at a rate of roughly 200 a year for as long records have been kept. The Conservatives wanted to prevent them from closing at a rate of thousands a year, which is clearly in prospect as a result of the changes the Government have now put in train—either that, or massive subsidies will be required to keep them open. I am not the only one who thinks that. The National Federation of Sub-Postmasters has said that the decision to make it compulsory to have payments of benefits made direct into a bank account will have a disastrous effect on the network of sub-post offices.

The reason for the decision to cancel aspects of the Horizon project became apparent at yesterday's hearings, when the current and two previous Chief Secretaries to the Treasury gave evidence together on the subject. The decision represents a Treasury victory: the Treasury has secured a long-desired goal, which is the sacrifice of the sub-post offices to achieve a short-term cut in the cost of delivering benefits.

Mr. O'Neill

I am aware that the right hon. Gentleman attended yesterday's hearing, and I hope that he can now answer a question that I should like to have asked him then. In what circumstances was the contract renegotiated in February 1997? Was he a party to that renegotiation? Was it exclusively his concern, or was the Treasury involved? I ask that, because there is a seamlessness about the Treasury's attitude across the decades. Was the Treasury looking over the right hon. Gentleman's shoulder and that of the Secretary of State for Trade and Industry when the contract was renegotiated?

Mr. Lilley

Not only do contracts of that complexity need to be signed: they have to be managed. When I was in charge of the DSS, I told my officials that, in respect of that contract and everything else for which I was responsible, I did not want to hear the good news, but the bad news. In contrast to the current Administration's attitude, mine was that I wanted to be the first to hear if something had gone wrong or if there were problems, not the last. Therefore, I heard that problems had been encountered soon after the contract had started. I took action: we altered the contract, and I announced that publicly and the reasons for it within weeks. The current Government have been in power for two years before telling us that they are aware that there are problems, but they have done nothing about those problems until now.

In the statement to the House, the Government claimed that the principal reason for abandoning the benefit payment card, which I seem to recall they welcomed wholeheartedly when it was first announced to the sub-postmasters conference by the seaside—at Bournemouth, not Blackpool—was that it was now technologically outmoded, because it was now possible to move forward from the magnetic strip to the chip. I have to point out that the original contract specifically required the contractors to be ready to move to a chip, if ever that was beneficial, so the whole thing was designed to make that possible, even though none of those competing for the contract thought that the chip would add any value. However, a previous DSS Minister, the right hon. Member for Birkenhead (Mr. Field), had said: The Payment Card is a magnetic stripe card and not a smart card. It holds very little personal data and … is therefore highly secure."—[Official Report, 6 May 1998; Vol. 311, c. 428] According to Ministers, that which was previously a benefit is now a disadvantage.

Ministers then said that the contract was undeliverable and could not be brought to completion, but, as we heard yesterday, both the consultants' report and an internal report stated that it could be completed. Then, Ministers said that the contract was running three years behind schedule—indeed, the Secretary of State said today that he had known all along that the project was running late and could not be delivered in its entirety. However, in May 1998, when the hon. Member for Newbury (Mr. Rendel) asked the Secretary of State what date the smart cards were expected to be in operation, the then Minister responsible replied: by the end of 2000."—[Official Report, 6 May 1998; Vol. 311, c. 428] Yesterday, en passant, Ministers told the Trade and Industry Committee that they knew that the contract was undeliverable. However, the previous Secretary of State for Trade and Industry, the right hon. Member for Hartlepool (Mr. Mandelson), had told the Committee: The current plans provide for post offices to be automated by the end of the year 2000 … I feel confident that the project will be properly completed". The Chairman asked him, "Will it be 2000 …?" to which he replied: That is still the objective … it is still on track. In November 1998, therefore, the project was still on track.

Ministers then said that in December they had many meetings because of developments of which they had previously been aware but about which they had not told Parliament. Indeed, they had been denying to Parliament that those developments had taken place. So they knew then that the project could not go ahead.

In January, a DTI Minister was asked when the project would be ready, and he replied that it would be ready by the end of 2000."—[Official Report, 26 January 1999; Vol. 324, c. 174] In February, a former Social Security Minister, who clearly would have been aware of any evidence of the project going wrong, asked when it would be ready, and he too was told that it would be ready by the end of 2000. I do not think that those who replied to him would have thought that they could pull the wool over his eyes.

It is clear that the Government either have known all along that there are problems and have been deliberately misleading the House, or have not known because they have not been on top of their jobs and have not been competent. Perhaps when the Minister winds up, he will be able to explain the contradiction between what the Government are now telling the House and what they have said in written answers for the past two years.

Far more worrying than the contradictions concerning the past is the lack of clarity about the future. Ministers simply have not thought through what the new arrangements will entail, because they have been forced on them by the Treasury. The new system will require everybody who is in receipt of benefits to have a bank account. However, 15 per cent. of those receiving benefits do not have a bank account. According to the Minister, 5 per cent. of them—the best part of 1 million people—cannot be expected to operate a bank account. Memorising a PIN number would not necessarily be easy for some frail and elderly people, and having to let other people know their PIN number obviously renders them extremely vulnerable. What will the Government do about that? Ministers are still thinking about it.

Young mothers who want their child benefit to be paid in cash so that they can spend it on their children will in future have to have it paid into their bank account. If they have only a joint bank account, it must be paid into that and may not, therefore, be used in the way that was intended. Will they have to open a separate bank account? If they do so, will they have to pay bank charges out of their child benefit? Ministers have no answer. What will be done about bank charges generally? Ministers are thinking about it.

Will banks be compelled to take as customers people who have no income other than benefit, even if they do not want those people as banking customers? Ministers are still thinking about it.

What will be the impact on the revenues of sub-post offices? Ministers are unable to tell us. What will happen to the network, when sub-post offices lose a third of their revenues and the extra business that handling benefits brings in its train? Ministers are unable to tell us. How many offices throughout the country will be put at risk? Ministers will not say. If Ministers intend to keep all those offices open, how much will it cost to subsidise them when they are no longer generating profits from footfall and the extra trade from channelling benefits? Ministers have not yet thought that through and cannot tell the House.

I have to tell the House that the policy is the result of a Treasury victory and it is a defeat for the sub-postmasters and postmistresses of this country. It is a defeat for the customers, benefit claimants and communities that depend on those sub-post offices. Ultimately, it will prove to be a defeat for taxpayers, who will have to pick up the bill at the end of the day.

5.34 pm

Mr. Martin O'Neill (Ochil)

I welcomed the White Paper last week and I still do a week later, after spending yesterday afternoon questioning Ministers and officials at a public hearing of the Select Committee on Trade and Industry. I still believe that this is a good deal for the Post Office and for the people of Britain.

Many of us were becoming extremely impatient and wondered whether we would ever see the White Paper. As has been said, there have been more Secretaries of State than White Papers. It was obvious that, the longer we delayed, the more difficult it would be for the Post Office to get its act together to face the challenges of the new millennium, which, to a large extent, are already with us.

The German Parcel deal will give the Post Office access to the central European network and will transform at least part of its operations, but far more investment must be made if the north American market and others are to be cracked.

Among the most encouraging parts of the White Paper are the sections on consumer protection and service obligations. We also look forward to hearing more about the regulatory arrangements. I use the word "arrangements" because I hope that the regulatory system will not be the remit of one person, but that several people will be appointed who are capable of developing that complex and innovative area of regulation.

One aspect of the White Paper that disappoints me is the restricted role that is envisaged for the regulator in respect of securing access to information about other players in the postal and parcels market, apart from the Post Office. That role needs more consideration.

If the Post Office is anything to our constituents, it is either the letter delivery service or the local post office. The universal service obligation and the manner in which that will be enshrined in legislation is extremely encouraging; it suggests the seriousness with which the Government are addressing that fundamental part of their responsibilities, which the postal service must embrace.

In today's debate we have heard incessantly about rural post offices. I have a semi-rural constituency. Parts of it were, and still are, mining villages with considerable unemployment, where people depend on the post office not only because that is where they obtain their benefit, but because it is the only facility in their community that offers anything approaching financial services and banking of the most limited and basic kind. We should remember that about 60 per cent. of rural parishes have post offices but only 10 per cent. have banks or building societies. Of necessity, therefore, people have to go to the local post office to get their money.

The Opposition are scaremongering. That is a fair enough tactic—Oppositions do it. We spent long enough perfecting scaremongering ourselves to know when we see a scare story being fomented. We acknowledge that, as has been said repeatedly, the post office network is fragile. That is one reason why the Post Office must start generating profits that it can use, and why the Treasury must not filch 95 per cent. of Post Office profits.

We hear a great deal about the malign role of the Treasury. We do not hear much condemnation of the way in which the Treasury creamed off so much of the profits of the Post Office when the previous Government were in power.

Mr. John Bercow (Buckingham)

Does the hon. Gentleman accept that the concerns that have been expressed are not Opposition scaremongering? Is he aware that it is the general secretary of the National Federation of Sub—Postmasters who has expressed the concern that payment via bank accounts will result in a 30 per cent. cut in the turnover of the average rural post office? That individual is not a member of Her Majesty's Opposition.

Mr. O'Neill

I believe that that figure is an exaggeration. With respect to the hon. Gentleman, it is only natural for the National Federation of Sub-Postmasters to exaggerate, because it must ensure that its members obtain as good a charge as possible for the services that they provide. That is megaphone diplomacy at an early stage of what will be a prolonged negotiating process. We must recognise that there will be many arguments, one way and the other.

We should aim for a deal to get all the post offices in the UK on-line. That need not cost as much as was suggested from the Dispatch Box this afternoon by my right hon. Friend the Secretary of State for Trade and Industry. The price of computers is dropping rapidly and access to the network is becoming cheaper, so the figures that have been quoted may be exaggerated.

If we have an on-line postal service in the United Kingdom, there will be access to the internet from every community. In two or three years there will still be many people who do not have computers, but in every community there will be trained people who can offer a service, albeit at a modest price. At their local post office, people will be able to make purchases through the net and pay with their smartcard. We hope that all the appropriate consumer safeguards will be in place by then.

It is unrealistic to suggest that there should be computers in libraries and access to the net from them. Among my constituents who are most dependent on post offices, the only book that most of them ever read is their benefit book. They are never seen in libraries.

We want on-line facilities in post offices, to give people access to world markets. That could be a liberating influence and could generate revenue. We have only begun to scratch the surface. As my right hon. Friend the Secretary of State told us yesterday in the Select Committee on Trade and Industry, he envisages good deals being struck. Given the number of benefit payments that are transacted, it should be possible for the banks to reduce their charges to a minimum.

We know that the Post Office has been able to negotiate a deal with British Gas, for example, whereby the payment of gas bills in post offices across the country is free to the consumer. That should be replicated on a wider scale. The deals have yet to be struck, but we now have a clear timetable in which to operate and a deadline, which will help to concentrate the minds of Ministers.

Mr. Hoyle

Does my hon. Friend agree that the Horizon project was a disaster, which we must put behind us, although it left a financial hole that must be plugged? Does he agree that urban and rural post offices could benefit from the link-up and attract new business, which would give them greater freedom through our proposals?

Mr. O'Neill

I agree with my hon. Friend. Probably the only body that would be capable of getting to the bottom of the Horizon story is the National Audit Office. The capabilities of Select Committees are somewhat limited in that respect. The National Audit Office would be better equipped to scrape below the surface —[Interruption.]—especially when the hon. Member for Buckingham (Mr. Bercow) is no longer assisting us in the Select Committee on Trade and Industry. Even with his talents, I doubt whether we would have got to the bottom of the matter, which requires close examination.

I know that initially, Ministers showed a relaxed attitude to the Horizon programme, but that changed suddenly. There was a realisation that the project would not be delivered within a reasonable time, and that the sums involved were getting ever greater while the returns on the investment became ever smaller. A line had to be drawn under it and a new approach had to be taken, but it would benefit us all if the NAO undertook a proper examination of the project so that we could establish what influence the customer and the Treasury had on it, in the first instance and afterwards, and how they were involved.

The Government have said that the proposed timetable can be realised and that, within the next five or six years, we will have a proper system across the United Kingdom that does not look back to the old benefits system, but which is geared to the future.

Mrs. Dunwoody

The only point that concerns me greatly is that British banks have no particular record of either innovation or imagination. Indeed, they have to be pushed into making most changes and they show no desire whatever for people with small amounts of money to have accounts. Since that is the case, and particularly in view of their reaction to the code of conduct—they are supposed to support it, but they make sure that nobody knows about it—there are grave reservations about their attitude.

Mr. O'Neill

I share my hon. Friend's concern about the indifference of the banks to many poor communities. They are not prepared to establish facilities in those communities, even to the extent of providing automated teller machines. However, although we could put ATMs in post offices and make proper arrangements, not all the banks conform to the picture that she paints. The Co-op bank and the Alliance and Leicester, which has taken over the Girobank, have links with the Post Office and they are currently positioning themselves to take advantage of the market opportunities.

Many of the arguments that we hear being made in respect of the poor and disadvantaged are the same ones that many of us advanced when we were anticipating the worst excesses that would follow the liberalisation of the supply of electricity and gas. The cherry-picking has not been as bad as we had anticipated, however, and arrangements have been reached for looking after the disadvantaged people in the community. A great deal more still needs to be done and one would hope that the regulatory criteria that are set down for the operation of the new system will include meeting serious social obligations so that the concerns of my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) and myself are given due recognition.

Anxieties are being expressed about the monopoly and the reduction in the mail monopoly price from £1 to 50p. Although the likely reduction in the profitability of the Post Office by £100 million in a year is a cause for concern—superficially at least—it must recognise that it must face severe competition if it is to survive in an internationally competitive world. Cutting the monopoly price will give the Post Office a cold shower and provide a salutary lesson to it, but if it can survive that, I cannot see it having the difficulty that some of my hon. Friends suggest it might face.

The Post Office is an admirable institution and it has a tremendous opportunity to expand and develop as a consequence of the sound approach that the Government have mapped out for it to take. The financial arrangements, such as the fast-track for borrowing, and the experience that has already been gained through the acquisition of the German Parcel business are encouraging signs and, under the White Paper, the future of post offices in rural and deprived areas is not anything like as bleak as people believe. I certainly think that we have little to fear if the Post Office is to be backed up by a counters network of the kind that we have at present and if proper commercial advantage is taken of the opportunities available.

The motion is nothing less than scaremongering of the kind that frightens people in rural communities, but they are somewhat cynical about the crocodile tears that the Conservatives are shedding for people to whom they paid no attention during the years when they were in power.

5.50 pm

Mr. David Chidgey (Eastleigh)

To pick up the theme of the closing remarks of the hon. Member for Ochil (Mr. O'Neill), my impression from today's debate is that Conservative Members are somewhat off target. They are in danger of being so wide of the mark that they could be indulging in an exhibition of collective shooting in the foot.

We are to understand that the Conservatives are condemning the Government for not privatising the Post Office fast enough. I recall the Conservatives, when in power, backing away from it as a privatisation too far. From today's comments, we are given to understand that the Conservatives are condemning the Government for delays in automating the Post Office. Yet, again when they were in power, they mismanaged and bungled the Pathway project to such an extent that it effectively ground to a standstill.

We are also expected to understand that the Conservatives are wringing their hands in deep concern at the fate of rural communities being deprived of sub-post offices. Yet, for most of their 18 years in power, they stood idly by while 3,500 sub-post offices closed their doors. I do not recall them showing a care in the world about their fate. This is one of the best examples that I have witnessed in this House of an Opposition party offering free target practice to the Government. No doubt the Government will take full advantage in due course.

The key issues that we should address are surely how best to turn a highly successful and respected public service into an equally successful international enterprise; how best fully to automate a network of 19,000 post offices so that they can retain their core business with the Government agencies—their prime customers; and how best to improve efficiency and attract new business sufficient to sustain the national network of sub-post offices, and reverse the disastrous pattern of closures in rural and urban areas alike—the key social obligation that post offices serve so well. Those are the key issues about the future of post offices and it is on them that the Government's proposals in the White Paper should be tested.

The Liberal Democrats argue that although we welcome the sentiments of support for the Post Office in the White Paper, we are concerned that, as they stand, the proposals lack the political will and the plans for action essential for the Post Office to thrive.

For the past 350 years, the Post Office has served the nation well. The uniform price and next-day postal service delivered nationwide are a fundamental commitment. Each year for the past 23 years, the Post Office has returned a profit to the Treasury, hitting its external financial limit targets time and again. Since 1981, the Post Office has contributed £2.4 billion to Government finances. But for some years—all hon. Members will recognise this—it has been clear that without greater commercial freedom, the Post Office has been losing ground to its competitors in an increasingly liberalised world postal market.

Yesterday, the Post Office announced its pre-tax profits for 1998–99 as some £608 million. That is good in itself, but those figures are down by £65 million from the previous year. That is a clear sign of the impact of increasing competition and of the fact that without greater commercial freedom, the Post Office will decline.

Analysts tell us that in a liberalised global postal market, there is room for only four or five really global players. At present, the Post Office is hanging in at about fifth place. Without greater commercial freedom and the ability to internationalise its business, the Post Office is bound to slip out of the major league. Therefore, the case for greater commercial freedom is crystal clear. The question is: what form should it take?

The Government propose to turn the Post Office into a plc which, I think, is a clear departure from the previous Secretary of State's preference for an independent, publicly owned corporation. Why? What extra benefits would a plc bring over an IPOC? In all its pleading for greater commercial freedom—and very well justified it is—the Post Office has not shown any desire to become a plc. The Government claim that, by raising shares, the Post Office could expand its business through share swaps and transfers. So it could, but it could equally well make direct investment in other companies internationally, as it has already started to do.

Anyone in the City would say that the prime purpose of raising shares is to sell them. It is clear that whatever Ministers may say, turning the Post Office into a plc will pave the way for a future privatisation. I give Opposition Members credit for noticing that. The Government tell us that they have no plans to sell shares in the Post Office for the foreseeable future, and that any proposed share sales would have to gain parliamentary approval. As most Governments are incapable of predicting events a week away, referring to "the foreseeable future" is meaningless. As Governments invariably exercise their majority to impose their will, seeking parliamentary approval is just as meaningless, unless the Government are prepared to pledge that any proposals brought before the House to sell shares in the Post Office will be subject to a free vote. The Minister makes no comment.

It seems to me that converting the Post Office into a plc is the result of pressure from the Treasury. It is interesting that the two principal spokesmen were both Chief Secretaries to the Treasury.

Mr. Lilley

I was not.

Mr. Chidgey

I beg the right hon. Gentleman's pardon. He corrected me, but he knows that Treasury influence is clearly present, and it is here to stay. The Treasury is bridling at losing Post Office profits, and is determined to retain an option to cash in Post Office shares when the coffers start to empty.

The Government have made no case to show that conversion to a plc would bring more benefits to the Post Office than would a conversion to an independent, publicly owned corporation. It would give no greater freedom, flexibility or competitiveness. In his statement on 8 July at column 1188 of Hansard, the Secretary of State claimed that his research had found fundamental weaknesses in the IPOC model. That sounds like a smokescreen for his failure to prize the dead hand of the Treasury from plans to modernise the Post Office.

The plain fact is that the Treasury rules established in the 1920s prevent the Post Office from converting to a publicly owned corporation fit for the 21st century. The political will is needed not just to convert the Post Office, but to modernise the Treasury at the same time and prevent it from continuing to operate under the same rules as have applied for almost a century.

Even under the Government's proposals for greater freedom, the Post Office will still not be able to compete equally. At the same time, the Government plan to add to the threat to the Post Office by reducing its monopoly in its home market, in advance of similar agreements to liberalise postal services elsewhere.

Under the Government's proposals, the Post Office will face new financial pressures that could amount to a future loss of profits of some £300 million a year. The key to international success for any enterprise is a strong home market. To succeed overseas, the Post Office must be able to offer a full range of flexible services, delivered with the benefits of modern technology to its home market. Yet the Post Office is expected to cope with the halving of the letter monopoly, resulting in the loss of £100 million profit; the loss of interest on Post Office reserves, which is a loss of £107 million profit; and the DSS's decision to pay benefits directly into bank accounts by 2003, which is a loss of another £100 million of income. That will hit rural post offices in particular, which, as many hon. Members have noticed, are going out of business at the rate of 200 a year.

The Post Office is doing its best. It has responded well to the impact of the closure of thousands of branch banks in small rural communities and in urban areas. There have been 3,500 such closures since 1990. More than a quarter of inner-London wards have lost all their banks since 1990. I raised that issue in my early-day motion 203 on 19 January, in which I urged closer co-operation between clearing banks and Post Office Counters Ltd. to accelerate the transfer of over-the-counter services from closing branch banks to local post offices.

Closure of branch banks and no over-the-counter cash services at post offices have had a tremendous impact on the viability of small retailers, who need to be able to bank their cash at the end of every day's trading. Such retailers also lose the benefit of additional trade for the bank, which brings business into their shops, and all too many go out of business. In Botley, a small village in my constituency, Lloyds bank customers were so incensed by the prospective closure of their branch that both personal and shopkeeper customers marched on Lombard street with a big black plastic horse, upside down, to demonstrate their views on the bank's policies.

I am glad to say that over-the-counter services are now being transferred to post offices. A contract has been signed providing for 15,000 post offices to take over such services from Lloyds-TSB. The Post Office, however, cannot provide the full service until it is completely automated. The sorry saga of the Pathway project, which was supposed to link Benefits Agency and DSS payments to a swipe card, has severely damaged the viability of thousands of sub-post offices throughout the country. The debacle of mismanagement, added to the rivalry between Departments, has led to the demise of the project, the loss of £1 billion to the taxpayer, and the risk of closure for thousands of rural post offices.

It is because the Government have failed to get a grip on their legacy from the Conservatives that the replacement Horizon project will arrive years later still. Hundreds more sub-post offices will close—and, to make matters worse, the delay in automation could result in 10,000 rural post offices' losing £350 million of business when the Benefits Agency and the DSS convert benefit payments to automatic transfer in 2003. Without an automatic platform, the Post Office cannot compete, and the business will be lost.

I listened carefully to what the Secretary of State said. He guaranteed that the contracts to introduce the automated platform would be in place by 2001. That is reassuring, but we know from recent experiences of huge computer projects how easily they can fall behind, and how easy it is for delays to mount up. I want a commitment from the Government that the re-tendering of service contracts that are currently placed with the Post Office by the Benefits Agency and the DSS will be phased in following the successful introduction of the Horizon platform project. I do not want to see another disaster brought about by delays in the Government's sponsored computerisation programme. We need a commitment for the Post Office to be given a fair chance to retain the business that is crucial to the survival of rural and urban sub-post offices alike.

The Government have claimed that they propose to extend the range of services available to post offices. I could not agree more that that is a vital ingredient of post offices' viability, but the Government could make a start with the DVLA. It is a fact that only about 4,000 post offices out of 19,000 are able to issue vehicle tax discs, which is a source of intense frustration throughout the country. The postmaster at Fryen Hill post office in my constituency has been complaining for years that he cannot get POCL to give him the right to sell vehicle tax discs.

A few weeks ago, on a Wednesday afternoon, when all the other local post offices were closed, 33 people went to that post office trying to buy tax discs. That shows the level of frustration caused by the DVLA's rather arcane view that only a limited number of post offices—less than one in four—should be able to sell the discs. The reason that it gives is the increased cost of the extra paperwork to the taxpayer.

Mr. Hoyle

As the hon. Gentleman will know, the problem is that if every post office issued vehicle licences, the income of other post offices that are very reliant on vehicle licensing would be diluted.

Mr. Chidgey

I agree, and the question of which post office is most vulnerable is interesting, but we must also bear in mind the frustration of customers. Many people find that continued frustration difficult to bear.

With that sort of approach—that lack of joined-up government—it is hardly surprising that, since 1979, over 3,500 sub-post offices have gone out of business and that the rate is continuing at some 200 a year. The approach is removing vital services in poor and socially excluded communities every week of the year. With the closure of bank branches, it is accelerating the failure of thousands of small shops throughout the country. The Government have a duty to ensure that sub-post offices can retain their core business and develop new flexible services through modern technology.

The Government statement is very good on sentiment and concern, but my colleagues and I are concerned that they are ducking the key issues in the creation of a dynamic enterprise overseas and a robust and reliable post office service at home. The Secretary of State has lost his fight with the Treasury for an independently owned public corporation which is free from state control, leaving the Treasury free to dip its hand in the till. Any further delays in modernising the system will place at risk the future of thousands of sub-post services, which are vital to the survival of the communities that they serve. I urge the Government to think carefully about how they bring their White Paper forward to legislation.

6.6 pm

Mr. Bob Laxton (Derby, North)

Unlike some Opposition Members, I feel buoyant about the Post Office's future. I welcomed the White Paper when it was presented to the House on 8 July. Not being, I trust, an over-cynical individual, unlike some hon. Members who have spoken, I take at face value the absolute assurance that, although the Government propose to convert the Post Office to plc status, there is no prospect in the foreseeable future of a share sell-off. In fact, we have been assured that that would require primary legislation. Unlike some hon. Members, I am eminently satisfied with that assurance.

I welcome the statement in general because, for the first time in years, the Post Office will have some stability and a clear knowledge as to what the future holds for it. For a long period during the Conservative Government, a debate raged within the Conservative party. We remember the desire of the hawks to sell off the Post Office, with little, if any, concern for the future of rural sub-post offices. The plan was: "Just get rid of it. Take the money into the Treasury. That is all we are after."

During that process, we saw how well loved and respected the Post Office was. The British public were hostile to that plan. It drove huge wedges between the ideologues and the perhaps more pragmatic individuals—the very few pragmatic individuals—in the Conservative party. There were enough of them for the prospect of privatising the Post Office to diminish. The statement will provide stability for the future.

About an hour and a half ago, I made an intervention because I was particularly interested in the Horizon project issue. The hon. Member for Tiverton and Honiton (Mrs. Browning) left-footed, or right-footed, my intervention and side-stepped answering it, so I was particularly keen to listen to the speech by the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I was not at all satisfied with the response.

I was particularly concerned about the fact that the contract for a computer project of this magnitude was signed in May 1996, and after only nine months, I understand, went through major renegotiation. I readily understand the comment that it was part of managing the project, but there is a lot of difference between tweaking and managing a project and rewriting a contract. We do not have access to the information—which is privileged—on how decisions on the project were made. Moreover, the other day, members of the Select Committee on Trade and Industry were unable to get answers to our questions on the matter because the relevant documents were not available to either Department of Trade and Industry Ministers or to the Secretary of State.

The current Government inherited plans for a technology—yesterday, it was described as "Lilley's legacy"—which, had it been introduced, would have been not only extremely expensive for the Post Office, thereby impacting on Post Office Counters Ltd. and the rural sub-post office network, but obsolescent, and perhaps even obsolete. Nevertheless, we have to be mindful of new technology, new work practices, and new methods of service delivery.

I have great respect for, and some involvement with, the Post Office, as many of my constituents work for it. Derby is a Post Office centre of excellence, with a huge mail sorting office and a mammoth mail operation located at East Midlands airport, moving mail by aeroplane at night around the countryside, and to and from the Isle of Man and the Channel Islands. As the Post Office employs many of my constituents, with whom I am closely involved, I know a great deal about how it operates.

In the debate, there has seemed to be an air of despondency about the future of rural sub-post offices. However, as we move into the new millennium, there are new opportunities and ways of working—such as using the worldwide web, electronic commerce and e-mail. Sub-post offices, particularly, will have to adapt to those new technologies, and—as my hon. Friend the Member for Ochil (Mr. O'Neill) said—thanks to drastically reduced computer hardware costs, will have to start providing services utilising those technologies.

Across the United Kingdom, including many of our rural areas, about 1.5 million people are working—teleworking, as it is euphemistically called—from home. Increasingly, people in rural areas will work from home and want services that, hitherto, they have not used. Previously, many people went to urban areas to work and to shop—like the Secretary of State, to get their newspapers and tins of beans. In the new millennium, with the new technology, people will want sub-post offices to offer high-technology services.

The message for the Post Office, therefore—particularly for rural sub-post offices—is not of despondency, but of buoyancy and hope.

6.14 pm

Mr. Christopher Chope (Christchurch)

This debate has been dominated by the threat to our sub-post office network. That threat is totally unnecessary: it was avoidable; it would not have happened if the Government had stuck with the Horizon project, as they should have done. I am not persuaded that the Government's decision to abandon the project was the right one.

After hearing the speech of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), I am even less convinced that the Government's decision was the correct one. I am convinced that my right hon. Friend left a golden legacy to pensioners, other benefit recipients, sub-postmasters and rural communities—a legacy of a network of post offices that could continue to pay out benefits over the counter on an exclusive basis. He left a system which would have guaranteed the future of thousands of sub-post offices across the country. That system was destroyed by the Government.

Many of the observations of the Government are disingenuous in the extreme. As my right hon. Friend the Member for Hitchin and Harpenden said, the responses to parliamentary questions show that the Government have shifted their ground. Last July, the Minister of State—who we believe is ill, and who we hope gets better soon—told me that the current plans provided for all post offices to be automated by the end of the year 2000. I then asked him why the date had been shifted to the end of 2000, as against 1999. The right hon. Gentleman replied that it was always expected that the original planning assumptions for this project would be tested and reviewed as the programme moved forward. There was no mention of the programme being three years behind, or of the fact that the Government had inherited a situation from the previous Government that was untenable or unmanageable.

In July last year, I asked the then Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson), why the Government had decided not to assess alternative options to the ICL Pathway project. The hon. Gentleman had plenty of time to think of his answer, which was that ICL Pathway was engaged in a project to automate Post Office Counters Ltd. under contracts agreed in 1996. He said that the Government remained committed to the objectives of the project.

We have heard today—and from the Secretary of State yesterday—red herrings about renegotiations in February 1997. This time last year, it was satisfactory for the Government to refer to the contract in 1996, and there was no talk of modifications, changes or difficulties. I am not convinced by the Government's story on this.

Nor am I convinced by comments to the effect that the points that we are making are exaggerated or scaremongering. In today's edition of The Independent, John Roberts, chief executive of the Post Office, is quoted as saying that the decisions of the Government inevitably put at risk a pretty substantial chunk of the network. There are 10,000 rural post offices and benefit payments generate £350 million of business—nearly 40 per cent. of Counters' total turnover. He is in a strong position to know the facts, and he is expressing grave concerns about the Government's claims.

Earlier this year, I was speaking to a 97-year-old constituent about the pleasures of life in Highcliffe-on-Sea. She told me that one of her great pleasures is walking to the local post office every Thursday to collect her pension, having a gossip with people on the way, and perhaps taking a bit longer than some of us would do. She does not want her post office to be closed by the Government so that she can no longer gain access to her pension once a week. She is one of 15 million people in a similar position.

In the amendment, the Government have said that they have a commitment to "a network"—not "the existing network", or a "network similar in extent to the existing one", but a network throughout the UK of post offices which will be automated". That is just not good enough.

In the White Paper, the Government said that all benefit recipients who wished to collect their benefits in cash at post offices would continue to be able to do so, both before and after the change. But what happens if the post office from which those benefits have been collected in the past is closed? What do they do then? I have been told that about half the existing 18,000 sub-post offices are not viable without cross-subsidy—even with income from benefit payments. Without the benefit payment income, they will need much more cross-subsidy to survive, but the post offices that will provide that subsidy will themselves be under financial pressure.

That is why it is not an exaggeration to say that up to half the existing sub-post offices are threatened with closure by the Government's policies. If a network is halved, is it safeguarded? It would be consistent with the Government's use of language for them to say that they had safeguarded the network but reduced it by half.

We wondered whether a future official line was being tried out on the Select Committee by Mr. Baker yesterday, when he told my hon. Friend the Member for Banbury (Mr. Baldry) that Germany had a much larger population and half as many post offices. One can imagine Ministers trotting out that line when half the network has been closed down.

On page 63 of the White Paper there is a reference to the Government standing by, ready to play their part in easing the transition, and supporting existing post offices "of special value". Which post offices are of special value? Are not all post offices of special value? I believe that one Minister was forced to concede that.

The Government have erected a false prospectus in the White Paper. The Post Office Counters network carries out over 800 million transactions a year. To find a replacement for all of them will take more than the Secretary of State going along to the post office and making a withdrawal from his savings. The policy is disastrous, and I strongly commend the motion to the House.

6.21 pm

Mr. Lindsay Hoyle (Chorley)

There is a lot of emotion about today. People's jobs are at stake and we are discussing the future of urban, rural and town post offices. It is too easy to forget that for 18 years post offices withered on the vine and closed without a word from Conservative Members. They have a memory of convenience, which is not acceptable. If we are serious about the future of post offices, we should say that we welcome the White Paper and the freedom that it offers, and we should look for new ideas.

We should introduce a people's bank. The main facility that is missing from rural areas is the bank. Everyone seems to agree that the local post office is the focal point, and we have a golden opportunity to introduce the bank back to the post office and give banking facilities to those who have been denied them. We can extend the facilities on offer well beyond tax discs.

With the new technology links that will come to rural post offices we can provide many new facilities. Instead of bickering and scoring cheap political points, why do we not sit down and concentrate on saving our post offices and protecting the work that they provide for self-employed people by ensuring that they can take advantage of the new opportunities?

Let us support the Post Office and give it the freedom that it needs to ensure that it has a long-term future and does not continue to wither on the vine, as it did under the Conservatives.

6.24 pm

Mr. Tony Baldry (Banbury)

We are considering two things this afternoon. The first is the Government's proposals for the future of the Post Office. I, like many other hon. Members who have spoken, am a member of the Select Committee on Trade and Industry and we seem to have had innumerable sessions on the subject in the past two years while the Government have changed their mind about the future of the Post Office.

The decision to grant plc status is welcome, but the Post Office will still be subject to Treasury controls. As the Financial Times said last week, it is. disappointing that a Government that prides itself on its market savvy has turned its face against privatisation. This is a company with nearly £7 billion turnover and profits of £650 million. It has to prepare for competition and the huge challenge thrown up by the intemet. The sooner it is allowed to make its choices and bear the consequences the better. On the Government's proposals for the future of the Post Office, The Economist observed: The results are an uneasy and probably unworkable political fudge. The Government have defended the decision not to press ahead with even a partial share sale on the grounds that the necessary legislation could not be introduced for years. The White Paper's backing of plc status reveals just how thin this excuse is. The reality is that the unions have blocked privatisation and the Government, even with its huge majority, is unwilling to risk taking them on. We will end up with a Post Office that will be hobbled in terms of international competition.

It became clear yesterday, in hearings before the Select Committee, that when Ministers were drafting the White Paper they did not take into account the decisions that would be taken on the Horizon project. Amazingly, the business plan that the Post Office has drawn up for the next five years has taken no account of Ministers' decision on that project.

The history of the Government's relationship with the Horizon project is a sorry tale. In April last year, the DTI told the Select Committee that the Government is committed both to the maintenance of a nationwide network of post offices and to providing a secure, convenient and cost-effective means of paying benefits to customers. That is why the Horizon automation programme is designed to do what it is designed to do. Post Office Counters Ltd and the Benefits Agency are continuing to work closely with ICL Pathway to progress the Horizon programme and the Government is monitoring development closely. No scintilla of a suggestion appears that there was any problem with the Horizon programme at that time.

In November, the then Secretary of State for Trade and Industry—the right hon. Member for Hartlepool (Mr. Mandelson)—appeared before the Select Committee. He said: There have been delays, but the Benefits Agency and the Post Office continue to work closely with ICL and the Government is closely monitoring progress. The current plans provide for post offices to be automated by the end of the year 2000 and in that context the Government is committed to the maintenance of a nationwide network of post offices. I feel confident that the project will be properly completed and that it will provide a very important platform, a computer-based platform springboard for the Post Office to introduce and develop a diversity of services. We remain confident on the basis of the information that we have at the moment that it will reach completion. That was only a few months ago, and again, there was no scintilla of a suggestion of any problems.

Suddenly, out of the blue at the end of May, there was a complete change of plan. In effect, what has happened is that Ministers have, for whatever reason, changed their mind in the middle of a major contract. One suspects that they were rolled over by the Treasury. ICL, the contractor, must have been left with a substantial loss. I imagine that the only reason why it has not issued litigation is that its parent company, Fujitsu, hopes to float some time next year and would like to retain the Government as a major client.

I agree with the hon. Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee, that the matter should be referred to the National Audit Office. I hope that the Select Committee will find a way unanimously to recommend that approach and I hope also the Public Accounts Committee will examine the issue. It is a scandal and we need to get to the bottom of it. There is no way that Ministers can pretend that it was the previous Government's problem, when just a few months ago—the record—the Secretary of State made it clear to the Committee that he supported the project.

Scrapping the ability of post offices to pay benefit is a threat to the network of sub-post offices, to rural post offices and to post offices on the edges of towns, on housing estates and elsewhere. Yesterday, the Select Committee heard a clear acknowledgement that 40 per cent. of the revenue of Post Office Counters Ltd. comes from benefit payments.

How will that lost revenue be made up? We heard about the automated platform, and were told that the revenue would be made up by allowing rural post offices to have cash cards. Another suggestion—which I hope hon. Members will investigate when they look at the record of our proceedings—came from a senior official from the Department of Trade and Industry. He said that when people moved house in future they would be able to tell every Government Department where they had gone by filling in one form. If that was the best that he could do, it was rather bizarre.

When asked how many post offices the Government thought would close as a result of the proposals, DTI officials said that Germany had only half as many post offices as this country, even though it is twice the size. The only reasonable inference to be drawn from that is that, because German post offices do not pay out benefits, the proposed change would cause the closure of something like half of our post offices in the areas to which I have already referred.

The proposals will also cause many village shops to close. In the areas that I have mentioned, post offices and shops are mutually dependent, but, in future, people who cash benefit cheques in the post office will spend the money in the part of office that is a shop. The proposal amounts to yet another attack by the Government on the fabric of rural Britain and on the livelihoods of people there.

Three Secretaries of State lined up yesterday before the Select Committee to explain that they were going to do away with previous proposals to protect the secure network of post offices, but they did not have the smallest suggestion as to how post offices will make up the 40 per cent. of revenue that they will lose. I asked them why the marketplace had not already caused post offices to use all the bright technological ideas that they described. They had no answer.

The truth is simple: the Treasury has put pressure on the DTI and thinks that a massive saving can be made. The people who will pay for it are those in rural England and on housing estates, because the numbers of post offices available to them will be decimated. Moreover, many people will be forced to use bank accounts against their wishes. At no time has any Minister attempted to explain who will deal with the bank charges or with mothers who will have to open a separate bank account if they want to keep their child benefit payments to themselves. The Government have not even begun to anticipate the number of letters that will come from constituents receiving benefit when they understand the full implications of the measure, and that they will be forced to open a bank account if they are to receive benefits in the future.

This is a shabby piece of work by the Treasury, and it does the Government no credit. The people of rural and urban Britain alike will pay for it and, sadly, the most vulnerable in our communities will pay the most.

6.34 pm

Mr. Edward Davey (Kingston and Surbiton)

Before entering the House, I was a management consultant for Omega Partners, one of whose niche markets was providing specialist advice to international postal administrations. On election, I relinquished all financial links to the firm, but I have maintained my interest in international postal issues. During four years with Omega, I had the privilege of visiting about 30 post offices around the world from Correos de Chile to New Zealand Post. I met the director general of post in Taiwan and visited the privatised Singapore Post plc. I became a bit of an anorak on post offices, so hon. Members will be pleased that my time tonight is limited.

Of all the projects I was involved in, the most relevant to our debate was a study that I co-authored, commissioned by the United States Postal Service, entitled "A Strategic Review of Progressive Postal Administrations: Competition, Commercialisation and Deregulation". The study considered 10 post offices around the world, including those in the UK, Sweden, Australia, New Zealand, Germany, Canada and the Netherlands. It focused on issues such as the ownership and structure of postal administrations, their financial mandate, the extent of competition, the degree of managerial freedom and the ability of managers to set pay, borrow capital and form joint ventures free of Government control. It examined the key parameters for analysing how far a country's postal market is liberalised and the extent to which a company was established as a commercial organisation.

On 8 July, the Secretary of State for Trade and Industry told the House that his proposals would give the House new commercial freedoms. If that is what he seeks to do, he is redefining "commercial". Under his White Paper, postal managers will be forced to keep pay settlements within public sector constraints. They will be unable to borrow freely on capital markets and unable to form joint ventures without prior parliamentary approval. I am intrigued to know the commercial model on which the Secretary of State based those proposals.

The Secretary of State chose his words carefully on 8 July, saying: We have based the plc and public ownership model for the Post Office on one that works very well in other countries, such as Australia, New Zealand, Finland and Sweden. The post offices in those countries have flexibility and commercial freedom, and are able to work in the wider national interest."—[Official Report, 8 July 1999; Vol. 334, c. 1184.] He may have used the Antipodean and Nordic models for his proposals on ownership and structure, but he has ignored them with respect to commercialisation.

On borrowing powers, the Government propose to allow the Post Office to borrow £75 million a year without prior Government approval. Even for domestic concerns, that is a self-evidently inadequate amount for a company with a turnover of £7 billion. The much-needed project for a new sorting site at Feltham, which would serve my constituents, will cost £40 million—more than half of the Post Office's annual limit.

The fast-tracking of other requests—as in the German Parcel project—may improve on the status quo, but it keeps the Post Office inside Treasury public sector borrowing requirement constraints. In some years, that is likely to bite unnecessarily hard on the Post Office. When considered in the context of the borrowing powers of other genuinely commercial post offices, the Government's proposals look even more out of date. My study notes: New Zealand Post is free to raise capital and borrow at commercial rates and on commercial terms. It has lines of credit with four banks and can issue equity bonds. With no state guarantee for its borrowings, New Zealand Post pays the commercial rate. Its borrowings do not score against the public sector borrowing requirement, and it can operate as a commercial organisation.

Sweden Post has similar freedoms. Again I quote from my study: Posten (Sweden Post) is free to borrow in commercial markets. Despite 100 per cent. public ownership, Sweden Post no longer enjoys a government guarantee and can raise money on a fully commercial basis. Both New Zealand and Sweden Post have had a price to pay for their freedoms, namely significant deregulation. In both postal markets, there are significant private sector competitors, and their presence has forced the state postal companies to become more efficient and to manage their balance sheets commercially. But that is the proper combination of liberalisation and commercialisation.

If all this was simply about the retention of controls on borrowing, one could perhaps understand the logic of the Government's position; but the detail of the White Paper shows that the Government are giving the Post Office the worst of all possible deals. Page 56 states that in order to ensure that the Post Office competes fairly with other postal operators in the private sector; and to reinforce commercial disciplines, the Post Office will borrow at a rate which is broadly comparable to the rate it would be charged in the market without an implicit or explicit Government guarantee. The Post Office moves from controlled borrowings at a cheaper rate than a commercial company to controlled borrowings at commercially comparable rates. What nonsense. If the Post Office has to pay a commercial rate for borrowings, it should at least set its own borrowing limit.

Faced with such absurdities, the House might want to reflect on why the Post Office has not gained freer access to the capital markets. The reason is the Treasury, whose officials are so committed to privatisation that, if they do not get their way, they will secure a proposal that is designed to fail—in the hope that privatisation will be seen as the only way out. The Conservatives are right to say that the proposals are paving the way to privatisation; it will be a long and painful path, on which the UK's post offices will be badly damaged.

6.40 pm

Mr. Nick Gibb (Bognor Regis and Littlehampton)

This has been a good debate, although, in his opening comments, the Secretary of State failed yet again to answer the important questions put to him by my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning). In an excellent speech, my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) made it clear that the Government have either known about the problems with Horizon all along, and hence have misled the House in written answers, or they did not know that there was a problem, so they were not on top of their job. He is right.

My right hon. Friend is equally right to highlight the fact that the Government have not thought about the long-term consequences of their policies. The hon. Member for Ochil (Mr. O'Neill), who is the Chairman of the Select Committee on Trade and Industry, made the correct point that not only rural post offices, but those in some of the less accessible urban areas, are at risk. His proposed solution seems to be to, turn the network of sub-post offices into cyber cafén However, he does realise that the Post Office faces the very real problem of survival in an internationally competitive world.

The hon. Member for Eastleigh (Mr. Chidgey) welcomed the sentiments of the White Paper and supported the proposals, but claimed that they lacked something or other to ensure that the Post Office would survive. That is typical of Liberal policy—wanting more of something without paying the price. The Liberals want more commercial freedom, but they oppose plc status because they cannot face up to the realities of Treasury rules. An independent, publicly owned corporation remains subject to state control, because it is still in the state sector.

The hon. Member for Derby, North (Mr. Laxton) exposes his wishful thinking in his belief that the Government's assurance not to privatise the Post Office in the foreseeable future means that they will not privatise it at all. My hon. Friend the Member for Christchurch (Mr. Chope) is correct to say that the system left by my.

right hon. Friend the Member for Hitchin and Harpenden would have guaranteed the survival of the sub-post office network. My hon. Friend is right not to be convinced by the Government's explanation of the failure of the Horizon project. The hon. Member for Chorley (Mr. Hoyle) wants to end the bickering and open a people's bank—perhaps we should leave that comment alone. My hon. Friend the Member for Banbury (Mr. Baldry) rightly said that the Post Office will remain subject to state control, despite a White Paper that refers to commercial freedom. He is also right to say that the Government's handling of the Horizon project is a scandal.

This has been an important debate. The House has assessed the Government's competence as guardian of the nation's post offices. The debate has shown how very unsafe the Post Office is in the hands of the Government. The Post Office White Paper fails to deliver the Post Office from the clutches of the public sector—a sector that is despised by one part of the Labour party and loved by another. Because of that division, which extends right to the top of the Labour party, the Government are failing to give the Post Office the freedom that Ministers know is right. Ministers know that that is right—or at least some of them know it—if the Post Office is to survive in the new internationally competitive and changing environment that it faces.

Post offices are unsafe in the hands of the Government, because the Government's decision to abandon paying benefits through a swipe card over the counter at 19,000 private sector sub-post offices will put at risk the very survival of those post offices. It will threaten the communities of many rural towns, villages and hamlets. It is yet another attack by the Government on rural life, and yet another piece of incompetent computer project management by Ministers. That piece of Government incompetence will cost taxpayers £940 million—the equivalent of three new hospitals. It is a piece of incompetence that, by the Government's own admission, will result in £320 million of extra social security fraud.

As my right hon. Friend the Member for Hitchin and Harpenden rightly said, contracts of such complexity do not only have to be signed, they have to be managed as well. He told his officials that he wanted to hear bad news as well as good news, so that he could take early remedial action. That is what management is all about. Will the Minister tell the House why, after two years in office, he believes that the problems are not the current Government's fault, but that they must be someone else's fault—the previous Government's, or, in the words of the Chancellor, the fault of his officials?

There is a pattern of incompetence developing in the Government. We have seen it in the computerisation of the Passport Agency and in the Government's handling of gold sales, and we are now seeing it in the way in which they have mismanaged the Horizon project. I do not want to preach to the Government, because we hear enough preaching from them, but to be a successful Minister of the Crown, one has to do more than jet around the world, languish in five-star hotels, be driven in a Government Rover, or make speeches at conferences designed to push the latest focus group-tested soundbites. Being a Minister is about managing a Department or a policy area—it is about detail. It is about ensuring that decisions are made competently and for the long term, not for the short-term newspaper headlines.

We are simply not getting the proper level of competence from Ministers in the current Government. The problem is that the penalties for such incompetence are paid not by the man who appointed the Ministers in the first place, but by the people—by the small businesses trying to keep a rural sub-post office afloat; by the elderly and infirm who rely on their local post office; and by rural communities which, yet again, are suffering the consequences of a Government who have no conception of the harsh realities of rural living.

In the detail of the Post Office White Paper, we see even more incompetence. Not only is the Post Office unsafe in the Government's hands, but so too are the 4,000 private sector companies and businesses that already deliver parcels, express packages and letters. That is because the Government are not putting the Post Office fully into the private sector, with all the risks that come with being outside the cosy, protected world of the state sector. Instead, the Post Office will have huge unfair advantages over its competitors in the United Kingdom. Size, state protection and hidden subsidy will enable Post Office plc to undercut and crush small, entrepreneurial private sector British businesses, while the dead hand of state control will hinder its response to innovative and fierce competition from American and European privatised multinational postal services.

The White Paper speaks of ensuring that Post Office borrowings are at market rates of interest, and that it is not allowed to subsidise its non-monopoly services from its monopoly services, but what does that mean in practice? This year, Parcelforce made a £25 million loss, following a £14 million loss last year. No private sector parcel delivery company can survive year after year of multimillion pound losses, so if the losses continue, by definition, Parcelforce is being subsidised. What charge will be made to the non-monopoly divisions of the Post Office for the use of its fixed assets? Will the special traffic regulations for Post Office vans apply to the non-monopoly sector of the Post Office? If so, will that privilege be extended to the private sector?

Lending to the Post Office will come not from the private sector, but from the national loans fund, which is a part of government. Apart from the interest rate, how can the Post Office's competitors be sure that the other terms of such loans will be fair, including repayment periods? How can they be sure that the margin of several points above base that is applicable to most businesses in this country will apply to the Post Office? We need answers to those questions to be sure that the new arrangements will not be as damaging to the private sector's long-term viability as they are to the Post Office itself.

The Government's policy on the future of our post offices is in complete disarray because of incompetence and cowardice: the incompetence of Ministers who are unable effectively to manage the detail of a computerisation programme, the consequences of which will put at risk thousands of rural sub-post offices, and the cowardice of a Government failing to do what they know is right for the competitiveness of the Post Office. They should fully release it from the clutches of the state. The policy is being dictated by Labour party divisions.

rather than the imperatives of what is right. The Government are bad for postal services and bad for rural communities, and I urge the House to support the motion.

6.50 pm

The Minister for Energy and Industry (Mr. John Battle)

This debate on the future of post offices has been useful, and it has opened up the discussion of our White Paper and its reforms.

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), who spoke from the Front Bench, was not a Member of the House under the previous Government, and it may have slipped his mind, or perhaps he was not aware, that that Government held back the Post Office from modernising Parcelforce. That denied the Post Office the investment that it needed. Before the hon. Gentleman started haranguing us across the Dispatch Box, perhaps he should have reflected on the contributions of hon. Members sitting behind him who were Ministers in the previous Administration.

I shall tackle the concerns that were common ground in the debate. The Post Office network needs to have a positive future, and we must recognise the vital role of post offices, particularly in local communities, whether in rural villages or our towns and cities. That concern is shared across the Chamber.

I was interested to hear Conservative Members express concerns for the poor and those on benefits who currently have no access to a bank account. After 13 years in the House, that is the first time I have heard such remarks from Conservative Members, although I welcome them. Under our proposals, there will for the first time be access criteria. With the new regulatory structure and the five-year strategic plan, that will mean that there is potential to protect and enhance the network, using new technologies to make post offices more attractive and enable the Post Office to realise its potential at home and internationally.

Interestingly, Opposition Members who were Ministers in the previous Administration, and who were known for their impeccable new right credentials, complain that we are not privatising the Post Office. They are free to set out their stall, and they are right to say that we are not privatising the Post Office.

I was surprised that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) even mentioned the Horizon project, Questions need to be asked about the roots of that project, which were established under his authority, and he is in the best position to answer those questions. We have had no answers so far, however.

My hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee on Trade and Industry, welcomed the White Paper and urged us to get on with it so that new opportunities will not be missed. He asked whether the regulatory system will be operated by a board rather than an individual. I can tell him that it will be run by a commission, and I hope that he welcomes that.

My hon. Friend also reminded us of the important fact that 60 per cent. of rural parishes have a post office while less than 10 per cent. have a bank or building society. Some of the comments made by Conservative Members need to viewed in that context, and we should not be beguiled by the scaremongering in which they have tried to indulge tonight.

The hon. Member for Eastleigh (Mr. Chidgey) reminded us that Conservative Members scarcely raised a finger when 3,300 post offices closed. I remember that when I was in opposition, the post office in Huntingdon, the constituency of the then Prime Minister, closed, but I do not remember those on the Benches around the right hon. Gentleman jumping up and protesting about that. For years afterwards they said that there was nothing they could do.

The accounts published yesterday confirm that there is pressure on the Post Office, and greater commercial freedom is needed to enable it to invest more, to internationalise its business and to reinforce the network. The hon. Member for Eastleigh suggested that there is a potential for the Post Office and banks to build new relationships. That idea was powerfully and imaginatively reinforced by my hon. Friend the Member for Chorley (Mr. Hoyle), who made positive proposals. He suggested that post offices could act as banks in local communities. Why not? Let us explore that suggestion as part of the consideration of the White Paper.

My hon. Friend the Member for Derby, North (Mr. Laxton) asked for reassurance that there is no intention to sell shares in the future. There is no such intention. As my hon. Friend reminded us, that would require primary legislation. We have no intention of introducing that primary legislation.

My hon. Friend also mentioned the Conservative ideologues who, trapped in an out-of-date ideology, are failing to get to grips with the potential of the new communication technologies that could transform post offices for the 21st century. Our approach to the Post Office is not driven by ideological dogma, or by the burnt-out traditional neo-liberal economic agendas still peddled by Conservative Members, who would privatise anything that moved, regardless of whether it was beneficial.

Interestingly, the Opposition motion does not even take a passing glance at the detailed challenges, here and now and globally, that the Post Office faces. Where is the challenge of global competition from postal services worldwide? There is not a reference to it in the motion. Where are the references to the challenges of being allowed to compete with other services in countries, such as Germany and Sweden, that are opening up their markets? Where are the references to the challenges of new forms of technology and communication? We believe that the Post Office needs to take a step change into the future as customers demand change, as technology advances and as new players—courier services, e-mail providers and so on—come on line. The Opposition motion is evidence of a tired old agenda. The Conservatives are locked into the "privatise regardless" attitude. Our proposals, set out in the White Paper—

Mr. Lilley

Will the hon. Gentleman give way?

Mr. Battle

I will. Perhaps the right hon. Gentleman will tell us about the roots of what went wrong with Horizon.

Mr. Lilley

I am grateful to the hon. Gentleman for giving way. Several of my colleagues and I have given chapter and verse a direct contradiction between what Ministers have been saying today and assurances that they gave the House on five occasions over the past 18 months. This is a very serious matter. The hon. Gentleman is noted for his personal integrity. I am sorry that he has not thought fit to try to restore the integrity of the Government Front Bench. Either the Government knew all along that there were problems—

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

Order.

Mr. Battle

The hon. Gentleman has the nerve to question my integrity. I seem to remember that he belonged—[Interruption.] Okay. He belonged to the previous Government and he spoke eloquently tonight about the needs for banking and post office provision for people in poverty. He may like to reflect upon the social loan fund that he introduced, offering loans which no one could take up because they could not afford to repay them—yet he then asks us to do joined-up thinking. He may now have found a new role in life on the Back Benches, and part of that new role may help us if he will explain what went wrong some of the time, because it seems that we are still picking up the pieces after what went wrong under the previous Administration.

Mrs. Browning

On what date were Ministers advised by officials that the Horizon project should be abandoned?

Mr. Battle

The hon. Lady will remember that, in this debate, two hon. Members—one my hon. Friend the Member for Ochil, the Chairman of the Trade and Industry Committee, and the other a member of the Conservative party—said that they thought that perhaps the Public Accounts Committee should trawl over this whole business. That would be very interesting for all Members of the House.

Our proposals in the White Paper will ensure that the universal service obligation continues to be supported. They will set out arrangements for a new independent regulator, with a duty to ensure that the Post Office holds to that universal service obligation. The regulator's job will be to keep the network of post offices, and the Post Office will move in the direction of new electronic platforms to transform it.

For the first time, the Government are setting access criteria which will ensure that specific areas of population must have access to a post office, and the regulator will have a duty to police that. Therefore, for the first time in history, deliveries to every address in the country and collections every working day will be set out in law. That is an improvement. The Government propose to strengthen the Post Office Users National Council. We will give the Post Office commercial freedom for the future.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 126, Noes 328.

Division No. 247]	[6.59 pm
AYES
Ainsworth, Peter (E Surrey)	Baldry, Tony
Amess, David	Beggs, Roy
Arbuthnot, Rt Hon James	Bercow, John
Atkinson, David (Bour'mth E)	Beresford, Sir Paul
Atkinson, Peter (Hexham)	Blunt, Crispin

Body, Sir Richard	Lidington, David
Boswell, Tim	Lilley, Rt Hon Peter
Bottomley, Peter (Worthing W)	Loughton, Tim
Bottomley, Rt Hon Mrs Virginia	Lyell, Rt Hon Sir Nicholas
Brazier, Julian	Maclean, Rt Hon David
Brooke, Rt Hon Peter	McLoughlin, Patrick
Browning, Mrs Angela	Madel, Sir David
Bruce, Ian (S Dorset)	Malins, Humfrey
Burns, Simon	Maples, John
Butterfill, John	Mates, Michael
Cash, William	May, Mrs Theresa
Chapman, Sir Sydney (Chipping Barnet)	Moss, Malcolm
	Norman, Archie
Chope, Christopher	Ottaway, Richard
Clappison, James	Page, Richard
Clarke, Rt Hon Kenneth (Rushcliffe)	Pickles, Eric
	Prior, David
Collins, Tim	Randall, John
Colvin, Michael	Redwood, Rt Hon John
Cormack, Sir Patrick	Robathan, Andrew
Curry, Rt Hon David	Robertson, Laurence (Tewk'b'ry)
Davies, Quentin (Grantham)	Roe, Mrs Marion (Broxbourne)
Davis, Rt Hon David (Haltemprice)	Ross, William (E Lond'y)
Day, Stephen	Ruffley, David
Dorrell, Rt Hon Stephen	St Aubyn, Nick
Duncan, Alan	Sayeed, Jonathan
Duncan Smith, Iain	Shephard, Rt Hon Mrs Gillian
Faber, David	Shepherd, Richard
Fabricant, Michael	Smyth, Rev Martin (Belfast S)
Fallon, Michael	Spelman, Mrs Caroline
Flight, Howard	Spicer, Sir Michael
Forth, Rt Hon Eric	Spring, Richard
Fox, Dr Liam	Stanley, Rt Hon Sir John
Gale, Roger	Steen, Anthony
Gibb, Nick	Streeter, Gary
Gillan, Mrs Cheryl	Swayne, Desmond
Gorman, Mrs Teresa	Syms, Robert
Gray, James	Tapsell, Sir Peter
Green, Damian	Taylor, Ian (Esher & Walton)
Greenway, John	Taylor, John M (Solihull)
Grieve, Dominic	Townend, John
Gummer, Rt Hon John	Tredinnick, David
Hamilton, Rt Hon Sir Archie	Trend, Michael
Hammond, Philip	Tyrie, Andrew
Hawkins, Nick	Viggers, Peter
Heathcoat-Amory, Rt Hon David	Walter, Robert
Horam, John	Wardle, Charles
Howard, Rt Hon Michael	Waterson, Nigel
Howarth, Gerald (Aldershot)	Wells, Bowen
Hunter, Andrew	Whitney, Sir Raymond
Jackson, Robert (Wantage)	Whittingdale, John
Jenkin, Bernard	Widdecombe, Rt Hon Miss Ann
Johnson Smith, Rt Hon Sir Geoffrey	Wilkinson, John
	Willetts, David
Key, Robert	Winterton, Mrs Ann (Congleton)
King, Rt Hon Tom (Bridgwater)	Winterton, Nicholas (Macclesfield)
Laing, Mrs Eleanor	Woodward, Shaun
Lait, Mrs Jacqui	Yeo, Tim
Leigh, Edward	Tellers for the Ayes:
Letwin, Oliver	Mr. Keith Simpson and
Lewis, Dr Julian (New Forest E)	Mr. Geoffrey Clifton-Brown.

NOES
Abbott, Ms Diane	Banks, Tony
Adams, Mrs Irene (Paisley N)	Barron, Kevin
Ainger, Nick	Battle, John
Alexander, Douglas	Bayley, Hugh
Allan, Richard	Beard, Nigel
Allen, Graham	Beckett, Rt Hon Mrs Margaret
Anderson, Donald (Swansea E)	Bell, Stuart (Middlesbrough)
Anderson, Janet (Rossendale)	Benn, Hilary (Leeds C)
Atherton, Ms Candy	Benn, Rt Hon Tony (Chesterfield)
Atkins, Charlotte	Bennett, Andrew F
Austin, John	Benton, Joe
Baker, Norman	Bermingham, Gerald

Berry, Roger	Dobbin, Jim
Best, Harold	Dobson, Rt Hon Frank
Betts, Clive	Donohoe, Brian H
Blackman, Liz	Doran, Frank
Blair, Rt Hon Tony	Dowd, Jim
Blears, Ms Hazel	Drown, Ms Julia
Bradley, Keith (Withington)	Dunwoody, Mrs Gwyneth
Bradley, Peter (The Wrekin)	Eagle, Angela (Wallasey)
Bradshaw, Ben	Eagle, Maria (L'pool Garston)
Brake, Tom	Edwards, Huw
Brand, Dr Peter	Ellman, Mrs Louise
Brinton, Mrs Helen	Ennis, Jeff
Brown, Rt Hon Nick (Newcastle E)	Etherington, Bill
Browne, Desmond	Fearn, Ronnie
Buck, Ms Karen	Field, Rt Hon Frank
Burden, Richard	Fisher, Mark
Burgon, Colin	Fitzpatrick, Jim
Burnett, John	Fitzsimons, Lorna
Burstow, Paul	Flint, Caroline
Butler, Mrs Christine	Flynn, Paul
Byers, Rt Hon Stephen	Foulkes, George
Cable, Dr Vincent	Fyfe, Maria
Campbell, Mrs Anne (C'bridge)	Galloway, George
Campbell, Rt Hon Menzies (NE Fife)	Gapes, Mike
	George, Bruce (Walsall S)
Cann, Jamie	Gerrard, Neil
Caplin, Ivor	Gibson, Dr Ian
Casale, Roger	Gilroy, Mrs Linda
Caton, Martin	Godman, Dr Norman A
Cawsey, Ian	Godsiff, Roger
Chapman, Ben (Wirral S)	Goggins, Paul
Chaytor, David	Gordon, Mrs Eileen
Chidgey, David	Gorrie, Donald
Chisholm, Malcolm	Griffiths, Nigel (Edinburgh S)
Clapham, Michael	Grocott, Bruce
Clark, Rt Hon Dr David (S Shields)	Gunnell, John
Clark, Dr Lynda (Edinburgh Pentlands)	Hain, Peter
	Hall, Mike (Weaver Vale)
Clark, Paul (Gillingham)	Hall, Patrick (Bedford)
Clarke, Charles (Norwich S)	Hamilton, Fabian (Leeds NE)
Clarke, Rt Hon Tom (Coatbridge)	Hancock, Mike
Clarke, Tony (Northampton S)	Hanson, David
Clelland, David	Harman, Rt Hon Ms Harriet
Clwyd, Ann	Harris, Dr Evan
Coaker, Vernon	Heal, Mrs Sylvia
Coffey, Ms Ann	Healey, John
Cohen, Harry	Heath, David (Somerton & Frome)
Coleman, Iain	Henderson, Ivan (Harwich)
Colman, Tony	Hesford, Stephen
Connarty, Michael	Hewitt, Ms Patricia
Cook, Frank (Stockton N)	Hill, Keith
Corbett, Robin	Hinchliffe, David
Corbyn, Jeremy	Hodge, Ms Margaret
Corston, Ms Jean	Hoey, Kate
Cotter, Brian	Hood, Jimmy
Cousins, Jim	Hopkins, Kelvin
Cox, Tom	Howarth, George (Knowsley N)
Cranston, Ross	Hoyle, Lindsay
Crausby, David	Hughes, Ms Beverley (Stretford)
Cryer, Mrs Ann (Keighley)	Hughes, Kevin (Doncaster N)
Cryer, John (Hornchurch)	Hughes, Simon (Southwark N)
Cunliffe, Lawrence	Humble, Mrs Joan
Cunningham, Jim (Cov'try S)	Hurst, Alan
Dalyell, Tam	Hutton, John
Darling, Rt Hon Alistair	Iddon, Dr Brian
Darvill, Keith	Illsley, Eric
Davey, Edward (Kingston)	Jackson, Helen (Hillsborough)
Davey, Valerie (Bristol W)	Jenkins, Brian
Davidson, Ian	Johnson, Miss Melanie (Welwyn Hatfield)
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)	Jones, Mrs Fiona (Newark)
Davis, Terry (B'ham Hodge H)	Jones, Helen (Warrington N)
Dawson, Hilton	Jones, Ms Jenny (Wolverh'ton SW)
Dean, Mrs Janet
Denham, John	Jones, Jon Owen (Cardiff C)
Dismore, Andrew	Jones, Dr Lynne (Selly Oak)

Jowell, Rt Hon Ms Tessa	Primaroto, Dawn
Keeble, Ms Sally	Prosser, Gwyn
Keen, Alan (Feltham & Heston)	Purchase, Ken
Keen, Ann (Brentford & Isleworth)	Quinn, Lawrie
Kelly, Ms Ruth	Radice, Rt Hon Giles
Kemp, Fraser	Rammell, Bill
Kennedy, Charles (Ross Skye)	Reed, Andrew (Loughborough)
Kennedy, Jane (Wavertree)	Rendel, David
Khabra, Piara S	Robertson, Rt Hon George (Hamilton S)
Kidney, David
King, Andy (Rugby & Kenilworth)	Rooker, Jeff
King, Ms Oona (Bethnal Green)	Rooney, Terry
Ladyman, Dr Stephen	Rowlands, Ted
Lawrence, Ms Jackie	Roy, Frank
Laxton, Bob	Ruane, Chris
Leslie, Christopher	Russell, Bob (Colchester)
Lewis, Terry (Worsley)	Salter, Martin
Linton, Martin	Sarwar, Mohammad
Livingstone, Ken	Savidge, Malcolm
Livsey, Richard	Sawford, Phil
Lloyd, Tony (Manchester C)	Sedgemore, Brian
Lock, David	Sheldon, Rt Hon Robert
Love, Andrew	Shipley, Ms Debra
McAvoy, Thomas	Short, Rt Hon Clare
McCafferty, Ms Chris	Simpson, Alan (Nottingham S)
McDonagh, Siobhain	Singh, Marsha
Macdonald, Calum	Skinner, Dennis
McDonnell, John	Smith, Rt Hon Andrew (Oxford E)
McIsaac, Shona	Smith, Angela (Basildon)
McKenna, Mrs Rosemary	Smith, Rt Hon Chris (Islington S)
Mackinlay, Andrew	Smith, Miss Geraldine (Morecambe & Lunesdale)
McNamara, Kevin
McNulty, Tony	Smith, Jacqui (Redditch)
MacShane, Denis	Smith, John (Glamorgan)
Mactaggart, Fiona	Smith, Llew (Blaenau Gwent)
McWalter, Tony	Smith, Sir Robert (W Ab'd'ns)
McWilliam, John	Soley, Clive
Mahon, Mrs Alice	Southworth, Ms Helen
Mallaber, Judy	Spellar, John
Marsden, Gordon (Blackpool S)	Squire, Ms Rachel
Marsden, Paul (Shrewsbury)	Starkey, Dr Phyllis
Marshall, David (Shettleston)	Steinberg, Gerry
Marshall, Jim (Leicester S)	Stevenson, George
Marshall-Andrews, Robert	Stewart, David (Inverness E)
Martlew, Eric	Stewart, Ian (Eccles)
Maxton, John	Stinchcombe, Paul
Merron, Gillian	Stoate, Dr Howard
Michie, Bill (Shef'ld Heeley)	Stott, Roger
Mitchell, Austin	Stringer, Graham
Moran, Ms Margaret	Stuart, Ms Gisela
Morgan, Alasdair (Galloway)	Stunell, Andrew
Morgan, Ms Julie (Cardiff N)	Sutcliffe, Gerry
Morley, Elliot	Taylor, Rt Hon Mrs Ann (Dewsbury)
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)	Taylor, David (NW Leics)
Naysmith, Dr Doug	Temple-Morris, Peter
O'Brien, Bill (Normanton)	Thomas, Gareth (Clwyd W)
O'Brien, Mike (N Warks)	Thomas, Gareth R (Harrow W)
O'Hara, Eddie	Timms, Stephen
Olner, Bill	Tipping, Paddy
O'Neill, Martin	Todd, Mark
Öpik, Lembit	Tonge, Dr Jenny
Osborne, Ms Sandra	Touhig, Don
Palmer, Dr Nick	Trickett, Jon
Pearson, Ian	Turner, Dennis (Wolverh'ton SE)
Pendry, Tom	Turner, Dr George (NW Norfolk)
Perham, Ms Linda	Twigg, Stephen (Enfield)
Pickthall, Colin	Vaz, Keith
Pike, Peter L	Vis, Dr Rudi
Plaskitt, James	Walley, Ms Joan
Pollard, Kerry	Wareing, Robert N
Pond, Chris	White, Brian
Pound, Stephen	Whitehead, Dr Alan
Powell, Sir Raymond	Wicks, Malcolm
Prentice, Ms Bridget (Lewisham E)	Williams, Rt Hon Alan (Swansea W)
Prentice, Gordon (Pendle)

Williams, Alan W (E Carmarthen)	Wright, Dr Tony (Cannock)
Wills, Michael	Wyatt, Derek
Wise, Audrey
Wood, Mike	Tellers for the Noes:
Worthington, Tony	Mr. Greg Pope and
Wright, Anthony D (Gt Yarmouth)	Mr. Robert Ainsworth.

Question accordingly negatived.

Question, That the proposed words be there added,put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 293, Noes 140.

Division No. 248]	[7.11 pm
AYES
Abbott, Ms Diane	Coffey, Ms Ann
Adams, Mrs Irene (Paisley N)	Cohen, Harry
Ainger, Nick	Coleman, Iain
Alexander, Douglas	Colman, Tony
Allen, Graham	Connarty, Michael
Anderson, Donald (Swansea E)	Cook, Frank (Stockton N)
Anderson, Janet (Rossendale)	Corbett, Robin
Atherton, Ms Candy	Corbyn, Jeremy
Atkins, Charlotte	Corston, Ms Jean
Austin, John	Cousins, Jim
Banks, Tony	Cox, Tom
Barren, Kevin	Cranston, Ross
Battle, John	Crausby, David
Bayley, Hugh	Cryer, Mrs Ann (Keighley)
Beard, Nigel	Cryer, John (Hornchurch)
Beckett, Rt Hon Mrs Margaret	Cunningham, Jim (Cov'try S)
Bell, Stuart (Middlesbrough)	Darting, Rt Hon Alistair
Benn, Hilary (Leeds C)	Darvill, Keith
Benn, Rt Hon Tony (Chesterfield)	Davey, Valerie (Bristol W)
Bennett, Andrew F	Davidson, Ian
Benton, Joe	Davies, Rt Hon Denzil (Llanelli)
Bermingham, Gerald	Davies, Geraint (Croydon C)
Berry, Roger	Davis, Terry (B'ham Hodge H)
Best, Harold	Dawson, Hilton
Betts, Clive	Dean, Mrs Janet
Blackman, Liz	Denham, John
Blair, Rt Hon Tony	Dismore, Andrew
Blears, Ms Hazel	Dobbin, Jim
Boateng, Paul	Dobson, Rt Hon Frank
Bradley, Keith (Withington)	Donohoe, Brian H
Bradshaw, Ben	Doran, Frank
Brinton, Mrs Helen	Dowd, Jim
Brown, Rt Hon Nick (Newcastle E)	Drown, Ms Julia
Browne, Desmond	Dunwoody, Mrs Gwyneth
Buck, Ms Karen	Eagle, Angela (Wallasey)
Burden, Richard	Eagle, Maria (L'pool Garston)
Burgon, Colin	Edwards, Huw
Butler, Mrs Christine	Ellman, Mrs Louise
Byers, Rt Hon Stephen	Ennis, Jeff
Campbell, Mrs Anne (C'bridge)	Etherington, Bill
Campbell, Rt Hon Menzies (NE Fife)	Field, Rt Hon Frank
	Fisher, Mark
Caplin, Ivor	Fitzpatrick, Jim
Casale, Roger	Fitzsimons, Lorna
Caton, Martin	Flint, Caroline
Cawsey, Ian	Flynn, Paul
Chapman, Ben (Wirral S)	Foulkes, George
Chaytor, David	Fyfe, Maria
Chisholm, Malcolm	Galloway, George
Clapham, Michael	Gapes, Mike
Clark, Rt Hon Dr David (S Shields)	George, Bruce (Walsall S)
Clark, Paul (Gillingham)	Gerrard, Neil
Clarke, Charles (Norwich S)	Gibson, Dr Ian
Clarke, Rt Hon Tom (Coatbridge)	Gilroy, Mrs Linda
Clarke, Tony (Northampton S)	Godman, Dr Norman A
Clelland, David	Godsiff, Roger
Clwyd, Ann	Goggins, Paul
Coaker, Vernon	Gordon, Mrs Eileen

Grocott, Bruce	Marshall, Jim (Leicester S)
Gunnell, John	Marshalt-Andrews, Robert
Hain, Peter	Martlew, Eric
Hall, Mike (Weaver Vale)	Maxton, John
Hall, Patrick (Bedford)	Merron, Gillian
Hamilton, Fabian (Leeds NE)	Michie, Bill (Shef'ld Heeley)
Hanson, David	Mitchell, Austin
Harman, Rt Hon Ms Harriet	Moran, Ms Margaret
Heal, Mrs Sylvia	Morgan, Ms Julie (Cardiff N)
Healey, John	Morley, Elliot
Henderson, Ivan (Harwich)	Murphy, Denis (Wansbeck)
Hesford, Stephen	Murphy, Jim (Eastwood)
Hewitt, Ms Patricia	Naysmith, Dr Doug
Hill, Keith	O'Brien, Bill (Normanton)
Hinchliffe, David	O'Brien, Mike (N Walks)
Hodge, Ms Margaret	O'Hara, Eddie
Hoey, Kate	Olner, Bill
Hood, Jimmy	Osborne, Ms Sandra
Hopkins, Kelvin	Palmer, Dr Nick
Howarth, George (Knowsley N)	Pearson, Ian
Hughes, Ms Beverley (Stretford)	Pendry, Tom
Hughes, Kevin (Doncaster N)	Perham, Ms Linda
Hurst, Alan	Pickthall, Colin
Hutton, John	Pike, Peter L
Iddon, Dr Brian	Plaskitt, James
Illsley, Eric	Pollard, Kerry
Jackson, Helen (Hillsborough)	Pond, Chris
Jenkins, Brian	Pound, Stephen
Johnson, Miss Melanie (Welwyn Hatfield)	Powell, Sir Raymond
	Prentice, Ms Bridget (Lewisham E)
Jones, Mrs Fiona (Newark)	Prentice, Gordon (Pendle)
Jones, Ms Jenny (Wolverh'ton SW)	Primarolo, Dawn
	Prosser, Gwyn
Jones, Jon Owen (Cardiff C)	Purchase, Ken
Jones, Dr Lynne (Selly Oak)	Quin, Rt Hon Ms Joyce
Jowell, Rt Hon Ms Tessa	Quinn, Lawrie
Keeble, Ms Sally	Radice, Rt Hon Giles
Keen, Alan (Feltham & Heston)	Rammell, Bill
Keen, Ann (Brentford & Isleworth)	Reed, Andrew (Loughborough)
Kelly, Ms Ruth	Robertson, Rt Hon George (Hamilton S)
Kemp, Fraser
Kennedy, Jane (Wavertree)	Rooker, Jeff
Khabra, Piara S	Rooney, Terry
Kidney, David	Rowlands, Ted
King, Andy (Rugby & Kenilworth)	Roy, Frank
King, Ms Oona (Bethnal Green)	Ruane, Chris
Ladyman, Dr Stephen	Salter, Martin
Lawrence, Ms Jackie	Sarwar, Mohammad
Laxton, Bob	Savidge, Malcolm
Leslie, Christopher	Sawford, Phil
Lewis, Terry (Worsley)	Sedgemore, Brian
Linton, Martin	Shipley, Ms Debra
Livingstone, Ken	Short, Rt Hon Clare
Livsey, Richard	Simpson, Alan (Nottingham S)
Lloyd, Tony (Manchester C)	Singh, Marsha
Lock, David	Skinner, Dennis
Love, Andrew	Smith, Rt Hon Andrew (Oxford E)
McAvoy, Thomas	Smith, Angela (Basildon)
McCafferty, Ms Chris	Smith, Rt Hon Chris (Islington S)
McDonagh, Siobhain	Smith, Jacqui (Redditch)
Macdonald, Calum	Smith, John (Glamorgan)
McDonnell, John	Smith, Llew (Blaenau Gwent)
McIsaac, Shona	Soley, Clive
McKenna, Mrs Rosemary	Southworth, Ms Helen
Mackinlay, Andrew	Spellar, John
McNamara, Kevin	Starkey, Dr Phyllis
McNulty, Tony	Steinberg, Gerry
MacShane, Denis	Stevenson, George
Mactaggart, Fiona	Stewart, David (Inverness E)
McWalter, Tony	Stewart, Ian (Eccles)
McWilliam, John	Stinchcombe, Paul
Mahon, Mrs Alice	Stoate, Dr Howard
Mallaber, Judy	Stott, Roger
Marsden, Gordon (Blackpool S)	Stringer, Graham
Marsden, Paul (Shrewsbury)	Stuart, Ms Gisela
Marshall, David (Shettleston)	Sutcliffe, Gerry

Taylor, Rt Hon Mrs Ann (Dewsbury)	Wareing, Robert N
	White, Brian
Taylor, David (NW Leics)	Whitehead, Dr Alan
Temple-Morris, Peter	Wicks, Malcolm
Thomas, Gareth (Clwyd W)	Williams, Rt Hon Alan (Swansea W)
Thomas, Gareth R (Harrow W)
Timms, Stephen	Williams, Alan W (E Carmarthen)
Tipping, Paddy	Wills, Michael
Todd, Mark	Wise, Audrey
Touhig, Don	Wood, Mike
Tricket, Jon	Worthington, Tony
Turner, Dennis (Wolverh'ton SE)	Wright, Anthony D (Gt Yarmouth)
	Wright, Dr Tony (Cannock)
Turner, Dr George (NW Norfolk)	Wyatt, Derek
Twigg, Stephen (Enfield)
Vaz, Keith	Tellers for the Ayes:
Vis, Dr Rudi	Mr. Greg Pope and
Walley, Ms Joan	Mr. Robert Ainsworth.

NOES
Ainsworth, Peter (E Surrey)	Day, Stephen
Allan, Richard	Dorrell, Rt Hon Stephen
Amess, David	Duncan, Alan
Arbuthnot, Rt Hon James	Duncan Smith, Iain
Atkinson, David (Bour'mth E)	Faber, David
Atkinson, Peter (Hexham)	Fabricant, Michael
Baker, Norman	Fallon, Michael
Baldry, Tony	Fearn, Ronnie
Beggs, Roy	Flight, Howard
Bercow, John	Forth, Rt Hon Eric
Beresford, Sir Paul	Fox, Dr Liam
Blunt, Crispin	Gale, Roger
Body, Sir Richard	Gibb, Nick
Boswell, Tim	Gillan, Mrs Cheryl
Bottomley, Peter (Worthing W)	Gorman, Mrs Teresa
Bottomley, Rt Hon Mrs Virginia	Gray, James
Brake, Tom	Green, Damian
Brand, Dr Peter	Greenway, John
Brazier, Julian	Grieve, Dominic
Brooke, Rt Hon Peter	Gummer, Rt Hon John
Browning, Mrs Angela	Hammond, Philip
Bruce, Ian (S Dorset)	Hancock, Mike
Burnett, John	Harris, Dr Evan
Burns, Simon	Hawkins, Nick
Burstow, Paul	Heath, David (Somerton & Frome)
Butterfill, John	Heathcoat-Amory, Rt Hon David
Cable, Dr Vincent	Horam, John
Cash, William	Howard, Rt Hon Michael
Chapman, Sir Sydney (Chipping Barnet)	Howarth, Gerald (Aldershot)
	Hughes, Simon (Southwark N)
Chidgey, David	Hunter, Andrew
Chope, Christopher	Jackson, Robert (Wantage)
Clappison, James	Jenkin, Bernard
Clarke, Rt Hon Kenneth (Rushcliffe)	Johnson Smith,
	Rt Hon Sir Geoffrey
Clifton-Brown, Geoffrey	Key, Robert
Collins, Tim	King, Rt Hon Tom (Bridgwater)
Colvin, Michael	Laing, Mrs Eleanor
Cormack, Sir Patrick	Leigh, Edward
Cotter, Brian	Letwin, Oliver
Curry, Rt Hon David	Lewis, Dr Julian (New Forest E)
Davey, Edward (Kingston)	Lidington, David
Davies, Quentin (Grantham)	Lilley, Rt Hon Peter
Davis, Rt Hon David (Haltemprice)	Loughton, Tim

Lyell, Rt Hon Sir Nicholas	Spring, Richard
Maclean, Rt Hon David	Stanley, Rt Hon Sir John
McLoughlin, Patrick	Steen, Anthony
Madel, Sir David	Stunell, Andrew
Malins, Humfrey	Swayne, Desmond
Maples, John	Syms, Robert
Mates, Michael	Tapsell, Sir Peter
May, Mrs Theresa	Taylor, Ian (Esher & Walton)
Norman, Archie	Thompson, William
Öpik, Lembit	Tonge, Dr Jenny
Ottaway, Richard	Tredinnick, David
Page, Richard	Trend, Michael
Pickles, Eric	Tyrie, Andrew
Prior, David	Viggers, Peter
Rendel, David	Walter, Robert
Robatnan, Andrew	Wardle, Charles
Robertson, Laurence (Tewk'b'ry)	Waterson, Nigel
	Wells Bowen
Roe, Mrs Marion (Broxbourne)	Whittingdale, John
Ross, William (E Lond'y)	Widdecombe, Rt Hon Miss Ann
Ruffley, David	Wilkinson, John
Russell, Bob (Colchester)	Willetts, David
St Aubyn, Nick	Winterton, Mrs Ann (Congleton)
Sayeed, Jonathan	Winterton, Nicholas (Macclesfield)
Shephard, Rt Hon Mrs Gillian	Woodward, Shaun
Shepherd, Richard	Yeo, Tim
Smith, Sir Robert (W Ab'd'ns)
Smyth, Rev Martin (Belfast S)	Tellers for the Noes:
Spelman, Mrs Caroline	Mrs. Jacqui Lait and
Spicer, Sir Michael	Mr. Keith Simpson.

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the important White Paper on the Post Office published by the Government; notes the contrast with the years of Tory dithering, blinkered by ideology, that left the Post Office to decline; welcomes the slashing of the EFL which contrasts with the Tory use of it as a variable tax on Post Office users; welcomes for the first time the clear commitment of the Government to a network throughout the United Kingdom of post offices which will be automated; welcomes the fact that for the first time the Universal Service Obligation will be guaranteed in legislation; and notes that the Opposition believes in immediate privatisation of the Post Office, showing they are still an ideologically-driven party, not one intent on improving services to the British public.